The Project is located in an accreted oceanic terrane of the Western Cordillera, described as the Calima Terrane by Restrepo & Toussaint (1988). The host rocks likely belong to the Upper Cretaceous Cañasgordas Group, which is subdivided into the Barroso Formation of basalts, and the Penderisco Formation of turbidites, chert and limestone. The Project area comprises three primary lithological domains: intrusive rocks (including porphyries) in the Alacran, Montiel East and Costa Azul deposits; volcanic rocks in the Montiel West deposit; and volcaniclastic rocks in the Alacran deposit. Volcaniclastic rocks are also present in the Alacran Norte and Willian prospect areas. The volcanics and volcaniclastics likely belong to the early Cretaceous-age Barroso formation.

The Alacran deposit Cu-Au-Ag mineralization is hosted by a west-dipping Cretaceous succession comprising mafic volcanic rocks overlain by a calcareous volcaniclastic sequence and capped by preto syn-mineral, sill-like diorite and felsic sub-volcanic bodies. The sequence is approximately 550 m thick, and the diorites are about 200 m thick. Cu-Au-Ag mineralization occurs throughout the volcaniclastic package at Alacran, except within the lower mafic units. It is most strongly developed in the calcareous volcaniclastic sequence. Several different deposit models have been proposed for the Alacran deposit, including Volcanogenic Massive Sulphide (“VMS”), Skarn, Carbonate Replacement Deposit (“CRD”), and Iron Oxide Copper-Gold (“IOCG”). To better understand the Alacran deposit formation, thesis-based research was initiated with the Mineral Deposit Research Unit (“MDRU”) at the University of British Columbia (“UBC”), in partnership with the Company. The goal of this active research is to develop the deposit model through a combination of alteration-mineralization and host rock geochronology, Pb and S isotope and Electron Microprobe Analysis (“EMPA”) in magnetite.

Finally, the Cu deposition in the Alacran deposit indicates that there is a temporal relationship (~ 73 Ma) with the magmatism and Cu-Au porphyry occurrences of the Project (i.e. Montiel East porphyry). Additionally, the recent delineation of the dacite intrusive breccia, which bears stockwork-porphyry clasts in the Alacran deposit, suggests a spatial and possibly genetic relationship with the tonalitic porphyry intrusions of the district. This type of relationship is uncommon in IOCG systems where the magmatic occurrences relate to highly fractionated, mantlederived intrusions ranging from gabbronorite to granodiorite with alkaline to sub-alkaline affinity (Pollard, 2006). In this sense, the Alacran ores display more porphyry-related features than features associated with VMS, or IOCG deposits.

The Montiel East Porphyry is located near the San Matías Village 2.5 km northeast Alacran deposit in the eastern side of the San Pedro River Lineament. The shallow parts of the Montiel East Deposit display surface dimensions of approximately 100 m x 70 m and a vertical extent of 100 m. The deposit is porphyry Cu-Au-Ag mineralization associated with a series of tonalite porphyry stocks and sills that intrude basaltic andesitic volcanic rocks and host a strong stockwork of quartz- magnetite-chalcopyrite-bornite veins. Based on cross-cutting relationships, alteration assemblages and compositions, four different phases have been identified within the Montiel East porphyry suite, three of which are hornblende porphyries and one of which is a quartz feldspar porphyry.

The Montiel West deposit is located approximately 2 km northeast of the Alacran deposit in the eastern margin of the San Pedro River Lineament, and less than 1 km west of the Montiel East deposit. Diamond drill holes intersected high-density zones of both sheeted and multi-directional quartz-magnetite-chalcopyrite-bornite veining that are hosted in mafic and intermediate volcanic rocks, but no intrusive rocks. This style of wall rock Cu-Au-Ag mineralization is interpreted to be porphyry-related, as seen at both the Montiel East and Costa Azul prospects. The veinlets are generally narrower than those observed at Montiel East, possibly suggesting that there is no direct relationship between the two prospects. Alteration appears to be sodic-calcic, defined by albite, actinolite and possible diopside.

The Costa Azul porphyry deposit is located approximately 2 km southeast of the Alacran deposit in the eastern side of the San Pedro River Lineament. The Costa Azul porphyry is a shallow dipping, holocrystalline, Cretaceous porphyry diorite intrusion dominated by phenocrysts, euhedral plagioclase and anhedral to subhedral hornblende, intergrown with primary magnetite and biotite.

Porphyry-style Cu-Au-Ag mineralization is associated with sheeted quartz-magnetite-chalcopyrite- pyrite-bornite veinlets within an altered diorite porphyry. This porphyry has not been described in the same detail as Montiel East porphyry; however, the intrusive phases are equivalent to the Montiel East (i.e. Hornblende Porphyry, Hornblende Porphyry Late) and the veining paragenesis is similar to the veins observed at Montiel East.

The Montiel East, Montiel West and Costa Azul deposits can all be broadly classified as Cu-Au porphyry systems as defined by Sillitoe (2000). Cu-Au porphyries are typically associated with I- type magnetite-series intrusive rocks and typically contain significant hydrothermal magnetite, indicating the host intrusions are highly oxidized and sulphur-poor members of this series of magmas. The porphyry stocks in these types of rocks span a range of compositions from diorites, quartz diorite and tonalite through to quartz monzonite, monzonite and syenite. The porphyry deposits of the Project area are of low-potassium, calc-alkaline dioritic and tonalitic composition.

OP mining was considered a viable option for the study given that the mineralization is on or near surface. OP mining will include conventional drilling and blasting with a combination of a backhoe type excavator and front end loader type excavator loading broken rock into haul trucks, which will haul the material from the bench to the crusher, ROM stockpile, or WMF depending on the material type. Ancillary equipment includes dozers, graders, and various maintenance, support, service, and utility vehicles.

During pre-production, the mineralized material (above cut-off grade) will be hauled to designated stockpiles. The higher grade mill feed material will be hauled to a stockpile near the ROM pad located near the primary crusher. The saprolite material and lower grade mill feed will be hauled and stockpiled in a stockpile located south of the mill and crusher areas.

During production, higher grade mill feed material will be hauled directly to the primary crusher and either direct tipped into the crusher or stockpiled temporarily on the ROM pad. For the first three years of production, lower grade mill feed material (8.85 = NSR < 16.85) will continue to be stockpiled for later rehandling and processing. In the fourth and fifth year of production, mill feed material with NSR = 14.85 (Bin 7 and Bin 8) will be hauled directly to the crusher, while stockpiling material with 8.85 = NSR < 14.85. After the fifth year of production, all fresh material with NSR = 8.85 will be directed to the crusher as it is mined.

A mine production schedule was developed with the main objective of delivering 22,000 t/d of material to the processing facility. This includes 20,000 t/d of fresh and transition economic material and 10% or 2,000 t/d of economic saprolite. Other considerations for the schedule included the following:
• Bringing forward higher value material where possible, that is mining at an elevated cut-off grade for the first five years of production period and stockpiling lower grade material for later processing.
• Economic saprolite material would be blended in at 10% ratio.
• Year 1 of production takes into account an approximate 6 month mill ramp up period.

Drilling
Drilling may be performed on 10 m benches and excavated on two five metre “flitches” for ore control if needed. Table 16-7 provides the blasthole productivity for a 10 m drill bench.

Two drill rigs will be required to meet the drilling targets for the 7.3 Mtpa of mill feed material scenario. A down the hole (“DTH”) drilling rig such as the EPIROC ATLAS DM45 140 mm to 225 mm rotary or CAT MD6250 152 mm to 250 mm rotary is envisaged.

It is the assumption that saprolite material will not required drilling and blasting and will be ripped and free digging.

Blasting
It is recommended that the blasting services be provided by a specialist blasting services provider. It is recommended to use booster sensitive bulk emulsion explosives and electronic detonators. An emulsion explosive is a suitable product for wet blasting application in open cut mines.

For the purposes of estimating the requirements it has been assumed that the saprolite material will be free digging.

For blasting in rock, double priming of the blastholes has been accounted for since the explosive length is greater than 6 m.

It is estimated that, during production, approximately 1.9 M kg to 3.7 M kg of emulsion explosive product would be required for blasting every year. Assuming a working period of 365 days per year, the blasting operations will require between about 5,200 kg and 10,200 kg of explosives per day and a blast would occur every two days. The drilling and blasting plan will be optimized during further studies.

Loading and Hauling
A backhoe type hydraulic excavator was envisioned for the production loading. A 12.0 m3 bucket capacity was assumed when estimating the loading fleet requirements. A front end loader type of excavator was envisioned for the Project for stockpiling handling and back-up loading. A 11.0 m3 bucket capacity was assumed when estimating the loading fleet requirements.

Loading fleet numbers have been estimated on first principles based on the operating hours required to achieve the production schedule, calculated by cycle times, and estimates of the equipment’s rated capacities and productivities.

Two types of haul trucks are envisioned for the Project. A 90 t rigid frame haul truck (“RDT”), example model includes CAT777, and a 55 t articulated dump truck (“ADT”), example model includes Volvo A60. Haul truck fleet numbers have been estimated on first principles based on the operating hours required to achieve the production schedule, calculated cycle times, and estimates of the equipment’s rated capacities and productivities. A limited number of typical haul profiles specific to the detailed pit design were estimated.

Other assumptions for the haul cycles include:
• 3% rolling resistance;
• 3.25 min for loading time, including spot time;
• 1.25 min for dumping time, including spot time;
• 20 m deceleration length at starting point and destination point;
• 40 km/hr maximum average speed.

For the additional haulage from the pit exit to the destination, a number of centroids were selected to represent dump locations.
• Distance from the pit exit to the ROM was estimated at 345 m with 3.8 min cycle time.
• Distance from the ROM to stockpiling area was estimated at an additional 1,340 m with 9.9 min cycle time.
• Distance from pit exit to WMF varied between 2,270 m and 2,812 m with 10.3 min to 12.4 min cycle time.
• Distance from pit exit to the WMF embankment varied between 515 m at the South Embankment to 3,295 m along the Main Embankment with cycle times varying between 3.4 min and 15.3 min.

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The process plant was designed using conventional and proven technology. It is designed for a throughput of 22,000 metric tonnes per day (“mtpd”) at an availability of 92% per annum, equating to an annual feed of 8,030,000 metric tonnes. The beneficiation plan will operate a planned 365 days per year and produce a Cu-Au-Ag concentrate to be sold in the open market.

ROM feed from the adjacent OP will be hauled to a primary crusher facility consisting of a gyratory crusher before being conveyed to a 25,000-tonne surface stockpile prior to the mill facility. On average, 20,000mptd of fresh/transition ore will be blended with 2,000 mtpd of saprolite prior to the primary crusher by mine operations on a day to day basis. The comminution circuit consists of a SAG mill closedin with a pebble crusher, and a ball mill operating in a closed circuit with a hydrocyclone cluster. Cyclone overflow of P80 of 200 µm will report to a four-stage flotation circuit including a roughing stage, p ........