The observed geologic and geochemical characteristics of the gold-silver-lead-zinc deposit at Camino Rojo are consistent with those of a distal oxidized gold skarn deposit. Characteristics of these deposits (Meinert, L.D., Dipple, G.M., and Nicolescu, S., 2005) are summarized as:
- Typically found in lithologies containing some limestone, but deposits not restricted to limestones
- Formed by regional or contact metamorphic processes by metasomatic fluids, often of magmatic origin.
- Typically zoned deposits with a general pattern of garnet and pyroxene minerals proximal to the mineralizing heat and fluid source, and distal zones of bleaching.
- Low total sulphide content.
- Sulphide mineralogy comprised of pyrite, pyrrhotite, chalcopyrite, sphalerite, and galena.
- Highest gold grades are associated with late relatively lower temperature mineralizing events, often with potassium feldspar and quartz gangue.
- May be transitional to epithermal deposits.

The near surface portion of the Camino Rojo deposit has characteristics consistent with those of the distal skarn zone, transitional to epithermal mineralization, and overlies garnet bearing skarn mineralization encountered in the deeper portions of the system.

Skarn deposits often exhibit predictable patterns of mineral zoning and metal zoning. Application of skarn zoning models to exploration allows for inferences about the possible lateral and depth extents of the mineralized system at the Camino Rojo deposit and can be used to guide further exploration drill programs.

The mineralization is polymetallic, comprised of Au, Ag, As, Zn, and Pb. For purposes of evaluation of the oxide resource potential, only Au is of potential significance. During Dr. Gray’s site visit, the only megascopically observed ore and gangue metallic minerals were pyrite, marmatite (Fe-rich sphalerite), sphalerite, and arsenopyrite.

Mineralization was observed to be multi-phase, comprising as many as 4 separate but related mineralizing pulses (inferred from observations of drill core). At hand specimen scale, mineralization is controlled by bedding and fractures. The sandy and silty beds of the turbidite sequences of the Caracol Formation are preferentially mineralized, with pyrite disseminations and semi-massive stringers hosted within them, presumably due to higher porosity and permeability relative to the enclosing shale beds. Basal layers of the turbiditic sandstone beds are often preferentially mineralized. Bedding discordant open space filling fractures and structurally controlled breccia zones host banded sulphide veins and sulphide matrix breccias. Some higher grade vein and breccia zones are localized along the margins of dikes of intermediate composition.

Dr. Gray observed mineralization in drill core over vertical intervals greater than 400 meters, with mineralization occurring in a broad NE-SW trending elongate zone as much as 300m wide and 700m long.

Oxidation was observed to range from complete oxidation in the uppermost portions of the deposit, generally underlain or surrounded by a zone of mixed oxide and sulphide mineralization where oxidation is complete along fracture zones and within permeable strata, but lacking in the remainder of the rock, which then is generally underlain by a sulphide zone in which no oxidation is observed.

Oxidation of the deposit is ~100%, extending from surface to depths of 100 to 150 meters. The underlying transitional zone of mixed oxide/sulphide extends over a vertical interval in excess of 100 meters, and is characterized by partial oxidation controlled by bedding and structures.

The sandy layers of the turbiditic sequence are preferentially oxidized, creating a stratigraphically interlayered sequence of oxide and sulphide material at the cm scale, with oxidation along structures affecting all strata. The partial oxidation of the Caracol Formation preferentially oxidizes the mineralized strata thus incomplete oxidation in the transition zone may result in nearly complete oxidation of the gold bearing portion of the rock, thus the metallurgical characteristics of mixed oxide/sulphide may vary greatly, with some material exhibiting characteristics similar to oxide material.

The distribution of mineralization at Camino Rojo is controlled by both primary bedding and discordant structures. Near surface oxidation extends to depths in excess of 100m, and extends to greater depths along structurally controlled zones of fracturing and permeability.

The Camino Rojo mine will be a conventional open pit mine. Mine operations will consist of drilling holes, blasting and loading into off-road trucks with loaders. Mineralized material will be delivered to the primary crusher and waste to the waste storage facility located southeast of the pit. Pit angles are based on previous geotechnical studies and range from -45 to -53 degrees. Mineral resource within the designed pit is broken into pervasive mineralized oxide (Kp), incipiently mineralized oxide (Ki), high transitional (60 to 90% oxidized) and low transitional (30 to 60% oxidized) material. Any material with less than 30% oxidation is categorized as waste. Of the total of 42.5 million tonnes of material going to the crusher, 5 million tonnes are low grade mineral resources that will be stockpiled and then processed at the end of the mine life. Approximately 385,000 tonnes of the material going to the crusher, or 1%, is categorized as inferred mineral resources. The remainder is categorized as measured and indicated mineral resources. In addition to the mineral resource, 24.5 million tonnes of waste will be mined, resulting in a strip ratio of 0.58:1.

Run of mine resource material will be crushed at a rate of 18,000 tonnes per day to 80% passing 38 mm using a two-stage closed crushing circuit with a primary jaw crusher and secondary cone crusher. After crushing, material will be conveyor stacked on the leach pad in 10-meter lifts. Lime will be added to the material for pH control before being stacked and leached with a dilute cyanide solution. Pregnant solution will flow by gravity to a pregnant solution pond before being pumped to a Merrill-Crowe plant for metal recovery. Gold and silver will be precipitated from the pregnant solution via zinc cementation. The precious metal precipitate will be dewatered using filters, dried in a mercury retort to remove mercury values, and smelted to produce the final doré product.