The important Au-Ag occurrences in Santa Cruz Province are confined to the Deseado Massif. The potential for important gold-silver mineralization was recognized in the Deseado Massif some 25 years ago. The Deseado Massif is a plateau consisting of Middle- to Upper Jurassic acid volcanic and volcaniclastic rocks that host fracture-controlled epithermal Au-Ag mineralization. Precious metal mineralization is related to LateJurassic magmatism.

The gold-silver deposits are hosted in silicic volcanic and volcano-sedimentary Jurassic rocks related to arc or back-arc settings in Andean or extra-Andean settings. The ore geology, textures, mineralogy, restricted alteration and geochemistry of these mineralized occurrences indicate that they belong to the epithermal class of precious metal deposits. The deposits are mainly associated with quartz +/- calcite +/- adularia +/- illite alteration assemblages interpreted to represent low and intermediate sulphidation epithermal type deposits.

Precious metal deposits generally occur in tectonically controlled structures with quartz fill, frequently brecciated in nature. Mineralization is generally associated with discrete banded quartz vein structures ranging in width from 0.5 to over 5 m, although a disseminated form of weak stockwork quartz veining of less than 0.5 m width intermediate to the principal quartz structures does also occur in some instances. Strong lithological control may occur. Dating in a few instances suggests that hydrothermal activity is several million years younger than peak magmatism. The presence of surface features like silica sinters, veins interpreted to be feeder structures, carbonate-lacustrine deposits and silicic lithocaps related to steam-heated waters in the water-table, indicates that the tops of some systems have been preserved. Erosion of younger sedimentary and volcanic cover is now exposing these systems and is suggesting that large regions or tectonic blocks are highly prospective for epithermal mineralized systems at depth.

The La Paloma and Martinetas epithermal systems are classic “low sulphidation” type deposits consisting mainly of quartz with adularia and free Au, minor amounts of sulphides (except at Sulfuro where a relatively high sulphide content occurs), and weak alteration haloes. Classic low sulphidation textures like lattice textures, crustiform-colloform banding, comb quartz, etc., are common. They may also be associated with anomalous amounts of arsenic (As), mercury (Hg), or antimony (Sb).

La Paloma Deposit Characteristics
- La Paloma vein field is focused on the SulfuroRocio vein system which comprises narrow, arcuate, steeply dipping quartz-breccia veins
- Gold and silver deposits typically occur as low sulphidation, epithermal mineralization within sub-vertically oriented quartz-breccia veins
- The Sulfuro vein is the principal deposit and is represented by a single, well developed quartz vein with a primarily northwest-south southeast orientation
- The La Paloma veins remain open-ended at depth with >12 km of cumulative vein strike length
- Strong brownfield potential as vein field is largely untested outside of the Sulfuro known deposit boundaries.

Martinetas Deposit
- Both the La Paloma and Martinetas epithermal systems are classic “low sulphidation” type deposits
- Strong structural and lithological control on mineralization reported
- Vein field is a robust system associated with large gold anomalous footprint.

Mining occurs at two regions, the La Paloma and the Martinetas areas; both areas comprised of multiple pits.

Mining operations use traditional drill, blast, haul methodologies at the two main mining zones.

Mining is conducted via a company owned and operated mine fleet of drill, truck, excavators and other ancillary mining equipment. Gold mineralization from the La Paloma region is hauled approximately 30 km to the mill using contractors.

Current mining rate of 1,000tpd delivered to the mill followed by crushing grinding and leaching in modern CIL plant.

Stripping rates declining as pit depth increases.

Current mining operations send material mined directly to the run of mine pad for processing while lower grade material is stockpiled. The potential to heap leach this material is planned to be investigated in the near future and could quickly add to the annual gold production.

The crushing circuit will reduce the mined material size from a nominal top size of 500 mm to a product size P80 of 6.5 mm in preparation for the grinding process.

The grinding circuit will reduce the size of the crushed material to a final product size with a product P80 of 75 µm, suitable for the subsequent gold recovery by gravity concentration and cyanide leaching processes. The grinding process will be a single-stage operation with the ball mill in closed circuit with classifying cyclones.

Minera Don Nicolás has a fully operational mine and a 1,000 tpd CIL plant constructed in 2017 located near the Martinetas pits supporting a targeted production rate of approximately 50,000 ounces of gold per annum.

Material mined is processed via a traditional crushing and grinding circuit followed by a carbon in leach circuit for gold recovery. The rated capacity of the plant is 1,000 tpd, however, higher rates of up to 1,200 tpd have been realized.

Average recovery of 92% for gold and 47% for silver.

The following information has been taken from the 2012 Technical Report:
The gravity concentration circuit will produce a concentrate containing coarse gold from the grinding circuit, and will treat the gravity concentrate on a shaking table to upgrade the concentrate suitable for its smelting at the refinery.

The gravity concentrate will be stored until a sufficient amount has been collected for the tabling process. Tabling of the gr ........