Gold mineralization in the Eau Claire Deposit is structurally controlled and exhibits similar geological, structural and metallogenic characteristics to Archean Greenstone-hosted quartz- carbonate vein (lode) deposits. These deposits are also known as mesothermal, orogenic, lode gold, shear-zone-related quartzcarbonate or gold-only deposits (Dubé and Gosselin, 2007).

The Eau Claire deposit is a structurally-controlled gold deposit. Mineralization occurs primarily in a series of sheeted en-echelon quartz-tourmaline veins; subordinate mineralization occurs as dissemination in the host rock. Carbonate occurs to varying degrees in the vein mineralization. The en-echelon pattern is hosted within a structural corridor and trends from the northwest to the southeast. Individual veins are up to 1 metre thick and extent for at least 100 metres along strike.

Veins are composed of quartz and tourmaline; the ratio between quartz with accessory calcite to tourmaline can vary from 100 percent quartz to 100 percent tourmaline. The quartz-tourmaline veins are massive, banded and/or brecciated. Pyrite, pyrrhotite, chalcopyrite and rare molybdenite generally constitute less than 1.5 percent of the composition of these veins. Commonly, brecciated veins contain angular blocks of tourmaline, ranging in size from less than one to more than 25 centimetres in size. Fragments are cemented by a quartz-carbonate matrix. Breccia textures locally form a piano key pattern with angular tourmaline blocks aligned perpendicular to the vein walls. This texture is due to protracted deformation that affected already formed veins and generated new veins (tension gash veins developed on pre- existing laminated veins). The piano key breccia has been observed throughout the deposit at all scales in tourmaline veins of less than 1 centimetre to more than 1 metre thick. A ladder vein texture has also been observed in outcrop at the 450 West Zone consisting of massive tourmaline layers with quartz-carbonate ladders aligned perpendicular to the vein walls.

Gold occurs as isolated grains or as clusters of fine grained particles. Irregular to sub-angular shaped gold grains range in size from less than 10 micrometres to 1 millimetre. In rare instances, grains up to 1 centimetre in size have been observed. Locally, veins contain micrometre-size clusters of visible gold particles. Tellurobismuthite (Bi2 Te3) occurs throughout the deposit. Gold and tellurides occur within micro fractures in quartz, interstitial to granular tourmaline grains, at the contact between massive aphanitic tourmaline and quartz bands, and along tourmaline laminations.

Gold mineralization also occurs within altered host rock without veining occurring as centimetre to several metre wide tourmaline-actinolite ± biotite ± calcite replacement zones around vein selvages.

The two major vein areas discovered to date (the 450 West and 850 West zones) form a crescent-shaped mineralized, surface projected footprint 1.8 kilometres long by more than 100 metres wide, which has been traced to date to a vertical depth of 900 metres. Veins within the 450 West zone typically strike 85 degrees and dip 45 to 60 degrees to the south. Mineralization within the veins plunges steeply to the southeast, subparallel to an F2 fold axis. Veins within the 850 West zone typically strike 60 degrees and dip subvertically. Mineralization within this vein set plunges gently to the southwest.

Proposed mining would commence with open pit mining followed by underground mining.

The PEA proposes a conventional truck and shovel open pit operation, followed by ramp access and captive long-hole open stoping in the underground portion of the mine. The mine plan is to extract the upper portions of the Mineral Resources (top 100 metres) using open pit mining methods. While the open-pit is producing, an underground portal will be established outside of the pit and an underground ramp will be extended below the proposed crown pillar.

The PEA schedule assumes mining of 1,641,000 tonnes of mineralized material at 3.78 g/t Au for 199,000 oz Au contained over three years from the two open pits. The open pit operations consist of production from the Main Pit (650 m x 275 m x 100 m depth) and the smaller West Pit (260 m x 120 m x 40 m depth), to be mined at a bench height of five metres. The open pits have an average strip ratio of 9.4:1.

Underground mining will progress by captive longhole methods in a top-down fashion with major sublevels every 24 metres. The underground operation assumes mining of 4,762,000 tonnes of mineralized material grading 5.24 g/t Au for 801,500 oz over 11 years. The average planned dilution factor was conservatively applied at 40% at zero dilution grade.

The PEA schedule assumes a combined open pit and underground operations of 6,403,000 tonnes of mineralized material at blended grade of 4.87 g/t Au for 1,001,000 contained oz Au over 12 years.

Run of mine mineralized material will be crushed in a jaw crusher and ground to a K80 of 48 microns in a semi-autogenous (“SAG”) mill followed by a ball mill. The ball mill will be in closed circuit with hydrocyclones. A gravity gold recovery circuit will remove a significant fraction of available free gold from cyclone underflow slurry which will be then processed in a batch reactor. Gold-bearing solution recovered via the reactor will be directed to the leach circuit.

Cyclone overflow will report to a thickener to control the density of the slurry fed to cyanidation. Leach discharge will flow through a series of carbon columns comprising a carbon-in- pulp (“CIP”) circuit where gold will be adsorbed onto active carbon. Carbon will pass through the columns countercurrent to the leach slurry and subsequently report to the gold elution circuit.

Gold will be eluted from the carbon in a high temperature pressure vessel yielding a relatively high-grade gold eluate ........