The Elk Gold Project is indicative of a reduced intrusive-related, structurally controlled quartz vein system. The gold- and silver-bearing quartz veins have historically been characterized as mesothermal based on fluid inclusion studies. The fluid inclusions within quartz crystals in the veins indicate gold mineralization formed at a minimum temperature of 250°C and a pressure of 2.5 kbar, corresponding to lithostatic pressure at a depth of 7 km (Geiger, 2000). Considerable open space within the veins, not related to weathered pyrite, suggests a much shallower vein emplacement, and more study will be needed to resolve the apparent conflict. The vein systems consist of structurally controlled; narrow, pyritic quartz veins hosted in granitic as well as volcanic rocks near the contact between these two primary lithologies. Emplacement of quartz veins is thought to be related to Tertiary Otter intrusions.

The Property hosts nine zones containing gold mineralization, including Siwash North, Siwash East, Gold Creek, Lake, End, Discovery, South, Bullion, and Nicola.

Gold mineralization occurs within quartz-sulphide veins and stringers, most often within phyllic- and silica-altered Osprey Lake rocks and adjacent phyllic- and silica-altered Nicola volcanic rocks. Pyrite is the most common sulphide (Conroy, 1994), ranging from 5% to 80%, with higher percentages often associated with chalcopyrite and tetrahedrite. Gold occurs asfine-grained free gold (typically lessthan 50 µm) in quartz, and within quartz-pyrite boxwork, and in fractures within veins(King, 2001). Gangue minerals include quartz and altered wall-rock clasts (xenoliths), with minor amounts of ankerite, calcite, barite, and fluorite. Most of the previous mine production occurred within the quartz-monzonite and granodiorite border phase of the batholith (Lewis, 2000).

Siwash North Zone
Mineralization is dominantly vein-hosted, consisting of pyrite-chalcopyrite-sphalerite-galena- arsenopyrite, with a small amount of visible gold-pyrrhotite-molybdenite and potential sulphosalts, as well as gold-bismuth phases (maldonite?). Except for the rare pyrrhotite, this generally indicates an intermediate sulphidation state of the system. In general, gold grades appear to correlate well with total sulphide content, with base metals being a positive indication; however, base-metal-dominant yellow-brown quartz veins were found to be poor hosts for gold mineralization.

Sulphides occur in one of six forms: 1) vein-hosted, 2) stringer-hosted, 3) mineralized gouge, 4) base- metals in honey quartz veins, 5) blebs within altered clots within the Nicola Group rocks, or 6) disseminations in intrusive units. The vein-hosted and stringer-hosted sulphide minerals are similar and likely formed as part of the same event. The mineralized gouge is simply interpreted to be a pulverized quartz-sulphide vein related to the same event.

Lake Zone
The Lake Zone, 800 m south of the Siwash North Zone, contains numerous gold-in-soil anomalies that range up to 1,210 ppb Au. Two of these anomalies were tested by trenching in 1989, in which an argillic-altered pyritic andesite dyke returned values up to 12.69 g/t Au over 0.86 m. Additional trenching in 1990 returned values up to 30.69 g/t Au over 0.34 m. A second 1990 trench, 150 m west of the former, exposed the gold-mineralized zone from which a grab sample yielded 40.39 g/t Au.

South Zone
Located approximately 3 km south of the Siwash North Zone, the South Zone has been tested by drilling 51 diamond drill holes (6,000 m) from 1995 to 2013. Drilling intersected a series of subparallel, narrow, gold-mineralized zones: as many as seven discrete vein sets in drill hole SND11-144.

Gold Creek Zone
Located approximately 150 m south of the west end of the Siwash North Zone, the Gold Creek Zone was initially investigated to follow up on soil geochemical and very-low-frequency (VLF) electromagnetic geophysical anomalies. Mineralization is similar to Siwash North in that gold bearing pyritic quartz veins are hosted in the Osprey Lake quartz monzonite.

Siwash East, End, Discovery, Bullion, and Nicola Zones
Five zones have been drill-tested north and south of the Siwash North Zone, although not to the same extent as the previously described zones—Siwash East, End, Discovery, Bullion, and Nicola. The five zones were tested by 32 diamond drill holes (2,638 m). All but the Nicola Zone intersected narrow gold veining, with multiple veins noted in the Bullion and Discovery zones.

The Elk Gold Project is envisioned to be developed as a conventional open pit mine. The operation will begin as a 70,000 t/a toll milling mine for three years. During Year 3 of operations, a 324,000 t/a mill will be constructed on site, which will commission starting in Year 4.

During Years 1 to 3, mineralized material is excavated from the open pit and placed on a limestone-capped stockpile pad. Material on the stockpile pad will be sampled and assayed for metal accounting before being shipped via highway dump trucks to a nearby mineral processing plant. Numerous potential mineral processing facilities exist within hauling distance of the Elk Gold Project.

It is anticipated that once the initial operation is underway, the owners will investigate and initiate an Environmental Assessment (EA) review, which would be required to expand the mine. This PEA envisages that by Year 4 of operations an EA Certificate will be received, and a 900 t/d processing plant will be assembled on site. The change to 900 t/d and on-site milling reduces the projected processing costs and therefore also decreases the mined cut-off grade.

Non-mineralized rock will be stockpiled in a rock management storage facility (RMSF) located west of the open pit, which is designed to have a low prominence and have 2H:1V slopes that will be capped with overburden and topsoil upon mine closure.

The total mine life will be 10 years, including processing 2.4 Mt of mineralized material grading 5.26 g/t Au and 8.78 g/t Ag. The plan includes 83.6 Mt of non-mineralized rock and an average strip ratio of 34.9 w:o.

Mining operations will be carried out by an owner-operated rental-leased fleet of mobile mining equipment including two 250 mm diameter blasthole drills, one 5 m3 front shovel, two 10 m3 front shovels, nine 136 tonne haul trucks, two 4 m wide blade track dozers, one 3.8 m blade rubber tire dozer, one motor grader, and one water truck.

Rock Management Storage Facility Design
Material below the cut-off grade is stored in one rock management storage facility (RMSF) located to the west of the open pit. The RMSF was designed with sufficient capacity to store the 84 Mt of non-mineralized material, assuming a loose density of 1.8 t/m3.

The WSF will be constructed in a series of 20 m lifts with 37° face slopes and catch berms on each lift, resulting in an overall slope of 26°.

A majority of the proposed expansion of the Elk Gold Project involves conducting underground mining. In order to do so, the Company must rehabilitate the historic underground decline that is currently flooded and was developed by previous owners and develop new underground infrastructure.

- subscription is required.

The process plant will include:
- Two stages of crushing;
- A single ball mill, grinding in reverse closed-circuit, with cyclones and a gravity circuit;
- Rougher flotation and one stage of cleaner flotation;
- Concentrate dewatering using thickeners and pressure filters;
- Concentrate storage and load-out facilities.

The crushing plant will have a throughput of 900 t/d, with an average LOM head grade of 5.26 g/t Au and 8.77 g/t Ag. The crushing circuit will operate for 12 hours per day, with an hourly throughput of 75 t/h. The grinding and flotation circuits will operate 24 hours per day, 365 days per year, with an availability of 90%, and a design throughput of 42 t/h.

Flotation
Cyclone overflow will flow by gravity to the rougher circuit, which will provide 20 minutes of residence time. Frother MIBC and sulphide collector PAX, at natural pH, will be added to aid in flotation.

The slurry will flow through a bank of ........