Exploration is focused principally on discovery and delineation of low sulfidation, Au-Ag epithermal mineralization of the type well documented throughout the Deseado Massif [e.g. White and Hedenquist (1990 &1994), Corbett, G.J. (2001) and Sillitoe, R.H. (1993)]. Mineralization typically comprises banded fissure veins and local vein/breccias characterized by high Au and Ag contents and ratios of Au:Ag generally greater than 1:10. Mineralized veins and breccias consist of quartz (coliform, banded, and chalcedonic morphologies), adularia, bladed carbonate (often replaced by quartz), and dark sulphidic material termed ginguro (fine grained electrum or Ag sulphosalts banded with quartz). Discrete vein deposits, such as at COSE, develop where mineralizing hydrothermal fluids are focused into dilatant structures, producing ore shoots which host the highest precious metal grades. Low sulfidation mineralization can also develop where mineralizing fluids flood permeable lithologies to generate large tonnage, low grade disseminated deposits (e.g. Round Mountain, Nevada; McDonald Meadows, Montana)

Based on observations by R. Sillitoe (2008 & 2009), mineralization at Cap-Oeste is assigned to a shallow epithermal, low sulfidation type of mineralization, specifically:

"The presence of fine-grained replacement quartz, widespread illite alteration, abundant marcasite, silver-bearing sulfosalts and late stage realgar and orpiment combine to confirm that Cap-Oeste formed in the epithermal environment, potentially in relative proximity to the paleosurface. The abundance of arsenopyrite, a sulfide that precipitates under reduced conditions, suggests that the prospect is assignable to the low-sulfidation epithermal category.”

Corbett (2011) attributes Au-Ag mineralisation at Cap-Oeste to be of an intrusion-related, low sulphidation epithermal style, deposited rapidly (quenched) at an elevated crustal setting. While much of the mineralisation is interpreted to have been deposited by rapid cooling of a rising quartz-sulfide ore fluid, bonanza Au grades result from the mixing of rising ore fluids with low pH acid sulphate waters, evidenced by the presence of kaolin in the higher grade ore assemblages (Corbett, 2011).

The PGSA geological staff have observed that mineralization occurs as a result of a fault localized combination of dominantly hydrothermal breccia and narrow quartz-Sulfide veinlets, rather than as one or more discrete banded quartz veins, as is the typical of deposits elsewhere in the Deseado Massif. In contrast to low-sulfidation systems, high sulfidation epithermal deposits are commonly replacement bodies, generally localized along or proximal to faults. A high-sulfidation assignation for the Cap-Oeste Project has been ruled out by the neutral-pH illite dominated alteration style and the complete absence of vuggy quartz and associated advanced argillic alteration assemblages.

The Company has selected a low cost initial open pit design with heap leach processing facilities with the option to increase the project mine life to six years with the development of the two underground projects at Cap-Oeste and COSE.

The pit optimisation was carried out at a price of $1,300/oz Au and $20/oz Ag and has resulted in an increase in the current open-pit life for Cap-Oeste from two to three years, with the pit now forecast for depletion in Q3 2019 with a total ore production of 2.03Mt @ 2.99g/t Au and 138g/t Ag for a total recoverable estimated production of 136,000 oz of Au and 3.2M oz of Ag, equating to 186,800 oz AuEq. Pursuant to the pit optimisation, the proposal is to increase the size of the pit to mine the ore previously delineated for the Cap-Oeste underground pit, resulting in the overall material to be moved over the life of the mine increasing from 7.2Mt to 25.2Mt, which will also increase the strip ratio from 3.7 to 11.44 and the ore being mined increasing from 1.55Mt to 2.03Mt. In order to mine the increased material, additional fleet will be required to increase the monthly production with one excavator, two fixed body dump trucks and one additional blast hole drill required.

The initial project consists of mining the oxide ore and treating it on a heap leach plant similar to that at Lomada. The open pit, heap leach pad and recovery plant were completed on time with the first gold pour on 27 October 2016.