Pan American Navidad Project

Navidad is a development stage silver property located in Chubut, Argentina.

Pan American acquired the project in 2010 through the acquisition of Aquiline Resources Inc. Silver, lead, and minor amounts of copper mineralization are present as epithermal, stratiform veins and disseminations

A preliminary economic assessment completed in 2011 anticipated a daily production rate of 15,000 tonnes per day from open pit mines at Navidad’s eight known deposits using shovels and trucks. The mine schedule, based on the mineral resources, was anticipated to last nearly 15 years after a pre-production and construction period, with an additional 18 months of re-handling ore from a low grade stockpile for plant feed after mining is completed. The anticipated processing plant design includes a 15,000 tonne per day capacity mill with flotation and concentrate filtration, producing a copper-silver concentrate and a lead-silver concentrate.

The Navidad project remains on care and maintenance since the fourth quarter of 2013. In 2015, we spent a total of $6.8 million at Navidad on holding and maintenance costs.

The Province of Chubut passed a law in 2003 (Law 5001) that prohibits open pit mining and the use of cyanide in mineral processing in the entire province, effectively preventing the development of Navidad. To date, this law remains in place.

The Navidad Technical Report, on which the foregoing is based, is a preliminary economic assessment. The results of this preliminary economic assessment are preliminary in nature, in that it includes inferred mineral resources that are considered too geologically speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the assessment will be realized. Mineral resources that are not mineral reserves have no demonstrated economic viability.

The Navidad project budget assumes that the law in the Province of Chubut would not be amended in a manner which encourages further investment at this stage and hence, our activities at Navidad are guided by an investment plan which focuses primarily on satisfying the legal requirements necessary to maintain our property interests under the current mining law. We plan to continue with such maintenance requirements and remain committed to Navidad and to contributing to the positive economic and social development of Chubut, should a favourable legislative framework be adopted.