All the major veins identified on the Pavón concessions are hosted by intermediate to felsic rocks within the Matagalpa Group sequence. Rhyolite tuffs and flows overlying the sequence appear to be syn- to post-mineral and have been mapped regionally as part of the Lower Coyol Group.

Potentially economic gold-silver mineralization at Pavón is hosted within quartz veins, and stockwork veinlets, and quartz vein breccia with textures and alteration assemblages typical of formation in a low sulphidation epithermal environment. Many of the veins display multiple stages of quartz deposition and both tectonic to hydrothermal brecciation. Brecciated veins are more common than massive fissure veins in the Pavón area.

Quartz vein textures vary both within individual veins, and between veins across the concession. Common quartz textures include granular (locally gray with fine-grained disseminated pyrite), massive, and banded clear, gray, and blue chalcedonic. Coarsely crystalline or massive quartz, cockscomb, and cockade textures are less common suggesting most of the multi-phase quartz was deposited at lower epithermal temperatures (Hawksworth, 2005).

Adularia is an important vein component of the Pavón Norte, Pavón Central, and Pavón Sur deposits. It occurs as millimetre-wide growth rims with banded massive, granular, or chalcedonic quartz, and locally as radiating crystals extending up to 1.0 cm into the quartz bands. Examination of drill logs shows a general correlation of gold with total quartz volume percent and adularia percent. Sulphides within the quartz veins are rare. Pyrite occurs within grey silica/quartz that forms the late stage hydrothermal breccia matrix which is generally the last vein event within the major structures. Trace amounts of base metal sulphide have been observed within select holes.

The proposed mine development includes two open pits (Norte and Central), separated by approximately three kilometres. Mine production will consist of up to 3.6 Mtpa and 6.6 Mtpa (ore and waste) for Pavón Norte and Central respectively.

Overall slope angles are determined by the geotechnical slope parameters. The theoretical slope angles are then reduced as required to accommodate haulage ramps and berms. These adjusted slope parameters are incorporated within the optimization package to reflect the final wall slope configuration and minimize the variance between the optimized shapes and actual design.

The final pit limits were established from the base case LG pit optimization. Design pits are complete with haul roads and adhere to the recommended geotechnical parameters. There is an adequate buffer zone around the pits for inclusion of surface haul roads, slope stability structures, rehabilitation, and future pit expansion. The buffer zone surrounding the pit limits was determined using an “upside economic scenario” derived from a US$2,000/oz Au pit shell. The Pavón Norte and Central pit limit does not significantly increase assuming a gold price of US$2,000/oz Au, as the size of the pit is limited by the modelled recovery and waste stripping requirements.

For the Norte pit, a bench geometry of 4.5 m wide and 5 m high was selected based on equipment sizing. Double benching was assumed (i.e. an overall bench height of 10 m in 2 x 5 m benches). For the Central Pit, a bench geometry of 5 m wide and 6 m high was selected. Double-benching was considered (i.e. an overall bench height of 12 m in 2 x 6 m benches).

The pushback sequence in Pavón Norte is dictated by two pushbacks that will allow mining with all the operational conditions for a maximum of 27 months. The average mining rate during this period is 10,000 tpd total material. The average mining rate is calculated based on the total production of pushback 1 and pushback 2 from January 1 to December 31, divided by 365 days.

The life of mine production schedule includes reduced production during the Nicaragua rainy season from late May/early June to November with a reduced throughput of 750 tpd ore during this period. The remaining dry months have a throughout of 1,200 tpd ore

Single-stage crushing with two jaw crushers capable of processing approximately 400 tonnes per hour (tph) and 200 tph, one utilized for ROM material and the other for spent heap material, followed by a crushed material stockpile.

Two-stage grinding to 70% passing (P70) 75 µm utilizing a conventional SABC (semi-autogenous grinding (SAG) followed by ball milling and pebble crushing) circuit. The grinding circuit consists of one SAG mill followed by two ball mills operating in parallel and an integrated pebble crushing circuit; the SAG and ball mills are 20 ft x 9 ft and 13 ft x 20 ft, respectively, each with a 1,680 kW motor.

Ore from the Pavón deposit will be blended with other feed sources at the La Libertad processing plant.

The La Libertad processing plant can treat approximately 2.25 Mtpa, and current gold recoveries are approximately 94% to 95% for a blend of spent and run of mine (ROM) mill feed from the adjacent La Libertad mines.

The processing plant consists of the following unit operations:

• Single-stage crushing with two jaw crushers, followed by a crushed material stockpile.

• Two-stage grinding to 70% passing (P70) 75 µm utilizing a conventional SABC (semi-autogenous grinding (SAG) followed by ball milling and pebble crushing) circuit.

• Pre-leach thickening to 45% solids, followed by leaching in 11 leach tanks (4 x 1,500 m3and 7 x 570 m3) with oxygen addition for a total of 32 hours residence time. Carbon adsorption is carried out in six 550 m3 Carbon in Pulp (CIP) tanks.

• Tailings disposal by pumping to the lined La Esper ........