La Colorada Gold District has many of the characteristics of a low sulfidization epithermal-vein type gold-silver deposit.

The significant mineralized zones discussed in the La Colorada Technical Report include El Crestón, La Colorada/Gran Central, and Veta Madre.

El Crestón Deposit
The El Crestón and Minas Prietas veins comprise the El Crestón deposit and combined, constitute the largest vein system at the La Colorada Mine and were originally mined as separate mineralized zones. The veins generally strike east to east-north-east, dipping an average of 75° N. The veins are all fault controlled, with the faulting preceding the veining. Small post-mineral fault offsets of a few metres are common. Underground mines selectively extracted individual veins over narrow widths, whereas open pit mining is focused on larger scale stockwork and multiple vein zones over cumulative thicknesses of up to 90 metres.

Gran Central Deposit
Gran Central is geologically similar to El Crestón-Minas Prietas, and again is composed of quartz veins and stockworks localized in the Gran Central Fault complex. It is hosted in a diorite stock which contains roof pendants of siltstone and lesser calc-silicate hornfels. Fine native gold is present in the deposit and visible gold is observed.

La Colorada Deposit
Gold-bearing quartz veins and stockworks at La Colorada are contained within an east-west striking fault with a north dip averaging 45°. The mineral system is mainly hosted by rhyolite porphyry and diorite and is within and adjacent to the same dioritic stock which hosts the Gran Central Deposit. Mineralization has been traced for 500 metres along strike and for 100 metres down dip with an average thickness of around 20 metres. Mineralogy and alteration are similar to the El CrestónMinas Prietas area.

Veta Madre Zone
Veta Madre is located 1.5 km east of the El Crestón pit. Historical miners sunk three deep sub-vertical shafts, possibly for exploration but no records of extensive workings or stoping have been found for this area. Rock types include siltstone, diorite, monzonite, granite, rhyolite feldspar porphyry and dacite.

The mining method employed at the La Colorada Mine consists of traditional open pit drill and blast operations followed by excavator loading of rigid body haul trucks for ore transport to a crusher and waste transport to designated dump locations.

The mine contractor Grupo Construcciones Planificadas, S.A. de C.V. (“Construplan”) drills 5.5-inch holes which are loaded with sacked ANFO. The amount of ANFO loaded is approximately 52 kg per drill hole. Argonaut pays for explosives as is common in Mexico, but the contractor is responsible for loading, priming and blasting of rock. Drill chips are sampled and sent to the local assay lab for grade control map creation by the mine engineering staff.

Loading is conducted using four Caterpillar 992 front end loaders, thirteen 100-tonne class haulage trucks (Caterpillar 777’s) and four Atlas Copco DM45 rotary drills. Waste material is sent to a main repository located south of the mine. No ARD issues are currently evident with the mining.

The El Crestón, La Colorada/Gran Central and Veta Madre pit designs combine current site access, mining width requirements and geotechnical parameters to explore the possible extraction of the resources through open pit techniques in a practical manner. For all three pits, the ramp width has been sized at 27 metres which can safely support Cat 777 (or equivalent) sized mining trucks. One way access of 15 metres has been applied at the pit bottom after stripping requirements have been met.

La Colorada currently processes oxide ore through a conventional heap leaching operation that includes three-stage crushing to 80% passing 3/8”, conveying and stacking to a multi-lift heap leach pad, irrigation with cyanide solution, and gold recovery through a conventional ADR plant to produce a final doré product.

The crushing plant, which has a nominal capacity of 600 t/h (12,000 t/d), consists of a 44 inch x 50 inch jaw that crushes RoM ore to -5 inches. Primary crushed ore is then scalped on a 5 ft x 16 ft scalping screen to remove the -9.5 mm fines as finished product. The screen oversize is advanced to the secondary crushing circuit which consists of two KPI K400+ standard cone crushers operated in open circuit with a 25 mm closed-side setting. The secondary crusher product is then screened at 9.5 mm and the screen oversize is advanced to the tertiary crushing circuit which consists of five (1 spare) KPI K400+ short head cone crushers that are operated in closed circuit to produce a final crushed product at about 80% -3/8 inch.

Crushed ore is conveyed to the leach pad through a system of overland and grasshopper conveyors and then stacked in 10 m high lifts with a radial stacker that is operated in retreat mode. The stacked ore is then then leached for a 90 day leach cycle with a cyanide leach solution (450 ppm NaCN) at an application rate of 10 L/h/m2 with a conventional drip irrigation system. Lime is added at about 1.2 kg/t to provide protective alkalinity and maintain solution pH at about 10.5. Generally, 85% to 90% of the recoverable gold is extracted during the first 60 days of leaching. After the leach cycle is complete the heap is allowed to drain down and is ripped in three different directions with a D6 dozer prior to placing the next lift in order to reduce compaction and maintain permeability.

The pregnant leach solution (PLS) flows at the rate of about 650 m3/h from the heap to the PLS pond located at the ADR plant at an average gold concentration of 0.20 ppm Au. Gold contained in the PLS, is recovered from solution in a standard carbon-in-column (CIC) adsorption circuit that consists of a train of five cascade-type carbon columns designed to handle a nominal PLS flowrate of up to 750 m3/hr. Each carbon column has capacity for 6 t of carbon, and carbon is loaded to about 5,000 g Au-Ag/t.

Loaded carbon is processed through a Zadra pressure strip circuit that includes acid washing followed by gold and silver stripping at 135°C and 450 kPa at the rate of 2.5 bed volumes per hour. The strip solution is recirculated through a series of four electrolytic cells to recover the gold from solution as a cathodic precipitate, which is then filtered, dried, fluxed and refined to produce the final doré product. Stripped carbon is thermally reactivated after every third cycle in a horizontal kiln that is operated at 750° C.

The carbon stripping circuit at La Colorada is used to process carbon from both La Colorada and Argonaut’s El Castillo mine. In addition, modifications are being made to process carbon from Argonaut’s newly commissioned San Agustin mine. It is noted that due to the high mercury content associated with the San Agustin ore, a mercury retort system has been installed in the refinery at La Colorada.