At El Castillo, gold is mainly associated with pyrite occurring as fracture fillings or stockworks and also occurring within areas of hydrothermal brecciation. Pyrite with gold also occurs as disseminations especially within intrusive rocks. Within the mine the host environment for gold mineralization is dominated by an alternating pattern of sediments and parallel intrusive sills that strike to the northwest and dip steeply to the northeast. The sedimentary units generally vary from 20 to 40 metres wide as do the intrusive sills. Many of the sills appear to have intruded along bedding planes by splitting the tabular sedimentary blocks into their present positions. This geologic event resulted in the unique alternating pattern of sediments and intrusive sills/breccias that are observed throughout the mine area. Extensive fracturing of the sedimentary blocks created favorable secondary permeability for the deposition of gold mineralization predominately associated with pyrite. As a result of this ground preparation, the northwest striking sediments can be better mineralized than the surrounding intrusive rocks.

There is typically a transition zone of partially oxidized mineralization that lies between the fully oxidized material and lower non-oxidized, sulphide material. The transition zone varies from 5 to 50 metres thick and is generally influenced by degree of fracturing and level of erosion.

The sulphide zone is generally identified by the presence of pyrite mineralization. The presence of sulphides, either fracturerelated or disseminated, is a good indicator of gold mineralization. The sulphide veinlets are most commonly 0.5 to 4.0 centimetres (“cm”) wide.

There are two main controls to mineralization. The more important of these is a close association between gold and sedimentary stratigraphy that generally strikes northwest and dips to the northeast. The favored permeability and chemistry of these rocks strongly influenced the distribution and geometry of mineralization. The second control to mineralization is related to a northeast structural fabric that provided the main conduits to the mineral system. The combination of these geologic controls resulted in a northeast elongated gold zone that measures approximately 1,600 metres by 1,300 metres.

The mining method employed at the El Castillo Mine consists of traditional open pit drill and blast operations followed by excavator loading of rigid body haul trucks for ore transport to heap leach pad or crusher with waste transported to designated dump locations.

The mine drills, which include two Atlas Copco DM45's and two Atlas Copco DM30's, produce a combination of 4.5-inch to 5.5-inch holes on 3 metres x 3 metres to 4.8 metres x 6.5 metres patterns that are loaded with sacked ammonium nitrate/fuel oil (ANFO). The amount of ammonium nitrate/fuel oil (ANFO) ranges from 21 to 52 kilograms ("kg") per drill hole. Drill chips are sampled and sent to the local assay laboratory for grade control map creation by the mine engineering staff.

Loading is done with one Caterpillar 993K and four Caterpillar 992 frontend loaders to fill 19 100- tonne class haulage trucks (four Caterpillar 777 haulage trucks, and 15 Terex TR100 haulage trucks). Waste material is sent to either of three waste dumps, one located to the north of the mine, one located to the south of the mine and one located within the mined out area of the existing pit (in-pit dump). No acid rock drainage (ARD) issues are currently evident with the mining of oxide material and testing to date shows no acid rock drainage (non-ARD) in the sulphide mineralization but as the pit deepens this will need to be further evaluated.

The El Castillo Mine currently processes oxide and transition gold ore through a conventional heap leaching operation that includes single-stage and two-stage crushing , truck and portable conveyor transport to multi-lift heap leach pads, irrigation with cyanide solution, and gold recovery through Carbon-in-Column (“CIC”) gold recovery circuits. Loaded carbon is transported to the Corporation’s La Colorada Mine facilities for further processing to a final doré.

The current cut-off grade is 0.15 g/t gold. Softer ore with grades from 0.15 g/t gold and higher grade and harder ore from 0.15 g/t to 0.25 g/t gold are classified as single-stage crushed ore and are delivered to the West Crusher and crushed to -6 inches. Harder ore with grades greater than 0.25 g/t gold is classified as higher grade ore and transition ore with grades greater than 0.21 g/t gold are two-stage crushed at the East Crusher to -1 inches before being delivered to the leach pad by a portable conveyor system. Lime is added to all ore before delivery to the pad in order to maintain protective alkalinity with a target leach solution of 10.5 pH.

Heap leaching is presently conducted on the East and West Side heap leach pads. All of the leach pads are double lined with clay and one and a half mm high density polyethylene (HDPE). The East Side leach pads, which were completed in early 2012, are divided into five cells with a total capacity of 30 million tonnes. An additional 9 million tonne expansion was completed in August 2015. The original West Side leach pads were constructed by Castle Gold and expanded in five increments by Argonaut Gold from 2010 to 2015.

Gold contained in the pregnant leach solution (“PLS”) from the East Side heap leach pads, is recovered from solution in a standard CIC circuit that consists of a train of five cascade-type carbon columns designed to handle a nominal PLS flow-rate of 1,000m3/hr. Each carbon column has capacity for six tonnes of carbon. The CIC circuit on the East Side was modified in 2015 adding an additional five 1 tonne carbon columns with a capacity of 150m3/hour.

Gold contained in the PLS from the West Side heap leach pads, is recovered from solution in a standard CIC circuit that consists of a train of five cascade-type carbon columns designed to handle a nominal PLS flow-rate of 1,000 m3/hr. Each carbon column has capacity for six tonnes of carbon. The CIC circuit on the West Side was modified in 2014 adding an additional five 1.5 tonne carbon columns with a capacity of 250 m3/hour. The loaded carbon is sampled and sent to the Desorption Plant/Refinery located at the La Colorada Mine operations for offsite stripping and gold refining.