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Operations
Operations

Ernesto/Pau-a-Pique Project

On June 23, 2016 the Company announced that it had completed the previously announced acquisition and assumed operational control of the Ernesto/Pau-a-Pique Project (the “Project”) located in the southwest of Mato Grosso state, near Pontes e Lacerda in Brazil.

Highlights

The Project consists of three deposits, two of which are underground and the third of which is open pit. These three deposits are currently being reviewed and three additional areas will be evaluated in 2017 and 2018.

  • The Lavrinha open pit and the Ernesto underground deposit are located approximately 60 kilometers ("km") south of the Company's Sao Francisco mine and 12 km south of the town of Pontes e Lacerda. These two deposits are within close proximity to the Project's processing plant.
  • The Pau-a-Pique underground mine has been on care and maintenance since 2013 and is located approximately 40 km south of the Ernesto and Lavrinha deposits and processing plant.
  • The three additional areas (Nosde, Japones and Pombihnas) are within 20 km of the processing plant.

The processing plant is centrally located to these deposits and additional areas and has a capacity of 3,000 tonnes per day through a conventional carbon-in-leach process. The facility includes crushing, milling, gold extraction/recovery and a tailings disposal facility with power supplied from the national grid. Significant infrastructure exists around the entire Project including paved roadways between all of the deposits and the town of Pontes e Lacerda.

The Company's primary technical focus areas for the Project restart will be grade control, choice of the proper selective mining methods, geotechnical optimization to reduce dilution, improve overall gold recovery and lower cash operating costs at this relatively high grade Project.

Mineral Resource Statement

In support of the Project, the Company announces the results of NI 43-101 Mineral Resource estimates, which were performed in conjunction with ongoing Feasibility Studies for this project. The Mineral Resources with an effective date of May 25, 2016 are reported as follows:

 
Lavrinha Deposit: Lavrinha Mineral Resource*
Resource Category Tonnes (t) Au (g/t) Contained Au Oz
Measured 74,000 2.31 5,500
Indicated 1,226,000 2.25 88,700
Measured + Indicated 1,300,000 2.25 94,200
Inferred 283,000 2.51 22,800
       

Notes*:

  1. CIM Definitions were followed for Mineral Resources.
  2. Mineral Resource estimates for the Lavrinha deposit were prepared under the supervision of Marcelo Batelochi, Ausimm (CP 205477).
  3. Mineral Resources, which are not mineral reserves, do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
  4. The quantities and grades of reported Inferred Resources in this estimation is uncertain in nature and there has been insufficient exploration to define these Inferred Resources as Indicated or Measured Mineral Resource and it is uncertain if further exploration will result in upgrading them to the Indicated or Measured Mineral Resource category.
  5. The mineral resource estimate is based on an optimized pit shell using US$1,300/oz gold and at a cut-off grade of 0.50 g/t gold. Mining costs were considered at US$2.44/t and US$1.89/t for mineralized material and waste haulage, plant processing costs of US$10.24/t and G&A of US$3,800,000 per year as well as a process recovery of 93%.
  6. A bulk density model based on rock type was used for volume to tonnes conversion with resources averaging 2.77 tonnes/m 3 .
  7. Surface topography as of December 31, 2015.
  8. Contained metal may not sum due to rounding.
 
Ernesto Deposit: Ernesto Mineral Resource**
Resource Category Tonnes (t) Au (g/t) Contained Oz
Indicated 734,000 6.70 158,200
       
Inferred 308,000 6.30 62,400
       

Notes**:

  1. CIM Definitions were followed for Mineral Resources.
  2. The Qualified Person for this Mineral Resource Estimate is: Richard Routledge M.Sc. (Applied), P.Geo.
  3. Mineral Resources are estimated from surface and underground diamond drilling and core sampling and underground chip sampling by conventional 3D block modelling based on wireframing at a 1.5 g/t Au cut-off grade and ordinary kriging grade interpolation.
  4. For the purpose of resource estimation, assays were capped at 40 g/t Au.
  5. The mineral resource estimate is based on a Cut-Off Grade of 1.5 g/t Au derived from a Au price: US$1,275 /Oz, costs of US$33/t for mining, US$11/t for processing and US$10/t for G&A, as well as a 93% process recovery.
  6. A bulk density model based on rock type was used for volume to tonnes conversion with resources averaging 2.62 tonnes/m 3 .
  7. Mineral Resources are estimated from the 380 m EL to the 96 m EL, or from approximately 50 m depth to 150 m depth from surface.
  8. Mineral Resources are classified as Indicated and Inferred based on drill hole spacing, interpreted geologic continuity and quality of data.
  9. Mineral Resources, which are not mineral reserves, do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
  10. The quantities and grades of reported Inferred Resources in this estimation is uncertain in nature and there has been insufficient exploration to define these Inferred Resources as Indicated or Measured Mineral Resource and it is uncertain if further exploration will result in upgrading them to the Indicated or Measured Mineral Resource category.
 
Pau-a-Pique Deposit: Pau-a-Pique Mineral Resource +
Resource Category Tonnes (t) Au (g/t) Contained Oz
Indicated 519,000 4.05 67,600
       
Inferred 117,000 4.45 16,700
       

Notes+:

  1. CIM Definitions were followed for Mineral Resources.
  2. The Qualified Person for this Mineral Resource Estimate is: Richard Routledge M.Sc. (Applied), P.Geo.
  3. Mineral Resources are estimated from surface and underground diamond drilling and core sampling and underground chip sampling by conventional 3D block modelling based on wireframing at a 1.5 g/t Au cut-off grade and ordinary kriging grade interpolation.
  4. For the purpose of resource estimation, assays were capped at 50 g/t Au and composites >25 g/t Au were restricted to 12.5 m area of influence.
  5. The mineral resource estimate is based on a Cut-Off Grade of 1.5 g/t Au derived from a Au price: US$1,275 /Oz, costs of US$29/t for mining, US$11/t for processing, US$10/t for G&A and US$7/t for mill feed surface transportation, as well as a 93% process recovery.
  6. A bulk density model based on rock type was used for volume to tonnes conversion with resources averaging 2.77 tonnes/m 3.
  7. Mineral Resources are estimated from the 410 m EL to the 65 m EL, or from approximately 30 m depth to 500 m depth from surface.
  8. Mineral Resources are classified as Indicated and Inferred based on drill hole spacing, interpreted geologic continuity and quality of data.
  9. Mineral Resources, which are not mineral reserves, do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
  10. The quantities and grades of reported Inferred Resources in this estimation is uncertain in nature and there has been insufficient exploration to define these Inferred Resources as indicated or Measured Mineral Resource and it is uncertain if further exploration will result in upgrading them to the Indicated or Measured Mineral Resource category.
 
The combined Mineral Resource for the Project follows:
Measured & Indicated  Resource Tonnes (t) Au (g/t) Contained Oz
Lavrinha 1,300,000 2.25 94,200
Ernesto 734,000 6.70 158,200
Pau-a-Pique 519,000 4.05 67,600
Total Measured & Indicated 2,553,000 3.89 320,000
       
       
Inferred  Resource Tonnes (t) Au (g/t) Contained Oz
Lavrinha 283,000 2.51 22,800
Ernesto 308,000 6.30 62,400
Pau-a-Pique 117,000 4.45 16,700
Total Inferred 708,000 4.48 101,900
       
Contained metal may not sum in the above tables due to rounding

Qualified Persons

The technical information included in this press release has been reviewed and approved by Fernando A. Cornejo M. Eng., P.Eng. (the Company's Vice-President, Projects), Eugene Puritch P.Eng. (President, P&E Mining Consultants), Richard Routledge M.Sc., P.Geo., (Sr. Associate Geologist, P&E Mining Consultants Inc.), and Marcelo Batelochi Ausimm, (CP) (Geologist, MCB Consultants).