The low sulphide content and near absence of base metals in the Cerro Blanco veins confirm it as a classic hot springs-related low-sulphidation epithermal deposit. In common with most low- sulphidation deposits, it appears to be linked to compositionally bimodal, basalt-rhyolite volcanism, the hallmark of intra- and backarc rift settings worldwide. The hydrothermal system seems likely to have been initiated during rhyolite dyke and cryptodome emplacement, at the base of the Salinas unit, with the rhyolitic magma and magmatic input to the mineralizing fluid both being derived from the same deep parental magma chamber.

Gold mineralization at Cerro Blanco is hosted within a broadly north-south striking sequence of westerlydipping siltstones, sandstones, and limestones (Mita Group) that are capped by silicified conglomerates and sediments with contemporaneous dacite / rhyolite flow domes or cryptodomes (Salinas Unit). The Salinas rocks are syn-mineral and believed to have accumulated progressively in a low-relief graben characterized by a shallow groundwater table. The Salinas conglomerate was presumably derived by erosion of the flanking horst blocks as relief was created during active faulting. The topographic inversion required to explain the current prominent position of the graben fill is ascribed to the silicic character of the Salinas unit and its consequent resistance to erosion.

The Salinas Group includes thin hot spring deposits, including sinters, which are probably genetically linked to underlying swarms of epithermal, gold-bearing quartz veins. The west and east sides of the Cerro Blanco ridge consist of flat agricultural plains characterized by Quaternary basalts, interbedded with boulder beds and sands. These rocks also appear down-faulted to lower elevations, implying major post-mineral extensional movements on such faults; and, they may be neotectonic (active).

The current gold resource occurs under a small hill and is confined within an area about 400 m by 800 m. The gold deposit is characterized by both high angle and low angle banded chalcedony veins, locally with calcite replacement textures. High angle mineralized faults and discontinuous stockwork zones host some of the highest gold grades. Gold bearing structures in the Cerro Blanco Project area extend 2 km to the northwest of the gold deposit and occur largely confined within the hydrothermal alteration zone. Exposures are poor and locally covered by alluvium and post- mineral rocks. Gold bearing structures extend at least 1 km south and southwest of the deposit under valley fill and post-mineral rocks.

High-grade mineralization at the Cerro Blanco deposit is in the form of laterally stacked sub- parallel narrow veins which generally strike to the northeast at an average azimuth of 25° to 50°. Veins range in dip with some tabular structures and others near vertical, however, the average dip values of high-grade vein mineralization is 50° to 55°. The average vein width is 1.9 m with average parallel spacing of 8 m. Perpendicular to strike, the deposit is approximately 250 m wide. The deposit contains upwards of 50 modeled veins with variable geometry along strike and dip.

Mineralization is centralized in two main zones, the North and the South. Both zones show similar vein geometry and spacing. The South zone contains more veins by volume and descends to lower elevations than the North. The total strike length of the North and South zones is approximately 800 m. High grade mineralization occurs from 540 masl to 180 masl. More than 50% of all mineralization occurs between 400 masl and 480 masl. Generally, lower grade mineralization surrounds the higher- grade lenses.

Cerro Blanco is proposed to be mined as an underground operation using a combination of longhole stoping (LH) and mechanized cut and fill (MCF) mining methods with cemented paste and rock backfill. A target production rate of 1,250 tpd is envisioned over a mine life of eight years that will extract 3.4 Mt of ore. LH stoping will account for about 54% of total production, and the remaining 46% will come from MCF and development. The Cerro Blanco deposit will be accessed from surface via a series of ramps, and all ore and waste rock will be trucked out of the mine. In addition to the four existing ventilation raises, two new raises will be required to circulate the required amount of air through the underground workings.

Two types of LH stoping will be used at Cerro Blanco: longitudinal and transverse.

Longitudinal LH methods operate parallel to the strike of the orebody. Longitudinal LH stoping is more favourable to transverse stoping in areas where ore thickness is less than 10 m and/or where isolated narrow veins are present. The orientation of longitudinal mining methods means that the hanging wall and footwall of the orebody will most likely form the sidewalls of the stope. In general, longitudinal methods are used where the rock mass quality of the hanging wall rock is competent enough to allow the development of a substantial opening in the hanging wall or footwall, usually greater than 15 metres. Longitudinal LH methods are very well suited to retreat mining and can be planned such that development occurs within the ore itself, reducing development costs, and generating revenue in the process. Longitudinal longhole stoping accounts for 15% of mine production, with average stope width of 4.4 metres.

Transverse LH stoping is a bulk mining method in which the long axis of the stope and access drifts are perpendicular to the strike of the orebody. Typically, drawpoints are located in under-cut access drifts which extend from the footwall, and the free face is mined in a horizontal retreat from the hanging wall to the footwall. In general, transverse longhole stoping is used where the rock mass quality of the hanging wall limits the length of the open mining span. This methodology requires more footwall waste development (for footwall drifts and drawpoints), however, since each stope has an independent access, it has more flexibility with regards to sequencing and scheduling. Transverse longhole stoping accounts for 27% of mine production, with average stope width of 11.1 metres.

Both longitudinal and transverse LH mining utilize top sills for drilling and a bottom sill for material extraction. In the event a top sill is unavailable, the lower extraction sill may be used to drill up holes. Mucking is achieved with remote control operated LHD machines. Backfilling is achieved from the top sill via paste line or ejector trucks and LHD’s. Rib pillars are not planned at Cerro Blanco, so transverse stopes will be mined in a primary / secondary fashion with cemented backfill placed into the primary stopes to provide structural support during excavation of the secondary stopes. In longitudinal LH stoping structural backfill will be required in all stopes.

Overhand MCF mining methods were selected for areas that have lower quality rock and/or where the resource geometry is not amenable to LH.

MCF is a highly selective mining method considered ideal for steeply or shallow dipping high grade deposits found in weak host rock. In this method, mining begins at the bottom of the ore body or block and progresses upward. During the mining sequence, the back of the excavation is temporarily supported using rock bolts before the stope is back filled to form the floor of the next level of development. Backfill is designed to provide mild excavation support sufficient to provide a strong working floor for personnel and equipment.

Progression between stopes is achieved through attack ramps driven at a 15% gradient from a main level access point. In a 20 m level there is generally three MCF levels, each four metres tall. The remaining eight metres between the last MCF lift and the next level above is mined in retreat using a series of LH up holes. This is done to avoid mine workers from drifting underneath sill pillars and increase miner safety. Whenever possible, internal ramping on vein is utilized to minimize waste generation and reduce costs.

Minimum rib pillar spacing between MCF drives is 4.0 metres. Where veins are too narrow to accommodate this pillar a primary / secondary mining will take place whereby the primary cuts are taken first and filled with a structural cemented backfill. This provides structural wall support to permit mining directly adjacent to the primary cut.

The recovery method will consist of the following unit operations:

- Primary Crushing – A vibrating grizzly feeder and 895 mm x 660 mm jaw crusher in open circuit,

- Secondary / Tertiary Crushing – Two stages of cone crushing in closed circuit with a double deck vibrating screen, producing a final product P80 of 8.3 mm,

- Crushed Material Bin and Reclaim – A 24 hour live capacity bin (1,250 t) with two reclaim belt feeders feeding the primary grinding circuit,

- Primary Grinding – A 3.66 m diameter x 6.1 m long ball mill in open circuit, producing a T80 transfer size of 300 µm,

- Secondary Grinding – A 3.66 m diameter x 6.1 m long ball mill in reverse closed circuit with a cluster of hydrocyclones, producing a final product target P80 of 50 µm,

- Gravity Concentration and Intensive Leach – A semi-continuous batch gravity concentrator to recover gravity recoverable gold from the ball mill cyclone underflow followed by intensive leach of the gravity concentrate,

- Pre-leach Thickening – A 12 m diameter high-rate thickener to achieve an underflow solids density of 50% prior to leaching,

- Pre-oxidation – An agitated tank sparged with oxygen to oxidize the slurry prior to leaching,

- Cyanide Leaching – Five agitated leach tanks, giving 48 hours of retention time to leach gold and silver into solution,

- Carbon in Pulp (CIP) – Eight CIP tanks, providing 6 hours of retention time to adsorb gold and silver cyanide complexes onto the pores of activated carbon,

- Carbon Elution and Regeneration – Acid wash of carbon to remove inorganic foulants, elution (strip) of carbon to produce a precious gold and silver rich solution, and thermal regeneration of carbon to remove organic foulants,

- Gold and Silver Refining – Precious metal electrowinning (sludge production), filtration, drying, and refining to produce gold and silver doré,

- Cyanide Destruction – Two agitated tanks, one operating and one standby, to reduce the CNWAD (weak acid dissociable) concentration in the CIP tailings to < 1.0 mg/L with sodium metabisulphite for SO2, air, lime and copper sulphate, and

- Final Tailings Dewatering – A filter plant to reduce final tailings to a moisture content of 18.6% for drystacking or paste production.