Don Mario Reserves/Resources

Cautionary Notes to Investors - Reserve and Resource Estimates

In accordance with applicable Canadian securities regulatory requirements, all mineral reserve and mineral resource estimates of the Company disclosed in this news release have been prepared as at September 30, 2014 in accordance with Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"), classified in accordance with Canadian Institute of Mining Metallurgy and Petroleum's "CIM Standards on Mineral Resources and Reserves Definitions and Guidelines" (the "CIM Guidelines").

Pursuant to the CIM Guidelines, mineral resources have a higher degree of uncertainty than mineral Reserves as to their existence as well as their economic and legal feasibility. Inferred mineral resources, when compared with measured or indicated mineral resources, have the least certainty as to their existence, and it cannot be assumed that all or any part of an inferred mineral resource will be upgraded to an indicated or measured mineral resource as a result of continued exploration. Pursuant to NI 43-101, inferred mineral resources may not form the basis of any economic analysis, including any feasibility study. Accordingly, readers are cautioned not to assume that all or any part of a mineral resource exists, will ever be converted into a mineral Reserve, or is or will ever be economically or legally mineable or recovered.

In fiscal 2015 the Company engaged Mercator Geological Services Limited (“Mercator”) and DCGS Exploration and Mining Consulting (“DCGS”), each an independent mining consulting firm, to complete mineral reserves and resources estimates, which were published in the “Don Mario Mine Operation 2015 Technical Report” by Mr. Michael Cullen of Mercator and Mr. Gino Zandonai of DCGS, each of whom is a qualified persons independent of the Company for the purposes of NI 43-101 and filed on Sedar on November 16, 2015, (the “Don Mario 43-101 Report”). The updated mineral resource and reserve estimates for Don Mario as at September 30, 2016 were prepared by Mr. Zandonai, an independent Qualified Person under NI 43-101. In respect of the LMZ, the tonnage reported as indicated resources as at September 30, 2015 was upgraded to probable reserves as at September 30, 2016 and production depletion during fiscal 2016 was accounted for. The following tables summarize the in-situ mineral resources estimates for UMZ, LMZ and Cerro Felix and the mineral reserves estimates for UMZ and LMZ:

 

In-situ Mineral Resources Inclusive of Mineral Reserves – September 30, 2016
Don Mario Mine
Measured
Zone Tonnage
(000 t)
Grade
(g/t Au)
Grade
(% Cu)
Grade
(g/t Ag)
Contained
(000 oz Au)
Contained Metal
(t Cu)
UMZ 51 1.35 1.10 30.70 2.2 563.1
LMZ 0 0.00 0.00 0.00 0.0 0.0
Cerro Felix 0 0.00 0.00 0.00 0.0 0.0
Total 51 1.35 1.10 30.70 2 563.1
Indicated
Zone Tonnage
(000 t)
Grade
(g/t Au)
Grade
(% Cu)
Grade
(g/t Ag)
Contained
(000 oz Au)
Contained Metal
(t Cu)
UMZ 0 0.00 0.00 0.00 0.0 0.0
LMZ 793 2.62 0.60 5.94 66.8 4,794.6
Cerro Felix 490 3.15 0.09 2.53 49.6 441.0
Total 1,283 2.82 0.41 4.64 116.5 5,235.6
Measured + Indicated
Zone Tonnage
(000 t)
Grade
(g/t Au)
Grade
(% Cu)
Grade
(g/t Ag)
Contained
(000 oz Au)
Contained Metal
(t Cu)
UMZ 51 1.35 1.10 30.70 2.2 563.1
LMZ 793 2.62 0.60 5.94 66.8 4,794.6
Cerro Felix 490 3.15 0.09 2.53 49.6 441.0
Total 1,334 2.77 0.43 5.63 118.6 5,798.7
Inferred
Zone Tonnage
(000 t)
Grade
(g/t Au)
Grade
(% Cu)
Grade
(g/t Ag)
Contained
(000 oz Au)
Contained Metal
(t Cu)
UMZ 0 0.00 0.00 0.00 0.0 0.0
LMZ 0 0.00 0.00 0.00 0.0 0.0
Cerro Felix 80 3.14 0.14 3.21 8.1 112.0
Total 80 3.14 0.14 3.21 8.1 112.0

Notes applicable to LMZ and Cerro Felix mineral resource:

  1. 1. An average block density factor of 2.89 was applied for both estimates.
  2. 2. Mineral resources are considered to have reasonable expectation for economic development by open-pit mining methods based on recent Don Mario open pit mine production history, resource amounts and metal grades, and current metal pricing.
  3. 3. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The quantity and grade of reported inferred mineral resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred mineral resources as indicated or measured mineral resources; it is uncertain if further exploration will result in upgrading of inferred resources to indicated or measured status.
  4. 4. Tonnes are rounded to nearest 10,000.
  5. 5. Ounces are rounded to the nearest 1,000 and pounds are rounded to the nearest 10,000. Calculated contained metal sums may not match reported tonnes and grade due to rounding.
  6. 6. The resource estimate cut-off value of 0.70 g/t Au is reflective of open-pit mining methods and resource estimate values are bolded.
  7. 7. Both resource estimates are based on validated core drilling program results and do not incorporate production sampling data.
  8. 8. Contained copper tonnes were calculated from original resource statement pound values by the factor 2204.62lb/tonne.
  9. 9. Numbers may not add due to rounding.
  10. 10. CIM definitions were followed.

Notes applicable to UMZ mineral resource estimate:

  1. 1. CIM definitions were followed for Mineral Resources and were prepared by G. Zandonai, a qualified person for the purposes of NI43-101, who is an employee of DGCS SA and is independent of the Company.
  2. 2. Mineral Resources are estimated at a Cu equivalent cut-off grade of 0.85% for the UMZ.
  3. 3. Mineral Resources are estimated using a long-term gold price of US$1,300 per ounce, copper price of US$3.00 per pound and a silver price of US$18 per ounce.
  4. 4. Mineral Resources are inclusive of Mineral Reserves.
  5. 5. Mineral Resources contained in stockpiles are exclusive of In-situ Mineral Resources.
  6. 6. Numbers may not add due to rounding.
In-situ Mineral Reserves – September 30, 2016
Don Mario
Proven
Zone Tonnage
(000 t)
Grade
(g/t Au)
Grade
(% Cu)
Grade
(g/t Ag)
Contained
(000 oz Au)
Contained Metal
(t Cu)
Sulphide UMZ
51
1.35 1.10 30.70 2.2 563.1
LMZ 0 0.00 0.00 0.00 0.0 0.0
Total 51 1.35 1.10 30.70 2 563.1
Probable
Zone Tonnage
(000 t)
Grade
(g/t Au)
Grade
(% Cu)
Grade
(g/t Ag)
Contained
(000 oz Au)
Contained Metal
(t Cu)
Sulphide UMZ 0 0.00 0.00 0.00 0.0 0.0
LMZ 793 2.62 0.60 5.94 66.8 4,794.6
Total 1,283 2.82 0.41 4.64 116.5 5,235.6
Total Proven and Probable
Zone Tonnage
(000 t)
Grade
(g/t Au)
Grade
(% Cu)
Grade
(g/t Ag)
Contained
(000 oz Au)
Contained Metal
(t Cu)
Proven 51 1.35 1.10 30.70 2.2 563.1
Probable 793 2.62 0.60 5.94 66.8 4,794.6
Proven and Probable 844 2.54 0.63 7.43 69.0 5357.7

Notes:

  1. 1. CIM definitions were followed for Mineral Reserves and were prepared by G. Zandonai, a qualified person for the purposes of NI43-101, who is an employee of DGCS SA and is independent of the Company.
  2. 2. Mineral Reserves are estimated using copper equivalent cut-off grade of 1.0% CuEq. Copper equivalent cut-offs were calculated using recent operating results for recoveries, off-site concentrate costs, and on-site operating costs.
  3. 3. Mineral Reserves are estimated using average long-term prices of US$1,100 per ounce gold, US$2.75 per lb copper, and US$16.5 per ounce silver.
  4. 4. Numbers may not add due to rounding.
  5. 5. The mineral reserves at the LMZ have been based on processing by the CIL and flotation methods.

Certain material mined was transported to the waste dump or various stockpile locations. Certain oxide, transitional and sulphide materials that were above the specified cut-off grades were classified as either stockpile mineral resources or stockpile mineral reserves. A summary of the mineral resources and reserves stockpile estimates completed as part of the Company’s annual mineral reserve and resource estimates update process is provided in the tables below.

Stockpile Mineral Resources (exclusive of in-situ) – September 30, 2016
Don Mario
Measured
Location/Zone Tonnage
(000 t)
Grade
(g/t Au)
Grade
(% Cu)
Grade
(g/t Ag)
Contained
(000 oz Au)
Contained Metal
(t Cu)
DM1 (Oxide) 492 2.24 1.74 54.44 35.4 8,559.6
DM2 (Oxide Pre-strip) 278 1.90 1.98 17.94 17.0 5,508.8
DM3 (Dolomite Oxide) 190 1.89 1.96 21.62 11.5 3,724.0
Plant Stockpile (Oxide) 515 1.61 1.57 57.82 26.7 8,108.3
DM4 Stock Talco 506 1.61 2.38 63.51 26.2 12,067.4
DM5 (Dolomite Oxide) 202 1.86 1.64 48.66 12.1 3,314.4
DM6 (Tremolite Oxide) - - - - - -
Total 2,184 1.84 1.89 49.30 129.0 41,282.6

Notes to UMZ stockpile mineral resources:

  1. 1. CIM definitions were followed for Mineral Resources and were prepared by G. Zandonai, a qualified person for the purposes of NI43-101, who is an employee of DGCS SA and is independent of the Company.
  2. 2. Mineral resources contained in stockpiles are estimated at a Cu equivalent cut-off grade of 0.85% CuEq.
  3. 3. Mineral resources are estimated using a long-term gold price of US$1,300 per ounce, copper price of US$3.00 per pound and a silver price of US$18 per ounce.
  4. 4. Mineral resources contained in stockpiles are exclusive of In-situ Mineral Resources. Mineral Resources that are not mineral reserves do not have demonstrated economic viability. The UMZ Oxide Stockpile resources are currently not economically viable to process through the gravity flotation plant.
  5. 5. Numbers may not add due to rounding.
Stockpile Mineral Resources (exclusive of in-situ) – September 30, 2016
Don Mario Mine
Measured
Location/Zone Tonnage
(000 t)
Grade
(g/t Au)
Grade
(% Cu)
Grade
(g/t Ag)
Contained
(000 oz Au)
Contained Metal
(t Cu)
DM1OS (Transition
and Sulphide)
8 1.93 1.10 27.63 0.5 88.4
Plant deposit DPL2* 26 1.33 0.99 16.32 1.1 255.1
Plant Pushabck LMZ** 19 0.70 2.06 5.08 0.4 382.3
UMZ Tremolita* 160 2.18 1.65 16.90 11.2 2648.2
Total 212 1.94 1.59 16.20 13.2 3374.1

Notes:

  1. 1. CIM definitions were followed for Mineral Resources and were prepared by G. Zandonai, a qualified person for the purposes of NI43-101, who is an employee of DGCS SA and is independent of the Company.
  2. 2. Mineral Reserves are estimated using a copper equivalent cut-off grade of 1.0% CuEq. Copper equivalent cut-offs were calculated using recent operating results for recoveries, off-site concentrate costs, and on-site operating costs.
  3. 3. Mineral Reserves are estimated using average long-term prices of US$1,100 per ounce gold, US$2.75 per lb copper, and US$16.5 per ounce silver.
  4. 4. Numbers may not add due to rounding.
  5. 5. * UMZ stock for processing Flotation
  6. 6. ** LMZ Stock for processing by CIL