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NI 43-101 TECHNICAL REPORT

ON RESOURCES

ROSARIO PROJECT

SAN LUIS POTOSI, MEXICO

PREPARED FOR

SANTACRUZ SILVER MINING LTD. Suite 1125-595 Howe Street

Vancouver, BC

V6C 2T5

Effective Date: December 1, 2012

Report Date: December 19, 2012

Prepared by

Donald E. Hulse, P.E., SME-RM

Patrick F. Daniels, SME-RM

Santacruz Silver Mining Ltd. NI 43-101 Technical Report on Resources

Rosario Project Date and Signature Pages

December 19, 2012 i

DATE AND SIGNATURE PAGES

DONALD E. HULSE, P.E. Principal Mining Engineer

Gustavson Associates, LLC

274 Union Boulevard, Suite 450

Lakewood, Colorado 80228

Telephone: 720-407-4062 Facsimile: 720-407-4067

Email: [email protected]

CERTIFICATE of AUTHOR

I, Donald E. Hulse do hereby certify that:

1. I am currently employed as Vice President and Principal Mining Engineer by Gustavson

Associates, LLC at:

274 Union Boulevard

Suite 450


2. I am a graduate of the Colorado School of Mines with a Bachelor of Science in Mining

Engineering (1982), and have practiced my profession continuously since 1983.

3. I am a registered Professional Engineer in the State of Colorado (35269), and a registered

member in good standing of the Society of Mining Metallurgy & Exploration

(1533190RM).

4. I have worked as a mining engineer for a total of 29 years since my graduation from

university; as an employee of a major mining company, a major engineering company, and

as a consulting engineer. I have worked in resource estimation since 1983, training in

geostatistics between 1983 and 1989 estimating resources under supervision and later

accepting responsibility for estimates of gold, gold-silver, and polymetallic deposits

containing silver. From 1989 to 1994 where I performed estimates for gold-silver deposits

in Mexico which successfully were produced as well as Volcanogenic Massive Sulfide

deposits in South Africa and Arizona, evaporates in South Africa and copper porphyries in

New Mexico. From 1994 to 1999 I worked for both a consulting group and an operating

company where I estimated resources on both narrow and massive precious metal vein

deposits as well as disseminated gold and silver and developed mine plans for those

deposits. During this period I performed modeling and mine planning on gold deposits in

Nevada, California, and Chile. As a consultant my projects included resource estimation

and mine planning of various gold deposits as well as providing training for my clients in

resource estimation and surface and underground mine design. With Gustavson Associates

I have worked on both disseminated and structurally controlled gold-silver deposits,

polymetallic veins and carbonate replacement systems.



December 19, 2012 ii

5. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI

43-101”) and certify that by reason of my education, affiliation with a professional

association (as defined in NI 43-101) and past relevant work experience, I fulfill the

requirements to be a “qualified person” for the purposes of NI 43-101.

6. I am responsible for sections 1- 4, 6 – 9, 10.1 and 11-20 of the technical report entitled NI

43-101 Technical Report on Resources, Rosario Project, Santacruz Silver Mining Ltd.”,

dated December 19, 2012, with an effective date of December 1, 2012, (the “Technical

Report”),. I visited the property on December 6, 2011.

7. I have had prior experience with the property that is the subject of this Technical Report. I

was responsible for Sections 1-6, 9-15, 17-20 and 23-27 of the technical report titled “NI

43-101 TECHNICAL REPORT PRELIMINARY ECONOMIC ASSESSMENT OF THE

ROSARIO PROJECT, SAN LUIS POTOSI, MEXICO,” dated December 21, 2011, with an

effective date of December 20, 2011 prepared for Forte Resources Inc. and Santacruz Silver

Mining Ltd.

8. I am independent of Santacruz Silver Mining Ltd. applying all of the tests in Section 1.5 of

National Instrument 43-101.

9. I have read National Instrument 43-101 and Form 43-101, and the Technical Report has

been prepared in compliance with that instrument and form.

10. I consent to the filing of the Technical Report with any stock exchange and other regulatory

authority and any publication by them for regulatory purposes, including electronic

publication in the public company files on their websites accessible by the public, of the

Technical Report.

11. As of the date of this certificate, to the best of my knowledge, information and belief, the

Technical Report contains all scientific and technical information that is required to be

disclosed to make the Technical Report not misleading.

Dated this 19th

day of December, 2012

/s/ Donald E. Hulse

Signature of Qualified Person

Donald E. Hulse, P.E., SME-RM

Printed Name of Qualified Person



December 19, 2012 iii

PATRICK F. DANIELS Principal Mining Engineer

Gustavson Associates, LLC

274 Union Boulevard, Suite 450


Telephone: 720-407-4062 Facsimile: 720-407-4067

Email: [email protected]

CERTIFICATE OF AUTHOR

I, Patrick F. Daniels, do hereby certify that:

1. I am currently employed as Principal Mining Engineer by Gustavson Associates, LLC at:

274 Union Boulevard

Suite 450

Lakewood, CO, USA, 80228

2. I am a graduate of the Colorado School of Mines with a Bachelor of Science in Mining

Engineering (1986), and have practiced my profession continuously since 1986.

3. I am a Registered Member of the Society of Mining, Metallurgy and Exploration (728800RM).

4. I have worked as a mining engineer for a total of 26 years since my graduation from university.

My relevant experience includes work in mining, engineering companies, a major mining

equipment manufacturer and as a consulting engineer. I have been directly involved in the

mining, exploration and evaluation of mineral properties internationally for precious and base

metals. In 1989, I managed the sample preparation and an assay lab for a precious metal mine in

the Western US. From 1990-1999, in a consultancy, I worked on exploration databases,

reviewed drilling data, resource estimations, and mining engineering on a number of projects in

in the Southern Cone of South America. These projects included both narrow and massive

precious metal vein deposits as well as disseminated gold and silver. As a consultant my

projects included resource estimation and mine planning of various gold deposits as well as

providing training for my clients in exploration databases, resource estimation, and surface and

underground mine design. With Gustavson Associates, I have worked on both disseminated

and structurally controlled gold-silver deposits and polymetallic veins. I have read the definition

of “qualified person” set out in National Instrument 43-101 (NI 43-101) and certify that by

reason of my education, affiliation with a professional association (as defined in NI 43-101) and

past relevant work experience, I fulfill the requirements to be a “qualified person” for the

purposes of NI 43-101.

5. I am responsible for the preparation of Sections 5 and 10.2-10.3 of the technical report entitled

“NI 43-101 Technical Report on Resources, Rosario Project, Santacruz Silver Mining Ltd.”,



December 19, 2012 iv

dated December 19, 2012, with an effective date of December 1, 2012, (the “Technical

Report”). I visited the property on November 27 and 28, 2012 for two days.

6. I have not had prior involvement with the property that is the subject of the Technical Report.

7. I am independent of the Santacruz Silver Mining, Ltd. applying all of the tests in section 1.5 of

National Instrument 43-101.

8. I have read NI 43-101 and Form 43-101F1, and the Sections 5 and 10.2-10.3 of the Technical

Report have been prepared in compliance with that instrument and form.

9. I consent to the filing of the Technical Report with any stock exchange and other regulatory

authority and any publication by them for regulatory purposes, including electronic publication

in the public company files on their websites accessible by the public, of the Technical Report.

10. As of the date of this certificate, to the best of my knowledge, information and belief, the

Sections 5 and 10.2-10.3 of the Technical Report contain all scientific and technical information

that is required to be disclosed to make the Technical Report not misleading.

Dated this 19th

Day of December, 2012.

Signature of Qualified Person

/s/ Patrick F. Daniels

Patrick F. Daniels

Printed Name of Qualified Person


Rosario Project Table of Contents

December 19, 2012 v

TABLE OF CONTENTS

SECTION PAGE

1. SUMMARY .............................................................................................................................................................. 1

1.1 INTRODUCTION ...................................................................................................................................................... 1

1.2 PROPERTY DESCRIPTION AND OWNERSHIP ............................................................................................................ 1

1.3 INFRASTRUCTURE AND POWER .............................................................................................................................. 2

1.4 PRIOR EXPLORATION ACTIVITY ............................................................................................................................ 3

1.5 GEOLOGY AND MINERALIZATION .......................................................................................................................... 3

1.6 EXPLORATION STATUS .......................................................................................................................................... 4

1.7 METALLURGICAL TESTING .................................................................................................................................... 4

1.8 MINERAL RESOURCE ............................................................................................................................................. 5

1.9 MINERAL RESERVE ESTIMATES ............................................................................................................................. 6

1.10 ENVIRONMENTAL CONSIDERATIONS ................................................................................................................ 6

1.11 RECOMMENDATIONS AND CONCLUSIONS ......................................................................................................... 6

2. INTRODUCTION ................................................................................................................................................... 8

2.1 PURPOSE ................................................................................................................................................................ 8

2.2 QUALIFIED PERSON ............................................................................................................................................... 8

2.3 SITE VISIT OF QUALIFIED PERSON ......................................................................................................................... 8

2.4 SOURCES OF INFORMATION ................................................................................................................................... 9

2.5 UNITS OF MEASURE ............................................................................................................................................. 10

3. RELIANCE ON OTHER EXPERTS .................................................................................................................. 13

4. PROPERTY DESCRIPTION AND LOCATION .............................................................................................. 14

4.1 LOCATION ........................................................................................................................................................... 14

4.2 MINERAL TENURE, AGREEMENTS, AND ROYALTIES ............................................................................................ 14

4.3 SURFACE RIGHTS ................................................................................................................................................ 17

5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE & PHYSIOGRAPHY ....... 18

5.1 ACCESS ............................................................................................................................................................... 18

5.2 CLIMATE ............................................................................................................................................................. 18

5.3 LOCAL RESOURCES AND INFRASTRUCTURE ........................................................................................................ 19

5.4 PHYSIOGRAPHY ................................................................................................................................................... 20

5.5 VEGETATION ....................................................................................................................................................... 20

6. HISTORY .............................................................................................................................................................. 21

6.1 PROPERTY HISTORY ............................................................................................................................................ 21

6.2 EXPLORATION HISTORY ...................................................................................................................................... 21

6.3 HISTORICAL CORE DRILLING AND LOGGING ....................................................................................................... 22

6.4 MINERAL RESOURCE COUNCIL ........................................................................................................................... 22

7. GEOLOGICAL SETTING AND MINERALIZATION .................................................................................... 25

7.1 REGIONAL GEOLOGY........................................................................................................................................... 25

7.2 LOCAL GEOLOGY ................................................................................................................................................ 28

7.3 PROPERTY GEOLOGY ........................................................................................................................................... 30

7.3.1 Mineralization ........................................................................................................................................... 30

8. DEPOSIT TYPES .................................................................................................................................................. 33



December 19, 2012 vi

9. EXPLORATION ................................................................................................................................................... 35

10. DRILLING ............................................................................................................................................................. 37

10.1 SANTACRUZ DRILLING ................................................................................................................................... 37

10.2 2011 DRILLING ............................................................................................................................................... 37

10.3 2012 DRILLING ............................................................................................................................................... 37

11. SAMPLE PREPARATION, ANALYSES, AND SECURITY ........................................................................... 39

11.1 DRILLING 2011-2012 ...................................................................................................................................... 39

11.2 VERIFICATION OF THE QUALITY CONTROL PROGRAM 2011 ........................................................................... 40

11.3 VERIFICATION OF THE QUALITY CONTROL PROGRAM 2012 ........................................................................... 43

11.4 HISTORICAL DATA .......................................................................................................................................... 47

12. DATA VERIFICATION ....................................................................................................................................... 48

12.1 FIELD CHECK SAMPLES .................................................................................................................................. 48

13. MINERAL PROCESSING AND METALLURGICAL TESTING .................................................................. 50

13.1 CURRENT PROCESS TESTWORK ...................................................................................................................... 50

13.2 HISTORICAL PROCESS TESTING ...................................................................................................................... 50

13.3 HISTORICAL FLOTATION TEST WORK ............................................................................................................. 51

14. MINERAL RESOURCE ESTIMATE ................................................................................................................. 52

14.1 DATA USED IN RESOURCE ESTIMATION ......................................................................................................... 52

14.2 GEOLOGIC MODELING .................................................................................................................................... 52

14.3 ESTIMATION METHODOLOGY ......................................................................................................................... 53

14.3.1 Mineral Domains .................................................................................................................................. 53

14.3.2 Compositing ......................................................................................................................................... 53

14.3.3 Capping ................................................................................................................................................ 54

14.3.4 Statistical Analysis ............................................................................................................................... 55

14.4 METHODOLOGY .............................................................................................................................................. 56

14.4.1 Model Parameters ................................................................................................................................ 57

14.4.2 Topography .......................................................................................................................................... 57

14.4.3 Grade Model ........................................................................................................................................ 57

14.4.4 Bulk Density ......................................................................................................................................... 58

14.5 MODEL CHECKS ............................................................................................................................................. 58

14.6 MINERAL RESOURCE CLASSIFICATION ........................................................................................................... 63

14.7 MINERAL RESOURCE STATEMENT .................................................................................................................. 65

15. ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT................. 69

15.1 ENVIRONMENTAL LIABILITIES ........................................................................................................................ 69

15.2 OTHER PERMITS ............................................................................................................................................. 69

16. ADJACENT PROPERTIES ................................................................................................................................. 71

16.1 ADJACENT PROPERTIES .................................................................................................................................. 71

17. OTHER RELEVANT DATA AND INFORMATION ....................................................................................... 72

18. INTERPRETATIONS AND CONCLUSIONS ................................................................................................... 73

19. RECOMMENDATIONS ...................................................................................................................................... 74

20. REFERENCES ...................................................................................................................................................... 75



December 19, 2012 vii

LIST OF FIGURES

FIGURE PAGE

FIGURE 1-1 ROSARIO PROJECT LOCATION .......................................................................................................................... 2

FIGURE 2-1 BULLDOZER TRENCH SHOWING ROSARIO VEINS ALONG STRIKE .................................................................... 9

FIGURE 4-1 ROSARIO PROJECT LOCATION MAP ................................................................................................................ 14

FIGURE 4-2 LOCATION OF MINING CONCESSIONS ............................................................................................................. 16

FIGURE 5-1 ROSARIO PROJECT ACCESS ............................................................................................................................ 18

FIGURE 5-2 ROSARIO PROJECT WATER AND ELECTRIC SERVICES .................................................................................... 20

FIGURE 6-1 DRILL COLLAR MONUMENT ........................................................................................................................... 23

FIGURE 7-1 REGIONAL GEOLOGIC MAP OF THE CHARCAS - SAN RAFAEL AREA, SAN LUIS POTOSI, MEXICO (AFTER SOTO

AND LOPEX, 2000) ................................................................................................................................................... 26

FIGURE 7-2 SAN RAFAEL ANTICLINE NE-SW SECTION LOOKING NORTHWEST ............................................................... 27

FIGURE 7-3 NORMAL FAULT AT ROSARIO II MINE ADIT (ARROWS SHOW DIRECTION OF MOVEMENT) .............................. 29

FIGURE 7-4 LOCAL GEOLOGY OF THE ROSARIO PROJECT, ROSARIO VEINS ...................................................................... 30

FIGURE 7-5 SULFIDE MINERALIZATION IN ROSARIO II MINE ADIT ................................................................................... 31

FIGURE 7-6 CROSS SECTION SHOWING ROSARIO I AND ROSARIO II VEINS ....................................................................... 32

FIGURE 8-1 ROSARIO VEIN EXPOSED IN TRENCH .............................................................................................................. 33

FIGURE 9-1 ROSARIO TRENCH DATA ................................................................................................................................ 35

FIGURE 9-2 VEINING IN EXPLORATION TRENCH AT THE ROSARIO PROSPECT ................................................................... 36

FIGURE 10-1 DRILL HOLE LOCATIONS BY CAMPAIGN ...................................................................................................... 38

FIGURE 11-1 DRILL CORE FROM HOLE AP-08 .................................................................................................................. 40

FIGURE 11-2 COMPARISON OF GOLD ASSAY VALUES TO STANDARD MATERIAL 2011 .................................................... 41

FIGURE 11-3 COMPARISON OF SILVER ASSAY VALUES TO STANDARD MATERIAL 2011 .................................................. 41

FIGURE 11-4 COMPARISON OF DUPLICATE SILVER ASSAYS 2011 ..................................................................................... 42

FIGURE 11-5 COMPARISON OF DUPLICATE LEAD ASSAYS 2011 ....................................................................................... 42

FIGURE 11-6 COMPARISON OF DUPLICATE ZINC ASSAYS 2011......................................................................................... 43

FIGURE 11-7 COMPARISON OF DUPLICATE GOLD ASSAYS 2011 ....................................................................................... 43

FIGURE 11-8 COMPARISON OF SILVER ASSAY VALUES TO STANDARD MATERIAL 2012 .................................................. 44

FIGURE 11-9 COMPARISON OF GOLD ASSAY VALUES TO STANDARD MATERIAL 2012 .................................................... 45

FIGURE 11-10 COMPARISON OF DUPLICATE SILVER ASSAYS 2012 ................................................................................... 45

FIGURE 11-11 COMPARISON OF DUPLICATE GOLD ASSAYS 2012 ..................................................................................... 46

FIGURE 11-12 COMPARISON OF ALS CHEMEX AND METALLURGICAL ASSAYS FOR SILVER............................................. 46

FIGURE 11-13 COMPARISON OF ALS CHEMEX AND METALLURGICAL ASSAYS FOR GOLD ............................................... 47

FIGURE 12-1 FIELD SAMPLES TAKEN IN 2011 ................................................................................................................... 49

FIGURE 14-1 CROSS SECTION OF ROSARIO VEINS ............................................................................................................. 53

FIGURE 14-2 CUMULATIVE FREQUENCY PLOT - ROSARIO VEIN I ..................................................................................... 54

FIGURE 14-3 CUMULATIVE FREQUENCY PLOT - ROSARIO VEIN II .................................................................................... 55

FIGURE 14-4 LONG SECTION LOOKING SW - VEIN I ......................................................................................................... 59

FIGURE 14-5 LONG SECTION LOOKING SW - VEIN II ........................................................................................................ 59

FIGURE 14-6 GOLD SWATH PLOT VEIN II ......................................................................................................................... 60

FIGURE 14-7 SILVER SWATH PLOT VEIN II ....................................................................................................................... 61

FIGURE 14-8 LEAD SWATH PLOT VEIN II .......................................................................................................................... 61

FIGURE 14-9 ZINC SWATH PLOT - VEIN II ......................................................................................................................... 62

FIGURE 14-10 THICKNESS SWATH PLOT - VEIN II ............................................................................................................. 62

FIGURE 14-11 LONG SECTION SHOWING RESOURCE CLASSIFICATION .............................................................................. 64



December 19, 2012 viii

LIST OF TABLES

TABLE PAGE

TABLE 1-1 ROSARIO I VEIN MINERAL RESOURCE ESTIMATE AT 75G/T AGEQ .................................................................... 5

TABLE 1-2 ROSARIO II VEIN MINERAL RESOURCE ESTIMATE AT 75G/T AGEQ .................................................................. 5

TABLE 1-3 TOTAL MINERAL RESOURCE FOR ROSARIO I AND II VEINS AT 75G/T AGEQ ..................................................... 5

TABLE 1-4 2013 ROSARIO EXPLORATION BUDGET 2013 .................................................................................................... 7

TABLE 4-1 CLAIMS COVERING THE ROSARIO PROJECT ..................................................................................................... 15

TABLE 4-2 PURCHASE AND ROYALTY COMMITMENTS ...................................................................................................... 17

TABLE 5-1 CLIMATOLOGICAL DATA FOR SAN LUIS POTOSI .............................................................................................. 19

TABLE 6-1 DISTRIBUTION OF DRILL HOLES ...................................................................................................................... 24

TABLE 6-2 HISTORIC RESOURCE ESTIMATION FOR ROSARIO VEINS ................................................................................. 24

TABLE 12-1 CONFIRMATION SAMPLES OF MINERALIZATION ............................................................................................ 48

TABLE 12-2 FIELD SAMPLES 2011 .................................................................................................................................... 48

TABLE 13-1 METAL AND RECOVERY RATES ..................................................................................................................... 50

TABLE 14-1 GRADE CAPPING VALUES BY VEIN ............................................................................................................... 55

TABLE 14-2 ROSARIO VEIN I STATISTICS ......................................................................................................................... 56

TABLE 14-3 ROSARIO VEIN II STATISTICS ........................................................................................................................ 56

TABLE 14-4 GRID MODEL DEFINITION ............................................................................................................................. 57

TABLE 14-5 ESTIMATION METHODS ................................................................................................................................. 57

TABLE 14-6 DENSITY BY LITHOLOGY ............................................................................................................................... 58

TABLE 14-7 RESOURCE CLASSIFICATION CRITERIA .......................................................................................................... 63

TABLE 14-8 ROSARIO I VEIN MINERAL RESOURCE ESTIMATE.......................................................................................... 65

TABLE 14-9 ROSARIO II VEIN MINERAL RESOURCE ESTIMATE ........................................................................................ 66

TABLE 14-10 TOTAL MINERAL RESOURCE FOR ROSARIO I AND II VEINS ......................................................................... 67

TABLE 15-1 PERMITS FOR CONSTRUCTION AND OPERATION ............................................................................................ 70

TABLE 19-1 2013 ROSARIO EXPLORATION BUDGET 2013 ................................................................................................ 74

TABLE A-1 HISTORICAL DRILL INTERCEPTS FOR ROSARIO ............................................................................................ A-2

TABLE A-2 2011 DRILL DATA FOR ROSARIO ................................................................................................................. A-3

TABLE A-3 2012 DRILL INTERCEPTS FOR ROSARIO ....................................................................................................... A-4

TABLE B -1 VERTICES OF THE REY DAVID CONCESSION AND CONTRACTED AREA OF SAN RAFAEL CONCESSIONS ....... B-2

LIST OF APPENDICES

A – Drill Hole Intercept Data

B – Concession and Contracted Boundary Vertices


Rosario Project Summary

December 19, 2012 1

1. SUMMARY

1.1 Introduction

Gustavson Associates LLC (Gustavson) was commissioned by Santacruz Silver Mining Ltd.

(Santacruz or the Company) to prepare an independent Technical Report on Resources for the

Rosario Project in northern Sonora, Mexico. The purpose of this report is to present the mineral

resource estimate and describe the geology of the Rosario Project with respect to silver, zinc,

lead, and gold mineralization, and to include information from new sampling and drilling

performed in 2011 and 2012.

This report was prepared in a with National Instrument 43-101 Standards of Disclosure for

Mineral Projects (NI 43-101) and Canadian Institute of Mining, Metallurgy and Petroleum

(CIM) “Best Practices and Reporting Guidelines”, November 27, 2010. The effective date of

this report is December 1, 2012.

The previous Technical Report applicable to the Rosario Project was entitled, “NI 43-101

Technical Report, Preliminary Economic Assessment of the Rosario Project, San Luis Potosi,

Mexico”, dated December 20, 2011 (“December 20, 2011 PEA”) and was issued by Gustavson.

This current Technical Report on Resources, also issued by Gustavson, supersedes the previous

Technical Report, the results of which are no longer to be relied on. The December 20, 2011

PEA is no longer current and valid in light of the update to the Mineral Resources, which have

been significantly upgraded. Gustavson does not consider the mine plan utilized in the previous

report to be current. As such, this Technical Report on Resources does not present the data and

information contained in the December 20, 2011 PEA.

1.2 Property Description and Ownership

The property consists of 500 hectares located approximately 13km southwest of the town of

Charcas in the state of San Luis Potosi, Mexico. The approximate center of the Rosario Project

is located at Easting 273,256, Northing 2,550,648, UTM WG84. Figure 1-1 shows the general

location of the Rosario Project area.



December 19, 2012 2

Figure 1-1 Rosario Project Location

Santacruz's rights to the two mining concessions within the Charcas National Mining Reserve

have been acquired through its Mexican subsidiary, Impulsora Minera Santacruz S.A. de C.V.

(IMS). Pursuant to a mining exploration and promissory assignment of rights agreement dated

February 15, 2010 with Bertha Alicia Howlet Solis, IMS can acquire a 100% interest in 42

hectares comprising the Rey David mining concession (Title No. 230640). Pursuant to a mining

exploration and exploitation agreement dated February 22, 2011 with Industrial Minera Mexico

S.A. de C.V., IMS has exploration and exploitation rights to 458 hectares of the 2912 hectares

comprising the San Rafael concession (Title No. 230641). Pursuant to these agreements, IMS

has rights to 500 hectares, as more fully described in Section 4.

The decision to commence production at Rosario was not based on a feasibility study of mineral

reserves demonstrating economic and technical viability, but rather on a more preliminary

estimate of inferred mineral resources. Accordingly, there is increased uncertainty and economic

and technical risks of failure associated with this production decision. Production and economic

variables may vary considerably, due to the absence of a complete and detailed site analysis

according to and in accordance with NI 43-101.

1.3 Infrastructure and Power

The nearest population center to the Rosario Project is the Town of Charcas, which lies

approximately 13 kilometers northeast of the project and is approximately 20 kilometers distant



December 19, 2012 3

by road. Charcas has limited medical, fire protection, and law enforcement services. Modern

medical services and all industrial support are available in the state capital San Luis Potosi,

approximately 100 kilometers to the south. In addition to these services, Grupo Mexico which

runs the Charcas Mine maintains a mine rescue team, and due to the mining history of the town

trained underground labor and mine contract services are available.

Power may be accessed through a substation that provides power to the Charcas Mine.

Santacruz is constructing a 24.5km power line to the project with a planned completion in

December 2012.

Santacruz has initiated drilling and construction of two 22 inch water wells to a depth of 200m

approximately 15km from the project site. These two wells will provide the 10-15 liters/sec

needed for a plant of 500 tonnes/day. The road for the pipeline is being built.

1.4 Prior Exploration Activity

The Servicio Geologico de Mexico (SGM), formerly known as the Consejo de Recursos

Minerales (CRM), conducted exploration work at the Rosario Project from 1982 to 1987. During

that time, exploration was conducted in the San Rafael Valley by and on behalf of the Mexican

Government to investigate the geologic potential of mineralized veins including the Rosario

Veins. Two veins were identified by drilling: the Rosario I (or “upper”) vein and the Rosario II

(or “lower”) vein. One-hundred eighty-five diamond core holes totaling nearly 25,000 meters

were drilled in 3 distinct vein areas. The Rosario I and II veins showed the most promise, and 34

holes are located on the Rey David claims with another 28 which appear to be on the

continuation of the Rosario structures (Rodriguez, 1987) on the surrounding San Rafael claims.

Information from these 62 holes was provided to Gustavson for this study.

Upon conclusion of the San Rafael exploration effort, the project was halted and the Rosario

Project drill core abandoned at the site. Although the paper records and field monuments still

exist, time and weather have destroyed the core boxes and the core is no longer useable for

technical purposes.

1.5 Geology and Mineralization

The regional geologic structure that dominates the both the Rosario Project area and the Charcas

area is the north-south oriented San Rafael anticline. The Rosario Project is located within an

erosional valley formed along the axis of the anticline. Here, the middle to upper Triassic

Zacatecas formation is exposed by erosion and bounded on both sides by the younger formations

which comprise the limbs of the anticline.

Mineralization is hosted in two veins with a general strike of N60W, dipping between 45 to 60

degrees southwest. The host rock of the veins is comprised of the Zacatecas formation, a mid to

late Triassic turbidite sequence, consisting of beds of dark grey, green and grayish-green shale,



December 19, 2012 4

sandstone, conglomerate and siltstone. The veins extend over a length of 2.5 to 3.0 kilometers,

and to a depth of at least 150 to 200 meters, as determined from available drilling data

(Rodriguez et al., 1987). Each of the Rosario I and Rosario II veins vary in width from 0.4 to

2.5 meters. Mineralization appears to have occurred in three stages, with the third stage

precipitating the silver bearing minerals. This deposit has been described as a mesothermal vein

system based on temperature (195 to 338°C), although mineralization is typical of other deposits

in Mexico which are described as epithermal.

1.6 Exploration Status

During the initial review of the Rosario Project, Gustavson recommended 10 core holes to test

the CRM data in the heart of the ore zone. The first 9 holes were completed in 2011 and an

additional 26 holes plus four surface trenches in 2012. The deposit remains open along strike

and at depth. Visual evaluation of the core shows veining which corresponds to the good assay

intervals in the core.

Nine new core holes were drilled during 2011. The core was examined by Gustavson during the

site visit on 6 December 2011. Intercepts were similar in length and character to those reported

in the CRM drill reports and cross sections.

After completing the drill testing of the core of the Rosario zone in 2011 and starting bulldozer

trenches to expose the top of the veins, Santacruz has drilled an additional 26 holes in 2012.

These holes were spaced along the length of the property and tested the area drilled earlier by

CRM within the Santacruz property. Assays for these holes were recently received. A potential

low gold bias in some of the holes is being investigated. The only consequence of a low gold

bias is a potential conservative value for estimated gold grades.

These holes have supported both the grades and structures seen in the historical drilling.

1.7 Metallurgical Testing

Metallurgical testing is in process through a lab connected with the Autonomous University of

San Luis Potosi (UASLP) which has a highly respected metallurgy department. When this work

is complete Gustavson will include it in the a pre-feasibility Study.

Preliminary metallurgical testing was performed in 1987 using froth flotation to recover gold,

silver, lead and zinc from drill core samples.

Based on preliminary testing and knowledge of other mining operations in the Charcas area,

Santacruz has purchased a used mill and started construction of this facility. The proposed plant

will process up to 500 tonnes/day of material to produce two concentrates, a lead concentrate and

a zinc concentrate.



December 19, 2012 5

1.8 Mineral Resource

Gustavson estimated this mineral resource estimate effective on 1 December 2012. The cutoff

for resource reporting is based on underground vein mining with long hole or shrinkage stoping

with milling and flotation. Gustavson has assumed similar metallurgical recoveries for all

metals. Gustavson is reporting the resources at a silver equivalent cutoff of 75g/t. The silver

equivalent (AgEq) calculation is described after the resource tables which follow.

Table 1-1 Rosario I Vein Mineral Resource Estimate at 75g/t AgEq

TONNAGE Thickness Silver Equivalent Gold Silver Lead Zinc

Classification k tonne m gpt k-oz gpt oz gpt k-oz pct lbsx1000 pct lbsx1000

Measured 126.7 1.01 305 1,243.3 0.988 4,025 157.2 640.2 1.21 3,393.1 2.64 7,385.4

Indicated 408.4 0.85 273 3,579.4 0.904 11,873 136.0 1,785.7 1.14 10,306.5 2.43 21,911.8

Meas+Ind 535 0.88 280 4,822.7 0.924 15,898 141.0 2,425.9 1.16 13,699.6 2.48 29,297.2

Inferred 164.0 0.73 190 1,001.0 0.995 5,246 74.7 393.6 0.81 2,943.5 1.74 6,276.1

Table 1-2 Rosario II Vein Mineral Resource Estimate at 75g/t AgEq


Classification k tonne m gpt k-oz gpt Oz gpt k-oz pct lbsx1000 pct lbsx1000

Measured 143.4 1.17 447 2,062.2 0.897 4,137 256.9 1,184.6 1.13 3,559.3 4.62 14,611.1

Indicated 302.6 1.10 345 3,351.3 0.852 8,286 198.6 1,932.5 1.22 8,123.7 2.82 18,778.6

Meas+Ind 446 1.12 378 5,413.5 0.955 12,423 217.4 3,117.1 1.19 11,683.0 3.40 33,389.7

Inferred 222.2 0.99 213 1,521.8 0.673 4,807 102.4 731.9 0.67 3,262.8 2.37 11,598.0

Table 1-3 Total Mineral Resource for Rosario I and II Veins at 75g/t AgEq


Classification k tonne m gpt k-oz gpt oz gpt k-oz pct lbsx1000 pct lbsx1000

Measured 270 2.18 381 3,305.5 0.940 8,162 210.1 1,824.8 1.17 6,952 3.69 21,997

Indicated 711 1.95 303 6,930.7 0.882 20,159 162.7 3,718.2 1.18 18,430 2.60 40,690

Meas+Ind 981 2.01 325 10,236.2 0.898 28,320 175.7 5,543.0 1.17 25,383 2.90 62,687

Inferred 386 1.72 203 2,522.8 0.810 10,053 90.6 1,125..5 0.73 6,206 2.10 17,874

Note: Mineral resources which are not mineral reserves do not have demonstrated economic viability. The quantity and grade of inferred resources reported herein are uncertain in nature and exploration completed to date is insufficient to define these mineral resources as indicated or measured. There is no guarantee that further exploration will result in the inferred mineral resources being upgraded to an indicated or measured mineral resource category.

*AgEq is the silver equivalent in ppm used to calculate the cutoff. The silver equivalent was

calculated with the following equation:



December 19, 2012 6

AgEq= (Ag *Pag/31.1035)+ (Pb*Ppb*22.05)+(Zn*Pzn*22.05)+(Au*Pau/31.1035)

(Pag)

Where:

Metal Symbol Grade Units

Price Price

Symbol

Silver Eq AgEq g/t

Silver Ag g/t 26.28 $/tOz Pag

Gold Au g/t 1,341.00 $/tOz PAu

Lead Pb % 0.9988 $/lb Pcu

Zinc Zn % 0.9531 $/lb Pzn

* The calculation assumes equal recoveries in all metals pending further metallurgical work.

The grades for copper, lead, and zinc are multiplied by each metal's three year

trailing average price.

The quantity and grade or quality is an estimate and is rounded to reflect the fact that

it is an approximation.

1.9 Mineral Reserve Estimates

As a pre-feasibility study has not yet been performed, no mineral reserves can be stated at the

Rosario Project.

1.10 Environmental Considerations

Santacruz has nearly completed the permitting process. As with all projects in Mexico, the

Rosario Project requires an Environmental Impact Manifest (MIA), Change of Land Use Permit,

Municipal Construction permit, and explosives permit. All permits are current except the permit

for Purchase and Use of Explosives” which is pending.

Gustavson considers that there are no material risks in permitting, or environmental risks other

than those common to small metal mines.

1.11 Recommendations and Conclusions

Gustavson considers that the Rosario Project has potential which merits additional work. The

new drilling and modeling has supported the resource developed from historical drill data. Due

to the results of the new exploration work, Gustavson can now classify the resource to include

some measured and indicated mineral resource as well as inferred. New metallurgical testing is

currently proceeding on Rosario data.

Gustavson recommends that Santacruz continue the ongoing exploration work on the project site.

They should proceed with a pre-feasibility study to better define the project risks and potential.

Gustavson believes that the low percentage of assay errors discovered in the QA procedures is

not material to the estimated resource.



December 19, 2012 7

Based on the three dimensional correlation between the historical drilling and the 2011 and 2012

drill campaigns, Gustavson believes that it is reasonable to include the earlier assay data in this

study.

Gustavson considers the data adequate for estimation of a mineral resource.

Gustavson knows of no environmental issues that could materially impact Santacruz’s ability to

extract mineral resources from the Rosario property.

Risks at this stage will include the ability to successfully mine the narrow dipping veins, and the

ability to recover metals efficiently from the mineral.

Metallurgical testing on composites from each vein is the highest priority and Gustavson has

been informed that it is in process. Gustavson suggests a series of surface geochemical lines

crossing the bodies along strike and continuing to the southeast. Following the geochem work, at

least 5 new holes should be planned along strike to the SE to examine continued mineralization.

Drilling appears to successfully confirm the size and grade of the deposit. Gustavson

recommends that a pre-feasibility study be performed to define the project’s economic potential

as well as the project risks. An estimated budget to for metallurgical test work, pre-feasibility

and infill and step-out drilling is shown in Table 1-4.

Table 1-4 2013 Rosario Exploration Budget 2013

Activity Estimate

Metallurgical Testing 60,000

Pre-Feasibility Study 400,000

Development Drilling 1000m 300,000

Step Out Drilling – 1000m 300,000

Total $1,060,000


Rosario Project Introduction

December 19, 2012 8

2. INTRODUCTION

2.1 Purpose

Gustavson Associates LLC (Gustavson) was commissioned by Santacruz Silver Mining Ltd.

(Santacruz or the Company) to prepare an independent Technical Report on Resources for the

Rosario Project in northern Sonora, Mexico. The purpose of this report is to present the mineral

resource estimate and describe the geology of the Rosario Project with respect to silver, zinc,

lead, and gold mineralization, and to include information from new sampling and drilling

performed in 2011 and 2012.

This report was prepared in accordance with National Instrument 43-101 Standards of Disclosure

for Mineral Projects (NI 43-101) and Canadian Institute of Mining, Metallurgy and Petroleum

(CIM) “Best Practices and Reporting Guidelines”, November 27, 2010. The effective date of

this report is December 1, 2012.

The previous Technical Report applicable to the Rosario Project was entitled, “NI 43-101

Technical Report, Preliminary Economic Assessment of the Rosario Project, San Luis Potosi,

Mexico”, dated December 20, 2011 (“December 20, 2011 PEA”) and was issued by

Gustavson. This current Technical Report on Resources, also issued by Gustavson, supersedes

the previous Technical Report, the results of which are no longer to be relied on. The December

20, 2011 PEA is no longer current and valid in light of the update to the Mineral Resources,

which have been significantly upgraded. Gustavson does not consider the mine plan utilized in

the previous report to be current. As such, this Technical Report on Resources does not present

the data and information contained in the December 20, 2011 PEA.

2.2 Qualified Persons

This report has been prepared in accordance with NI 43-101, Standards of Disclosure for Mineral

Projects dated June 30, 2011. The Qualified Persons responsible for this report are:

Donald E. Hulse, P.E., Principal Mining Engineer, Gustavson Associates LLC

Patrick F. Daniels, SME-RM, Principal Mining Engineer, Gustavson Associates LLC

Mr. Hulse is responsible for Sections 1through 4, 6 through 9, 10.1 and 11through 20 of this

Technical Report.

Mr. Daniels is responsible for Sections 5, 10.2 and 10.3 of this Technical Report.

2.3 Site Visit of Qualified Persons

Mr. Hulse, Principal Mine Engineer and Qualified Person according to NI 43-101, visited the site

on May 20, 2010 in the company of Santacruz personnel. Mr. Hulse and reviewed geologic



December 19, 2012 9

cross sections and reports in the office of D & A Morales y Asociados S.A. de C.V. in

Monterrey, Nuevo Leon, Mexico.

Mr. Hulse visited the property a second time on 6 December 2011. Based on previous

recommendations new core holes have been drilled and several bulldozer trenches have been

opened to expose the top of the veins at intervals along its length. Figure 2-1 shows the exposed

veins in the trench.

Figure 2-1 Bulldozer Trench Showing Rosario Veins Along Strike

Mr. Daniels visited the property on November 27 and 28, 2012 to physically inspect drillhole

locations and trenches. In addition, a visit was paid to the core storage facility, to verify a

sampling of the core from the 2011 and 2012 drillhole campaigns. Mr. Daniels also reviewed

current infrastructure, inclusive of water and electrical, and accessibility, including the ongoing

construction and access to site. .

2.4 Sources of Information

The information, opinions, conclusions, and estimates presented in this report are based on the

following:

Information and technical data provided by Santacruz;

Review and assessment of previous investigations;



December 19, 2012 10

Assumptions, conditions, and qualifications as set forth in the report; and

Review and assessment of data, reports, and conclusions from other consulting

organizations.

These sources of information are presented throughout this report and in Section 21 –

References. The qualified persons are unaware of any material technical data other than that

presented by Santacruz.

During this study, Gustavson relied on geological information provided by Santacruz, which

Gustavson believes to be of sound quality. Gustavson has reviewed the laboratory certificates

and checked them against the data base for the 2011 and 2012 drilling campaigns, and has

reviewed quality control data provided by Santacruz. Gustavson has reviewed copies of the

contracts for information regarding land ownership and tenure. Gustavson used data and reports

prepared by other consultants and government agencies, including the Servicio Geologico de

Mexico (SGM) and Arian Silver de Mexico, S.A. de C.V (ASM).

2.5 Units of Measure

All measurements used herein are metric units and all references to dollars are United States

dollars. Metric tons are used throughout unless otherwise stated:

Common Units: Above mean sea level ............................................................ amsl

Cubic meter .............................................................................. m3

Day ............................................................................................... d

Degree .......................................................................................... °

Degrees Celsius .......................................................................... °C

Degrees Fahrenheit .................................................................... °F

Dollar US ............................................................................ $ US$

Foot ............................................................................................ ft

Gallon ........................................................................................ gal

Gallons per minute (US) ......................................................... gpm

Grams per metric ton .................................................................. g/t

Greater than .................................................................................. >

Hectare ....................................................................................... ha

Hour ............................................................................................. h

Inch ........................................................................................ in. "

Kilo (thousand) ............................................................................ k

Less than ...................................................................................... <

Kilogram .................................................................................... kg

Liter ............................................................................................... l

Mexican Peso ............................................................ M.N. $Mex

Micrometre (micron) ................................................................ µm

Milligram .................................................................................. mg

Metric ton ............................................................................. tonne

Metric ton (US) ............................................................................. t

Ounces per metric ton .............................................................. oz/t

Parts per billion ........................................................................ ppb




Parts per million ...................................................................... ppm

Percent ........................................................................................ %

Pound(s) ...................................................................................... lb

Short ton (2,000 lb) ..................................................................... st

Metric ton ..................................................................................... t

Specific gravity ......................................................................... SG

Square foot ............................................................................ feet2

Square inch ................................................................................ in2

Yard ............................................................................................ yd

Year (US) ....................................................................................yr

Metric Conversion Factors (divided by): Short tons to metric tons .................................................. 1.10231

Pounds to metric tons ........................................................ 2204.62

Ounces (Troy) to metric tons .............................................. 32,150

Ounces (Troy) to kilograms ................................................ 32.150

Ounces (Troy) to grams .................................................... 0.03215

Ounces (Troy)/short ton to grams/metric ton .................... 0.02917

Acres to hectares ............................................................... 2.47105

Miles to kilometres ............................................................ 0.62137

Feet to metres .................................................................... 3.28084

Abbreviations: Absolute Relative Difference ................................................ ARD

Adsorption Desorption Refining ........................................... ADR

Acid Rock Drainage .............................................................. ARD

American Society for Testing and Materials....................... ASTM

Atomic Absorption Spectrometry .......................................... AAS

Canadian Institute of Mining and Metallurgy ........................ CIM

Carbon-in-Column .................................................................. CIC

Diamond Drill .......................................................................... DD

Environmental Assessment .......................................................EA

Environmental Impact Statement ............................................. EIS

Finding of No-Significant Impact ...................................... FONSI

Fleet Performance Calculator .................................................. FPC

Global Positioning System ......................................................GPS

Gold Standard Royalty ........................................................... GSR

Induced Polarization .................................................................. IP

Inductively Coupled Plasma .................................................... ICP

Internal Rate of Return ............................................................ IRR

Metallic Screen Fire Assay ................................................. MSFA

Mine and Quarry Engineering Services ............................... MQes

Mine Development Associates ..............................................MDA

Mount Diablo Base Meridian ............................................ MDBM

National Environmental Policy Act of 1969 ....................... NEPA

NI 43-101 ...................................................................... NI 43-101

Nearest Neighbour ................................................................... NN

Net Present Value ................................................................... NPV

Net Smelter Royalty ............................................................... NSR




Ounces per short ton gold ................................................ OPT Au

Preliminary Economic Assessment ........................................ PEA

Probability Assigned Constrained Kriging ......................... PACK

Record of Decision ................................................................ ROD

Reverse Circulation ......................................................... RC/RCV

Rock Quality Designation ..................................................... RQD

Selective Mining Unit ........................................................... SMU

Universal Transverse Mercator ............................................. UTM


Rosario Project Reliance on Other Experts


3. RELIANCE ON OTHER EXPERTS

The qualified persons relied on information provided by Santacruz regarding property ownership

and mineral tenure (Section 4.2). The qualified persons have not independently verified the

status of the property ownership or mineral tenure.

Mr. Lorenzo de la Anda, Counsel, Santacruz Silver Mining Ltd. – Legal Matters

Mr. Arturo Prestamo, President, Santacruz Silver Mining Ltd. – Contractual Matters

Ing. y Lic. Juan Antonio Calzada Castro, Director de Concesiones Mineras, Geo

Procesos, Licensed independent surveyor for Santacruz – Mining Concessions


Rosario Project Property Description and Location


4. PROPERTY DESCRIPTION AND LOCATION

4.1 Location

The Rosario Project is located in the Municipality of Charcas in the State of San Luis Potosi in

Mexico, 184 kilometers north of the capital city of San Luis Potosi. The nearest town, Charcas,

is approximately 13 kilometers to the northeast and is the municipal administrative center.

Charcas is also a well-known mining district which has produced gold, silver, lead, and zinc for

the last 450 years. The approximate center of the Rosario Project is located at Easting 273,256,

Northing 2,550,648, UTM WG84. Figure 4-1 shows the location of the Rosario Project in

Latitude and Longitude.

Figure 4-1 Rosario Project Location Map

4.2 Mineral Tenure, Agreements, and Royalties

Santacruz is a company incorporated under the laws of the Province of British Columbia, which

is the parent of Impulsora Minera Santacruz S.A. (IMS), a private Mexican company which

holds options to acquire a 100-per-cent interest in the Rosario, Gavilanes and San Felipe silver

projects, located in the historical mining districts of Charcas, San Luis Potosi, San Dimas

Durango and San Felipe Sonora, Mexico, respectively.

Santacruz's rights to the two mining concessions within the Charcas National Mining Reserve

have been acquired through IMS. Pursuant to a mining exploration and promissory assignment




of rights agreement dated February 15, 2010 with Bertha Alicia Howlet Solis, IMS can acquire a

100% interest in 42 hectares comprising the Rey David mining concession (Title No. 230640).

Pursuant to a mining exploration and exploitation agreement dated February 22, 2011 with

Industrial Minera Mexico S.A. de C.V., IMS has exploration and exploitation rights to 458

hectares of the 2912 hectares comprising the San Rafael concession (Title No. 230641). The San

Rafael concession encompasses the entirety of the Rey David concession. The two concessions

are valid until 2057, and a summary of the parameters is in Table 4-1.

Table 4-1 Claims Covering the Rosario Project

Concession No Name Status Area (Ha) Renewal Expiration Claimant

230640 Rey David Current 42.0 28/09/2007 27/09/2057 Bertha Alicia Howlet Solis

230641 San Rafael Current 2,912.0 28/09/2007 27/09/2057 Industrial Minera Mexico S.A. de C.V.

The total mineral area of mining concessions controlled by Santacruz is 500 ha. Appendix B

delineates the vertex coordinates of the two concessions as shown in Figure 4-2. The figure

shows the limit of these concessions in blue with the contracted portion of the San Rafael

concession outlined in red.




Figure 4-2 Location of Mining Concessions




The compensation for the rights to the Rey David claim is scheduled in a series of payments

summarized in the Table 4-2, as well as a variable NSR royalty. Upon completion of the

payment schedule, the cessation of rights will take effect and the title of the concessions will

convert to Santacruz.

Table 4-2 Purchase and Royalty Commitments

ROSARIO PROJECT Mining Concession Contracts

Timing of Payments

Carlos Perez

IMMSA* TOTAL

Concession Rey David

(1) San Rafael

(2)

Feb-12 $150,000 $20,000 $170,000

Aug-12 $200,000 $20,000 $220,000

Feb-13 $300,000 $20,000 $320,000

Aug-13 $350,000 $20,000 $370,000

Feb-14 $645,000 $20,000 $665,000

Aug-14

$20,000 $20,000

Feb-15

$20,000 $20,000

Aug-15

$20,000 $20,000

Feb-16

$20,000 $20,000

Total $1,645,000 $180,000 $1,825,000

(1) NSR of 0.4%which may be purchased by IMS within 48 months for US$637,000, failing which the royalty increases 0.1% per year until it reaches 1%.

(2) NSR of 2.5% NSR

4.3 Surface Rights

Santacruz has contracted with the San Rafael Ejido to surface right of way on 100 hectares to

exploit the deposit and construct the plant. There are two contracts for 50 hectares each signed

on September 10, 2011, and September 2, 2012. The contract term is for 30 years renewable at

Santacruz’s discretion. The deposit is located within ejido lands. An ejido is Mexican communal

ownership of (usually) agricultural land, which gives the members of the ejido (ejidatarios)

surface rights to the land. The relationship with the ejido is cordial and undue difficulties are not

expected in reaching an agreement. Gustavson had an opportunity to meet some of the

ejidatarios during the first visit and a number of them are working with Santacruz in the project.

Gustavson judges that the 100ha under contract is sufficient for the mine and surface facilities.

Section 16 of this report addresses environmental considerations and permitting for this project.

Gustavson knows of no other significant factors or risks that may affect access, title, or the

ability to perform work on the Rosario property.


Rosario Project Accessibility Climate Local Resources Infrastructure & Physiography


5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE &

PHYSIOGRAPHY

5.1 Access

The Rosario Project is located 13 kilometers southwest of the Town of Charcas, in the State of

San Luis Potosi, Mexico. The site can be accessed by the Charcas to Santo Domingo highway,

heading west of the town of Charcas. Approximately 8 km from the center of town is a dirt road

which leads south to the village of San Rafael and to the project site. The condition of the dirt

road is improved for approximately 10 km and the remaining 3 kilometers are unimproved but

accessible.

LEGENDHighwayImproved dirt roadUnimproved dirt road

0 2 km

Scale

N

Figure 5-1 Rosario Project Access

5.2 Climate

The Rosario/Charcas area is slightly south of the Tropic of Capricorn and the climate is

considered to be semi-arid. In the capital city of San Luis Potosí, 183 kilometers to the south,

the average year-round high temperature is about 25.8°C (78.4°F). The average annual

precipitation in the capital is 34.2 cm (13.5 inches) per year (WWIS, 2010). Average monthly




temperatures in the Charcas area are generally cool to warm as shown in Table 5-1 below. With

little rainfall and a moderate climate, the mine is expected to operate year round.

Table 5-1 Climatological Data for San Luis Potosi

Month Mean Temperature Rainfall

Daily Min.°C Daily Max.°C Mean Total Cm Mean no. of Rain days

Jan 4.5 21.7 18.0 3.1

Feb 5.8 23.9 6.5 2.0

Mar 7.7 27.0 4.2 1.7

Apr 10.0 28.9 20.4 3.8

May 12.3 30.2 38.6 6.5

Jun 13.1 28.7 51.1 7.2

Jul 12.5 26.9 52.5 7.5

Aug 12.4 26.6 42.1 7.9

Sep 11.9 25.4 50.1 9.0

Oct 9.2 24.7 32.8 5.1

Nov 7.1 23.9 7.0 2.2

Dec 4.9 21.9 18.7 2.6

Climatological information is based on monthly averages for the 30-year period 1971-2000.

(Source: WWIS, 2010)

5.3 Local Resources and Infrastructure

The nearest population center to the Project is the Town of Charcas with a population of about

20,000 (CONAPO, 2010). The town lies approximately 13 km northeast of the project area.

Charcas is connected to the capital city of San Luis Potosi by the Montezuma-Charcas Highway

to the south, and to the City of Matehuala to the east by the Charcas-La Concepcion Highway.

The Charcas-La Concepcion Highway 57 is a major north-south artery which runs between

Mexico City and Piedras Negras at the border with the United States. The nearest access to rail

transportation is a railhead at the Charcas station, 14 km east of Charcas.

Charcas has limited medical, fire protection, and law enforcement services. Modern medical

services and all industrial support are available in the state capital San Luis Potosi,

approximately 100 kilometers to the south. In addition to these services, Grupo Mexico which

runs the Charcas Mine maintains a mine rescue team, and due to the mining history of the town

trained underground labor and mine contract services are available. Power may be accessed

through a substation to the Federal Electric Commission (CFE) line. Santacruz has taken the

initiative to construct a 24.5km power line to the project. This power is expected to be available

in December 2012.

Santacruz has initiated drilling and construction of two 200m water wells approximately 15km

from the project site. These two wells will provide the 10-15 liters/sec needed for a plant of 500




tonnes/day. The road for the pipeline is in the process of being built. A drawing of the routing

for these services is shown in Figure 5-2.

Figure 5-2 Rosario Project Water and Electric Services

5.4 Physiography

The Project lies along the eastern edge of the Mesa Central physiographic province west of the

Sierra Madre Oriental fold belt. The terrain in the Mesa Central is typically north-south oriented

low lying mountains and valleys. The project area lies within an anticlinal valley. The

topography is relatively flat to gentle rolling, incised by several arroyos. The elevation of the

Project area ranges from about 2,180 to 2,200 meters.

5.5 Vegetation

The vegetation of the area is typical of Mexican deserts in this elevation. Common plants found

within the project area are mesquite (Proposis dulcis), huizache (Acacia sp.), nopal (Opuntia sp.),

and bisnaga (Mamillaria magnanima) (Butler, 1972). There are several small cultivated fields

containing lechugilla (agave) in the area.

0 1000 3000m

Graphic Scale

WATER WELL SITE

CHARCAS

ELECTRIC LINELENGTH 24 KMS

WATER PIPELENGTH 15.5 KMS

ROSARIO PROJECTSource: INEGI 2011

ELECTRIC

LINE

WATER

PIPE

L E G E N D


Rosario Project History


6. HISTORY

The Rosario Project is located within the Charcas Mining District which has been the focus of

exploration and development interest for over 400 years. The first mineral discovery in the

Charcas area was by Don Juan de Onate in 1563 (INAFED, 2010) with mineral production

beginning later from several small mines of the Hacienda de Charcas Viejas around 1570

(Butler, 1972). Mining has continued in the area at varying rates since the 16th

century.

6.1 Property History

The Rosario Project is part of what was the Charcas National Mining Reserve. “No data is

available to the public prior which corroborate the legal status of the Mining Reserve. It was

supposedly canceled and the concessions placed in the custody of the Mining Directorate.”

(Crespo Hernandez, 2004) In 1990 Mexico started to liberalize their mining law, passing new

Mining legislation in 1992. (Sanchez Mejorada, 2001). Mining concessions across the country

were gradually released to concession by private individuals/companies. The Rey David and San

Rafael concessions covering this property were released in 2007 and were claimed by Berta

Alicia Howlett Solis and Industrial Minera Mexico, S.A. de C.V., respectively. These

concessions are controlled by Impulsora Minera Santacruz, the Mexican operating subsidiary of

Santacruz Silver Mining Ltd. Under different agreements signed between 2010 and 2011.

6.2 Exploration History

The Rosario Project area has been the subject of exploration work performed by the Mexican

Geologic Service (SGM) since 1978. Exploration began at the Buena Vista area near the Ejido

San Rafael. From 1982 through 1987, the SGM performed trenching, diamond core hole

drilling, and mercury vapor soil sampling.

Geophysical work performed from 1982 through 1987 included Electro-magnetic (Turam)

method and induced polarization and resistivity. The EM survey utilized a total of 24 lines at

550 m long with 50 m separation for a total of 13.2 km. A total of 6 km of line was surveyed for

induced polarization and resistivity with using 15 lines at 400 m long with stations 15 m apart.

A total of 2,073 soil samples were collected along a survey grid covering 231.2 hectares and

tested for mercury vapor (Rodriguez, 1987). The soil survey identified six discrete anomalies in

the Rosario area.

Exploration drilling began in 1982 and concluded in 1987 with a total 185 core holes reported as

being drilled with a recovery of 24,969.5m on several targets in the area. Rodriguez Moreno

(1987) reports that 91 holes, measuring 11,181m, were dedicated to delineating the area of the

Rosario veins. Gustavson has reviewed the data received as well as the plans and sections

created by the CRM and counted 62 holes with 91 intercepts. These holes had an average

recovery of the mineralized intercepts of 86%.




6.3 Historical Core Drilling and Logging

The core size of the CRM drilling at Rosario was not documented, however it appears to be a

mixture of BQ and NQ size (1.4 and 1.8 inch diameter respectively) based on abandoned core

found at the site. Drilling was performed using multiple drill rigs including Winkie Gw-15, JKS-

300, Boart Longyear 24, Boart Longyear 38 and a Gardner Denver 1500.

All core holes were logged and sent out for assay in the CRM laboratory, with the remaining

core stored on site. Core from the 1980’s drilling campaign was stored in wooden core boxes,

which were later destroyed. The sample preparation procedure is not described in any of the

CRM reports on the property, although the intervals assayed were those identified in the drill

core as being vein material.

The historic Rosario Project exploration work was conducted in the 1980’s prior to the creation

of NI 43-101 reporting requirements. As such, sample preparation and security procedures have

not been described in the studies performed by the CRM.

The field and laboratory work were performed by CRM. The CRM (now Mexican Geological

Service, SGM) maintained and continues to maintain in-house laboratory facilities. All assays

were analyzed through atomic absorption in the 1980’s. These laboratory facilities are widely

recognized within Mexico but were not internationally certified in the 1980’s. This laboratory

has been ISO9001 certified since 1998 and was ISO17025 certified in 2012.

The Rosario Project has been explored in modern times by a variety of methods including

surface geologic mapping, trenching, soil samples for mercury vapor, geophysics and most

notably diamond core drilling. All earlier documented exploration work was performed by CRM

at a time when the Mexican government was performing basic exploration works. The CRM

performed basic mapping and drilled the project looking for vein intercepts.

6.4 Mineral Resource Council

The CRM had several exploration campaigns in the Rosario area between 1978 and 1987. There

were seven individual areas identified:

1. Veta Azul

2. Rosario I

3. Rosario II

4. El Huizache

5. Providencia

6. El Membrillo

7. Azogues




There were 185 drill holes spread between the various areas. The structures are within a 4 by 5

km area, and structures other than Rosario I and II are spread out to the southeast of the Rosario

veins with similar strike directions. None of the assays for these areas were provided to

Gustavson and there is only limited summary information in the CRM reports provided.

Reyes Reyes summarized the program from 1982 to 1984 as covering 54 Ha, with 67 outcrop

samples, and 531 core samples in 4,271 m of drilling. (Reyes Reyes, 1985) The report also

mentions 25 km2 of induced polarization (IP) studies and 13 km

2 of electromagnetic response

studies. The geophysics reports were not available to Gustavson.

Rodriguez Moreno reports progress at the end of 1987 as including 4000 samples including the

samples reported in 1984, 11,181m of drilling, 3 large diameter holes for metallurgical studies,

and 231 Ha of soil geochemistry (described below).

In 1987, the CRM commissioned a soil geochemical survey of mercury halos by Raul Palacios

Garcia. Palacio Garcia concluded that the use of soil mercury vapor correlates positively with

the Rosario veins, and that it can be a valuable exploration tool in the area. The geochemistry

was recommended as a tool to identify other potential targets similar to Rosario.

Gustavson has confirmed that 6 concrete drill hole monuments corresponded to the locations

identified on the maps and in the digital data base. Figure 6-1 shows an example of one original

monument.

Figure 6-1 Drill Collar Monument




During this time, 185 core holes were reported as being drilled with a recovery of 24,969.5

meters on several targets in the area. Table 6-1 shows the drill hole distribution as reported in

Crespo Hernandez 2004. Gustavson understands that the distance between these areas is small

enough that the naming conventions may not correlate directly to the current Rosario Project,

which is connected to the Rey David mining concessions. Rosario is identified as being part of

the Providencia area.

Table 6-1 Distribution of Drill Holes

Area Vein System No.

Drillholes

No. Meters

Providencia Providencia 81 5,044.95

Providencia Rosario 34 11,181.32

Providencia Huizache 18 1,932.80

San Rafael Azul 9 1,392.53

San Rafael Azogues I and II 8 1,180.85

Cuchillas las Arañas Membrillo 35 4,237.00

TOTAL 185 24,969.45

Two NW-SE bearing veins were identified by drilling within the Project, Rosario I (upper) and

Rosario II (lower). Resource estimations were performed between 1982 and 2004 using the

block triangulation method.

The most recent estimate was reported by the SGM in 2004 (Table 6-2). The 2004 SGM

resource estimate is not in accordance with NI 43-101, and does not use the categories defined

by CIM and NI43-101. Since that time, Santacruz has re-drilled the deposit and these data

support the grade and thickness of the structures sampled in the historical data. Due to the

methodology used, and the non-standard resource categories Gustavson has not relied on this

estimate and it is disclosed here for historical completeness only.

Table 6-2 Historic Resource Estimation for Rosario Veins

1982-1986, and 1987 Using Block Triangulation Method*

Vein K Metric Ton Au (g/t) Ag (g/t) Pb (%) Zn (%)

Rosario I 554.5 0.74 249. 1.87 3.04

Rosario II 318.8 0.90 289. 1.62 4.05

Total 873.4 0.80 263. 1.77 3.45

* Crespo H. Francisco, Consejo de Recursos Minerales, 2004

There is no known historic production from the Project.


Rosario Project Geological Setting and Mineralization


7. GEOLOGICAL SETTING AND MINERALIZATION

7.1 Regional Geology

The Rosario Project is located approximately 13 km southwest of the Town of Charcas and the

Charcas lead zinc silver deposit. The project is situated within a north-south anticlinal valley

known as the San Rafael anticline, and Rosario is part of what is traditionally known as the San

Rafael District. The host rock of the veins is comprised of the Zacatecas formation, a mid to late

Triassic turbidite sequence, consisting of beds of dark grey, green and grayish-green shale,

sandstone, conglomerate and siltstone (Bartolini et al., 2001). The Zacatecas Formation is

thought to have formed along a passive continental margin of western Pangea and correlates with

a sea level drop during the Permian-Triassic (Bartolini et al., 2001).

The Nazas Formation, which unconformably overlies and is in fault contact with the Zacatecas

Formation (Bartolini et al., 2001) is the remnant of a volcanic arc. The base of the Nazas

formation is composed of intercalated siltstone, sandstone conglomerate, and andesite flows.

The middle to upper part of the formation is dacite, breccias, tuffs, andesite flows and pyroclastic

rock. The entire Nazas formation is cut by rhyolite dikes which are generally less than 3 meters

thick. The flanks of the San Rafael anticline are comprised of middle Jurassic to upper

Cretaceous formations beginning with the La Joya formation. These formations are primarily

limestone with subordinate siltstone, marlstone, shale, and chert (Butler, 1973). Much of the

quaternary sediments that overly the Zacatecas rocks have been cemented, forming caliche with

thickness that ranges from 0 to 10 meters, based on Gustavson’s field observation.

The regional geologic structure in Rosario Project is a north-south oriented, asymmetric, north-

plunging anticline known as the San Rafael anticline. The main San Rafael anticline is

asymmetric, overturned dipping west with smaller peripheral overturned anticlines and synclines

to the southwest of the project area. The Zacatecas formation is exposed along the anticline axis

in an erosional structural window (an exposure of the underlying unit through an eroded area of

the overlying unit) within the overlying limestone units. The formation of this anticline is

believed to have occurred during the compressive tectonics of the Laramide Orogeny. Reverse

faults along the Zacatecas, Nazas and La Joya formation contact were caused by folding of the

more plastic Jurassic-Cretaceous cover over a more rigid Zacatecas formation. Extensional

forces during the Paleogene resulted in NW-SE normal faulting (Soto and Lopez, 2000).




Figure 7-1 Regional Geologic Map of the Charcas - San Rafael Area, San Luis Potosi, Mexico (After Soto and Lopex, 2000)

ROSARIO VEIN




Figure 7-2 San Rafael Anticline NE-SW Section Looking Northwest




7.2 Local Geology

The geology in the immediate vicinity of the Rosario Project is sandstone and siltstone of the

Zacatecas Formation, which form the axis of the San Rafael anticline. The majority of the

mining concession is covered by a Quaternary caliche deposit that appears to range from 0

meters to 10 meters thick based on observations of trenches in the area.

Mineralization is hosted in two veins, the Rosario I and II veins, with a general strike of N60W,

dipping between 45 to 60 degrees southwest. The veins extend over a length of 2.5 to 3.0 km,

and to a depth of at least 150 to 200 meters, as determined from available drilling (Rodriguez et

al., 1987). The vein width varies from 0.4 to 2.5 meters. Mineralization appears to have

occurred in three stages, the third stage precipitating the argentiferous (silver bearing) minerals.

This deposit has been defined as mesothermal vein system based on temperature (195 to 338°C),

although mineralization is typical of other epithermal deposits in Mexico. Abundant sulfides,

sphalerite pyrite and galena with subordinate amounts of chalcopyrite, arsenopyrite and hematite,

can be found within the veins. Additional minerals identified through electron microscopy

include freibergite, tetrahedrite, boulangerite, pyrargyrite, argentite, stromeyerite, and diaphorite

(Rodriguez et al., 1987)

Artisanal workings are situated at two locations where the Rosario I vein crops out along the

surface. At the Rosario I Mine, a decline follows the vein down approximately 9 – 10 meters.

Approximately 200 meters to the northwest, the Rosario II adit enters the vein from where a

small arroyo crosses the veins. At the Rosario II adit (Rosario I vein), Gustavson observed

normal faulting hosting mineralization (Figure 7-3). Approximately 20 meters south of the

Rosario II mine adit within the arroyo, Gustavson noted a 4 cm wide conjugate E-W striking,

mineralized vein.




Figure 7-3 Normal Fault at Rosario II Mine Adit (arrows show direction of movement)




Figure 7-4 Local Geology of the Rosario Project, Rosario Veins

7.3 Property Geology

7.3.1 Mineralization

The mineralization within the Rosario veins is strongly structurally controlled and occurs as

fracture filling of the two normal faults. Mineralization is mostly limited to the veins filling

these faults, although Gustavson did observe one 4 cm wide vein conjugate to the larger Rosario

veins. The Rosario veins, as mapped, strike N55 for approximately 1500 meters. The dip of the

veins is between 45 to 60 degrees SW. Drilling has indicated that the mineralization extends to

depth of 150 meters to 200 meters, limited by the depth of drilling performed (Rodriguez et al.,

1987). Minerals which can be observed macroscopically in the veins are sphalerite, pyrite and

galena with subordinate chalcopyrite, arsenopyrite and hematite in a matrix of quartz and calcite

with epidote and chlorite (Palacios and Arriaga, 1994). Microscopy identified other metallic

minerals including freibergite, tetrahedrite, boulangerite, pyrargyrite, argentite, stromeyerite, and

diaphyrite.

(After Soto and Lopez, 2000)




Palcios and Arriaga (1994) reported that the alteration within the vein system is propyllitic and

silicic in nature. The propyllitic alteration was observed in drill core, with a halo extending out 5

meters from the vein. Silicification is intense in both the Rosario I and II veins and is evident in

quartz veinlets for several meters above and below the veins.

Figure 7-5 Sulfide Mineralization in Rosario II Mine Adit




Figure 7-6 Cross Section Showing Rosario I and Rosario II Veins


Rosario Project Deposit Types


8. DEPOSIT TYPES

The Rosario Veins at the Rosario Project are vein filled faults defined as mesothermal within

epithermal limits.

Based on fluid inclusion work in quartz and calcite, Palacios and Arriaga (1994) postulated that

the mineralization in the Rosario veins occurred in three stages, the most important of which was

the latest stage in which argentiferous minerals were deposited. The temperatures during deposit

formation were determined using fluid inclusions in quartz and calcite. The third stage occurred

within epithermal temperature ranges between 195 to 262 degrees Celsius with salinity of 12% to

16%. Palacios and Arriaga state that fluid inclusion temperatures indicate that this is a

mesothermal type deposit based on temperatures defined by Lindgren (1933) although based on

the presence of adularia and silver sulfosalts, the Rosario veins more closely resemble an

epithermal deposit.

Within the newly exposed trenches, one of the Rosario Veins can be seen near the site of the

original discovery. (Figure 8-1). The veins can be noted cross cutting the shear fabric of the

shale and sandstone.

Figure 8-1 Rosario Vein Exposed in Trench


Rosario Project Deposit Types


Based on the proximity to the Charcas deposit, Palacios and Arriaga (1994) consider that the

source of mineralization is most likely related to the same convection heat cell and possibly the

same intrusive body that formed the Charcas deposit.

Deposit types are described in greater detail in Section 7 of this report.


Rosario Project Exploration


9. EXPLORATION

In 2011 and 2012, Santacruz has advanced the work at the Rosario Project. Core drilling is

described further in Section 10. Other works include:

Geological mapping of 108.5 hectares

35 diamond core holes

76 surface samples

105 lineal meters of trenches crossing the strike of the veins to confirm linear continuity

including

o Zanja 1= 37.00m

o Zanja 2= 30.00m

o Zanja 3= 18.00m

o Zanja 4= 20.00m

These works have allowed the confirmation of continuity of the veins near to the surface. The

trenches and trench mapping are shown in Figure 9-1.

Figure 9-1 Rosario Trench Data

Trenches were developed by cutting through the alluvium using a tractor. Figure 9-2 shows

veining exposed in a trench.


Rosario Project Exploration


Figure 9-2 Veining in Exploration Trench at the Rosario Prospect


Rosario Project Drilling


10. DRILLING

10.1 Santacruz Drilling

Santacruz has conducted two drilling campaigns, one in 2011 and one in 2012. The procedures

have been identical between the two campaigns. Both campaigns drilled HQ core and were

drilled by AP Exploration Drilling using a Longyear 44. Nearly all of the samples had

recoveries above 90%.

Drill intercept information for the historical drilling and the 2011 and 2012 campaigns is

contained in Appendix A.

10.2 2011 Drilling

During the initial review of the Rosario Project, Gustavson recommended 10 core holes to test

the CRM data in the heart of the zone. The first 9 holes totaling 1,443.35 meters were completed

in December 2011. The deposit remains open along strike and at depth. Visual evaluation of the

core shows veining and mineralization which correspond to the assay intervals in the core.

Gustavson conducted a second site visit on 6 December 2011.

10.3 2012 Drilling

After completing the drill testing of the core of the Rosario zone in 2011 and starting bulldozer

trenches to expose the top of the veins, Santacruz has drilled an additional 26 holes in 2012.

Assays for these holes were received in November 2012. These holes were spaced along the

length of the properties and covering the volume drilled earlier by CRM within the Rosario

property.

Mr. Patrick Daniels made a third site visit to Rosario on November 27, 2012. During his visit

Mr. Daniels reviewed drill core, and rock quality designation (RQD) data, examined

mineralization in the core and trenches, visited 10 drill collars from the two new programs,

observed development of roads, a power line, and other infrastructure works on site.

These holes have supported both the grades and structures seen in the historical drilling. Figure

10-1 shows the location of these two campaigns relative to historical drilling.




Figure 10-1 Drill Hole Locations by Campaign




11. SAMPLE PREPARATION, ANALYSES, AND SECURITY

11.1 Drilling 2011-2012

Sample preparation for the Santacruz drilling program consisted of a Santacruz geologist

supervising the removal of the core and labeling the boxes as the core is collected at the drill.

The core is then rinsed with water to remove extraneous matter, and washed with detergent and

rinsed if lubricants from the drilling are present.

Core is marked with wax crayons, color coded according to the mark as it is logged.

Blue (Depth (m)

Red Sample Intervals

Black Contacts

Yellow Structures

Core is logged for lithology and mineralization. The intervals marked for assay are controlled

between a minimum of 0.20m and 1.20m of length. Labels are entered to correspond to the

numbering in the sample log book. Insertion of control samples has been previously noted in the

log for each hole and these are inserted in the process.

Core is then photographed, and intervals designated to sample are cut with a diamond saw and

bagged with labels corresponding to the log inside the bag and written on the bag with indelible

marker. Prior to shipping the sample is crushed and split to an appropriate sample weight.

Coarse rejects are kept on site. Samples are sent to ALS Chemex in Zacatecas for preparation

with final assaying performed by ALS at their facility in Vancouver. Chemex is an independent

commercial laboratory with ISO 9001:2000 certification.

In addition to the samples for assay, three types of control samples are places in the sample

stream, duplicates, blanks, reference standards. The insertion and analysis of these samples is

discussed in Section 12.

Figure 11-1 shows drill core of a vein intercept from hole AP-08 drilled in late 2011.




Figure 11-1 Drill Core from Hole AP-08

Nearly all of the previously drilled area is now covered by 2011-2012 holes which have been

subject to the procedures described in Section 10. The historical data is being used in

conjunction with the modern data to produce a mineral resource estimate.

11.2 Verification of the Quality Control Program 2011

The quality control program as described by Santacruz consisted of blanks, duplicates and

standard reference materials. These were to be inserted one of each, in each 20 samples sent to

the labs. This quantity was exceeded and at least one of each was included with each drill hole

although not all intervals were included including 9 blanks, 12 standards and 12 duplicates in the

9 holes drilled in 2011. None of the blanks exceeded the expected values and only one of the

duplicates exceeded the expected difference for several metals. The standard reference materials

only included values for gold and silver and these were never outside of 2 standard deviations

from the expected value. Figures 11-2 and 11-3 show the assays received for the standard

reference samples compared to the accepted values.

Out of specification control samples have been sent for reassay, however these results have not

yet been received. Gustavson is of the opinion that this low percentage of assay errors does not

present a material impact to this resource estimate. As soon as the re-assay values are received

these will be corrected.




Figure 11-2 Comparison of Gold Assay Values to Standard Material 2011

Figure 11-3 Comparison of Silver Assay Values to Standard Material 2011

1 2 3 4 5 6 7 8 9 10 11 12

ALS Chemex Labs 1.35 1.38 1.45 1.40 1.34 1.38 1.40 1.43 1.42 1.45 1.42 1.31

STD Valor Real 1.38 1.38 1.38 1.38 1.38 1.38 1.38 1.38 1.38 1.38 1.38 1.38

+3SD 1.500 1.500 1.500 1.500 1.500 1.500 1.500 1.500 1.500 1.500 1.500 1.500

-3SD 1.260 1.260 1.260 1.260 1.260 1.260 1.260 1.260 1.260 1.260 1.260 1.260

-2SD 1.300 1.300 1.300 1.300 1.300 1.300 1.300 1.300 1.300 1.300 1.300 1.300

+2SD 1.460 1.460 1.460 1.460 1.460 1.460 1.460 1.460 1.460 1.460 1.460 1.460

1.10

1.15

1.20

1.25

1.30

1.35

1.40

1.45

1.50

1.55

Au

(gr

/to

n.)

Standard-1 (Au)

1 2 3 4 5 6 7 8 9 10 11 12

ALS Chemex Labs. 10.00 9.00 8.00 11.00 10.00 12.00 9.00 10.00 10.00 9.00 10.00 10.00

STD Valor Real 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00

+3SD 13.09 13.09 13.09 13.09 13.09 13.09 13.09 13.09 13.09 13.09 13.09 13.09

-3SD 6.91 6.91 6.91 6.91 6.91 6.91 6.91 6.91 6.91 6.91 6.91 6.91

+2SD 12.06 12.06 12.06 12.06 12.06 12.06 12.06 12.06 12.06 12.06 12.06 12.06

-2SD 7.94 7.94 7.94 7.94 7.94 7.94 7.94 7.94 7.94 7.94 7.94 7.94

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

Ag

(gr/

ton

)

Standard-1 (Ag)




Figure 11-4 Comparison of Duplicate Silver Assays 2011

Figures 11-5 through 11-7 show the comparison of duplicate assays in the 2011 drilling

campaign. Only one silver, and one gold assay were out of compliance and these were in the

same sample.

Figure 11-5 Comparison of Duplicate Lead Assays 2011

0

20

40

60

80

100

120

0 100 200 300 400 500 600 700

Silver

0

0.5

1

1.5

2

2.5

3

3.5

0 0.5 1 1.5 2 2.5 3 3.5

Comparison of Duplicate Lead Assays




Figure 11-6 Comparison of Duplicate Zinc Assays 2011

Figure 11-7 Comparison of Duplicate Gold Assays 2011

11.3 Verification of the Quality Control Program 2012

The 2012 drilling program used a purchased standard from RockLabs. The results are shown in

Figures 11-8 through 11-10.

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

0 1 2 3 4 5

Comparison of Zinc Duplicate Assays

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0 0.02 0.04 0.06 0.08 0.1 0.12 0.14

Comparison of Gold Duplicate Assays




Although one of the gold blanks was slightly elevated with a value of 0.03 rather than 0.005ppm.

This batch of samples should be sent for reassay. Out of 29 duplicate samples submitted, two of

the silver duplicates and one of the gold duplicates exceeded the expected difference. The

standard reference materials only included values for gold and silver. Of these 31 samples only

one gold value was outside of 3 standard deviations of the expected value.

Although these control failures should be presented to ALS for reassay, Gustavson considers the

low assay error rate to not have a material impact for the estimation of a mineral resource. When

the re-assay values are received they will be corrected in the database.

Figure 11-8 Comparison of Silver Assay Values to Standard Material 2012

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

ALS Chemex Labs. 60. 62. 64. 58. 67. 56. 59. 61. 65. 61. 64. 56. 60. 56. 66. 61. 60. 58. 62. 63. 65. 58. 58. 59. 57. 62. 57. 58. 66. 60. 63.

STD Valor Real 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60. 60.

Limite Sup. 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70 70

Limite Inf. 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51 51

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

Ag

(gr/

ton

)

Estandar SP49 Ag




Figure 11-9 Comparison of Gold Assay Values to Standard Material 2012

Figure 11-10 Comparison of Duplicate Silver Assays 2012

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

ALS Chemex Labs 18 18 18 18 17 17 18 18 18 18 18 18 18 18 18 18 18 18 18 18 8. 18 18 18 18 18 18 17 18 18 18

STD Valor Real 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18 18

Limite Sup. 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23

Limite Inf. 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13 13

0.00

5.00

10.00

15.00

20.00

25.00

Au

(gr

/to

n.)

Estandar SP49 Au

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00

Silver Duplicate Assays 2012




Figure 11-11 Comparison of Duplicate Gold Assays 2012

Nine samples have been sent for metallurgical analysis. The assays of parts of these samples

appear to have a bias from the values received from ALS Chemex. The scatter plots are shown

in Figures 11-12 and 11-13

Figure 11-12 Comparison of ALS Chemex and Metallurgical Assays for Silver

0

0.2

0.4

0.6

0.8

1

1.2

1.4

0.000 0.200 0.400 0.600 0.800 1.000 1.200 1.400

Gold Duplicate Assays 2012

0

10

20

30

40

50

60

0 10 20 30 40 50 60

ALS

Ch

em

ex

Inst. Metalurgico

Silver Assays (ppm)




Figure 11-13 Comparison of ALS Chemex and Metallurgical Assays for Gold

Based on these graphs, the silver assays from ALS may have a slightly low bias, and that the

gold assays from ALS have a low bias. Reviewing reports from the CRM shows that in part of

the deposit, extra pulverization was needed to correctly assay gold values. It is hypothesized that

gold in this part of the deposit is encapsulated in pyrite and the normal sample preparation is

inadequate for correct gold assays. Mineralogical studies are in process to assist in identifying

the issue.

Santacruz has requested that ALS re-pulverize and re-assay the samples from the 2012 drilling.

Gustavson cannot judge from the 9 samples presented if this effect is statistically significant, or

not, but believes that it is prudent to re-assay these samples. Any error caused by this problem

would result in an underestimation of gold values and possibly the silver values in the mineral

resource estimate. Values of lead and zinc are unaffected. Gustavson judges that the re-assay

and mineralogical analysis are prudent steps, and this is not material at this stage of the resource

estimate. The only consequence is a potential conservative value for estimated gold grades.

11.4 Historical Data

These data have been confirmed by the twinned and closely spaced holes in the 35 new holes in

2011 and 2012 campaigns. The new intercepts coincide closely with the 3-dimensional model of

the veins. The assays and geology as provided correlate exactly with the field observations

including collar locations. Gustavson is of the opinion that it is reasonable to use the earlier assay

data in this study, since it is now supported over the length of the known deposit by the

2011/2012 drilling.

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00

ALS

Ch

em

ex

Inst Metalurgico

Gold Assays (ppm)


Rosario Project Data Verification


12. DATA VERIFICATION

Gustavson has audited the quality control program for both 2011 and 2012, and the resulting data

as described in Section 11. Gustavson has also reviewed the assay certificates from the 2011 and

2012 drilling programs. A small number of data entry errors were found and corrected.


12.1 Field Check Samples

During the site visit on May 10, 2010, Gustavson collected two near surface samples to verify

the presence of mineralization. Sample R1-U was taken out of the underground working in the

Rosario vein from the hanging wall of the vein approximately 9 meters underground. Sample

420-1 was taken from a small 6 cm wide vein outcrop in the arroyo that runs sub parallel to the

Rosario I vein approximately 20 meters south of the Rosario 2 Mine (Rosario Vein I outcrop). At

the time of the initial visit the structures were only exposed and safely accessible at these two

locations. Both were sampled.

These samples were transported to Colorado with chain of custody maintained by Gustavson.

Each sample was hand split and delivered to Hazen Research Inc. in Golden, Colorado for

geochemical testing for gold, silver, lead and zinc. Fire assay method with gravimetric finish

was used to test for gold and silver. Lead and zinc were tested using Atomic Absorption.

Sample RU-1 was from the inclined shaft on the Rosario vein and Sample 420-1 from an outcrop

in an arroyo about 20m from the shaft. These samples confirm the presence of mineralization, as

shown in the cross sections and reports. Table 12-1 contains the assay results.

Table 12-1 Confirmation Samples of Mineralization

Sample # Au ppm Ag ppm Pb % Zn %

R1-U 0.479 96.00 1.79 0.344

420-1 ND 3.43 0.054 0.026

During the site visit on December 6, 2011 Santacruz had developed bulldozer trenches exposing

the veins at 2 new locations. Gustavson collected two additional samples from these trenches.

The samples were transported to Colorado with chain of custody maintained by Gustavson and

delivered to ALS Chemex in Reno Nevada for assay. Gold and silver were fire assayed and the

base metals assayed by Atomic Absorption. Sample R-12-11-A and Sample R-11-12-B were

from a vein exposure near the inclined shaft. Table 12-2 shows the assays of the 2011 samples.

Figure 12-1 shows these samples.

Table 12-2 Field Samples 2011

Weight kg Au (ppm) Ag (ppm) Pb (ppm) Zn (ppm)

R-12-11A 1.74 0.07 54 2300 4840

R-12-11B 1 <0.05 <5 283 365


Rosario Project Data Verification


Figure 12-1 Field Samples Taken in 2011

Gustavson considers that this data is adequate for the estimation of a mineral resource as

described in this Technical Report.


Rosario Project Mineral Processing and Metallurgical Testing


13. MINERAL PROCESSING AND METALLURGICAL TESTING

13.1 Current Process Testwork

Metallurgical testing is in process through a lab connected with the Autonomous University of

San Luis Potosi (UASLP) which has a highly respected metallurgy department. When this work

is complete it will be included in a pre-feasibility study.

Based on preliminary testing and knowledge of other mining operations in the Charcas area,

Santacruz has purchased a used mill and started construction of this facility. Gustavson has not

reviewed or approved the planning for this work.

The proposed plant will process up to 500 tonnes/day of material to produce two concentrates, a

lead concentrate and a zinc concentrate. Additional metallurgical work and lab tests are needed

to determine the recovery of each of the metals, to determine the grade of the concentrate, and to

determine if the concentrate will be saleable. Gold and silver may be present in each of the

concentrates impacting the value of the concentrate, and affecting deductions.

13.2 Historical Process Testing

Summary reports document that four metallurgical tests were performed in the 1980’s to prove

that the sulfide mineralized material is amenable to flotation processing. The recovery rates

provided in Table 13-1 are from the sulfide flotation testing in 1987 completed by Fidecomiso de

Fomento Minero (FFM) (Mining Development Trust). Other testing at the University of

Guanajuato (1987) also indicated that metals are recoverable through differential flotation.

Differential floatation is the most probable process for this mineralized material. The summary

of the work performed at the University of Guanajuato was provided to offer insight until

definitive test work can be completed; sensitivity studies were performed on the economic model

changing the recovery rates of the metals. Table 13-1 shows the recovery rates from the 1987

FFM study.

Table 13-1 Metal and Recovery Rates

Metal Recovery

Gold 71.6%

Silver 91.5%

Lead 97.6%

Zinc 31.3%


Rosario Project Mineral Processing and Metallurgical Testing


13.3 Historical Flotation Test Work

Though there are references to two metallurgical tests, one for a single sulfide concentrate and

one using differential flotation to produce both a lead and a zinc concentrate, the only results

available were for the single concentrate. Recoveries on ores assumed to be similar from the

nearby Charcas mine exceed the recoveries from previous testing, possibly due to reagents that

were not available in the early 1990’s.


Rosario Project Mineral Resource Estimate


14. MINERAL RESOURCE ESTIMATE

The mineral resource statement for the Rosario Project is effective as of December 1, 2012 and

was completed by Zachary J. Black, E.I.T, Associate Geological Engineer, under the supervision

of Donald E. Hulse, Qualified Person. This mineral resource estimate is made prepared in

accordance with NI 43-101 and CIM.

14.1 Data Used in Resource Estimation

Drill data for the Rosario Project has been collected and provided to Gustavson as three separate

phases. The historical data was provided as Microsoft Excel files supported by a series of

scanned documents detailing 70 drill holes in cross section, long section, and on surface maps.

Gustavson evaluated each document for relevant information to construct a historic drill hole

database. All information was cross checked with one of the sectional or plan view maps

provided.

For the 2011 and 2012 drilling campaigns, Santacruz provided drill hole data, including collar

coordinates, down hole surveys, and sample assay as Microsoft Excel sheets. The geologic logs

from 9 drill holes were provided to Gustavson as scanned documents containing the lithology

and alteration interpretations. The final compiled Rosario Project drill hole database contains

assay data with gold and silver grades in ppm, and lead and zinc grades in percent for 105 drill

holes (35 Santacruz and 70 Historic). Santacruz also provided Gustavson with AutoCAD cross

sections of the drill holes with interpreted veins. Gustavson is of the opinion that the data

provided is adequate for the preparation of a resource estimate.

14.2 Geologic Modeling

Mineralization at Rosario has been identified within two strongly structurally controlled veins

occurring as fracture filling between two normal faults. Mineralization is mostly limited to the

veins, although a few assay intervals indicate that additional vein sets may exist in the project

area. The Rosario veins, as mapped, strike approximately N55W for approximately 1,500

meters. The veins dip between 45 to 60 degrees to the SW. Drilling demonstrates that the veins

extend down dip 150 to 200 meters with average true thicknesses of 1.07 and 1.23 meters in

Rosario I and II, respectively. Gustavson used the plan maps and sectional views to construct the

two veins in Leapfrog 3D geologic modeling software (Figure 14-1).




Figure 14-1 Cross Section of Rosario Veins

14.3 Estimation Methodology

To constrain the grade estimation, Gustavson created a rotated 2 dimensional grid model for each

of the two Rosario veins. This grid model enabled better controls for variography and estimation

of the veins. This model was transferred into normal space for graphic display purposes.

14.3.1 Mineral Domains

The individual sample assays within the modeled vein boundaries were selected and coded as

Rosario I or II. The data inside of the Rosario I or Rosario II veins were composited and

statistically analyzed by Gustavson.

14.3.2 Compositing

The vein assays were composited into a single intercept and the true thickness was calculated

assuming the veins strike N55W and dip 50 degrees to the southwest.




14.3.3 Capping

Capping is the practice of replacing any statistical outliers with a value from the assumed sample

distribution. This is done statistically to better understand the true mean of the sample

population. The estimation of a highly skewed grade distribution can be sensitive to the presence

of even a few extreme values. Gustavson utilized a log scale Cumulative Frequency Plots (CFP)

of the gold, silver, lead, and zinc true thickness composites to identify the presence of any

statistical outliers within each vein. By accepting the statistical assumption that the assay sample

distribution is log normal, one can fit a lognormal model to the distribution. The point at which

data are no longer aligned with the model represents potential statistical outliers. The CFPs for

silver in Rosario I and II are presented below in Figures 14-2 and 14-3, respectively. Gustavson

capped the silver composites where the points along the CFP begin to deviate from one another

spatially. Table 14-1 below summarizes the capped maximum value for each metal.

Figure 14-2 Cumulative Frequency Plot - Rosario Vein I




Figure 14-3 Cumulative Frequency Plot - Rosario Vein II

Table 14-1 Grade Capping Values by Vein

Vein I II

Gold (gpt) 4.0 5.2

Silver (gpt) 600 1000

Lead (%) 5.0 5.0

Zinc (%) 7.0 10.5

14.3.4 Statistical Analysis

Summary statistics for the two Rosario veins are shown in Tables 14-2Error! Reference source

ot found. and 14-3 below.




Table 14-2 Rosario Vein I Statistics

Rosario Vein 1 Descriptive Statistics

Metal Missing No. Minimum Maximum Mean Variance Std. Dev. COV

Gold 14 73 0.003 4.000 0.695 0.633 0.796 1.14

Silver 12 75 1.0 2385.0 154.8 116925.0 341.9 2.21

Lead 18 69 0.01 9.18 1.09 3.52 1.88 1.73

Zinc 14 73 0.01 21.75 2.24 10.85 3.29 1.47

Thickness 12 75 0.24 2.96 1.03 0.47 0.68 0.66

Rosario Vein 1 Capped Descriptive Statistics


Gold* 14 73 0.003 4.000 0.695 0.633 0.796 1.14

Silver 12 75 1.0 600.0 121.8 34512.0 185.8 1.53

Lead 18 69 0.01 5.00 1.00 2.60 1.61 1.61

Zinc 14 73 0.01 7.00 1.94 4.62 2.15 1.11

Thickness 12 75 0.24 2.96 1.03 0.47 0.68 0.66

Table 14-3 Rosario Vein II Statistics

Rosario Vein 2 Descriptive Statistics


Gold 17 58 0.001 5.200 0.752 0.973 0.986 1.31

Silver 17 58 1.0 2832.0 277.5 294969.0 543.1 1.96

Lead 21 54 0.01 15.41 1.46 6.84 2.62 1.79

Zinc 17 58 0.01 15.35 7.95 24.02 4.90 0.62

Thickness 17 58 0.22 3.03 1.23 0.55 0.74 0.60

Rosario Vein 2 Capped Descriptive Statistics


Gold* 17 58 0.001 5.200 0.752 0.973 0.986 1.31

Silver 17 58 1.0 1000.0 207.2 90790.0 301.3 1.45

Lead 21 54 0.00 5.00 1.04 1.81 1.35 1.30

Zinc 17 58 0.01 10.50 3.20 10.87 3.30 1.03

Thickness 17 58 0.22 3.03 1.23 0.55 0.74 0.60

14.4 Methodology

A two dimensional grid model was created for the area covering the Rosario veins. The

composites for each vein were translated and rotated to a horizontal, north-south orientation from




normal space and the original coordinate system for grade estimation. Composite point relative

separation was maintained from the original UTM WG84 survey system. The model was built

and grades estimated using MicroModel software.

14.4.1 Model Parameters

The grid model was defined to include all drilling within and around the Rosario deposit.

Composite sample points for each vein were rotated and translated in three steps using Microsoft

excel. First each sample was pressed to a plane striking N55W and dipping 50 degrees to the

southwest. The rotation was accomplished by translating the plane with an origin at point

(273,653.94, 2,550,004.33, 1819.27) in model space to coordinate (0,0,0) thus performing a

transformation on the composite coordinates. The plane was then rotated around the z-axis 55

degrees to true north and then around the y-axis to vertical. The grid model space is defined as

follows (Table 14–4):

Table 14-4 Grid Model Definition

Vein Rosario I Rosario II

X Y Z X Y Z

Minimum 0 0 0 0 150 -20

Maximum 1 1190 600 1 1920 580

Cell size 1 10 10 1 10 10

14.4.2 Topography

Topography used in the model extracted from an AutoCAD drawing file provided by IMS.

Topography was based on a survey performed by the National Institute of Statistics and

Geography (INEGI) of Mexico. Data were provided by IMS as both three dimensional contour

lines and as a triangular mesh or wireframe. Grid modeled topography was used to truncate the

vertical extent of the vein grid model.

14.4.3 Grade Model

Grades for gold, silver, lead and zinc were estimated using the composite grades and the true

thickness of each vein. A total of five estimates were made for each vein. These are shown in

Table 14-5:

Table 14-5 Estimation Methods

Method Power Variable

Inverse Distance 2 Gold

Inverse Distance 2 Silver

Inverse Distance 2 Lead

Inverse Distance 2 Zinc

Inverse Distance 3 True Thickness




Each of the metals and the true thickness were modeled using an inverse distance algorithm with

an isotropic distance of 150m or roughly twice the average drill spacing. The estimate was

completed using between two and five samples with a minimum of two drill holes required.

Each vein was estimated independently using only samples from the vein being estimated.

14.4.4 Bulk Density

64 density measurements were taken in eight distinct rock types in 2011, and 188 measurements

were taken in 2012. The densities are presented in Table 14-6. Although pure sulfide veins are

slightly denser, Gustavson has accounted for vugs and alteration with an average in-place density

of 3.0t/m3 for all vein material below topography.

Table 14-6 Density by Lithology

Description 2011 2012

Number Density Number Density

Sandstone 13 2.55 80 2.54

Shales 11 2.56 75 2.59

Veins (with sulfides) 10 3.16 25 3.11

Sandstone Breccia 5 2.67 2 2.75

Qtz Vein 9 2.77 6 2.66

Vein with lead and zinc 5 2.95

Chlorite (Chlorite Alteration) 1 2.84

Altered Sandstone/Shale 3 2.74 5 2.44

14.5 Model Checks

The model was validated by evaluating the blocks against actual drill hole assay data to

determine if the estimated blocks fit the grades of the respective vein. Rotated long-sections

looking southwest displaying the block model silver content with the associated composite data

are presented in Figures 14-4 and 14-5.




Figure 14-4 Long Section Looking SW - Vein I

Figure 14-5 Long Section Looking SW - Vein II

A swath plot is a graphical display of the grade distribution derived from a series of bands, or

swaths, generated in several directions through the deposit. Grade variations from the inverse

distance model (capped and uncapped) models are compared using the swath plot to the

distribution derived from the nearest neighbor grade model.




On a local scale, the nearest neighbor model does not provide reliable estimations of grade, but

on a much larger scale, it represents an unbiased estimation of the grade distribution based on the

total data set. Therefore, if the inverse distance model is unbiased, the grade trends may show

local fluctuations on a swath plot, but the overall trend should be similar to the polygonal

distribution of grade.

Swath plots have been generated for the gold, silver, lead, zinc, and true thickness distributions

in the model to show the comparison between a nearest neighbor estimate, and estimates made

with capped and uncapped metal grades (Figures 14-6 through 14-10). All estimation models

correlate well with one another. Deviations tend to occur for two reasons. First, reduced tonnage

near the edges of the deposit accentuates the differences in grade between models. Second,

differences in grade are more apparent in the lower-grade areas, which typically represent the

edges of the deposit where the drilling density is sparse.

Figure 14-6 Gold Swath Plot Vein II

0

0.5

1

1.5

2

2.5

3

2550000 2550500 2551000 2551500 2552000

Ave

rage

Go

ld (

pp

m)

Northing

Gold Swath Plot South To North

NN

ID Uncapped




Figure 14-7 Silver Swath Plot Vein II

Figure 14-8 Lead Swath Plot Vein II

0

50

100

150

200

250

300

350

400

2550000 2550500 2551000 2551500 2552000

Ave

rage

Silv

er

(pp

m)

Northing

Silver Swath Plot South To North

NN

ID Uncapped

ID Capped

0

0.5

1

1.5

2

2.5

3

2550000 2550500 2551000 2551500 2552000

Ave

rage

Le

ad (

pp

m)

Northing

Lead Swath Plot South To North

NN

ID Uncapped

ID Capped




Figure 14-9 Zinc Swath Plot - Vein II

Figure 14-10 Thickness Swath Plot - Vein II

0

1

2

3

4

5

6

2550000 2550500 2551000 2551500 2552000

Ave

rage

Zin

c (p

pm

)

Northing

Zinc Swath Plot South To North

NN

ID Uncapped

ID Capped

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2550000 2550500 2551000 2551500 2552000

Ave

rage

Th

ickn

ess

(m

)

Northing

Thickness Swath Plot South To North

NN

ID




14.6 Mineral Resource Classification

The mineral resources at Rosario are classified as measured, indicated, and inferred in

accordance with CIM.

The resource was classified based on the average distance to the two nearest composites. Blocks

were classified as measured if two drill holes completed by Santacruz were within an average

distance of 50m from the block centroid. Blocks were classified as indicated if two composites

from any drill program were within 75m of a block centroid. The remaining estimated blocks

were classified as inferred. The distances, in meters, used to assign classifications are listed in

Table 14-7. These classifications were confirmed by overlaying the classified blocks over the

drill holes in long-section (Figure 14-11) to review that the criteria were appropriate.

Table 14-7 Resource Classification Criteria

Domain Measured Indicated Inferred

No. Santacruz Holes 2 1+ 1+

No. Historical Holes 0 1+ 1+

Minimum 2 2 2

Distance (m) 50 75 150




Figure 14-11 Long Section Showing Resource Classification




14.7 Mineral Resource Statement

Gustavson estimated this mineral resource estimate effective on 1 December 2012. The cutoff

for resource reporting is based on underground vein mining with long hole or shrinkage stoping

with milling and flotation. Gustavson has assumed similar metallurgical recoveries for all

metals. Gustavson is reporting the resources at a silver equivalent cutoff of 75g/t. The silver

equivalent (AgEq) calculation is described after the resource tables which follow.

Table 14-8 Rosario I Vein Mineral Resource Estimate

Rosario Vein 1 Measured Resources

CUTOFF TONNAGE Thickness Silver Equivalent Gold Silver Lead Zinc

gpt k tonne m gpt k-oz gpt oz gpt k-oz pct lbsx1000 pct lbsx1000

100 107.2 0.95 375 1,292.2 0.970 3,343 175.4 604.6 1.34 3,162.0 2.89 6,831.5

75 126.7 1.01 305 1,243.3 0.988 4,025 157.2 640.2 1.21 3,393.1 2.64 7,385.4

50 137.2 1.01 288 1,272.6 0.970 4,279 146.9 648.1 1.15 3,477.8 2.48 7,514.7

Rosario Vein 1 Indicated Resources



100 323.5 0.83 320 3,323.9 0.961 9,993 164.5 1,710.4 1.35 9,637.4 2.83 20,181.0

75 408.4 0.85 273 3,579.4 0.904 11,873 136.0 1,785.7 1.14 10,306.5 2.43 21,911.8

50 548.2 0.88 223 3,935.1 0.796 14,036 108.2 1,906.7 0.95 11,540.4 1.99 24,064.2

Rosario Vein 1 Measured Plus Indicated Resources


gpt k tonne m gpt k-oz gpt Oz gpt k-oz pct lbsx1000 pct lbsx1000

100 431 0.86 333 4,616.1 0.963 13,335 167.2 2,315.0 1.35 12,799.4 2.84 27,012.5

75 535 0.88 280 4,822.7 0.924 15,898 141.0 2,425.9 1.16 13,699.6 2.48 29,297.2

50 685 0.91 236 5,207.7 0.831 18,315 115.9 2.554.8 0.99 15,018.2 2.09 31,578.9

Rosario Vein 1 Inferred Resources


gpt k tonne m Gpt k-oz Gpt Oz Gpt k-oz pct lbsx1000 pct lbsx1000

100 124.2 0.63 211 844.2 1.022 4,082 86.8 346.8 0.94 2,567.0 1.91 5,242.9

75 164.0 0.73 190 1,001.0 0.995 5,245 74.7 393.6 0.81 2,943.5 1.74 6,276.1

50 273.3 0.86 144 1,265.9 0.872 7,661 52.6 461.9 0.59 3,568.4 1.27 7,653.3




Table 14-9 Rosario II Vein Mineral Resource Estimate

Rosario Vein 2 Measured Resources



100 141.5 1.21 463 2,106.5 0.901 4,099 266.3 1,211.5 1.15 3,578.4 4.84 15,095.9

75 143.4 1.17 447 2,062.2 0.897 4,137 256.9 1,184.6 1.13 3,559.3 4.62 14,611.1

50 147.2 1.06 410 1,941.2 0.857 4,058 235.2 1,112.9 1.06 3,435.3 4.15 13,457.7

Rosario Vein 2 Indicated Resources


gpt k tonne m gpt k-oz Gpt Oz gpt k-oz pct lbsx1000 pct lbsx1000

100 290.8 1.15 362 3,380.5 0.863 8,073 209.3 1,956.5 1.28 8,214.4 2.99 19,197.0

75 302.6 1.10 345 3,351.3 0.852 8,286 198.6 1,932.5 1.22 8,123.7 2.82 18,778.6

50 315.9 0.95 316 3,205.7 0.832 8,453 182.9 1,857.6 1.10 7,649.1 2.46 17,167.2

Rosario Vein 2 Measured Plus Indicated Resources


gpt tonne m gpt Oz Gpt Oz gpt Oz pct lbsx1000 pct lbsx1000

100 432 1.17 395 5,487.0 0.965 12,172 227.9 3,168.0 1.24 11,792.7 3.60 34,292.9

75 446 1.12 378 5,413.5 0.955 12, 423 217.4 3,117.1 1.19 11,683.0 3.40 33,389.7

50 463 0.98 346 5,146.9 0.926 12,511 199.5 2,970.5 1.09 11,084.4 3.00 30,624.9

Rosario Vein 2 Inferred Resources


gpt k tonne m Gpt k-oz gpt Oz Gpt k-oz pct lbsx1000 pct lbsx1000

100 196.2 1.01 232 1,462.4 0.677 4,269 110.5 696.9 0.74 3,191.3 2.72 11,756.0

75 222.2 0.99 213 1,521.8 0.673 4,807 102.4 731.9 0.67 3,262.8 2.37 11,598.0

50 238.3 0.89 198 1,514.1 0.658 5,039 94.7 725.1 0.63 3,300.1 2.12 11,161.8




Table 14-10 Total Mineral Resource for Rosario I and II Veins

Rosario Veins 1 and 2 Measured Resources



100 249 2.17 425 3,398.7 0.931 7,441 227.1 1,816.1 1.23 6,740 4.00 21,927

75 270 2.18 381 3,305.5 0.940 8,162 210.1 1,824.8 1.17 6,952 3.69 21,997

50 284 2.07 351 3,213.8 0.912 8,337 192.6 1,761.0 1.10 6,913 3.34 20,972

Rosario Veins 1 and 2 Indicated Resources



100 614 1.98 339 6,704.4 0.915 18,066 185.7 3,666.9 1.32 17,852 2.91 39,378

75 711 1.95 303 6,930.7 0.882 20,159 162.7 3,718.2 1.18 18,430 2.60 40,690

50 864 1.83 257 7,140.8 0.809 22,488 135.5 3,764.3 1.01 19,190 2.16 41,231

Rosario Veins 1 and 2 Measured Plus Indicated Resources



100 863 2.03 364 10,103.1 0.919 25,508 197.6 5,483.0 1.29 24,592 3.22 61,305

75 981 2.01 325 10,236.2 0.898 28,320 175.7 5,543.0 1.17 25,383 2.90 62,687

50 1,149 1.89 280 10,354.6 0.835 30,825 149.6 5,525.3 1.03 26,103 2.46 62,204

Rosario Veins 1 and 2 Inferred Resources



100 320 1.64 224 2,306.6 0.811 8,351 101.3 1,043.7 0.82 5,758 2.41 16,999

75 386 1.72 203 2,522.8 0.810 10,053 90.6 1,125.5 0.73 6,206 2.10 17,874

50 512 1.75 169 2,780.0 0.772 12,699 72.2 1,187.0 0.61 6,869 1.67 18,815

Note: Mineral resources which are not mineral reserves do not have demonstrated economic viability. The quantity and grade of inferred resources reported herein are uncertain in nature and exploration completed to date is insufficient to define these mineral resources as indicated or measured. There is no guarantee that further exploration will result in the inferred mineral resources being upgraded to an indicated or measured mineral resource category.

*AgEq is the silver equivalent in ppm used to calculate the cutoff. The silver equivalent was

calculated with the following equation:

AgEq= (Ag *Pag/31.1035)+ (Pb*Ppb*22.05)+(Zn*Pzn*22.05)+(Au*Pau/31.1035)

(Pag)

Where:

Metal Symbol Grade Units

Price Price

Symbol

Silver Eq AgEq g/t

Silver Ag g/t 26.28 $/tOz Pag

Gold Au g/t 1,341.00 $/tOz PAu

Lead Pb % 0.9988 $/lb Pcu

Zinc Zn % 0.9531 $/lb Pzn

* The calculation assumes equal recoveries in all metals pending further metallurgical work.




The grades for copper, lead, and zinc are multiplied by each metal's three year

trailing average price.

The quantity and grade or quality is an estimate and is rounded to reflect the fact that

it is an approximation.


Rosario Project Environmental Studies Permitting & Social or Community Impact


15. ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR

COMMUNITY IMPACT

15.1 Environmental Liabilities

There are no existing environmental liabilities. The land has always been used for agriculture

and grazing, and Gustavson knows of no environmental issues that could materially impact the

issuer’s ability to extract mineral resources from the Rosario property.

15.2 Other Permits

San Luis Potosi has a number of operating mines, and the procedures for permitting and

operation are well established. Santacruz has all of the permits necessary for the operation of the

project, except the permit for purchase and use of explosives which is pending.

On May 16, 2012, Santacruz received approval for their environmental impact statement (MIA).

This document establishes operation and closure requirements for the Rosario Project.

Gustavson has reviewed this and determined that the requirements are typical of all mines in

Mexico. Only one condition is not common to all mines and that is the creation of a botanical

conservation area for two protected species of flora found at the site, the maguey and the

bisnaga, two succulents native to northern Mexico and the Chihuahua Desert which extends into

the southern U.S.

Santacruz has also received approval for the Land Use Change (CUS). Based on this Santacruz

has posted a reclamation bond for the construction of the mine.

Santacruz has conducted hydro-geologic studies for construction, operation, and process water.

The aquifer in the area is not restricted and water rights are available, thus no permit for pumping

is required, however Santacruz will be required to file water consumption reports with the

National Water Commission (CNA). Santacruz has initiated the construction of two process

water wells and a pipeline.


Rosario Project Environmental Studies Permitting & Social or Community Impact


Table 15-1 Permits for Construction and Operation

Permit Agency Date Granted Expiration

Environmental Impact Statement (MIA)

Secretary of Environment and natural Resources (SEMARNAT)

16 May 2012 15 May 2045

Risk Analysis (Mining) SEMARNAT 16 May 2012 N/A

Land Use Change SEMARNAT and Municipality of Charcas 8 May 2012 N/A

Archaeological Release Nation Institute of Archaeology and History (INAH)

February 2011 N/A

Water Well Permit National Commission of Water (CNA) 18 Oct. 2012 N/A

Construction Permit Municipality of Charcas 19 Sept. 2012 N/A

Explosives Purchase and Use Permit

National Defense Secretary (SEDENA) Pending 1 year -

Renewable

Reclamation Bond Fianzas Monterrey 11 Sept. 2012 N/A


Rosario Project Adjacent Properties


16. ADJACENT PROPERTIES

16.1 Adjacent Properties

The information presented in this section has not been independently verified by Gustavson and

is not necessarily indicative of mineralization with regard to the Rosario Project. The project is

surrounded by claims held by Grupo Mexico (IMMSA). Although other mineral occurrences

were identified in the area surrounding the Rosario veins, none of these intersect the larger San

Rafael claim surrounding the deposit.

The Charcas Mining District has been the focus of exploration and development interest for over

400 years.

IMMSA’s Charcas mine lies approximately 12 kilometers northeast of the Rosario Project site.

The Charcas mine has been classified as a Silver-Lead-Zinc limestone replacement deposit. It

may be temporally or spatially related to the Rosario deposit. The Charcas mine is located on the

eastern flank of the San Rafael anticline in a thick sequence upper Jurassic to lower Tertiary

limestone, mudstone and marl. In the Eocene, this carbonate sequence was intruded by the El

Temeroso intrusive, a granodiorite and rhyolite stock. Faulting and fissures developed upon

solidification of the cooling magma. These fissures and other zones of high permeability

provided conduits for mineralizing fluids, developing fissure filled veins and replacement bodies

along the contact of the marble and the El Temoroso stock. Because the El Temeroso stock

appears to have cooled prior to mineralization, it is not considered to be the source of the

mineralization (Butler, 1972).


Rosario Project Other Relevant Data and Information


17. OTHER RELEVANT DATA AND INFORMATION

Although the Rosario Project only has mineral resources, Santacruz has made the decision to

invest in the construction of the site. Gustavson was not consulted and the plans have not been

subject to independent technical review.

Santacruz has purchased a mill from Goldcorp Inc.'s Mexican subsidiary, Minera Nukay. The

mill is being constructed for a 500 tonnes/day capacity, although the process area and

foundations are built with space for expansion. Mill site preparations were completed including

leveling of the ground at the mill location and pouring of concrete foundations for both the mill

and the crushing facilities. The mill arrived onsite as scheduled during the second week of

September 2012 and assembly of the mill components including the flotation cells and thickeners

is in process. At the current rate, commissioning of the mill will be complete in the first quarter

of 2013.

In addition, about 200m of the initial ramp has been constructed a few hundred meters west of

the mill facility. Excavation will continue until the rock will withstand the construction of a

portal. This is expected to begin in early 2013.

The decision to commence production at Rosario was not based on a feasibility study of mineral

reserves demonstrating economic and technical viability, but rather on a more preliminary

estimate of inferred mineral resources. Accordingly, there is increased uncertainty and economic

and technical risks of failure associated with this production decision. Production and economic

variables may vary considerably, due to the absence of a complete and detailed site analysis

prepared in accordance with NI 43-101.


Rosario Project Interpretations and Conclusions


18. INTERPRETATIONS AND CONCLUSIONS

The new drilling and modeling has supported the estimation of a mineral resource from the drill

data. New metallurgical testing is currently proceeding on Rosario data.

Gustavson believes that the low percentage of assay errors discovered in the QA procedures is

not material to the estimated resource.

Based on the three dimensional correlation between the historical drilling and the 2011 and 2012

drill campaigns, Gustavson believes that it is reasonable to include the earlier assay data in this

study.


Gustavson knows of no environmental issues that could materially impact Santacruz’s ability to

extract mineral resources from the Rosario property

Due to the results of the new exploration work, Gustavson can now classify the resource to

include some measured and indicated mineral resource as well as inferred.

Risks at this stage will include the ability to successfully mine the narrow dipping veins, and the

ability to recover metals efficiently from the mineral.


Rosario Project Recommendations


19. RECOMMENDATIONS

Gustavson recommends that Santacruz continue the ongoing exploration works on the project

site. They should also proceed with a pre-feasibility study to better define the project risks and

potential.

Metallurgical testing on composites from each vein is the highest priority and Gustavson has

been informed that it is in process. It is not known when these results will be available. It is

necessary to confirm the recoveries as well as the quality of the concentrates that can be

produced.

Gustavson suggests a series of surface geochemical lines crossing the bodies along strike and

continuing to the southeast. The tendency of grades and thicknesses is increasing in that

direction and there may be potential to increase the high grade resource. Following the geochem

work, at least 5 deep holes should be planned along strike to the SE to examine continued

mineralization.

Drilling appears to successfully confirm the size and grade of the deposit. Gustavson

recommends that a pre-feasibility study be performed to define the project’s economic potential

as well as the project risks. An estimated, one phase budget for metallurgical test work, pre-

feasibility and infill and step-out drilling is shown in Table 19-1.

Table 19-1 2013 Rosario Exploration Budget 2013

Activity Estimate

Metallurgical Testing 60,000

Pre-Feasibility Study 400,000

Development Drilling 1000m 300,000

Step Out Drilling – 1000m 300,000

Total $1,060,000


Rosario Project References


20. REFERENCES

Butler, James H., 1972, Geology of the Charcas Mineral District, San Luis Potosi, Mexico,

Masters Thesis, Colorado School of Mines, Golden Colorado

Booth, Matthew., 2007, Rosario Mine Project, Internal Report by Arian Silver of Mexico

CONAPO, 2010, Consejo Nacional de Población,

http://www.conapo.gob.mx/index.php?option=com_content&view=article&id=36&Itemid

=234, website accessed on Jun. 18, 2010

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Charcas Project, Report for Mexican Mineral Resource Council (Spanish), p. 23

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http://www.grupomexico.com/aboutus/en-au01.asp, accessed on June 18, 2010

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website, http://www.e-local.gob.mx/work/templates/enciclo/sanluispotosi/

municipios/24015a.htm , website accessed on Jun. 17, 2010

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the Rosario I and II veins, Municipality of Charcas, San Luis Potosi, Consejo de Recursos

Minerales, Gerencia Regional Zona Noreste (Mineral Resources Board, Northeast

Regional Management Area)

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evaluation of the Charcas National Mining Reserve, Municipality of Charcas, San Luis

Potosi, Mexico, Consejo de Recursos Minerales, Gerencia Regional Zona Noreste

(Mineral Resources Board, Northeast Regional Management Area)

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and II Veins – Sep-Dec 1984, Mineral Resource Counsel.

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Rosario Project Appendices

December 19, 2012 A-1

APPENDIX A


Rosario Project Appendices


Table A-1 Historical Drill Intercepts for Rosario

Azimuth Dip X Y Z Length Recovery From To Width

Au gr/ton

Ag gr/ton

Pb % Zn %

BN-1 VERTICAL -90 273,226.37 2,550,552.84 2,181.90 236.7 83.7 106.00 106.50 0.50 0.37 222 5.99 4.17

BN-1 VERTICAL -90 273,226.37 2,550,552.84 2,181.90 236.7 83.7 148.85 149.85 1.00 0.15 40 0.03 10.70

BN-2 N 28° E -60 273,284.32 2,550,452.14 2,185.11 185.35 83.8 106.19 107.25 1.06 0.37 195 1.68 2.77

BN-2 N 28° E -60 273,284.32 2,550,452.14 2,185.11 185.35 83.8 167.05 169.05 2.00 2.00 563 0.20 1.04

BN-3 VERTICAL -90 273,284.32 2,550,452.14 2,185.11 298.35 87.7 138.20 139.20 1.00 0.00 9 0.10 0.35

BN-3 VERTICAL -90 273,284.32 2,550,452.14 2,185.11 298.35 87.7 238.10 239.10 1.00 0.25 12 0.01 0.35

BN-4 N 28° E -60 273,123.13 2,550,546.50 2,182.00 200.65 83.7 117.25 118.35 1.10 0.37 30 0.12 10.90

BN-4 N 28° E -60 273,123.13 2,550,546.50 2,182.00 200.65 83.7 155.80 157.05 1.25 0.98 272 3.40 7.28

BN-5 VERTICAL -90 273,049.52 2,550,686.34 2,176.19 200.2 87.63 79.30 79.65 0.35 0.25 25 0.03 0.03

BN-5 VERTICAL -90 273,049.52 2,550,686.34 2,176.19 200.2 87.63 98.99 100.25 1.26 2.70 20 0.04 0.14

BN-7 N 32°E -56 272,961.46 2,550,747.52 2,181.40 182.3 92.4 101.18 101.68 0.50 0.35 110 2.40 3.10

BN-8 N 28° E -50 273,278.40 2,550,548.30 2,182.22 84.65 87.9 56.69 58.10 1.41 0.25 20 0.70 0.75

BN-8 N 28° E -50 273,278.40 2,550,548.30 2,182.22 84.65 87.9 73.60 74.25 0.65 0.75 72 1.10 1.78

BN-9 VERTICAL -90 273,278.40 2,550,548.30 2,182.22 167.2 88.71 74.62 79.00 4.38 0.35 218 1.03 2.42

BN-9 VERTICAL -90 273,278.40 2,550,548.30 2,182.22 167.2 88.71 115.60 126.43 10.83 0.49 3 2.79 2.98

BN-10 N 28° E -60 273,368.99 2,550,502.43 2,181.12 133.2 76.53 32.50 32.95 0.45 0.15 36 0.75 0.02

BN-10 N 28° E -60 273,368.99 2,550,502.43 2,181.12 133.2 76.53 85.66 88.32 2.66 1.00 401 5.08 3.03

BN-11 VERTICAL -90 273,368.99 2,550,502.43 2,181.12 155.1 89.54 41.60 44.19 2.59 1.00 949 8.32 6.71

BN-11 VERTICAL -90 273,368.99 2,550,502.43 2,181.12 155.1 89.54 132.31 133.34 1.03 2.70 66 0.90 0.18

BN-12 VERTICAL -90 273,325.81 2,550,420.74 2,185.24 300.4 92.06 139.20 140.97 1.77 0.62 249 2.13 4.87

BN-12 VERTICAL -90 273,325.81 2,550,420.74 2,185.24 300.4 92.06 256.60 257.03 0.43 0.15 23 0.16 0.25

BN-13 N 28° E -67 273,408.92 2,550,469.03 2,180.65 161.05 89.74 43.75 45.15 1.40 0.25 312 0.60 3.10

BN-13 N 28° E -67 273,408.92 2,550,469.03 2,180.65 161.05 89.74 139.40 140.40 1.00 1.50 130 0.90 21.75

BN-14 N 28° E -60 273,446.92 2,550,540.77 2,176.34 72.6 74.58 42.70 44.35 1.65 0.29 433 4.20 3.70

BN-15 VERTICAL -90 273,444.33 2,550,449.39 2,180.09 89.8 83.3 49.90 53.54 3.64 1.73 438 2.79 4.31

BN-16 VERTICAL -90 273,420.71 2,550,405.09 2,182.05 112 83.51 87.18 91.05 3.87 3.00 119 0.65 1.09

BN-17 N 28° E -60 273,473.25 2,550,504.33 2,177.33 100 79.2 75.47 76.55 1.08 1.00 565 6.65 6.30

BN-18 VERTICAL -90 273,473.25 2,550,504.33 2,177.33 142 77.27 112.55 113.87 1.32 0.88 950 7.38 1.89

BN-19 VERTICAL -90 273,220.73 2,550,612.35 2,177.00 90.7 87.1 23.46 24.39 0.93 0.00 12 0.03 0.02

BN-19 VERTICAL -90 273,220.73 2,550,612.35 2,177.00 90.7 87.1 55.90 58.80 2.90 1.95 1,229 2.53 15.24

BN-20 VERTICAL -90 273,370.16 2,550,450.46 2,182.48 160.9 81.14 84.30 86.15 1.85 0.25 150 2.10 2.75

BN-21 N 28° E -50 273,370.16 2,550,450.46 2,182.48 72.8 67.53 61.72 63.10 1.38 2.35 2,832 15.41 15.35

BN-23 N 28° E -60 273,517.97 2,550,503.92 2,175.62 98.85 71.54 70.35 71.75 1.40 0.25 154 0.50 1.65

BN-24 VERTICAL -90 273,517.97 2,550,503.92 2,175.62 128.1 76.47 116.30 117.05 0.75 0.25 367 2.00 5.62

BN-25 N 28° E -45 273,174.71 2,550,643.29 2,174.24 66.35 76.53 25.40 26.80 1.40 0.80 40 0.45 3.32

BN-25 N 28° E -45 273,174.71 2,550,643.29 2,174.24 66.35 76.53 60.25 61.45 1.20 1.60 2,385 4.95 12.30

BN-26 VERTICAL -90 273,174.71 2,550,643.29 2,174.24 121.55 88.45 45.40 46.60 1.20 1.50 1,121 0.45 4.10

BN-26 VERTICAL -90 273,174.71 2,550,643.29 2,174.24 121.55 88.45 88.95 90.80 1.85 2.25 23 0.25 2.54

BN-27 N 33° E -45 273,110.24 2,550,619.73 2,173.00 109.8 84.03 78.78 80.50 1.72 0.80 20 0.30 3.85

BN-27 N 33° E -45 273,110.24 2,550,619.73 2,173.00 109.8 84.03 100.43 101.38 0.95 1.40 35 0.25 3.10

BN-28 VERTICAL -90 273,110.24 2,550,619.73 2,173.00 170.8 85.38 107.20 109.05 1.85 0.40 270 3.00 3.22

BN-28 VERTICAL -90 273,110.24 2,550,619.73 2,173.00 170.8 85.38 153.60 154.00 0.40 2.20 12 0.35 0.50

BN-29 N 28° E -80 273,091.58 2,550,658.30 2,173.11 147.55 92.65 57.62 59.52 1.90 0.60 29 0.25 5.12

BN-29 N 28° E -80 273,091.58 2,550,658.30 2,173.11 147.55 92.65 100.15 102.37 2.22 0.30 28 0.18 4.48

BN-30 N 21° E -70 273,046.26 2,550,720.66 2,170.76 182.5 86.63 55.83 56.25 0.42 0.00 10 0.33 0.60

BN-30 N 21° E -70 273,046.26 2,550,720.66 2,170.76 182.5 86.63 74.30 74.60 0.30 0.15 11 0.47 0.40

BN-32 VERTICAL -90 272,896.55 2,550,785.85 2,183.32 194.95 94.48 114.75 115.25 0.50 3.40 40 0.45 0.44

BN-33 N 32°E -45 272,823.74 2,550,790.78 2,188.19 140.35 89.09 115.70 116.72 1.02 1.50 43 0.25 0.50

BN-34 VERTICAL -90 272,823.74 2,550,790.78 2,188.19 194.65 95.19 167.00 167.65 0.65 1.60 9 0.60 0.58

BN-37 N 32°E -60 272,716.77 2,550,892.57 2,177.51 189.63 94.17 94.95 96.43 1.48 0.40 17 0.45 0.44

BN-38 VERTICAL -90 272,716.77 2,550,892.57 2,177.51 143.65 86.22 130.90 131.30 0.40 1.72 63 0.64 0.70

BN-39 N 32°E -60 272,810.32 2,550,910.29 2,180.51 162.1 85.81 128.00 128.55 0.55 0.10 12 0.48 0.37

BN-40 VERTICAL -90 272,810.32 2,550,910.29 2,180.51 77.6 86.4 70.55 72.10 1.55 0.90 27 0.52 0.59

BN-42 VERTICAL -90 272,650.13 2,550,915.84 2,180.92

377.00 378.55 1.55 1.25 90 0.40 0.32

BN-43 N 32°E -60 272,659.06 2,550,929.47 2,181.19 146.1 95.32 109.45 111.20 1.75 0.15 13 0.38 0.26

BN-44 VERTICAL -90 272,659.06 2,550,929.47 2,181.19 139.85 97.43 130.70 131.45 0.75 0.60 18 0.40 0.23

BN-45a VERTICAL -90 272,650.14 2,550,915.84 2,180.92

255.00 255.95 0.95 0.10 19 0.50 0.30

BN-46 VERTICAL -90 272,599.27 2,550,966.24 2,181.19

143.65 144.35 0.70 0.10 21 0.50 0.35

BN-48 N 32°E -60 272,534.18 2,550,993.02 2,158.09

143.90 145.75 1.85 0.13 19 0.55 0.15

BN-52 VERTICAL -90 272,484.27 2,551,049.17 2,165.51

134.15 134.92 0.77 0.25 18 0.20 ind

BN-54 N 32°E -65 272,364.98 2,551,132.45 2,165.04

200.92 202.00 1.08 0.00 15 0.65 0.75

BN-l VERTICAL -90 273,497.90 2,550,550.96 2,174.38 26.2 67.14 22.25 22.8 0.55 3.00 512 2.3 2.87

BN-4a VERTICAL -90 273,123.13 2,550,546.50 2,182.00 278.65 92.25 156.50 157.58 1.08 0.26 17 0.08 1.80

BN-4a VERTICAL -90 273,123.13 2,550,546.50 2,182.00 278.65 92.25 218.70 223.31 4.61 0.24 22 0.08 0.06

BN-a N 28° E -55 273,260.87 2,550,617.52 2,181.90 43.33 91.09 26.42 27.12 0.70 1.00 160 1.15 6.72

BN-a N 28° E -55 273,260.87 2,550,617.52 2,181.90 43.33 91.09 36.30 36.75 0.45 0.15 60 0.00 4.05

BN-b N 28° E -50 273,301.55 2,550,592.31 2,180.48 43.46 80.22 22.1 22.5 0.40 1.00 535 3.1 2.17

BN-d N 28° E -60 273,336.25 2,550,550.11 2,180.71 70.31 85.87 16.95 19.6 2.65 0.30 223 1.76 3.81

BN-g VERTICAL -90 273,404.20 2,550,568.08 2,175.78 50.54 82.73 20.58 21.84 1.26 0.15 358 4.85 5.55

BN-h N 28° E -60 273,349.92 2,550,575.59 2,178.23 40.1 78.85 21.90 22.45 0.55 0.50 764 9.18 6.80

BN-j VERTICAL -90 273,457.72 2,550,475.01 2,178.74 35.55 75.94 14.7 15.1 0.40 0.75 120 1.1 3.63

BN-n N 33° E -60 273,149.49 2,550,681.54 2,173.70 49.6 76.13 17.35 18.65 1.30 0.20 53 0.30 4.50

BN-n N 33° E -60 273,149.49 2,550,681.54 2,173.70 49.6 76.13 43.05 44.70 1.65 0.50 63 0.25 2.54

BN-ñ N 28° E -60 273,112.26 2,550,697.05 2,172.68 63 91.18 19.10 20.28 1.18 0.50 19 0.30 1.07

BN-ñ N 28° E -60 273,112.26 2,550,697.05 2,172.68 63 91.18 49.80 51.00 1.20 0.20 24 0.25 1.75

BN-o N 21° E -50 273,061.90 2,550,762.18 2,180.54 52.25 91.92 26.10 28.70 2.60 0.38 12 0.30 1.45

BN-p N 32°E -55 272,992.96 2,550,810.84 2,173.67 50.2 87.61 37.46 38.58 1.12 4.00 87 0.35 1.10

BN-q N 32°E -45 272,933.59 2,550,845.80 2,181.08 39.65 70.36 32.10 34.25 2.15 0.33 10 0.37 0.43

BN-s N 32°E -55 272,838.14 2,550,954.52 2,187.10 65.30 86.25 30.50 31.55 1.05 1.00 14 0.03 2.60

BN-t N 32°E -60 272,788.56 2,551,005.81 2,179.03 65.15 90.98 21.90 22.40 0.50 0.15 15 0.37 0.30

BN-u N 32°E -55 272,729.34 2,551,043.41 2,169.51 40.95 94.84 17.80 18.05 0.25 0.60 35 0.43 0.25

BN-v N 32°E -60 272,666.29 2,551,077.23 2,169.77 39.65

38.85 39.80 0.95 0.00 20 0.49 1.95

BN-w N 32°E -60 272,595.11 2,551,101.30 2,170.25

21.35 23.65 2.30 0.20 24 0.38 0.37

BN-x N 32°E -60 272,547.95 2,551,151.64 2,166.54

34.20 35.10 0.90 ind 17 0.20 0.12

BN-y N 32°E -60 272,490.60 2,551,194.86 2,165.41

78.70 80.20 1.50 0.00 9 0.20 0.25

BN-k VERTICAL -90 273,478.59 2,550,433.71 2,178.60 42.7 91.5 35.65 36.73 1.08 0.50 1228 3.27 5.85


Table A-2 2011 Drill Data for Rosario


Au gr/ton

Ag gr/ton

Pb % Zn %

AP-1 N 25.8° E -60.6 273,281.07 2,550,452.22 2185.69 220.50 99.90 114.30 115.35 1.05 0.98 3464 4.74 10.46

AP-1 N 25.80° E -60.6 273,281.07 2,550,452.22 2185.69 220.50 99.90 181.05 181.95 0.90 0.99 18 0.02 0.76

AP-2 N 28.60° E -60.8 273,241.88 2,550,485.57 2184.91 224.85 97.37 121.00 121.45 0.45 0.54 378 0.23 5.00

AP-2 N 28.60° E -60.8 273,241.88 2,550,485.57 2184.91 224.85 97.37 166.20 166.90 0.70 0.80 362 4.87 4.14

AP-3 N 25.80° E -62.0 273,286.62 2,550,576.26 2181.58 100.30 94.51 72.60 73.75 1.15 0.19 225 0.37 3.64

AP-4 N 31.45° E -52.95 273,527.57 2,550,288.84 2171.53 238.30 98.44

0.00 NA NA NA NA

AP-5 N 26.40° E -61.2 273,444.13 2,550,446.79 2180.15 175.55 93.47

0.00 NA NA NA NA

AP-6 N 33.20° E -59.90 273,481.13 2,550,519.51 2176.45 75.15 88.02 42.45 42.75 0.30 0.25 694 1.65 0.97

AP-7 N 33.9° E -66.9 273,407.10 2,550,463.46 2181.25 181.15 97.29 43.30 44.75 1.45 0.07 169 0.17 1.04

AP-7 N 33.90° E -66.9 273,407.10 2,550,463.46 2181.25 181.15 97.29 147.60 149.80 2.20 0.24 157 0.29 2.29

AP-8 N 31.6° E -60.40 273,444.39 2,550,536.51 2177.22 71.60 70.53 22.00 23.80 1.80 0.14 367 1.92 1.88

AP-9 N 34.30° E -55.60 273,365.86 2,550,452.79 2183.08 155.95 97.01 64.70 66.55 1.85 0.04 24 1.06 0.20

AP-9 N 34.30° E -55.60 273,365.86 2,550,452.79 2183.08 155.95 97.01 131.40 132.40 1.00 0.25 4 0.01 0.39


Table A-3 2012 Drill Intercepts for Rosario


Au gr/ton

Ag gr/ton

Pb % Zn %

RS-01 N 28.8° E -43.60 273177.95 2550648.75 2175.36 83.20 89.60 36.30 37.85 1.55 0.12 304 0.2 3.4

RS-01 N 28.8° E -43.60 273,177.95 2,550,648.75 2,175.36 83.20 89.6 57.10 58.30 1.20 0.33 634 0.28 6.66

RS-02 VERTICAL -80.80 273177.06 2550647.47 2175.19 -80.80 92.19 44.00 46.10 2.10 0.36 122 0.05 2.12

RS-03 VERTICAL -88.30 273,217.01 2,550,611.37 2,177.04 85.95 91.68 60.15 62.75 2.60 1.23 344 0.12 12.10

RS-04 N 31.20° E -59.35 272,777.51 2,550,898.34 2,175.05 129.65 94.83 83.15 83.65 0.50 0.39 7 0.01 0.01

RS-05 N 35.30° E -60.97 272846.71 2550824.98 2183.89 149.20 97.29 96.70 99.75 3.05 0.76 24 0.01 0.32

RS-05 N 35.30° E -60.97 272,846.71 2,550,824.98 2,183.89 149.20 97.29 116.80 117.35 0.55 0.34 7 0.02 0.29

RS-06 N 30.2° E -61.43 272913.92 2550769.72 2183.76 150.25 96.89 95.10 96.65 1.55 0.17 3.4 0.01 0.06

RS-07 N 32.78° E -61.28 272739.38 2550754.48 2182.39 278.75 98.30 190.20 192.55 2.35 0.04 2 0.00 0.01

RS-08 N 33.75° E -60.55 273123.10 2550635.80 2171.86 115.80 94.72 59.00 61.50 2.50 0.40 75 0.02 3.76

RS-09 N 30.53° E -57.18 272,929.77 2,550,691.79 2,188.70 210.20 98.15 129.55 132.25 2.70 0.38 2.15 0.00 0.01

RS-10 VERTICAL -88.67 273,048.95 2,550,687.13 2,176.19 155.20 95.27 102.15 103.40 1.25 2.13 43 0.01 1.08

RS-11 N 30.85° E -59.90 273121.55 2550541.52 2182.66 183.50 93.10 126.60 127.80 1.20 3.91 48 0.01 8.97

RS-11 N 30.85° E -59.90 273,121.55 2,550,541.52 2,182.66 183.50 93.1 168.90 169.55 0.65 1.22 112 1.76 3.95

RS-12 N 28.78° E -58.32 272578.94 2550785.44 2180.88 349.15 96.62 233.10 234.40 1.30 0.02 5.35 0.01 0.00

RS-13 N 30.73° E -69.90 273085.54 2550581.23 2179.65 181.70 94.62 127.40 127.65 0.25 0.21 11 0.03 1.82

RS-14 N 31.65° E -52.10 272660.55 2550817.05 2176.68 225.05 95.78 179.55 180.65 1.10 0.13 7 0.02 0.16

RS-15 N 30.33° E -68.57 273220.76 2550539.23 2179.84 151.35 95.31 92.10 92.75 0.65 2.01 10 0.01 4.39

RS-16 N 33.17° E -59.27 272987.27 2550701.92 2182.48 148.70 96.12 91.70 92.45 0.75 0.48 2 0.00 1.20

RS-16 N 33.17° E -59.27 272,987.27 2,550,701.92 2,182.48 148.70 96.12 131.95 132.35 0.40 0.20 14 0.00 0.02

RS-17 N 34° E -53.00 272990.53 2550795.93 2175.54 70.35 93.50 40.50 42.20 1.70 0.01 1 0.00 0.01

RS-18 N 39.3° E -53.90 272932.40 2550852.91 2180.73 62.40 87.82 18.30 19.60 1.30 0.04 1 0.00 0.05

RS-18 N 39.30° E -53.90 272,932.40 2,550,852.91 2,180.73 62.40 87.82 31.00 32.70 1.70 0.01 1 0.00 0.00

RS-19 N 39.00° E -59.75 272,903.57 2,550,808.04 2,183.31 110.50 95.43 74.15 76.30 2.15 1.29 8.23 0.01 0.31

RS-20 N 32.5° E -54.30 272882.03 2550887.90 2180.46 54.65 89.20 31.85 33.20 1.35 0.27 5.4 0.00 0.01

RS-21 N 27.33° E -59.33 273257.71 2550402.49 2188.62 280.45 97.44 155.70 156.45 0.75 0.15 231 0.10 14.86

RS-21 N 27.33° E -59.33 273,257.71 2,550,402.49 2,188.62 280.45 97.44 203.35 203.65 0.30 0.05 25 0.01 8.46

RS-22 N 25.44° E -70.70 273382.73 2550423.57 2182.97 241.20 90.83 81.55 84.75 3.20 0.09 75 1.67 0.82

RS-22 N 25.44° E -70.70 273,382.73 2,550,423.57 2,182.97 241.20 90.83 193.90 194.35 0.45 0.33 19 0.14 1.08

RS-22 Bis N 27.2° E -70.00 273380.85 2550420.04 2182.97 128.35 89.42 84.90 85.40 0.50 0.04 102 1.41 1.35

RS-24 N 26.1° E -60 273106.49 2550510.68 2185.88 211.20 95.37 150.55 152.00 1.45 1.68 37 0.03 9.10

RS-24 N 26.10° E -60 273,106.49 2,550,510.68 2,185.88 211.20 95.37 201.40 201.95 0.55 0.27 1 0.00 0.01

RS-25 N 40.7° E -50.97 273046.60 2550687.78 2176.36 120.30 92.93 51.70 53.70 2.00 0.01 1 0.00 0.02

RS-25 N 40.70° E -50.97 273,046.60 2,550,687.78 2,176.36 120.30 92.93 85.10 86.00 0.90 0.01 2 0.00 0.02

RS-30 N 26.70° E -60.5 273,555.08 2,550,440.04 2,172.31 250.40 92.00 98.00 98.35 0.35 0.52 143 0.89 6.18

December 19, 2012 B-1

APPENDIX B



December 19, 2012 B-2

Table B -4 Vertices of the Rey David Concession and Contracted Area of San Rafael Concessions

Rey David

San Rafael

Point East North

Point East North

1 273,029.32 2,550,954.03 1 272,500.00 2,551,700.00

2 273,029.32 2,550,904.03 2 274,500.00 2,551,700.00

3 273,129.32 2,550,904.03 3 274,500.00 2,549,200.00

4 273,129.32 2,550,804.03 4 272,500.00 2,549,200.00

5 273,329.32 2,550,804.03

6 273,329.32 2,550,704.03

7 273,429.32 2,550,704.03

8 273,429.32 2,550,604.03

9 273,529.32 2,550,604.03

10 273,529.32 2,550,404.03

11 273,629.32 2,550,404.03

12 273,629.32 2,550,304.03

13 273,729.32 2,550,304.03

14 273,729.32 2,550,104.03

15 273,529.32 2,550,104.03

16 273,529.32 2,550,204.03

17 273,229.32 2,550,204.03

18 273,229.32 2,550,304.03

19 273,129.32 2,550,304.03

20 273,129.32 2,550,404.03

21 273,029.32 2,550,404.03

22 273,029.32 2,550,504.03

23 272,929.32 2,550,504.03

24 272,929.32 2,550,604.03

25 272,829.32 2,550,604.03

26 272,829.32 2,550,704.03

27 272,729.32 2,550,704.03

28 272,729.32 2,551,004.03

29 273,029.32 2,551,004.03

ni 43-101 technical report on resources … · ni 43-101 technical report on resources rosario...

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