2014 Preliminary Economic Assessment of the Eagle Mountain
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PRELIMINARY ECONOMIC ASSESSMENT OF THE EAGLE MOUNTAIN SAPROLITE GOLD PROJECT, GUYANA for Report No. 977 A.C.A. Howe International Limited Toronto, Ontario, Canada Wm. Douglas Roy, M.A.Sc., P.Eng. Ian D. Trinder, M.Sc., P.Geo. Alex Lum, P.Eng. Mauritz Lundt, B.Eng., P.Eng. Effective Date: June 15, 2014 Signature Date: September 12, 2014 Effective Date: June 15, 2014 Signature Date: September 12, 2014 Report Number: 977 Client Reference: GOLDSOURCE MINES INC. PRELIMINARY ECONOMIC ASSESSMENT OF THE EAGLE MOUNTAIN SAPROLITE GOLD PROJECT, GUYANA Authors: Wm. Douglas Roy, M.A.Sc., P.Eng. “Signed and Sealed” Associate Mining Engineer _____________________ ACA Howe International Ian D. Trinder, M.Sc., P.Geo. “Signed and Sealed” Senior Geologist _____________________ ACA Howe International Alex Lum, P.Eng. “Signed and Sealed” Senior Metallurgist _____________________ Met-Solve Laboratories Inc. Mauritz Lundt, B.Eng., P.Eng. “Signed and Sealed” Senior Process Engineer _____________________ Sepro Mineral Systems 365 Bay Street, Suite 501, Toronto, ON, Canada, M5H2V1 (t) +1.416.368.7041, (f) +1.416.368.2579 Wingbury Courtyard Business Village, Upper Wingbury Farm, Wingrave, Aylesbury, Buckinghamshire, HP22 4LW, U.K. (t) +44.1442.873.398 website: www.acahowe.ca; www.acahowe.co.uk Office Locations: Toronto – London – Halifax TABLE OF CONTENTS 1 SUMMARY ......................................................................................................................................... 1 1.1 General ............................................................................................................................. 1 1.2 Geology and Mineral Resource Estimate ......................................................................... 3 1.3 Preliminary Economic Assessment (PEA) ....................................................................... 8 1.3.1 Mine Plan .................................................................................................................. 8 1.3.2 Metallurgy ................................................................................................................. 8 1.3.3 Processing ................................................................................................................. 9 1.3.4 Capital & Operating Costs ........................................................................................ 9 1.3.5 Pit Optimization and Production Scheduling .......................................................... 11 1.3.6 Production & Financial Model................................................................................ 11 1.3.7 PEA Sensitivity Analysis ........................................................................................ 13 1.4 Recommendations .......................................................................................................... 13 2 INTRODUCTION ............................................................................................................................. 16 2.1 Scope and Conduct ......................................................................................................... 18 2.2 Sources of Information ................................................................................................... 21 2.3 Units and Currency......................................................................................................... 22 3 RELIANCE ON OTHER EXPERTS .............................................................................................. 23 4 PROPERTY DESCRIPTION AND LOCATION .......................................................................... 23 4.1 Location .......................................................................................................................... 23 4.3 Property Description and Title ....................................................................................... 26 4.3.1 Eagle Mountain Property Description .................................................................... 26 4.3.2 Eagle Mountain Property History ........................................................................... 28 4.3.3 Current Ownership and Title .................................................................................. 28 4.3.4 Previous Ownership History - Stronghold/EMGC Joint Venture .......................... 30 4.4 Mineralization Location ................................................................................................. 33 4.5 Environmental Issues ..................................................................................................... 33 4.6 Required Permits ............................................................................................................ 33 5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE & PHYSIOGRAPHY ..................................................................................................................................... 34 6 PROPERTY HISTORY ................................................................................................................... 37 6.1 Eagle Mountain Property History .................................................................................. 37 6.1.1 Pre 1998 Exploration .............................................................................................. 37 6.1.2 Omai Gold Mines Ltd / Cambior 1998-2004 .......................................................... 38 6.1.3 Omai Gold Mines Ltd / IAMGOLD 2006-2009 ..................................................... 39 7 GEOLOGICAL SETTING AND MINERALIZATION ............................................................... 44 A.C.A. HOWE INTERNATIONAL LIMITED Report No. 977 Page | i of ix September 12, 2014 7.1 Regional Geology ........................................................................................................... 44 7.2 Eagle Mountain Property ............................................................................................... 46 7.2.1 Eagle Mountain Property Geology ......................................................................... 46 7.2.2 Eagle Mountain Property Structural Geology......................................................... 50 7.2.3 Eagle Mountain Property Mineralization and Alteration........................................ 54 8 DEPOSIT TYPES ............................................................................................................................. 60 9 EXPLORATION ............................................................................................................................... 61 9.1 EMGC Exploration 2010 - 2013 .................................................................................... 61 9.1.1 2011 Infrastructure Improvements .......................................................................... 61 9.1.2 2012 Lidar Survey................................................................................................... 61 9.1.3 2010-2014 Environmental Data Collection ............................................................ 61 9.1.4 Line Cutting and Surveying .................................................................................... 61 9.1.5 2011 Trench & Outcrop Channel Sampling ........................................................... 62 9.1.6 2011 Drill Program ................................................................................................. 63 9.1.7 Bulk Density Data ................................................................................................... 63 9.2 Goldsource Exploration 2013-2014 ............................................................................... 64 10 DRILLING ......................................................................................................................................... 65 10.1 Historic Drilling .......................................................................................................... 65 10.1.1 General Core Handling, Logging and Sampling Methods and Approach .............. 66 10.2 Stronghold/EMGC (Goldsource subsidiary) 2011 Diamond Drill Program .............. 67 10.2.1 2011 General Drill Hole, Core Handling, Logging and Sampling Methods and Approach ............................................................................................................................... 71 11 SAMPLE PREPARATION, ANALYSES AND SECURITY ....................................................... 74 11.1 Sample Security .......................................................................................................... 74 11.1.1 Historic Work.......................................................................................................... 74 11.1.2 2011-2012 Stronghold/EMGC (Goldsource subsidiary) Exploration Programs .... 74 11.2 Sample Preparation and Analyses .............................................................................. 75 11.2.1 Historic Work.......................................................................................................... 75 11.2.2 2011-2012 Stronghold/EMGC (Goldsource subsidiary) Exploration Programs .... 75 11.3 QUALITY ASSURANCE AND QUALITY CONTROL ......................................... 79 12 DATA VERIFICATION ................................................................................................................... 85 12.1 ACA Howe 2010 Site Visit ........................................................................................ 85 12.2 ACA Howe 2012 Site Visit .......................................................................................