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HISTORICAL OXIDE ZINC RESOURCE REVIEW

SIERRA MOJADA PROJECT

ESMERALDA, COAHUILA, MEXICO

Prepared For:

METALLINE MINING COMPANY

2200 – 885 WEST GEORGIA STREET

VANCOUVER, BC V6C 3E8

April 25, 2011


1. Contents

1. Executive Summary ........................................................................................... 3

2. Introduction ........................................................................................................ 4

2.1 Terms of Reference ........................................................................................... 5

2.2 Personal Inspection ............................................................................................... 5

2. Reliance on Other Experts ................................................................................. 6

3. Property Description and Location ..................................................................... 6

4. Access, Climate, Local Resources, Infrastructure and Physiography ................ 6

5. History ................................................................................................................ 6

6. Geology and Mineralization ................................................................................ 6

7. Deposit Types .................................................................................................. 13

8. Exploration ....................................................................................................... 13

9. Drilling .............................................................................................................. 13

10. Sample Preparation, Analysis and Security .................................................. 14

11. Data Verification............................................................................................ 14

12. Mineral Processing and Metallurgical Testing ............................................... 14

13. Mineral Resource Estimates ......................................................................... 15

14. Adjacent Properties ....................................................................................... 16

15. Other Relevant Data and Information ........................................................... 16

16. Interpretation and Conclusions ..................................................................... 16

Recommendations ................................................................................................... 17

17. References ................................................................................................... 18


2. Executive Summary

In January 2010 Pincock, Allen & Holt issued the “Technical Report and Resource

Estimate for the Sierra Mojada Project, Mexico”. On April 19th 2011 Geosim

Services Inc. and Nilsson Mining Services produced a technical report on the

“Shallow Silver Zinc Deposit, Sierra Mojada Project, Coahuila State, Mexico.”

This review does not disclose any new resource estimates for the Sierra Mojada

project and although it follows the format of the new CSA NI 43-101 form, it has not

been prepared to meet NI 43-101 standards for disclosure.

JDS Energy & Mining Inc. has incorporated information and resources from both

reports as well as reviewing internal company reports, press releases and SEC

filings. The purpose of this report is to identify important information about the

property and to provide value to the client by outlining an exploration direction to

improve the potential of adding or upgrading the presently understood resources.

JDS noted that since the merger with Dome Ventures Inc. Metalline Mining

Company (MMC) has been working diligently toward addressing the

recommendations of the PAH 2010 technical report. That report disclosed a

combined inferred resource of 48.82 million tonnes at 96.3g/t silver and 5.98% zinc.

Under CIM guidelines and inferred resource has uncertainty such that it cannot be

assumed that all or any part will be upgraded to indicated or measured resources.

Three key recommendations of the 2010 PAH report were to:

a. Conduct a robust QA/QC- program to provide a measure of confidence for

the sample data used to estimate the resource and potentially upgrade a

portion of the inferred resources.

b. An exploration drill program to “better delineate the north silver

mineralization as well as provide better geological information into the

continued development of the resource model”.

c. Surface and underground mapping and surveying to help address the

“considerable debate over the genesis of the Sierra Mojada deposits”.

The author of this review can confirm that:

a. The QA/QC program was completed and that future grade modeling

should have both measured and indicated resources.

b. A 99-hole drill program was initiated on January 4th, 2010 to address the

shallow silver mineralization. This program formed the basis for a new NI

43-101 technical report by GeoSim/Nilsson Mining Services.

c. Surface mapping was reviewed and areas around the test trench on Line

629600E remapped. For safety reasons no underground mapping or

surveying was permitted.


In August 2010, Pincock, Allen & Holt completed the QA/QC campaign and wrote

that “Based on the execution of the Program and a detailed review of the results,

PAH concludes that the drill hole assay data for channel and core samples used in

its January 2010 resource estimate are of sufficient quality to support measured and

indicated resources. Note that converting inferred resources to measured and

indicated is contingent upon other factors not related to data quality.”

JDS is of the opinion that among “other factors” for upgrading inferred resources

would include increased drilling and sample density along with a robust lithology

model to constrain grade modeling methods.

To help improve understanding of the lithology and genesis of the deposit, Metalline

contracted the technical expertise from consulting geologists Jon Thorson PhD, and

Martin King after the issuance of the PAH resource. Mr. King has been retained to

continue surface mapping and interpretations which are presently being integrated

with those of the onsite geologists.

With respect to the conclusions and recommendations of the 2011 Geosim/NMS

Technical Report, Metalline is presently doing exploration drilling along strike to the

east and will commence infill drilling in late April.

There remains considerable upside potential within the zinc resource and three

obvious and immediate value-add opportunities that warrant further evaluation:

Upgrade a significant portion of the PAH 2010 resource from an Inferred

classification to Measured or Indicated (increased confidence);

Expand the resource at depth to include the smithsonite (white zinc) zone

(increased resource); and

Identify waste-stripping synergies between the zinc oxide and the near

surface silver resources (reduced stripping).

3. Introduction

Since both of the technical reports have associated zinc resources, it is important to

understand the spatial relationship between the two and put into context the upside

exploration potential and future zinc mining synergies that may be identified from the

2011 exploration program.

In March 2011 a large geophysical program was flown over the property to help

identify targets for future prospecting. Concurrent with that program, a 20,000m drill

program was implemented to address better geologic delineation and improve

confidence in the calculated resources. The infill program will also upgrade much of

the inferred and indicated resources into indicated and measured categories.


JDS has been providing Metalline with overall project management assistance which

includes reviews of data collection and management; identifying productivity

improvements and implementing health and safety standards.

Site data management has been through the use of Gemcom Software

International’s GEMS®. JDS also uses this software and helped Metalline by

restructuring databases, introducing error traps and organizing additional training.

Currently SMP has identified three distinct mineralized zones in the primary zinc

resource zone at the base of the Sierra Mojada range:

1. The silver oxides (argentite/acanthite +/- silver halides) in a breccia zone

along the erosional unconformity below the Tertiary Upper Conglomerate

which overlies the breccia, the Aurora Formation limestone and dolomite

beds;

2. a lead-silver oxide manto higher in the stratigraphic sequence but historically

assumed to be mined out; and

3. two types of zinc oxide mantos:

a. the red zinc (hemimorphite, goethite, hematite) zone, and a deeper

b. white zinc (smithsonite) zone.

The inter-relationships of the mineralization and the fact that historical underground

mining focused on very high grade ores suggests that with improved mining and

milling techniques and current high silver and zinc commodity prices, the exploration

upside at the Sierra Mojada warrants further evaluation.

2.1 Terms of Reference

Metalline Mining Company (MMC) commissioned JDS to review all available

documentation stored at the Sierra Mojada project to help guide future exploration

plans. This information included historic internal company reports and investigations

by external consultants.

JDS Energy & Mining Inc. is independent of Metalline Mining Company. Fees for

this report and site services are not dependent in whole or in part on any prior or

future agreement or understanding resulting from the conclusions of this report.

2.2 Personal Inspection

JDS senior project manager Allan Reeves, P.Geo. R.E.T, PMP has been working

approximately 10-14 days per month at the project since August 2010. He was also

present for two of the site visits undertaken by Jon Nilsson in April (10-12th 2010 and

Jan 12-13th, 2011).

Mr. Reeves has had unrestricted access to all of Metalline’s historical and current

data and ample time and opportunity to converse with staff geologists and


consultants Martin King and Jon Thorson with respect to the geology and

mineralization of the Sierra Mojada project.

JDS senior geologist Tony Gonzales conducted a site visit April 11-22, 2011. During

that time he reviewed the recent geologic reports and cross sections. He also had an

opportunity to examine some NITON® XRF data collected and do a preliminary

assessment of its use to correlate some elements with lithologies.

4. Reliance on Other Experts

JDS has not verified the published resources and relies on the work of both PAH

and Geosim/NMS in this overview. It is the author’s opinion that the data used by

PAH and Geosim/NMS was of sufficient quality to produce the technical reports and

notes that the quality is being maintained for future resource and economic

evaluations.

5. Property Description and Location

The property is located in the Mexican state of Coahuila approximately three hours

(250km northwest) by road north of Torreón.

6. Access, Climate, Local Resources, Infrastructure and

Physiography

For the purposes of brevity, the author refers the reader to the Geosim/NMS

technical report for a concise and current description of local infrastructure etc.

7. History

For the purposes of brevity, the author refers the reader to the Geosim/NMS

technical report for a summary of the mining history of the Sierra Mojada district.

8. Geology and Mineralization

The Geosim/NMS report has an excellent summary of the current geologic model.

One aspect that requires further investigation is the width of the fluid-controlling

Sierra Mojada fault system.

As noted, consulting geologist Martin King is involved with surface mapping,

reviewing core logs and generating a current stratigraphic sequence in the

immediate area of the resources. The 2011 Shallow Silver Technical report has a

very complete summary of the geology and mineralization partially repeated here.


In very general terms, the host rock for local mineralization is the Aurora Formation

limestone sequence which contains clean limestone, carbonaceous limestone and

dolomitic beds. Currently a correlation study between the zinc mantos and

favourable horizons is under review by the site geologists. The basic mineralization

zones have been described in the Geosim/NMS report as follows:

1. Zinc Manto Zone. Predominantly zinc dominated, but with subordinate 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,

3. 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).

4. 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.

5. 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.

In 2010 Metalline Mining Company purchased a Niton® portable XRF unit for the

purpose of assisting in field reconnaissance programs. Initially the unit was used

during core logging to confirm that simple “grade or no-grade” determinations could

be made. This proved worthwhile and a second unit was purchased.

Niton® derived elemental concentration data were obtained from a select number of

2011 drill holes to determine the possibility of using the instrument to differentiate

rock types at the Sierra Mojada Project. Limestone and dolomite were chosen for

the test because they are typically easily identifiable, have chemical and genetic

variabilities and they provide a large number of sample points. Elements that were

present in detectable concentrations were used in the test and include: As, Ba, Ca,

Cs, Fe, K, Mn, Sr, Te and Zn.

The mean concentration of these elements were statistically evaluated using the F-

test two-sample for variances and Two-sample t-test statistics “built-in” functions in

MS Excel®. The aim of the test was to uncover statistical variations, if they exist,

between the limestone and dolomite chemistries at Sierra Mojada. The sample

sizes or “N” for the test were large enough (N > 30) to validate the method.


The preliminary test results show that limestone and dolomite at Sierra Mojada can

be differentiated by Sr, Cs and Zn. The Niton® XRF Analyzer can be used to test

other rock types at Sierra Mojada and potentially aid in identifying difficult lithologies

for interpretations and developing the newly evolving stratigraphic ore model.

Figure 1 on the following page is the lithology for Section 631500E and was

prepared by site geologist Ing. Andres Castillos who has been with the project for

five years and has over sixteen years experience as an exploration geologist.

The current drill program is testing the geologic interpretation and grade control

features postulated. One target to be fully tested is the underlying white zinc manto

which presently has been defined to be about 165m thick and 450m of strike length.

It is not unreasonable to assume that its continuity may not be dissimilar to that of

the well-defined red zinc manto which has a known strike length of 2,400m and a

thickness up to 100m.

Figure 2 shows an underlay of the 631200E geology interpretation and the zinc

resource as it is currently understood. The geometry of the resource has been

defined by channel samples, underground long holes and sparse surface drilling. To

upgrade the inferred resource to the right of the figure, surface drilling is required.

PAH defined both a high-grade core and a low grade envelope. It is the opinion of

site staff that the high-grade core correlates well with a favourable horizon in the

Aurora Formation. Modifying the lithologic model and redoing a resource calculation

is unlikely to have much affect the contained metal within the high grade core but is

considered likely to have an impact on the metal content and distribution within the

low grade envelope.

Please note that the Mineral Resources referred to in this review follow the

guidelines of Canadian National Instrument 43-101 (“NI 43-101”). The modeling and

estimate of the Mineral Resources were done under the definitions and criteria set

forth in NI 43-101; by independent consultants. The Mineral Resources referred to

in this report 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 drillholes. 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 drillholes that are spaced closely enough

for geological and grade continuity to be reasonably assumed.

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 drillholes that are spaced closely enough to confirm both

geological and grade continuity.

Under the definition of “inferred” resources this report cannot be construed as a

material change due to the uncertainty of the geologic model and limited drilling

information that was available for grade modeling in late 2009.

The principle of the current exploration program is that the zinc oxide resource is

amenable to open pit mining methods. The proximity of the shallow silver zone and

the zinc resource are shown on Figure 2 along with a rough pit outline that is guiding


the program. At the top of the highwall (south side or to the right of the figure),

abandoned lead-silver manto workings have been highlighted although they are just

off the section to the east. A program to test for minable silver grades is needed as

this could further reduce the waste stripping to expose the zinc resource.

The south wall (highwall) is assumed to be completely in the Aurora Formation and

that slope angles could be increase to those seen at the adjacent Mina Dolomita

operated by Peñoles. Shown slope angles have been reduced to conservative

values of 35o within the Quaternary Alluvium/Cretaceous Upper Conglomerate, and

50o within the limestone/dolomite package. A full geotechnical drilling program and

analysis will be required for future design purposes.


Figure 1 - Section 631200E


Figure 2 – 632100E lithology underlay with GEMS data overlay.


9. Deposit Types

The zinc mantos are likely low-temperature carbonate hosted replacement deposits

(CRD’s) formed from basinal brines that may have undergone a later supergene

remobilization and reconstitution of sulphide mineralization.

10. Exploration

Since August 2010 a concerted effort has been made to compile historical mining

level maps and cross sections. Some of this information dates back to the 1930’s.

Many of the abandoned stopes and tunnels were re-surveyed over the past few

years with a total station (Sokkia 5” accuracy) and it is now possible to correctly

orient the historic mine grids to the NAD 83 Zone 12 datum. Structure and geologic

contacts on the old level plans/sections are being transferred to the digital database.

Present exploration outside of the main deposit has only recently commenced.

Initially it consists of ground-truthing the geology of many of the old prospects that

outcrop at surface. Grab samples and specimens for thin section have been taken

although when the results will be obtained is unknown at this time.

Going forward, Metalline plans prospect sampling and mapping of areas outside of

the main deposit which should lead to the identification of additional targets. These

targets will be mapped and sampled in greater detail and tested by drilling. The use

of geophysical techniques and geological models will also be considered as

additional target generation tools.

11. Drilling

As noted in both of the technical reports, historical drilling has been significant

although the vast majority of the meterage had been obtained during underground

zinc oxide resource delineation. At the time of the PAH 2010 report the underground

longholes and channel samples were not considered acceptable for modeling the

resource to measured and indicated classifications. Metalline followed up the PAH

2010 recommendation for a robust QA/QC program and in August 2010 PAH

confirmed that the data could be utilized in future resource calculations to reclassify

some of the inferred resources to indicated and measured.

Of particular note is that the smithsonite zone is considered to sit lower in the

stratigraphic sequence. As described by PAH “The Red Zinc zone has a known

strike length of 2,400m and a thickness up to 100m. This zone appears to be parallel

or semi-parallel to the primary dolomitic host bedding, which dips to the south at

approximately 15o. PAH has interpreted a higher grade zone of semi-massive to


massive hemimorphite (minor smithsonite), within a halo of fracture fill and

replacement lower grade mineralization”.

JDS concurs with site staff that the higher grade hemimorphite zone was likely

favouring a particular horizon of the stratigraphic sequence. It is not unreasonable

to assume that the underlying smithsonite zone could have similar dimensions and

attributes. Given the lack of drill data to depth, there are large areas still untested.

For 2011, the 20,000 metre drill program is split about 50/50 between testing the

shallow silver zone and infill drilling of the red zinc manto. Several of the holes over

the primary red zinc resource will be extended to test the smithsonite zone. The

intent is to get enough intercepts in the smithsonite to develop robust geologic and

grade models that will allow calculation of NI43-101 compliant resources that will

include measured, indicated and inferred classifications.

12. Sample Preparation, Analysis and Security

It is the author’s opinion that the current core handling, addition of blanks and

standards and security are acceptable for resource analyses. With the closure of

the onsite assay lab, any questions of impropriety or poor techniques were laid to

rest.

13. Data Verification

Metalline mining company has implemented the services of ioGlobal Services Inc. to

collect the core logging spreadsheets from site and the ALS-Chemex (Chihuahua

lab) reports for QA/QC. The final approved spreadsheets are returned and comma

separated values files produced for input into programs such as MapInfo® and

GEMS®.

14. Mineral Processing and Metallurgical Testing

As reported in the Geosim/NMS technical report, metallurgical testing is in progress

and once the results are made available, JDS has been requested to produce a

preliminary economic assessment of the silver resource. Given the importance of

the current drilling campaign and assessment of the lithologic models, the PEA may

be delayed until late Q3 2011.

Once the spatial relationships of the silver and zinc deposits is properly understood,

a new program of metallurgical testing should be conducted by either using some of

the remaining core or implementing a program of metallurgical drill testing.


15. Mineral Resource Estimates

The two mineral resource estimates for the Sierra Mojada Project are shown in the

following tables. Please note that remodeling or recalculating either of the current

zinc or silver resources is beyond the scope of this report.

Table 1- PAH 2010 Resources

Table 2 - Geosim/NMS 2011 Resource


16. Adjacent Properties

There are no nearby zinc or silver producing mines. Valuable information on

equipment suppliers, labour costs and mining activities have been kindly provided by

Peñoles Mina Dolomita Mine Manager Ruben Esquivel Carrillo.

17. Other Relevant Data and Information

JDS is not aware of any other relevant data or information with respect to the

project.

18. Interpretation and Conclusions

Better delineation of the stratigraphic sequence is likely to reduce the thickness of

the low grade portion of the red zinc manto within the geologically identified

limestone and dolomite horizons. This area contains inferred resources with low

confidence and uncertainty. Many areas are under-drilled.

By using well-defined geologic contacts, updated grade modeling may allow

Metalline the opportunity to segregate and stockpile lower grade red zinc resources

until later in any potential mine life while focusing on processing high-grade zinc

lenses.

Historic mining confirms that exploration potential in the lower white zinc manto

should be tested to NI 43-101 standards. This resource has positive implications to

the project, particularly if the geologic model confirms grade and continuity of similar

dimensions to the red zinc manto.

Furthermore, the shallow silver zone could be expected to have a positive impact on

any economic zinc oxide pit by reducing the overall waste stripping ratio. A two-

stage processing circuit that could capitalize on silver mining first and stockpiling

zinc-rich mineralized horizons for later processing is worthy of further consideration.

In summary, three obvious and immediate value-add opportunities for the project

should result from the 2011 infill drill program:

Upgrade a significant portion of the resources from an Inferred classification to

Measured or Indicated (increased confidence);

Expand the resources up and down dip, along strike to include the smithsonite

zone and expand the shallow silver zone (increased resources); and

Identify waste-stripping synergies between the zinc oxide and the near surface

silver resources (reduced stripping).


19. Recommendations

It is recommended that Metalline conduct a two phase data collection program. The

first phase would be to have the site staff:

Complete the collation and integration of zinc-related historic plans and

sections onto updated sections for digitizing;

Complete the surface mapping and sampling program;

Incorporate any recommendations from the geophysical program that have a

direct implication on the zinc resource;

Summarize the evolving geological model and use it to guide the drill

program;

Continue drilling the zinc mantos with particular emphasis on

deeper holes that will allow the incorporation of the white zinc

resource;

Test the lead-silver manto for possible incorporation into the

shallow silver zone modeling;

Be dynamic in rapidly modifying the drill program as drill results

dictate; and

Continue metallurgical testing by selecting composite samples that are

representative of limestone or dolomite horizons.

The second stage of data collection would include:

Embark on a baseline environmental program;

Complete the acquisition of outstanding land holdings;

Conduct preliminary socio-economic studies;

Consider a program of geotechnical drilling for the determination of pit slope

angles;

Investigate potential tailings storage sites;

Continue the identification of possible production water well locations.


20. References

Ahn, Hye In; Mineralogy and Geochemistry of the Non-sulfide Zn Deposits in the

Sierra Mojada district, Coahuila, Mexico, MSc Thesis, The University of Texas

(Austin) August 2010.

Canadian Securities Administrators, Repeal and Replacement of National

Instrument 43101 Standards of Disclosure for Mineral Projects, Form r3-101F1

Technical Report, and Companion Poliy 43-101CP, April 8, 2011.

King. M. A. A Geological Review of the Sierra Mojada Zinc-Lead-Silver-Copper

Project. 25 June 2010

Kyle, J.R., PhD, 2009, Sierra Mojada Ore Characterization and Mineralization

Controls Project; December 28, 2009

Pincock, Allen & Holt, Technical Report and Resource Estimate for the Sierra

Mojada Project, Mexico. January 29, 2010

Pincock, Allen & Holt, Re-Sampling Program for the Sierra Mojada Project, August

11, 2010.

Pincock, Allen & Holt, Metalline Mining Summary Letter, April 1, 2011.

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