Your Questions, Our Answers

A: Actually, neither Guanaceví nor Bolañitos had any mine life (no reserves or resources) when we bought them, and El Cubo's mine life was very short, so you may also wonder how we managed not only to restart the mining operations but grow the production on a regular basis. What we recognized at each mine site was that even though these mines had prolific histories of small scale production, they had received very little modern exploration and we thought the exploration potential for new discoveries was excellent.

Over the past 11 years, we have established an enviable track record of making new discoveries to drive organic growth, and we remain bullish on the potential to extend the mine lives of our operations. Due to the geological nature of underground mines, our mine lives will always be considered short compared to larger open pit mines, and our higher-grade epithermal vein ore-bodies are more reasonably explored and developed over a number of years, hence the smaller annual reserves and resources.

Last year, we once again replaced our silver reserves by underground development and expanded our silver resources by surface drilling. Another reason why our mine lives may be shorter than some peers is our conservative approach to reserve estimation. We do not estimate reserves based on drilling, only on driving tunnels, and given how much time and money are needed for underground development, it just makes better sense to convert resources to reserves on an annual basis.

At Guanaceví, we discovered two new zones of high grade silver-gold mineralization in 2014: Porvenir Centro adjacent to the main Santa Cruz mine ramp, and Santa Cruz Sur just south of our producing Santa Cruz mine. At Bolañitos, exploration drilling successfully delineated the LL-Asunción orebody, which is now in development with production expected to begin this year. At El Cubo, we made the new Villalpando-Asunción discovery in 2013, delineated it last year and it is now the anchor of our current production.

While we have many exploration targets at the three mine sites yet to be tested, it is certainly true that each mine will ultimately run out of ore. However, we are not there yet and our focus continues to be squarely on extending our mine lives through our brownfields acquisition and exploration strategy.