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Impact Silver Corp.
Impact Silver Corp.

Operations

Production Centres

IMPACT Silver has two production centres on its 357-square-kilometer land package - the Guadalupe Production Centre in the north, and the Capire Production Centre (currently on care and maintenance) in the south.

Guadalupe Production Centre


The Guadalupe Production Centre is a 500-tonne-per-day ("tpd") crushing and flotation plant, located in the Royal Mines of Zacualpan Silver District, Mexico. It is currently the Company's primary processing facility. Since acquiring the project in 2006, IMPACT has carried out an extensive program of upgrading operations and expanding production; the Company has upgraded the majority of the mining equipment, including the expansion of the tailings dam (continuing). IMPACT has also purchased additional surface land near the mill to address the need for additional tailings capacity in the future.

The Guadalupe Production Centre is currently fed by the San Ramon Mine, the Mirasol Mine and the Cuchara-Oscar Mine, and produces silver-lead and zinc-silver concentrates.


Capire Production Centre


IMPACT's second production centre is Capire which is currently on care and maintenance waiting for higher silver prices before re-commencing production Capire is located 16 kilometers southwest of the Guadalupe Production Centre, in the Capire-Mamatla Mineral District. It is a volcanogenic massive sulphide ("VMS") base and precious metal deposit. VMS mineralization in the Capire-Mamatla district is predominantly silver-rich with zinc and lead credits. The district was acquired by IMPACT in February 2007 in a government auction and production is subject to a 1% net smelter royalty ("NSR") to the Mexican Geological Survey.

In March 2013, IMPACT announced the commissioning of the new Capire open pit mine and completion of construction of the 200-tpd pilot plant. The purpose of the open pit silver test mining and processing operations at Capire was to determine production costs, and optimize mining and processing methods in planning for a potentially larger operation in the future. Most of this test work was completed; however, in light of lower silver prices, Mexican mining tax changes, hauling costs and low overall silver grade being mined at Capire, the Company recognized that the open pit test mining operation was not presently economical. In February 2014, after processing approximately 33,000 tonnes of material, the open pit operations were suspended. Production from the Capire open pit may restart in the future with higher metal prices and/or lower unit production costs associated with a potential larger operation.

After the shut-down, the Capire plant was reconfigured as a bulk test processing facility for gold and copper mineralization from the Carlos Pacheco South Zone in the Noche Buena Mine. Test operations ended during the second quarter of 2014. The results of this test work at Capire and later at the Guadalupe mill, demonstrated good gold recoveries from Carlos Pacheco South mineral when mixed with Zacualpan silver mineral. As a result, there was higher gold production at Guadalupe during the first half of 2014.

Infrastructure is good throughout the Capire area with gravel road networks, gentle topography, a new 778 kV electric power line, water supplies and a local work force augmented by personnel from the Guadalupe Production Centre.

The Capire processing plant was fed by the open pit Capire Mine, located immediately beside the plant. Exploration continues on nearby mineral prospects as potential sources of additional feed for the Capire plant.

Capire Mineral Resource

On January 18, 2016, IMPACT announced new NI43-101 compliant mineral resources for the Capire Zone as follows and then filed a supporting technical report on www.sedar.com on March 3, 2016.

Total Resource at US Dollar per Tonne Cutoffs - Inferred and Unoxidized
Cutoff Inferred Mineral Resources
US$/t Tonnes US$/t g Ag/t %Zn %Pb Oz Ag lbs Zn lbs Pb
10 4,465,000 36.20 44.21 0.72 0.31 6,346,000 71,183,000 30,212,000
15 3,450,000 43.24 53.03 0.85 0.37 5,881,000 64,914,000 28,072,000
20 2,707,000 50.37 62.22 0.98 0.43 5,414,000 58,444,000 25,755,000
25 2,177,000 57.19 71.06 1.10 0.49 4,974,000 52,766,000 23,522,000
30 1,786,000 63.74 79.49 1.22 0.54 4,563,000 47,975,000 21,423,000
35 1,490,000 69.96 87.65 1.33 0.59 4,199,000 43,692,000 19,504,000
40 1,242,000 76.47 96.20 1.45 0.65 3,842,000 39,596,000 17,666,000
45 1,035,000 83.30 105.37 1.56 0.70 3,507,000 35,693,000 15,905,000
50 859,000 90.69 115.49 1.69 0.75 3,189,000 31,983,000 14,203,000
60 636,000 103.31 133.60 1.88 0.84 2,732,000 26,339,000 11,793,000
70 489,000 114.89 150.72 2.04 0.92 2,370,000 22,034,000 9,909,000
80 381,000 126.33 167.97 2.20 0.99 2,057,000 18,455,000 8,338,000
90 294,000 138.53 187.15 2.34 1.07 1,772,000 15,194,000 6,966,000

The reported resource ("Base Case") cutoff grade is US$30/tonne in the table. The Mineral Resources in this disclosure were estimated by Mine Development Associates ("MDA") of Reno, Nevada. The resources were estimated using current Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") standards, definitions and guidelines. The resources were estimated by inverse distance cubed ("ID3") and checked the estimate with inverse distance to the 4th power, kriging, and nearest neighbour. The Capire database was audited in its entirety and has 20,273 assays of silver, gold and lead and zinc collected from 376 exploration drill holes. There are also 889 samples with density measurements in the Capire database. MDA worked with the data on 20 meter-spaced sections. During that work, MDA found the geology and analytical data to support each other and to present a qualitatively reasonable set of drill data. The table presents the Inferred diluted resources at Capire using total-metal (silver, zinc and lead) dollar-value cutoffs. The model block size is 3m by 3m by 3m. The diluted resources are displayed at multiple cutoffs, but the resource is reported at a cutoff of US$30/t lying within a pit optimized using $31/oz Ag, $1.51/lb Zn, and $1.69/lb Pb. MDA considers a US$30/t cutoff to be appropriate for production using IMPACT's 200t/d mill and recoveries around 80%, 50%, and 65% for silver, zinc and lead, respectively. The resources were generated within an optimized pit shell on the Capire zone that best conveyed "reasonable prospects for eventual economic extraction" which is a requirement of the 2014 CIM Definition Standards, incorporated into Canadian National Instrument 43‑101. There is additional mineralization too deep to fulfill the criteria of "reasonable prospects for eventual economic extraction" within an open pit, but that may be available for potential underground development. Quality Assurance/Quality Control ("QA/QC") protocols were carried out to assess the quality of the drilling assay results and the confidence that can be placed in the assay data. The QA/QC data available at Capire demonstrate the analytical data are sufficient to be used in estimating Inferred resources. The drill spacing is tighter in the central area. Overall the average distance to the nearest composite sample is 20m (less in the central area), and the average distance to all composites used in the estimation is 40m (less in the central area). Three separate drill-hole database and composite files were built, one for each of silver, zinc and lead. Each drill-hole database was composited to three-meter lengths respecting each metal's domain and the alluvium contacts. Samples from the open pit mining blast-holes and samples logged as alluvium were excluded from compositing. There was no minimum width for compositing because the composites are length-weighted during grade estimation. This new mineral resource is based on improved geological and structural modeling over the previous 2011 mineral resource. MDA used this new geologic interpretation as the foundation for building mineral domains for silver, zinc and lead. Those domains followed the sedimentary/ volcanic package contacts and respected the structural deformation defined within the sedimentary package. The interpretations were made as polygons digitized on the same 20m-spaced sections. The polygons were extruded halfway to adjacent sections to obtain a volume for model coding and controlling the estimate. The extrusion of these polygons, rather than snapped-in-3D polygons and constructing solids or solid equivalents, was done at the request of IMPACT to reduce work and reduce the time to completion. That was a principal reason for the Inferred classification, which could otherwise have been higher with minor additional work. Statistics by each domain for each metal and by domain were evaluated and in part used to determine capping levels. Capping levels were determined for each metal in each domain, using quantile plots and considering coefficients of variation.

The differences between the previous 2011 publically reported tonnes and grade at Capire and those reported as the current resources here are substantial. The Base Case resources reported in this new estimate are much smaller than those previously reported, in part because the current resources were estimated with tighter constraints, both geostatistical and geological, and in part because they lie within an optimized pit shell and exclude additional mineralization lying at deeper levels. Much of this deeper mineralization was included in the 2011 estimate. That deep mineralization may be available for potential underground development but that remains to be studied and is not included in the current resource tabulation.