Mineralization of the Project is part of the VMS or volcanic hosted massive sulphide (VHMS) family of deposits. The Kutcho deposits are VMS deposits of the Kuroko type or felsic volcanisiliciclastic depending upon the classification scheme.

Mineralization occurs as three deposits along a 3.5 km trend. Metallic minerals occur in a series of massive sulphide lenses and include pyrite, sphalerite, chalcopyrite, bornite, minor chalcocite, trace tennantite, galena, digenite, djurleite, and idaite. Gangue minerals include quartz, dolomite, ankerite, sericite, gypsum, and anhydrite.

There are three known deposits that comprise the Project and form a westerly plunging linear trend. From east to west, the deposits are termed the Main, Sumac, and Esso deposits. The Main deposit comes to surface at its eastern end, whereas the Esso deposit occurs at depths about 400 m below surface.

Main Deposit
The Main deposit has an elliptical, lenticular shape with approximate dimensions of 1,500 m long, 260 m wide (down-dip), and up to 36 m maximum thickness. The long axis of the deposit plunges to the west at about 12°, just slightly less than the regional fold axes. The deposit is conformable with stratigraphy, dipping moderately to the north. There is a gentle warping of the deposit, such that the dip of the deposit changes from east to west and north to south. The shallowest dip (about 38°) occurs at the south-eastern edge and becomes progressively steeper (to about 63°) at the north-western edge. In general, the up-dip edge of the sulphide lens is narrow and pinches out, whereas the downdip edge is thicker and interlayered with tuffaceous rock.

In detail, the Main deposit is composed of three depositional cycles. The cycles are interpreted to begin with pyritic mineralization, which then becomes more copper-rich and finally zinc-rich. The cycles are variably separated by siliceous or carbonate exhalative material and minor volcanic ash and detritus. Interpretation of the shape of the sulphide zone, taken together with the observed volcanic and depositional textures of the enclosing rocks, suggests that the sulphide mineralization was deposited in a structural depression, likely a half-graben type structure. Fine mineralogical layering and sulphide-ash, sulphide-silica, or carbonate inter-layering, as well as framboidal and snowball textures in both the sulphide and carbonate minerals, suggests quasi-sedimentary deposition at the seawater seafloor interface. Polished section analysis indicates that very little sulphide recrystalization has taken place.

Sulphide mineralogy of the deposit is relatively simple, consisting of pyrite, chalcopyrite, sphalerite, and bornite, with minor sulphide minerals chalcocite, tetrahedrite, digenite (and related minerals), galena, idaite, hessite, and electrum. Gangue minerals include quartz, dolomite, ankerite, sericite, gypsum, and anhydrite. Fluorite and barite have been observed, but do not occur in volumetrically significant amounts.

Sumac Deposit
The Sumac deposit was initially identified by a chargeability anomaly in the mid-1980’s and is located approximately 550 m west of the Main deposit, is nearly continuous with the Esso deposit and sits within a local depression relative to the Main and Esso deposits. A total of 20 drillholes at approximately 100 m spacing define the Sumac deposit. Better intercepts include 1.45% Cu, 2.56% Zn, and 23.7 g/t Ag over 26.1 m, 1.37% Cu, 1.9% Zn, and 26.2 g/t Ag over 23.4 m, and 1.94% Cu, 2.66% Zn, and 43.2 g/t Ag over 10.1 m.

The Sumac deposit is finely banded but massive and competent, and has the highest sulphide content (>90%) of the three deposits. Alteration of the host stratigraphy around it is very similar to that of the Main and Esso Deposits.

Esso Deposit
The Esso deposit is the deepest and most westerly massive sulphide lens and lies between 400 to 550 m below the surface. It was discovered by following the westward trend of mineralization down plunge beyond the Main and Sumac deposit areas. The Esso deposit has an elongated lens shape with a strike length of approximately 640 m, a dip direction of 240 m and is up to 21 m thick but averages approximately 12 m thick. The deposit consists of two connected lenses, the upper lens being the larger of the two. The mineralization at Esso deposit is higher grade than at Main or Sumac deposits, but displays similar mineral zonation with copper or zinc layers or zones, as well as zonation in thickness and grade from the central deposit area. Alteration at Esso is similar to the Main deposit, where sericite alteration of feldspars in the hangingwall is gradational from very weak at distances up to 50 m, to very intense with proximity to the sulphide zone. As a result of the 35 drillholes completed in 2010 the Esso deposit is now drilled off on approximately 50 m centres; allowing reclassification of the entire Mineral Resource for Esso into the Indicated Category.

Other Mineralization
Other zones of mineralization include the footwall zone (FWZ), and the Jenn Area. The FWZ occurs approximately 100 m stratigraphically below the Main deposit and slightly up-dip and to the east of the centre of the Main deposit. The FWZ is relatively narrow, at 2 to 5 m thick, and relatively zinc-rich. The mineralization was only systematically drilled up to the historical Esso-Sumac property boundary, but a number of drillholes by SML (and more recently WKM) demonstrate that the FWZ does not extend for significant distances to the west and down-dip of its current position.

The Jenn area is on the eastern end of the property and received a fair amount of attention by EML. Although significant alteration and some local mineralization were intersected in a number of drillholes, no resources have been defined in the Jenn area.

The deposits are planned to be mined predominantly by underground methods. Access to the Main and Esso deposits will be via two separate portals. The Main deposit extends from surface to about 250 metres (m) in depth. The Esso deposit is located approximately 420 m below surface and extends vertically about 200 m. The Main deposit has a strike length of about 1.5 kilometres (km) while Esso has a strike length of about 600 m. The deposits range in thickness from 3 to 20 m and have dips ranging from 30 to 70 degrees. Esso and Main are about 1.5 km apart.

The underground mine is envisioned to produce at an average annual rate of approximately 2,500 tonnes per day (t/d) and will operate year-round for a total of 10.4 million tonnes (Mt) of ore and a 12 year mine life. A small starter open pit will extract about 0.4 Mt of ore from the Main deposit to provide preliminary mill feed material and non-potentially acid generating (non-PAG) construction material.

The Main and Esso deposits vary in dip from 30 to 70º and in width from 3 to 20 m. The Main deposit essentially outcrops on surface and extends to depth of approximately 250 m below surface, while the Esso deposit extends to a depth of 420 to 600 m below surface. The Esso deposit is approximately 1,500 m to west of the Main deposit.

Two underground mining methods are proposed: MCF and sublevel LH stoping with paste backfill. The MCF will be utilized in the shallow dipping areas (less than 50º of both ore deposits, while LH is proposed for areas where the dip is greater than 50º.

Approximately 61% of the total underground mine ore tonnes will be mined with MCF stopes and the remaining 39% with LH stopes. The majority of the stopes will be mined longitudinally (along strike) with both methods.

Approximately 4% (446 kt) of the total ore tonnes mined will be from the Main open pit.

Longhole stoping provides high productivity at low mining costs from a small number of working faces. All stopes will be filled with a mixture of paste fill and/or development waste.

Sublevels will be developed at intervals of 15 to 20 m depending on ore body geometry. Sublevels will be developed in waste to provide access for ore drifting and slashing. The sublevels developed in ore will be 5 m high and initially 5 m wide and then slashed to the ore boundaries. The ore sublevels will provide access for drilling, blasting, ground support and ore mucking.

Average LH stope dimensions of 10 m wide, 20 m high with 3.5 m ring burdens have been assumed for production and cost estimation. Cycle times for stoping operations are based on best practice productivities for personnel and equipment productivities. Blasthole drilling will use top hammer drills to drill 15 to 19.5 m long down holes from the upper sill to the lower extraction level. Blastholes will be 89 mm diameter, drilled on a 3.5 m burden by 1.5 m toe spacing pattern and will be charged with ANFO and high explosive boosters and initiated with NONEL caps. An approximate 0.37 kilograms per tonne (kg/t) powder factor has been assumed for LH blasting.

The broken ore will be mucked from the bottom of the stope by remote control load haul dump units (LHDs) and loaded into trucks and hauled to surface. The mined out stopes will then be backfilled.

Mechanized cut and fill mining will be utilized in shallower dipping areas of both the Main and Esso deposits. MCF is a lower productivity, higher cost mining method than LH stoping, but provides highly selective mining with minimal dilution. Stopes can be sized with irregular backs and walls to match the ore boundaries.

Each 25 m high stoping block is accessed by a -15% access ramp and mined in five, 5 m high MCF stopes. Stopes are developed on the lowest level first, and each subsequent stope or 5 m lift is developed above the depleted and backfilled stope. Production and cost estimation have been based on 5 m high and 5 m wide stopes.

Two-boom electric-hydraulic jumbos will drill 4 m long rounds on a standard development heading pattern with 45 mm diameter blastholes which will be charged with high explosives primers and ANFO and initiated with NONEL caps. After blasting, the heading will be washed and scaled and then bolted with a mechanized bolter as required.

The broken ore will then be mucked with LHD’s into trucks and hauled to surface. The completed 5 m high stope is then filled with hydraulic backfill and/or development waste. The next 5 m lift will then commence on top of the hardened fill of the previous lift.

A small starter pit will be developed and mined by open pit mining methods to provide initial ore feed while the underground mine is being developed.

All starter pit ore and waste mining will be done by a contractor. Mobile equipment is provided by the Owner and will be used post open pit mining to maintain roads and miscellaneous earthworks.

The starter pit was designed with following criteria:
• Bench Height: 10 m (double benching);
• Bench Face Angle: 70º;
• Catch Bench Width: 8 m;
• Ramp Width: 16.5 m (Single Lane Traffic, CAT 777 class trucks);
• Ramp Grade: 10%;
• Dump Lifts: 10 m, with 10 m berms; and
• Dump Slope: 2 Horizontal: 1 Vertical.

The pit will provide 446,215 ore t at 1.84% Cu, 1.62% Zn, 23.2 g/t Ag, and 0.31 g/t Au. Waste mining will total 2,748,021 t for a waste to ore ratio of 6.1:1. Approximately, 1,524,390 t of waste is expected to be PAG, all of which will be stored permanently in the mined pit or TMF.

The plant will process material at a rate of 2,500 t/d with an average LOM head grade of 2.01% copper and 3.19% zinc. Based on test work, the overall LOM metal recoveries are expected to be approximately 84.7% for copper and 75.7% for zinc. The two stage grinding circuit will target a product size of 80% passing (P80) 75 µm, followed by sequential flotation to produce copper and zinc concentrates. The tailings will be pumped to a TMF. The crushing circuit will operate at an availability of 70%, while the milling and flotation circuits will operate 24-hours per day, 365 days per year at an availability of 92%.

The plant will consist of the following unit operations:

• Primary Crushing – A vibrating grizzly feeder and jaw crusher in open circuit, producing a final product P80 of 125 mm;

• Crushed Material Storage and Reclaim – A 2,500 t live stockpile with two reclaim belt feeders feeding the Ball Mill Feed Conveyor;

• Primary Grinding – A ........