Overview

The Buriticá project is 100% owned and encompasses an aggregate area of 69,983 hectares in the Antioquia Department in north-western Colombia.  The project area is comprised of 24 concessions covering 29,812 hectares and 40 concession applications totally 40,171 hectares. Buriticá is located in the middle Cauca belt and is approximately a two-hour drive on the paved Pan-American highway from Medellín, Colombia‘s second largest city. On February 24, 2016, the Company announced the results of an independent Feasibility Study for the project, prepared in accordance with National Instrument 43-101. The Feasibility Study was authored by JDS Energy and Mining Inc., and M3 Engineering & Technology Corp. was responsible for designing the processing facilities and related surface infrastructure. The Feasibility Study indicates that the Buriticá project will be host to an economically robust, high-grade underground gold mine. The Feasibility Study is set out in the technical report entitled “Buriticá Project NI 43-101 Technical Report Feasibility Study Antioquia, Colombia” dated March 29, 2016 with an effective date of February 24, 2016. A copy of the technical report can be accessed under the Company’s SEDAR profile at www.sedar.com or on this website.

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Feasibility Study Highlights

  • Maiden mineral reserve for the combined Yaraguá and Veta Sur vein systems totaling 3.7 million ounces of gold and 10.7 million ounces of silver (13.7 million tonnes grading 8.4 g/t gold and 24.3 g/t silver)
  • Gold and silver recoveries of 94.1% and 59.9%, respectively, over the life of the mine (“LOM”)
  • A 14-year mine life that will produce 3,492,000 ounces of recovered gold and 6,425,000 ounces of recovered silver
  • The first five years of production will average approximately 282,000 ounces of gold and 494,000 ounces of silver annually, at a total average cash cost of $387 per ounce of gold (including silver credits). LOM production will average 253,000 ounces of gold and 466,000 ounces of silver annually, at a total cash cost of $411 per ounce of gold (including silver credits), placing Buriticá in the lowest cash-cost quartile globally
  • Estimated project capital cost, including contingency, of $389.2 million
  • LOM average operating costs of $111.59 per tonne milled (including royalty, doré transport and refining charges)
  • Base case scenario utilizes a gold price of $1,200/ounce, a silver price of $15/ounce and a US$:COP exchange rate of 1:2,850, resulting in the following economics:
    • After-tax net present value at a 5% discount (“NPV5”) of $0.86 billion
    • After-tax Internal Rate of Return (“IRR”) of 31.2%
    • Capital payback of 2.3 years
  • High case scenario utilizing a gold price of $1,400/ounce, a silver price of $17/ounce and an exchange rate (US$:COP) of 2,850, resulting in the following economics:
    • After-tax NPV5 of $1.16 billion
    • After-tax IRR of 37.8%
    • Capital payback of 1.8 years

Mineral Reserves

The project’s Mineral Reserve estimate from the Feasibility Study is derived from the 2015 Mineral Resource Estimate and covers both the Yaraguá and Veta Sur vein systems, and  includes:

  • Proven and Probable Reserves of 3.71 million gold ounces and 10.72 million silver ounces (13.72 million tonnes at 8.4 g/t Au and 24.3 g/t Ag)

See Mineral Reserves & Resources for complete details.

Mineral Resources

The project’s Mineral Resource estimate, covering both the Yaraguá and Veta Sur vein systems, is based on 271,003 metres of drilling and 7,215 metres of underground sampling (as at May 11, 2015) and include:

  • Measured & Indicated mineral resources of 4.71 million gold equivalent ounces (12.89 million tonnes at 11.4 g/t AuEq)
  • Inferred mineral resources of 4.8 million gold equivalent ounces (15.6 million tonnes at 9.5 g/t gold AuEq)

See Mineral Reserves & Resources for complete details.

Exploration Potential

Within the Buriticá project, there are several exploration targets (within a 22 square kilometre-area of interest) that have been generated by geophysics and systematic soil geochemistry. The area of interest includes high-grade carbonate base metal gold vein deposits (“CBM”) feeding off of andesitic/microdioritic porphyries at depth. The combined mineral resources and combined mineral reserves estimates are derived solely from the Yaraguá and Veta Sur vein systems and both remain open along strike and at depth.

The current mineral resource estimate excluded a number of veins in these systems for which there was limited drilling as of May 11, 2015. The average domain dimensions used in the mineral resource estimate versus actual dimensions (strike length x vertical metres) are as follows:

  • Yaraguá – 470 metres x 910 metres vs. 1,125 metres x 1,540 metres
  • Veta Sur – 575 metres x 990 metres vs. 1,140 metres x 1,600 metres

Geological Model

Geological Model

Soil Anomaly

Soil Anomaly

Additional Targets

  • The Laurel Area is located south of the Yaraguá and Veta Sur vein systems on the corresponding mountainside surrounding the Higabra valley. Initial drilling resulted in the discovery of up to three high-grade silver and gold vein systems encountering multiple intervals of vein mineralization, particularly at depth. Each vein system has a strike and vertical extent potential of over one-kilometre. High-grade intercepts in BUSY282 are among the deepest obtained to date in all drilling at the Buriticá project. Significant intervals include 4.4 metres @ 8.3 g/t gold and 41 g/t silver and 2.0 metres @ 10.6 g/t gold and 8 g/t silver. These intercepts project vertically up to extensive shallow artisanal workings, suggesting vertical extents of precious metal mineralization of more than 1,200 metres.
  • San Agustin is located up to 400 metres north of the Yaraguá vein system. Exploration drilling into the San Agustin target has resulted in the discovery of several veins at depth and has potential for over 500 metres of strike and 900 metres of vertical extent.
  • Surface exploration has outlined four new precious metal mineralized systems at the Buriticá project called Obispo, Pinguro, Pinguro North and Guarco-Pajarito located 6 kilometres southeast, 3 kilometres south, 1 kilometre south and 4 to 10 kilometres northwest of the Higabra valley, respectively. Each prospect displays distinctive styles of mineralization, including precious metal-bearing vein systems, spatially related to andesitic/microdioritic intrusions similar to those at the Yaraguá and Veta Sur vein systems.
    • In the Obispo area, northeast-trending and steeply-dipping vein systems have been mapped and partially sampled along approximately 3,500 metres of potential strike length. These veins and a distinct set of intersecting northwest trending veins occur over an elevation range of more than 500 metres and are open in all directions. The Obispo vein sets locally exhibit very high-grade precious metals, accompanied by low to moderate base metal and high tellurium contents. The geochemical signature of Obispo mineralization is akin to Stage II mineralization in the Veta Sur vein system, but also exhibits highly anomalous vanadium contents, similar to bonanza-grade mineralization at the Porgera gold mine in Papua New Guinea and elsewhere. 
    • At Pinguro, soil geochemical work, geological mapping, and near-surface sampling have outlined a one square-kilometre area containing multiple families of veins. Two orientations of vein sets have been recognized, north-northwest-striking and east-northeast-striking and moderately southwest-dipping; the latter vein set having potential strike length of over 300 metres, and a vertical extent of more than 300 metres. Rock-chip sampling to date indicates that both vein orientations may exhibit high-grade gold mineralization and are base-metal rich, geochemically similar to Yaraguá Stage I mineralization

Property Location

The Buriticá project is located in mountainous terrain with a peak elevation of approximately 2,000 metres above sea level. The focus area of the project is a mountain slope which is approximately 900 vertical metres in length and is adjacent to the flat-lying Higabra Valley, 1,000 metres above sea level.

Colombia Map 2016

Infrastructure

A two-lane paved road traverses the property at the top of the mountainside leading to the town of Buriticá.  The Buriticá project has abundant water and power. Recently, the Company was granted an environmental license approving the construction of a 110Kv electrical transmission line to provide power for its proposed large-scale underground mine. The Company also received approval to construct a six-kilometre access road from the existing two-lane paved road at the top of the mountainside to the Higabra Valley, which will be the future infrastructure site of milling operations.

Geology

Mineralization at Buriticá is a porphyry-related, carbonate base metal (CBM) gold vein/breccia system. High-grade precious metal mineralization in CBM systems may occur over substantial vertical intervals, to well in excess of one kilometre, from the porphyry level to below the shallow epithermal range. Compared to low-sulfidation epithermal styles, CBM mineralization is sulphide-rich, with abundant pyrite +/- pyrrhotite plus sphalerite and galena along with minor sulfosalts and chalcopyrite and with quartz-carbonate gangue mineralogy. Mineralization in CBM systems typically comprises sheeted veins, stockworks and mineralogically similar breccias with some fracture-related disseminations in wall-rocks.

CBM systems are widespread in circum-Pacific magmatic arcs and include the supergiant Peñasquito deposit (Goldcorp: >25 million ounces of gold) and the Porgera deposits in Papua New Guinea (Barrick/Zinjin Mining Group: >25 million ounces of gold, previous production plus remaining reserves and resources) and the Kelian deposits (7 million ounces of gold produced + resources) in Indonesia. Gold mineralization at Porgera has been mined over a vertical range of approximately 1,000 metres.

As at Porgera, precious metal mineralization in Yaraguá and Veta Sur appears to be related to two main depositional stages. “Stage I” is represented by banded base-metal (iron, zinc and lead) sulphide-rich mineralization with variable amounts of quartz-carbonate gangue and bands.  “Stage II” mineralization is texturally and chemically distinctive high-grade gold mineralization that locally cross-cuts and overprints Stage I mineralization as veins and breccia veins.  Stage II mineralization is characterized by abundant free (and commonly visible) gold in siliceous and carbonate gangue, associated with arsenical pyrite and with low zinc and lead contents.

Mining Concessions

The project area is comprised of 24 concessions covering 29,812 hectares and 40 concession applications totalling 40,171 hectares. As in the case of all the Company’s properties, concession applications in process give the Company priority on the properties in question during the application process; however, there is no guarantee that the Company will be granted the pending concession applications.

Small-Scale Operating Mine

The Company has operated a small maximum capacity 30 tpd small-scale operating mine at Buriticá for over 20 years and is one of the largest employers in north-western Antioquia, employing over 300 members of the local community.  To date, over 10 kilometres of horizontal development over 200 vertical metres has been completed in the Yaraguá vein system.

The small-scale operating mine has historically developed along individual veins in competent andesite rock. With over 10 kilometres of underground development, the Company has been able to perform underground channel sampling, cross-cutting and drilling.  Results from this underground work have demonstrated the continuity of high grades over potential mining widths along substantial strike lengths and have resulted in grades that are generally higher than the drilling-based assay results in comparable regions of the current mineral resource model.

Review by Qualified Person, Quality Control and Reports

The results of the Company‘s drilling program have been reviewed, verified and compiled by Dr. Vic Wall (PhD), Special Advisor to the Company, and Qualified Person (“QP”) for the purpose of NI 43-101. Dr. Vic Wall is a geologist with over 35 years of international experience.

Donald Gray, BSc. Mining Engineering and MSc. Civil Engineering, Chief Operating Officer of the Company and a QP, has reviewed and approved the technical information above.

The Company utilizes a rigorous, industry-standard QA/QC program. Core is sawn in half with one-half shipped to a sample preparation lab in Medellín run by ALS Colombia Limited (“ALS”) in Colombia. Samples are then shipped for analysis to an ALS-certified assay laboratory in Lima, Peru. The remainder of the core is stored in a secured storage facility for future assay verification. Blanks, duplicates and certified reference standards are inserted into the sample stream to monitor laboratory performance and a portion of the samples are periodically check assayed at SGS Colombia S.A., a certified assay laboratory in Medellín, Colombia.

A review of data generated to date and the QA/QC program is presented in an independent technical report prepared by JDS Energy & Mining, Inc. The technical report, dated March 29, 2016, with an effective date of February 24, 2016, is posted on this website as well as under the Company’s profile on SEDAR.

 


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