Gold mineralization is controlled by the Goudreau Lake Deformation Zone (GLDZ). Gold occurs in narrow, subparallel quartz veins in areas of intense sericitization and silicification. Five (5) major zones have been identified along the GLDZ: the Island Zone, the Lochalsh Zone, the North Shear/Shore Zone, the 21 Zone and the Goudreau Zone. A continuous 900-m-long mineralized structure marked by alteration and gold values of 1 g/t or more is indicated in drill core from the Lochalsh Zone to the Island Zone.

The Island Gold Lower Zones at the Island Gold mine concerns six (6) mineralized zones (G, G1, B, C, D and E1E) in the deepest part of the deposit, of which the C Zone is the most important, showing very good continuity with consistent gold grades. The six zones have been identified within an east-west alteration corridor 100 to 150 m thick that extends between -450 m and -1,000 m of vertical depth, and over a lateral strike length of 900 to 1,000 m spanning the Lochalsh, Island Gold and Extension 1 sectors. The dip of the mineralization is generally subvertical to the south, except between levels 400m and 500m where it becomes less steep.

Gold mineralization in the Goudreau-Lochalsh area is found in several different rock types and geologic settings. All of the past-producing mines and numerous other gold occurrences exhibit a close spatial association with felsic to intermediate intrusive rocks, and all are located along the GLDZ.

The GLDZ is subdivided into four structural domains (Southern, Northern, Eastern and Western) based on the style of deformation, lineation patterns, and the orientation and sense of shear displacement on sets of shear zones. Most gold deposits along this zone are associated with quartz veining and/or shear zones. Sage and Heather (1991) have grouped these shear zones into six main shear or high strain zone categories with the following azimuths: 070°, 020° to 035°, 130° to 140°, 080° to 090°, 110° to 115°, and 350° to 010°.

Of all the methods tested since mining activities commenced at the Island Gold mine, the longitudinal long-hole retreat mining is the preferred method. The ore width, vertical dip, good ground quality, productivity factors, costs, and availability of equipment and personnel were some of the major parameters involved in the decision.

In the proposed mining plan, sills are planned on levels 860 m, 740 m and 635 m.No significant changes in the geological shape are expected in the area studied in this PEA. Therefore, the current mining method remains adequate for the evaluated mine expansion.

Long hole mining consists of drilling a series of vertical holes downward into mineralization from one level to another. The mineralization is then blasted in vertical slices, and the broken material ends up in the bottom sill and is extracted using LHDs. For every sill and sublevel horizontal slice, a primary slot opened by drop raise method is excavated at each extremity of the level, and blasting of a first stope 18 to 22 m length along strike is achieved using a longitudinal retreating process. All the broken mineralized material is extracted before another slice is blasted to ensure maximum recovery of the mineralized material should any unplanned caving occur. Once the stope is completed, waste rock is dumped in the empty stope as noncemented rock fill. To be able to blast the second stope of the same level, a void must first be created by pulling out some of the backfill of the first fully-backfilled stope. The second stope is then blasted, mucked and backfilled. The process is repeated until all sublevels are mined out. This mining method is often referred to as the Modified Avoca Mining Method. Some part of the mucking and backfilling steps are performed with remotely operated LHDs for safety reasons.

The Island Gold Mine ore is processed at Kremzar mill. The Mill is composed of a two (2) stage crushing section followed by a two (2) stage grinding section. The mill uses cyanide leaching and a carbon in pulp process to recover gold. Some improvements were made to the plant in recent years, replacement of crushers, cyclone replacement and piping and pumping upgrade.

The ore from the stockpile is crushed by a jaw crusher followed by a secondary cone crusher. The crushed material is then sent to a ball mill operated in closed circuit with cyclones with a regrind mill. Gold is leached in a leaching circuit and extracted in a carbon-in-pulp (CIP) circuit. The loaded carbon is washed with nitric acid solution to remove scale before being sent through a carbon regeneration kiln. Gold is removed from the loaded carbon by elution (stripping) followed by electro winning. The stripped carbon is regenerated in reactivation kilns before being returned to the process. Fine carbon is constantly removed and recovered from the process to avoid gold loss, while fresh carbon is continuously added to the process. The high grade electro winning concentrate is sent to a bullion furnace for smelting of doré.