Gold mineralization at Castle Mountain can be classified as volcanic-hosted low-sulfidation, quartz-adularia epithermal (LSE); it typically occurs within silicified zones, stockwork veins, breccias of tectonic or hydrothermal origin, as disseminations, and as lesser quartz veining within broad zones of hydrothermal alteration. LSE deposits are commonly found in volcanic island arcs, continent-margin magmatic arcs, and continental volcanic fields with extensional structures. Depositional environments include high-level hydrothermal systems from surficial hot spring settings to a depth of about 3,300 ft. to 4,900 ft.

Gold mineralization on the Castle Mountain property occurs in oxidized fractures, faults, discontinuous veins, and breccia matrix; it correlates with iron oxide, but it is not always a reliable indicator as there are many generations of iron oxide. Iron oxide varies in color from pink-red and is fracture controlled and discontinuous in coherent rhyolite facies; to deep red matrix replacement in rhyolite breccias, and wispy selvages and clast haloes in volcaniclastic rocks. In diatremes, iron oxide can be either pervasive or matrix selective and varies in color from a deep red to a brownred-gray. These iron oxide occurrences can be cut by fracture and vein filling iron oxide that ranges in color from brown-tan to red. Gold appears to correlate best with the deep red, red-brown and brown iron oxide.

Gold mineralization also correlates with moderate to intense silica alteration which includes pervasive silica flooding and quartz veining. Quartz veins can be vitric and “gel-like” or opaque white-gray opal. Vitric quartz veins typically occur in clusters as sheeted veins or stockwork in zones 1m to >10m wide. Amorphous quartz occurs as discontinuous irregular veins and as open space filling quartz. The strongest silica alteration associated with gold mineralization is found along brecciated coherent rhyolite margins; this results in floating angular rhyolite clasts in a hydrothermal silica matrix.

ilica alteration that contains mineralization typically contains iron oxide also. Like iron oxide, silica alteration is not a reliable indicator, instead it provides a tool to indicate proximity to mineralization. Visible gold is uncommon, but where observed, occurs as very small free gold grains in silica, and in close association with Fe-oxide.

Gold mineralization with associated iron oxide and silica alteration is found in all rocks types. In coherent rhyolite facies gold is typically hosted in joints, fractures, and faults with iron oxide ± quartz. Joints and fractures with mineralization range from 1mm to >5cm wide and are usually found as subparallel sets. Faults that cut coherent rhyolite facies can also contain gold in cataclasite matrix. Rhyolite breccias host gold mineralization in the matrix, are typically strongly silicified, and iron oxide-rich. In volcaniclastic facies, mineralization can be both disseminated within the matrix, and as hosted in fractures and veins like those found in coherent facies. Phreatomagmatic diatremes host gold in structures though the matrix rarely contains gold. Phreatic diatremes that are iron oxide rich contain gold in the matrix.

The Castle Mountain deposits have generally similar host rocks, alteration, chemistry, mode of gold occurrence, and gold to silver ratios. Silicification is common to all mineralization, and despite pervasive low intensity argillic alteration the best mineralization is low in clay content.

Gold mineralization is focused along structures and margins of facies contacts. It is believed that the vertical structures which tapped the magma responsible for the felsic volcanic package also acted as conduits for hydrothermal fluids that carried and deposited gold. Intersections of the steep structures with permeable units in the volcanic package created an environment for gold precipitation from hydrothermal fluids, possibly due to processes of boiling and interaction with meteoric water.

Rock porosity-permeability characteristics was a first-order control on the distribution of gold mineralization. Flow-dome breccia margins, phreatic diatremes, fault cataclasite, and fractures focused and interacted with more mineralizing fluids and contain the highest gold grades. Unfractured coherent flow-dome facies, clay altered volcaniclastic facies, and clay altered phreatomagmatic diatremes with low or variable permeability are the least mineralized due to limited exposure to hydrothermal fluid. Mineralized rocks with lower permeability are invariably cut by structures e.g. faults, fractures, or phreatic diatremes.

Ore body geometry appears to be the combination of two principal factors:
1. Mineralization can mimic steep to vertical brecciated contacts of flow-domes and phreatomagmatic diatremes; and
2. Mineralization can form broad tabular zones that correlate more closely to the general orientation of variably bedded clastic units, such as flows, lobe and coulée breccias, basal flow breccias or autoclastic carapace and talus breccias, and felsic Agglomerated Lithic Tuff (ALT) units.

Both can occur in the same space and all transitions between them are possible. Felsic ALT units with a more porous matrix proximal to cross-cutting flow-domes and phreatomagmatic diatremes may contain gold mineralization in the matrix. Individual mineralized bodies are also focused around fault zones with the same general vertical geometry but may mushroom where permeability was high. The lateral volume of the mineralized bodies focused around fault zones is dictated by the intensity and extent of fracturing and faulting, and the pre-existing permeability-porosity of the host rocks.

Mine design and preparation of the mining reserves was completed using conventional open-pit design practice. The designs are based on the $850/oz Lerchs-Grosmann optimal pit solution. From that initial pit design, ramp systems were designed and the pits were divided into 14 different laybacks/phases. Mining of the pits was subsequently scheduled to provide the required ore per year in the plan while balancing the waste mining to ensure proper development of the Project.

During the first two years of operations mining will be performed exclusively by a mining contractor. In years 3 and 4 the mining contractor will continue mining and will also assist with pre-stripping operations, which will be primarily undertaken by the Company’s own mining fleet. Contract mining operations will cease by year 5. Grade control will be performed by Castle Mountain personnel throughout the mine life.

It is anticipated that the mining contractor will use a fleet of 85-tonne to 100-tonne capacity rear dump trucks and equivalent class front-end- loaders. The initial owner fleet is expected to comprise 17 180-tonne capacity rear dump trucks and four 425-tonne class excavators. Mining will take place on 6.1-metre (20 foot) benches, with double benching anticipated in waste areas.

Mining costs are estimated at $1.39 per tonne mined over the current LOM.

The processing plan has been divided into two stages:

- Stage 1 (Years 1-3) considers processing 14,000 tons per day of ROM backfill material from the JSLA pit, where it was stored from the previous operation. Excavated backfill material will be loaded into 100-ton haul trucks and stacked in 50- ft lifts. Quicklime (CaO) will be added to the material in the trucks for pH control before the ore is stacked and leached in two stages using a dilute sodium cyanide solution. Pregnant solution discharging from the heap will flow by gravity to a pregnant solution tank from which it will be pumped to a Carbon-in-Column (CIC) adsorption circuit. Gold and silver values will be loaded onto activated carbon and then be periodically stripped from the carbon in a desorption circuit, electrowon and smelted to produce the final doré product.

- Stage 2 (Years 4+) will be constructed during Year 3 and includes expanding the Stage 1 leach pad, adsorption and desorption circuits, and ........