The majority of mineralization within the concession area consists of volcanic hosted goldsilver + copper, lead, and zinc epithermal quartz veins of intermediate sulphidation type. There is a vertical zonation of metals and base metal grades are higher at depth, although, in general, gold grades appear to stay constant.

In addition to these epithermal quartz veins, there are a number of alluvial gold deposits derived from weathering of the mineralized veins.

Mineralization at the Hemco Property is hosted in the Panama, Pioneer, and Constancia groups. The Constancia Group includes the Porvenir, Leticia, and San Antonio deposits.

VEIN DEPOSITS
The majority of mineralization within the concession area consists of volcanic hosted goldsilver ± copper, lead, and zinc epithermal quartz veins of intermediate sulphidation type. There is a vertical zonation of metals, and base metal contents are higher at depth, although, in general, gold grades appear to stay constant except in those areas near surface where residual gold has been liberated by the oxidation of pyrite and weathering/disintegration of host rock.

The epithermal veins at Bonanza are characterized by moderate to intense propylitic alteration of the andesite wall rocks locally accompanied by argillic alteration and silicification. There are several variations in style of mineralization among the veins.

Veins in the southwest part of the district are characterized by gold mineralization associated with quartz, chalcopyrite, and hematite enriched in base metal sulphides. Gold mineralization in veins toward the northeast, i.e., the Pioneer and Panama groups, is associated with quartz and chlorite and generally lower base metals content. The difference in gold and base metal tenor between the Panama, Pioneer, and Constancia groups may be a function of the spatial relation with the intrusive heat source. Shallow epithermal veins are characterized by low grades but wider zones resulting from bifurcations and quartz stockwork zones. Base metal contents are generally lower at the shallow depths than what has been encountered in deeper parts of the system and trace elements such as strontium and barium are higher. Alteration is characterized by zonation from propylitization of country rocks to argillic alteration as the vein is approached. Silicification can be widespread and intense. Phreatic breccias are common as are boiling textures such as bladed quartz after calcite. Deeper portions of epithermal systems are typically enriched in base metals and have higher gold grades. The veins are more discrete and alteration is characterized by moderate to strong propylitization of the wall rocks. In the Bonanza district, all of the veins are interpreted to lie in the middle to deeper levels of an epithermal system. On the basis of base metal content, the Porvenir, Leticia and San Antonio veins in the Constancia Group are interpreted to be deeper relative to the Pioneer and Panama groups.

Byington (1996) noted that quartz veins are controlled by strike-slip faulting with both sinistral and dextral displacement and mineralized shoots are controlled by gold deposition introduced during dextral strike-slip movement resulting from wrench tectonics. Gold grades are higher in areas of increased fracture density and permeability such as flexures in strike and dip. This may also account for the observed periodicity of mineralized shoots and non-mineralized portions of the structures. In a very general sense northwest dipping mineralized shoots more often have southwest plunges and southeast dipping shoots have a vertical to steep northeast plunge.

The Bonanza epithermal gold mineralization may be related to a 40 km diameter pluton on the southeast side modeled from pseudo-gravity high. The Siuna and Rosita copper-gold deposits are also on the edges of this interpreted pluton.

ALLUVIAL DEPOSITS
The presence of alluvial gold has been identified in several of the rivers and alluvial flats in the Bonanza district. The only alluvial occurrence that has been evaluated is the Salto Grande hydroelectric reservoir. The dam has silted up with alluvial sediments which are gold bearing. Mineros has carried out some programs of sediment sampling and drilling. Preliminary exploration target estimates are reported in Wilson (2012). RPA has not reviewed Mineros’ historical alluvial gold estimate.

None of the other placers have been evaluated. The placer deposits include (Diduck, 1996; Wilson, 2012):

• Waspanona Creek, an extensive alluvial flat located south of Concordia at the southwest end of the Bonanza district. The pay gravel is covered by red clay one metre to three metres thick. The pay gravel below this is estimated to be 12 m to 30 m thick.

• Panama Tunkey Bin, located east of the Panama sector.

• River Tunkey, located east of the Panama sector, with a width of 23 m to 90 m. The pay gravel is one metre to two metres below a red clay cover, and is one metre to nine metres thick.

Mining is currently carried out at Panama and Pioneer.

PANAMA MINE
Panama is a shallow underground operation accessed by adits, with multiple workings across multiple veins. The top of the mine is near surface, while the deepest planned workings are 250 m below surface. Production is separated into two areas, namely shrinkage stoping and mechanized long hole stoping.

The Panama Mine has four levels (1300, 1100, 960, and 850, with numbers representing the altitude above sea level in feet) with the bulk of production coming from the 1100 Level. The 1300 Level (396 MASL), which is just below the surface, is almost exhausted and some areas are now being mined by artisanal miners. The 850 Level is the main transport level.

In the area of Panama above 850 Level, the mining method applied is shrinkage stoping (nonmechanized). Shrinkage stoping suits the dips of 65° to 90°, and the widths ranging from 0.4 m to 2.5 m. Stopes are 30 m to 60 m on strike and interlevel spacing ranges from 45 m to 60 m.

Mining above 850 level
Raises are developed at planned intervals, with small access stubs developed off each raise at 6.3 m intervals. The lowest stubs are developed horizontally until they meet, and several short box holes are developed into this lower access. After this preparation work, normal production can commence. Holes are drilled upwards into the vein and blasted. Following this, some broken ore is drawn off through the box holes below, in order to create sufficient workspace in the panel. Further holes are drilled and blasted on top of previously broken ore, while some ore is continually drawn off to maintain working space in the stope. Once the stope limit is reached at a sill pillar below the next level, the remaining ore is drawn out of the stope.

The ore is drawn into hoppers (rail bound ore cars) on the level below, which take the ore to ore passes, where it is loaded onto 20 t trucks using chutes, then transported to surface and the plant.

All production work, including development, is done by pneumatic handheld drilling teams. Ground conditions are generally good, and thus little additional support is required. Support requirements are determined following a geotechnical evaluation.

Development of each level is a conventional drive until a vein is reached, after which development follows the vein. Hoppers are loaded with a pneumatic rocker shovel.

Mining below 850 level
The area below 850 Level has been extensively developed with the intention of mining using long hole stoping methods. Production and development mining is completed by a contractor with a mechanized suite comprised of a long hole drill rig, face drill rig, load-haul-dump (LHD) trucks and mine trucks. Ramps and accesses are 4.0 m x 4.5 m, while cross cuts are 3.5 m x 3.5 m. Ore drives are narrower in order to reduce dilution, at 3.0 m x 3.5 m. Advance rates are 50 m to 70 m per face per month, depending on the number of available faces and priorities. Currently, the development team has achieved a per face rate of 280 m per month, though future required rates for a single development team are lower than this rate.

Blasted material will be loaded out by LHD and either directly tipped into a mine truck or into a remuck bay, from where it will be rehandled into a truck. Loading points are planned where cross cuts intersect the ore drives. Trucks will haul the material out of the mine to the ore stockpile near the plant, where it will be rehandled by a front end loader as required for blending purposes into the plant. Stoping will be executed with a long hole drill rig, done in retreat, from the bottom level upwards. Current planning is based on 200 tpd, which will require two to three rings with a one metre burden to be blasted each day.

The Panama Mine operates a forced ventilation system with three ventilation districts, each of which has a main Airtec fan.

PIONEER MINE
The production approach for the Pioneer Mine is similar to that of the mechanized areas of the Panama Mine. The same contractor used at Panama is retained to complete the development and mining work at the Pioneer Mine. The long hole mining method is largely the same, with some changes to the geotechnical parameters.

Ore mined at the Pioneer Mine will be trucked to the Hemco Plant near the Panama Mine. Waste material will be dumped at a waste dump immediately outside the mine access.

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Prior to 2011, the Hemco Plant had a rated capacity of 750 tons per day, which, through various
upgrades and changes in operating procedures, has since increased to the current 1,750 tons
per calendar day.

The milling process consists of the following:
• Three crushing stages
• Two stages of grinding
• A primary thickener
• An agitated cyanide leach stage comprising eight agitated leach tanks
• A Counter Current Decantation (CCD) area comprised of eight thickeners with solutions running counter current to slurry
• A Merrill-Crowe process for treating the gold bearing or pregnant solution (precipitation)
• Smelting of the Merrill-Crowe precipitate, to recover doré (silver and gold), at a silver to gold ratio of 1.70 for 2019

Overall gold recovery for the Hemco Plant in 2019 was 89.7% gold, while overall recovery from
all three Processing Plants was 88.2% gold.

LEACHING
The slurry produced from the se ........