PROPERTY:

HISTORY

From 1995 to 2016

From 1995 to 2015, fifteen (15) exploration programs, including three integrated exploration programs with geological mapping, surface sampling, geophysical surveys, and drilling as well as twelve (12) drill only programs were undertaken on Nieves by four explorers:

Kennecott Exploration, 8 RC holes 1995-1998; Western Silver, 5 RC holes 1998-1999; Quaterra Resources 14 core holes; Quaterra/Blackberry JV 181 holes, 2004-2006 for a total of 208 holes drilled.

Kennecott Exploration 1994 and 1996

In the early 1990’s, a group of Mexican concessionaires (Abelardo Garza Hernandez, Noel McAnulty and Bill Shafer) assembled a land position in the area and presented it to Kennecott which signed the option agreement on January 16th, 1995. Exploration work completed by Kennecott included geologic mapping, surface sampling (535 rock samples and 131 rock chip samples), three soil surveys, geophysical surveying (airborne and ground magnetic surveys, IPR survey, controlled source audio-frequency magneto-telluric survey) and reverse circulation (RC) drilling of the San Gregorio, California and Orion West veins.

 In 1995 and 1996, 8 drill holes (NV01 to NV08) were drilled totaling 1532.5 m. The drilling intersected several zones of significant silver mineralization hosted by two distinct styles of mineralization. Drill hole NV08 in the California area intercepted two separate 2m intervals of

high grade silver vein mineralization that returned assay values of 367 g/t and 795 g/t of silver at depths of 108m and 116m, respectively. In contrast, drill hole NV03 intersected a large low grade zone of silver mineralization at a depth of 180 m depth that averaged 82 g/t silver over 28 m. Drill hole NV03 also encountered a high grade silver vein at 148 m depth that returned 254 g/t silver over 2 m. Drill hole NV06 also encountered a large zone of low-grade silver mineralization that returned 67 g/t silver over 68 m.

 

Kennecott conducted several geophysical surveys including airborne and ground magnetic surveys, a single dipole-dipole induced polarization and resistivity (IPR) line and seven controlled source audio- frequency magneto-telluric (CSAMT) lines. No results were available to the author.

Western Copper Exploration in 1997 and 1998

On March 13th, 1998, Kennecott transferred its rights under the Nieves option to Western Copper in consideration for an uncapped 2% NSR on certain core concessions and a 1% NSR royalty on others. Before assigning its rights to the Nieves Project to Quaterra on March 26th, 1999, Western Copper drilled 5 RC holes testing the California vein system. The holes were drilled in the area around hole NV08. Western Copper also

twinned hole NV08 and reproduced similar assay values for the intercepts reported by Kennecott including 890 g/t Silver over 1.0 m in drill hole WCNV01. Holes drilled to intercept mineralization below drill hole NV08 returned assay values of 841 g/t silver over 0.45 m, 109 g/t silver over 0.8 m, and 1,081 g/t silver over 0.35 m in drill hole WCNV04.

Quaterra Resources Exploration in 1999 and 2000

Western Copper transferred its rights to the Nieves Property to Quaterra on March 26, 1999. In 1999 and 2000 Quaterra completed an exploration program consisting of geological mapping, sampling and drilling. Quaterra completed 10 drill holes on the Concordia and Gregorio North veins in conjunction with surface mapping

and sampling programs during 1999 and 2000 and deepened four holes. Significant reported drilling results drill hole QTA-1 reported 204 g/t Au from a 9.14m interval, drill hole QTA-3 reported 243 g/t Au from a 3 m interval, and drill hole, QTA-4 reported 36.5 m interval with 98.18 g/t AU.

Quaterra and Blackberry Exploration 2003 - 2014

On April 10th, 2003, Quaterra completed a US$1.5 million limited partnership financing with Blackberry, whereby Blackberry could earn a 50% interest in the Property by funding two exploration programs of US$750,000 each, which was fulfilled. In 2006 Quaterra and Blackberry signed a joint venture agreement and have jointly contributed to all exploration costs subsequently incurred.

 

Exploration between 2003 and 2010 by Quaterra and Blackberry included air photograph interpretation, surface sampling, field work, two geophysical surveys, six drill programs and three 43-101 independent technical reports, two of which include 43-101 compliant resource estimations.

 

In November and December 2003, Quaterra and Blackberry completed a geophysical survey consisting of 10 lines (6.6 km in length) of CSAMT and Controlled Source Induced Polarization (CSIP) for a total of 66 line-km. In addition, a Ground Magnetometer survey was completed consisting of 12 lines including the 10 lines surveyed with CSAMT for total of 76 line-km of magnetic surveying. The work was performed by Zonge Engineering and Research Organization of Tucson, Arizona (Job No 0319). The CSAMT survey greatly extended coverage of the survey completed in 1995 and 1996 by Zonge Engineering on behalf of Kennecott. The survey identified several prospective anomalies, a number of which correspond to areas of known mineralization, but extend far beyond the limits of previous drilling (Quaterra News Release February 3, 2004).

The CSAMT survey identified six conductive features, three of which correspond to the areas of known mineralization along the Santa Rita, San Gregorio and Majada veins, the rest were previously unknown. These conductive zones coincide with some of the IP anomalies. The anomalies are interpreted to represent mineralization, have a southwest-northeast trend extending for distances up to 3.5 km and spaced at intervals of approximately 1,000 meters from north to south across the Nieves property.

The survey also identified a large undrilled IP anomaly west of San Gregorio and several smaller untested anomalies in the adjacent areas.

Between May and August 2010, Quaterra and Blackberry conducted a geophysical survey performed by Zonge Engineering (Job No. 10094). The survey consists of 25 lines utilizing dipole-dipole or pole-dipole IPR (Induced Polarization and Resistivity) arrays, covering the Concordia-San Gregorio-Delores vein system (14 lines); east extension of Santa Rita vein system (4 lines); the California vein system (4 lines); Manto-1 CSAMT target (1 line); and the El Rosario mercury occurrence (2 lines).

The results of the survey indicate the Concordia and San Gregorio are two separate veins and not fault offsets of the same vein, and identified strong anomalies along strike to the east and west of both veins that have not been drilled. the San Gregorio vein appears to be the eastern extension of the Orion vein, which is generally unexplored and under-explored for a distance of over 2,500 meters.

The results of the survey east of the historic mine at Santa Rita vein indicate a zone of anomalies extending eastward a distance of 1,000 meters. The results from the two lines surveyed at the El Rosario mercury occurrence identified narrow zones of weak IP anomalies.

Mapping and sampling was completed to follow up the geophysical anomalies. The most interesting area was identified in the West Santa Rita, where mapping identified two groups of narrow, sub-parallel 2 to 30 centimeter wide calcite-quartz veinlets, some of which contain strong gold and silver mineralization. Gold values are up to 8.11 g/t over 0.2 m and silver values are up to 253 g/t over 0.4 m.


Quaterra and Blackberry completed two phases of drill programs between March 2010 and October 2011, consisting of 73 drill holes and totaling 18,547.25 m. Most of the drilling concentrated on the Concordia-Dolores-San

Gregorio vein system, but a significant amount of drilling is located in the California and Santa Rita vein systems as well.

The drill program was very successful at increasing the size of known mineralized zones along all the major vein systems. Mineralization along the Concordia vein system was extended an additional 400 m, to a total of approximately 1,300 m. The length of known mineralization along the California vein system was increased to a total of approximately 550 m and it remains open to the east. Drill programs were successful in doubling the strike length of the Gregorio North mineralized zone located north of the San Gregorio vein, extending the strike length of the mineralized zone to approximately 1,200 m. A total of 15 drill holes systematically tested the Santa Rita vein system over 500 m along strike, and the total length of mineralization was extended to approximately 750 m and remains open to the west.

 

The best intersections include 149 g/t Ag and 0.11 g/t Au over 31.25 m, which includes 6,320 g/t Ag and 1.82 g/t Au over 0.25 m in drill hole QTA123 along the Concordia West vein, 104 g/t Ag over 19 m, including 6,410 g/t Ag over 0.1 m and 5,960 g/t over 0.1 m in drill hole QTA137 along the California vein, and 152.2 g/t Ag and 0.12 g/t Au over 57 m in drill hole QTA144 in the Concordia West area.

 

Drilling by Quaterra and Blackberry started in 2004 and included six drill programs consisting of 72 drill holes, totaling 34,048.43 m. Holes were drilled on every vein system on the property, but most of the veins concentrated on the Concordia vein system, where the resource was estimated.

 

Most of the drill holes were planned to target geophysical anomalies, to extend the known mineralized zones in length and depth and for in-fill drilling to increase the confidence in the resource estimation.

 

The drill programs were very successful and extended the known mineralized zones in several areas. The Concordia vein system was extended to at least 1,100 m along strike and 400 m down dip.

Significant Intercepts Along the Orion Vein

"The fact that you could step out a kilometer and drill those three holes that we did at Orion and still hit high grade shows you that this thing is not vectoring down to the west but, if anything, it's increasing to the west."

Dr. Thomas Patton, Lead Geologist

There have been 11 drilling campaigns executed over the past 13 years. During the tenth campaign, three core holes — holes 190, 191 and 192 — were drilled on the Orion vein 1,000 meters west of the proposed pit area. All three holes, separated by 200 meters, intersected a meter or less of very high grade silver. Drill hole 190 (above) intersected 54 ounces of silver per ton over .9 of a meter while the other two holes intersected 8 and 9 ounces, respectively. The mountain in the distance is where the pit is planned.

Blackberry Exploration 2015 - 2016: 

Airborne and Land Based Property-Wide Geophysical Survey

• In February 2015 Geotech completed an airborne VTEMplus survey of the entire Nieves Silver Property consisting of a total of 1146 line-km at a 200 meter spacing between lines. The survey collected magnetic field and time domain electromagnetic field (TEM) data for processing and modeling.

• The most notable feature to emerge from the survey was a large, ovoid magnetic low anomaly with dimensions of 1,900 meters by 1,000 meters, which is located at the western end of the central vein system (the Concordia-Gregorio) which includes the “drill indicated” Ag (silver) within the Concordia vein. This magnetic low lies midway between the Orion-Gregorio vein, where drill hole QTA 190 intercepted bonanza grade silver (54.5oz/ton), and the Santa Rita vein system to the south, where gold has been mined from gold-silver veins as recently as 1980, which is thought to be the center and source of the extensive mineralization previously encountered on the property. The most likely cause of the magnetic low anomaly is an intrusive rock, breccia or hydrothermal alteration, or combination thereof.

• Two zones of increased  (higher) magnetite located north and south of the low may be hornfels or magnetite-bearing skarns peripheral to the intrusion or breccia which need to be tested for gold.

 

• A magnetic field low within a mining district is often of interest, but unless there is a sulfide system closely associated with the low it remains little more than a curiosity until it is drilled or surveyed. The best geophysical indicator of a hidden metallic sulfide zone is a properly configured inverse polarization (IP) survey. The IP method is very sensitive and very accurate. This method has evolved to the point that geophysicists

no longer talk in terms of “anomalous IP zones”, but rather in terms of sulfide zones.

 

• Three 8,000 ft. northwest-southeast lines of induced polarization were subsequently run over the magnetic low anomaly depict a strong chargeability anomaly coincident with the massive observed magnetic low anomaly beginning at depth on all three lines. This means the anomaly is caused by the presence of sulfide minerals, which could be entirely pyrite or more likely a combination of pyrite and other sulfide carrying values in gold and silver. It is probable that the mineralization in the known vein systems, including the 110 million ounce silver resource found in the Concordia Vein System, is peripheral leakage from a concealed mineralized system at depth recognizable only by coincident magnetic low and IP high anomalies.

• The 2015-2016 Geophysical Survey found:

     - That the three known major braided vein systems,

       the California, Concordia, and Santa Rita extend 8km

       west, 10km east to west;

     - Three untested veins located south and southeast of

       the vein swarm known as the Santa Rita;

     - Two interesting magnetic lows near the west edge of

       the survey, located 9-10km west of the Central Vein

       System at Nieves, the Concordia.

There is limited past exploration in this area. Though the source of the magnetic features is unknown, it was considered important enough to stake an additional claim of 1873.4 hectares (4,460 acres) to protect the property for future exploration work. These anomalies will be tested to determine if the magnetic lows contain sulfides and silver mineralization – more importantly if they identify the intrusive source of Nieves silver resource.