Gold mineralization on the Property includes a large, disseminated, pyritic, quartz-poor, structurally controlled style of mineralization. Collectively, this style of mineralization is best described as forming part of the IRGS. The mineralized zones within and surrounding the locally porphyritic syenitic intrusive complex are likely related to the corresponding intrusive-hydrothermal system, and are predominantly controlled by rock permeability, created either by rheological contrasts between the different lithologies and their associated alteration and/or by deformation zones, particularly along lithological contacts.

DOUAY WEST ZONE
The Douay West (DW) Zone is located five to thirty metres north of a graphitic fault zone. The mineralized zone extends over a strike distance of approximately one kilometre and trends 100°. The zone is composed of several sub-parallel bodies that trend from 90° to 100°, and dip from -55° to -65° to the south. The drilled thickness of each of the individual bodies ranges from less than one metre up to 65 m.

Gold bearing mineralization is associated with pyritized and altered zones (albitized, silicified, carbonatized, hematized) within mafic volcanic rocks and at the contact of a gabbroic intrusive. Leaching, albitization, carbonatization, and pyritization are the dominant alteration and mineralization patterns. Sericitization and/or ankeritization and weak hematization are present. Visual estimates of 1% to 30% pyrite of various types do not provide a direct estimate of expected gold grade.

PORPHYRY ZONE
The Porphyry Zone hosts high tonnage, lower grade, structurally controlled gold mineralization. It is not a porphyry-style deposit type but may instead be an Intrusive-Related Gold System (IRGS). The Porphyry Zone has an overall trend of 100° to 110° over a strike distance of 3.5 km. The overall width is approximately 500 m. It is composed of east-west to east-southeast oriented, subparallel mineralized lenses, with each lens typically tens of metres with some over 100 m thick. The lenses dip to the south at -60° to -65°.

NORTHWEST ZONE
The Northwest (NW) Zone has an overall east-southeast trend over a strike distance of approximately 900 m. The overall width is approximately 400 m not including what is now called the Nika Zone. It is composed of sub-parallel mineralized lenses trending 95° to 100°, with each lens typically approximately 100 m to less than 900 m long.

The mineralized bodies dip to the south at -50° to -65°, separated by less than one metre to 100 m intervals of barren rock. The lenses ranged from a drilled width of less than one metre to 40 m, with an average drilled width of 11 m. The NW Zone is underlain by a mixed basaltsyenite sequence. Carbonatization and epidote are the main alteration types seen in this area. Secondary silicification and chloritization occur.

NIKA ZONE
The Nika Zone has an overall east-southeast trend over a strike distance of 840 m. The overall width is 350 m. It is composed of several individual sub-parallel to joined, or multi-limbed, lenses trending 100°, with each lens typically 100 m to 1,900 m long. The mineralized bodies dip to the south at -70° to -85°, separated by less than one metre to 70 m intervals of barren rock. The lenses ranged from a drilled width of less than one metre to 60 m, with an average drilled width of 8.5 m. The Nika Zone is underlain by a mixed basalt-syenite sequence, including some thick syenitic dykes that are well mineralized.

ZONE 20
Zone 20 occurs south of the central part of the Porphyry Zone, has an overall trend of 125° over a strike distance of 600 m and a width of 300 m. Significant volumes of syenitic rocks mixed with somewhat less basalts. Zone 20 is composed of sub-parallel sub-continuous lenses trending 125°, with each lens typically 100 m to 500 m long. The mineralized bodies dip to the south at -45° to -50°, separated by less than one metre to 60 m intervals of barren rock. The lenses range from one metre to 40 m wide, however are usually less than 10 m to 20 m wide.

ZONE 10
Zone 10 has a trend of 90° to 115° over a strike distance of 600 km. The overall width is 200 120 m. It is composed of several sub-parallel mineralized, sub-continuous lenses trending 90° to 110°, with each lens typically 100 m to 500 m long. The mineralized bodies dip to the south at -65° to -85°, separated by one metre to 70 m intervals of barren rock. The lenses range from a drilled width of one metre to 60 m, with an average drilled width of 10 m. Zone 10 is underlain by mixed basalt with multiple interflow sedimentary horizons and only minor syenite, mainly present in the western portion.

Higher grade mineralization within Zone 10 is characterized by:
1. Intense brecciation: intense fracturing, brecciation, shearing, and fault gouge are all present, and are interpreted to mostly reflect formation of a fault breccia.
2. Pyritization: The high grade gold zone contains up to 15% pyrite, compared to 1% to 3% in the surrounding rock.
3. Silicification/sericitization: The rock is pervasively silicified and sericitized overprinting the composition and textures of the protolith.
4. Felsic unit: fingers of what appear to be syenitic injections or feldspathic alteration are noted immediately below the high grade zone. Pyroclastic fragments are also present, which are indicative of felsic volcanism.

531 ZONE
The 531 Zone has a trend of 90° to 105° over a strike distance of approximately 500 m. The overall width is 300 m. It is composed of several sub-parallel mineralized, sub-continuous lenses trending 90° to 105°, with each lens typically 100 m to 500 m long. The mineralized bodies dip to the south at -60° to -75°, separated by one metre to 70 m intervals of barren rock. The lenses ranged from a drilled width of one metre to 60 m, with an average drilled width of 11 m.

The area is underlain by a mafic to ultramafic sequence with multiple interflow sedimentary (argillite and chert) horizons. Two styles of gold mineralization can be distinguished:
1. Anomalous to low gold grades (100 ppb Au to 700 ppb Au) are associated with abundant (5% to 15%) pyrite as disseminations or aggregates.
2. Gold grades dicrease from 1.5 g/t Au to over 10 g/t Au, when discrete (one to five metre thick) structural features such as brecciation, strong fracturing, and/or shearing intersect syenite-contaminated.

MAIN ZONE
Several of the highest gold drill intercepts at Douay were obtained here. The Main Zone has an overall trend of 105° over a strike distance of 850 m. The overall width is 350 m. It is composed of several sub-parallel mineralized, sub-continuous lenses trending 90° to 100°, with each lens typically 100 m to 500 m long. The mineralized bodies dip to the south at -75° to -80°, separated by five metre to 200 m intervals of barren rock. The lenses ranged from a drilled width of less than one metre to 49 m, with an average drilled width of 7.5 m. The grade shells were modelled considering composites of =0.1 ppm Au.

The PEA proposes a conventional truck and shovel open pit, followed by ramp access, long-hole open stoping in the underground mine.

Both the open-pit and underground operations will deliver material to a stockpile area near the crusher.

Since the LOM currently being contemplated is relatively short, the entire mining operation would be conducted on a contractor basis. The mining methods and production capacity have been chosen to match an ultimate milling throughput rate of 900 tonnes per day (“tpd”). This total will be composed entirely of feed from the open pit operation until the underground mine has been developed sufficiently to provide underground mill feed.

OPEN PIT
Hard rock pit slopes were assumed to be stable at a 45 degree inter-ramp slope. Reducing the cut-off lower than this grade effectively accelerated the incremental increase in the stripping ratio to undesirable levels.

The open pit mining dilution was estimated to be 16.3%, at a grade of 0.32 Au g/t. Mine extraction in the open pit mine is estimated to be 97%.

The ultimate pit would measure approximately 450 m long by less than 400 m wide and have an ultimate depth of approximately 80 m. Whereas there is mineralization below this elevation, the stripping ratio required to recover this material would be high. Also, it is expected that this material could be recovered at a later date using underground mining methods.

UNDERGROUND MINE
An underground mining operation would access and extract potential mill feed located at depth and below the open pit.

An initial pre-strip operation of approximately 3.5 million tonnes of overburden will be required. Preliminary estimates of stable slope angles in this material are on the order of 15–18 degrees. This has been used in the design of the pit and in the design of the footprints of the overburden storage area. The final overburden slopes will be conditioned with waste rock, as this material is accessed in the pit. The blasted rock would be excavated and hauled using the contractor's labour and equipment. The overburden and waste rock would be hauled to separate disposal areas and the potential mill feed would be hauled to the primary crusher. Waste rock would be used as backfill wherever possible.

Access to the underground mine will be through an underground decline ramp from the open pit wall. The underground ramp will be driven 5.0 m wide by 4.5 m high at a 15% gradient, complete with safety bays and re-muck bays, as required. The underground portal is scheduled to be started during the 9th month of Year 1 of the overall schedule. Mill feed production will commence at the beginning of Year 2.

The lowest elevation of the underground mine as designated as 0 elevation. All level designations are based on the vertical distances above this elevation. The remaining mineralized material at the bottom of the pit (between 175 level and 200 level) would be left as a crown pillar until later in the mine life.

Initial access to the underground deposit will be via a portal at about the 241 m elevation in the open pit and a decline with an inclination of about -15%. This decline will connect with the 200 m level in the vicinity of the mineralization. The decline will eventually be extended to connect all of the levels between the 200 and the 0 m levels, which would facilitate the use of mechanized mining procedures between those levels. Mining of potential mill feed will commence as soon as it is accessed by the decline and sublevels.

The mineralization will be mined in a top-down fashion, commencing below the 200 level.

The underground mining methods selected are longhole longitudinal retreat in the narrow zones and transverse stoping with a primary and secondary sequence in the wider zones. Initially, a 4.0 m wide by 4.0 m high pilot drift will be driven in mineralization at the base (bottom) and top of each stope. Undercuts and overcuts will be slashed to the width of mineralization in the longitudinal stopes. A 1.8 m by 1.8 m slot raise will be driven from the back of the undercut, up to the overcut, at the far-end of each stope. Longhole blastholes, approximately 3 inches in diameter, will then be drilled from the overcuts to breakthrough into the undercuts below. In some cases at the upper limits of a stope, longhole blastholes will be drilled from the backs of the undercuts, as uppers, to dead-end at the mineral/waste contact above. Longhole blastholes will be blasted starting at the slot raise, retreating back to the access point. Broken mill feed material will be mucked from the undercut locations using remotely operated load-haul-dump units. Once a stope has been completely mined out, it will be backfilled from the overcut elevation with cemented rockfill, or left open, depending on the mining sequence and prevailing geotechnical conditions.

A crusher/sizer facility will be installed near the rim of the pit to prepare the run-ofmine material for transport by highway trucks.

The construction of an on-site processing facility would not be justified given the current estimates of the quantity of potential mill feed. However, P&E is aware of several potential processing facilities within a moderate trucking distance, which may be amenable to accepting potential mill feed from the Douay West property. The closest facility is the Sleeping Giant mill, which was placed on care and maintenance in late 2014. It is approximately 50 kilometres south of the Douay West project. Initial tests indicate that gravity and flotation processes would not provide acceptable results. However, these tests did suggest that Douay West mill feed would react well to cyanidation and that it would be reasonable to expect a recovery of between 92% and 94%. The lower value of 92% has been adopted for this study.