Exhibit 96.2

 

Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

TECHNICAL REPORT SUMMARY

 

COLADO SITE

LOVELOCK, PERSHING COUNTY, NEVADA

 

Submitted to: U.S. Silica Holdings, Inc.

Prepared By:

 

Boerne, Texas

830-249-8284

Date: September 30, 2022

Project No. 10711-025-013

-ML-

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

TABLE OF CONTENTS

 

1.0  EXECUTIVE SUMMARY			6
1.1  Background			6
1.2  Product			7
1.3  History of Acquisition			7
1.4  Mineral Rights			8
1.5  Location			11
1.6  Geology			14
1.7  Exploration			14
1.8  Testing			15
1.9  Recoverable Ore Estimate			16
1.10 Mining Methods			18
1.11 Processing and Recovery Methods			19
1.12 Infrastructure			19
1.13 Permitting			19
1.14 Capital and Operating Costs			20
1.15 Recommendations			21
2.0  INTRODUCTION			21
2.1  Sources			22
2.2  Personal Inspection			22
2.3  Previous Technical Reports			22
3.0  PROPERTY DESCRIPTION			23
3.1  Location			23
3.2  Leases/Royalties			27
3.3  Encumbrances			28
3.4  Permitting			28
4.0  ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY			29
4.1  Topography			29
4.2  Means of Access			29
4.3  Climate and Operating Season			31

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

4.4  Infrastructure			31
5.0  HISTORY			31
6.0  GEOLOGICAL SETTING, MINERALIZATION AND DEPOSIT			32
7.0  EXPLORATION			37
7.1  Exploration			37
7.2  Hydrogeology			41
8.0  SAMPLE PREPARATION, ANALYSES AND SECURITY			42
9.0  DATA VERIFICATION			43
10.0 MINERAL PROCESSING AND METALLURGICAL TESTING			44
11.0 MINERAL RESOURCE ESTIMATES			45
11.1 U.S. Silica Methodology			46
11.2 Data Verification Methodology			49
11.3 Process Verification Methodology			49
11.4 Results			50
11.5 In-Situ Recoverable Ore Resources			50
11.6 Cut Off Grade			50
12.0 MINERAL RESERVE ESTIMATES			51
12.1 U.S. Silica Methodology			51
12.2 In-Situ Recoverable Ore Reserves			52
12.3 Cut-Off Grade			52
13.0 MINING METHODS			52
13.1 Mining Environment			52
13.2 Overburden and Interburden Waste Handling			58
13.3 Mining Process			60
13.4 Mine Ore Stockpiles			61
13.5 Pit Repair and Maintenance			61
13.6 Mine Equipment			61
13.7 Colado Plant Raw Ore Movement			62
13.8 Mine Engineering, Planning, and Production Scheduling			64
14.0 PROCESSING AND RECOVERY METHODS			71
14.1 DE Processing Description			73
14.2 Plant Manning			76

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

15.0 INFRASTRUCTURE					76
15.1 Road and Truck Access					77
15.2 Rail					77
15.3 Electric Power					78
15.4 Natural Gas					78
15.5 Water					79
15.6 Waste Handling and Disposal					79
15.7 Buildings					79
16.0 MARKET STUDIES AND CONTRACTS					80
16.1 General Marketing Information					80
16.1.1 DE Market					81
16.2 Material Contracts Required for Production					81
17.0 ENVIRONMENTAL STUDIES, PERMITTING, PLANS, NEGOTIATIONS OR AGREEMENTS WITH LOCAL INDIVIDUALS OR GROUPS					81
17.1 Federal Requirements					82
17.2 State Requirements					84
17.3 Other Requirements					85
18.0 CAPITAL AND OPERATING COSTS					86
18.1 Operating Cost					86
18.2 Capital Costs					87
18.3 Assumptions					88
18.4 Accuracy					88
19.0 ECONOMIC ANALYSIS					88
19.1 Operating Costs					88
19.2 Capital Costs					89
19.3 Economic Analysis					89
19.4 Sensitivity Analysis					90
20.0 ADJACENT PROPERTIES					94
21.0 OTHER RELEVANT DATA AND INFORMATION					94
22.0 INTERPRETATIONS AND CONCLUSIONS					95
22.1 Comments on Exploration					95
22.2 Comments on Mineral Processing and Metallurgical Testing					95

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

22.3 Comments on Mineral Resource Estimates			95
22.4 Comments on Mineral Reserve Estimates			95
22.5 Comments on Mining Methods			96
22.6 Comments on Infrastructure			96
22.7 Comments on Permitting			96
23.0 RECOMMENDATIONS			97
24.0 REFERENCES			97
25.0 RELIANCE ON INFORMATION PROVIDED BY THE REGISTRANT			97

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

1.0    EXECUTIVE SUMMARY

This Technical Report Summary (“Technical Report” or “TRS”) updates the previously submitted Colado TRS included as Exhibit 96.2 to U.S. Silica Holding Inc.’s (“U.S. Silica”) Form 10-K for Fiscal Year Ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 25, 2022. This TRS has been prepared at the request of U.S. Silica by Westward Environmental, Inc. (“WESTWARD”) and Q4 Impact Group (“Q4”) who have conducted an audit of the proven and probable reserves at the Colado, Pershing County, Nevada (“NV”) mine as of December 31, 2021. This report also discusses the processing plant located northeast of Lovelock, NV where the mined material is processed. The Colado Site as referenced herein includes the mining area located northwest of Lovelock, NV (the “Colado mine”) and the Lovelock / Colado processing plant (the “Colado plant” or “plant”).

This audit was performed in conjunction with U.S. Silica’s Mine Engineering and Geology staff and was prepared in accordance with Subpart 1300 and Item 601(b)(96) of Regulation S-K promulgated by the SEC

There are numerous individual pits at the Colado Site that have been mined over the years to various degrees. Not all are actively being mined as of the writing of this report. Only pits that are currently designated with proven or probable reserves equal to, or greater than, 100,000 tons were considered material by U.S. Silica for this report. It must be noted that there are several other pits with measured and indicated resources as well as proven or probable reserves that were not included in the Recoverable Ore estimates provided in this report. The overall volume of recoverable DE is greater than what is presented herein.

 

1.1	Background

EP Minerals, LLC (“EPM”), an indirect subsidiary of U.S. Silica, operates four different diatomaceous earth (“DE”) operations. The Colado Site in northwestern Nevada, northeast of the town of Lovelock, is one of these operations. There are two more operations in Nevada, one

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

close to the city of Reno and one close to the city of Fernley, with the fourth facility located in Oregon, near the towns of Drewsey and Juntura. All four operations consist of at least one Mining Complex and an associated DE Processing Plant. DE products are used in hundreds of marketing applications by thousands of customers in the global industrial minerals’ marketplace.

The Colado plant is owned and operated by EPM and is located about seven (7) miles northeast of the town of Lovelock, NV and sits on approximately 493 acres. The plant address is 150 Coal Canyon Road, Lovelock, NV 89419.

 

1.2

Product

DE, also known as Kieselguhr or Diatomite, is a sedimentary mineral with physical properties that are like soil.¹ In Nevada, diatomite is the silica skeletons of billions of single-celled algae organisms deposited millions of years ago at the bottom of freshwater lakes. The remains of these single celled organisms create a soft, siliceous material with some unique chemical and physical properties. When dried, DE contains over 80% voids by volume.²

 

1.3	History of Acquisition

In late 1950’s Eagle-Picher Industries, Inc. submitted a Plan of Operations to conduct DE mining in the Colado District. Since then, the company has undergone several name and ownership changes:

 

1.

November 1986: Eagle-Picher Industries (Minerals Division) became Eagle-Picher Minerals, Inc. a wholly owned subsidiary of Eagle-Picher Industries, Inc.

 

2.

April 2003: The parent company Eagle-Picher Industries became Eagle Picher, Inc., and Eagle-Picher Minerals, Inc. was renamed Eagle Picher Filtration & Minerals, Inc.

 

3.

March 2006: Eagle Picher Filtration & Minerals, Inc. was renamed EP Minerals, LLC.

 

4.

August 1, 2011: EPM Minerals, LLC was acquired by Golden Gate Capital.

 

1	U.S. Silica Internal Report Colado, December 31, 2020.

2	U.S. Silica Internal Report Colado, December 31, 2020.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

5.

May 1, 2018: EPM Minerals, LLC was acquired by U.S. Silica.

U.S. Silica’s corporate headquarters are in Katy, TX and Reno, NV (the former EPM headquarters). EPM is a fully owned indirect subsidiary of U.S. Silica and is licensed to operate the Colado Site.

 

1.4	Mineral Rights

U.S. Silica, through EPM, holds land leases with the Franco-Nevada U.S. Corporation, and the United States Federal Government. The land lease with Franco-Nevada is for 3,718 acres and is renewed annually. Additionally, U.S. Silica, through EPM, holds 176 mineral claims on Federal, Bureau of Land Management (“BLM”) land. Of the 176 mineral claims, 146 are active and are classified as placer claims. Mineral claims are renewed on an annual basis, with the annual maintenance fee due on or before September 1st.

The Franco-Nevada U.S. Corporation leases are based on a royalty-type structure that considers the tons of product sold during the lease period and how material used for the product tons sold was mined from each lease area. The leases also include a minimum annual amount, to ensure a minimum annual payment to the landowners. The royalty unit values are adjusted based on the Consumer Price Index (“CPI”), a statistical index that is calculated and published annually by the U.S. Bureau of Labor Statistics. Regarding the Federal land lease, BLM publishes a mining claim fees schedule on an annual basis. The Colado Site permit & claim map below (Figure 1.1) illustrates where the leases are:

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Figure 1.1 U.S. Silica Mine Permit and Claim Map.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

An aerial view of Colado and overall boundaries is provided in Figure 1.2 below:

 

Figure 1.2 Colado Site.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

In particular, the Franco-Nevada U.S. Corporation lease is based on a $45,000 minimum amount, with an above minimum payment of $0.77 per ton shipped adjusted by an increase in price (current price $5.32 plus 2.5% surcharge).³ For 2021, the maintenance fees for existing mineral claims were set to $165 per claim. The 2021 land lease payments were $242,687.04 for the Franco-Nevada U.S. Corporation lease, and $28,380.00 for the BLM lease. Lease and royalty payments for the last-4 years are listed in Table 1.1 below:⁴

 

YEAR		FRANCO NEVADA				BLM
2021		$	242,687.04			$	28,380
2020		$	141,908.87			$	28,380
2019		$	248,756.27			$	28,380
2018		$	135,695.31			$	26,660

Table 1.1 Colado Site lease and royalty payments.

 

1.5

Location

The Colado mine is located approximately 19 miles to the northwest of the town of Lovelock, NV, in central-west Pershing County (Figure 1.3). Specifically, active operations are in Sections 16, 20, and 21 in Township 28N Range 29E in Pershing County (Figure 1.1). The mine is accessible solely by a paved road, CR 399 (also known as 7 Troughs Rd.). Due to the mine site’s remote location, there is no official address associated with it (Figure 1.3).

 

3	U.S. Silica Internal Report dated December 31, 2020.

4	U.S. Silica email date January 2022 from Terry Lackey.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Figure 1.3 Aerial location of the Colado Site and town of Lovelock, NV.

The Colado plant is located about seven (7) miles northeast of the town of Lovelock, NV and sits on approximately 493 acres (Figure 1.4). The plant address is 150 Coal Canyon Road, Lovelock, NV 89419 and is accessible by vehicles from Interstate 80, State Route 396 (Coal Canyon Road) and Business Highway 95 (Upper Valley Road).

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Figure 1.4 Location map of the Colado plant and mine.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

1.6

Geology

The Colado Site is in an area known as the Great Basin. A region comprising nearly the entire state of Nevada, western Utah, and small portions of southwest Idaho, southern Oregon, and eastern California. The Great Basin is marked most significantly by crustal extension where large scale basins and ranges predominate, however smaller scale structural features, in the form of grabens, concentrate in and around the variably aged lacustrine sediments.⁵

DE sequences are both spatially and temporally related to these grabens and are present throughout the Great Basin ranging in age from 16 to 40 Ma (“million years ago”). Stratigraphic thicknesses of DE present in Colado range from inches to 50 ft. thick and are separated by friable tuffaceous units that are typically light gray in color.

Welded and lithic tuff units overlie the DE strata, with Tertiary aged basalts forming capping units that have protected the underlying strata from erosion over millions of years. Bi-modal volcanics form the substrate on which the diatomite sequences reside; these volcanics are rhyolitic, basaltic andesite, and basaltic in composition.

 

1.7	Exploration

Exploration activities in the Colado Site region have been ongoing since the 1960’s, with variable phases incorporating geologic mapping, field sampling, three-dimensional analysis, drilling, and survey techniques. Drilling methods have included rotary, reverse circulation, sonic and diamond core techniques to investigate subsurface geology. Over 600 drill holes have been performed in the region to date.⁶ Locations of drill holes are illustrated in Figure 1.5 below.

 

5	USGS The Basin and Range Province in Utah, Nevada and California, 1943.

6	U.S. Silica Internal Report dated December 31, 2020.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Figure 1.5 Boring Location Map.

 

1.8

Testing

All ore samples from the drilling operations are transferred to the U. S. Silica dry lab located at the Vale Plant in Oregon. Testing in the dry lab is performed by lab technicians under the direction of the lab manager and lab supervisor. Sample drying, preparation and groups of chemical and physical tests are conducted on each of the drill samples.

 

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

The primary tests for diatomite ore are determinations of wet bulk density, permeability, and brightness on both natural and muffle burned samples. Post-muffle burn lab tests are conducted by the dry lab technician to determine soluble metal concentrations. A standard group of tests are set as a work instruction for testing of filter aid products of white and pink ore, as well as a group of tests made for natural filler products. Non-routine tests of samples are completed in the research and development lab in Reno, Nevada, and include x-ray fluorescence, used to determine chemical analyses of samples, centrifuge wet density tests, x-ray diffraction mineralogical testing and scanning electron microscope evaluations to determine diatom genus.

 

1.9	Recoverable Ore Estimate

The ore volume that is measured in the SURPAC module’s block model is reported in cubic ft. This volume is converted to bank cubic yards (“BCY”). A mining recovery ranging from 75% to 90% is assigned to account for ore losses resulting from extraction of the in-situ deposit to stockpiles located in designated areas of the Colado Site. The mining recovery used for the deposits in the Colado mine is most commonly 85%.

The recoverable ore is converted to a value of stockpile cubic yards (“SCY”) by multiplying the amount of extracted ore by 110% which is a swell factor. This is determined from how the volume of DE increases due to moving the ore with loader and truck from the mine bench to the stockpile area. Next the SCY is converted to a dry ore ton using a factor of 3:1.

The resource tons are equal to the dry ore tons and are reported as the recoverable ore tons and reported to the SEC in U.S. Silica’s annual reports. Recoverable ore tons also meet the requirements of having a completed mine plan and obtaining an operational mine permit from the BLM and the State of Nevada Bureau of Regulation and Reclamation (“BMRR”).

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Table 1.2 shows the mineral resources at the Colado Site as of December 31, 2021. Resources are reported inclusive of reserves. Resources presented herein are utilized for mine planning purposes, and subsequently, reserve estimates. Resources are not reported in addition to reserves. There are no resources exclusive of reserves included in this TRS.

 

Deposit Classification		In-Situ, Recoverable Ore Tons*
Measured Resource			1,100,000
Indicated Resource			3,361,000
Total			4,461,000

*Tons rounded down to the nearest 1,000

Table 1.2 U.S. Silica Recoverable Ore Resources.

Reserve estimates present in Table 1.3 show only the reserves at the Colado Site from material pits that are considered proven and probable as of December 31, 2021. Other deposits at the Colado Site that are currently classified as measured, indicated or inferred resources are not included in this report.

 

Deposit Classification		In-Situ, Recoverable Ore Tons*
Proven Reserve			1,100,000
Probable Reserve			3,361,000
Total			4,461,000

*Tons rounded down to the nearest 1,000

Table 1.3 U.S. Silica Recoverable Ore Reserves.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

1.10	Mining Methods

The Colado Site consists of multiple DE mine properties, four of which are currently active.⁷ A summary of mine areas is provided in Table 1.4 below.

 

MINE AREA		STATUS
Horseshoe Basin		Active
Horseshoe Basin - East Pit Extension		Active
Horseshoe Basin – South Knob		Idle
Tarp Stand		Idle
Antelope Basin		Idle
Burro Basin		Idle
Black Butte		Idle
Atlantis		Active
Liberty		Idle
Quivera		Active
Tunnel Hill		Idle

Table 1.4 Individual mine areas at the Colado Site.

The mine utilizes conventional open pit mining methods averaging approximately 600,000 cubic yards (“yd³”) of stockpiled DE production yearly, operating about 200 days per year. The mine has a full production capacity of 3.0 million (“M”) yd³ of DE per year. The quantities of overburden and interburden waste are backfilled into the pit as a part of the mine reclamation plan. Expansion of mining into the additional three properties will proceed as the current pits are depleted. Other than stockpiling the mined ore, no processing of raw DE is performed at Colado. The raw ore is delivered by truck to the U.S. Silica plant northeast of Lovelock, NV approximately 19 miles away.

 

7	Terry Lackey email dated February 8, 2022.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

1.11	Processing and Recovery Methods

The Colado plant receives raw DE ore from one of the stockpiles at the Colado mine. The plant uses dry processing methods to refine the raw DE into saleable products to meet customer demand. As required, soda ash is introduced into the process stream to enhance the salability of the final DE product as necessary. Cellulose is blended with a portion of the final DE product as required. The Colado plant runs 365 days per year, and it operates 24 hours-per-day. The plant capacity is approximately of 160 K tons-per-year. The plant ships by over the road (“OTR”) truck and rail. Products are sold as bulk or bagged in Super Sacks or bagged and palletized.

 

1.12	Infrastructure

The Colado mine is remote with few improved roads and installed mine-related infrastructure. The mine site is accessible by roads maintained as private roads and by State roads. Energy for the mine site is provided primarily by diesel powered equipment. Water requirements for the mine are primarily for dust suppression or drinking and is supplied either with an on-site well or municipal supply.

The Colado plant has been operating in its present location for over 60 years and is supplied with reliable and sufficient power and natural gas from regional utility companies. Water for the Colado plant comes from municipal sources, supplemented by a well at the plant site. Waste disposal and handling capacity and capability is sufficient for the current production level and for the ramp-up of operations to full capacity for the life of the Colado mine reserves. Any needed investment in required infrastructure has been accounted for in capital and expense projects estimated over the life of the mine to meet infrastructure needs.

 

1.13	Permitting

As of the effective date of this report, the Colado Site has the necessary permits and plans in place to mine the DE deposit as discussed in this report. However, the Colado plant does not have a current stormwater permit or Stormwater Pollution Prevention Plan (“SWPPP”) in place.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Please refer to Section 17.0 for further information regarding permitting. A summary of permits/plans is provided in Table 1.5 below.

 

Item		Regulatory Authority		Area Covered		Status
Reclamation Permit		NDEP & BLM		Mines		Major Mod in Review
Stormwater Permit		NDEP		Processing Plant		Needed
Best Practice Plan		N/A		Mines		Complete
Class I Air Quality Operating Permit		NDEP		Processing Plant		Approved
Class II Surface Area Disturbance Permit		NDEP		Mines		Approved
Class III Landfill Waiver		NDEP		Mines & Processing Plant		Approved
Hazardous Materials Permit		NSFM		Mines		Approved
Hazardous Materials Permit		NSFM		Processing Plant		Approved
Hazardous Materials Permit		NSFM		Shop		Approved
Groundwater Use Permit		NDWR		Mines/Processing Plant		Approved
Spill Prevention Control and Containment (SPCC) Plan		EPA		Processing Plant		Complete
Stormwater Discharge Evaluation		NDEP		Processing Plant		Complete

Table 1.5 Colado Site Permit Summary.

 

1.14	Capital and Operating Costs

In 2020 and 2021 total operating costs were $37,799,000 and $48,367,000 and total capital costs were $1,731,000 and $4,670,000 respectively (Table 18.1). The higher than average capital spend in 2021 was associated with scheduled maintenance and continuous improvement projects to drive and maintain cost efficiencies.

The Colado Site maintains a five-year capital forecast for planned capital expenditures to support current production. A summary of foreseen capital expenditures through 2026 is provided on Table 18.2. As shown on Table 18.2, total estimated capital expenditure through 2026 is $16,070,000. Listed expenditures are based on historic cost data, vendor/contractor quotations, and similar operation comparisons and are within +/-15% level of accuracy.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

1.15	Recommendations

The primary recommendations of this report include performing third party laboratory testing and consider revising the way recoverable ore tonnage values are reported. Additionally, it is recommended that U.S. Silica obtain a Nevada Industrial Multisector General Stormwater Permit (NVR050000) and prepare a SWPPP to be in compliance. Please refer to Section 22.0 Recommendations for additional information.

2.0    INTRODUCTION

This TRS updates the previously submitted Colado, Pershing County, Nevada TRS included as Exhibit 96.2 to U.S. Silica’s Form 10-K for Fiscal Year Ended December 31, 2021, filed with the SEC on February 25, 2022. This TRS has been prepared at the request of U.S. Silica by WESTWARD who has conducted an audit of the proven and probable reserves present at the Colado Site, Pershing County, Nevada mine as of December 31, 2021. This audit was performed in conjunction with the U.S. Silica’s Mine Engineering and Geology staff and was prepared in accordance with Subpart 1300 and Item 601(b)(96) of regulation S-K promulgated by the SEC. U.S. Silica common stock is traded on the New York Stock Exchange under the symbol “SLCA”.

WESTWARD’S third-party reserves audit (Section 11.0 & Section 12.0 of this report), completed on February 11, 2022, presented in this TRS, was prepared for public disclosure by U.S. Silica in filings made with the SEC in accordance with the requirements set forth in the SEC regulations. Any capitalized terms used herein, but not defined herein, shall have the meaning ascribed to such term in Item 1300 of Regulation S-K.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

2.1

Sources

 

•

U.S. Silica

 

•

United States Geological Survey

 

•

Google Earth

 

•

Bureau of Land Management

 

•

Nevada Bureau of Mines and Geology

 

•

Nevada Division of Environmental Protection

 

•

Nevada Division of Water Resources

 

•

Nevada State Fire Marshall

 

•

Nevada Department of Water Resources

 

2.2	Personal Inspection

Michelle M. Lee, PG (TX #6071, SME Registered Member 413034RM) performed site visits to the Colado mine on May 25, 2021, and September 15, 2021. During these site visits, a tour of pertinent parts of the mine was conducted by the plant manager that included each mine area, staging areas, stockpile areas, pit areas, reserve areas, and property perimeter. Although a general walk about of the processing plant area was performed in May, the facility was not toured in depth as plant processing is out of the Qualified Person’s (“QP”) expertise.

Robert Archibald, PE (VA 0402023235) with Q4 performed a site visit to the Colado plant on August 9, 2022. During the visit, an inspection of all plant and infrastructure facilities was conducted. In addition, key management personnel were interviewed and numerous aerial photographs, flow sheets and reports were examined.

 

2.3	Previous Technical Reports

This TRS updates the previously submitted Colado, Pershing County, Nevada TRS included as Exhibit 96.2 to U.S. Silica’s Form 10-K for Fiscal Year Ended December 31, 2021, filed with the SEC on February 25, 2022.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

3.0    PROPERTY DESCRIPTION

 

3.1

Location

The Colado Site is located about 19 miles northwest of the town of Lovelock, NV, in west central Pershing County (Figure 1.3). Specifically, active operations are in Section 16, Section 20, and Section 21 in Township 28N Range 29E in Pershing County. The mine is accessible by a paved road, the 7 Troughs Rd. (CR 399). Due to the mine site’s remote location, there is no official address associated with it.

The Colado Site consists of approximately 10,798+/- acres (Figures 3.1 and 3.2 below) that is a combination of private, state and federal lands as follows: approximately 3,773 acres of owned private land and private leased land, and approximately 7,025-acres of leased Federal land (administered in tandem by the BLM in Winnemucca, NV and NDEP in Carson City, NV. The front entrance to Colado is located at approximately 40.274948, -118.727916. Figure 3.1 shows the overall Colado Site.

This section intentionally left blank.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Figure 3.1 Overall Colado Site Map.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

The Colado plant is located about seven (7) miles northeast of the town of Lovelock, NV. The physical address is 150 Coal Canyon Road, Lovelock, NV 89419. The plant and processing facilities occupy approximately 493 acres across five (5) separate parcels. Figure 3.2 shows both the processing plant and mine areas.

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
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Figure 3.2 Colado mine and plant locations.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

3.2	Leases/Royalties

U.S. Silica holds land leases with the Franco-Nevada U.S. Corporation, and the United States Federal Government.⁸ The land lease with Franco-Nevada is for 3,719 acres and is renewed annually. Additionally, U.S. Silica holds 176 mineral claims in BLM land. Of the 176 mineral claims, 146 are active and are classified as placer claims. Mineral claims are renewed on an annual basis, with the annual maintenance fee due on or before September 1st.

The Franco-Nevada U.S. Corporation leases are based on a royalty-type structure that considers the tons of product sold during the lease period, and how material used for the product tons sold was mined from each lease area. The leases also include a minimum annual amount, to ensure a minimum annual payment to the landowners. The royalty unit values are adjusted based on the CPI, a statistical index that is calculated and published annually by the U.S. Bureau of Labor Statistics.

In particular, the Franco-Nevada U.S. Corporation lease is based on a $45,000 minimum amount, with an above minimum payment of $0.77 per ton shipped adjusted by an increase in price (current price $5.32 plus 2.5% surcharge).⁹ For 2021, the maintenance fees for existing mineral claims were set to $165 per claim. The 2021 land lease payments were $242,687.04 for the Franco-Nevada U.S. Corporation lease, and $28,380.00 for the BLM lease. For the past few years, non-federal lease and royalty payments are listed in Table 3.1 below:¹⁰

 

8	U. S. Silica Internal Report dated December 31, 2020.

9	U.S. Silica Internal Report dated December 31, 2020.

10	Terry Lackey email dated January 24, 2022.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
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YEAR		Franco Nevada				BLM
2021		$	242,687.04			$	28,380.00
2020		$	141,908.87			$	28,380.00
2019		$	248,756.27			$	28,380.00
2018		$	135,695.31			$	26,660.00

Table 3.1 Colado Site lease and royalty payments.

U.S. Silica issued a payment of $28,380.00 that was received by the BLM on August 9, 2021, for the 2022 maintenance fees on 146 active mine claims.

The Colado plant property is owned outright and there are no royalty or lease payments associated with this facility.

 

3.3	Encumbrances

No significant encumbrances exist at the mine site. Topography and the presence of overburden limit the accessibility of the ore in certain areas but there are no known pipelines, easements, jurisdictional areas or other related restrictions to prevent mining at the Colado Site.

 

3.4	Permitting

State and federal permits are required to mine the DE. Surface disturbance is permitted as needed in accordance with state regulations. Major modifications to the permit are made as needed. As of the writing of this report, U.S. Silica has all the necessary permits in place to mine the DE. However, the Colado plant is missing a stormwater permit and SWPPP. Please refer to Section 17.0 for detailed information regarding permitting at the Colado Site.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

4.0    ACCESSIBILITY, CLIMATE, LOCAL RESOURCES,

INFRASTRUCTURE AND PHYSIOGRAPHY

 

4.1	Topography

The topography at the Colado mine varies significantly. The Site is located in a Basin – Range province region that is marked by abrupt changes in topography. Steep mountains give way to low lying, flat valleys in alternating patterns across the region. Vegetation is sparse due to lack of rainfall in the region. Refer to Figure 13.1.

 

4.2	Means of Access

The Colado Site is located about 19 miles northwest of the town of Lovelock, NV, in west-central Pershing County (Figure 4.1). Specifically, active operations are in Sections 16, 20, and 21 Township 28N Range 29E in Pershing County. The mine is accessible by a paved road CR 399. This is the only means of access to the Colado Site. Due to the mine site’s remote location, there is no official address associated with it. The Colado plant is accessible by Interstate 80, Coal Canyon Road (State Route 396) and Upper Valley Road (Hwy 95).

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Figure 4.1 Regional Map of the Colado Mine and Plant Areas.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

4.3	Climate and Operating Season

According to the Köppen climate classification system¹¹, the Colado Site is located in an arid climate region. Annual precipitation averages less than 7” annually which meets the definition of a dessert.¹²

The Colado mine operates year-round with ore mining activity starting in early spring and concluding sometime in the late fall when either sufficient ore has been stockpiled, or when inclement weather makes ore mining too costly or difficult. The April to November time frame provides optimum working conditions; moreover, the dry hot weather aids the natural drying of the ore in the stockpiles. Colder winter months are used for stripping operations and reclamation projects.

 

4.4	Infrastructure

The Colado mine has the necessary infrastructure in place to operate the mine. Solar and diesel provide power for onsite operations and water is trucked in from Lovelock, NV. The Colado plant is supplied with reliable and sufficient power and natural gas from regional utility companies. Water for the plant comes from municipal sources, supplemented by a municipal water source. Please refer to Section 15.0 for more information regarding infrastructure for both locations.

5.0    HISTORY

In the late 1950’s, Eagle-Picher Ind., Inc. submitted a Plan of Operations to conduct DE mining in the Colado District. Since then, the company has undergone several name and ownership changes:

 

1.

November 1986 - Eagle-Picher Industries, Inc. (Minerals Division) became Eagle-Picher Minerals Inc. a wholly owned subsidiary of Eagle-Picher Industries, Inc.

 

11	Koppen climate classification system – Wikipedia, Köppen climate classification - Wikipedia.

12	Koppen climate classification system – Wikipedia, Köppen climate classification - Wikipedia.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
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2.

April 2003 - The parent company Eagle-Picher Industries became Eagle Picher, Inc., and Eagle-Picher Minerals Inc. was renamed Eagle Picher Filtration & Minerals Inc.

 

3.

March 2006 - Eagle Picher Filtration & Minerals, Inc. was renamed EP Minerals, LLC.

 

4.

August 1, 2011 – EP Minerals, LLC was acquired by Golden Gate Capital.

 

5.

May 1, 2018 – EP Minerals, LLC was acquired by U.S. Silica.

U.S. Silica’s corporate headquarters are in Katy, TX and Reno, NV (the former EPM headquarters). EPM is a wholly owned, indirect subsidiary of U.S. Silica and is licensed to operate the Colado mine and plant.

Significant exploration has been undertaken by EPM (and affiliates) prior to the acquisition by U.S. Silica in 2018. Most of the information has been entered into an exploration database from which geologic and reserve models have been built from. U.S. Silica has undertaken an effort to convert the numerous handwritten boring logs into digital format but has not yet completed this task. Records from before 2012 are in the process of being digitized.

6.0    GEOLOGICAL SETTING, MINERALIZATION AND DEPOSIT

The Colado Site near Lovelock, NV is in the Great Basin, a region comprising nearly the entire state of Nevada, western Utah, and small portions of southwest Idaho, southern Oregon, and eastern California. The Great Basin is marked most significantly by crustal extension where large scale basins and ranges predominate, however smaller scale structural features in the form of grabens concentrate variably aged lacustrine sediments.¹³

DE sequences are both spatially and temporally related to these grabens and are present throughout the Great Basin ranging in age from 16 to 40 Ma. Stratigraphic thicknesses of DE present in the Colado mine area range from inches to 50 ft. thick and are separated by friable tuffaceous units that are typically light gray in color. Welded and lithic tuff units overlie the DE

 

13	USGS The Basin and Range Province in Utah, Nevada and California, 1943.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

strata, with Tertiary basalts forming capping units that have protected the underlying strata from erosion for millions of years. Bi-modal volcanics form the substrate on which the diatomite sequences reside; these volcanics are rhyolitic, basaltic andesite, and basaltic in composition.¹⁴ A general stratigraphic column of the region is provided in Figure 6.1 below.

This section intentionally left blank.

 

14	USGS The Basin and Range Province in Utah, Nevada and California, 1943.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Figure 6.1 General Stratigraphic Column of the Colado mine.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Figures 6.2 and 6.3 illustrate some of the geology in the pit highwalls at Colado.

 

Figure 6.2 View to the north from the Atlantis Pit.

 

Figure 6.3 View to the southwest from the Quivera Pit.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

7.0    EXPLORATION

 

7.1	Exploration

As shown in Figures 7.1 and 7.2 below, to date more than 600 borings have been drilled at the Colado Site.¹⁵

 

Figure 7.1 Boring Location Map I Colado Site.

 

15	U.S. Silica Internal Report 2020.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Figure 7.2 Boring Location Map II Colado Site.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Based on discussions with U.S. Silica¹⁶, drilling was performed using sonic, air rotary and coring methods. The predominant method was air rotary as it was the most cost effective to determine thicknesses of the DE across the multiple pit areas. Sonic drilling resulted in very poor recoveries as the material was either pulverized or too broken up to retain. Coring was used much less frequently, due to cost, and only in instances when specialized testing was required or a sample was needed for future reference.

Drilling recovery information was not available for review. The predominant drilling method is air rotary. This method breaks up the material into chips and uses air to blow the chips back to the surface. Sample recovery cannot reasonably be measured using this method. Based on the QP’s experience with this drilling method, overall homogeneous geologic nature of the DE, the lack of this information does not materially affect the accuracy and reliability of the exploration results reviewed.

Once the DE is extracted, it is spread out and stockpiled in a designated area to dry out. The DE is not separated based on grade but only by location. The DE is loaded into trucks and transported to the processing plant located in Lovelock approximately 19 miles away. Any separation due to quality occurs at the plant and not at the Colado mine.

Geologic mapping and outcrop sampling were made on a district scale using exposures within each of the mine areas and areas peripheral to the mine pits. The variable physical and chemical character of the field samples were lab tested and the locations of DE grade quality DE confirmed through additional field sample collection and follow up lab test work. Mapping and drilling have identified distinct deposits of DE stratigraphic sequences. DE in these deposits is of variable thicknesses up to 50 ft. thick. A cross section representing a typical diatomite section in the Colado mine area is shown in Figure 7.3, and the location of this cross section is shown in Figure 7.4 below.

 

16	Ryan Bresnahan meeting, May 24, 2021.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Figure 7.3 Horseshoe Basin cross section location map.

 

Figure 7.4 Cross section of DE intervals from the Horseshoe Basin pit - south is on

the left of the illustration.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Some very limited trenching was performed in the prospecting stage to identify potential DE at the surface on certain claims. However, samples were not collected from these trenches.

The DE is deposited as a dried-up lake in relatively homogeneous structural deposits. Post depositional events, such as extreme faulting that is associated with being in a Basin and Range Province geological setting, have moved the blocks of DE from their original position. The DE has remained intact as a lacustrine deposit that is evident in the white colored nature of the DE. Other materials, such as volcanic ash and basalt, are distinctly different in physical nature and color that the DE is easily recognizable in drill cuttings. This is why using a rotary drill to do exploration is acceptable for determining interval thicknesses.

 

7.2	Hydrogeology

There are no natural surface water features at, or near, the Colado Site. There are no water wells at the Colado Site. Water used for mine activities/dust suppression is derived from municipal water wells near Lovelock and is trucked to the mine site. A desktop hydrogeological study was performed by Hydro Resources Aquifer Imaging Group (“Hydro”) in 2012 to conduct a groundwater-availability study in order to provide background information needed to optimize the design of a geophysical aquifer-imaging survey with the Aqua Gem system on the Lovelock mine property.

Hydro conducted a two-township water well search in the mine area which did not reveal any publicly available water well records in the NDWR database. Hydro proposed several geophysical testing transects across the Colado Site around known fault lines in order to locate an optimal location for a proposed groundwater well. The study was not performed. There has been no analysis or testing of groundwater performed at the Colado Site.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

8.0 SAMPLE PREPARATION, ANALYSES AND SECURITY

No documentation showing sample collection or security measure undertaken for transport was available at the time of this report. Based on review of the U.S. Silica Internal Laboratory procedure documents¹⁷, all ore samples from the drilling operations are transferred to the dry lab located at the Vale Plant in Oregon. Testing in the dry lab is performed by lab technicians under the direction of the lab manager and lab supervisor. Sample drying, preparation and groups of chemical and physical tests are conducted on each of the submitted samples.

The primary tests for diatomite ore are determinations of wet bulk density, permeability, and brightness on both natural and muffle burned samples. Post-muffle burn lab tests are conducted by the dry lab technician to determine soluble metal concentrations. A standard group of tests are set as a work instruction for testing of filter aid products of white and pink ore, as well as a group of tests made for natural filler products.

Non-routine tests of samples are completed in the research and development lab in Reno, Nevada. Such non-routine tests include x-ray fluorescence, used to determine chemical analyses of samples, centrifuge wet density tests, x-ray diffraction mineralogical testing and scanning electron microscope evaluations to determine diatom genus.

U.S. Silica does have numerous written laboratory procedures in place that adhere to International Organization for Standardization (“ISO”) 9001 / Quality System criteria. Other protocols reviewed as part of this report include the U.S. Silica Company ISO 9001 / Quality System – Process Washing: CAP605 (“corporate analytical procedure”) and the U.S. Silica Company ISO 9001 / Quality System – Attrition Scrubbing documents. Both documents were signed by David Weller, Technology Director, ISP in 2016 and distributed internally. These documents detail the change history, scope, safety, equipment, and procedure instructions for each test.

 

17	Lab procedures provide by U.S. Silica.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Written statements from U.S. Silica indicate that the internal labs follow all protocols discussed here.¹⁸ Based on the QP review, there is sufficient data in the documents reviewed to show laboratory procedures are adequate. There is no documentation of sample transport and/or security measures taken for sample delivery. It is recommended that procedures be drafted to address this task. It is also recommended that U.S. Silica develop a third-party laboratory testing program to validate in house testing procedures and results. It is the QP’s opinion that the procedures and protocols for laboratory sample preparation and analytical procedures currently in place are adequate. It is recommended that a chain of custody protocol be developed for samples arriving at the lab from the field.

9.0 DATA VERIFICATION

Only exploration samples are tested at the Colado Site for basic mineralogical parameters. Since the DE is made into numerous different finished products, each individual customer has internal quality requirements and quality control/quality assurance (“QA/QC”) methods to verify the quality of the finished product.

Available laboratory reports were reviewed for content. The reports showed the concentrations of up to 60 individual minerals/compounds that were selected for analysis. However, not every sample was tested for the same parameters. The primary testing parameter used is mineralogy. The mineralogical makeup of finished DE products varies significantly from customer to customer which is market driven. The purity of the DE varies slightly from one pit to another with the Atlantis pit having the highest level of purity according to U.S. Silica.

 

18	Terry Lackey email dated 9.24.21.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Please refer to Section 12.2 Data Verification Methodology and Section 12.3 Process Verification below for further detail. It is the QP’s opinion that the data reviewed in preparation of this Technical Report is adequate and appropriate for the commodity being produced.

10.0 MINERAL PROCESSING AND METALLURGICAL TESTING

The DE is extracted from the ground and then placed into stockpiles to dry. A stockpile may be worked on occasion to turn over the ore to enhance drying. Moisture content testing is performed routinely until the DE reaches a certain level of dryness before it is transported to the processing plant. The DE is then loaded into trucks and transported approximately 19 miles to the Colado plant. No other processing or testing is performed at the mine.

All testing is performed internally at U.S. Silica labs. Testing is only performed on the samples collected during exploration. Basic mineralogical testing is adequate for the samples collected during exploration. Since the DE is used to make multiple finished products for numerous different customers, it is not reasonable to conduct other testing at the exploration stage. The results of the testing performed do not include material that has been processed at the Colado plant. Only the raw ore is extracted at the Colado mine.

Table 10.1 shows partial results from a sample collected from the exploration performed at the Atlantis pit. The actual table is too large to fit into this report format. The selection of results presented below shows the results of 18 of the 26 individual parameters noted in the spreadsheet.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Hole ID		Sample ID_B				From				To				Moist ure				GCOA %				CWD (lb/ft				(Y)				Asse mblag				L*				a*				b*				blue				SiO2 (%)				Al2O3 (%)				CaO (%)				MgO (%)				Na2O (%)				K2O (%)				Fe2O3 (%)				MnO (%)				TiO2 (%)				P2O5 (%)				Cr2O3 (%)				LOI (%)				Sum (%)				Sb (PPM)				As (PPM)				Ba (PPM)				Cu (PPM)
ATL1407A			1				216				220				1.5				128				30.1				79.34								91.39				0.4				3.63				74.92				91.85				2.88				0.43				0.41				0.2				0.13				0.96				0.01				0.11				0.02				0.001				3				100				7				2				121				11
ATL1303			10				125				130				1.6				143				24				79.87								91.63				0.04				5.15				73.55				91.36				3.04				0.52				0.36				0.26				0.24				1.19				0.02				0.11				0.03				0.001				2.79				100				33				1.5				163				10
ATL1303			11				130				135				1.4				141				26				83.81								93.37				0.06				4.67				77.9				93.3				2.03				0.34				0.22				0.24				0.16				0.69				0.01				0.07				0.02				0.001				2.82				100				14				1.5				129				8
ATL1303			12				135				140				1.9				125				26				76.32								90.01				0.14				7.53				67.4				87.25				4.65				0.76				0.52				0.31				0.26				2.52				0.02				0.24				0.03				0.001				3.35				100				37				9				166				12
ATL1303			1				61				65				1.5				169				22.7				81.64								92.42				0.16				6.05				74.12				93.39				1.87				0.44				0.22				0.29				0.21				0.88				0.02				0.08				0.02				0.001				2.49				100				23				1.5				151				11
ATL1303			2				65				70				1.6				156				23.1				83.3								93.15				-0.09				5.25				76.68				92.45				2.24				0.65				0.28				0.29				0.2				1.07				0.02				0.11				0.04				0.001				2.53				100				21				2				152				11
ATL1303			3				70				75				1.5				177				21.9				85.76								94.21				-0.04				4.39				80.12				94.96				1.33				0.33				0.19				0.18				0.09				0.5				0.02				0.04				0.02				0.001				2.23				100				1.5				1.5				131				7
ATL1303			4				75				80				1.5				171				22.3				83.27								93.13				-0.18				5.79				75.97				92.92				2.08				0.51				0.31				0.26				0.2				1.03				0.02				0.07				0.02				0.001				2.48				100				23				1.5				150				7
ATL1303			5				80				85				1.6				180				20.5				81.88								92.52				-0.26				5.64				74.84				92.99				1.93				0.5				0.32				0.22				0.14				1.14				0.03				0.06				0.02				0.001				2.54				100				8				1.5				140				14
ATL1303			6				105				110				1.6				143				23.6				81.36								92.29				-0.2				5.27				74.82				91.54				2.53				0.77				0.27				0.34				0.34				1.06				0.02				0.09				0.11				0.001				2.85				100				54				1.5				177				10
ATL1303			7				110				115				1.4				153				23.1				82.24								92.68				-0.08				4.89				76.12				92.32				2.45				0.52				0.26				0.29				0.23				0.79				0.02				0.09				0.03				0.001				2.9				100				31				1.5				160				9
ATL1303			8				115				120				1.4				156				23.1				84.21								93.54				-0.08				4.12				78.97				92.86				2.28				0.39				0.23				0.25				0.28				0.61				0.02				0.09				0.02				0.001				2.86				100				41				1.5				166				7
ATL1303			9				120				125				1.6				126				26.6				79.02								91.24				-0.26				5.06				72.85				88.69				4.06				0.71				0.47				0.37				0.45				1.65				0.02				0.14				0.04				0.001				3.27				100				74				4				201				12
ATL1306			17				95				100				1.9				154				19.5				76.72								90.19				0.3				9.97				64.98				87.43				3.51				0.71				0.4				0.31				0.24				2.31				0.03				0.2				0.03				0.001				4.75				100				36				31				149				13
ATL1306			18				100				105				2.8				143				25.5				77.01								90.32				0.25				8.22				67.24				84.5				4.75				1.08				0.58				0.38				0.28				2.85				0.03				0.22				0.1				0.001				5.16				100				43				12				148				13
ATL1308			1				25				30				1.8				177				29.7				85.77								94.21				-0.43				5.55				78.62				91.82				2.09				0.7				0.31				0.2				0.11				1.08				0.01				0.08				0.02				0.002				3.47				100				6				1.5				127				11
ATL1308			2				30				35				2.7				138				24.5				79.47								91.45				-0.53				6.12				71.99				84.34				5.22				1.1				0.84				0.43				0.38				2.36				0.04				0.18				0.04				0.003				5.1				100				65				3				207				15
ATL1308			3				35				40				1.9				190				19.8				83.6								93.28				-0.34				5.03				77.23				91.43				2.36				0.56				0.36				0.19				0.14				1.14				0.01				0.09				0.03				0.002				3.7				100				10				2				130				7
ATL1308			7				55				60				4.4				110				27.1				70.45								87.21				0.31				9.26				60.14				81.61				6.24				1.25				0.92				0.39				0.27				3.49				0.02				0.26				0.06				0.005				5.5				100				40				7				159				14
ATL1308			8				60				65				3.4				91				29.7				72.78								88.34				0.19				7.88				63.75				77.26				8.19				1.99				1.01				0.62				0.37				3.25				0.02				0.44				0.06				0.003				6.87				100				46				8				180				17
ATL1308			9				110				115				3				54				37.8				63.63								83.77				0.76				7.67				55.61				84.05				5.3				1.21				0.75				0.35				0.23				2.31				0.02				0.22				0.09				0.01				5.31				100				21				6				145				16

Table 10.1 Partial mineralogy test results from samples collected during exploration performed at the Atlantis pit.

11.0 MINERAL RESOURCE ESTIMATES

Resources are reported inclusive of reserves. Resources presented herein are utilized for mine planning purposes, and subsequently, reserve estimates. Resources are not reported in addition to reserves. There are no resources exclusive of reserves included in this TRS.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

11.1	U.S. Silica Methodology

U.S. Silica reports its in-situ resources and reserves in “Recoverable Tons.” As such, a geologic “Resource” that is identified by exploration drilling is further defined by several other key criteria before it can be considered “Recoverable Ore.” The most important of these criteria are that the resource must have:

 

Indicated Resource		Reasonable level of confidence of geometry and estimates
		Quantity and grade/quality are estimated on the basis of adequate geological evidence/sampling
		Information locations too widely or inappropriately spaced to confirm geological and/or grade
		Confidence sufficient to allow a qualified person to apply modifying factors in sufficient detail to support mine planning and evaluation of economic viability of the deposit
Measured Resource		High level of confidence of geometry and estimates
		Information locations are closely spaced enough to confirm geological and grade continuity
		Information gathered appropriately
		Confidence sufficient enough to allow the application of technical and economic parameters and to enable the evaluation of economic viability that has a greater degree of certainty

Resources for the Colado Site are estimated using SURPAC mine software and routine block modeling methods. The drill log information and analytical lab data are used to construct three dimensional models to constrain volumetric calculations and estimates of recoverable ore reserves.

Drill hole data is extracted from a GeoSequel database and is examined for quality purposes. The data checks include ensuring correct drill collar coordinates and correct drill hole azimuth and dip record. The physical and chemical data sets are each reviewed for values that do not appear reasonable. If a discrepancy is noted, it is resolved by consulting the plant laboratory and the data set is corrected. A judgment call is made whether to isolate and ignore suspect data from historic, pre-2010 records.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Three dimensional geologic solid models are created using Leapfrog software and the lithologic data contained in the drill hole database. The solid models generated for a deposit include at least one diatomite ore solid but may contain as many as four or more solid layers for diatomite ore. Geologic solid models are also constructed for ash seams interbedded in a diatomite ore deposit, soil and alluvium that occurs as waste overburden, and volcanic units that form the bottom of the ore zones.

Assay data is composited as 5 ft. sample lengths constrained within the ore solids. Composite grades are assigned as length weighted values. As a conservative model step, grade estimations include all sample values, and no high values are capped. Use of a cap to treat an anomalous high value would result in an inappropriate downgrading of the high value to be used in the estimation. Lab values reported as ‘below detection limit’ are set as a value of one-half of the detection limit. There are no cases where the reported lab values exceed an upper detection limit.

The block dimensions are routinely assigned as 25 ft. (x) by 25 ft. (y) by 5 ft. (z) as the smallest minable unit (“SMU”) for an individual deposit. A search ellipse orientation is selected based on the strike and dip of the stratigraphic sequence determined from geologic mapping, or it is interpreted using cross sections of the diatomite deposit. The search ellipse uses a 10:10:1 anisotropy as the major: semi-major: minor ellipse axes, respectively, in order to honor the layered character of the deposits formed in the lacustrine depositional environment.

An ore model block is considered as measured if it is contained in a 200 ft. search ellipse and an ore model block is considered as indicated if it is contained within a 400 ft. search ellipse. The 200 ft. and 400 ft. search distances are used because a close agreement is demonstrated between estimated in-situ ore quality and the grade quality of mined ore production as determined in

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

stockpile sampling evaluations reported as certificate of analysis. To be designated as measured, an ore model block is further required to have at least five composite grade values within the 200 ft. search ellipse. To be designated as indicated, an ore model block is further required to have at least three composite grade values within the 400 ft. search ellipse. In all cases the maximum number of eight samples is used to estimate a block grade.

The block model grade estimations use an inverse distance cubed (“ID3”) interpolation method. Sets of block grade estimation using nearest neighbor, varying powers of inverse distance, and ordinary kriging methods were evaluated in a block model validation study. The ID3 interpolation was selected because this produced the most reasonable result for block model estimation in the validation study. The ID3 block models are validated by a combination of comparing block statistics with composite drill hole grade statistics and comparing graphical, cross sectional, displays of estimated block grades with composite drill hole grade values.

The ore volume that is measured in the SURPAC module’s block model is reported in cubic ft. This volume is converted to BCY. A mining recovery ranging from 75% to 90% is assigned to account for ore losses resulting from mining transitions from waste to ore and ore to waste horizons. The mining recovery used for the deposits in the Colado Mine is most commonly 85%. The recoverable ore is calculated by multiplying the in-situ ore volume by the recoverable ore factor. The recoverable ore is converted to a value of SCY by multiplying by 110% (swell factor) determined as the volume increases due to moving the ore with loader and truck from the mine bench to the stockpile. Next the SCY is converted to a dry ore ton using a factor of 3:1. The Resource tons are equal to the dry ore tons and are reported as the recoverable ore tons and reported to the SEC in U.S. Silica’s annual reports. Recoverable ore tons also meet the requirements of having a completed mine plan and obtaining an operational mine permit from the BLM and the BMRR.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

WESTWARD utilized two approaches in confirming U.S. Silica’s internal Colado Site reserve estimates: data verification and process verification. The purpose of data verification was to address whether data incorporated in the U.S. Silica’s models was supported by documentation and that the model inputs matched those documents. The purpose of process verification was to address whether U. S. Silica’s results could be replicated using identical data sets.

 

11.2	Data Verification Methodology

WESTWARD coordinated with U.S. Silica personnel to compile copies of all available exploratory field logs, gradational test results and a database of the geologic model inputs. Once compiled a spreadsheet was developed including a list of all exploratory boings from the model and their locations, elevations, and exploration depths. If supporting documentation was available, it was indicated on the spreadsheet next to the associated boring.

To address whether model inputs matched supporting documentation, field logs were checked against lithological inputs to the Atlantis deposit model. At least 30% of modeled borings were checked against field logs.

 

11.3	Process Verification Methodology

WESTWARD developed an independent geologic model of the Atlantis deposit from the provided U.S. Silica data inputs, setbacks, and mining assumptions. RockWorks21 modeling software was used to develop the independent model with the Inverse Distance Weighting algorithm and a 40x40x1 ft. model resolution. Volumetric estimates of in-situ raw material for each mine block were extracted from the model. Reductions were made for reported production based on the provided topo date resulting in a bank cubic yard volume of ore. This value was compared against U.S. Silica estimates.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

11.4

Results

During the data verification process, WESTWARD determined that supporting documentation was not available for every boring incorporated into the U.S. Silica geologic models. This is primarily due to the vintage of some of the drilling performed by EP Minerals prior to being purchased by U.S. Silica. Handwritten logs were not converted into electronic documents. Where performed, WESTWARD’S process verification resulted in a less than four (4) percent difference between the U. S. Silica and WESTWARD bank cubic yard ore estimates. This is acceptable.

 

11.5	In-Situ Recoverable Ore Resources

There are numerous individual pits at the Colado Site that have been mined over the years to various degrees. Not all are being actively mined as of the date of this report. Only pits that are currently designated with proven or probable reserves equal to, or greater than, 100,000 tons were considered material by U.S. Silica for this report. It must be noted that there are several other pits with indicated and measured resources as well as proven or probable reserves that were not included in the recoverable ore estimates provided in this report. The overall volume of recoverable DE is higher than what is presented herein. As of December 31, 2021, the mineral reserves of the Colado Site are reported as follows:

 

Deposit Classification		In-Situ, Recoverable Ore Tons*
Measured Resource			1,100,000
Indicated Resource			3,361,000
Total			4,461,000

 

*	Tons rounded down to the nearest 1,000

Table 11.1 U.S. Silica In-Situ, Recoverable Ore Resources Estimate.

 

11.6	Cut Off Grade

Cut-Off grade is the minimum grade required for a mineral or metal to be economically mined (or processed). At the Colado Site, material is considered to be economically recoverable when

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

the cost to extract, process and then sell the material results in a profit. There is no single “cut-off grade” for the total recoverable ore resource estimation at a mine site because the direct-shipping grades are fixed by the sale contract and tailored to each customer’s specific particle sizing and physical characteristic requirements.

Exploration and testing are performed to determine where the recoverable/saleable material is located. Only areas that meet the criteria for being economic are mined. The recoverable material is defined in individual mine blocks that are created based on exploration results. Only blocks with economic deposits of DE are modeled. Please refer to Section 19.0 Economic Analysis for pricing information.

12.0 MINERAL RESERVE ESTIMATES

 

12.1	U.S. Silica Methodology

For the in-situ DE deposit at the Colado Site, indicated resource areas were converted to probable reserve areas due to fewer available drill logs or locations and larger spacing distances between drill holes than what is in the measured resource areas. The deposit varies in location and thickness due to faulting and a higher degree of drilling is required to adequately define the limits of economically recoverable DE in these areas.

Measured resource areas were converted to proven reserve areas based on a sufficient number of drill holes with adequate spacing in conjunction with several modifying factors.

Modifying factors such as required and sustainable infrastructure (Section 15), market studies (Section 16), environmental considerations and permitting (Section 17), capital and maintenance costs (Section 18) and economic analysis (Section 19) have been completed or are in place. This allows for unencumbered mining and processing at the Colado Site. A robust need for DE and extended high sales volumes make the mine viable. These factors demonstrate the economic viability of the in-situ DE deposit at the Colado Site.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

12.2	In-Situ Recoverable Ore Reserves

There was sufficient data available for review to convert the Measured and Indicated Mineral Resources, as discussed above, at the Colado Site to Proven and Probable Mineral Reserves. Reserve estimates of in-situ DE as of December 31, 2021 reported by U.S. Silica are shown in Table 12.1 below.

 

Deposit Classification		In-Situ, Recoverable Ore Tons*
Proven Reserve			1,100,000
Probable Reserve			3,361,000
Total			4,461,000

 

*	Tons rounded down to the nearest 1,000

Table 12.1 U.S. Silica In-Situ, Recoverable Ore Reserves Estimate.

 

12.3	Cut-Off Grade

Cut-Off grade is the minimum grade required for a material to be economically mined (or processed). Please refer to section 11.6 Cut Off Grade for the discussion pertaining to the Colado Site.

13.0    MINING METHODS

U.S. Silica mines DE approximately 19 miles northwest of the town of Lovelock, NV. The mine provides raw DE ore to the plant located in Lovelock, NV which is approximately 19 miles to the southeast. The Colado mine encompasses approximately 1,456 acres of a total of approximately 7,025 acres of land U.S. Silica has under lease. Figure 1.1 in Section 1.0 Executive Summary, shows the Colado boundaries, and the mining locations identified by U.S. Silica.

 

13.1	Mining Environment

The thicknesses of economically viable DE deposits in the Colado mine area range from a few inches to 50 ft. The DE deposits vary slightly in physical characteristics. This variation is useful

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

to U. S. Silica in blending products at the Colado plant to tailor final products for specific customers. The mining horizons are separated by a waste product called volcanic tuff.¹⁹ Tuff is a common material in the basin and range geologic setting in Pershing County, NV.²⁰ Tuff varies in thickness depending on its distance from the volcanic vent. In addition to the interbedded²¹ tuff material and basalt,²² layers may overlay the other deposits. If present, this basalt layer and any overlying organics and dirt (all called overburden) must be removed before mining the DE.

Colado is in topography known as basin and range. The surface is a mix of gentle undulating landforms to small scale uplifts forming small cliffs. From a mining standpoint, this type of surface irregularity does not provide unwieldy difficulty. Figure 13.1 shows the typical topography at the Colado Site. The DE mining horizons at Colado are relatively shallow and are moderately dipping.²³ These traits favor surface mining by conventional methods. Where the DE is relatively friable,²⁴ it is considered mineable. The friability of the deposit, a limited amount of overburden, and the relatively shallow dip of the deposit are the characteristics which designate the deposit as mineable.

 

19	Tuff is a common name of a pyroclastic rock made up of volcanic ash which was ejected from a volcano, likely through a vent or hole in the side of the volcano. (https://geology.com/rocks/tuff.shtml and https://www.mindat.org/min-48591.html).

20	“Geologic units in Pershing County, Nevada, “USGS, https://mrdata.usgs.gov/geology/state/fipsunit. php?code=f32027.

21	Interbedded implies the mineral may occur between other units of the geologic column; when mined it is called “interburden.”

22	Basalt is a fine-grained igneous rock that is the most common rock under the earth’s surface which usually forms as a flow of molten rock (https://geology.com/rocks/basalt.shtml).

23	Dipping refers to a deposit that is not horizontal and the plane of the deposit is inclined to the horizontal plane.

24	Friable is “a rock or mineral that crumbles naturally or is easily broken, pulverized, or reduced to powder, …; “Illinois State Geological Survey, https://isgs.illinois.edu/outreach/geology-resources/friable.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Figure 13.1 Typical rolling landform and vegetation at Colado.

There are nine open pit mining locations at Colado. These pits are named Atlantis, Horseshoe Basin, Quivera, Antelope Basin, Tunnel Hill, Burro Basin, Black Butte, Tarp Stand and Liberty (Figure 13.2).²⁵ Currently, active mining is occurring in only two of these pits Atlantis and Horseshoe Basin-Quivera. Figure 13.3 shows the arrangement of these production areas. Colado operates under a 2001 Plan,²⁶ which provided approval for disturbance and operation on 968.7 acres. In 2018, an “as built”²⁷ reconciliation was performed to determine the extent of unauthorized disturbance. The amount of surface disturbance was found to be 1,372.9 acres, exceeding the permitted acreage by some 404.2 acres. The BLM and the State of Nevada

 

25	Email from Terry Lackey from December 2, 2021, on geotechnical.

26	The term “2001 Plan” is used here without specificity to represent the Plan of Operations and permits required by the Bureau of Land Management and the State of Nevada in place to allow ongoing operations of Colado in 2001.

27	The term “as-built” refers to a revision of the plan based on the essential completion of initial construction parameters and the actual surface disturbance of the project upon the on-set of operations.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

allowed the bond to be increased to account for the additional disturbance.²⁸ In October 2021, a Minor Modification for 55 acres was approved by the State for additional surface disturbance on private lands in the new South Knob (Horseshoe Basin) mine area.

 

Figure 13.2 Colado Layout.

 

28	EP Minerals, LLC Colado Mine Project, Mine Plan of Operations, NVN-065329/ Nevada Reclamation Permit No. 0182, Major Modification submittal of November 2021, EM Strategies for EP Minerals, LLC.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

Figure 13.3 Current mining areas at Colado.

 

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

The mine capacity is approximately 3.0 MM yd³ of stockpiled DE ore. The average annual production for the last five years has been approximately 600 K yd³ of stockpiled DE. Colado schedules mining approximately 200 days per year.²⁹ Figure 13.4 shows a typical cross section of the various benches at Colado. The DE deposit is the light-tan-colored lenticular deposits in the benches. Individual pits will vary.

 

Figure 13.4 Typical cross section of different mining benches.

Mining has been ongoing at the Colado Site since 1986. U.S. Silica acquired the right to mine in May of 2018 with the acquisition of EPM. No site visit was made by the mining QP. The information presented in this section is based on a review of previous technical reports available for the Colado Site, discussions with U.S. Silica’s team and site photos from the WESTWARD site visits. Opinions herein are based on those reports provided to the QP by U.S. Silica, literature search of available information, and interviews of available U.S. Silica personnel.

 

29	Email from Terry Lackey of November 14, 2021, on equipment and capacity.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

13.2	Overburden and Interburden Waste Handling

The vegetation on the future mining areas on the Colado property is classified as either “Salt Desert Scrub” or “Sagebrush Steppe.”³⁰ This type of vegetation is sparse and relatively easily cleared. The typical vegetative cover and basalt overburden is shown in Figure 13.5. The practice at Colado is to remove the organic material and brush as part of the basalt overburden removal process. Organic soils are nonexistent to less than 1 ft. across the property. Drilling and experience have shown the anticipated depth of the overburden will remain in the range where U.S. Silica believes the organic and other deleterious materials can be removed in this manner throughout the life of the mine.³¹

 

Figure 13.5 Typical vegetative scrub and basalt cap rock in the overburden overlying the

mining horizon at Colado.

 

30	“An annotated checklist of the bryophytes of Nevada, with notes on collecting history in the state,”

https://www.researchgate.net/publication/228360582_An_annotated_checklist_of_the_bryophytes_of_Nevada_with_notes_on_collecting_history_ in_the_state.

31	Email from Terry Lackey of December 2, 2021, email from Terry Lackey on geotechnical.

 

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Colado, Pershing County, Nevada		Technical Report Summary December 31, 2021
		Amended as of September 30, 2022

 

The basalt overburden and the tuff interburden are waste products produced as U.S. Silica removes the DE ore. The quantity of waste material moved is dependent upon the local lithology and the quantity of DE needed for the raw DE stockpile. The waste is mined separately from the ore by conventional open pit methods using excavators and other conventional mining equipment. Blasting may be required to fragment the basalt cap rock and the less friable tuff interburden from time to time.³² Drilling and blasting are performed by a contractor.³³ The tuff interburden layers between the primary ore strata are mined in 15-to-20-ft. benches. Colder winter months are reserved for overburden removal operations and reclamation projects.³⁴

The tuff waste and other non-basaltic waste are subject to erosion from wind and water. In July of 2021, Golder Associates Inc. (“Golder”) authored a report³⁵ addressing the construction of certain waste dumps in a manner which complies with the objectives set forth in the Modified Plan of Operation, submitted by U.S. Silica in November of 2020. The Modified Plan of Operation and subsequent Golder report requires segregation of the waste so the basalt overburden can be used to cap the erodible interburden material in a manner which protects the waste materials from wind and water erosion and establishes vegetation appropriate for the life zone of the surrounding area.

In their report Golder developed mining and blasting recommendations for the basalt to provide the synergistic use of the material for reclamation purposes. U.S. Silica has a procedure in place to mine, segregate, and place the waste materials in a manner consistent with industry best practices and the Golder July 2021 report. This procedure is part of their November 2, 2021, Major Modification submission.³⁶ The QP believes the plan in place to handle the overburden and interburden is a best practice.

 

32	Terry Lackey email of November 11, 2021, on face heights.

33	IT Service Desk - RE_ SK1300 - Mine Info.msg, email of September 21, 2021, from Joe Petersen.

34	Internal U.S. Silica document, “Reserve Report: Colado Complex – Lovelock, NV,” 200714 - Colado Mine NV - FINAL - USS Internal Reserve Report.

35	“Basalt Overburden Closure Cover Evaluation, U.S. Silica Colado Mine,” Golder Associates Inc., July 8, 2021.

36	Email from Terry Lackey of December 2, 2021, on geotechnical.

 

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