Media Luna

Media Luna: Defining Our Second Mine

The Media Luna deposit, hosted in a magnetic anomaly south of the Balsas River, was discovered in March of 2012 and has current inferred resources of 7.4 million gold equivalent ounces at a grade of 4.48 g/t. This resource is contained in less than 30% of the area of the targeted magnetic anomalies. The conceptual design contained in a positive PEA announced in July of 2015 envisions an underground operation with expected average annual production of 313,000 ounces of gold equivalent at an average AISC of US$636/oz.

Conceptual Design Summary

The concept for recovery of the Media Luna resource is through underground mining methods at 7,000 t/d with the mineralized material being transported via a hybrid underground / aerial / underground rope conveyor to the ELG processing plant. Processing to produce both a Copper/Gold/Silver concentrate as well as dore bars would be completed using the existing plant and through a circuit to be added for flotation and concentrate handling. Tailings required for paste backfill would be transported back to the underground mine utilizing the same rope conveyor that transported the mineralized material to the processing facility. Production at the ELG mine would continue at 14,000 t/d with the higher grade 7,000 tonnes directed to the processing plant and the lower grade 7,000 tonnes directed to stockpile for processing in the future. Development of the Media Luna resource would take place over a four year period, with capital for the construction of the processing plant additions delayed until the latter two years.

Additional technical information is contained in the technical report entitled "Morelos Gold Property, NI 43-101 Technical Report, El Limón Guajes Mine Plan and Media Luna Preliminary Economic Assessment, Guerrero State, Mexico" dated effective August 17, 2015, and filed on September 3, 2015 (the "Technical Report"). The technical information contained in this presentation is based upon the information contained in the Technical Report which is available on SEDAR as www.sedar.com

Media Luna Resource Area

Media Luna Resource Area

Media Luna Deposit Inferred Mineral Resource Estimate at a 2.0 g/t Au Eq. Cut-off Grade.



Deposit Resource
Category
Tonnes
(Mt)
Gold Eq.
Grade
g/t
Contained Gold Eq.
(Moz)
Gold
Grade
(g/t)
Contained Gold
(Moz)
Silver
Grade
g/t
Contained Silver
(Moz)
Copper
Grade
%
Contained Copper
(Mlb)
Media Luna Inferred 51.5 4.48 7.42 2.40 3.98 26.59 44.02 0.99 1,128.50
    Notes to accompany mineral resource tables
  1. The qualified person for the estimate is Mark Hertel, RM SME, an Amec Foster Wheeler employee. The estimate has an effective date of June 23, 2015.
  2. Au Equivalent (AuEq) = Au (g/t) + Cu % *(79.37/47.26) + Ag (g/t) * (0.74/47.26)
  3. Mineral Resources are reported using a 2 g/t Au Eq. grade
  4. Mineral Resources are reported as undiluted; grades are contained grades
  5. Mineral Resources are reported using a long-term gold price of US$1470/oz, silver price of US$23.00/oz, and copper price of US$3.60/lb. The metal prices used for the Mineral Resources estimates are based on Amec Foster Wheeler's internal guidelines which are based on long-term consensus prices. The assumed mining method is underground, costs per tonne of mineralized material, including mining, milling, and general and administrative used were US$50 per tonne to US$60 per tonne. Metallurgical recoveries average 88% for gold and 70% for silver and 92% for copper.
  6. Inferred blocks are located within 110 m of two drill holes, which approximates a 100 m x 100 m drill hole grid spacing
  7. Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade, and contained metal content

Media Luna PEA Financial Highlights (LOM Metal Prices - US$1,200/oz. Au, US$3.00/lb. Cu, US$20.00/oz. Ag)



After Tax IRR 24.6%
After Tax NPV @ 5% US$729 M
After Tax NPV @ 8% US$488 M
Cumulative Cash Flow US$1,402 M
CAPEX Payback 3.7 years
Mine Life 13 years
2021 EBIDA (First Year Of Full Production) US$225 M

The preliminary economic assessment is preliminary in nature, and is based on inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Media Luna Resource Exploitation - PEA Conceptual Operational Performance Highlights (LOM Metal Prices - US$1,200/oz. Au, US$3.00/lb. Cu, US$20.00/oz. Ag)



Start Underground Development Q1 2016
Start Production Q1 2020
Achieve Full Production Run Rate Q3 2020
Mine life 13 years
Average Annual Production:
Gold Equivalent Ounces 313,000
Gold Ounces 170,000
Silver Ounces 1,697,000
Copper Pounds 46,425,000
Average Cash Cost Per Gold Equivalent Ounce US$571.88
Average Cash Cost Per Gold Ounce, Net Of By-Product Credits US$39.72
Average AISC Per Gold Equivalent Ounce US$636.07
Average AISC Per Gold Ounce, Net Of By-Product Credits US$158.31
Project CAPEX: Total US$481.8 M
Year 1 US$58.6 M
Year 2 US$75.5 M
Year 3 US$133.7 M
Year 4 US$214.0 M
Sustaining CAPEX US$109.0 M
Processing Plant Recoveries:
Gold 88%
Silver 89%
Copper 90%
Processing Plant Head Grades:
Gold 2.56 g/t
Silver 27.43 g/t
Copper 1.03 %
Mineral Resources @ 2.0 Au Eq. g/t cut-off 51.5 Mt at 4.48 Au Eq. g/t
Mineral Resource included in the PEA mine plan 31 Mt at 4.77 Au Eq. g/t

The following is the projected gold equivalent production for the property over the expected life of the mines, and the potential contribution from each of the ELG Mine and Media Luna Project (as contemplated in the PEA).

ELG 2015 LOM Plan Production From Proven and Probable Reserves ELG 2015 LOM Plan Production From Proven and Probable Reserves
(assuming Media Luna proceeds as contemplated in the PEA)
ML PEA Conceptual Production Contribution From Inferred Resource
Au Eq. payable K Ozs Au Eq. payable K Ozs Au Eq. payable K Ozs
2015 10 10 -
2016 279 279 -
2017 391 391 -
2018 329 329 -
2019 315 315 -
2020 337 252 372
2021 342 262 390
2022 390 278 345
2023 541 368 325
2024 413 316 319
2025 300 332 359
2026 - 100 340
2027 - 99 311
2028 - 99 294
2029 - 99 289
2030 - 99 290
2031 - 18 291
2032 - - 140
Total 3,645 3,645 4,091

Assumed metal prices over life of mine: Gold: US$1,200/oz -- Silver US$20/oz -- Cu US$3/lb
The preliminary economic assessment is preliminary in nature, and is based on inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.