Gold mineralization occurs in a series of quartz and quartz-carbonate veins which are interpreted from the drilling as being steeply dipping and east-west striking, roughly parallel to the Porcupine-Destor Fault Zone (PDFZ). The veins, while appearing to be consistent in orientation from section to section are observed in the drill core to occur in a wide variety of orientations. It is highly likely that many of these veins are not tabular, but irregular in shape, similar to others observed in the gold deposits of the Timmins area.

The quartz veins occur most often in the mafic volcanic rocks, usually in proximity to porphyry intrusions. There is a persistent zone of quartz veining associated with the sedimentary-volcanic contact, and there are some wide vein intercepts to the south of the contact, but these tend to be weakly mineralized.

The mineralization at Clavos is located within an envelope of highly altered ultramafic flow and volcanic clastic fragmental rock referred to as the DL zone. The DL zone, which lies approximately 10m north of the sedimentary-volcanic contact, varies in thickness from 30m to 60m, is cored by several semi-concordant, east-west trending, steeply dipping and shallow eastplunging feldspar porphyry bodies of up to 20m in thickness. The shallow easterly plunge is regional in character and is overprinted by local structures.

There are six gold-bearing mineralized zones inwhich mineral resources have been estimated at Clavos. These are locally referred to as the Hanging Wall Zone (HW Zone), the Foot Wall Zone (FW Zone), the Contact Zone, the Sediment Zone, the 960 Zone, and a group of miscellaneous intersections listed as Other Mineralization.

In general, the best veining within the DL alteration envelope occurs close to the contacts of all three intrusive types. Deformed early grey, ribbon or stylolitic veining, with pyrite and arsenopyrite in stylolites when in close proximity with vein margins appears to be related with to the best gold values.

Significant gold grades have also been encountered within the porphyry bodies, primarily along the contacts with the HW Zone and FW Zone; however the gold mineralization lacks continuity and is more erratic in distribution. Arsenic is common for deposits of this type where the gold is unevenly distributed within the veins. Numerous occurrences of visible gold have been noted in drill core from the property and there are a number of very high grade assays in the database, measuring in tens and hundreds of g/t Au.

Structurally, the higher grade mineralization occurs within numerous east plunging shoots of up to 50 m in strike length. A secondary shallow plunge to the west defines roll structures within the shoots. Where mined, very high gold grades have been encountered at the intersection of the shoots and roll structures. Both structures overprint an earlier regional plunge of approximately 30º to the east. In general, the best veining within the DH alteration envelope occurs close to the contacts of all three intrusive types. Deformed early grey, ribbon or stylolitic veining, with pyrite and arsenopyrite in stylolites and near vein margins appears to be related with the better gold values.

The stope mining methods proposed in this PEA for the Clavos JV project are cut & fill stoping and bulk long hole stoping with pillars for the most part located in waste material. These stoping methods are common in mining, and are considered to be inherently safe methods of mineralized material extraction.

Cut & Fill Stoping:

- Selected as being safe while allowing a high percentage of mineralized material extraction with selective extraction methods possible

- Highly flexible permitting selective mining to be performed through alternate production faces within a single mining area

- Most efficient should the mineralized material grade or configuration of the mineralized structure be variable

- With two or more cut & fill stoping complexes in close proximity with each other, the same stope mining gear can be employed by traversing a connecting sub drift

- Could utilize steel mill holes and galvanized man ways in conjunction with cemented fill floors

- Could make use of hand held pneumatic drilling machines

- Mucking could utilize 1.25 mechanically driven diesel scoop trams and/or Cavo type muckers.

Bulk Long Hole Stoping:

- Allows utilization of similar equipment throughout the mine workings

- Incorporates longitudinal retreat stoping methods

- Utilizes 2 ½” to 3” diameter holes drilled from a pneumatic drill wagon

- Utilizes 3.5 yd. remote diesel scooptram operating from a draw point.

Based on previous metallurgical test work results, the selected processing flow sheet for the Clavos JV project is for whole ore cyanidation with recovery of soluble gold by CIP process.

In selecting a suitable custom mill facility,the laboratory test work performed on the various samples was taken into account and emphasis on the historical metallurgical performance at Clavos JV during past production.

There are a number of milling facilities within the general area which, subject to suitable commercial arrangements, are considered to be acceptable. The custom milling and processing facility design parameters preferred for gold recovery are summarized below:

- Combination of primary and secondary comminution crushing circuits
- Two stage ball mill grinding through utilization of a single primary grinding mill and a secondary grinding mill locked in closed circuit through a set of hydro-cyclones
- Pre leach circuit thickener
- Carbon columns
- 24 hour retention time period in the leaching and carbon in leaching circuit
- carbon in pulp circuit
- Carbon stripping and regeneration circuit
- Electro-winning cell
- Bullion furnace.