Santacruz Announces Closing of Second and Final Tranche of Previously Announced Private Placement for CDN$10.00 Million with a Lead Order from Palisades Goldcorp

Overview

Santacruz Silver Mining (TSXV:SCZ,OTC:SZSMF,FSE:1SZ) is poised to become Mexico’s next mid-tier silver producer. The company is expecting significant growth after a low-cost acquisition of the Zimapan mine for only US$4.96 per ounce silver equivalent (AgEq) of average annual production. The property is located within the Zimapan mining district, which has been the site of prolific precious metals mining for nearly half a century.

Peñoles, Mexico’s second largest mining company, operated the Zimapan mine from 1964 until it leasing the mine to Santacruz in August 2009. From 2011 to 2019, Santacruz completed roughly 30,000 meters of underground drilling and mined approximately 5.9 million tonnes of mineralized material. The Zimapan property covers over 5,000 hectares that remains largely unexplored, with current mining activity limited to less than 5 percent of the total property. The company is now exploring numerous opportunities for low-cost production expansion.

Santacruz’s Rosario project is located in the historic mining district of Charcas, one of Mexico’s most prolific mining sites and home to two world-class vein systems, Rosario and Membrillo. The Rosario property offers many similarities to the contiguous Charcos mine owned by Grupo Mexico (BMV:GMEXICOB), a world leader in precious metals production. In 2019, Santacruz’s Rosario mine and processing facility produced 466 Koz AgEq from 76,000 tonnes of mill feed (190 g/t AgEq) at an all-in sustaining cost (AISC) of US$26.68 per oz AgEq. In the first half of 2020, the company generated 144,0000 oz AgEq at an AISC of US$30.43 per oz AgEq.

Both the Zimapan and Rosario properties benefit significantly from exceptional infrastructure, with access through paved and dirt roads, water supply, grid power and skilled labor. Both properties also host significant exploration upside and new discovery potential. The Rosario mine includes 3,000 ha of unexplored mineralized areas, and recent drilling has confirmed higher silver grades across the Membrillo vein. The company has also planned a 35,000 m diamond drill program to substantially increase resources.

Santacruz is managed by a renowned technical team with a proven track record of success in discovering, developing, and operating silver mines in Mexico. The company’s CEO, Carlos Silva Ramos, is a seasoned mining executive who offers more than three decades of expertise and extensive experience with the Zimapan mine. As co-founder of Carrizal Mining SA de CV, he increased mining and milling operations from 1,400 to 3,200 tons per day.

Santacruz also controls 8,900 ha of the historic Zacatecas silver mining belt, which hosts prolific mines such as the Fresnillo silver mine operated by Peñoles and the Cozamin mine, operated by Capstone Mining (TSX:CS). The Veta Grande mine is located in the renowned mining district of Veta Grande, Zacatecas, and currently operates at 430 tonnes per day (tpd) milling capacity. Construction is already underway to increase capacity to 750 tpd or more.

The company is intent on leveraging its multiple properties in historic, mining-friendly jurisdictions to position itself as Mexico’s next mid-tier silver producer. For the remainder of 2020, Santacruz plans on increasing silver head grades by 64 percent, boosting mill throughput tonnage and investigating unexplored mineralization on its Zimapan and Rosario properties.

Santacruz has also been recognized by the Initiative for Responsible Mining Assurance (IRMA) for Transparency after an audit for compliance against the IRMA Standard for Responsible Mining. Carlos Silva, CEO of Santacruz stated, “Receiving recognition for IRMA Transparency is an important milestone as we advance along IRMA’s process. This norm will help us to continue to improve our business practices that go beyond industry standards for social responsibility, which translates into a culture of mutual respect and ultimately success for the Company and its employees as we strive to meet our corporate objectives.”

Santacruz Silver Mining Company Highlights

• Santacruz Silver Mining has positioned itself to become Mexico’s next mid-tier silver producer through strategic exploration and resource development. The company recently acquired the historic Zimapan mine at a low cost.
• The company’s technical and management team offers a proven track record of building efficient and sustainable mines in Mexico.
• Santacruz’s Zimapan property spans more than 5,000 ha that remain largely unexplored. Mining activity on 5 percent of the property produced 5.9 million tonnes of mineralized material between 2011 and 2019.
• The company’s Rosario project is located in the historic mining district of Charcas and is home to two world-class vein systems, Rosario and Membrillo. The Rosario property includes 3,000 ha of unexplored mineralized areas. Recent drilling has confirmed higher silver grades across the Membrillo vein.
• Santacruz’s Veta Grande mine, located within the historic Zacatecas silver mining belt, currently operates at 430 tpd milling capacity. Construction is already underway to increase capacity to 750 tpd or more.

Zimapan Project

The Zimapan mine is located seven kilometres from the municipality of Zimapan in Hidalgo, Mexico. The property is situated along the southern margin of the prolific Sierra Madre Oriental and contains 14 mineralization zones—six at the Carrizal mine and eight at El Monte.

Mineralization

The Zimapan property contains high-temperature carbonate replacement deposits of silver, lead, zinc and copper in semi-massive and massive sulphide bodies hosted in skarns, which are usually 20 m wide and 200 m long, and quartz-feldspar porphyry dikes.

Mineral zones located within the Zimapan property have been characterized with the ideal structure for high-volume, low-cost underground mining. The Carrizal and El Monte mines are connected by a 7.4 km underground access tunnel. Underground mining at Zimapan involves cut-and-fill, long-hole and sub-level stoping.

The processing facility at Zimapan relies on three circuits for the production of high-quality lead, zinc and copper concentrates. Overall process recoveries include 67% silver, 64% lead, 70% zinc and 52% copper. Between 2010 and 2019, Santacruz produced 5.9 million tonnes of precious metals from the Zimapan mine.

Rosario Project

The Rosario property consists of 2,900 ha located in the prolific Mexican mining district of Charcas, roughly 180 km north of the city of San Luis Potosi. The current primary source of mill feed is the Membrillo prospect, a mesothermal, low-sulphidation and polymetallic vein system of silver, gold, zinc and lead that carries to the surface. The mine’s milling capacity is currently 500 tpd, but the company plans on quickly expanding its throughput by an additional 150 tpd.

Santacruz Silver Mining Management Team

Arturo Préstamo Elizondo—President and CEO

Arturo Préstamo Elizondo holds a CPA degree from the University of Monterrey, a master’s degree from EGADE University and a professional degree from IPADE Business School. With more than 10 years of executive and operational experience in the mining industry (precious metals), Elizondo has worked for different public companies as director of planning, corporate finance and investor relations. Elizondo is a member of Mexico’s Mining Chamber, and participates actively in different mining initiatives in the country.

Carlos Silva Ramos—COO

Silva Ramos has a degree in mine engineering from the University of Guanajuato, and additionally holds an MBA from ITESM (Instituto Tecnologico de Estudios Superiores Monterrey). He has more than 30 years of experience working in the mining industry in Mexico with both senior and junior mining companies, the last 17 years of which were in senior management roles.

Silva co-founded Carrizal Mining SA de CV, a private Mexican silver producer. During his nine-year tenure at Carrizal, he successfully increased the mining and milling operations of the Zimapan Mine in Hidalgo, Mexico, from 1,400 tpd to 3,200 tpd. Prior to this, Silva held senior management positions at the Tayoltita mine located in San Dimas, Durango, Mexico. During his time with the Tayoltita mine, production was increased from an initial rate of 1,800 tpd to an eventual final rate of 3,200 tpd.

Robert McMorran—CFO and Corporate Secretary

Robert McMorran has a CPA, CA designation and 30 years of experience in financial reporting and administration of public companies, the last 20 years through his private management company, Malaspina Consultants. During this time, McMorran has served as an officer and director of several public companies, primarily involved in mineral exploration and development.

Roland Löhner—Director

Roland Löhner has been a senior partner and managing director of the Boston Consulting Group (BCG) for the last 20 years and during the last 5 years he has held the position of managing director for Latin America. He is fluent in Spanish, German, French, English, Portuguese, Dutch and Italian. After retirement, he continues to serve as a senior advisor to BCG.

Larry Okada—Director

Larry Okada is a member of both the Canadian Institute of Chartered Professional Accountants and the Washington State Certified Public Accountants Association with over 43 years of experience providing financial management services to publicly traded companies, with emphasis on mineral companies. He is currently a director of several public companies including EMX Royalty, Forum Uranium and Rokmaster Resources.

Federico Villaseñor—Director

Federico Villasenor graduated with a B.Sc. in mining and metallurgy from the University of Guanajuato, a master’s of mineral economics from Columbia University and a finance degree from the Instituto Tecnologico Autonomo de Mexico. His career has spanned 40 years in the mining industry, including roles with Penoles, Grupo Mexico, Goldcorp and as a director of Starcore International Mines.

Barry Girling—Director

Barry Girling has been active in various aspects of mineral exploration since 1977. He couples his geological understanding with a B.Com. (Finance) degree from the University of British Columbia to provide consulting services to a number of TSX Venture Exchange companies. He has strong capital markets experience and has been a founder and director of multiple TSXV listed companies over the past 20 years including I-Minerals Inc, Roxgold and Silver One Resources prior to joining Santacruz Silver Mining.

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The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with Santacruz Silver Mining and seek advice from a qualified investment advisor.