Technical Report on the Sierra Mojada Silver Project, Coahuila State, Mexico

Transcription

1 Technical Report on the Sierra Mojada Silver Project, Coahuila State, Mexico Report Prepared for Silver Bull Resources Inc. Report Prepared by SRK Consulting (Canada) Inc. 2CS November 25, 2011

2 Sierra Mojada NI Page i Technical Report on the Sierra Mojada Silver Project, Coahuila State, Mexico Silver Bull Resources Inc. Suite 2200, HSBC Building 885 West Georgia Street Vancouver, B. C., V6C 3E8 SRK Consulting (Canada) Inc. Suite West Hastings Street Vancouver, BC V6E 3X2 vancouver@srk.com website: Tel: Fax: SRK Project Number 2CS November Effective date: August 31, 2011 Author: Gilles Arseneau, Ph.D., P. Geo. Principal Geological Associate Peer Reviewed by: Marek Nowak, P.Eng. Principal Geostatistician

3 Sierra Mojada NI Page ii Executive Summary Introduction This technical report was prepared for Silver Bull Resources Inc. ( Silver Bull ). It discloses an updated mineral resource estimate for the Sierra Mojada Project, Coahuila State, Mexico. Specifically, the report focuses on the silver mineralization found near the surface on the property and generally referred to as the Shallow Silver Zone. The Sierra Mojada Project has been the subject of previous technical reports by Ronald Simpson and John Nilsson ( Nilsson report ) in April 2011 and by Pincock Allan & Holt ( PAH ) in January 2010 which disclosed mineral resource estimates for the Shallow Silver Zone and the Red Zinc Zone respectively. Mineral resources presented in this report are not intended to replace or update the mineral resources prepared for the Red Zinc Zone prepared by PAH. However, the mineral resources presented in this report do cover some of the same ground estimated by PAH in 2010, as such the PAH estimate should no longer be relied upon as a current mineral resource estimate as defined in National Instrument ( NI ) The purpose of this Report is to provide an independent technical assessment of the mineral resources found on the Sierra Mojada property within the Shallow Silver Zone on behalf of Silver Bull. Dr. Gilles Arseneau, P. Geo. visited the site on July 27 and 28, 2011 and from October 1 to October 3, The Sierra Mojada Project area is situated in the northwestern part of Coahuila State, Mexico at latitude North and longitude West, close to the border with Chihuahua State, south of the village of Esmeralda. It is accessible by paved roads from the city of Torreon, Coahuila which lies about 250 kilometers ( km ) to the southwest. Most of the area adjacent to the project site is used for cattle ranching, however; the southeastern boundary of the project abuts the Peñoles dolomite extraction and processing facility. The Peñoles quarrying facility contains associated waste piles and a 1 km long conveyor belt transporting crushed dolomitic carbonate aggregate of specific magnesium carbonate grade to the railroad spur for transportation to the Peñoles process plant known locally as Quimica del Rey. A rail line utilized by Peñoles to transport material to its chemical plant extends west to La Esmeralda. The remains of an older section extend right up to old workings and a loading facility located south of La Mesa Blanca right in the center of the Sierra Mojada Camp. The spur line connects the main national line which connects Escalon and Monclova. Rail traffic to the east is through Frontera to the United States via Eagle Pass, Texas, or southward to Monterrey or the seaport at Altamira. Service to the west is available as well as to the western USA via El Paso, or to points south connected through Torreón. Although power levels are sufficient for current operations and exploration, any development of the project would potentially require additional power supplies to be sourced Silver and lead were first discovered by a foraging party in 1879, and mining to 1886 consisted of native silver, silver chloride, and lead carbonate ores. After 1886 silver-lead-zinc-copper sulphate ores within limestone and sandstone units were produced. No accurate production history has been found for historical mining during this period.

4 Sierra Mojada NI Page iii History Approximately 90 years ago, zinc silicate and zinc carbonate minerals ( Zinc Manto Zone ) were discovered underlying the silver-lead mineralized horizon. The zinc Manto is predominantly zinc dominated, but with subordinate lead rich manto and is principally situated in the footwall rocks of the Sierra Mojada Fault System. Since discovery and up to 1990; zinc, silver, and lead ores were mined from various mines along the strike of the deposit, including from the Sierra Mojada property. Ores mined from within these areas were hand sorted and the concentrate shipped mostly to smelters in the United States. Metalline Mining Company ( Metalline ) entered into a Joint Exploration and Development Agreement with USMX in July 1996, involving USMX s Sierra Mojada concessions. In October 1999, Metalline entered into a joint venture with North Limited of Melbourne, Australia (now Rio Tinto). Exploration by North Limited consisted of underground channel samples in addition to surface RC and diamond drilling. North Limited withdrew from the joint venture in October A joint venture agreement was made with Peñoles in November The agreement allowed Peñoles to acquire 60% of the project by completing a bankable Feasibility Study and making annual payments to Metalline. During 2002, Peñoles conducted an underground exploration program consisting of driving raises through the oxide zinc Manto, diamond drilling, continuation of the percussion drilling and channel sampling of the oxide zinc workings (stopes and drifts) previously started by Metalline in 1999, and continued by North in 2000 and Metalline during In December 2003, the joint venture was terminated by mutual consent between Peñoles and Metalline. Since 2003, Metalline continued sampling numerous underground workings through channel and grab samples. In April 2010, Metalline merged with Dome Ventures, retaining the name Metalline Mining Inc. Subsequently, in April 2011, the company changed name to Silver Bull Resources. Silver Bull continue to diamond drill the project Geology Regionally, the Sierra Mojada mineralized system sits along one of a series of broad northwestsoutheast-trending major structural zones that extend across northern and eastern Mexico east of the Sierra Madre foreland terrane. The entire region forms part of the Eastern Zone, one of the three geological terranes of Mexico. The regional geology reflects events dating to Late Jurassic-Early Cretaceous time on the eastern margin of the North American craton. Three NW-SE-trending structural zones are identified in this part of the Eastern Zone of northeastern Mexico. The Sierra Mojada area contains a well preserved Cretaceous stratigraphic sequence representing a marine transgression onto the Late Jurassic red bed conglomerates of the San Marcos Formation. The San Marcos Formation itself is deposited on igneous basement. Continued deepening of the Salinas Basin allowed the development of a carbonate-sedimentary sequence with littoral sandstones and siliclastics; a supratidal sabkha environment with discrete evaporates (three cycles identified in the Sierra Mojada stratigraphy), carbonaceous sandstones and oolites of the marginal marine environment.

5 Sierra Mojada NI Page iv The prograding marine transgression is locally accelerated with the development of deepening shelf facies carbonates and some anoxic basinal organic-rich mudstones predating the development of a more extensive carbonate platform with extensive biothermal reef structure build-up. The prograding marine transgression and associated carbonate facies are spectacularly developed and preserved at Sierra Mojada. The stratigraphy is consistent throughout the deposit area from north to south across the Sierra Mojada Structural Zone (King 2010). The Sierra Mojada deposit was long considered to be unique without immediately obvious characteristics linking the mineralization with the more abundant Mississippi Valley Type ( MVT ) and Irish-Type base metal deposits. A broad stratigraphic control is recorded with the limestone/dolomite hosted base metal and silver mineralization. Whilst the zinc and lead dominated base metal mineralization formed distinct Manto bodies, with a possible replacement of favourable carbonate host rocks, a structural control was suggested for the mineralization in the vicinity of the Sierra Mojada Fault. This Shallow Silver Zone occurs close to surface and is deposited along and directly below an unconformity resulting from the uplift and erosion of the carbonate sequence containing the Manto horizons and associated dolomite altered carbonates. The Zone is essentially the up-dip (north) representation of the Manto horizon mineralization and its associated dolomitization. It is the result of weathering, supergene enrichment and remobilization of metals into various paleo karst structures and breccia along the unconformity. There is considerable enrichment of Ag into this horizon. This very significant mineralized zone generally lies under cover of an extensive Quaternary Alluvium horizon but is locally exposed in trenches. Mineralization within the Shallow Silver Zone commonly occurs directly below and is conformable with the contact of the Upper Conglomerate ( UC ) and the underlying carbonates. The contact is an unconformity locally containing vestige of the eroded upper carbonate sequence in the form of a ferruginous breccia ( Fbx ). Mineralization ranges from a few meters thick up to 90 m and appears to cross cut bedding as it is broadly parallel to the unconformity surface. The sub-parallel orientation of mineralization suggests the overlying Fbx layer potentially acts an aqualude layer, restricting fluid movement into the very porous overlying Upper Conglomerate. The thicker, mineralized intervals appear preferentially sited where thicker dolomite horizons underlie or are juxtaposed against the unconformity. Sample preparation, analyses and data verification All analytical work used in the project has been performed in the ALS laboratory ( ALS ) in Vancouver, BC, Canada. ALS is a leading provider of assaying and analytical testing services for mining and exploration companies. The laboratory is ISO 9001:2000 and ISO/IEC 1702S:2005 certified. SRK is of the opinion that the sample preparation, security and analysis meets or exceeds industry standards and is adequate to support a mineral resource estimate as defined under NI , but that better care should be taken in reviewing and analyzing the QA/QC. SRK downloaded all available data from ALS and compared the digital database supplied by Silver Bull against original assay data provided by ALS. A total of 19,550 assays were checked against the digital database; about 13% of the total assay population. While some discrepancies were observed, most of the errors were considered not material and most were easily explained. A few samples that did not agree with the assay certificates were not used for the resource estimate.

6 Sierra Mojada NI Page v Metallurgical testing The Sierra Mojada project has historically been subdivided into two resource areas of differing composition referred to as Zinc Manto and the Shallow Silver Zone. The Zinc Manto metallurgy has been previously discussed in the PAH and Nilsson reports. For this reason, and because zinc is not considered as part of the current resource, only the metallurgical testing associated with the Shallow Silver Zone is discussed in this section of the report. On November 11 and 12, 2009, the KCA laboratory facility in Reno, Nevada received three small sacks of Sierra Mojada material from Coeur Mexico a subsidiary of Coeur d Alene Mines Corporation. The samples were taken from the 3 level in the San Salvador Shaft, roughly 100 m below the surface and on Section East. Each of the three separate sacks contained intervals of crushed material with a top size of approximately 6.3 millimeters ( mm ). The intervals from each separate sack were combined to develop a composite sample. A total of three separate composite samples were generated and used for metallurgical testing. The samples were evaluated by bottle roll tests on coarse material on a portion of the as-received material from each of the three separate composite samples and on milled material. Sample composite head grades varied from 148 g/t silver to 1,373 g/t silver. Coarse bottle roll leach tests were conducted on a portion of the as-received material from each of the three separate composite samples. Particle size reduction can be a problem in bottle roll leach tests completed on coarse material. As such, KCA developed a testing protocol by which the bottles are allowed to roll for only one minute out of every hour during the leaching period. This intermittent agitation reduces the amount of attrition that a continuously rolled bottle roll test would have and makes the results of this type of test much more reliable with respect to determining the effect of crush size on precious metal recovery. The results of the coarse bottle roll leach tests indicated that silver recoveries on coarse material ranged from a low of 29% to a high of 47%. The results for the 96 hour bottle roll tests on milled samples indicated the following overall average extraction ratios: Between 48% and 77% for silver, based on calculated head values in the range of to 1,200.5 g/t silver; Between 7% and 49% for copper, based on calculated head values in the range of 497 to 2,434 parts per million ( ppm ) copper; and Between 2% and 20% for zinc; based on calculated head values in the range of 3,383 to 78,625 ppm zinc. The overall average sodium cyanide consumption ranged from 1.23 to 6.43 kg/t, and the hydrated lime addition was between 0.50 and 1.50 kg/t. Mineral Resources Mineral Resource estimation described in this report follows the guidelines of NI The modeling and estimate of the Mineral Resources were done by Dr. Gilles Arseneau, a qualified person with respect to Mineral Resource estimation under NI Dr. Arseneau is independent of Silver Bull and of the Sierra Mojada property. There is no affiliation between Dr. Arseneau and Silver Bull except that of an independent consultant/client relationship.

7 Sierra Mojada NI Page vi The digital database provided by Silver Bull contained a total of 14,808 header records, 1,107 from DDH, 34 from RC, 10,611 from CH and 3,056 from LH. In total, these contain 157,758 assay records, of these only 148,950 records contain silver and zinc assays values Silver mineralization occurs within dolomitized limestone, in fractures and micro veinlets. The mineralization is both parallel to bedding and cross-cutting following faults and joints within the dolomitized limestone. Modeling of individual fractures is neither possible not practical. Drilling has defined a fairly continuous mineralized zone that extends for approximately 3 km in an east-west direction. To define the mineral deposit, SRK utilized a grade shell based on 10 g/t Ag to determine the limits of the Shallow Silver Zone. The wireframe was constructed on vertical sections at 50 m spacing. The sectional modeling was assisted with a three dimensional outline generated from LeapFrog modeling software and validated on level plans at 5 m spacing. SRK reviewed all data and all quality control and quality assurance procedures utilized by Silver Bull and previous owners and concluded that from the original 48,678 assays contained within the Shallow Silver Zone, only 46,057 were suitable for use in the resource estimate. The remainder 2,621 assay records could not be verified and were eliminated from the subset used for block estimation. Because only silver and zinc were estimated, only these metals were evaluated to determine appropriate capping levels. Separate analyses were carried out for each data type and different capping levels were established for each of the data types. SRK opted to cap silver at 500 g/t for all diamond drill holes, 700 g/t for all long holes, 900 g/t for all channel samples and 200 g/t for all reverse circulation drill holes. All assay data were composited to a fixed length prior to estimation. SRK evaluated the assay lengths for the various data type and found that most samples had an average length of 1 m with 97 % of samples lengths being less than 2 m. For this reason, SRK decided to composite all assay data to 2 m prior to estimation. Several channel samples had total lengths less than 2 m. To assure that these samples did not skew the composite table, SRK diluted all short channel samples to a minimum length of 2 m. A block model was constructed to cover the entire extent of the Sierra Mojada deposit mineralization and any potential pit limits. All blocks are 5 m by 5 m by 5 m in size. Block grades were estimated by ordinary kriging. Kriging parameters were derived from a variogram analysis that was completed on the composites for each metal and within the mineralized domains. The nugget effects were established from downhole variograms. The nugget values are 20% and 25% of the total sill for silver and zinc respectively. Silver and zinc grades were estimated in multiple passes with increasing search radii. Successive passes only calculated grades into blocks that had not been interpolated by the previous passes. Mineral Resources were estimated in conformity with generally accepted CIM Estimation of Mineral Resource and Mineral Reserve Best Practices Guidelines. Mineral Resources are not mineral reserves and do not have demonstrated economic viability. The Mineral Resources may be affected by subsequent assessment of mining, environmental, processing, permitting, taxation, socio-economic and other factors. There is insufficient information in this early stage of the study to assess the extent to which the Mineral Resources will be affected by these factors that are more suitably assessed in a conceptual study.

8 Sierra Mojada NI Page vii About two thirds of the Shallow Silver Zone has been classified as Indicated. At the margin of the drill hole data, material has been classified as Inferred. In order to determine the quantities of material offering reasonable prospects for economic extraction from an open pit, SRK used a pit optimizer to evaluate the profitability of each resource block. The optimization parameters include: ore mining and processing costs over all pit slope angles and metallurgical recovery. A silver price of US$20.00 per ounce was used. SRK assumed a zero recovery for zinc and as such; the pit optimizer did not consider zinc in estimating the reasonableness of economic extraction. The reader is cautioned that the results from the conceptual pit optimization work are used solely for the purpose of reporting Mineral Resources that have reasonable prospects for economic extraction by an open pit and do not represent an attempt to estimate Mineral Reserves. Additional mineralization exists below the pit floor and could potentially be accessible by underground mining methods. To evaluate the reasonable prospect of this resource, SRK reported the mineralized resources outside of the Whittle shell at a cut-off of 70 g/t Ag. Table i summarizes the Mineral Resources as defined on October Table i: Mineral Resource Statement Shallow Silver Zone, Sierra Mojada Project, SRK Consulting (Canada) Inc., October 12, 2011 Class Domain Cut-off Tonnage (000) Ag (g/t) Zn (%) Indicated Potential Open pit >15 g/t Ag 28, Inferred Potential open pit >15 g/t Ag 9, Indicated Potential underground >70 g/t Ag Inferred Potential underground >70 g/t Ag Indicated Combined N/A 28, Inferred Combined N/A 9, The mineral resources are sensitive to the selection of cut-off grade. The reported quantities and grades are only presented as a sensitivity of the resource model to the selection of cut-off grade and contain both open pit and underground mineral resources. The steep drop in tonnage with increasing cut-off is indicative that the bulk of the tonnage of the deposit is concentrated in the lower grade ranges below 30 g/t. The linear nature of the grade tonnage curve is indicative that there does not appear to be a natural cut-off between 10 and 70 g/t Ag. SRK concluded that mineralization remained open in all directions and recommends that Silver Bull continues to explore the extent of the Shallow Silver Zone to the west. SRK recommends that Silver Bull continues to explore the Sierra Mojada property. The next phase work program should include the drilling of the Shallow Silver Zone along strike to the west, east and north of the current drilling and a detail program to better define the Red and White Zinc Manto mineralization. SRK estimates that the total costs of the next phase work program will cost about $3,500,000.

9 Sierra Mojada NI Page viii Table of Contents Executive Summary... ii Important Notice... xiii 1 Introduction Background of the Project Purpose of the Report Statement of SRK Independence Reliance on other Experts Property Description and Location Surface and Private Property Rights Accessibility, Climate, Local Resources, Infrastructure and Physiography Climate Local Resources Infrastructure History Past Production Historical Resource Estimates Geological Setting and Mineralization Regional Geology Property Geology Mineralization Zinc Manto Zone Shallow Silver Zone Structurally Controlled, Sulphide-Dominated Pb-Ag-(Cu) Cu-Ag-Pb Mineralization in Shallow, North-Dipping Structures within the Upper Conglomerate Deposit Types Exploration Drilling Introduction Peñoles Surface Diamond Core Underground Diamond Core Surface Reverse Circulation Underground Long Hole Drill hole database... 24

10 Sierra Mojada NI Page ix Long Hole pre MMC Drilling Campaigns 1999 to MMC Campaign of 2004 to 2011 (SBR from April 2011) Surface Diamond Core Underground Diamond Core Surface Reverse Circulation Underground Long Hole Sample Preparation, Analyses and Security Sample Preparation MMC-SBR Sample Preparation Procedures (2010 to Present) MMC Sample Preparation Procedures ( ) MMC Sample Preparation Procedures ( ) MMC Sample Preparation Procedures (pre-2003) Analyses Quality Assurance/Quality Control (QA/QC) Historical QA/QC Procedures Pulp Submission QAQC Procedures Core Submission QAQC Procedures Reference Standards Blank Controls Duplicate Samples Pulp Duplicates Coarse Duplicates Coarse Reject Duplicates Check Sampling Programs Precision Checks Sample Accuracy Checks Conclusions and Recommendations Data Verification Collar Coordinates Downhole Surveys Assay Data Channel Samples, Collars, and Underground Workings Mineral Processing and Metallurgical Testing Introduction Shallow Silver Zone Bottle Roll Test Work on Coarse Material... 40

11 Sierra Mojada NI Page x Bottle Roll Test Program on Milled Samples Shallow Silver Zone Metallurgical Characterization Test work Sample Selection and Preparation Zinc Minerals Silver Minerals Lead Minerals Arsenic Content Gangue Minerals Head Assays Size Fraction Analysis Sink Float Results Archimedes Spiral Results Test work in Progress Mineral Resource Estimates Introduction Resource Modeling and Estimation Data Geology and Solid Models Bulk Density Resource Modelling Mineral Resource Classification Grade model Validation Mineral Resource Statement Sensitivity of the Block Model to Selection of Cut-off Grade Adjacent Properties Other Relevant Data and Information Interpretation and Conclusions Recommendations Date and Signature Page References... 78

12 Sierra Mojada NI Page xi List of Tables Table i: Mineral Resource Statement Shallow Silver Zone, Sierra Mojada Project, SRK Consulting (Canada) Inc., October 12, vii Table 3.1: List of mining concessions held by SBR... 7 Table 3.2: Summary of joint venture obligations... 8 Table 5.1: Summary of previous resource estimates Table 10.1: Summary assay of standard reference material Table 10.2: Analyses of new blank material Table 12.1: Milled Bottle roll test results Table 12.2: Comparison of composite sample head assay grades Table 12.3: Cyanide soluble silver Table 12.4: Composite No 1 screen assays as received Table 12.5: Composite No 1-1/2 in crush Table 12.6: Composite No 2 Screen assay as received Table 12.7: Composite No 2-1/2 in crush Table 12.8: Composite No 3 screen assay as received Table 12.9: Composite No 3-1/2 in crush Table 12.10: Archimedes spiral test results Table 13.1: Basic statistical data of all database data Table 13.2: Summary of Bulk Density Measurements by Year Table 13.3: Comparison of Metalline and SGS bulk density measurements Table 13.4: Specific gravity per geological unit Table 13.5: Statistical information for assays contained within Shallow Silver Zone Table 13.6: Silver capping levels Table 13.7: Zinc capping levels Table 13.8: Statistical data of 2 metre composited data Table 13.9: Resource Block Model Extent Table 13.10: Silver and zinc correlogram parameters for Shallow Silver Zone Table 13.11: Search ellipse parameters Table 13.12: Mineral Resource Statement Shallow Silver Zone, Sierra Mojada Project, SRK Consulting (Canada) Inc., October 12, Table 17.1: Proposed recommended budget... 76

13 Sierra Mojada NI Page xii List of Figures Figure 3.1 Property location map... 4 Figure 3.2 Mining concession map... 5 Figure 3.3 Mining concessions in resource area... 6 Figure 3.4 Surface rights controlled by SBR... 9 Figure 6.1 Shallow Silver zone exposed in surface trench Figure 9.1 Planview of diamond drilling Figure 9.2 Cross section E looking east. Grid is 100 m by 100 m Figure 9.3 Cross section E looking east. Grid is 100 m by 100 m Figure 10.1 Graphical performance of Standard K Figure 10.2 Graphical representation of Standard K Figure 13.1 Three dimensional view of the Shallow Silver zone wireframe Figure 13.2 Scatter plot of Metalline and SGS bulk density data Figure 13.3 Comparison of average grade and assay length Figure 13.4 QQ Plot of silver grades for DH estimated blocks compared with CH estimated blocks Figure 13.5 QQ Plot of silver grades for DH estimated blocks compared with LH estimated blocks Figure 13.6 Directional correlograms from 2 m composited silver data Figure 13.7 Directional correlograms from 2 m composited zinc data Figure 13.8 Three dimensional perspective of block classification (looking down) Figure 13.9 Grade tonnage curve for blocks classified as Indicated mineral resources Figure Grade tonnage curve for blocks classified as inferred mineral resources... 71

14 Sierra Mojada NI Important Notice Page xiii This report was prepared as a National Instrument Technical Report for Silver Bull Resources Inc. ( Silver Bull or SBR ) by SRK Consulting (Canada) Inc. ( SRK ). The quality of information, conclusions, and estimates contained herein is consistent with the level of effort involved in SRK s services, based on: i) information available at the time of preparation, ii) data supplied by outside sources, and iii) the assumptions, conditions, and qualifications set forth in this report. This report is intended for use by Silver Bull and subject to the terms and conditions of its contract with SRK and relevant securities legislation. The contract permits Silver Bull to file this report as a Technical Report with Canadian Securities regulatory authorities pursuant to National Instrument , Standards of Disclosure for Mineral Projects. Except for the purposes legislated under provincial securities law, any other uses of this report by any third party is at that party s sole risk. The responsibility for this disclosure remains with Silver Bull. The user of this document should ensure that this is the most recent Technical Report for the property as it is not valid if a new Technical Report has been issued.

15 Sierra Mojada NI Page 1 1 Introduction This technical report was prepared for Silver Bull Resources Inc. ( Silver Bull or SBR ). It discloses an updated mineral resource estimate for the Sierra Mojada Project, Coahuila State, Mexico. Specifically, the report focuses on the silver mineralization found near surface on the property and generally referred to as the Shallow Silver Zone. The Sierra Mojada Project has been the subject of previous technical reports by Ronald Simpson and John Nilsson ( Nilsson report ) in April 2011 and by Pincock Allan & Holt ( PAH ) in January 2010 which disclosed mineral resource estimates for the Shallow Silver Zone and the Red Zinc Zone respectively. SRK has relied on the Nilsson report for sections 3 through 8 of this report and on the PAH report for section 12. Mineral resources presented in this report are not intended to replace or update the mineral resources prepared for the Red Zinc Zone prepared by PAH. However, the mineral resources presented in this report do cover some of the same ground estimated by PAH in As such, the PAH estimate should no longer be relied upon as a current mineral resource estimate as defined in National Instrument ( NI ) Mineral resource estimates disclosed in the Nilsson report are being replaced by the estimates presented in this report and are no longer considered current. The effective date of this report is August 31, Background of the Project Silver Bull Resources Inc., formerly known as Metalline Mining Company ( Metalline or MMC ) is currently exploring the Sierra Mojada property and is in the process of defining mineral resources in both the Shallow Silver Zone and the deeper Red Zinc Zone. The Company plans to complete a 23,000 metre ( m ) drill program by year-end Purpose of the Report The purpose of this Report is to provide an independent technical assessment of the mineral resources found on the Sierra Mojada property within the Shallow Silver Zone on behalf of Silver Bull. Dr. Gilles Arseneau, P. Geo. visited the site on July 27 and 28, 2011 and on October 1 to October 3 rd. The purpose of the visits was to review the geology and mineralization encountered on surface and in the drill holes completed to date and to review the sampling, quality assurance/quality control ( QA/QC ), sample preparation and analytical protocols and procedures established by Silver Bull. This Report is to comply with the technical property information required under various securities laws of Canada. The source of information for this report came mainly from data collected during the site visit, assay data obtained directly from ALS Chemex, the assay laboratory responsible for the chemical analyses, a technical report prepared by Nilsson, and from data made available by Silver Bull.

16 Sierra Mojada NI Page Statement of SRK Independence Neither SRK nor any of the authors of this Report have any material present or contingent interest in the outcome of this Report, nor do they have any pecuniary or other interest that could be reasonably regarded as being capable of affecting their independence or that of SRK. SRK has no prior association with Silver Bull in regard to the mineral assets that are the subject of this Report. SRK has no beneficial interest in the outcome of the technical assessment being capable of affecting its independence. SRK s fee for completing this Report is based on its normal professional daily rates plus reimbursement of incidental expenses. The payment of that professional fee is not contingent upon the outcome of the Report.

17 Sierra Mojada NI Page 3 2 Reliance on other Experts SRK has not conducted independent land status evaluations, and has relied upon information provided by Silver Bull regarding the property status, legal title, and environmental compliance for the project, which SRK believe to be accurate.

18 Sierra Mojada NI Page 4 3 Property Description and Location The Sierra Mojada Project area is situated in the northwestern part of Coahuila State, Mexico at latitude North and longitude West, close to the border with Chihuahua State (Figure 3.1). It is accessible by paved roads from the city of Torreon, Coahuila, which lies about 250 kilometers ( km ) to the southwest. The Sierra Mojada project site is situated to the south of the village of Esmeralda, on the northern side of a major escarpment that forms the northern margin of the Sierra Mojada range. In general, the site is about 1,500 m above sea level. Source: Simpson and Nilsson, 2011 Figure 3.1: Property location map Silver Bull operates in México through a wholly owned Mexican subsidiary; Minera Metalin S.A. de C.V. All minerals in Mexico are owned by the federal government and mineral rights are granted by soliciting mining concessions, which by law have priority over surface land use, but in practice the concessions owner must have an agreement with the surface owner. License locations are shown in Figure 3.2 and Figure 3.3; note claims outlined in green are not owned by SBR and excluded from the resource estimation. SRK understands that all necessary agreements are in place and that the mining concessions are in good standing for the resource estimates presented in this report. Table 3.1 shows the mining concessions currently controlled by SBR. Total area for these licences combined is 21,176 hectares ( ha ).

19 Sierra Mojada NI Page 5 Source: SBR, 2011 Figure 3.2: Mining concession map

20 Sierra Mojada NI Page 6 Source: SBR, 2011 Figure 3.3: Mining concessions in resource area

21 Sierra Mojada NI Page 7 The legal opinion provided by SBR states that the current mining law in Mexico allows for the concession to be issued for 50 years. This law was made effective April 29, 2005 and concessions issued prior to this change in mining law will have the expiration date of the concession amended to reflect the 50-year period. SRK has relied on representations and legal opinions provided by Silver Bull regarding the legal disposition of mining concessions. SBR holdings cover all the mineralized zones. No mining operations are currently active within the area, except for a dolomite quarry by Peñoles near Esmeralda. Table 3.1: List of mining concessions held by SBR Claim ID Area (Ha) Comment SIERRA MOJADA Staked SIERRA MOJADA Fraccion I 0.47 Staked SIERRA MOJADA Fraccion II 0.01 Staked SIERRA MOJADA Fraccion III 0.33 Staked SIERRA MOJADA Fraccion IV 1.18 Staked MOJADA 3 (Reduccion) Purchased ESMERALDA Purchased ESMERALDA I Purchased LA BLANCA Purchased FORTUNA Purchased VULCANO 4.60 Purchased UNIFICACION MINEROS NORTEÑOS Purchased LOS RAMONES 8.60 Purchased EL RETORNO Purchased EL RETORNO FRACC. I 5.51 Purchased VOLCAN DOLORES Purchased MOJADA Staked DORMIDOS Staked AGUA MOJADA Claim Filed PODER DE DIOS Purchase Option ANEXAS A PODER DE DIOS 8.00 Purchase Option AMPLIACION DE PODER DE DIOS Purchase Option VETA RICA o LA INGLESA Purchase Option LA PERLA Purchase Option LA INDIA Purchase Option LA INDIA II 9.84 Purchase Option YOLANDA III 6.51 Purchase Option NUEVAS DULCES NOMBRES Purchase Option OLYMPIA 8.97 Purchase Option

22 Sierra Mojada NI Page 8 Claim ID Area (Ha) Comment FORTALEZA Purchase Option AMPL FORTALEZA Purchase Option ALOTE Fracc. I Staked ALOTE Fracc. II Staked ALOTE Fracc. III 1.65 Staked ALOTE Fracc. IV 5.60 Staked ALOTE Fracc. V 2.16 Staked ALOTE Fracc. VI 7.54 Staked COLA SOLA Staked ESMERALDA I Fraccion I 0.74 Staked ESMERALDA I Fraccion II 0.03 Staked The Sierra Mojada property is subject to three separate joint venture agreements, the Poder de Dios, the Veta Rica and the Valdez option agreement. Table 3.2 summarizes the obligations of each agreement. Table 3.2: Summary of joint venture obligations Agreement Agreement date Payment remaining Last payment date Poder de Dios March 2010 Between $4,800,000, and April 27, 2012 $9,700,000 1 to 2016 Veta Rica April 2010 $800,000 April 21, 2014 Perla, India, India April 2010 Between $ 5,200,000 and $6,200,000 2 April 21, 2015 Olympia August 2011 $147,690 August 2013 Centenario and Yolanda III August 2011 $ 6,950,000 August 2015 Note: 1 Includes final purchase payment $7 million which could be $ 4 million if a final payment is made in 2012 (and is incremental by $ 1 million in 2014 and 2015); 2 includes final purchase payment of $5 million which could be $ 4 million if a final payment is made in includes final purchase payment of $4 million for Centenario and $2 million for Yolanda III 3.1 Surface and Private Property Rights As shown in Figure 3.4, approximately 80% of the area of interest (labelled "Municipality ) is currently owned by the Federal Government. The Municipality have applied to the Federal Government in order for the Federal Government to cede the rights to the Municipality (a formality since the Federal Government is not allowed to sell surface rights according to Mexican law. SBR are already in discussions with the municipality of Sierra Mojada for acquisition of the surface rights once ceded. All of SBR s fixed assets, including offices and buildings, are on land owned by SBR..

23 Sierra Mojada NI Page 9 Source: Simpson and Nilsson, 2011 Figure 3.4: Surface rights controlled by SBR

24 Sierra Mojada NI Page 10 4 Accessibility, Climate, Local Resources, Infrastructure and Physiography Sierra Mojada is connected to Torreon by about 250 km of a paved, mostly two lane highway. Fair weather dirt roads sometimes provide a shorter alternative for going north without first going south to Torreon. These routes connect to the interstate highway at Camargo via Hercules or at Escalon via the Bolson de Mapimi. Esmeralda is served by a spur of the Coahuila Durango railroad. There is a loading dock with railroad car weigh scales. Direct shipping ore has been sent through Monclova regularly to the USA via Eagle Pass, Texas. Service is also available to Chihuahua and the western USA via El Paso. All points south are connected through Torreon or Monterrey. Although there is an airstrip east of Esmeralda, the government rarely allows aircrafts to land there. There is a paved functional airstrip at the Peñoles magnesite plant situated 55 km to the east of the Sierra Mojada project area. Most landings are generally reserved for Peñoles staff. The Peñoles airstrip is the closest one to Sierra Mojada that can be used for medical evacuation. Advance reservations with Peñoles are required to use the facility. Commercial flights to Torreon are available from most major airports in Mexico, and there are daily international flights from Dallas and Houston. 4.1 Climate The climate is arid and warm. The average annual temperature is 14 to 16 degrees Celsius ( º C ), with rainfall of 400 to 500 millimetres ( mm ) per year. The highest daily temperatures are typically experienced in May, and the maximum temperature is moderated by rainfall in the months of June through October. Freezing occurs from time to time during the winter, and there is occasionally snow. Temperatures below freezing occur less than 20 days out of the year in most years. Winds are highly variable, but strong southerly winds coming down from the mountains are common. Streams are ephemeral and wells with acceptable water quality are tens to hundreds of meters deep. The physical relief in the project area varies from virtually flat to near vertical cliff faces on the southern boundary of the project site. The majority of the mineral concessions are located in areas at the base of the cliffs where there is moderate relief with numerous stream forming gullies that erode the surface alluvium. The area is high desert covered by scrub vegetation; comparable to the Basin and Range in Nevada. Mining operations are viable throughout the year. 4.2 Local Resources The Sierra Mojada Project area is located south of the paved road linking La Esmeralda with Sierra Mojada town; both serve as centers for the local workforce and minor supplies for the project. Most of the area adjacent to the project site is used for cattle ranching; however, the southeastern boundary of the project abuts the Peñoles dolomite extraction and processing facility. The Peñoles quarrying facility contains associated waste piles and a 1 km long conveyor belt that transports crushed dolomitic carbonate aggregate of specific magnesium carbonate grade to the railroad spur for transportation to the Peñoles process plant known locally as Quimica del Rey.

25 Sierra Mojada NI Page Infrastructure A rail line utilized by Peñoles to transport material to its chemical plant extends west to La Esmeralda, and the remains of an older section extends right up to old workings and loading facility located south of La Mesa Blanca right in the center of the Sierra Mojada Camp. The spur line connects the main national line which connects Escalon and Monclova. Rail traffic to the east is through Frontera to the United States, via Eagle Pass, Texas, southward to Monterrey, or via the seaport at Altamira. Service to the west is also available, as well as to the western USA via El Paso, or to points south connected through Torreón. Although power levels are sufficient for current operations and exploration, any development of the project would potentially require additional power supplies to be sourced. The Comisión Federal de Electricidad (English: Federal Electricity Commission) is the Mexican state-owned electricity monopoly, widely known as CFE, which provides service to the area. High voltage (13,400 v) power is available to the vicinity of the head frames of the San Salvador shaft (500 KVA), the Encantada shaft (300 KVA), and the Metalline shop area (112.5 KVA).

26 Sierra Mojada NI Page 12 5 History The following historical summary has been taken from the Nilsson report, the PAH 2010 report, and was also compiled in part from previous reports written by R.W. Hodder and MMC. Silver and lead were first discovered by a foraging party in 1879, and mining to 1886 consisted of native silver, silver chloride, and lead carbonate ores. After 1886, silver-lead-zinc-copper sulphate ores within limestone and sandstone units were produced. No accurate production history has been found for historical mining during this period. Approximately 90 years ago, zinc silicate and zinc carbonate minerals ( Zinc Manto Zone ) were discovered underlying the silver-lead mineralized horizon. The Zinc Manto Zone is predominantly zinc dominated, but with subordinate Lead rich manto and is principally situated in the footwall rocks of the Sierra Mojada Fault System. Since discovery and up to 1990; zinc, silver, and lead ores were mined from various mines along the strike of the deposit including from the Sierra Mojada property. Ores mined from within these areas were hand sorted and the concentrate shipped mostly to smelters in the United States. Activity during the period of 1956 to 1990 consisted of operations by the Mineros Norteños Cooperativa and operations by individual owners and operators of pre-existing mines. The Mineros Norteños operated the San Salvador, Encantada, Fronteriza, Esmeralda, and Parrena mines, and shipped oxide zinc ore to Zinc National s smelter in Monterrey, while copper and silver ore were shipped to smelters in Mexico and the United States. The principal mines operated by individuals and lessors were the Veta Rica, Deonea, Juárez, Volcán I and II, Once, San Antonio, San José, San Buena, Monterrey, Vasquez III, Tiro K, El Indio and Poder de Dios. The individual operators were mainly local residents, such as the Farias, Espinoza, and Valdez families. In the early 1990 s, Kennecott Copper Corporation ( Kennecott ) had a joint venture agreement involving USMX s Sierra Mojada concessions. Kennecott terminated the joint venture in approximately Metalline entered into a Joint Exploration and Development Agreement with USMX in July 1996 involving USMX s Sierra Mojada concessions. In 1998, Metalline purchased the Sierra Mojada and the USMX concessions and the Joint Exploration and Development Agreement was terminated. Metalline also purchased the Esmeralda, Esmeralda I, Unificación Mineros Norteños, Volcán, La Blanca and Fortuna concessions, and conducted exploration for copper and silver mineralization from 1997 through During this period, exploration consisted of reverse circulation ( RC ) drilling which intersected significant zinc mineralization. In October of 1999, Metalline entered into a joint venture with North Limited of Melbourne, Australia (now Rio Tinto). Exploration by North Limited consisted of underground channel samples in addition to surface RC and diamond drilling. North Limited withdrew from the joint venture in October A joint venture agreement was made with Peñoles in November The agreement allowed Peñoles to acquire 60%of the project by completing a bankable Feasibility Study and making annual payments to Metalline.

27 Sierra Mojada NI Page 13 During 2002, Peñoles conducted an underground exploration program consisting of driving raises through the oxide Zinc Manto, diamond drilling, continuation of the percussion drilling, and channel sampling of the oxide zinc workings (stopes and drifts) previously started by Metalline in 1999 and continued by North in 2000 and Metalline during The workings operated by the Norteños Cooperativa in the Zinc Manto allow access to the entire Zinc Manto in the San Salvador, Encantada, and Fronteriza mine operations. The objective of Peñoles`s 2002 program, in addition to evaluating the Zinc Manto mineralization, was to compare the quality and consistency of sampling methods. Peñoles developed diamond drill sites in the San Salvador and Encantada mines. It also developed raises through the vertical extent of the Zinc Manto. Bulk samples of raise muck and channel samples of the raise walls were collected at one meter intervals. Percussion and diamond drill holes were drilled parallel to the raises and also sampled at one meter intervals. The Peñoles 2003 program continued the underground channel sampling and included percussion and diamond drilling from the surface. In addition to drilling the manto along its extent in the three mines, Peñoles conducted step out drilling to the east and west. Peñoles drilled holes on fences spaced 200 m apart east of the Fronteriza mine toward the Oriental mine, a distance of nearly 2 km. The holes were spaced 50 to 100 m in a north-south direction along the fences. To the west Peñoles followed up the North Limited drilling in the vicinity of the San Antonio mine, 2 km west, which confirmed and extended the mineralization. In December 2003, the joint venture was terminated by mutual consent between Peñoles and Metalline. Peñoles had other projects it preferred to fund and Metalline was interested in re-acquiring a 100% interest in the project. From 2003 to April 2010, Metalline continued sampling numerous underground workings through channel and grab samples as well as completing underground and surface drill holes exploring the zinc-silver mineralization. Subsequent to the merger with Dome Ventures in April 2010 underground exploration of the Zinc Zone was terminated. Focus was switched to a surface diamond drill program exploring near surface low grade bulk tonnage silver-zinc mineralization or the same style of mineralization above and updip from the hemimorphite zinc mineralization. The program is on-going. 5.1 Past Production Total production from the Sierra Mojada district is estimated at approximately 10 million short tons of silver, zinc, lead, and copper ore. Numerous shaft and smaller underground workings are located within the district and the current tenement holdings of Silver Bull. Estimates from 1931 put production along the mineralized trend, of which the Sierra Mojada property is a subset, at approximately 5 million short tons (all of the following will be short tons). That compares with Shaw, who in his 1922 AIME paper estimated that production to 1920 was 3 to 3.5 million tons of lead-silver ores; and 1.5 to 2 million tons of Ag and Cu-Ag ores. Based on fragmented records, anecdotal evidence and stope volumes, perhaps 900,000 tons of additional oxide zinc may have been mined from Red Zinc and White Zinc areas on the Sierra Mojada property. Significant production occurred between 1920 and 1950 from the district with the involvement of major international mining companies operating small daily tonnage mines during that period.

28 Sierra Mojada NI Page 14 To date approximately 150 km of underground workings have been surveyed on the property. This represents approximately 4 million tonnes of development attributable to the Sierra Mojada property. These workings are mostly accessed through vertical shafts. 5.2 Historical Resource Estimates While the area has hosted mining activity for over 100 years and there has been some 10 million tonnes produced from the Sierra Mojada trend, no significant reliable historical resource estimates exists for the deposit. Prior NI compliant mineral resources have been prepared for the property; namely a mineral resource prepared by PAH in January 2010 covering the Shallow Silver Zone and the Zinc Manto Zone and a mineral resource estimate prepared by Simpson and Nilsson in April 2011 covering the Shallow Silver Zone only (Table 5.1). These estimates are documented in technical reports listed in the Reference section of this report and available on SEDAR. The estimates are reliable and relevant to the property. The Simpson and Nilsson estimate and the PAH estimate for the Shallow Silver Zone are being replaced by the estimate presented in Section 17 of this report. The Zinc Manto has been partially re-estimated by SRK, as such the PAH estimate for the Zinc Manto is no longer considered current and should not be relied upon. Table 5.1: Summary of previous resource estimates Author Zone Class Cut- off Tonnes Ag (g/t) Zn (%) PAH Shallow Ag Inferred 60 (g/t Ag) 28,422, PAH Zn Manto Inferred 6% Zn 20,405, Nilsson Shallow Ag Indicated 20 (g/t Ag) 9,235, ND Nilsson Shallow Ag Inferred 20 (g/t Ag) 15,258, ND

29 Sierra Mojada NI Page 15 6 Geological Setting and Mineralization 6.1 Regional Geology Regionally, the Sierra Mojada mineralized system sits along one of a series of broad NW-SEtrending major structural zones that extend across northern and eastern Mexico east of the Sierra Madre foreland terrane. The entire region forms part of the Eastern Zone, one of the three geological terranes of Mexico. The regional geology reflects events dating to Late Jurassic-Early Cretaceous time on the eastern margin of the North American craton. Three NW-SE-trending structural zones are identified in this part of the Eastern Zone of northeastern Mexico (McKee et al. 1990): 1. The Sabinas Fault system or lineament crossing northern Coahuila, otherwise known as the La Babia Fault system, extends northwest into the south western US. 2. A basin margin controlling structure in central Coahuila forming the northern structural boundary to a Late Jurassic-Early Cretaceous landmass known as `The Coahuila Island`. This central structure is variously named the San Marcos Fault or Sierra Mojada Fault (McKee and Jones, 1979). The structure is well represented within the Sierra Mojada property where it exerts significant controls on stratigaphy and mineralization in a system that includes the Sierra Mojada Structural Zone. 3. To the south a postulated mega structure transecting the whole of northern Mexico the Saltillo- Torreon fracture zone, also known as the Mojave-Sonora mega shear (McKee et al. 1990). Focusing into the margin of the Sabinas Basin, in the vicinity of the Sierra Mojada property, the Sierra Mojada Structural Zone formed the northern basin margin controlling structure at the southern margin of the Salinas Basin in the Late Jurassic-Early Cretaceous. Rifting along the Salinas Basin margin (the Salinas Basin itself an auloacogen of the proto Gulf of Mexico basin), dates from the early Jurassic, and continues through the Jurassic, with the deposition of material into the newly formed basins formed on the deformed Palaeozoic basement (deformed and recrystallized during the Permian Alleghanian Orogeny and accreted onto the Precambrian North American craton). The onset of the early Cretaceous witnessed the opening of a back-arc basin east of the Sierra Madre terrane (and west of The Coahuila Island high). The early Cretaceous witnessed continued erosion and deposition of material derived from basement high features such as that on the Coahuila Island followed by a period of quiescence, a marine transgression into the Salinas Basin, and the development of a significant Cretaceous carbonate platform within the Salinas Basin and associated shelf. Initial siliclastic sediments, restricted evaporite sequences, and incipient carbonates accumulated and developed on the late Jurassic-Early Cretaceous molasse debris already accumulating in the Salinas Basin and elsewhere in this part of eastern Mexico. Carbonate build-up continued unabated, with local in-basin cyclicity and sub-basin development through the Cretaceous. The Late Cretaceous-Eocene witnessed a dramatic disruption in events with the closure of the backarc basin and a cessation of the extensional regime of subsidence and basin development/infill (as recorded in the Salinas Basin). The onset of the Laramide Orogeny resulted in inversion and uplift (with the cessation of the extensional regime) across northern Mexico and extending into the western US resulting in the thrust and fold belt in the foreland of the Sierra Madre and farther north in the Rocky Mountains.

30 Sierra Mojada NI Page 16 The tumultuous sequence of events included Late Cretaceous-early Eocene ridge subduction along with the closure of the back-arc (accompanied by early Cretaceous emplacement of porphyry copper mineralization along the arc and significant skarn/manto Zn-Pb-Ag mineralization along the continental foreland farther to the west) (King 2010). 6.2 Property Geology The Sierra Mojada area contains a well preserved, locally continuous Cretaceous stratigraphic sequence, representing a marine transgression onto the Late Jurassic red bed conglomerates of the San Marcos Formation. The San Marcos Formation itself is deposited on an igneous basement. Continued deepening of the Salinas Basin allowed the development of a carbonate-sedimentary sequence with littoral sandstones and siliclastics; a supratidal sabkha environment with discrete evaporates (three cycles identified in the Sierra Mojada stratigraphy), carbonaceous sandstones, and oolites of the marginal marine environment. The pro-grading marine transgression is locally accelerated with the development of deepening shelf facies carbonates and some anoxic basinal organic-rich mudstones predating the development of a more extensive carbonate platform with extensive biohermal reef structure build-up. The pro-grading marine transgression and associated carbonate facies are spectacularly developed and preserved at Sierra Mojada. The stratigraphy is consistent throughout the deposit area from north to south across the Sierra Mojada Structural Zone (King 2010). 6.3 Mineralization The Sierra Mojada deposit was long considered to be unique without immediately obvious characteristics linking the mineralization with the more abundant Mississippi Valley Type (MVT) and Irish-Type base metal deposits. A broad stratigraphic control is recorded with the base metal and silver mineralization limestone/dolomite hosted. While the zinc and lead dominated base metal mineralization formed distinct Manto bodies, with a possible replacement of favourable carbonate host rocks, a structural control was suggested for the mineralization in the vicinity of the Sierra Mojada Fault (Sierra Mojada Structural Zone. The basic mineralization zones are redefined as follows: 1. Zinc Manto Zone. Predominantly zinc dominated, hemimorphite being the principal zinc mineral, but with subordinate silver and Lead rich manto (principally situated in the footwall rocks of the Sierra Mojada Fault System) 2. Shallow Silver Zone. Essentially the up-dip representation of the manto mineralization with supergene enrichment of silver in various breccias zones, predominantly of karstic derivation, located within and directly below a significant unconformity which represents the erosion of upper parts of the carbonate sequence and extending deeper into favourable dolomitized horizons. Thicker zones of mineralization are directly related to the extensive shear zone developed by the Sierra Mojada fault system. 3. White Zinc Zone. Discordant zinc mineralization in the form of smithsonite deposited as extensive karstic cavern fill. The structural intersection between the northeast trending Calabazas fault system with the east-west Sierra Mojada fault system regarded as a key component.

31 Sierra Mojada NI Page Structurally controlled, sulphide-dominated Pb-Ag-(Cu) mineralization occurring along select segments of the Sierra Mojada Fault Zone principally along north-dipping structural segments along the Upper Conglomerate-Carbonate contact (Veta Rica Type mineralization). 5. Various Cu-Ag-Pb mineralization occurrences on locally mineralized shallow, north-dipping structures within the upper conglomerate and even within tectonic, structurally controlled allochthonous `rafts` in the Upper Conglomerate. 6. Disseminated copper mineralization within carbonaceous sandstones and siliclastics in the lower parts of the carbonate sequence as observed in some of the older workings on the `North-side` e.g. Tiro Escobedo and Tiro Volcan. PAH summarized the mineralization in the 2010 Technical Report. This description is has been adapted below for continuity Zinc Manto Zone Mineralization within the Zinc Manto Zone consists of two forms of predominantly supergene zinc oxide, differentiated historically based on oxide coloration into: Red Zinc and White Zinc Zones. Both zones are zinc rich, with lower concentrations of silver and lead mineralization. However, lead is locally concentrated in the vicinity of the Zinc Manto in contiguous pods known historically as the Lead Manto. The Red Zinc Zone plunges towards an azimuth of 110 o with a 30 o dip to the south. The White Zinc Zone has a discordant, subvertical control to mineralization. Red Zinc Zone The Red Zinc Zone has a measured strike extent of 2,400 m in an east-west direction and a thickness up to 100 m. The zone appears to be parallel or semi-parallel to the primary dolomitic host rocks, perhaps implying a primary genetic association. The zone dips to the south at approximately 15 o. PAH interpreted a higher grade zone, containing semi-massive to massive hemimorphite (with minor smithsonite), within a halo of fracture fill and replacement zinc mineralization. This high grade zone is porous and vuggy and has a rarity of sulphide minerals (PAH). Hemimorphite is by far the major mineral in this zone; however, smithsonite (zinc carbonate) is commonly associated, giving rise to the white streaks commonly found within the zone. The higher grade zinc mineralization commonly contains a suite of cross-cutting iron oxide veins set as observed in several drill core intercepts. The halo surrounding the high grade zone has a lower concentration of iron oxide minerals which occur either as fracture fill veinlets or diffuse replacement along the fractures of the host limestone/dolomite. Hodder (2001) summarizes the Red Zinc Zone as follows: Such zonations support an interpretation that fluids have penetrated limestone, affected dolomitization along grain boundaries, and in some instances completely replaced primary calcite. Dolomitization caused a volume reduction that made open spaces in which iron oxides, zinc silicates and zinc carbonate minerals precipitated. Sulphide minerals are sparse, on fractures, and at local sites of reduction. In this interpretation, the Red Zinc Zone is epigenetic and superimposed on a selectively dolomitized horizon in the Aurora formation. There is no mineralogical or textural evidence that the manto is supergene - the product of weathering of previously existing sulphide mineral species.

32 Sierra Mojada NI Page 18 Hematite is usually associated with a general increase in zinc grade, whether as fracture fill in the peripheries or massive hemimorphite with iron oxide (hematite) veins in the central high grade parts of the zinc zone. This general increase in iron oxide is consistent with fluid penetration of limestone as described by Hodder. White Zinc Zone The white zinc mineralization is smithsonite dominated and commonly underlies the Red Zinc Zone but in several occurrences lies adjacent, possibly due to structural control to the mineralizing fluids. The White Zinc Zone is slightly higher in zinc grade than the Red Zinc Zone, with lower lead and more aluminum. Mineralogically, the White Zinc Zone differs from the Red Zinc Zone with significantly lower iron oxide content and a much higher concentration of smithsonite and lower hemimorphite (Clark et al. 2010). Vugs are extremely common with open spaces up to 1 m being reported. The geometry of the Zinc Manto Zone is poorly understood due to the limited drilling in the vicinity of the deposit; however, interpretations suggest a chimney-like shape. The zinc body is hosted by south-dipping dolomitized bedded limestones. The majority of the zinc zone consists of smithsonite interbedded with calcite. It is unclear if the Red Zinc Zone and White Zinc Zone are the result of direct replacement or fracture/cavern fill deposits Shallow Silver Zone This Shallow Silver Zone occurs close to the present day surface and has three key depositional criteria, one or all of which come into play at any one time: i) Structural control by the open space created from shearing in the Sierra Mojada fault system in proximity to the unconformity; hence the Shallow Silver Zone follows the trace of the Sierra Mojada fault. Shallow Silver Zone mineralization tends to be thickest in proximity to the fault zone. ii) Unconformity control. Secondary silver deposition was clearly controlled by proximity to the Cretaceous-Tertiary weathering surface. iii) Favourable host rock. Dolomite in proximity to the Sierra Mojada fault and (or) the unconformity are clearly a favourable host rock for the secondary silver mineralization. The zone is essentially the up-dip (north) representation of the Manto horizon mineralization and its associated dolomitization. It is the result of weathering, supergene enrichment and remobilization of metals into various paleo karst structures and breccia along the unconformity. There is considerable enrichment of Ag into this horizon. This very significant mineralized zone generally lies under cover of an extensive Quaternary Alluvium horizon but is locally exposed in trenches (Figure 6.1).

33 Sierra Mojada NI Page 19 Figure 6.1: Shallow Silver Zone exposed in surface trench Mineralization within the Shallow Silver Zone commonly occurs directly below and is conformable with the contact of the Upper Conglomerate ( UC ) and the underlying carbonates. The contact is an unconformity locally containing vestiges of the eroded upper carbonate sequence in the form of a ferruginous breccia ( Fbx ). Mineralization ranges from a few meters thick up to 90 m and appears to cross cut bedding as it is broadly parallel to the unconformity surface. The sub-parallel orientation of mineralization suggests the overlying Fbx layer potentially acts an aqualude layer restricting fluid movement into the very porous overlying Upper Conglomerate. The Shallow Silver Zone is silver dominated with subordinate zinc. There are some zinc-rich intervals associated with iron oxide-rich dolomite altered carbonate intervals Structurally Controlled, Sulphide-Dominated Pb-Ag-(Cu) Structurally controlled, sulphide-dominated Pb-Ag-(Cu) mineralization occurs along select segments of the Sierra Mojada Fault Zone principally along north-dipping structural segments of the Upper Conglomerate-Carbonate contact. This mineralization is situated on the north side of, and along, the Sierra Mojada Fault. It encompasses much of the mineralization formerly defined as `North-Side` mineralization. The mineralization is believed to be epigenetic, controlled by shallow north-dipping fault components defining the UC-Carbonate contact. The type area for this mineralization is at the Veta Rica Mine, one of the very rich early `bonanza` deposits at Sierra Mojada.

34 Sierra Mojada NI Page 20 The Veta Rica mineralization is predominantly silver and lead dominated with silver generally occurring as argentiferous galena. Ore from Veta Rica was shipped directly for processing Cu-Ag-Pb Mineralization in Shallow, North-Dipping Structures within the Upper Conglomerate Variable Cu-Pb-Ag mineralization occurs on localized shallow, north-dipping structures within the upper conglomerate and also within tectonic, structurally controlled allochthonous `rafts` in the Upper Conglomerate. The type area is termed La Mesa Blanca and consists of bright red oxide zones in altered, indurated, tectonized and mineralized conglomerate breccias beneath the carbonate cap on La Mesa Blanca. Samples of this Cu-rich mineralized horizon can contain up to 5% Cu with significant Ag and Pb values.

35 Sierra Mojada NI Page 21 7 Deposit Types The Sierra Mojada Deposit is very unique and does not easily lend itself to common deposit type definitions. Both the zinc and silver mineralization bodies are hosted in limestone and dolomite carbonate sequences. Morphologically, these bodies are zinc dominated mantos indicating broad stratigraphic control but also related to dolomitization. There also appears to be significant structural control to mineralization proximal to the Sierra Mojada Fault System. The Sierra Mojada deposit has a total absence of high temperature mineral phases either in the deposit or as spatially and temporally related peripheral alterations (Hodder, 2001). No direct evidence of replacement of sulphide minerals by oxide minerals is found. The deposits are probably low temperature carbonate hosted deposits formed from basinal brines. This interpretation differs from the high temperature carbonate replacement deposits ( CRD ) commonly found throughout northern México, and in the United States in Arizona and New Mexico.

36 Sierra Mojada NI Page 22 8 Exploration The exploration summary is compiled from the Nilsson report and data provided by Silver Bull. Bedrock exposures in the area are generally extremely poor except in areas that have been previously mined. Geochemical methods have not been a primary exploration tool because of the extensive historical mining. Extremely high background numbers for zinc, in the percent range, are common close to zinc deposits. Rock sampling is the most important exploration and evaluation tool, but conventional low-level trace element geochemical surveys are rarely used in the area. Metalline collected and compiled older mine maps and drill core assays, surface and underground mine mapping, and sampling. Channel sampling was used to identify areas of interest, followed by long hole percussion drilling to extend samples away from old workings, and finally, underground and surface core drilling was used to further extend sampling. Surface trenching and excavation of a bulk sample was undertaken in Silver Bull carried out a mapping and prospecting campaign targeting the San Francisco Canyon, Palomas Negras, and Dormidos prospects. This first pass program focused initially on the historical mine workings before expanding into the wider surrounding area. Fieldwork has confirmed widespread, structurally and lithologically controlled mineralization on all prospects from the surface. Two styles of mineralization have been identified: Oxide supergene enrichment similar to that seen in the Shallow Silver Zone and which is thought to have resulted from the oxidation and remobilization of original sulphide bodies into highly fractured rock along the fault zones and karst systems in the area. Primary sulphide mineralization seen either as fracture controlled veinlets or as disseminated sulphides partially replacing the country rock. The company carried out a 20,000 m drill program on the Shallow Silver Zone and is expected to continue drilling to expand the mineral resources through to the end of the year and into 2012.

37 Sierra Mojada NI Page 23 9 Drilling 9.1 Introduction PAH and Nilsson have summarized the drilling in their 2010 Technical Reports. Their description of past drilling programs has been adapted below for continuity and expanded to include 2011 drilling. The Sierra Mojada property has been drilled extensively in the past by various companies using several drilling and sampling techniques. Data for the property include diamond drill holes ( DDH ) from surface and underground platforms, reverse circulation drill holes ( RC ), and long holes ( LH ), from underground platforms. In addition, the company has carried out an extensive channel sampling ( CH ) program in the underground mine workings Peñoles Surface Diamond Core An extensive program of surface core drilling was performed by Peñoles. Most of the holes in this phase were drilled from the surface to a predetermined depth using RC drilling, then cased through the gravel, and completed as a core hole. In many instances, the RC portion of the hole was drilled into mineralized rocks before the hole was converted to core. The core drilling was extremely difficult, expensive, slow, and mineralized zones had extremely poor core recovery. The drill helpers were observed to wash the red, muddy material from Red Zinc Manto off of the core before boxing it. Typically, short intervals of white limestone were all that reached the core boxes. None of the Peñoles surface drilling results was used in resource estimation. During 2006, some surface core holes were drilled for Metalline by World Wide Exploration, a startup drilling contractor based in Torreón, México. This drilling was done using a drill with a casing advancement system that was recommended because of its presumed ability to rapidly set surface casing. This system never worked reliably during the time that the drill was at Sierra Mojada and eventually, an older Longyear drill was brought to the project. Sophisticated mud and bit selection programs were run and a few of the drillers had previous experience drilling underground at the project. With these changes, adequate sample quality was obtained Underground Diamond Core Underground diamond core drilling was conducted by Peñoles, by Metalline s contractors in 2004, and subsequently by Metalline with its own drills. For Peñoles drilling, the drillers laid the core out in core boxes carried to the surface daily. The Peñoles core was NQ2 size (50.6 mm core diameter) wire line core. The cores were taken to the core shack where Peñoles technicians measured the length of the cores to determine core recovery. Most of Metalline s underground drilling used NQ2 wire line core. Some HQ (63.5 mm core diameter) drilling was done early in 2004 but the drilling was much slower and core recovery was no better than for NQ2 so NQ2 soon became the standard. Some holes were drilled using LTK48 (35.6 mm core diameter) conventional core.

38 Sierra Mojada NI Page Surface Reverse Circulation Reverse circulation ( RC ) drilling using a down-the-hole-hammer was used to obtain samples during the Metalline 1999 campaign and the North campaign. Standard RC drilling equipment was used by all RC drilling contractors Underground Long Hole Percussion drill holes were laid out by the geologist and surveyor in certain locations that were selected to obtain reasonable coverage in an area and where the back of the workings is high enough that the drilling crew could was able to work. A pneumatic hammer with a jackleg is used with a one inch (2.54 cm) diameter drill steel and a 1.75 inch (4.45 cm) diameter bit. A hole is drilled below the location of the desired test hole, and a bucket used to catch the return is suspended there. 9.2 Drill hole database Long Hole pre-1999 MMC purchased all of the available historic data from Peñoles. This included early 1900 s underground maps, drill hole data dating from 1930 to 1950, and a few late 1980 s reports. The drill hole database included nearly 900 long holes for 22,400 m. These holes were drilled from several underground stations in radiating fan patterns. This drilling appears to have been concentrated on four separate areas along the trend of silver mineralization. Within these four areas, underground stations are typically spaced 20 m apart with average hole depths 25 m resulting in very dense drilling. Arial coverage of these long holes is approximately 9 ha MMC Drilling Campaigns 1999 to 2004 MMC has been working the Sierra Mojada property since In 1999, MMC drilled 24 holes using reverse circulation for a total of 6,600 m. This drilling covers 28 ha and intercepts the Red Zinc Manto and Silver Mineralization. Approximately half of the holes were drilled vertically and the remaining holes were angled with dips ranging from near vertical to 54. In 2000, MMC drilled 26 RC holes totalling 3,500 m down the long axis of the known Red Zinc Manto. All holes were drilled vertically. MMC drilled 73 underground long holes for 1,100 m in These holes were drilled from several underground stations in radiating fan patterns. This drilling is located at the western extent of the Red Zinc Manto. In 2002, MMC optioned the property to Peñoles. Peñoles explored the property with surface and underground core holes as well as underground long holes. In the eastern end of the property, 34 diamond core holes were drilled from surface for 11,000 m. The surface diamond core holes were drilled on fences spaced 200 m apart east of the Fronteriza mine toward the Oriental mine, a distance of nearly 2 km. The holes were spaced 50 m to 100 m in a north-south direction along the fences.

39 Sierra Mojada NI Page 25 At the western end of the property, five core holes were drilled from surface for 1,300 m. The holes are irregularly spaced and cover an area of approximately 7 ha. Thirty-six diamond core holes were drilled from underground for 2,400 m. These holes were drilled from several underground drilling stations in radiating fan patterns. Drilling stations are typically spaced 50 to 100 m apart in an irregular pattern. In plan view, this drilling covers approximately 7 ha, mostly in the Red Zinc Manto. Six-hundred eighty-five underground long holes were drilled for 11,000 m. Typically, these holes were drilled from several underground stations in radiating fan patterns. Spacing of the underground stations is typically less than 20 m and hole lengths average 13 m resulting in very dense drilling. These holes intercept much of the Red Zinc Mmanto and Silver Mineralization 9.3 MMC Campaign of 2004 to 2011 (SBR from April 2011) Surface Diamond Core MMC drilled 211 diamond drill holes from surface for 30,680 m (Figure 9.1). The surface drilling has been completed along fences oriented north-south with hole spacing varying from 50 m to 200 m. The majority of drilling has been completed using 100 m fences with 50 m hole spacing. The main concentration of drilling covers approximately 20 ha intercepting the Shallow Silver Zone just west of the Red Zinc Manto. Vertical dip is commonly used, however, and due to location restrictions, some holes are angle drilled with dips up to 60. Typical drill sections showing composited silver values are shown in Figure 9.2 and Figure 9.3. MMC updated the surface drilling practices employed during the MMC and Peñoles drilling campaign of 2002 to These updates have largely mitigated the recovery issues experienced back then. 9.4 Underground Diamond Core MMC drilled 668 underground diamond drill holes for 63,700 m. These holes were drilled from several underground drilling stations in radiating fan patterns. Drilling stations are typically spaced 50 to 100 m apart in an irregular pattern. The drilling covers approximately 52 ha intercepting most of the known Red Zinc Manto and Silver Mineralization Surface Reverse Circulation MMC drilled eight reverse circulation holes from surface for 2,900 m. These were water well and condemnation holes drilled in an irregular and widely spaced pattern, testing areas east and north of the underground workings. Of these eight holes, only R intercepted silver mineralization. These holes were not used for grade interpolation Underground Long Hole Approximately 2,220 underground long holes were drilled for 30,700 m from several underground stations in radiating fan patterns. Spacing of the underground stations is typically less than 50 m and hole lengths average 17 m, resulting in very dense drilling.

40 Sierra Mojada NI Page 26 Figure 9.1: Planview of diamond drilling Figure 9.2: Cross section E looking east. Grid is 100 m by 100 m

41 Sierra Mojada NI Page 27 Area of underground long holes drilling Figure 9.3: Cross section E looking east. Grid is 100 m by 100 m

42 Sierra Mojada NI Page Sample Preparation, Analyses and Security PAH have summarized sample preparation, analysis and security in the 2010 Technical Report. PAH s description of sample preparation analyses and security has been expanded to include the 2010 and 2011 drilling programs Sample Preparation Prior to November 2003, all samples were shipped directly to ALS Chemex ( ALS ) for sample preparation and assay. After November 2003, samples were prepared to the pulp stage on site by MMC personnel. In 2007, MMC updated its laboratory equipment and sample preparation procedures following recommendations made by ALS. In 2010, Silver Bull abandoned the on-site sample preparation and began shipping samples to ALS for preparation and assay MMC-SBR Sample Preparation Procedures (2010 to Present) Drill core is delivered by the drill contractor to the logging facility. The movement of the core, once delivered at the logging facility, is designed such that it is always in an easterly direction as it goes through each phase of the logging and sampling process, entering on the west side of the facility and leaving on the east side of the facility towards the sample storage area. Initially, boxes are laid out in order on the logging tables by company staff. The meterage blocks inserted by the drill contractor are checked to ensure there are no errors. Drill core recovery between each of these blocks is calculated and recorded. Subsequently, the core is logged by a geologist who also marks the intervals to be sampled and prints out a "Sample Print Sheet", indicating sample numbers and the sample numbers for the QA/QC sample insertion. At this point, Niton readings are taken in each sample interval and recorded. Once logged, and with the sample intervals marked, the core boxes are then taken to the photograph, density, and bar coding room. Here, each core box is photographed in a staged facility that ensures identical lighting for each photograph. Density samples are taken (the samples to be taken are indicated by the geologist) and the bar codes for each sample are then printed. Following the photography, the boxes are carried and stacked, ready for the core to be cut by a rock saw. Half core samples are taken according to the sample intervals marked by the geologist and, when required (as indicated by the QA/QC program), quarter core field duplicates are also cut. Samples for assay are placed in thick plastic sample bags with the sample number written on them and a strip of flagging with the sample number written on it is inserted into the sample bag. The bags are then stapled firmly shut. The samples are then placed into rice sacks, eight samples per sack. From the start of the year until June 30, 2011, samples were shipped two or three times a week once one tonne of sample material had accumulated. The shipment was done with company personnel and a company vehicle. As of July 1, 2011, sample shipment to the ALS preparation facility in Chihuahua has been subcontracted. The subcontractor is a company that Silver Bull has used for a number of years for other services and is regarded as trustworthy and reliable. Shipments are programmed weekly.

43 Sierra Mojada NI Page 29 Once received by ALS, they check the shipment and confirm via whether the samples shipped coincide with what is registered on the shipment form and analysis submittal MMC Sample Preparation Procedures ( ) From 2007 to 2010, sample preparation was done at the Sierra Mojada property by MMC personnel. Samples were first dried in a clean drying pan. After the samples were thoroughly dried, the pan and samples were transferred to the on-site preparation facility. The samples passed through a Rhino crusher and then a secondary crusher resulting in material that has been crushed to greater than 70 % passing -10 mesh (-2 mm). The crushed samples were split in a Jones splitter multiple times to generate a 250 to 300 g crushed sub-samples. The crushed sub-samples were then transferred to a puck mill and milled for three minutes to attain a size specification of greater than 95 % passing a mesh screen. The pulverized material was passed through a riffle splitter to generate two pulp sub-samples (one for analysis and one for reference). The pulp sub-samples were transferred to individual sample bags. The methods utilised by MMC were standard and adequate for generating assay data for use in resource estimation MMC Sample Preparation Procedures ( ) All samples were weighed and their weight was recorded before processing. The entire samples were then crushed to nominal ¾-inch ( in ) sized samples using a Fraser & Chalmers jaw crusher. The crusher was cleaned after each sample using compressed air. Once first stage crushing was completed, the samples were then crushed to nominal ¼-in sized samples using a Roskamp rolls crusher. The rolls crusher was also cleaned with compressed air after each sample. All quality control was visual at both crushing stages and no testing for screen sizing was done at either stage. After the second crushing stage, the nominal ¼-in sample was split through a Jones type splitter to approximately 500 g, and placed in an aluminum pan, to be taken to the drying oven. Each pan was well labelled, with the contained sample number recorded on masking tape, attached to the pan. Drying was conducted in a block building which has two propane space heaters, manufactured by Desa, Inc. The samples were placed upon drying racks, still in the aluminum pans, and a heater was activated. Once dry, the pans and contained samples were returned to the sample preparation area for pulverizing. Pulverizing was conducted upon the ¼-in samples using one of four Bico disc pulverisers. The 500 g sample was pulverized to nominal 80 mesh, with visual and tactile inspection performed upon each sample after pulverizing to ensure that the nominal 80 mesh size was achieved. No screen size testing is done upon the pulverized samples on a regular basis. The pulverisers were cleaned with compressed air after each sample was processed. Once pulverising was completed, each 500 g sample was split into two sub-samples, with a maximum of 200 g kept for each sub sample. These two sub-samples were packaged in Kraft type envelopes; one 200 g sample was sent to the shipping area to be boxed and prepared for shipping to the ALS laboratory in Vancouver, BC, Canada. The remaining 200 g sample was stored in archive storage, as a reserve sample, should more analysis be required. All pulps were labelled with the sample number, which has all drill hole and interval data included, as well as the date the sample was drilled.

44 Sierra Mojada NI Page 30 The sample preparation methods used from 2003 to 2007 are adequate for generating assay data for use in resource estimation MMC Sample Preparation Procedures (pre-2003) Prior to 2003, all sample preparations were carried out by ALS laboratory using the following procedures: Coarse crushing of rock chip and drill samples to 70 % nominal -6 mm was used if the material received was too coarse for introduction into the pulverizing mill, and as a preliminary step before fine crushing of larger samples. Fine crushing of rock chip and drill samples to 70 % -2 mm or better. Samples were split sample using a riffle splitter. The split sample was pulverized using a flying disk or ring and puck style grinding mills. Unless otherwise indicated, all pulverizing material was at least 85 % pulverized to 75 micron (200 mesh) or better. These sample preparation procedures are adequate for generating assay data to be used in resource estimation Analyses All analytical work used in the project has been performed in the ALS laboratory in Vancouver, BC, Canada. ALS is a leading provider of assaying and analytical testing services for mining and exploration companies. The laboratory is ISO 9001:2000 and ISO/IEC 1702S:2005 certified. Samples are analyzed by Inductively Coupled Plasma ( ICP ) for a standard 41 element suite. Silver, zinc, lead and copper samples above the upper detection limit (100g/t for silver and 10,000 ppm for zinc, lead and copper) are automatically reanalysed. In the case of silver, the analysis is fire assay with a gravimetric finish, whilst for the base metals; it s a four acid digestion with an atomic absorption spectrometry ( AAS ) finish. For the ICP analysis, a sample is digested with aqua regia in a graphite heating block. After cooling, the resulting solution is diluted to 12.5 millilitre ( ml ) with deionized water, mixed and analyzed by inductively coupled plasma-atomic emission spectrometry. The analytical results are corrected for inter-element spectral interferences. The fire assay sample is fused with a mixture of lead oxide, sodium carbonate, borax, silica and other reagents in order to produce a lead button. The lead button containing the precious metals is cupelled to remove the lead. The remaining gold and silver bead is parted in dilute nitric acid, annealed and weighed as gold. Silver is then determined by the difference in weights. For samples analysed by AAS, the prepared sample is fused with a mixture of lead oxide, sodium carbonate, borax, silica, and other reagents as required. It is then inquarted with 6 mg of gold-free silver and then cupelled to yield a precious metal bead. The bead is digested in 0.5 ml dilute nitric acid in the microwave oven. After this, 0.5 ml of concentrated hydrochloric acid is then added and the bead is further digested in the microwave at a lower power setting. The digested solution is cooled, diluted to a total volume of 4 ml with de-mineralized water, and analyzed by atomic absorption spectroscopy against matrix-matched standards.

45 Sierra Mojada NI Page 31 It is SRK s opinion that these analytical procedures are adequate for generating assay data to be used in resource estimation Quality Assurance/Quality Control (QA/QC) Historical QA/QC Procedures PAH reviewed the QA/QC procedures implemented throughout the life of the project and concluded that they were insufficient relative to current industry standards of practice. As a result of these inadequate procedures, PAH was not able to classify its January 2010 resource estimate for Sierra Mojada as anything higher than an inferred mineral resource. To resolve this issue, MMC and PAH developed and executed a re-sampling and assaying program to estimate the type, frequency, and magnitude of assay sample errors in the historical drill hole database for the Sierra Mojada Project. This plan was meant as a substitute of the QA/QC program that would resolve PAH s doubts about the validity of the Sierra Mojada assay data. Based on the execution of the program and a detailed review of the results, PAH concluded that the drill hole assay data for channel and core samples used in its January 2010 resource estimate were of sufficient quality to support measured and indicated resources. As a caveat, PAH notes that converting inferred resources to measured and indicated is contingent upon other factors not related to data quality (McMahon, 2010). SRK has reviewed the results of the additional sampling program carried out by PAH and concurs with their conclusions. In 2010 a QA/QC program of certified standards, blanks and duplicates were instituted to monitor the integrity of all drilling assay results. Two sets of QA/QC procedures were used by Metalline since the time of a QA/QC review performed by PAH (McMahon, 2010) on pre-march 2008 drill hole assay data: The first set of QAQC procedures was used for the submission of pulp samples for analysis by a certified laboratory. These pulps had previously been prepared and analyzed by the Metalline on-site laboratory facility as part of a pre-selection process. All samples for 2008 and 2009 drill campaigns and all 2010 drilled prior to August 2010 followed these procedures; and The second set of QAQC procedures applies to samples sent directly to ALS for sample preparation and analysis. This procedure has been in place since August 2010 and includes drill holes submitted since this time.

46 Sierra Mojada NI Page Pulp Submission QAQC Procedures After sample preparation all samples selected for certified laboratory analysis were located and placed in boxes ready for shipment. The same pulp envelope used for the original analysis was selected for submission to the external laboratory. Each sample box contained between 60 and 120 pulp samples, including control samples. The QA/QC control samples submitted in each box consisted of: A minimum of three standard samples were submitted, normally at least one of each of the three certified standards prepared for Metalline Mining by CDN Laboratories; At least one blank pulp sample and often two; At least one, and generally two, field duplicate samples (¼ or ½ core samples) prepared but not analyzed by Metalline onsite during In general ¼ core samples were submitted so as to leave witness core in the core box, however in broken zones the complete remaining half core was selected for submission; and At least one and generally two pulp duplicate samples, with splits made from the original pulp sample to be selected within the same box Core Submission QAQC Procedures Control samples were inserted approximately every 10 core samples. In addition, after every 25 core samples the following additional samples were inserted: A minimum of one certified standard is included; A minimum of one field duplicate sample is included; and Normally one blank sample is included and occasionally blanks are preferentially inserted in a mineralized sequence outside of the normal 25 sample range. In November 2010, the system was modified slightly to ensure that controls samples were inserted at a standard interval of every 10 sample numbers Reference Standards Metalline inserted certified reference standards as a quality check on the laboratory accuracy. The certified standards used were prepared by CDN Resource Laboratories Ltd. This laboratory specializes in preparing site specific certified standards. The three standards prepared for Metalline were identified as K10001, K10002 and K The characteristics of these standards are given in Table Table 10.1: Summary assay of standard reference material Standard Ag g/t Zn % Pb % Cu % Certified Value 1 S.D. Certified Value 1 S.D. Certified Value 1 S.D. Certified Value 1 S.D. K10001(K-01) NR NR K10002(K-02) K10003(K-03) Discrepancies with reference samples were resolved by re-assaying pulps if material was available as well as selected pulp or coarse reject samples in the nearby sample intervals.

47 Sierra Mojada NI Page 33 Two hundred and forty standards were inserted with samples taken from drill holes B11001 to B110075, B110079, B and B110083, 71 assays of K10001, 90 assays of K10002 and 81 assays of K The following results were observed: Four samples (6%) of the K10001 standard had greater than 3 standard deviation ( S.D. ) variance; Three samples (3 %) of the K10002 standard had greater than 3 S.D. variance; and One sample (1%) of the K10003 standard had greater than 3 S.D. variance. An analyses of the failed standards revealed that of the four failed K10001 standards, two were actually mislabelled standards and were really standard K10002 instead. Two were failures that could not be explained and are currently being investigated by the laboratory (Figure 10.1) Standard K Ag (g/t) Assay Expected Value SD +3SD -2SD -3SD Mislabelled standards CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH Batch number Failures Figure 10.1: Graphical performance of Standard K10001 Two of the three failed K10002 standards were actually mislabelled K10001 standards and the one failed K10003 standards could not be explained and is being investigated by the lab (Figure 10.2). SRK noted that the failure rate of standards is high, about 3% for this level of project. Nearly half of the failures were caused by mislabelling of standards. SRK recommends that standard insertion procedures be reviewed to minimize the number of wrong standard being inserted in the assay stream.

48 Sierra Mojada NI Page Standard K Mislabelled Standard Ag (g/t) Ag_ppm Standard +2SD +3SD -2SD -3SD 0 CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH CH Batch number Figure 10.2: Graphical representation of Standard K Blank Controls Blank samples were used to check for laboratory sample preparation issues and accuracy. These samples consisted of material that contained low but not below detection limits grades of elements to be analyzed. Four types of blank sample material were used by Metalline: Pulverized blank material obtained from either rock samples or crushed material from the Peñoles Dolomita mining operation. Pulverized blank samples were prepared and analyzed at the Metalline laboratory to confirm their blank nature; Blank core samples were either ¼ or ½ core samples of barren or low grade intervals selected from old drill core; Blank crushed samples were typically prepared form RC samples or blank rock samples, coarse rejects are generally used for this purpose; and Blank rock samples were prepared from rock samples, with part of the original sample analyzed by the Metalline laboratory when it was operating, to confirm the blank nature of the material. Discrepancies with blank samples were resolved by re-assaying pulps or coarse rejects or both if material is available as well as selected samples in the nearby sample intervals. Coarse blank material for the 2011 drill holes were inserted at a rate of one in 40 samples. The "blank" sample came from drill core intercepts from previous drill campaigns with low level or null concentrations of silver, zinc, lead and copper. The problem with this methodology is that there is not a consistent grade range for the "blank" material selected.

49 Sierra Mojada NI Page 35 There also is a lingering doubt as to just how inert some of the selected "blank" material is. Ten samples (5%) returned values above 3 S.D. in silver assays. Of those ten samples, two stand out as having possible contamination problems as they follow high grade samples and the silver value of the blank is far greater than the expected value. Silver Bull is pursuing the problem with the sample preparation laboratory. As of drill hole B11099 onwards (beyond the scope of the current study) a different blank sample has been used and will be consistently used going forward. The sample BLANCO-DOL comes from a nearby dolomite mine. A large sample was taken from the fines of this mine. Ten samples were taken and analyzed at ALS Vancouver. Results of the silver, zinc, lead and copper concentrations in the BLANCO-DOL blank sample are shown in Table 10.2 below: Table 10.2: Analyses of new blank material Certificate number CH Sample Number Ag (ppm) Cu (ppm) Pb (ppm) Zn (ppm) BP <1 3 8 BP <1 <2 6 BP <1 <2 6 BP <1 <2 4 BP00005 <0.2 <1 <2 11 BP <1 <2 4 BP <2 9 BP <0.2 <1 <2 5 BP <1 <2 6 BP < Duplicate Samples Duplicates area used to check on sample homogeneity and laboratory precision. They were also used to detect issues associated with sample preparation. Two types of duplicate samples were used in the 2010 QA/QC program. Duplicate samples were submitted with a different sample number to that used for the original sample. Discrepancies and inconsistencies with duplicate samples were resolved by re-assaying pulp, reject or both Pulp Duplicates Pulp samples submitted to a second certified laboratory were also used as a test of precision and accuracy. Pulp duplicates were submitted with the pulp samples, previously analyzed by the Metalline laboratory. They were also submitted after results were been received from ALS as a check on laboratory precision.

50 Sierra Mojada NI Page Coarse Duplicates Coarse duplicate samples were taken and inserted every 40th sample. Coarse duplicates are duplicate core samples taken from selected core interval initial ½ core was split into two ¼ core samples, one of which was submitted as the original sample and one of which was submitted as the duplicate sample. For the samples submitted as pulps the sample was taken from the core remaining in the core box. Normally a ¼ core sample was collected (to leave a ¼ core specimen sample in the core box); however if the original sample consisted of broken core all the remaining sample (½ core) was submitted as the duplicate. Three hundred and ninety seven coarse duplicate samples were taken as part of the QA/QC program for drill holes B11001 to B110075, B110079, B and B Silver, zinc, lead and copper results were analyzed for Relative Difference using the following formula: The following results were observed: 278 samples assayed below 5 g/t silver. Of these samples 115 displayed a relative difference greater than 20%; 119 samples assayed greater than 5 g/t silver. Of the 119 samples 22% (27 samples) had a relative variance greater than 20%; 28 samples returned less than 50 ppm zinc of which 16 had greater than 20% variance; 369 samples returned greater than 50 ppm zinc of which had greater than 20% variance; 137 samples assayed less than 50 ppm lead of which 46 had greater than 20% variance; 260 samples assayed greater than 50 ppm lead of which 31.9% (83 samples) had greater than 20% variance; 164 samples returned less than 5 ppm copper of which 37.19% returned greater than 20% variance; and 233 samples returned greater than 5 ppm copper of which 28.75% returned greater than 20% variance Coarse Reject Duplicates Coarse rejects were stored on site in sealed drums. Coarse rejects were selected for re-submission (with re-numbering) to ALS as a check on sample precision. Core samples coarse rejects prepared by ALS were collected from the ALS sample separation facility in Chihuahua, Chihuahua, Mexico for storage on site. Selected coarse reject samples were re-bagged and re-submitted to the Chihuahua facility. This same procedure was used for check pulps Check Sampling Programs In addition to inserting pulps and standards in the original batches submitted to ALS, additional check sampling consisted of re-submitting selected, re-numbered pulps and coarse rejects to ALS and also selected pulps (with their original ALS sample number) to a second certified laboratory; The check laboratory used for 2010 submitted samples was BSI Inspectorate. Samples were received, and prepared if necessary, at their preparation facility in Durango, Mexico and analyzed at their laboratory facility in Reno, Nevada.

51 Sierra Mojada NI Page 37 Check sampling programs were used to determine if there was a significant bias between labs and as a test for both accuracy and precision and also sample homogeneity Precision Checks Precision checks were evaluated by doing repeat assays on core duplicate samples, coarse reject samples and pulp repeat samples. The results of the precision checks were shown using scatter plots, Q-Q plots and relative difference plots Sample Accuracy Checks Sample accuracy was assessed through standard reference material submissions included with standard assay submissions. Previous work by PAH (McMahon, ibid.) in early 2010 indicated no significant bias between ALS and BSI Inspectorate Laboratories (both certified facilities). Review of the pulp, coarse reject and core duplicate data to date showed one significant assay error for an original ALS Ag assay to date; neither Zn nor Pb have any significant issues. A total of 493 standard reference samples were submitted during the March to December 2010 assay program Conclusions and Recommendations SRK is of the opinion that the sample preparation, security and analysis meets industry standards and is adequate to support a mineral resource estimate as defined under NI but that better care should be taken in reviewing and analyzing the QA/QC.

52 Sierra Mojada NI Page Data Verification Data verification has been carried out by PAH and Nilsson as part of the previous technical reports for the sierra Mojada. In addition, SRK carried out data review and validation as part of this technical report Collar Coordinates Selected holes were checked against hardcopy notes, spread sheet information and the database. Collars were located in the field and check with hand-held GPS during the site visit by SRK. No issues were found and all holes validated correctly Downhole Surveys PAH s initial review of downhole survey information indicated several issues relating to improper interpretation and processing of the survey data. To mitigate these issues PAH and MMC compiled all available survey data. SRK reviewed the digital downhole data and noted some minor data entry errors with the Long Hole database. These errors are not considered to be material to the resource estimation because of the relative short length of the long holes, on average less than 15 m. SRK recommends that Silver Bull carry out an audit of the Long Hole database and fix any survey errors prior to the next resource update Assay Data Assay data were provided by MMC in the digital drill hole database as well as scanned images of assay certificates from ALS. PAH compared the digital database to the certificates for approximately 5% of the samples used to estimate resources at Sierra Mojada. No material discrepancies were noted. Nilsson checked a total of 519 assay intervals against the ALS certificates. No errors were found. These samples represent 4.2% of the 2010 core drilling and 5.7% of the intervals used in the resource model SRK downloaded all available data from ALS and compared the digital database supplied by Silver Bull against original assay data provided by ALS. A total of 19,550 assays were checked against the digital database, about 13% of the total assay population and while some discrepancies were observed most of the errors were considered not material and most were easily explained. A few samples that did not agree with the assay certificates were not for the resource estimate.

53 Sierra Mojada NI Page Channel Samples, Collars, and Underground Workings Three dimensional locations of channel samples ( CH ), underground drill holes and surveyed underground workings were supplied by Silver Bull. SRK imported these data into Gems software, which has the capability of displaying such data in three dimensions. The channel samples and underground drill hole collars were visually compared against the underground workings. A number of inconsistencies were noted. Namely, some channel samples and collars were located several meters away from the surveyed underground workings. This implies erroneous survey data for either the channel sample/collar location or the underground workings. These data were excluded from the dataset prior to estimation.

54 Sierra Mojada NI Page Mineral Processing and Metallurgical Testing 12.1 Introduction The Sierra Mojada project has historically been subdivided into two resource areas of differing composition referred to as Zinc Manto and the Shallow Silver Zones. The Zinc Manto Zone metallurgy has been previously discussed in the PAH and Nilsson reports. For this reason and because zinc is not considered as part of the current resource, only the metallurgical testing associated with the Shallow Silver Zone is discussed in this section of the report Shallow Silver Zone The following has been summarized from the reports entitled Coeur Mexico Project Report of Metallurgical Test Work February 2010, Sierra Mojada Project Report of Metallurgical Test Work May 2010 and Sierra Mojada Report of Metallurgical Test Work October 2010 prepared by Kappes Cassiday & Associates ( KCA ). These reports describe the test work programs undertaken for coarse bottle roll testing, milled sample bottle roll testing and flotation testing of three underground samples. On November 11 and 12, 2009 the KCA laboratory facility in Reno, Nevada received three small sacks of Sierra Mojada material from Coeur Mexico a subsidiary of Coeur d Alene Mines Corporation. The samples were taken from the 3 rd level in the San Salvador Shaft roughly 100 m below the surface and on Section East. Each of the three separate sacks contained intervals of crushed material with a top size of approximately 6.3 millimeters ( mm ). The intervals from each separate sack were combined to develop a composite sample. A total of three separate composite samples were generated and used for metallurgical testing. The samples were evaluated by bottle roll tests on coarse material on a portion of the as-received material from each of the three separate composite samples and on milled material. Sample composite head grades varied from 148 g/t silver to 1,373 g/t silver Bottle Roll Test Work on Coarse Material Coarse bottle roll leach test were conducted on a portion of the as-received material from each of the three separate composite samples. Particle size reduction can be a problem in bottle roll leach tests completed on coarse material. As such, KCA developed a testing protocol by which the bottles are allowed to roll for only one minute out of every hour during the leaching period. This intermittent agitation reduces the amount of attrition that a continuously rolled bottle roll test would have and makes the results of this type of test much more reliable with respect to determining the effect of crush size on precious metal recovery. The coarse bottle roll leach tests were conducted as follows: A 5,000 g portion of the as-received composite material was placed into a 20 litre ( L ) carboy and slurried with the addition of 7.5 L of water;

55 Sierra Mojada NI Page 41 The slurry was mixed thoroughly and the ph checked. The ph of the slurry was adjusted, as required, to ph 11.0 with hydrated lime; Sodium cyanide was added to the slurry to equal 2.0 g of sodium cyanide per L of water added; The carboy was then placed onto a set of laboratory-rolls. Rolling one minute every hour throughout the duration of the test mixed the slurry; The slurry was checked at 2, 4, 8, 24, 48, 72, 96 and 120 hours for ph, dissolved oxygen, NaCN, Au, Ag and Cu; Following completion of the leach period, the slurry from the bottle roll leach test was wet screened at 3.35, 2.36, 1.7, 0.6, 0.3, 0.212, 0.15, and mm. Each size fraction was then dried, weighed and the weights recorded; and From each separate fraction two portions were split out and pulverized, as needed, to 80% passing mm. The pulverized portions were then assayed for gold, silver and copper. The results of the coarse bottle roll leach tests indicated that silver recoveries on coarse material ranged from a low of 29% to a high of 47% Bottle Roll Test Program on Milled Samples The bottle roll leach tests were conducted as follows: 500 g of each sample was placed into a 2.5 L bottle and slurried with the addition of 750 milliliters ( ml ) of water; The slurry was mixed thoroughly. The ph of the slurry was checked and adjusted to ph 10.5 with hydrated lime (calcium hydroxide, Ca(OH) 2 ); Sodium cyanide was added to the slurry to equal 2.0 g of sodium cyanide per liter of added water. The bottle was then placed onto a set of laboratory-rolls. Rolling throughout the duration of the test mixed the slurry; The slurry was checked at 2, 4, 8, 24, 48, 72 and 96 hour intervals for ph, dissolved oxygen, NaCN (titration), Au, Ag, Cu and Zn; Following completion of the leach period, the slurry from the bottle roll leach test was wet screened at 35, 65, 80, 100, 150 and 200 mesh Tyler (0.425, 0.212, 0.180, 0.150, and mm). Each size fraction was then dried, weighed and the weights recorded; and From each separate fraction two portions were split out and pulverized to 80% passing 200 mesh Tyler (0.075 mm). The pulverized portions were then assayed for gold silver, copper and zinc.

56 Sierra Mojada NI Page 42 Table 12.1: Milled Bottle roll test results Sample No. Test No. P80 Head grade Ag Extracted Avg tails Ag Extracted Leach time NaCl consumption Ca(OH) 2 (mm) Ag (g/t) Ag (g/t) Ag (g/t) % Hours Kg/t kg/t A B C * D A B ** C D A *** Note* tail screen analysis, calculated 97.8% passing mm Note** tail screen analysis, calculated 94.7% passing mm Note*** tail screen analysis, calculated 93.4% passing mm In addition to the bottle roll tests MMC carried out metallurgical characterization tests on the Shallow Silver Zone mineralization Shallow Silver Zone Metallurgical Characterization Test work Sample Selection and Preparation Three trench bulk samples were taken to represent possible sub-ore types all with an anticipated average grade of 50 to 60 g/t Ag and 1.0 to 1.5% Zn. The samples were shipped to Mountain States R&D International Inc. ( MSRDI ) facility November 1, This section of the report has been modified from a progress report prepared by MSRDI on January 6, MET-S (south) had high lead head grades (5 to 10 times the average lead grade of the deposit), containing jarosite, and a black matrix thought to be manganese. It also had high arsenic. This sample is not thought to be very representative of the deposit as a whole. MET-C (central) was chosen for its higher iron oxide and dolomite host. It was considered a dolomite-host sample. MET-N (north) as chosen for its low iron oxide content and limestone host. It was considered a limestone-host sample. Samples were screened entirely at +4 inch ( in ), +2 in, +1 in, +3/4 in and +1/2 in. Half splits of each sized fraction were isolated and stored pending scoping test results. The remaining ½ splits were advanced to screen assay analysis (as received). Additional test charges were generated to provide screen assay analysis after crush to ½ in and minus. Other charges were assembled for Bond Work Index, Bond Abrasion, Head Assay Analysis (multiple locations), Sink/Float, Archimedes Spiral and Mineralogy on each composite head. There were also test charges produced for preliminary flotation.

57 Sierra Mojada NI Page Zinc Minerals All of the identified zinc minerals were hemimorphite. Other samples analyzed previously from the Shallow Silver Zone also contained smithsonite. There appear to be two zinc mineral species present in the deposit suggesting perhaps some mineral zoning that may need to identification and modeling Silver Minerals Very few discrete silver mineral grains were identified, and those were argentite (acanthite). This mineral is amenable to both cyanidation and flotation. Previously silver halides (soluble in cyanide) were also identified in other samples, and fine grained halides in these samples are suspected as well. More mineralogical work will be done, especially on MET-S (Composite 1) sample, which had poor cyanidation results Lead Minerals Lead was present in mimetite, a lead arsenate, and no other lead mineral species were identified. Lead arsenate is not a marketable product, so this may render lead recovery non-commercial, unless it is possible to remove the arsenic. Lead and arsenic distributions in the deposit need to be modeled. Detailed investigations are still in progress Arsenic Content Arsenic is high in all three samples, especially in MET-S (Composite 1) where lead is high and silver extraction is low. Distribution of arsenic in the deposit should be modeled. Studies are under way with the NITON, reading every sample interval in every drill hole within the deposit for arsenic and arsenic is being added to the database and will be incorporated in future models Gangue Minerals Calcite and dolomite were the dominant gangue. Hematite is abundant, and jarosite is minor in the MET-S (Composite 1) sample. Jarosite is known to be refractory to cyanide, and if the silver is in the jarosite that might help to explain the low extraction of silver in sample MET-S. Barite is present in all three samples. Previous mineralogical work has shown that some silver may be tied up in barite Head Assays Initial results obtained from numerous procedures and laboratories were used to determine the disposition of values in each composite. A table of results obtained from MSRDI, Skyline and ALS Chemex is shown in Table 12.2.

58 Sierra Mojada NI Page 44 Table 12.2: Comparison of composite sample head assay grades Oxide Lab Comp No Pb (%) Zn (%) Zn (%) Ag (ppm) Ag (ppm) MSRDI Skyline ALS 1 (Met-S) (Met-C) (Met-N) (Met-S) na na 2 (Met-C) na na 3 (Met-N) na na 1 (Met-S) > na 47 na 2 (Met-C) na 60 na 3 (Met-N) na na na 57 na Table 12.3 below provides original and additional results generated by MSRDI from the incorporation of modifications to the analytical procedure as discussed below. Table 12.3: Cyanide soluble silver Analytical Total Ag (ppm) CN Ag (ppm) Procedure Comp #1 Comp# 2 Comp # 3 Comp #1 Comp #2 Comp #3 Original Modified Method # Modified Method # CN Modified methods numbers 1 and 2 increase cyanide solution strength from 1.25 g per L to 5.0 g per L and 10.0 g per L respectively. Method 2 increased roll time to 4 hours from 2 hours. No caustic or lime was added in modified methods 1 and 2. For modified methods 1 and 2, ph was monitored before and after. In all cases, ph ranges modified method number 1 ±10.5 before and ±10.5 after. For modified method number 2, ph range 10.8 before and ±10.8 after Size Fraction Analysis Tables 12.4 to 12.9 provide assay analyses of sized fractions as received as well as after a ½ in crush. The results presented compare Skyline assays to MSRDI assays from duplicate splits of each fraction and each for the three composites.

59 Sierra Mojada NI Page 45 Table 12.4: Composite No 1 screen assays as received MSRDI # Size Fraction Weight MSRDI Assay Distribution (%) (kg) (%) Pb (%) Zn (%) Ag (ppm) Pb Zn Ag in in ¾ in ½ in ½ in Calculated Head Head Assay MSRDI MSRDI # Size Fraction Weight Skyline Assay Distribution (%) (kg) (%) Pb (%) Zn (%) Ag (ppm) Pb Zn Ag in in ¾ in ½ in ½ in Calculated Head Head Assay Skyline

60 Sierra Mojada NI Page 46 Table 12.5: Composite No 1-1/2 in crush MSRDI # Size Fraction Weight MSRDI Assay Distribution (%) (kg) (%) Pb (%) Zn (%) Ag (ppm) Pb Zn Ag /8 in ¼ in mesh mesh mesh mesh Calculated Head Head Assay MSRDI MSRDI # Size Fraction Weight Skyline Assay Distribution (%) (kg) (%) Pb (%) Zn (%) Ag (ppm) Pb Zn Ag /8 in ¼ in mesh mesh mesh mesh Calculated Head Head Assay Skyline

61 Sierra Mojada NI Page 47 Table 12.6: Composite No 2 Screen assay as received MSRDI # Size Fraction Weight MSRDI Assay Distribution (%) (kg) (%) Pb (%) Zn (%) Ag (ppm) Pb Zn Ag in in ¾ in ½ in ½ in Calculated Head Head Assay MSRDI MSRDI # Size Fraction Weight Skyline Assay Distribution (%) (kg) (%) Pb (%) Zn (%) Ag (ppm) Pb Zn Ag in in ¾ in ½ in ½ in Calculated Head Head Assay Skyline

62 Sierra Mojada NI Page 48 Table 12.7: Composite No 2-1/2 in crush MSRDI # Size Fraction Weight MSRDI Assay Distribution (%) (kg) (%) Pb (%) Zn (%) Ag (ppm) Pb Zn Ag /8 in ¼ in mesh mesh mesh mesh mesh Calculated Head Head Assay MSRDI MSRDI # Size Fraction Weight Skyline Assay Distribution (%) (kg) (%) Pb (%) Zn (%) Ag (ppm) Pb Zn Ag /8 in ¼ in mesh mesh mesh mesh mesh Calculated Head Head Assay Skyline

63 Sierra Mojada NI Page 49 Table 12.8: Composite No 3 screen assay as received MSRDI # Size Fraction Weight MSRDI Assay Distribution (%) (kg) (%) Pb (%) Zn (%) Ag (ppm) Pb Zn Ag in in in ¾ in ½ in ½ in Calculated Head Head Assay MSRDI MSRDI # Size Fraction Weight Skyline Assay Distribution (%) (kg) (%) Pb (%) Zn (%) Ag (ppm) Pb Zn Ag in in in ¾ in ½ in ½ in Calculated Head Head Assay Skyline

64 Sierra Mojada NI Page 50 Table 12.9: Composite No 3-1/2 in crush MSRDI # Size Fraction Weight MSRDI Assay Distribution (%) (kg) (%) Pb (%) Zn (%) Ag (ppm) Pb Zn Ag /8 in ¼ in mesh mesh mesh mesh mesh Calculated Head Head Assay MSRDI MSRDI # Size Fraction Weight Skyline Assay Distribution (%) (kg) (%) Pb (%) Zn (%) Ag (ppm) Pb Zn Ag /8 in ¼ in mesh mesh mesh mesh mesh Calculated Head Head Assay Skyline

65 Sierra Mojada NI Page Sink Float Results Each of the three composites was subjected to sink/float testing at three independent top size crushes. Splits from each composite were evaluated at 1 inch by +35 mesh, 5/8 inch by +35 mesh and 3/8 inch by +35 mesh. Gravities utilized during the test program varied somewhat by virtue of results obtained during the test program. Results obtained from composites 2 and 3 were not too promising. However, results produced on the high grade were interesting. On the high grade (Met-S) at 1 inch crush and S.G. 3.0, 24% of the feed to the crushing plant (27% feed to HMS) was rejected to the float component. As a result 63.5% of the Zinc reported to the float while the resulting sink plus -35 mesh (projected feed to mill) contained 98% of the lead, 88% of the silver and 37% of the zinc Archimedes Spiral Results The results obtained on one kilogram test charges at minus 10 mesh are shown in Table Table 12.10: Archimedes spiral test results Composite No 1 MSRDI # Identification Weight Assay Skyline Distribution (%) (g) (%) Pb (%) Zn (%) Ag (ppm) Pb Zn Ag 2837 Spiral Conc Spiral Tail calculated head Assay Head Skyline Composite No 2 MSRDI # Identification Weight Assay MSRDI Distribution (%) (g) (%) Pb (%) Zn (%) Ag (ppm) Pb Zn Ag 3091 Spiral Conc Spiral Tail Calculated head Assay HEAD MSRDI Composite No 3 MSRDI# Identification Weight Assay MSRDI Distribution (%) (g) (%) Pb (%) Zn (%) Ag (ppm) Pb Zn Ag 3093 Spiral Conc Spiral Tail Calculated head Assay Head MSRDI

66 Sierra Mojada NI Page Test work in Progress A number of additional analyses and determinations on the three composite heads are currently in progress. A summary detailing the disposition of these is given below. Additional Analysis of Composite Heads (ALS) 1. LOI 2. Sulfur Species 3. CN Soluble Silver 4. Oxide Zinc Bond Abrasion Hazen DMS (float/sink) Testing Cyanidation Bond Work Index (Grindability) MSRDI Mineralogy DCM Science Lab 1. XRD 2. XRF Whole Rock 3. SEM A series of bottle cyanide agitation leach tests were performed on the three trench samples to assess the amenability of the ore to cyanide agitation leaching at various grind sizes, leach times and cyanide strengths without removing the zinc first. While all analytical data are not in yet it appears that recovery of 60-80% can be achieved on whole ore at grind sizes from -100 mesh to mesh, leach times of hours and cyanide strengths of 2-5 g/l CN. Sequential leach analyses and mineralogical analyses on the respective samples indicates that 20% of the silver is encapsulated in silica and is unavailable to cyanide for leach extraction, establishing 80% extraction as the maximum achievable in these samples. A complete cost benefit analysis will be required to determine the optimum grind size, leach time and cyanide strength to maximize return at various silver price assumptions. Further flotation test work on extracting the zinc prior to cyanidation has failed to return recoveries of more than 50 to 60% of the contained zinc in concentrate and at low concentrate grades of 2 to 4% Zn, with considerable accompanying silver in the zinc concentrate. Continuing test work will address the possibility of both flotation or alkaline leach of the zinc in the tailings residue from cyanidation of the silver. Only 10 to 15% of the zinc goes into solution during cyanidation due to the general insoluble nature of the zinc silicate mineral hemimorphite in cyanide solution, leaving 85 to 90% of the zinc in the agitation leach tailings for recovery by either flotation or alkaline leach. Bond Work Index tests were conducted on samples from each of the three composites, with results ranging from to 16.1 KWhr/tonne.

67 Sierra Mojada NI Page Mineral Resource Estimates 13.1 Introduction Mineral Resource estimation described in this report follows the guidelines of NI The modeling and estimate of the Mineral Resources were done by Dr. Gilles Arseneau, a qualified person with respect to Mineral Resource estimation under NI Dr. Arseneau is independent of Silver Bull and of the Sierra Mojada property. There is no affiliation between Dr. Arseneau and Silver Bull except that of an independent consultant/client relationship. Although SRK is not an expert with respect to any of the following aspects, SRK is not aware of any unusual environmental, permitting, legal, title, taxation, socio-economic, marketing, or political factors that may materially affect the Sierra Mojada Mineral Resources as of the date of this report. The Mineral Resources presented in this report for the Sierra Mojada project conform to the definitions adopted by the Canadian Institute of Mining, Metallurgy and Petroleum ( CIM ) in December 2000 and modified in 2005, and meet the criteria of those definitions, where: A Mineral Resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the Earth s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories. An Inferred Mineral Resource has a lower level of confidence than that applied to an Indicated Mineral Resource. An Indicated Mineral Resource has a higher level of confidence than an Inferred Mineral Resource but has a lower level of confidence than a Measured Mineral Resource. An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques for locations such as outcrops, trenches, pits, workings and drill holes. Due to the uncertainty that may be attached to Inferred Mineral Resources, it cannot be assumed that all or any part of an Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource as a result of continued exploration. An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

68 Sierra Mojada NI Page 54 A Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity. Most of the data was verified by SRK, whereas the historical data were audited in some detail by PAH and Nilsson in 2010 and SRK reviewed the work carried out by PAH and Nilsson and agreed with the results of their investigations of the historical data. SRK carried out a review of about 13% of the historical assay data and noted only minor errors. Silver and zinc mineralization boundaries were modelled by SRK using a grade outline prepared in Leapfrog (ARANZ Geo Limited TM ) and validated in GEMS (Gemcom TM ). SRK is of the opinion that the current drilling information is sufficiently reliable to interpret with confidence the boundaries of the mineralized areas and that the assaying data are sufficiently reliable to support estimating Mineral Resources. This section describes the work undertaken by SRK and key assumptions and parameters used to prepare the Mineral Resource model for the Sierra Mojada deposit Resource Modeling and Estimation Data The digital database provided by Silver Bull contained a total of 14,808 header records, 1,107 from DDH, 34 from RC, 10,611 from CH and 3,056 from LH. In total, these contain 157,758 assay records, of these only 148,950 records contain silver and zinc assays values. Table 13.1 summarizes the assay data by drill hole types.

69 Sierra Mojada NI Page 55 Table 13.1: Basic statistical data of all database data Hole Type Class Ag Zn Cu Pb Length Minimum DDH LH RC CH Maximum 5, Mean Standard Deviation Minimum Maximum 10, Mean Standard Deviation Minimum Maximum 2, Mean Standard Deviation Minimum Maximum 7, Mean Standard Deviation Geology and Solid Models Silver mineralization occurs associated within dolomitized limestone, in fractures and micro veinlets. The mineralization is both parallel to bedding and cross-cutting following faults and joints within the dolomitized limestone. Modeling of individual fractures is neither possible not practical. Drilling has defined a fairly continuous mineralized zone that extends for approximately 3 km in an east-west direction so to define the mineral deposit SRK utilized a grade shell based on 10 g/t Ag to determine the limits of the Shallow Silver Zone (Figure 13.1). The wireframe was constructed on vertical sections at 50 m spacing. The sectional modeling was assisted with a three dimensional outline generated from Leapfrog modeling software and validated on level plans at a five-metre spacing.

70 Sierra Mojada NI Page 56 Figure 13.1: Three dimensional view of the Shallow Silver Zone wireframe Note: 3D view is looking north, red and white markers are 100 m long. From the 151,758 assay records in the digital database, 49,751 samples lie within the wireframe representing the mineralized envelope. Topographic Surface Topographical data was provided in digital format by Silver Bull. The topographical data was compiled from aerial ortho-photography contoured at 2 m intervals. SRK did not carry out a detail validation of the topographical dataset. Instead we have compared the collar surveys with the digital topographic base provided and found only two drill holes that did not correspond with the topgraphic base provided (holes D and D ) neither holes intersected the Shallow Silver Zone wireframe and were therefore excluded from the dataset used for the estimation Bulk Density A total of 3,393 bulk density measurements were made available in an Excel spreadsheet. A breakdown of measurements by drilling campaign/year is given in Table Table 13.2: Summary of Bulk Density Measurements by Year Drill program Number Measurements % of measurements Company % Peñoles % MMC % MMC % MMC ,191 35% MMC TOTAL 3, % ALL

71 Sierra Mojada NI Page 57 Bulk densities were determined by water immersion method using the following procedures: A 10 cm sample of core was selected at regular intervals generally between 5 and 25 m down the hole. Closer spaced samples were generally collected in mineralized zones. Attempts were made to collect samples from different rock units. Bulk density measurements were performed on whole core. All measurements were made on an electric balance scale. Samples were weighed in a polythene sample bag. The bag and sample were weighed separately. The bag with the sample in it is then vacuum sealed. The sealed bag is then weighed in water by being suspended on a line connected to the scale, then completely immersed in water. Two measurements of the weight in water are made and the average value used as the weight of the sample bag. The density of the sample bag is assumed to be the same as water. The bulk density is then calculated using the difference in weight of the sample in air and water. The average bulk density for all samples is 2.56 g/cm 3. During 2010 a total of 60 bulk density samples were submitted to the metallurgical facility at the certified SGS laboratory in Durango for verification of density measurements. The method used by the SGS laboratory is similar to that used by Metalline with the exception that samples are coated in wax rather than the vacuum sealed bag. The method used by SGS is an industry accepted practice. Table 13.3 shows a summary comparison of the data sets. The work from SGS indicates that there is no major issue with the Metalline data. It appears that Metalline is underestimating the bulk density by less than 2% on average (0.05 g/cm 3 ), this tendency to slightly underestimate the bulk density is shown in the scatterplot (Figure 13.2).

72 Sierra Mojada NI Page 58 Table 13.3: Comparison of Metalline and SGS bulk density measurements Metalline SGS Avg Diff (MM-SGS) % Relative Diff No of Samples Average % Median % Maximum % Minimum % On the basis of these results it would appear that the methodology used by Metalline Mining is acceptable although tending to underestimate the bulk density by a small amount. Bulk Density SGS Bulk Density Metalline y = x Figure 13.2: Scatter plot of Metalline and SGS bulk density data The specific gravity ( SG ) used for estimation was assumed equivalent to the measured bulk density. The average SG grades for each modeled lithologic unit were assigned to the corresponding blocks in the resource model as shown in Table13.4. Table 13.4: Specific gravity per geological unit. Lithology Block Model Code SG Overburden (Qal) Upper Conglomerate (UC) Limestone (LS)

73 Sierra Mojada NI Page Resource Modelling The silver Mineral Resources at Serra Mojada were modeled and estimated by evaluating the drill and assay data statistically, interpreting geology and structures on cross sections, analyzing the modeled mineralization geostatistically to establish estimation parameters, and estimating grades into a three-dimensional block model. All modeling of the Sierra Mojada resources was performed using Gemcom mining software. Data Utilized SRK reviewed all data and all quality control and quality assurance procedures utilized by Silver Bull and previous owners and concluded that from the original 48,678 assays contained within the Shallow Silver Zone only 46,057 were suitable for use in the resource estimate. The remainder 2,621 assay records could not be verified and were eliminated from the subset used for block estimation. Table 13.5 summarises the basic statistical information of the data used to estimate the mineral resources of the Shallow Silver Zone. Table 13.5: Statistical information for assays contained within Shallow Silver Zone Hole Type Class Ag (g/t) Zn (%) Cu (%) DDH LH RC Channel Pb (%) Length (m) Minimum Maximum 6, Mean Standard Deviation Minimum Maximum 10, Mean Standard Deviation Minimum Maximum 2, Mean Standard Deviation Minimum Maximum 7, Mean Standard Deviation Count 26,847 12, ,126

74 Sierra Mojada NI Page 60 Evaluation of Extreme Assay Values Block grade estimates may be unduly affected by high grade outliers. Therefore assay data were evaluated for high grade outliers and capped to values were determined based on decile and probability plot analyses. Because of the high variation in raw assay lengths, from 0.2 m to 1.5 m, SRK evaluated the assay average grades of different sample lengths to determine if shorter sample lengths were selected over high grade sections of the deposits and to evaluate if compositing prior to capping was appropriate. Figure 13.3 shows the average assay grade for silver and zinc for different sample lengths, as can be seen on the figure; shorter assay lengths are not associated with higher average grades. For this reason, SRK decided to cap the assay data prior to compositing Average Silver (g/t) Avg Ag Avg Zn Avearge Zinc (%) Average length (m) Figure 13.3: Comparison of average grade and assay length Because only silver and zinc were estimated, only these metals were evaluated to determine appropriate capping levels. Separate analyses were carried out for each data types and different capping levels were established for each of the data types. Table 13.6 summarises the capping levels suggested by the probability plots and decile analyses for silver and Table 13.7 summarises the zinc capping levels.

75 Sierra Mojada NI Page 61 Table 13.6: Silver capping levels Silver cap level (g/t) Number of samples capped Metal loss (%) Coefficient of variance DDH LH CH RC Table 13.7: Zinc capping levels Zinc cap level (%) Number of samples capped Metal loss (%) Coefficient of variance DDH LH CH RC Compositing All assay data were composited to a fixed length prior to estimation. SRK evaluated the assay lengths for the various data types and found that most samples had an average length of one metre with 97% of samples lengths being less than 2 m. For this reason, SRK decided to composite all assay data to 2 m prior to estimation. Several channel samples had total length less than 2 m, to assure that these samples did not skew the composite table, SRK diluted all short channel samples to a minimum length of 2 m. After compositing, all composites were sorted and the composites that were less than one metre in length were eliminated from the database prior to estimation. In total, the compositing process generated 30,806 composites. A total of 1,788 composites had lengths shorter than one metre and were eliminated prior to estimation. Table 13.8 summarises the basic statistical data for the 2 m composites contained within the Shallow Silver Zone.

76 Sierra Mojada NI Page 62 Table 13.8: Statistical data of 2 metre composited data Hole Type Class Ag Cap (g/t) DDH LH RC Channel Zn Cap (%) Cu (%) Pb (%) Length (m) Minimum Maximum Mean Standard Deviation Coefficient of variance Minimum Maximum Mean Standard Deviation Coefficient of variance Minimum Maximum Mean Standard Deviation Coefficient of variance Minimum Maximum Mean Standard Deviation Coefficient of variance Count 15,047 7, ,831 Data Types and Support SRK evaluated the various data type to test if any biases existed between drill holes, long holes or channel samples. To evaluate for possible bias, SRK declustered the data types using a 20 m by 20 m by 10 m declustering cell. The declustered data were then compared on quantile-quantile plots (QQ plots). As can be seen on Figures 13.4 and 13.5 there is a significant difference between blocks estimated with LH and CH as compared to blocks estimated with DH only. SRK interpreted this bias to represent higher grade mineralization that was preferentially mined by previous owners and as such preferentially sampled by CH and LH over DH which sample the deposit at a regular spacing. To resolve this apparent bias, SRK restricted the influence of the CH and LH to a very small volume represented by a single 5m by 10 m by 5 m block to assure that the high grade assays were not smeared throughout the broader lower grade mineralized envelope.

77 Sierra Mojada NI Page 63 Figure 13.4: QQ Plot of silver grades for DH estimated blocks compared with CH estimated blocks Figure 13.5: QQ Plot of silver grades for DH estimated blocks compared with LH estimated blocks

78 Sierra Mojada NI Page 64 Block Model Database A block model was constructed to cover the entire extent of the Sierra Mojada deposit mineralization and any potential pit limits. The geometrical parameters of the block model are summarized in Table All blocks are 5 m by 5 m by 5 m in size. Table 13.9: Resource Block Model Extent Description Easting (X) Northing (Y) Elevation (Z) Block Model Origin (min) (NAD 83 Zone 12) 629,200 3,016,500 1,800 1 Block Dimension (m) Number of Blocks Note 1: Gemcom defines the block origin as the minimum X and Y but the maximum Z value, the minimum block elevation is 1,000 m. Grade Interpolation Block grades were estimated by ordinary kriging into the model. Kriging parameters were derived from variogram analysis was completed on the composites for each metal and within the mineralized domains (Table 13.10). The nugget effects were established from downhole variograms. The nugget values are 20% and 25% of the total sill for silver and zinc respectively. Note that the sill represents the grade variability at a distance beyond which there is no correlation in grade. Table 13.10: Silver and zinc correlogram parameters for Shallow Silver Zone Metal Nugget C0 Sill C1, C2 Gemcom Rotations (RRR rule) Ranges a1, a2 around Z around Y around Z X-Rot Y-Rot Z-Rot Ag 0.20 Zn Figure 13.6 and Figure 13.7 show the directional correlograms and exponential models for silver and zinc.

79 Sierra Mojada NI Page 65 Figure 13.6: Directional correlograms from 2 m composited silver data Figure 13.7: Directional correlograms from 2 m composited zinc data

80 Sierra Mojada NI Page 66 Silver and zinc grades were estimated in multiple passes with increasing search radii. Successive passes only calculated grades into blocks that had not been interpolated by the previous passes. Table summarises the search ellipse parameters used to estimate metal grades into the model. Channel and long hole samples were only used during the first pass search ellipse. Drill hole data were used for all three passes. Table 13.11: Search ellipse parameters Metal Search Pass Search Type Rotation Search Ellipse Size Number of Composites Z Y Z X (m) Y (m) Z (m) Min. Max. Max. Samples per DDH Ag 1 Ellipse Ag 2 Ellipse Ag 3 Ellipse Zn 1 Ellipse Zn 2 Ellipse Zn 3 Ellipse Mineral Resource Classification Mineral Resources were estimated in conformity with generally accepted CIM Estimation of Mineral Resource and Mineral Reserve Best Practices Guidelines. Mineral Resources are not mineral reserves and do not have demonstrated economic viability. The Mineral Resources may be affected by subsequent assessment of mining, environmental, processing, permitting, taxation, socio-economic and other factors. There is insufficient information in this early stage of study to assess the extent to which the Mineral Resources will be affected by these factors that are more suitably assessed in a conceptual study. Mineral reserves can only be estimated based on the results of an economic evaluation as part of a preliminary feasibility study or feasibility study. As such, no mineral reserves have been estimated by SRK as part of the present assignment. There is no certainty that all or any part of the Mineral Resources will be converted into a Mineral Reserve. In order to complete valid classification of the Shallow Silver Zone Mineral Resource, the data and estimate were evaluated for: Data confidence, validation of historic data and analytical QA/QC; Data spacing (drillhole and assay); Deposit geological model; Metallurgical testing and analysis; Blocks were classified as Indicated where they were populated using more than 6 samples from a minimum of three drill holes at an average distance of less than 60 m. All other estimated blocks were classed as Inferred.

81 Sierra Mojada NI Page 67 The results of the block-by-block classification, described above, were then re-interpreted for data continuity and spatial outliers. During this process, contiguous volumes of similarly classified material were grouped into the appropriate mineral resource classes. About two thirds of the Shallow Silver Zone has been classified as Indicated. At the margin of the drill hole data, material has been classified as Inferred (Figure 13.8) Figure 13.8: Three dimensional perspective of block classification (looking down) Note: Blue blocks are classified as Indicated and green blocks are classified as Inferred, red and white markers are 100 m in length Grade model Validation The Shallow Silver Zone resource block model grades were validated by completing a series of visual inspections and by: Comparison of local well-informed block grades with composites contained within those blocks; Comparison of average assay grades with average block estimates along different directions swath plots. Figure 13.9 shows a comparison of estimated silver block grades with borehole composite assay data contained within those blocks in the mineralized area. On average, the estimated blocks are very similar to the composite data, although there is a relatively large scatter of points around the x = y line. This scatter is typical of smoothed block estimates compared to the more variable assay data used to estimate those blocks. This is indicated by a thick white line. The thick white line that runs through the middle of the cloud is the result of a piece-wise linear regression smoother.