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The San Jose silver-gold mine is located in Argentina, in the Santa Cruz province, 1,750 kilometres south-southwest of Buenos Aires. The property covers a total area of 50,491 hectares and consists of 46 contiguous mining concessions totalling 40,499 hectares and an exploration permit covering almost 10,000 hectares. The San Jose property is located approximately 20 kilometres north of Goldcorp’s Cerro Negro project.

History

Historical ownership and exploration of the San José Property are summarized below. There is no formally-recorded exploration on the Property prior to work carried out by Minera Andes Inc. (acquired by McEwen) in the late 1990s. The Property was acquired by Minera Andes in 1997, after a regional structural study and prospecting program uncovered areas of Landsat colour anomalies, and coincident anomalous gold and silver values. Based on these results, Minera Andes embarked on an exploration program commencing in 1997.

1997 to 2001, Minera Andes

5-year program consisting of prospecting; soil sampling; stream sediment sampling; mapping and sampling; trenching and channel chip sampling. IP/Resistivity (74 line km) CSAMT (42 line km) and magnetic surveys (186 line km) by Quantec Geofisica Argentina S.A. RC drilling (85 holes) and diamond drilling (3 holes); alteration studies (Portable Infrared Mineral Analyzer); metallurgical studies; discovery of Saavedra West and Huevos Verdes Zones, plus numerous prospects.

2001 to 2003, Minera Santa Cruz S.A.

Joint venture company created between Minera Andes and Hochschild; 2 year program consisting of surveying; IP/Resistivity (45 line km), and Real Section IP (20.25 line km) surveys by Quantec Geofisica Argentina S.A.; diamond drilling (30 holes); further definition of the Huevos Verdes Zone; mineral resource estimates at Huevos Verdes and Saavedra West vein and breccia zones.

2003 to 2004, Minera Santa Cruz S.A.

Hochschild vested at 51 % ownership; 2 year program consisting of underground development at Huevos Verdes Norte and Huevos Verdes Sur; surface rights land purchasing; road construction; diamond drilling (39 holes); program further outlined the Huevos Verdes Zone and resulted in the discovery of the Frea Zone.

2004 to 2005, Minera Santa Cruz S.A.

Definition-style diamond drilling (144 holes). Initiation of Feasibility Study including mineral resource and mineral reserve estimates at Huevos Verdes and Frea managed by MTB Project Management Professionals Inc. of Denver, USA, includes mine design, capital and operating cost estimation, metallurgical, geotechnical environmental EIA and social studies by Vector Argentina, AMEC retained to do resource audit; continued underground development on 480 and 430 levels at Huevos Verdes Norte and Huevos Verdes Sur; IP/Resistivity (215 line km) surveys; additional 38 diamond drill holes to test regional targets.

October 2005, Minera Santa Cruz S.A.

Completion of Feasibility Study in October 2005, decision to proceed to production was made on March 28, 2006.

November 2005 to June 2006, Minera Santa Cruz S.A.

Phase 1 and Phase 2 drilling at Kospi Vein (128 holes); EIA approved by DPM on March 1, 2006; continued underground development (ramp construction and drifting at Huevos Verdes Sur and Frea); Granting of Environmental Permit, production decision (March 28, 2006); change of metallurgical processing and recovery methodology to a Gekko system; supporting metallurgical test work; mine construction, permitting

July 2006 to September 2007, Minera Santa Cruz S.A.

Ongoing plant and infrastructure construction, continued mine development, mineral resource/mineral reserve estimation (Huevos Verdes, Frea, Kospi), continued metallurgical test work, official mine opening (June 26, 2007), continued drilling of regional prospects.

September 2007, Minera Santa Cruz S.A.

Preparation of a technical report by AMEC, including a mineral resource and mineral reserve estimation with effective date of December 31, 2006

October 2010 to December 2010, Minera Santa Cruz S.A.

Drilling focused on extending Micaela, Luili; Susana, Rml and HVSur veins in order to identify new areas of mineralization and extensions. Drilling was also undertaken at the Saavedra Oeste prospects to identify new veins and mineralization. Ground magnetic survey conducted over 342 km. 4 lines of IP totalling 19.45 km conducted on North block. 19 lines of IP totalling 99 km conducted on South block.

January 2011 to December 2011, Minera Santa Cruz S.A.

Drilling focused on the Pilar, Luli, Antonella, Rml 861 A, Dalila and Sanson veins, in order to increase resources and Infill drilling on known Veins Micaela, Sofia, Luli, HVN A, Ramal A, Ramal Ayelen and Susana. This drilling identified new exploration targets, Pluma and Linea 4.

January 2012 to December 2012, Minera Santa Cruz S.A.

Drilling focused on increasing resources on the Pilar veins while new exploration targets were identified in the Emilia, Estela and Esperanza veins. 3 lines of IP/resistivity totalling 23 km were conducted and 3 lines of pole-dipole IP totalling 20 km were conducted on the Property.

Regional Geology

The Property is located in the northwest corner of the 60,000 km2 Deseado Massif of the Santa Cruz Province, Argentina. The Deseado Massif consists of Paleozoic metamorphic basement unconformably overlain by Middle to Upper Jurassic bimodal andesitic and rhyolitic volcanics and volcaniclastics. Cretaceous sediments and Tertiary to Quaternary basalts overlie the Jurassic volcanics.

Jurassic magmatism in the Deseado Massif accompanied extensional tectonics marked by normal faults, horst and graben formation, and block tilting during the opening of the southern Atlantic Ocean. Several small basins formed after the main volcanic episodes, a consequence of intense diastrophic block faulting. Continental sediments were deposited in the Upper Jurassic to Lower Cretaceous in those basins, represented by tuffaceous sandstones, tuffites, limestones, conglomerates, and shales. Low sulphidation (“LS”) epithermal silver-gold deposits accompanied magmatism and deformation. Basaltic plateau volcanism was dominant during the Tertiary span, coupled with minor marine ingressions that produced the deposition of sandstones, shales and fossiliferous limestones. Intrusive rocks are scarce in the area. They are represented by irregular bodies of rhyolitic porphyries that intrude the main silicic volcanic units, and by basaltic plugs that pierce the whole sequence.

Large amounts of intermediate to silicic volcanics were erupted in the Jurassic, in a sub-aerial, cratonic back-arc tensional environment. These volcanics are subdivided into the Bajo Pobre Formation, predominantly of intermediate to basic composition, and the felsic Bahia Laura Group that discordantly overlies the Bajo Pobre Formation. The Bahia Laura Group is further subdivided into the interdigitating Chon Aike Formation (dominantly ignimbrites) and the La Matilde Formation (dominantly volcaniclastics).

The volcanic rocks of the Deseado Massif host the producing silver-gold mines of Cerro Vanguardia, Marta Mine, Manantial Espejo and San José, as well as the prospects and development projects of Cerro Negro, Lomada de Leiva and La Josefina. The principal host rock for silver and gold mineralization in the San José district is the Bajo Pobre Formation where veins are typically developed in competent andesite flows, and to a lesser extent, in volcaniclastic units.

Geology of the Deseado Massif, Argentina

Geology of the Deseado Massif, Argentina

Property Geology

Bajo Pobre Formation (Upper Jurassic)

The Jurassic Bajo Pobre Formation at around 145-150 Ma is the lowermost stratigraphic unit on the San José Property and is assumed to underlie the entire area. It is the main host of Au and Ag mineralization at the Huevos Verdes, Frea, Kospi and all other vein deposits at San José as well as many regional prospects. The formation also hosts some of the mineralization at Saavedra West Zone.

The formation comprises a lower andesite volcaniclastic unit and an upper andesite lava flow and has a maximum thickness of 120 m. A dacitic, hornblende-megacrystic lava flow of restricted extent has been identified but its stratigraphic position within the Formation is unknown.

An epiclastic environment is inferred for the andesitic volcaniclastic unit, supported by the chaotic change in facies. This unit is generally pervasively altered and commonly has at least a propylitic overprint. Age dating of the volcaniclastic and lava flows indicates a hiatus of around 5 Ma between the two volcanic events. The andesitic and dacitic lava flows discordantly overlie the volcaniclastics. The andesitic lava flow has a thickness of up to 50 m. These flows are massive, with columnar jointing and auto-breccia textures where weathering and hydrothermal alteration is concentrated.

Bahia Laura Group - Chon Aike & La Matilde Formations (Upper Jurassic)

The andesitic volcanics are discordantly overlain by volcanic rocks of the Bahia Laura Group. Subdivision of the Group into the Chon Aike and La Matilde Formations is not well defined on the Property, and in some earlier reports the formations have been grouped together and referred to as the Chon Aike Formation (Colquhoun et al. 2007) and this practice is adopted in the section below.

Previously, outcrops of the Chon Aike Formation were thought to be restricted to geologically-mapped areas to the north of the Rio Pinturas valley and in the Saavedra West area. However, mapping of a widespread tuffaceous unit overlying the Bajo Pobre Formation by Dietrich et al. (2004), indicated that these rocks may belong to the tuffaceous facies of either the Chon Aike or La Matilde Formation.

The Saavedra West basin is interpreted to be a syn-volcanic graben, possibly a caldera, developed within the Bajo Pobre Formation and infilled by pyroclastics correlated with the La Matilde Formation. Pebble dykes are abundant within the graben, and ignimbrites that may be correlated with the Chon Aike Formation occur as dykes along one edge. In the Saavedra West area, the thickness of the Group is around 80 to 100 m, however at Huevos Verdes, La Sorpresa and Rio Pinturas the thickness is only 15 to 20 m. Pyroclastic rocks of the Chon Aike Formation are laterally extensive. Age dating of the ignimbrites within the Chon Aike Formation gives ages around 147-151 Ma, younger than the age of the volcaniclastic sequence but older than the andesitic flows of the Bajo Pobre Formation.

Where this Group is overlain by sedimentary rocks of the Cretaceous Castillo Formation, the upper contacts of the Chon Aike Formation are concordant. However, this contact is discordant with the overlying Tertiary flood basalts of the Alma Gaucha Formation.

Post-Jurassic Geology

Deposition of Cretaceous sedimentary rocks of the Castillo Formation is interpreted to be controlled by block faulting which created small, normal fault-controlled depressions. Thickness of the formation varies, but is generally between 5 to 80 m and decreases towards the south. The formation is divided into three members, with the lowermost member redefined as a tuffaceous deposit belonging to the Chon Aike Formation.

The north-western part of the Deseado Massif is covered by an extensive area of Tertiary-aged basalts with at least two basaltic episodes recognised in the San José region. The Upper Oligocene Alma Gaucha Formation occurs as uniform flat-lying flood basalts up to 30 m that cover a significant portion of the Property. Recent basaltic flows from the Cerro Portuguese volcanic centre form lava flow channels that overlie the flood basalts.

Glacially-derived, unconsolidated till deposits up to 50 m in thickness occur predominantly in the Rio Pinturas valley.

Geology of the San José Property

Geology of the San José Property

 Structural Geology

 

The district surrounding San José is transected by two north-northeast striking major lineaments. The Rio Pinturas lineament follows the Rio Pinturas valley and is one of the main structural features of the Deseado Massif. This lineament can be traced for over 100 km. A second, sub-parallel lineament is located 2 km east of the Rio Pinturas lineament.

The main structural trend of fault and vein systems on the Property is west-northwest to north-northwest. Less prominent are east-striking faults and veins and those north to northeast striking.

The vein systems at Huevos Verdes, and possibly also those at Frea, developed along north-northwest striking (average orientation of 325° / 65° NE) sinistral strike-slip faults that were reactivated during Triassic rifting. The Huevos Verdes vein system is known to be composed of three main segments along strike.

Variations of vein orientation in bends and jogs along, and in between, sub-parallel sinistral faults control vein width and mineralization style.

Sinistral shearing along the north-northeast striking lineaments such as Rio Pinturas may have resulted in overall extension within the bounding blocks that host the San José mineralization, facilitating formation of structural openings along re-activated faults of favourable north-northwest strike.

Alteration

Alteration is typically a LS epithermal with silicification accompanying all of the veins and fractures and occurring as a narrow alteration halo, generally surrounded by an extensive zone of intermediate argillic mixed with phyllic alteration. Strong argillic alteration is interpreted to be a supergene overprint of the propylitic halo with disseminated pyrite.

Mineralization

Mineralization in the vicinity of the Property occurs as LS epithermal quartz veins, breccias and stockwork systems accompanying normal-sinistral faults striking 330° to 340° and conjugate dextral faults. Most of the known mineralization at the Property is hosted by the Jurassic Bajo Pobre and Chon Aike Formations.

Veins And Vein Systems

Regional exploration has identified numerous vein targets, of which five, Huevos Verdes, Frea, Kospi, Ayelén and Odin have been extensively explored by surface diamond drilling and subsequently developed by underground mining.

After reviewing the various drilling programs, Colquhoun et al. (2007) concluded the Frea and Kospi Veins were the most significant zones in terms of grade and tonnage. The mineralized Frea has been traced over a 1,200 m strike length and to depths of up to 250 m, with an average width of up to 2.5 m (Colquhoun et al. 2007, Minera Andes News Release, September 2, 2008). The Kospi Vein has been traced for over 1,300 m strike length (Mach and Elliott 2009) and to depths of up to 230 m, with an average width of around 3.0 m.

Huevos Verdes

The Huevos Verdes vein system is one of the most important targets on the Property consisting of three to four discontinuous zones: Huevos Verdes Norte (“HVN”), Huevos Verdes Sur (“HVS”), Huevos Verdes Centro (“HVC”) and Huevos Verdes Ramal (“HVR”). The system is comprised of an array of sub-parallel veins striking 325° with dips ranging between 45° and 75° to the northeast that can be traced almost 2,000 m along strike. Mineralization is hosted by the Jurassic Bajo Pobre Formation, close to the contact of andesitic lava flows with underlying volcaniclastics.

The veins pinch and swell and have numerous bends and jogs. Several sub-parallel veins and splays off the main vein have been identified. The width of the vein zone is variable, ranging from less than 1 m to around 15 m. With the exception of limited outcrops of the HVS, the remainder of the veins are blind targets, below a cover of Tertiary basalt layers of up to 50 m.

Within the HVN and HVS zones, the strongest mineralization is restricted to sub-vertical 50 to 80 m long ore shoots which can extend 50 to 200 m vertically. The location of these shoots may locally correspond to structural bends and jogs.

High-grade portions of the veins consist of banded to mottled quartz with irregular sulfide bands mineralized by fine-grained argentite and pyrite. Ruby silver and native silver are locally observed. The base metal content (zinc, lead, copper) of the veins and the amount of sphalerite, galena and chalcopyrite tends to increase with depth.

Huevos Verdes North (HVN)

The main HVN vein is irregularly-shaped and pinches and swells along the 400 m of strike. The vein width varies between 0.5 to 4 m and the dip ranges between 65° to 70° to the north-northeast. The vein and surrounding host rocks have associated strong illitic and argillic alteration with minor propylitic and potassium feldspar alteration.

The northern and southern extents of the vein have been closed off by drilling. At depth, mineralization is mostly closed off, except at the northernmost end of the zone. This zone is the weakest mineralized structure of the three Huevos Verdes zones. The strongest levels of gold and silver mineralization are restricted to two principal sub-vertical shoots, which are each approximately 50 to 80 m long and can be traced approximately 150 to 200 m vertically.

Huevos Verdes South (HVS)

The HVS vein has been traced for approximately 520 m along strike and ranges in width from 0.5 to 3 m. The dip of the vein ranges from 42° to 75° to the north-northeast and the strike varies from 100° to 190°. The change in orientation may explain the better mineralization and higher gold and silver grades at HVS compared to the HVN vein. Four main sub-vertical shoots, up to 80 m long horizontally and up to 200 m vertically appear to control the majority of the mineralization. Mineralization is open to the northnorthwest, and, similar to the HVN, gold and silver grades are strongest in the uppermost parts of the vein and appear to decrease with depth.

Huevos Verdes Central (HVC)

The HVC vein has been traced approximately 400 m along strike and ranges in width between 0.5 to 5.0 m. The dip of the vein ranges from 70° to 75° to the north-northeast. The strongest mineralization is restricted to a gently plunging ore shoot 40 to 70 m in width. The shoot has been traced for almost 300 m and remains open at depth.

Huevos Verdes Ramal (HVR)

The HVR vein has been traced approximately 200 m along an east-west strike and ranges in width from 1 to 3 m. The vein is located between the HVC and HVS and has been traced vertically for 250 m.

Frea Vein

The Frea vein is hosted in Jurassic volcanics and controlled by northwest trending faults. The vein is a blind target below Cretaceous sediments and Tertiary basalts, discovered in 2003 as a result of test drilling an IP/resistivity target. The vein has been traced approximately 1,200 m along its northwesttrending strike and vertically to 200 m. The width of the vein varies from 0.5 to 7 m and dips at approximately 52° to the northeast. The vein remains open in all directions except the northwest extension, which is closed off by drilling.

Kospi Vein

The Kospi vein is also hosted by Jurassic volcanics and controlled by northwest trending faults, however, it dips to the southwest at about 70°. Kospi is also a blind target beneath Cretaceous and Tertiary cover rocks, discovered in 2005 as a result of drilling an IP/resistivity target. The vein has been traced for approximately 1,300 m along its northwest strike at 308° and vertically to 230 m. The thickness of the vein ranges from 0.25 to 9.5 m. The vein remains open to the southeast but is closed off by drilling in its northwest extent.

Odín and Ayelén Veins

The Odín and Ayelén veins are the two most north-easterly northwest-striking sub-parallel systems that have been drilled. As a result of the 2008 drilling program, Odín has been traced approximately 1.6 km along strike and Ayelén 1.2 km along strike, with both dipping to the southwest (Minera Andes News Releases, September 2, 2008 and January 9, 2009). Mach and Elliott (2009) reported an extension to these veins of 1.9 km for Odín and 1.6 km for Ayelén. Both of these vein systems were discovered by test drilling blind geophysical targets. The Odín vein remains open to the west along strike and at depth where it has been tested to 200 m.

Luli and Susana Veins

The Luli and Susana veins are part of an E-W trending vein system that has an orientation different from the typical northwest trend of all other veins at San José. This system does not outcrop. The Luli Vein has an inferred strike length of 1,300 m and the Susana Vein has an inferred strike length of 1,200 m.

Micaela Vein

The Micaela vein has been traced approximately 1,000 m along an east-west strike and ranges in width from 1 to 4 m. The vein has been traced vertically for approximately 200 m.

Structural Controls On Mineralization

The most important control on mineralization at San José is structure, which governs the formation and opening of faults and fractures, and the creation of open space during the mineralizing events.

Huevos Verdes veins have the best developed ore shoots with respect to grade and width at strike directions of 320° to 305°. Vein segments with strikes greater than 325° usually lack significant mineralization and are characterised by brecciation and fault gouge. These findings led to the conclusion that the Huevos Verdes vein system developed in a sinistral strike-slip setting. Counter-clockwise bending of a sinistral strike-slip fault creates a dilational setting, whereas clockwise bending creates awhereas increased tectonic friction with fault gouge and brecciation will develop preferentially in a compressional setting along clockwise-rotated bends. With respect to the Huevos Verdes system, the best mineralization will generally occur where structures bend counter clockwise from the average strike (less than 325°). Mineralized shoots would be expected to occur along the vein system where vein strike bends towards less than 325°.

Early north-northwest striking normal faults were formed in the region in response to Permian-Triassic rifting (Dietrich et al. 2005). Dextral east-west to west-northwest-trending wrench faulting associated with mineralization in the Deseado Massif occurred at 150 to 125 Ma. The Huevos Verdes vein system formed as sinistral extension fissures within this dextral wrench fault system. The Permian-Triassic northnorthwest trending faults were reactivated and became hosts to mineralization.

The Huevos Verdes system is discontinuous and displays counter-clockwise bending at the tips of mineralized sections. This geometry is interpreted to reflect formation of mineralized tension fissures with sinistral strike-slip displacement in between dextral master wrench faults. The bending indicates proximity to dextral east-west trending master faults. Dextral wrench faulting is thought to have occurred during mid- to upper-Jurassic times in the region and related to the early opening of the southern Atlantic. Outcrops of east-west striking, weakly-to-unmineralized quartz veins are exposed in the intermittent segments between the three zones of the Huevos Verdes system. East-west trending lineaments are rare but are present in the northwestern Deseado Massif.

Sinistral, north-northeast striking lineaments on the San José Property, limit the known occurrences of the north-northwest striking mineralized veins such as Huevos Verdes. The Rio Pinturas and the San José lineaments form a prospective corridor, with no known mineralization either east or west of this corridor.

Litho-stratigraphy may also play an important role in governing mineralization where certain lithostratigraphic horizons favoured the opening of fractures. Mapping in the Pluma Zone noted that the fracturing of rocks is far more intense in andesitic lava flows than in underlying volcaniclastic rocks. Fracture-controlled wall rock alteration and mineralization is more pronounced in the lava flows. Host lithology may be a factor controlling the depth of mineralized shoots.

Structural Lineaments on the San José Property

Structural Lineaments on the San José Property

The structure at the Saavedra / Saavedra West (Discovery Hill) deposits has been interpreted to be a synvolcanic graben, possibly a caldera that developed within the Bajo Pobre Formation and infilled with sedimentary rocks of the La Matilde Formation (Colquhoun et al. 2007). A series of N-NW trending steeply dipping gold-silver quartz veins and siliceous structures occur at Discovery Hill. These veins may have been emplaced along graben-bounding faults. This trend is sub-parallel to that at Huevos Verdes and IP / resistivity surveys have traced this trend from just northeast of Discovery Hill to a point that occurs 100 m directly southwest of the HVS zone.

Cross-Section Showing the Horst and Graben Structure at San José

Cross-Section Showing the Horst and Graben Structure at San José

Deposit Types

The San José deposit is considered to be a typical low sulphidation (“LS”) silver-gold epithermal deposit.

 

San Jose resources and resrves 31.12.2018

Source: Technical repory on the San Jose Silver-Gold mine for McEwen Mining Inc. by P&E Mining Consultants Inc. 2015; Annual results final 2018 Hochschild mining

 

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