Property Evaluation Report
Northeastern Mexico
February, 2015
Mina la Dura – Durango
Matt Melnyk, CPG# 11540 – AIPG
Bullion Exploration Inc.
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Executive Summary

Mina la Dura exhibits very strong quartz veining along several main structures (10+m in width)
and in stockwork veining with intermittent high grade shoots. Additional details are as follows:
o High grade mineralization (up to 90 g/T Au) is concentrated in 3 shoots
o Continuity of extensive historic mining activity was reliant on processing of low grade
(0.5-2 g/T Au) ore from continuous vein structures between shoots
o The shoots have largely been mined out to 170m depth
o A Penoles resource calculation is intact within the shoots below 170m
o Approximately 100,000T of tailings at 1.2 g/T Au exist with potential to produce near
term cash flow
o This property shows a clear potential path forward from the processing of tailings to a
blocked out resource to potential ongoing mine activity as a stand alone project
Mina la Dura. The Mina la Dura property is accessible by air from Culiacan (Sinaloa) or Tamazula
(Durango) via a ½ hour flight, 6 days a week, excluding Sunday’s. It is also accessible by road which can
take 8 hours or more depending on river crossing times. A ferry is needed to cross the Rio Tamazula
which can result in travel delays. Bus service exists to the town of Durazno with buses arriving and
departing on alternate days, excluding Sundays.
The Mina la Dura deposit is a voluminous epithermal quartz vein deposit with four main structures in
the principal mine area within the 2052 ha property. Vein convergence, mine discontinuity, multiple
names for the same structure and lack of drilling information results in a somewhat chaotic
understanding of the mine plan but in general, the deposit is characterized by a central zone of massive
quartz veining over multiple structures which decrease in width/volume outwardly where they are
associated with quartz veinlet stockwork. The stockwork gradually becomes less dense and ultimately
dissipates outward from the core area. Mineralization is dominated by gold and silver with very minor if
any sulfide content. Host rock consists of andesite and rhyolite with rhyolite containing the vast
majority of economic vein mineralization. Where veins cut andesitic host rock, the grades tend to drop
off substantially.
Previous Work. Historic work on the Mina la Dura property is strictly exploitative in nature. Production
began in 1926 though relatively continuous production didn’t begin until 1979 and continued until
recently. Low grade mineralization and continuity of quartz veining between shoots has allowed for the
economic viability of ongoing low grade exploitative activity (1 g/T Au, 70-100 g/T Ag) punctuated by
high grade windfalls (91 g/T Au, 4240 g/T Ag) upon discovery of shoot mineralization. The average
exploited grade of approximately 300,000 total tonnes is thought to be about 2 g/T Au, 150 g/T Ag.
Exploration of the system has typically been conducted by drift rather than drill with little geological
input. Taken in this context, the extent of mining activity is impressive and gives credence to the
strength of the system. It is estimated that the extent of the workings is approximately 2km with
numerous portals and stopes to access and exploit the veins over 5 principal levels on the main area and
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numerous other areas. Access to these levels is strictly by winze and ladder with the lowermost level
currently flooded.
Most of the geological work conducted on the deposit was performed as a result of site visits and due
diligence by various companies. Some of these studies were more detailed than others. One of the
more detailed studies, conducted by Penoles included a resource estimate based on visible ore exposed
in the workings on the shoots. The resource calculations are as follows:
This resource has not been touched by subsequent mining operations and is considered to be a key
element in the viability of the project moving forward. A poorly preserved image of the areas included
within this resource is included below for a general idea of the potential. The main areas of interest
with respect to this evaluation are the gray areas (probable reserves) and yellow areas (possible
reserves). The blue area (inferred) and red outlined area (potential for exploration) may be considered
to represent future potential of the property. There are additional shoots that may also be considered
for future potential.
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Figure 14. Met-Mex Penoles blocked out resource.
Numerous studies have also been conducted on the tailings pile located onsite. In 1999, COREMI
conducted a dynamic cyanide test with the following recoveries:
In 2002, Resendiz Asociados conducted a flotation test with the following results:
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In 2002, SIPSA assayed the tailings pile as follows:
A more detailed study of 300-1kg samples from various locations and depths within the tailings pile
estimated the grade to be 1.2 g/T Au, 54 g/T Ag. This is considered to be a more accurate grade of the
tailings.
Results of Visit. Given that the property was accessed via air and given the scale of the workings on the
property, a limited number of samples were collected with the intent of illustrating key components of
the story. In general, the merits of the deposit are based on three primary shoots that have been largely
mined out to the 170m level. There is a 60tpd plant onsite that can be used to profitably process
material from the shoots but would only break even at best on material from veining between the
shoots. Future potential of the deposit therefore depends on defining a resource in the shoots below
the lowest currently mined level at 170m. Additionally, there is the possibility for more shoots along the
strike of the primary vein structures and for the definition of a low grade resource within the quartz
veinlet stockwork zone, outward from the primary deposit area. These possibilities are secondary
however, to the main prospectivity of the three principal shoots. There is also a tailings pile of older
tailings grading 1.2 g/T Au, 54 g/T Ag and a pile of younger tailings grading 0.5 g/T Au, 50 g/T Ag. The
older pile contains approximately 100,000T of material and the younger pile contains an indeterminate
tonnage. These tailings may be critical to the startup financing of the mine as well as to the owner’s
preferred advancement of the property.
In light of this context, samples were taken of the four primary vein structures as well as one from the
old tailings pile. The first vein sample (959951) comes from Veta Alta which is voluminously, the most
important of the veins. The sample assayed at 6.2 g/T Au, 595 g/T Ag and is probably the closest sample
of any to a former shoot. This particular sample was exposed in a rare pillar close to a reported shoot.
Normally, throughout the mine, shoots have been thoroughly cleaned out with extensive stoping and
pillars are only left to either end of the shoot along the strike of the vein.
Samples 959952, 959953 and 959954 were sampled from Veta Baja (Vein 2) : 0.5 g/T Au, 48 g/T Ag, the
San Silverio Area (Vein 3): 0.8 g/T Au, 26 g/T Ag and Plan 3 (Vein 4/Tajo Vein/Polvarin?): nil Au, 25 g/T Ag
respectively. The results are considered to represent vein material between shoots. The lowest mined
level of the shoots themselves is flooded.
A fifth sample collected from the older portion of the tailings pile comes from a level approximately 45m from the base. The pile originally contained 120,000T of tailings but subsequent rainfall has eroded
some of the material. A stream passes by the pile and all of the removed material would have passed
into the stream. Downstream from the plant between the Tajo area and the Polvarin Mine, is a small
weir which evidently impounded water from the stream at some point in the past. Any portion of the
gold content in the eroded tailings that was present as free gold, may have collected in this area.
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The plant onsite is a 60Tpd flotation plant with a 40Tpd ball mill and a separate 20Tpd ball mill. The mill
has been extensively used but evidently is in workable condition. It is unclear exactly how much work
would be required to ensure that the plant is running smoothly but the power plant was started and
running during the site visit. Currently, the owner has listed the plant for sale and is selling parts of it
piecemeal.
The mine is setup with a complete camp to house and feed 40 men. There is a rustic but usable kitchen
and dining hall, sleeping quarters and restrooms. There are separate quarters for management as well
as workshop and bodega areas. The site is wired for satellite internet service with a dish in place. Cell
phone coverage is available onsite. The nearby town of Durazno is equipped with a hotel, groceries,
hardware and other services.
Figure 15. Mina la Dura area in relation to the town of Durazno and the Alizal airstrip.
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Figure 16. Overview of Mina la Dura. 60 Tpd flotation plant is built above the main deposit area. The
four principal veins trend parallel to the cliff face and are located behind the plant. The lowest level of
the mine is 170m below the main building.
Figure17. Mill at the Mina la Dura plant. The plant contains one 40 Tpd mill and one 20 Tpd mill for a
total capacity of 60 Tpd.
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Figure 18. Mina la Dura camp. The camp contains a kitchen, dining hall and lodging for 40 men. It is set
up for internet service and powered by a 350KVa power plant
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Figure 19. Veta Alta and Veta Baja respectively. Veta Alta is up to 13m in width. At depth, the veins
converge to a combined width of 17m.
Figure 20. Quartz veining and stockwork in outcrop to the southwest of the main deposit area.
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Figure 21. Tailings pile at the Mina la Dura Mine. Sample 959955 (1 g/T Au, 86 g/T Ag) comes from the
erosional gully at the center of photo.
UTM 13R
Tag #
Other
GPS of general
mine locationsamples from
959951 underground
GPS of general
mine locationsamples from
959952 underground
GPS of general
mine locationsamples from
959953 underground
GPS of general
mine locationsamples from
959954 underground
959955 N/A
UTM X
UTM Y
Type
308679 2817403 chip
Description
Au
white-gray quartz vein and
strongly silicified andesite
from veta alta
308679 2817403 chip
quartz vein stockwork in
brecciated and silicified
rhyolite; vein 2
quartz vein stockwork in
brecciated and silicified
rhyolite; vein 3-San Silverio
area
silicified rhyolite tuff with
mm-cm scale quartz veinlet
stockwork in the Polvarine
mine; Plan 3 vein?
308679 2817403 tailings
4-5m from the bottom of the
old tailings pile; medium
grained sand size
308679 2817403 chip
308679 2817403 chip
Figure 22. Assays from Mina la Dura
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Ag
Assay
for:
Significance
6.2
595 Au-Ag
representative of mined
material
0.5
48 Au-Ag
representative of mined
material
0.8
26 Au-Ag
representative of mined
material
0
25 Au-Ag
representative of mined
material
1
86 Au-Ag
representative of old tailings
Recommendations. The Mina la Dura property is best viewed as a standalone operation with the
possible exception of a potential combination with the nearby Copalquin property (same owner, 50km
by road, difficult elevation change) or with potential resources yet to be discovered. As such, the key to
starting the operation probably lies in the older tailings material present on the site. The owner has
expressed interest in using this material to provide seed financing for ongoing operations. The owner
has also done some work to determine the costs and feasibility of processing these tailings by various
methods including heap leach and dynamic cyanide leaching. One potential obstacle in the processing
of the tailings is a location for such an operation. The owner has experience in pumping the tailings to
transport them on the property and has identified a possible site located 600m from the plant.
Provided that sufficient working capital could be obtained by processing the tailings, the next step
would be to define further resources within the shoots below the deepest mined level at 170m.
Penoles’ historic resource calculation is still intact and if drilling confirms the calculation, it would be
sufficient to justify rehabilitation of the plant. Although the tailings pile occupies much of the level
ground above the principal shoots, adequate drill pad locations should be available along the roads or if
necessary, from the tailings pile.
In order to access and exploit the Penoles resource, it would be necessary to develop a negative ramp to
resource. The cost of such work should act as a guideline for determining whether the tailings operation
would be sufficiently robust in terms of economics, so as to permit full development of the deposit.
Proceeds from processing of the Penoles resource could be used to explore for additional shoots and to
extend known mineralization to depth.
The Copalquin Property might also be examined as an add-on to the operation or potentially as a
standalone operation. Grades at the Copalquin property are generally significantly higher than those at
Mina la Dura but access is a major obstacle. Although the project is roughly 50km away, much of the
route is currently a horse trail (13km). Additionally, Copalquin is topographically much lower than Mina
la Dura over rough terrain. At present, there is a 10tpd plant in disrepair on the Copalquin property
which has been used in the past to produce concentrates to be flown out of the project. If the two
projects were linked, the rough terrain between them may preclude direct ore shipment. Onsite
processing of ore from Copalquin and shipping of the concentrate to Mina la Dura might be a better
option. A preliminary visit to the Copalquin property is recommended if it is to be considered an
attractive option.
Durango – Mina la Dura Area: The Mina la Dura property is primarily viewed as a standalone property.
There are elements within the property that could lead to a viable path forward for its advancement.
The tailings pile would be the first step and could be used for cash flow to confirm an existing Penoles
resource calculation below 170m. Production from the Penoles area could justify re-starting the onsite
60Tpd plant. Exploration and future delineation work would dictate possible upgrades. The Copalquin
property (same owner) could be an add-on to the Mina la Dura property but elevation changes might
make for difficulty in shipping ore. Production of concentrates and shipment of the concentrates to
Mina la Dura could be a viable option. The ability to secure a reasonable deal structure and the cost of
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initiating a program to process the tailings are the two biggest obstacles with respect to this project. If
those obstacles can be overcome, the project stands a reasonable chance of success.
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