The Gramalote gold deposit is an intrusive-hosted, structurally controlled, stockwork gold-silver deposit. Gold mineralization is controlled by northeast-southwest trending strike-slip shear zones and north-northwest to south-southeast trending extensional shear zones and dilational fractures cutting the tonalites and granodiorites of the Antioquia Batholith.

Mineralization is closely linked to alteration and, like alteration, is structurally controlled. The mineralization is vein hosted, either in sheeted veins or local stockworks. Three stages are identified and associated with vein and alteration types:

1. Quartz-calcite-pyrite is an assemblage of fine grained quartz and calcite with very fine grained pyrite. This vein type generally does not host gold;

2. Quartz-pyrite-chalcopyrite-gold is the most important gold host typically associated with K-feldspar (potassic) selvedge. The gold occurs in fractures in pyrite along with chalcopyrite; and

3. Quartz-calcite-white mica is commonly barren but can show moderate gold grades (but up to 20 g/t). The veins are typically identified through the selvedge of white mica.

The main zone of mineralization at Gramalote Central, defined by drilling, has been traced along strike to the northeast (azimuth 70º) for approximately 1,100 meters. Mineralization occurs within several zones that periodically coalesce both along strike and down-dip. Zones vary in width from tens of meters to 150 meters in true width with vertical to sub-vertical dips to the south-southeast. The silver to gold ratio is approximately 1:1.

Gold mineralization occurs within altered and mineralized tonalite of the Antioquia Batholith. Anomalous gold grades are associated with three overprinting, texturedestructive alteration assemblages including potassic, quartz-sericite and sericitecarbonate. The magnetite destructive alteration characteristics of these zones is clearly defined using airborne and ground magnetic surveys over the tonalite host rock which is weak to moderately magnetic. Within these alteration zones, anomalous gold mineralization is associated with three specific types of stockwork quartz veining. These include quartz veinlets with fine grained pyrite, quartz-carbonate veinlets and quartz veinlets with granular pyrite. Oriented core data collected in 2008 suggests the veins have random orientations with a weak preference for a 045º subvertical orientation.

The saprolite (oxide) and “saprock” (transition) portion of the deposit represents a small percentage of the mineralization. Saprolite thickness is variable from 5 to 30 meters, with an average thickness of 15 meters. Local artisanal miners are active within the saprolite portion of the deposit. In the Gramalote Central area they mine narrow (<50 cm) north-south to northwest trending sub-vertical mineralized quartz veins.

Coarse gold is not observed in the drill core, and petrographic work to date indicates the gold occurs in 5 to 20 micron sizes associated with fractures and inclusions within pyrite and cavities associated with sulphosalts (aikinite PbCuBiS3, matildite AgBiS2) and tellurides (hessite (Ag2Te) (Leal, 2007 and Cabral, 2007).

The Gramalote Project is composed of three mineralized zones that are envisioned to be mined by open pit methods. The largest is the Gramalote Central pit. The smaller, satellite pits are the Monjas West and Trinidad pits.

The dominant mineralized rock type in the pits is tonalite, with minor amounts of a “soft material” consisting of tonalite weathered to saprolite, occurring near surface (20-30 m). Mineralization is low grade and continuous over true widths of tens of meters to 200 m, and is appropriate for large scale open pit mining.

During the 14 year mine life (13 years of mining and 1 year of stockpile rehandling), it is estimated the Project will produce 16 M tonnes per year of mineralized material with an average strip ratio of 2.48.

The expected height of the operating pit bench is 10 meters, with 20 meter double benches in final walls, face slope angle of 85º. Catch bench will be 6 to 8 m in width, and the inter-ramp angle will be between 58 to 60 degrees. Ramps are expected to be 30 meters in width with a gradient no more than 8% due to the expected weather conditions of high rainfall).

The proposed production equipment for load and haulage will include CAT 793/Komatsu 830E haul trucks (220 tonne capacity), Komatsu PC5500-6D hydraulic shovels (27.5 m3 bucket) and CAT 994 front end loaders (18.3 m3 bucket).

Production drilling equipment includes Atlas Copco drills: model PV 235 for blast holes (waste) and model Roc L8 for Grade Control (ore) and Pre-splitting (highwall control).

Auxiliary support equipment includes CAT D10 bulldozers, CAT 834 Wheeldozers, CAT 16M motor grader and CAT 20 k Gl water trucks.

During steady state production, the fleet will include 29 trucks, 3 hydraulic shovels, 2 front end loaders, 5 production drills, 1 drill for grade control and 2 drills for pre-splitting the high wall.

The crushing circuit comprises a single stage primary gyratory crusher which crushes the ROM mineralized material. The product is discharged using a conveyor to a coarse mineralized material stockpile. The product from the stockpile is withdrawn by apron feeder to a main feed belt which conveys the mineralized material to the semiautogenous grinding (SAG) mill.

The grinding circuit will be conventional SAG-Ball Mill (BM) circuit with the cyclone overflow is pumped to the flotation circuit.

The flotation circuit will consist of rougher cells and scavenger cells. The scavenger concentrate will be pumped back to the flotation roughers. The rougher concentrate will be pumped directly to the regrind cyclone feed tank. The cyclone underflow will be reground to 25 µm in order to ensure liberation for maximum recovery of gold and silver before downstream processing in the fine gravity concentrator and intense leaching circuit. The fine gravity concentrate will go to a fine concentrate holding tank ahead of intense leach reactor and the tailings are recycled back to the regrind circuit.

The fine flotation concentrate from the pre-leach thickener will be leached in a series of leach tanks before going to CIP tanks. The carbon from the CIP circuit will be sent to the gold recovery and carbon regeneration circuit, consisting of an adsorptiondesorption-recovery (ADR) circuit. The gold and silver will be electrowon and the gold/silver sludge converted to doré bars.

The leach residue will be detoxified to destroy cyanide before pumping to the tailings pond.