Grassy Mountain is the largest of twelve recognized epithermal hot spring precious metal deposits of the Lake Owyhee volcanic field.

Mineralization of the Grassy Mountain deposit includes low grade gold associated with hot springs sinter deposition, and high grade gold associated with multi-stage quartz-adularia gold-silver veining and stockworks, late remobilization within sub-vertical rubble zones defined by clay matrix breccias, and kaolinitic acid-leached zones beneath sinter caps. The deposit is characterized by stacked sinter terraces capping acid-leached sediments and multiple generations of veining which suggest repeated eruption, brecciation, breeching, and sealing of the hydrothermal system. At a depth of 300 ft, the main sinter at Grassy Mountain is underlain by a zone of intense silicification which formed a seal or cap over the hydrothermal system.

The surface expression of the Grassy Mountain system is indicated by weak to moderately strong silicification and iron staining with scattered 1/8-in to 1-in wide creamy to light gray chalcedonic veinlets. Approximate dimensions of the Grassy Mountain deposit are 1600 ft long by 1000 ft wide by 600 ft thick. The deposit has a general N70 E elongation and a 15° bedding plane dip to the north-northeast as a result of faulting and fault block rotation. There is an envelope of lower grade mineralization at depths of 200 to 800 ft which contains a higher-grade zone of mineralization between 500 and 750 ft below the surface. The well-defined base of higher grade mineralization from about 700 to 750 ft in depth suggests a strong pressure-temperature control on gold deposition. This pressure-temperature control likely indicates a boiling horizon in the hydrothermal system which acted as a controlling mechanism on gold deposition. Boiling horizons are common in hydrothermal systems and are identified by sinter and/or hydrothermal breccia. These sinters and breccias often parallel the paleosurface present at the time of mineralization. Breccias tend to be clast supported with minimal clast rotation. They occur where over-pressuring in the hydrothermal system caused hydrofracturing of the rocks. The fractures create a stockwork pattern generally found below the sinter, though some vein extensions may extend to the surface. The stockwork is surrounded by silicified sediments. Mineralized quartz-adularia stockwork and vein types include single, banded, colliform, brecciated, and calcite-pseudomorphed veins. Visible gold (0.5 mm) has been found within the stockwork portions of the boiling horizon. The gold mostly occurs as electrum along the fracture margins or within microscopic voids. A brassy color is imparted due to the high silver content. The average silver to gold ratio at Grassy Mountain is 2.5:1.

Silicification in the form of sinters and disseminated quartz is the dominant alteration type at Grassy Mountain and is largely controlled by hot-spring vents. Silicification occurs both pervasively as silica flooding and as cross-cutting veins, veinlets and stockworks. The silicified envelope has plan dimensions of 3000 ft (N-S) by 2500 ft (E-W). Silicification is surrounded by barren, unaltered, clay-rich (20-40% montmorillonite), tuffaceous siltstone and arkose with minor disseminated diagenetic pyrite. Many of the sinters occur as sheets instead of mounds, which suggests that they are related to vents along faults rather than point sources.

The mine plan was developed using a drift and fill up-raising mining methodology. A cut-off grade of 0.103 opt of Au (~3.53 g/T of Au) was used to define economic stopes. Ore processing from the upper portion of the mine is expected to commence concurrently with the completion of the processing plant and infrastructure. The construction of the decline will continue to the bottom of the mine for an additional 10-month period. Following ramp up, the mine is expected to produce an average of 1,300 to 1,400 tonnes per day, 4 days a week, which will provide enough material for the 750 ton per day mill and processing plant to operate at full capacity for 7 days a week.

Stope size and support were defined by Ausenco’s geotechnical group using geotechnical work and consideration provided by Golder coupled with additional geotechnical and stopes stability analysis conducted by Ausenco. Depending on the rock quality, the support and reinforcement will include bolts, steel nets and shotcrete. Mine methodology is based on primary drifts intercalated with secondary drifts. Primary drifts once mined will be back filled with cemented rock fill (“CRF”), and once the fill is cured the adjacent secondary drift can be mined and later filled with run-of-mine waste from a surface borrow source. Approximately 46% of the tons are coming from primary drifts and 54% from the secondary ones. The mine plan includes 5% of ore lost and approximately 9% dilution. The dilution consisted of 7% external dilution from Measured and Indicated resources and approximately 2% dilution with no grade from the CRF.

Ausenco`s metallurgists and process design engineers evaluated and reviewed extensively the previously completed metallurgical testing. They concluded that the best and most effective process was a first stage of gravity concentration of ground material and a subsequent leaching circuit of the gravity tails in a carbon in leach (CIL) circuit. Analysis of additional material collected during the 2016-2017 drilling campaign was used to define recoveries. Analysis shows that recovery is primarily and best correlated with grade. Ausenco provided a recovery relationship between grade and recovery and this relationship was incorporated into the mine plan on a monthly basis to provide the most accurate representation of the recovered gold. Additionally, Ausenco defined maximum and minimum gold recoveries whereby this relationship can be used as the most accurate for the Grassy Mountain design process flowsheet. Overall recovery for the life of mine is estimated to average 94.2 % for gold ........