El Rayo Project

Primary Silver & Gold
10,036 hectares - 100% title interest

Click here for PDF: PDAC Presentation by Steve Priesmeyer

Video version with audio: PDAC Presentation by Steve Priesmeyer

Click here for PDF: NI 43-101 El Rayo Project Report

Click here for PDF: Location, History and Geology

The El Rayo Project is located near the town of Guachinango in Jalisco, Mexico and is the site of some of the earliest silver mining in Mexico. The Project hosts numerous mineralized structures where silver, gold and lead were extracted from several underground mines, beginning in the mid-1500's.

Soltoro acquired the Project in 2005 and began drilling in 2007. From 2007 through 2010, Soltoro's primary focus was on the Las Bolas, Catarina-El Rayo and Highway structures, where much of Soltoro's current silver resource is located. Silver and gold mineralization has been traced in these structures over an aggregate distance of more than five kilometers.

In 2011, drilling focused on defining a resource on the high-grade La Soledad structure. Concession-scale geologic mapping, soil sampling and ground magnetics programs were also initiated in late 2011 and continued throughout 2012. Several targets were identified as a result of this work, including the Piedras Amarillas and Mascotas areas (see below).

In December of 2011, Soltoro released an updated NI 43-101-compliant resource estimate, completed by Roscoe Postle Associates Inc. The resource estimate includes an updated estimate for the Las Bolas and Highway areas as well as the initial resource for the La Soledad structure. No work was done in the El Rayo gold zone so the El Rayo gold resource remains unchanged from the resource completed in June of 2011 (see table below). The 2011 drilling, coupled with higher metallurgical recoveries for La Soledad, resulted in roughly a 25% increase in the measured and indicated silver resource at El Rayo. The results of the current NI 43-101 silver resource are reported below:

Las Bolas & Highway Zone & Soledad Deposit Silver Resources NOTE A
Deposit Area Cut-off grade
(g/t Ag)
Tonnes
(millions)
Average Grade
(g/t Ag)
Contained ounces of Silver
Measured Mineral Resources
Las Bolas 20 6.10 63.44 12,400,000
Indicated Mineral Resources
Las Bolas 20 29.30 49.49 46,600,000
Highway Zone 20 2.90 57.39 5,400,000
La Soledad 20 3.90 104.20 13,000,000
Total Measured and Indicated Resources
Las Bolas, Highway Zone & La Soledad 20 42.20 57.11 77,400,000

Inferred Mineral Resources
Highway Zone 20 0.21 36.34 245,000
La Soledad 20 0.37 82.15 935,000
Total Inferred Mineral Resources
Highway Zone & La Soledad 20 0.58 65.51 1,180,000

Notes:
1. CIM definitions were followed for Mineral Resources.
2. Mineral Resources were estimated using prices of US$27/oz Ag. No credits are assigned for other metals.
3. Metallurgical recovery is assumed to be 72% of the contained silver for the Las Bolas deposit and Highway Zone,
and 80% for Soledad.
4. High silver values are cut to 400 g/t Ag.
5. Mineral Resources were estimated using a pit discard cut-off grade of 20.8 g/t Ag for the Bolas and Highway deposits,
and 18.72 g/t Ag for La Soledad deposit.
6. The numbers for tonnage, average grade and contained ounces of silver are rounded figures.
7. The Las Bolas, La Soleded and Highway Zone deposits are modeled at a minimum of 5 m vertical thickness of mineralization.
8. The above resources are constrained by a Whittle optimized pit shell and constitute 87% of total resources within a conceptual
open pit for the Bolas Structure, 89% of total resources for La Soledad Structure, and 64% for the Highway Zone.
9. Mineral resources, which are not mineral reserves, do not have demonstrated economic viability.The estimate of mineral resources
may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.


NOTE A - During the third quarter of 2013, Soltoro concluded extensive metallurgical testing on the Las Bolas deposit and detected recoveries which Soltoro considers will have a negative impact on the resources established in the 2012 Resource Estimate Report and listed above. As a result, a new technical report is planned to take into account relevant recovery factors as well as all new exploration programs completed since the 2012 Resource Estimate Report above. It will update the silver resource estimates for Las Bolas, the Highway Zone, and La Soledad, as well as establish an initial resource estimate for the Catarina Mine.

In 2012, Soltoro's focus was drilling known mineralization along strike and at depth, and testing anomalies identified through soil sampling and geophysics. In late 2012, Soltoro discovered high-grade semi-massive sulfide mineralization at depth at the Las Bolas deposit and extended that mineralization along strike at depth 200 metres to the southeast in early 2013. Due to market conditions, drilling was halted near the end of the first quarter of 2013. The remainder of 2013 will be spent reevaluating data and permitting future exploration activities.

Las Bolas & Highway Zone Primary Silver Deposits: The Las Bolas deposit consists of a tabular body of silver-bearing specularite-quartz breccia-vein striking to the northeast and dipping to the northwest at 50 to 60 degrees. The mineralized breccia-vein ranges in thickness from around one metre to 40 metres with silver-bearing quartz-specularite stockwork of varying intensity occurring in the hanging wall. At Las Bolas, silver occurs in fine-grained sulphide minerals, such as acanthite, mckinstryite and aguilarite in quartz-specularite veinlets, often in close association with mimetite (lead arsenate) and vanadinite (lead vanadate) with very minor base metal sulphides. The breccia-vein has been drill-tested for more than 300 metres down dip from the surface and for over 1,000 metres along strike and shows little variation along strike or at depth.

Recent drilling at depth in the Las Bolas zone encountered a sulphide-rich zone near the base of the typically sulphide-poor breccia-vein and stockwork zone. Hole Ray12-152 averaged 278 g/t Ag and 11.5% Pb over 11.2 metres drilled width and was distinctly rich in galena and poor in specularite. The relationship of this mineralization to the typical sulphide-poor, specularite-bearing breccia-vein and stockwork mineralization is currently being investigated.

The Highway Zone is similar in composition and structural attitude to Las Bolas and may be the southern faulted extension of the Las Bolas mineralized zone, which has been offset over 700 metres to the east along west-northwest-trending La Soledad fault.

La Soledad Primary Silver Deposit: In early 2011, Soltoro completed a surface trenching and sampling program followed by an initial four hole diamond drilling program to test the La Soledad structure. The results of this drilling were extremely encouraging and an additional drill rig was added to the program, such that 50 diamond drill holes totaling 8,968 metres were completed in 2011. With this drilling, Soltoro defined two mineralized zones within La Soledad structure: the Central Zone measuring 225 metres in length and the Western Zone measuring 150 m in length. The Central Zone has been drill tested to a depth of 250 metres below the surface. The Western Zone has been drill tested to a depth of approximately 100 metres below the surface and is open at depth.

At La Soledad, mineralization is hosted within a sequence of intermediate to mafic volcanic rocks consisting of massive flows and interbedded fragmental units. The mineralization is associated with hematite-altered structures in association with fine-grained silica as part of wider intervals of highly sheared and brecciated volcanic wall rocks. Silver occurs as freibergite and mckinstryite with lesser amounts of acanthite, aguilarite and furutobeite. Other metallic minerals consist of pyrite, sphalerite, galena with minor amounts of chalcopyrite and tetrahedrite-tennantite and traces of bornite, covellite and chalcocite.

In 2012, Soltoro focused on the strike extensions of the La Soledad deposit. The western extension of the Western Zone is complexly faulted and offset some 100 m to the north; the intersections are high-grade, but narrow, possibly due to a change in composition of the host rock. Additional drilling is required to define this portion of the Western Zone.

Historic Catarina Silver Mine Area: The southeastern portion of the Catarina-El Rayo structure hosts the Catarina mine, where five high-grade silver ore shoots were mined by the Spaniards beginning in 1546. Mineralization at the Catarina mine was developed on several levels over approximately 500 metres of strike. In 2010, Soltoro completed detailed mapping and sampling along the surface portion of the Catarina vein. Results can be viewed at the link:

Click here for PDF: July 2010 Catarina mine trench location map with assay results

In late 2011, Soltoro completed seven diamond drill holes in the Catarina Mine area to test mineralization at depth. Drilling established that the Catarina mine area is not amenable to open pit mining and that further work is required to define an underground resource.

In 2013, Soltoro collected 340 underground channel and chip-channel samples from over a 385 metre strike length on the main level of the Catarina mine. Phase 1 was designed to better understand the geology of the Catarina mine area and confirm the historic silver resource estimate made by the Mexican government in the early 1980's. The best result was 11.57 metres averaging 449 g/t silver, 0.13 g/t gold and 3.54% lead. Complete results are presented in the Soltoro news release dated June 25, 2013.

In the third quarter of 2013, Phase 2 of the Catarina Mine sampling program was initiated where an additional 140 channel samples from the main level were collected. A total of 93 samples were collected from a second level located 50 m below the main level. Sampling of this level is now complete and the final batch of samples has been submitted to the ALS Geochemistry sample preparation facility in Guadalajara. Results are expected later in the fourth quarter.

Piedras Amarillas Silver Discovery Zone: Over 13,000 soil samples have been collected from the El Rayo Property leading to the identification of several multi-element anomalies, including three parallel soils anomalies in the Piedras Amarillas area located approximately 1,500 metres east of the Las Bolas deposit. The anomalies range from 300 metres to 800 metres in length and 50 metres to 150 metres in width with silver values ranging up to 34 ppm. Follow-up sampling of the eastern soil anomaly identified a northeast-trending zone of quartz stockwork with associated hematite staining in basaltic wall rocks. At Piedras Amarillas there are a few small prospect pits but no evidence of historic mining activity as the zone sits primarily under pasture land and cultivated fields. Evidence suggests that the stockwork zone extends for nearly 500 m along strike but the width of the stockwork is not presently known because the area is largely covered by soil and outcrops are scattered. In 2012, 16 reverse circulation drill holes totaling 2,445 m were completed in the two soil anomalies at Piedras Amarillas. Most of the drill holes intersected low-grade silver values over modest widths but only one narrow, high-grade interval was intersected.

Mascotas Silver Discovery Zone: The Mascotas zone was discovered during geologic mapping as part of Soltoro's systematic exploration of the El Rayo land package. The Mascotas mineral system consists of at least five separate mineralized structures occurring within an area extending 600 metres northeast by 800 metres northwest located approximately five kilometres north-northeast of the main silver deposit area.

All five structures strike to the northeast, dip to the northwest at 55 to 70 degrees and vary in width from 2 metres up to approximately 10 metres. Mineralization in the Mascotas area shares many similarities with mineralization in the Las Bolas primary silver deposit including: 1) Similar strike and dip; 2) Mineralization consisting primarily of an anastomosing network of quartz veinlets and breccia hosted by mafic to intermediate volcanic rocks; 3) Presence of yellowish-green quartz thought to be caused by the occurrence of mimetite and/or vanadinite in the quartz; 4) Hematite alteration interpreted to be hypogene in origin, and 5) Both areas are anomalous in silver, lead, arsenic, vanadium and barium.

A total of 59 samples were collected during the first phase of sampling, nine contained silver grades greater than 100 g/t Ag and 12 contained silver grades between 50 g/t Ag and 100 g/t Ag. The highest silver grade obtained during this phase of work was 264 g/t Ag.

Additional mapping, sampling, and ground geophysics are planned to identify drill targets while permitting is underway.

El Rayo Gold Deposit: Previous drilling identified a zone of gold mineralization one kilometre in strike length at the northwestern end of Catarina-El Rayo structure. At a pit discard cut-off grade of 0.35 g/t Au, the resource estimate for the northwestern-most 250 metres of the gold structure is reported by Roscoe Postle Associates Inc. as follows:

El Rayo Nothern Zone Gold Resource
Deposit Area Cut-off grade (g/t Au) Tonnes
(millions)
Average Grade
(g/t Au)
Contained ounces of Gold
Indicated Mineral Resources
El Rayo North 0.35 380 1.85 22,600
Inferred Mineral Resources
El Rayo North 0.35 365 1.61 18,900

Notes:
1. CIM definitions were followed for mineral resources.
2. Mineral Resources were estimated using prices of US$1,300/oz Au. No credits were assigned for other metals.
3. Metallurgical recovery is assumed to be 90% of the contained gold.
4. The Rayo Extension deposit is modeled at a minimum of 5 m vertical thickness of mineralization.
5. The numbers for tonnage, average grade and contained ounces of gold are rounded figures.
6. The above resources are constrained by a Whittle optimized pit shell.

Soil geochemistry and ground magnetics, followed by a limited trenching program, in 2012, identified the possible northeastern extension of the El Rayo structure in the La Ocotera area. This adds an additional 750 m of prospective structure to be explored. Values from trenching in the La Ocotera area include 1.01 g/t Au over 4.8 m and 0.91 g/t Au over 6.5 m. A limited drilling program in this area is planned for 2013.

Talayote Gold Discovery Zone: In the second quarter of 2013, the Company discovered the previously unknown Talayote gold target. Initial soil sampling detected several isolated gold anomalies in the area where follow-up geologic mapping and rock sampling revealed a series of northwest-trending quartz located approximately 1.5 kilometres southeast of the El Rayo gold deposit. Chip samples returned values up to 2.3 metres of 2.18 g/t gold including 0.50 metres of 11.40 g/t gold. Further sampling is underway to define drill targets.

Exploration Programs in 2013: Drilling to depth in the main resource areas to better understand the underground silver potential below the existing silver deposits has been initiated with further drilling being planned. Underground sampling at the historic Catarina mine is being completed to define further high grade silver resources. Mapping and sampling of the newly discovered Mascotas silver zone and Talayote gold zone is ongoing to define drill targets with a view to expanding the precious metal resource base. Comprehensive environmental permitting is being completed to permit all of these areas for trenching and drilling.