Four distinct mineralization types occur in the Gualcamayo Project and three of these are of present economic interest. They are:

1. Sediment-hosted distal-disseminated gold (QDD);
2. Sulphide-bearing skarn deposits containing copper, zinc and molybdenum with late stage gold-arsenic mineralization (AIM); and
3. Porphyry style molybdenum mineralization.

Gold mineralization at QDD occurs in carbonate sediments within conformable and discordant carbonate breccias and fractured limestone. The gold mineralization is related to a hydrothermal event overprinting the proximal skarns and extending into the surrounding marbles and limestones. The QDD canyon itself lies along a fault/dyke system, which is believed to be a reactivated, Ordovician rift structure that acted as the primary conduit for hydrothermal fluids migrating away from the intrusive contacts.

Alteration of the host rocks is minimal and sulphide content is low. Gold, sulphides (arsenopyrite), realgar, orpiment, pyrite, and calcite are deposited along fractures and as matrix fillings. Higher gold values are spatially related to the intrusive breccia (Bx4). The mineralized structures are strongly oxidized throughout the depth of drilling, except for minor unoxidized intervals in which the primary mineralization is preserved.

Higher-grade zones in the QDD deposit (> 2 g/t Au) are common and related to fold hinges, sediment infilled karst cavities, and brecciated intrusive contacts with limestone and marble. Mineralized breccia thicknesses range from 30 m to 150 m thick and extend more than 500 m outboard to the east and NW of the QDD feeder structure. Due to the complex folding along NNW and E-W axes and strong lithological control, the mineralized collapse breccias form an undulatory ore deposit (dome and basin geometry) underlain by the hydrothermally altered dolomite member of the upper San Juan Formation.

Although more confined, gold mineralization remains open down dip along the QDD fault zone cutting the white recessive limestone unit (white marble) of the lower San Juan Formation.

The QDD deposit is silica poor, high-level gold-arsenic system with fine marcasite and trace amounts of realgar and orpiment forming the main sulphide minerals. Silver values generally less than 0.1 ppm. Barium is also elevated (200 ppm to 400 ppm) with higher concentrations localized along brecciated E-W striking dike margins.

Mercury and Antimony are weakly anomalous. Strong clay alteration along brecciated intrusive margins consisting of supergene kaolinite and alunite is also common suggesting a fairly acidic hydrothermal system. Gold occurs mainly as 1 µm to 5 µm inclusions within marcasite that was deposited with calcite along fractures and breccia matrices.

At Amelia Inés and Magdalena, late stage gold-arsenic mineralization overprints skarn zones and extends into the surrounding marbles of the San Juan Formation. Skarn hosted mineralization comprised of chalcopyrite, sphalerite, galena, pyrrhotite and pyrite was deposited as a retrograde event preceding the introduction of the gold-arsenic mineralization.

Gold mineralization is intimately associated with fine grained marcasite that lines late fractures and forms the chief component to marble and skarn breccias matrices Brecciation and higher grade gold mineralization are localized along the W to NW trending marble–skarn contact and cross cutting E-W tensional structures. The rheological contrast between the brittle skarn and ductile marble is believed to have accommodated much of the movement during later wrench fault tectonics, forming localized E-W trending, tensional zones (i.e breccia zones) that extend 10’s of metres outboard into the marble and skarn from the contact.

Silver is anomalous but very sporadic returning greater than 30 gpt within the higher grade >5 gpt Au zones. Silver is localized within retrograde tetrahedrite veinlets and possibly electrum during deposition of the later stage fine grained marcasite.

Negligible gold mineralization extends into the intrusive stock to the north. Narrow 1-3 cm wide sheeted quartzmolybdenite veinlets are generally confined within the skarn at both Magdalena and Amelia Inés and extend outboard into the intrusive stock, localized along EW tension structures.

Areas of high molybdenum content commonly lie peripheral to the gold enriched zones and overlap the intrusive contacts. Molybdenum mineralization is often associated with high manganese levels and occurs mainly in skarn with lesser amounts hosted by marble and intrusive rocks. Drill holes at Magdalena commonly encounter intervals of +1000 ppm Mo over several metres. Core hole 06QD-369 intersected an average Mo grade of 422 ppm over 152.4 metres. Hole 07QD-412 intersected 113.8 m averaging 556 ppm Mo including an interval grading 1014 ppm. RC holes drilled into the intrusive stock more than 50 metres away from the contact intersected anomalous Mo mineralization but the levels were much lower with the best interval averaging 162 ppm over 56 m in hole 06QDR-350.

The primary mining option for this ore deposit was for underground mining, because the ore area lies at a depth over 430 m, therefore an open pit option was completely ruled out, considering the high ore waste rates which this type of mining would imply.

The considerations lead to underground mining through the open stopes method called Sublevel Stoping, which is considered because it complies with two basic conditions, which are overall stability assurance and a required productive rate.

Open-pit mining activities began at Gualcamayo in 2008. The ore is transported through haul trucks to the crusher.

ROM ore is provided to the underground crusher from two sources: An ore pass fed from within the pit perimeter and an ore chute located outside the pit perimeter. A stationary grizzly with 650 mm openings to limit the feed size entering the ore pass and crushing circuit screen the ROM ore from the ore pass and ore chute. The ore pass and ore chute discharge material onto an underground conveyor system by Ross chain feeder and apron feeder respectively. Only one of these feed systems will be operated at a time. The conveyor discharges ore onto a vibrating grizzly with 150 mm spacing’s with the oversize material discharging into a jaw crusher set at a 150 mm closed side setting. The jaw crusher product and the vibrating grizzly undersize materials are conveyed to an intermediate ore stockpile using an overland conveyor. The ore from the intermediate stockpile is screened at 25 mm, resulting in a 100% -25 mm product, with the oversize material feeding a secondary cone crusher. The secondary cone crusher closed-side-setting is 40 mm, and is operated in open-circuit.

The secondary crusher discharge is conveyed to the tertiary vibrating screen, also with 25 mm apertures, with the oversize sent to a tertiary crusher with a calculated closed-side setting of 24 mm. The tertiary crusher discharge combines with the secondary crusher discharge and is returned to the tertiary screen. The secondary and tertiary screen underflows are conveyed to the leach pad, where it is stacked in 10-m lifts. Barren solution is distributed on the surface of the stacked ore using a drip system and percolates through the ore to dissolve the gold over a leach cycle of 30 days. The pregnant solution is pumped to a set of five carbón columns that contain activated carbon to recover the gold. The barren solution discharging from the columns is returned to the leach pad after adding fresh cyanide to a concentration of 500 mg/l.

The loaded carbon is advanced through an acid-wash circuit then to the gold desorption and stripping circuit where the gold is removed from the carbon with a high-pressure, high temperature caustic and cyanide solution. The stripped carbon is returned to a regeneration circuit for re-activation before returning to the carbon columns. The gold in the high-grade solution from desorption/stripping circuit is recovered by electrowinning. The electrowinning tailings solution is recycled to the desorption/stripping circuit. The electrowinning cell cathodes are cleaned and the sludge containing the gold is dewatered with a high-pressure filter and dried in an oven. The dried product is mixed with fluxes and smelted in a furnace to produce gold bullion.