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Pre - Feasibility Study Technical Report on the Magino Project, Wawa, Ontario, Canada Effective Date: January 18, 2016 Report Date: February 22, 2016

Prepared for:

Argonaut Gold Inc. 9600 Prototype Court Reno, NV 89521 USA

Qualified Persons Company Michael Makarenko, P. Eng. JDS Energy & Mining Inc. Dino Pilotto, P. Eng. JDS Energy & Mining Inc. Kelly McLeod, P. Eng. JDS Energy & Mining Inc. Ali Sheykholeslami, P. Eng. JDS Energy & Mining Inc. Khosrow Aref, P. Eng. Rockland Ltd. Mike Lechner, P. Geo. Resource Modeling Inc. David Salari, P. Eng. D.E.N.M. Engineering Ltd. Ian Hutchison, PE SLR International Corp.

VANCOUVER | TORONTO | KELOWNA | WHITEHORSE | YELLOWKNIFE | TUCSON | HERMOSILLO

A RGONAUT GOLD INC. M AGINO PRE-FEASIBILITY STUDY TECHNICAL R EPORT

Date and Signature Page

This report entitled Revised Pre-Feasibility Study Technical Report for the Magino Project, Wawa, Ontario, effective as of XXX was prepared and signed by the following authors:

Original document signed and sealed by: “Michael Makarenko” February 22, 2016 Michael Makarenko, P. Eng. Date Signed

Original document signed and sealed by: “Dino Pilotto” February 22, 2016 Dino Pilotto, P. Eng. Date Signed

Original document signed and sealed by: “Kelly McLeod” February 22, 2016 Kelly McLeod, P. Eng. Date Signed

Original document signed and sealed by: “Ali Sheykholeslami” February 22, 2016 Ali Sheykholeslami, P. Eng. Date Signed

Original document signed and sealed by: “Mike Lechner” February 22, 2016 Mike Lechner, P. Geo Date Signed

Original document signed and sealed by: “Khosrow Aref” February 22, 2016 Kosrow Aref, P. Eng. Date Signed

Original document signed and sealed by: “David Salari” February 22, 2016 David Salari, P. Eng. Date Signed

Original document signed and sealed by: “Ian Hutchison” February 22, 2016 Ian Hutchison, PE Date Signed

Effective Date: January 18, 2016 i

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NOTICE JDS Energy & Mining, Inc. prepared this National Instrument 43-101 Technical Report, in accordance with Form 43-101F1, for Argonaut Gold Inc.. The quality of information, conclusions and estimates contained herein is based on: (i) information available at the time of preparation; (ii) data supplied by outside sources, and (iii) the assumptions, conditions, and qualifications set forth in this report. Argonaut Gold Inc. filed this Technical Report with the Canadian Securities Regulatory Authorities pursuant to provincial securities legislation. Except for the purposes legislated under provincial securities law, any other use of this report by any third party is at that party’s sole risk.

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Contents

1 Executive Summary ...... 1-1 1.1 Introduction ...... 1-1 1.2 Property Description and Ownership ...... 1-1 1.3 Geology and Mineralization ...... 1-2 1.4 History, Exploration and Drilling ...... 1-2 1.5 Mineral Processing and Metallurgical Testing ...... 1-3 1.6 Mineral Resource Estimate ...... 1-4 1.7 Mineral Reserve Estimate ...... 1-6 1.8 Mining ...... 1-7 1.8.1 Open Pit Mine Plan and Phasing ...... 1 - 7 1.8.2 Mine Schedule and Operations ...... 1-10 1.8.3 Waste Management ...... 1-12 1.9 Recovery Methods ...... 1-12 1.10 Project Infrastructure ...... 1-12 1.11 Environment Assessment and Permitting ...... 1-13 1.12 Capital and Operating Costs ...... 1-14 1.12.1 Capital Costs ...... 1-14 1.12.2 Operating Costs ...... 1-15 1.13 Economic Analysis ...... 1-15 1.14 Conclusions ...... 1-18 1.15 Recommendations ...... 1-18 2 Introduction ...... 2-1 2.1 Basis of Technical Report ...... 2-1 2.2 Scope of Work ...... 2-1 2.3 Qualified Person Responsibilities and Site Inspections ...... 2-3 2.4 Sources of Information ...... 2-4 3 Reliance on Other Experts ...... 3-1 4 Property Description and Location ...... 4-1 4.1 Location ...... 4-1 4.2 Mineral Titles ...... 4-1 4.3 Royalties, Agreements and Encumbrances ...... 4-8 4.4 Environmental Liabilities and Permitting ...... 4-9 4.4.1 Environmental Liabilities ...... 4-9 4.4.2 Status of Environmental Approvals and Permits ...... 4-9 4.5 Other Significant Factors and Risks ...... 4-13 5 Accessibility, Climate, Local Resources, Infrastructure & Physiography 5-1 5.1 Accessibility ...... 5-1 5.2 Climate ...... 5-1 5.3 Physiography ...... 5 - 1 5.4 Local Resources...... 5-4

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5.5 Infrastructure ...... 5-4 5.5.1 Power ...... 5-4 5.5.2 Water ...... 5-4 5.5.3 Mining Personnel ...... 5-5 5.5.4 Historic Tailings Management Facility ...... 5-5 5.5.5 Potential Tailings Management Areas ...... 5-5 5.5.6 Potential Waste Disposal Areas ...... 5-5 5.5.7 Potential Processing Plant Sites ...... 5-6 6 History ...... 6-1 6.1 Ownership ...... 6-3 6.2 Historic Mineral Resource Estimates ...... 6-4 6.3 Historical Production ...... 6-6 7 Geological Setting and Mineralization...... 7-1 7.1 Archean Superior Province ...... 7-1 7.2 Wawa Subprovince ...... 7-2 7.3 Michipicoten Greenstone Belt ...... 7-4 7.4 Geology of the Magino Mine Area ...... 7-5 7.5 Gold Mineralization ...... 7-8 7.6 Structures Associated with Gold Mineralization ...... 7-10 8 Deposit Types ...... 8-1 9 Exploration ...... 9-1 10 Drilling ...... 10-1 10.1 Type and Extent of Drilling ...... 10-1 10.2 Drilling Procedures ...... 10-2 10.2.1 2006 ...... 10-2 10.2.2 2007 ...... 10-3 10.2.3 2010 ...... 10-3 10.2.4 2011-2015 ...... 10-3 10.3 Interpretation of Results ...... 10-4 10.4 Drilling, Sampling, and Recovery Factors ...... 10-4 10.5 Relationship Between Sample Length and True Thickness ...... 10-5 11 Sample Preparation, Analyses and Security ...... 11-1 11.1 Sample Security ...... 11-1 11.2 Sample Selection/Transportation ...... 11-1 11.3 Laboratory Facilities ...... 11-2 11.3.1 Activation Laboratories Ltd...... 11-2 11.3.2 ALS Chemex ...... 11-3 11.4 Sample Splitting and Reduction ...... 11-3 11.4.1 Activation Laboratories ...... 11-3 11.4.2 ALS Chemex ...... 11-3 11.5 Analytical Procedures ...... 11-3 11.5.1 Activation Laboratories ...... 11-3 11.5.2 ALS Chemex ...... 11-4 11.6 2015 QA/QC Results ...... 11-5

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11.6.1 2015 Au Blank Performance ...... 11-6 11.6.2 Performance of Low-Grade Au SRM's Submitted in 2015 ...... 11-6 11.6.3 Performance of Medium-Grade Au SRM's Submitted in 2015 ...... 11-7 11.6.4 Performance of High-Grade Au SRM's Submitted in 2015 ...... 11-10 11.6.5 Duplicate Sample Results for 2015 ...... 11-13 11.7 Qualified Person's Comments ...... 11-14 12 Data Verification ...... 12-1 12.1 Pre-2006 Drill Hole Data ...... 12-1 12.2 Prior Data Verification Efforts ...... 12-1 12.3 2015 Data Verification ...... 12-1 12.4 QP's Opinion ...... 12-2 13 Mineral Processing and Metallurgical Testing ...... 13-1 13.1 Summary of Metallurgical Testing – Preliminary Prefeasibility Study – January 30, 2014 ...... 13-1 13.2 Summary of Metallurgical Testing – Phase 2 – 2015 Update ...... 13-1 13.3 MLI Testing 2015 ...... 13-3 13.3.1 Objectives for the 2015 Test Program ...... 13-3 13.3.2 Ore Grade Composites Head Analysis ...... 13-3 13.4 MLI 2015 – Air and Oxygen Sparging Testwork – Phase 3 ...... 13-24 13.5 Conclusions – Updated Testwork - MLI 2015 ...... 13-30 14 Mineral Resource Estimate ...... 14-1 14.1 Introduction ...... 14-1 14.2 Drill Hole Assay Statistics ...... 14-1 14.3 High-Grade Outlier Treatment ...... 14-1 14.4 Drill Hole Compositing ...... 14-4 14.5 Spatial Analysis - Variography ...... 14-4 14.6 Digital Data ...... 14-6 14.6.1 Topography ...... 14-6 14.6.2 Geologic Data ...... 14-7 14.6.3 Underground Workings ...... 14-7 14.6.4 Land Ownership ...... 14-7 14.6.5 Lakes ...... 14-7 14.7 Block Model Construction ...... 14-7 14.7.1 Model Extents ...... 14-7 14.7.2 Model Coding ...... 14-8 14.7.3 Bulk Density ...... 14-10 14.8 Block Gold Grade Estimation ...... 14-11 14.9 Model Validation ...... 14-15 14.10 Resource Classification ...... 14-17 14.11 Mineral Resources ...... 14-18 14.12 General Discussion ...... 14-20 15 Mineral Reserve Estimates ...... 15-1 15.1 Introduction ...... 15-1 15.2 Open Pit Mineral Reserves ...... 15-2 15.2.1 Open Pit Mineral Reserve Basis of Estimate ...... 15-2

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15.2.2 Mining Method and Mining Costs ...... 15-2 15.2.3 Dilution ...... 15-2 15.2.4 Geotechnical Considerations ...... 15-3 15.2.5 Lerchs-Grossman Optimization ...... 15-4 15.2.6 Cut-Off Grade and Resource Classification Criteria ...... 15-5 15.2.7 Mine Design ...... 15-6 16 Mining Methods ...... 16-1 16.1 Introduction ...... 16-1 16.2 Open Pit Mining ...... 16-1 16.2.1 Open Pit Planning ...... 16-1 16.3 Geotechnical Criteria ...... 16-3 16.3.1 Pit Geotechnical Characterization ...... 16-3 16.3.2 Pit Slope Stability ...... 16-4 16.4 Open Pit Optimization ...... 16-7 16.5 Open Pit Mine Design ...... 16-12 16.6 Mine Production Schedule ...... 16-16 16.6.1 Material Movement ...... 16-16 16.6.2 Open Pit Development ...... 16-31 16.7 Mine Equipment Requirements ...... 16-31 16.7.1 General Operating Parameters ...... 16-32 16.7.2 Blasthole Drilling, Grade Control Program and Blasting ...... 16-33 16.7.3 Loading ...... 16-35 16.7.4 Hauling ...... 16-36 16.7.5 Support/Ancillary Equipment ...... 16-37 16.8 Mine Maintenance ...... 16-38 16.9 Mine Personnel and Organization Structure ...... 16-39 16.9.1 Basis ...... 16-39 16.9.2 Personnel Levels and Structure ...... 16-39 17 Recovery Methods ...... 17-1 17.1 Summary ...... 17-1 17.2 Plant Design ...... 17-4 17.2.1 Design Criteria ...... 17-4 17.2.2 Operating Schedule and Availability ...... 17-5 17.3 Process Plant Description ...... 17-5 17.3.1 Primary Crushing...... 17-5 17.3.2 Crushed Rock Stockpile and Reclaim ...... 17-6 17.3.3 Grinding Circuit ...... 17-6 17.3.4 Pre-leach Thickener ...... 17-7 17.3.5 Leach Circuit ...... 17-8 17.3.6 CIP Circuit ...... 17-8 17.3.7 CIC Circuit ...... 17-9 17.3.8 Carbon Acid Wash, Elution, and Regeneration ...... 17-10 17.3.9 Electrowinning and Refinery ...... 17-12 17.3.10 Tailings Wash Thickeners ...... 17-13 17.3.11 Cyanide Detoxification ...... 17-13

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17.3.12 Tailings Handling & Reclaim ...... 17-14 17.3.13 Reagent Handling and Storage ...... 17-14 17.3.14 Water Supply ...... 17-15 17.3.15 Air Supply ...... 17-15 17.3.16 Sample Analysis ...... 17-16 18 Project Infrastructure ...... 18-1 18.1 Road and Railway Access ...... 18-3 18.1.1 Access Road ...... 18-3 18.1.2 Public By-Pass Road ...... 18-3 18.1.3 Haul and Service Roads ...... 18-3 18.1.4 Railway Access ...... 18-3 18.2 Site Geotechnical Conditions ...... 18-4 18.3 Foundations ...... 18-4 18.3.1 Light Buildings ...... 18-5 18.3.2 Heavy Industrial Facilities ...... 18-5 18.3.3 Light Industrial Facilities ...... 18-6 18.4 Power Supply ...... 18-6 18.4.1 Main Substation...... 18-7 18.4.2 Site Power Distribution ...... 18-7 18.4.3 On-Site Power Lines ...... 18-7 18.4.4 Back-up Power ...... 18-8 18.5 Water Management ...... 18-8 18.5.1 Water Management Plan ...... 18-8 18.5.2 Project Water Balance ...... 18-11 18.6 Waste Management ...... 18-16 18.6.1 Waste Rock Management ...... 18-16 18.6.2 Tailings Management ...... 18-19 18.7 Plant Site Facilities ...... 18-22 18.7.1 Crushing and Coarse Ore Stockpile...... 18-24 18.7.2 Mill Building ...... 18-28 18.7.3 Pebble Crusher Installation ...... 18-31 18.7.4 Assay Laboratory ...... 18-33 18.7.5 Warehouse & Maintenance Shop Building ...... 18-33 18.7.6 Administration, Security and First Aid Buildings ...... 18-33 18.8 Ancillary Facilities ...... 18-33 18.8.1 Truck Shop ...... 18-33 18.8.2 Detonator and Explosives Facilities ...... 18-34 18.8.3 Fuel Storage ...... 18-34 18.8.4 Permanent Camp and Mine Dry ...... 18-34 18.8.5 Communications Systems ...... 18-34 18.9 Sewage Collection and Treatment ...... 18-34 19 Market Studies and Contracts ...... 19-1 19.1 Market Studies ...... 19-1 19.1.1 Gold ...... 19-1 19.2 Contracts ...... 19-1

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19.3 Royalties ...... 19-1 19.4 Metal Prices ...... 19-1 20 Environmental Studies, Permitting and Social or Community Impact ... 20-1 20.1 Factors Related to the Project ...... 20-1 20.2 Environmental Study Results ...... 20-3 20.2.1 Climate ...... 20-3 20.2.2 Air Quality ...... 20-4 20.2.3 Noise ...... 20-5 20.2.4 Surficial Geology ...... 20-5 20.2.5 Soils ...... 20-8 20.2.6 Ecosystems ...... 20-8 20.2.7 Vegetation ...... 20-8 20.2.8 Wildlife ...... 20-9 20.2.9 Surface Hydrology ...... 20-9 20.2.10 Surface Water Quality ...... 20-10 20.2.11 Hydrogeology ...... 20-11 20.2.12 Aquatic Resources ...... 20-11 20.2.13 Archaeological Resources ...... 20-13 20.3 Environmental Issues ...... 20-13 20.4 Closure Planning ...... 20-14 20.4.1 Post-Performance and Reclamation Bonds ...... 20-14 20.5 Social and Community ...... 20-15 20.5.1 Community of Dubreuilville ...... 20-15 20.5.2 Community of Wawa ...... 20-16 20.5.3 Community of White River ...... 20-18 20.6 First Nations and Métis Communities ...... 20-19 20.6.1 Michipicoten First Nation ...... 20-19 20.6.2 Missanabie Cree First Nation ...... 20-21 20.6.3 Métis Nation of Ontario ...... 20-22 20.6.4 Pic Mobert First Nation ...... 20-22 20.6.5 Red Sky Metis Independent Nation...... 20-23 20.6.6 Batchewana First Nation ...... 20-23 20.7 Mine Closure ...... 20-24 20.7.1 Historic Mine Facility ...... 20-24 20.7.2 Project Closure ...... 20-25 20.8 Required Permits and Status ...... 20-29 20.8.1 Environmental Compliance Approvals ...... 20-33 20.8.2 Permits ...... 20-34 21 Capital Costs ...... 21-1 21.1 Summary of Capital Cost Estimates ...... 21-1 21.2 Basis for Capital Cost Estimates ...... 21-4 21.2.1 Basis of Cost Estimate for the Ore Handling, Process Plant, Infrastructure and Tailings ...... 21-4 21.2.2 Mining ...... 21-6 21.2.3 On-Site Development ...... 21-7 21.2.4 Ore Crushing and Handling and Process Plant ...... 21-7

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21.2.5 Infrastructure ...... 21-8 21.2.6 Indirect Costs ...... 21-9 21.2.7 Engineering, Procurement, and Construction Management (EPCM) ...... 21-11 21.2.8 Owner’s Costs ...... 21-12 21.2.9 Contingency ...... 21-12 21.2.10 Sustaining Capital ...... 21-13 21.2.11 Closure Cost Estimate ...... 21-13 21.2.12 Tailings Management Facility ...... 21-14 21.2.13 Low-Grade Ore Stockpile(s) ...... 21-14 21.2.14 Waste Rock Management Facility...... 21-14 21.2.15 Miscellaneous Site Closure Allowances ...... 21-14 21.2.16 Capital Cost Exclusions ...... 21-14 22 Operating Cost Estimates ...... 22-1 22.1 Summary of Operating Cost Estimates ...... 22-1 22.2 Basis for Operating Cost Estimates ...... 22-2 22.2.1 G&A Operating Costs ...... 22-2 22.2.2 Mill Operating Costs ...... 22-4 22.2.3 Mine Operating Costs ...... 22-6 23 Economic Analysis ...... 23-1 23.1 Assumptions ...... 23-1 23.2 Revenues and NSR Parameters ...... 23-2 23.3 Taxes ...... 23-4 23.4 Economic Results ...... 23-4 23.5 Sensitivities ...... 23-11 24 Adjacent Properties ...... 24-1 25 Other Relevant Data and Information ...... 25-1 26 Interpretations and Conclusions ...... 26-1 26.1 Risks ...... 26-1 26.2 Opportunities ...... 26-4 27 Recommendations ...... 27-1 28 Units of Measure, Calculations & Abbreviations ...... 28-1 29 References ...... 29-1

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Tables and Figures

Table 1.1: Selected General Process Design Criteria ...... 1-4 Table 1.2: Conceptual Pit Parameters for Resource Estimate ...... 1-5 Table 1.3: Magino Undiluted Mineral Resources (inclusive of Mineral Reserves) ...... 1-6 Table 1.4: Mineral Reserve Estimate ...... 1-6 Table 1.5: Magino Mine Design Criteria ...... 1-9 Table 1.6: Proposed Mining Plan ...... 1-10 Table 1.7: Total Mine and Mill Production Schedule ...... 1-11 Table 1.8: Summary of Life of Mine Capital Costs...... 1-14 Table 1.9: LOM Total Operating Cost Estimate ...... 1-15 Table 1.10: Unit Operating Cost Estimate ...... 1-15 Table 1.11: LOM Plan Summary ...... 1-16 Table 1.12: Summary of Results ...... 1-17 Table 1.13: Sensitivity Results for Base Case Scenario ($1,200/oz Au, 0.78 F/X Rate) ...... 1-18 Table 2.1: Qualified Person Responsibilities ...... 2-3 Table 4.1: Project Area Dispositions ...... 4-2 Table 4.2: Description of the Mining Title Types in Ontario ...... 4-4 Table 4.3: Property Mineral Claims - Lease CLM 520 ...... 4-5 Table 4.4 Magino Property – Unpatented Mining Claims (UMC)...... 4-6 Table 4.5 Magino Property – Leases and Patented Claims ...... 4-7 Table 4.6: Federal Approvals and Permits ...... 4-11 Table 4.7: Provincial Approvals and Permits ...... 4-12 Table 6.1: Historical Work Summary for the Property ...... 6-2 Table 6.2: Historical Measured and Indicated Mineral Resource Estimates ...... 6-5 Table 6.3: Historical Inferred Mineral Resource Estimates ...... 6-6 Table 10.1: Magino Drilling Data by Type/Campaign ...... 10-1 Table 10.2: Magino Drilling Data by Year ...... 10-2 Table 10.3: Relevant 2015 Gold Drill Hole Intercepts ...... 10-6 Table 13.1: Selected General Design Criteria –2015 ...... 13-2 Table 13.2: Gold Head Assay Results and Head Grade Comparisons ...... 13-4 Table 13.3: Head Assay and Cyanide Solubility Results – Magino Ore Grade Composites ...... 13-5 Table 13.4: Gold Summary Metallurgical Results ...... 13-6 Table 13.5: Gold Summary Metallurgical Results ...... 13-7 Table 13.6: Gold Summary Metallurgical Results ...... 13-8 Table 13.7: Gold and Silver Summary E-GRG Test Results ...... 13-9 Table 13.8: Extended Gravity Recoverable Gold (E-GRG) Test Results ...... 13-10 Table 13.9: Gravity Concentration Test Results ...... 13-11 Table 13.10: Gravity Concentration Test Results ...... 13-11 Table 13.11: Gravity Concentration Test Results ...... 13-11 Table 13.12: Combined Metallurgical Results, Gravity Cyanide Optimization Tests ...... 13-25 Table 13.13: Summary of Test Results ...... 13-29 Table 14.1: Gold Assay Statistics by Select Lithologies ...... 14-2 Table 14.2: Gold Assay Statistics by Estimation Domain ...... 14-3 Table 14.3: Gold Assay Distribution by Deciles and Percentiles ...... 14-1

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Table 14.4: Metal Loss by Grade Capping ...... 14-3 Table 14.5: Magino Block Model Setup – 5 m x 5 m x 5 m Model ...... 14-8 Table 14.6: Bulk Density Values in Model ...... 14-11 Table 14.7: Inverse Distance Cubed Estimation Parameters ...... 14-15 Table 14.8: Global Bias Checks ...... 14-15 Table 14.9: Conceptual Resource Pit Parameters ...... 14-18 Table 14.10: Undiluted Mineral Resources ...... 14-19 Table 15.1: Summary of Mineral Reserves ...... 15-2 Table 15.2: Open Pit Dilution Estimate ...... 15-3 Table 15.3: Optimization Parameters ...... 15-5 Table 15.4: Pit Design Parameters ...... 15-6 Table 16.1: Pre-Feasibility BFA and IRA ...... 16-6 Table 16.2: Pit Optimization Results ...... 16-8 Table 16.3: Open Pit and Phase Design Summary ...... 16-12 Table 16.4: Open Pit Production Schedule – Magino Project ...... 16-17 Table 16.5: LOM Schedule by Phase ...... 16-22 Table 16.6: Initial Primary Open Pit Mining Equipment ...... 16-32 Table 16.7: Availability, Target Use of Availability, and Effective Utilization of Major Equipment ...... 16-33 Table 16.8: Drilling Parameters ...... 16-33 Table 16.9: Blasting Parameters ...... 16-35 Table 16.10: Loading Unit Productivity ...... 16-36 Table 16.11: Haulage Cycle Parameters ...... 16-37 Table 17.1: Key Process Design Criteria ...... 17-4 Table 18.1: Summarized Electrical Load List ...... 18-6 Table 18.2: Average Annual Water Balance ...... 18-12 Table 19.1: Metal Price and Foreign Exchange Rate Used in Economic Analysis Scenarios ...... 19-2 Table 20.1: Potential Environmental Effects and Mitigation Measures ...... 20-2 Table 20.2: Preliminary List of Required Federal Approvals and Permits ...... 20-30 Table 20.3: Preliminary List of Required Provincial Approvals and Permits ...... 20-31 Table 21.1: Summary of Capital Costs by Category ...... 21-2 Table 21.2: Summary of Capital Cost Distribution ...... 21-2 Table 21.3: Waste Factors ...... 21-5 Table 21.4: Facility Cost Basis ...... 21-6 Table 21.5: On-Site Development Cost Estimate (WBS 1000) ...... 21-6 Table 21.6: On-Site Development Cost Estimate (WBS 2000) ...... 21-7 Table 21.7: Ore Crushing & Handling and Process Plant Cost Estimate (WBS 3000 & 4000) ...... 21-7 Table 21.8: On-Site Infrastructure Capital Cost Estimate (WBS 6000) ...... 21-8 Table 21.9: Tailings Storage Facility Capital Cost Estimate (WBS 7000) ...... 21-9 Table 21.10: Indirect Capital Cost Estimate (WBS 9000) ...... 21-9 Table 21.11: EPCM Capital Cost Estimate (WBS 10000) ...... 21-11 Table 21.12: Owner's Cost Estimate (WBS 11000) ...... 21-12 Table 21.13: Contingency Costs (WBS 12000) ...... 21-13 Table 21.14: Closure Costs ...... 21-13 Table 22.1: LOM Total Operating Costs ...... 22-1 Table 22.2: Unit Operating Cost ...... 22-2 Table 22.3: G&A Labour Staffing Schedule ...... 22-3

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Table 22.4: Mill Operations Labour Staffing Schedule ...... 22-5 Table 22.5: Support Equipment ...... 22-6 Table 22.6: Open Pit Operating Cost Estimate – by Function ...... 22-7 Table 22.7: Open Pit Operating Cost Estimate – by Category ...... 22-7 Table 22.8: Summary of Mining Costs by Year ...... 22-8 Table 22.9: Open Pit Operating Cost Details ...... 22-9 Table 22.10: Open Pit Operating Unit Costs ...... 22-10 Table 22.11: Open Pit Equipment Effective Utilization ...... 22-10 Table 22.12: Open Pit Equipment Hours ...... 22-11 Table 23.1: LOM Plan Summary ...... 23-1 Table 23.2: Metal Price and Foreign Exchange Rates Used in Economic Analysis Scenarios ...... 23-2 Table 23.3: NSR Parameters Used in Economic Analysis ...... 23-3 Table 23.4: Summary of Results (Base Case, $1,200/oz Au, 0.78 F/X Rate) ...... 23-5 Table 23.5: Summary of Results ($1,200/oz Au, 0.74 F/X Rate) ...... 23-7 Table 23.6: Summary of Results ($1,200/oz Au, 0.70 F/X Rate) ...... 23-9 Table 23.7: Sensitivity Results (Base Case, $1,200/oz Au, 0.78 F/X Rate) ...... 23-11 Table 23.8: Project Sensitivity to Au Price (Base Case, $1,200/oz, 0.78 F/X Rate) ...... 23-12 Table 23.9: Project Sensitivity to Discount Rate (Base Case, $1,200/oz, 0.78 F/X Rate) ...... 23-12 Table 23.10: Sensitivity Results ($1,200/oz Au, 0.74 F/X Rate) ...... 23-13 Table 23.11: Project Sensitivity to Au Price ($1,200/oz, 0.74 F/X Rate) ...... 23-14 Table 23.12: Project Sensitivity to Discount Rate ($1,200/oz, 0.74 F/X Rate) ...... 23-14 Table 23.13: Sensitivity Results ($1,200/oz Au, 0.70 F/X Rate) ...... 23-14 Table 23.14: Project Sensitivity to Au Price ($1,200/oz, 0.70 F/X Rate) ...... 23-15 Table 23.15: Project Sensitivity to Discount Rate ($1,200/oz, 0.70 F/X Rate) ...... 23-15 Table 26.1: Main Project Risks ...... 26-2 Table 26.2: Identified Project Opportunities ...... 26-5 Table 27.1: Cost Estimate to Advance Magino to FS Stage ...... 27-1 Table 28.1: Units of Measure ...... 28-1 Table 28.2: Abbreviations & Acronyms ...... 28-2

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Figure 1.1: Magino Project Site Plan ...... 1-8 Figure 4.1: Location Map of the Magino Property in Ontario ...... 4-1 Figure 4.2: Claim Map of the Magino Property ...... 4-3 Figure 5.1: Accessibility of the Magino Property ...... 5-2 Figure 5.2: Topography of the Magino Property ...... 5-3 Figure 7.1: Tectonic Subdivisions of the Superior Province of Northern Ontario ...... 7-1 Figure 7.2: Major Geological Elements of the Eastern Wawa Subprovince ...... 7-3 Figure 7.3: Mineral Belts in the Michipicoten-Shebandowan Region of the Wawa Subprovince ...... 7-4 Figure 7.4: Magino Site Geology ...... 7-7 Figure 7.5: Historical G Zone in the 24+75E Drift ...... 7-9 Figure 7.6: Gold-Bearing Veins on the Face of the 23+80E Drift ...... 7-10 Figure 8.1: Schematic Diagram Illustrating the Inferred Crustal Levels of Gold Deposition ...... 8-1 Figure 8.2: Schematic Diagram Illustrating the Setting of Greenstone-Hosted Quartz Carbonate Vein Deposits ...... 8-2 Figure 8.3: Location of the Goudreau Lake Deformation Zone ...... 8-4 Table 11.1: 2015 QA/QC Reference Materials ...... 11-5 Figure 11.2: CDN-BL-10 Gold Blank Performance Chart ...... 11-6 Figure 11.3: SRM CDN-GS-P4C Performance Chart ...... 11-7 Figure 13.1: Gravity Recoverable Gold and Silver vs. Grind Size ...... 13-9 Figure 13.2: Gravity Recoverable Gold by Size Fraction ...... 13-10 Figure 13.3: Gold Leach Rate Profiles, Gravity Cyanide Optimization Tests ...... 13-13 Figure 13.4: Gold Leach Rate Profiles, Gravity Cyanide Optimization Tests ...... 13-14 Figure 13.5: Gold Leach Rate Profiles, Gravity Cyanide Optimization Tests ...... 13-15 Figure 13.6: Gold Leach Rate Profiles, Gravity Cyanide Optimization Tests ...... 13-15 Figure 13.7: Gold Leach Rate Profiles, Gravity Cyanide Optimization Tests ...... 13-16 Figure 13.8: Gold Leach Rate Profiles, Gravity Cyanide Optimization Tests ...... 13-17 Figure 13.9: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests ...... 13-18 Figure 13.10: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests ...... 13-18 Figure 13.11: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests ...... 13-19 Figure 13.12: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests ...... 13-19 Figure 13.13: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests ...... 13-20 Figure 13.14: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests ...... 13-20 Figure 13.15: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests ...... 13-21 Figure 13.16: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests ...... 13-21 Figure 13.17: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests ...... 13-22 Figure 13.18: Gold Leach Rate Profiles, Gravity Cyanidation Oxygen Sparging Tests ...... 13-23 Figure 13.19: Gold Leach Rate Profiles, Gravity Cyanidation Oxygen Sparging Tests ...... 13-23 Figure 13.20: Gold Leach Rate Profiles, Gravity Cyanidation Oxygen Sparging Tests ...... 13-24 Figure 13.21: Gold Gravity & Leach Rate Profiles, Mech. Agitated Tests ...... 13-26 Figure 13.22: Gold Gravity & Leach Rate Profiles, Mech. Agitated Test ...... 13-27 Figure 13.23: Gold Gravity & Leach Rate Profiles, Mech. Agitated Test ...... 13-28 Figure 14.1: Cumulative Probability Plot - Webb Lake Stock Assays...... 14-2 Figure 14.2: Cumulative Probability Plot - Non Webb Lake Stock Assays ...... 14-3 Figure 14.3: 0.35 g/t Gold Correlogram - Webb Lake Stock Composites ...... 14-5 Figure 14.4: 1.00 g/t Gold Correlogram - Webb Lake Stock Composites ...... 14-6 Figure 14.5: Webb Lake Stock Domain Relative Distances - 250 Level ...... 14-9

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Figure 14.6: Webb Lake Stock Domain Relative Distances - Cross-Section View ...... 14-10 Figure 14.7: Cross Sectional View of Domain Relative Distances Used as Soft Boundaries ...... 14-12 Figure 14.8: Cross Sectional View of Domain Relative Distances - Blocks and Drill Holes ...... 14-13 Figure 14.9: Cross Sectional View of Domain Relative Distances - Gold Grades ...... 14-14 Figure 14.10: Gold Swath Plot - Columns ...... 14-16 Figure 14.11: Gold Swath Plot - Rows ...... 14-16 Figure 14.12: Gold Swath Plot - Levels ...... 14-17 Figure 14.13: Indicated Resource Shape ...... 14-18 Figure 14.14: Undiluted Indicated Resource Grade-Tonnage Curves ...... 14-20 Figure 16.1: 2013 Pit Shell Outline, Structural Domains and Design Sectors ...... 16-5 Figure 16.2: Pit Optimization Results - Overall Summary ...... 16-10 Figure 16.3: Pit Optimization – Incremental Results ...... 16-11 Figure 16.4: Plan View Magino Pit/Phase Designs ...... 16-13 Figure 16.5: Typical Cross-Section (looking E) - Magino Pit/Phase Designs ...... 16-13 Figure 16.6: Typical Long Section (looking NW) - Magino Pit/Phase Designs ...... 16-14 Figure 16.7: Open Pit Phase Summary ...... 16-15 Figure 16.8: LOM Mined Tonnes, Grade and Strip Ratio ...... 16-19 Figure 16.9: Processing Schedule ...... 16-20 Figure 16.10: Annual Open Pit Mined Benches ...... 16-21 Figure 16.11: LOM Tonnage by Phase ...... 16-23 Figure 16.12: Site Plan Year -1 ...... 16-24 Figure 16.13: Site Plan Year 1 ...... 16-25 Figure 16.14: Site Plan Year 2 ...... 16-26 Figure 16.15: Site Plan Year 3 ...... 16-27 Figure 16.16: Site Plan Year 5 ...... 16-28 Figure 16.17: Site Plan Year 7 ...... 16-29 Figure 16.18: Site Plan Year 10 ...... 16-30 Figure 17.1: Simplified Process Flowsheet for 30,000 t/d ...... 17-3 Figure 18.1: Overall Site Plan – Stage 3 ...... 18-2 Figure 18.2: Surface Water Management Systems ...... 18-10 Figure 18.3: Magino Project Water Balance ...... 18-11 Figure 18.4: Seepage Management System ...... 18-14 Figure 18.5: Overall Site Plan – Stage 3 (Completion of Mining) ...... 18-17 Figure 18.6: Overall Site Plan – Stage 1 ...... 18-18 Figure 18.7: Overall Site Plan – Stage 2 ...... 18-20 Figure 18.8: Tailings Management Facilities – Embankment Cross-Section ...... 18-21 Figure 18.9: Plant Site Layout ...... 18-23 Figure 18.10: Primary Crusher Layout ...... 18-25 Figure 18.11: Coarse Ore Stockpile and Reclaim ...... 18-27 Figure 18.12: Processing Plant Layout ...... 18-29 Figure 18.13: Pebble Crusher Installation ...... 18-32 Figure 19.1: Average Gold Cash Price as at December 22, 2015...... 19-2 Figure 20.1: Monthly Mean Precipitation and Evaporation ...... 20-4 Figure 20.2: Surficial Geology ...... 20-7 Figure 20.3: Federal EA Timeline ...... 20-33 Figure 21.1: Breakdown of Pre-Production Capital Costs ...... 21-3

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Figure 21.2: Breakdown of Capital Expenditures During Production ...... 21-3 Figure 22.1: Operating Costs Percentage by Area ...... 22-1 Figure 23.1: Payable Gold Doré Production by Year ...... 23-3 Figure 23.2: Annual After-Tax Cash Flows (Base Case, $1,200/oz Au, 0.78 F/X Rate) ...... 23-6 Figure 23.3: Annual After-Tax Cash Flows ($1,200/oz Au, 0.74 F/X Rate) ...... 23-8 Figure 23.4: Annual After-Tax Cash Flows ($1,200/oz Au, 0.70 F/X Rate) ...... 23-10 Figure 23.5: Sensitivity Results (Base Case, $1,200/oz Au, 0.78 F/X Rate) ...... 23-12 Figure 23.6: Sensitivity Results ($1,200/oz Au, 0.74 F/X Rate) ...... 23-13 Figure 23.7: Sensitivity Results ($1,200/oz Au, 0.70 F/X Rate) ...... 23-15 Figure 23.8: Economic Model ...... 23-16 Figure 24.1: Aerial View of Island Gold Mine ...... 24-1 Figure 25.1: Argonaut and Richmont - Surface and Mining Rights Exchange ...... 25-2

APPENDICES

Appendix A QP Certificates

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1 Executive Summary

1.1 Introduction The Magino Project (the Project or Magino) is 100% owned by Prodigy Gold Inc. (Prodigy), a wholly-owned subsidiary of Argonaut Gold Inc. (Argonaut). JDS Energy & Mining Inc. (JDS) was commissioned by Argonaut to compile a revised Pre-Feasibility Study (PFS) of the Magino property. This Technical Report summarizes the results of the PFS and is prepared according to the guidelines of the Canadian Securities Administrator’s National Instrument 43-101 (NI-43-101) and Form 43-101F1. The key differences between this revised PFS and the PFS completed in 2013 and detailed in the “Preliminary Feasibility Study Technical Report For the Magino Project Wawa, Ontario, Canada” report dated January 30, 2014 is an increased processing rate of 30,000 tonnes per day (t/d or tpd) from 12,500 t/d and a significantly increased reserve due to obtaining better access to the known resource through a land swap agreement with Richmont Mines Inc. JDS managed the PFS and completed the property description, mining, infrastructure, recovery methods and economics sections of the report. JDS was assisted by several Argonaut-designated subcontractors providing report information as noted below:  Resource Modeling Inc. (RMI): geology and mineral resources;  SLR International Corp. (SLR): environmental and permitting, mine closure, waste and water management;  Rockland Ltd. (Rockland): mine geotechnical assessment; and  D.E.N.M Engineering Ltd. (DENM): metallurgical testing.

1.2 Property Description and Ownership The Magino Project is a brown-fields site that contains an historic underground gold mine, landfill and tailings facility. The PFS plan presented in this report is to mine the deposit using conventional open pit mining methods and extract gold from the ore using a 30,000 t/d carbon-in-pulp (CIP) mineral processing facility. The Project is located 195 km north of Sault Sainte Marie, Ontario, Canada. It is in Finan Township, approximately 40 km northeast of Wawa, Ontario and 10 km southeast of Dubreuilville, Ontario. As of 9 January 2016, Prodigy’s wholly owned (i.e., 100% Registered Ownership) land holdings forming the Magino property comprise 18 patented mining claims (mining and surface rights), 62 leased mining claims, and 17 unpatented mining claims with a combined area of 2,261 ha. The four leased mining claims are contiguous and Prodigy owns the mining and surface rights on these leased mining claims, except for one claim for which Prodigy owns only the mining rights.

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1.3 Geology and Mineralization The Property is located within the Michipicoten greenstone belt of the Archean Superior Province. The Michipicoten greenstone belt is a structurally and stratigraphically complex assemblage of volcanic, sedimentary and intrusive rocks that were metamorphosed to greenschist and amphibolite facies. Several suites of plutonic rocks ranging in composition from gabbro to monzogranite and syenite occur in and around the Michipicoten greenstone belt. The Property is situated in the Goudreau-Lochalsh gold district of the Wawa gold camp.

Supracrustal rocks in the Goudreau-Lochalsh district consist of Cycle 2 felsic to intermediate pyroclastic metavolcanics capped by pyrite-bearing ironstone. To the north are pillowed, massive and schistose, mafic to intermediate metavolcanics and minor intercalations of Cycle 3 mafic pyroclastic rock. Several medium- to coarse-grained quartz dioritic to dioritic sills and/or dikes intrude all metavolcanic rocks.

Gold mineralization at the former Magino Mine is dominantly hosted by the Webb Lake Stock, which intrudes Cycle 3 mafic volcanic rocks. The Webb Lake Stock is a felsic intrusion interpreted as a trondhjemite, but continues to be called a granodiorite in mine terminology. The long axis of the Webb Lake Stock is parallel to the regional supracrustal rock stratigraphy. The Webb Lake Stock is east northeast-striking and has a steep northerly dip. The granodiorite (trondhjemite) contains 5 to 10% veins of carbonate, quartz, tourmaline and pyrite in various orientations.

Argonaut is currently focusing its evaluation on shear related zones of gold-bearing quartz-sericite- pyrite mineralization that contain narrow higher grade gold-bearing veins; the target of former underground mining. Argonaut and their predecessor company Prodigy, completed surface drilling campaigns in 2011, 2012, and 2015. These programs were designed to in-fill and replace earlier sample data.

1.4 History, Exploration and Drilling

th The discovery of iron ore deposits around the turn of the 20 century in the Michipicoten area southwest of Wawa led to prospecting for other minerals. Gold was discovered in 1918 near Goudreau, prospecting and mining have been semi-continuous since then, being particularly active from the mid-1920s to the beginning of World War II. Gold production from the area was sporadic. Various companies owned, operated, and explored Magino from 1917 to today.

Total drilling, both surface and underground within the Magino resource area is approximately 332,000 m in 2,064 holes. The Qualified Person responsible for his section was unable to verify drilling completed before 2006 and excluded that data from being used to estimate mineral resources which are the subject of this Technical Report. This resulted in the removal of about 114,000 m of data associated with 1,273 holes, most of which were short, small diameter underground core holes.

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There have been eight publicly disclosed mineral resource estimates performed for the Magino property over the past 11 years. The Qualified Person responsible for this section has not done sufficient work to classify those historical estimates as current mineral resources. Those resources are considered to be obsolete and replaced by the resources that are the subject of this Technical Report. Total historic production from the Magino property is 885,305 tons (803,135 t) of ore yielding 114,319 troy ounces (oz) at 0.129 oz/ton (4.43 g/t).

1.5 Mineral Processing and Metallurgical Testing Results from metallurgical testing completed at McClelland Laboratories, Inc. (MLI) for the Magino Project were presented and detailed in the previous Preliminary Prefeasibility Study (PFS-2014) of January 30, 2014. That report was based largely on the results from MLI as well it incorporated any and all of the relevant earlier work to evaluate the overall Project results at that time. The highlights of that Phase1 test work were presented and discussed in that report (PFS-2014). Follow-up work (Phase 2) carried out by MLI recently focused on the additional gravity recoverable gold testing and optimization of the agitated cyanidation of the gravity tailings. The new and refined data have now been used as the basis for the Project economic evaluation part of this report. Based on this recent work, the previous grind size of 75 microns was maintained. Further review and analysis of the updated data resulted in the selection of a conservative LOM 93.5 % recovery that was used for the economic analysis for this new study. These new test results from MLI in conjunction with the previous work completed for the PFS-2014 resulted in revised Project economics and new modified flowsheet for the Project. The flowsheet includes fine grinding, a gravity recovery circuit, cyanide leach, carbon-in-pulp (CIP) gold adsorption, carbon-in-columns (CIC) gold adsorption, slurry detoxification and finally, discharge to a conventional slurry TMF. The evaluation of this recent work by D.E.N.M. Engineering Ltd. (DENM) has resulted in a modified and new flowsheet with changes that have incorporated the following:  Increased daily feed rate to the process – 30,000 t/d (increased from 12,500 t/d – PFS- 2014) and resultant equipment to suit the process design criteria;  Additional tankage to accommodate the extended leach residence time (increased to 36 hours); and  Two (2) stage tailings wash circuit to reduce incoming CN (WAD) concentration to the slurry detoxification process and reduce overall detoxification reagent requirements (SO2, lime, Cu2SO4). The general process criteria selected for the process design and Project economics are shown in Table 1.1.

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Table 1.1: Selected General Process Design Criteria

Parameter Units Value Overall Plant throughput, Nominal M t/y 10.95 Plant throughput, nominal t/d 30,000

Grind size, P80 micron 75 Leach time hours 36

Cyanide concentration, leach feed ppm NaCN 750

Gold recovery % 93.5 Cyanide consumption kg NaCN/t 0.50 Lime required, CaO kg/t 1.2

Detoxification method SO2 - Air Detoxification limit ppm WAD Cyanide <0.50 Source: DENM (2015)

1.6 Mineral Resource Estimate A total of 2,064 drill holes, both surface and underground, were supplied by Argonaut for consideration to be used to estimate mineral resources. The Qualified Person responsible for this section was unable to verify drill hole data collected prior to 2006 because; 1) the data did not meet current QA/QC requirements and could not be verified and 2) there appears to be a bias associated with some of the older data, particularly the small diameter underground core hole data. After removing the unverified data, a total of 791 holes totaling about 218,000 m were used to estimate mineral resources that are the subject of this Technical Report. These data are supported by modern QA/QC protocols and deemed to be suitable to be used for resource estimation. Various statistical and geostatistical analyses were performed in developing a grade estimation strategy. High-grade outliers were identified using decile/percentile and cumulative probability plots. Within the primary mineralized host rock (Webb Lake Stock) a cap grade of 60 g/t was selected and implemented on the original samples. Outliers in other host rocks were capped at 30 g/t. A rotated block model was constructed with 5 m x 5 m x 5 m blocks. Commensurate with the block size, 5 m long drill hole composites were constructed. Grade and indicator variography showed relatively high nugget effects and short ranges which is supported by a visual inspection of drill hole grades in plan and cross-section views, and historical reports that described underground mine development/production observations.

Based upon the style and geometry of mineralization, the Qualified Person responsible for this section elected to use relative elevation methods for selecting eligible composites for grade estimation. The majority of mineralization at Magino is within the Webb Lake Stock and hosted in silicified structures often with discrete narrow quartz veins/veinlets.

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Observations and past mining records indicate that mineralized structures tend to be oriented sympathetically to the hangingwall and footwall contacts of the Webb Lake Stock. Gold rich zones appear as a parallel series of silica flooded structures and discrete quartz vein/veinlet systems. These variably mineralized structures are generally continuous; typically displaying ore shoots with vertical to horizontal ratios of 2.5:1 which are classically observed in greenstone lode gold deposits. A three dimensional wireframe representing the Webb Lake Stock was constructed. The Webb Lake Stock solid created from the wireframe model were then sub-divided into four semi- equal volumes (domains). Surfaces for each of the four Webb Lake wireframe solids were gridded at a 5 m spacing. Those points were used as pseudo drill hole composites in order to capture the Cartesian distance between each model block and the hangingwall and footwall surfaces of the Webb Lake stock sub-divided domains. A relative distance calculation was made on a block by block basis so that the relative position of each block relative to the Webb Lake stock contacts was completed. The relative distance between hangingwall and footwall contacts was then transferred to the 5 m long drill hole composites by back tagging methods from the model. This allowed for only select drill hole composites located in a similar "structural/stratigraphic" horizon as the blocks to be used to estimate gold grades. This method essentially allows a dynamic search ellipse to be generated on the fly and, in some cases, the search ellipse warps so as to conform to the interpreted structure of the Stock. A multi-pass inverse distance cubed estimator was used for the actual block grade estimate.

Bulk density values were assigned to the model blocks based on logged and modelled lithology. A significant number of bulk density (Specific Gravity) determinations have been completed from various Magino drill campaigns. After removing suspicious values, averages by lithology were calculated from nearly 9,000 determinations. The average bulk density that was assigned to the model for the primary host lithology (synvolcanic intrusives i.e. the Webb Lake Stock) was 2.72.

The blocks were sub-divided into Indicated and Inferred mineral resource categories. A 3D solid was created reflecting mineralized continuity and drill hole spacing. Blocks inside of this solid were classified as Indicated and blocks outside were flagged as Inferred resources provided that the blocks were within two different distances from drilling data depending on estimation domain.

A conceptual pit was generated in order to constrain the tabulation of mineral resources. A gold price of US $1,300 was used along with other cost, recovery, and slope parameters that are summarized in Table 1.2. The conceptual resource pit was not allowed to mine within 50 m of Goudreau Lake or onto ground not controlled by Argonaut Gold Inc.

Table 1.2: Conceptual Pit Parameters for Resource Estimate

Parameter Unit Value Gold Price US$/ounce 1,300 Gold Price US$/gram 41.80 Gold Recovery % 93.5 Mining Cost US$/tonne mined 1.80 Processing + G&A Cost US$/tonne processed 7.60 Slope Angles Degrees Variable - 46 to 51 Source: RMI (2015)

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Mineral resources were estimated in the conceptual pit using a 0.25 g/t gold cut-off grade. This cut-off was calculated using revenue and cost data shown in Table 1.2. Table 1.3 tabulates undiluted Indicated and Inferred mineral resources for the Magino Project at a 0.25 g/t gold cut-off grade.

There is a certain amount of internal dilution built into the grade model by virtue of drill hole compositing and subsequent block grade estimation, however, no allowance has been made for any mining dilution or loss.

Table 1.3: Magino Undiluted Mineral Resources (inclusive of Mineral Reserves)

Indicated Resources Inferred Resources Contained Au Contained Au Tonnes Au Tonnes Au Ounces Ounces (Mt) (g/t) (Mt) (g/t) (000) (000) 143.8 0.88 4,069 43.3 0.76 1,058 Source: RMI (2015)

1.7 Mineral Reserve Estimate The open pit Mineral Reserve estimate for the Magino Project is summarized in Table 1.4. Table 1.4: Mineral Reserve Estimate

Cut-off Diluted Diluted Contained Gold Deposit Reserve Class Tonnage Grade Grade (Mt) g/t Au g/t Au Au (koz) Total Mineral Reserve Probable 105.4 0.34 0.89 3,019 Source: JDS (2016)

The mineral reserve estimate for the Magino open pit was constrained with estimates of gold price, mining dilution, process recovery, operating costs, pit slope angles and refining/transport costs. The mineral resource block model for the Magino deposit (as supplied by RMI) was then used with the DataMine NPV Scheduler (NPVS) software to determine optimal mining shells and pit phasing. Only indicated mineral resources were included in the pit optimization process (no mineral resource has been classified in the measured category). Inferred resources within the designed open pit are treated as waste. Detailed pit and phase designs were created based on the pit optimization results. These designs incorporated geotechnical parameters as well as ramp accesses and formed the basis of the Mineral Reserve Estimate. A gold cut-off grade (COG) of 0.34 g/t was used to calculate the Mineral Reserve estimate for Magino. This elevated COG was chosen in order to increase the average grade of material processed and limit the amount of the lower grade, marginal material reporting to the mill.

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1.8 Mining The Magino deposit is amenable to development as an open pit (OP) mine. Mining of the deposit is planned to produce a total of 105.4 Mt of ore and 398.5 Mt of waste (includes low grade material) for a 3.8:1 overall strip ratio, over a ten and a half year mine production life (including one year of pre-production). The current life-of-mine (LOM) plan focuses on achieving consistent ore production rates, and mining of higher value material in the production schedule, as well as balancing grade and strip ratios. Lower grade material that is above the marginal cut-off but below the elevated cut-off is planned to be stockpiled and is not included in the Mineral Reserves or processed ore tonnages reported. 1.8.1 Open Pit Mine Plan and Phasing

Figure 1.1 illustrates the proposed overall site layout for the Magino Project, including the open pit, waste rock facilities, tailings management facilities, and proposed plant site locations. The mine design process for the deposit commenced with the development of open pit optimization input parameters. These parameters included estimates of metal price, mining dilution, process recovery, off-site refining costs, geotechnical constraints (slope angles) and royalties (see Table 1.5).

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Figure 1.1: Magino Project Site Plan

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Table 1.5: Magino Mine Design Criteria

Parameter Unit Value Revenue, Smelting & Refining Gold Price US$/oz Au 1,200 Payable Metal % 99 TC/RC/Transport US$/oz Au 4.00 Net Gold Value per Ounce US$/oz 1,184 Net Gold Value per Gram US$/g 38.07 OPEX Estimates OP Waste Mining Cost US$/t waste mined 1.84 OP Ore Mining Cost US$/t ore mined 1.84 Processing Cost US$/t milled 6.78 Mineralized Material Rehandle US$/t milled 0.17 G&A US$/t milled 0.84 Total Opex (excl. Mining) US$/t milled 7.79 Recovery and Dilution Process Gold Recovery % 93.5 External Mining Dilution % 23 Mining Recovery % 95 External Gold Cut-Off Grade g/t Au 0.27 Other Overall Pit Slope Angles degrees variable Discount Rate % 5 Mill Production Rate t/d 30,000 Mine design parameters in this table differ from final cost estimates but the QP considers the differences to be not material Source: JDS (2016)

Based on the pit optimizations and analysis of the Net Present Value pit shells, an ultimate and phase shells were chosen and used as the template for the detailed ultimate pit and phase designs. These detailed ultimate and phase pit designs incorporated geotechnical parameters (bench face angle, inter-ramp angles, and berm widths) for defined domains and pit sectors and included 10% gradient access ramp designs and take into account minimum mining widths. Waste rock facilities were then designed to account for the waste material produced in each mining phase. In addition, waste material produced will be used to construct the containment structure for the tailings management facility. Table 1.6 summarizes the pit design ore tonnages and grades for the open pit deposit.

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Table 1.6: Proposed Mining Plan

Description Unit Value Mine production life (incl. pre-prod) yr 11 Process diluted ore feed Mt 105.4 Diluted gold grade (head grade) g/t 0.89 Contained gold koz 3,019 Waste Mt 398.5 Total material Mt 503.9 Strip ratio t:t 3.8

Source: JDS (2016)

1.8.2 Mine Schedule and Operations

The pit design for the Magino Project deposit was divided into phases (or pushbacks) for the mine plan development in order to provide flexibility in the schedule, maximize grade and value, reduce pre-stripping requirements in the early years, provide consistent feed from the mine and maintain the process plant at full production capacity. The deposit is exploited most economically when open pit phases are mined concurrently.

The open pit mine is projected to provide the process facility feed at a nominal rate of 10.95 Mt/a. and open pit mining is envisioned to be undertaken by Argonaut, the Project owner. Annual mine production of ore and waste is profiled to peak at 55 Mt/a, with a LOM waste to ore stripping ratio of 3.8:1.

In order to maximize mill head grades a ROM stockpile will be used as necessary for stockpiling of higher grade ore from the open pit. The re-handling of this ore is included in the open pit scheduling and operating cost estimate. Low grade material (below the elevated cut-off of 0.34 g/t Au) will not be processed but instead stockpiled separately to allow for future processing although it is counted as waste in the current study.

Mining will begin at the Magino Project in Year -1 to provide waste rock for general construction as well as for the construction of the first lift of the containment structure at the tailings management facility. This will also enable the stockpiling of higher grade ore prior to the start of mill processing. Mill processing will commence in Year 1. Open pit mining and mill processing will be completed in the first half of Year 10. Table 1.7 summarizes the LOM material movement by year for both the mine and the processing facility.

Open pit mining operations will use a fleet comprising 22 m3 front shovels, a 20 m3 front-end loader and 220 t haul trucks. This fleet will be supplemented by drills, graders, and track and rubber-tire dozers. A 10 m bench height was selected for mining in ore and waste with overall 20 m effective bench heights based on a double bench configuration.

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Table 1.7: Total Mine and Mill Production Schedule

Year Description Unit -1 1 2 3 4 5 6 7 8 9 10 Total Mining Schedule Ore Feed M tonnes 6.9 11.7 14.0 16.5 3.8 3.4 9.4 10.9 12.7 9.2 6.9 105.4 Gold Grade g/t 0.84 0.83 0.82 0.97 0.87 0.78 0.73 0.97 1.05 0.98 0.76 0.89 Contained Gold k Oz. 185 312 368 514 106 85 221 340 430 287 168 3,019 Waste M tonnes 18.1 43.3 41.0 38.5 51.2 51.6 45.6 44.0 42.3 18.3 4.6 398.5 Strip Ratio t:t 2.6 3.7 2.9 2.3 13.4 15.2 4.9 4.0 3.3 2.0 0.7 3.8 Total Material M tonnes 25.0 55.0 55.0 55.0 55.0 55.0 55.0 55.0 55.0 27.5 11.4 503.9 Processing Schedule Ore processed M tonnes 10.9 10.9 10.9 10.9 10.9 10.9 10.9 10.9 10.9 6.9 105.4 Average Gold grade g/t 1.12 0.96 1.29 0.54 0.50 0.68 0.97 1.16 0.88 0.76 0.89 Contained Gold k Oz. 395 339 453 192 175 238 340 409 309 168 3,019 High-Grade Stockpile Ore at Beginning of year M tonnes 6.9 7.7 10.7 16.2 9.1 1.6 1.8 Gold Grade g/t 0.84 0.42 0.38 0.37 0.36 0.34 0.37 Contained Gold k Oz. 185 102 131 192 106 17 21 Ore Feed in M tonnes 6.9 7.7 4.7 5.5 0.9 0.8 1.8 28.2 Gold Grade g/t 0.84 0.42 0.33 0.34 0.31 0.31 0.37 0.48 Contained Gold k Oz. 185 102 50 61 9 8 21 437 Ore Feed Out M tonnes 6.9 1.6 0.0 8.0 8.3 1.6 1.8 28.2 Gold Grade g/t 0.84 0.42 0.38 0.37 0.36 0.34 0.37 0.48 Contained Gold k Oz. 185 22 0 95 97 17 21 437 Source: JDS (2016)

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1.8.3 Waste Management

The waste rock management facility and tailings management facility are planned to be located on site with construction staged over the life of the mining operation. Over the life of the Magino mine a total of 398 Mt of waste rock will be produced (includes 26 Mt of low grade mineralized material). Waste rock from the open pit is planned to be deposited in various engineered facilities to the north of the deposit and used as construction material for the tailings facility containment structure. Low grade mineralized material is to be placed in a separate stockpile near the process plant facilities. Geochemical characterization (based on static and humidity cell testing, acid base accounting, and trace element analyses) indicates that more than 99% of the waste rock at the Magino deposit is non-acid generating. Tailings generated from the process plant are proposed to be delivered to a tailings management facility located southwest of the proposed plant location. In order to contain the 105 Mt of tailings, staged containment structures are scheduled. Construction material would be sourced from waste material from the open pit, as well as local borrow sources if necessary.

1.9 Recovery Methods The 30,000 t/d process plant will be designed to use conventional crushing, grinding, gravity concentration, gold leaching by cyanidation, gold adsorption by carbon-in-pulp (CIP), and gold recovery from loaded carbon and gravity concentrate to produce gold doré. Cyanide destruction of the tailings will be by liquid SO2. The process plant will process 10 t of carbon per day recovering an LOM average of approximately 25 kg/d of gold based on an average recovery of 93.5%. The process plant includes the following:  Single-stage crushing circuit reducing run of mine (ROM) ore to approximately 80% passing (P80) 150 mm;  Crushed rock stockpile (feeding the mill) with a live capacity of 20,000 t;

 Grinding and gravity circuit comprising a SAG mill and a ball mill (P80 75 µm), and two centrifugal gravity concentrators;  Cyanide leaching and carbon adsorption circuits;  Carbon stripping and reactivation circuits;  Gold electrowinning and refining circuit producing bullion; and  Tailings handling circuit, including cyanide destruction and two stage tailings washing.

1.10 Project Infrastructure The infrastructure for a 30,000 t/d mine and gold processing plant does not currently exist and will need to be developed and built for the Magino Project. The site is accessible by a 10 km all-weather gravel road from Dubreuilville, Ontario, where it connects with provincial highways. An existing railway siding is also available in Dubreuilville, which is connected to the CN rail network.

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There is an existing gravel road from Goudreau to Dubreuilville that passes through the Project site. An 8.2 km public bypass road is planned to be built around the site to maintain the road connection between Dubreuilville and Goudreau.

Electrical power to the Project site is planned to be provided by Algoma Power Incorporated (API) via an existing 44 kilovolt (kV) line and a dedicated 44 kV line. Both lines will supply up to 45 MW. The calculated Project power requirements are for an average demand of 37.4 MW. API operates the existing 44 kV line that crosses the Magino Project property supplying power to neighboring Island Gold Mine operated by Richmont Mines (Richmont); however, it does not have sufficient capacity for the Project. This line would be re-routed around the site when the Project is developed, and a separate Magino line would be installed.

A complete on-site gold ore processing facility would be constructed and built to support the mining operations, and process the mineralized rock into gold-silver doré as described previously. The mine facilities are planned to include explosive and detonator storage in separate locations, a truck shop for mining fleet and auxiliary equipment maintenance, a mine dry, communications systems, emergency services equipment, and bulk fuel storage. The plant site would be equipped with crushing, grinding, processing, gold refining, maintenance, and storage installations. Administration offices, site security, a supplementary personnel camp, and personnel facilities would also be included on site.

1.11 Environment Assessment and Permitting The environmental assessment and permitting for the mine involves the following:  Collection of environmental, socio-economic, traditional land use, geologic and hydrologic baseline information for the site and the region;  Consultation with Federal and Provincial Government agencies, the public, and several Aboriginal groups on the Project;  Obtaining environmental approvals for the Project from both the Federal and Provincial governments;  Obtaining the necessary permits to construct and operate the mine;  The majority of the baseline data has been collected and the program is essentially complete. Ongoing water monitoring is occurring in 2016. Some additional data collection may be required to address comments on the EIS and other permit applications. Consultation has been ongoing since 2011 and is continuing. Impact Benefit Agreements (IBAs) are being negotiated with First Nation groups. A Project Description Report (PDR), which starts the federal environmental approval process has been completed and approved by the Canadian Environmental Assessment Agency (the Agency) but may be subject to review based on this PFS. It has been determined by the Agency that the Project environmental assessment will progress through a comprehensive study;  The following steps are required to initiate the Provincial environmental approval process and to apply for the required operating permits;

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o Submission of a Class Environmental Assessment Project Description to Ministry of Environment; o Submission of a Draft and a Final Environmental Study Report; o Completion of a Ministry of Natural Resource (MNR) Class Environmental Assessment (EA) for MNR Resource Stewardship and Facility Development; o Completion of a Ministry of Northern Development and Mines (MNDM) Class EA for certain mining rights leases and an environmental screening process for backup diesel power generation on site; and o Application and approval of the necessary environmental permits.

1.12 Capital and Operating Costs 1.12.1 Capital Costs

The capital cost (CAPEX) estimate includes the costs required to develop, sustain, and close the operation for a planned 16-year mine life. The construction schedule is based on a 20-month build period, with major construction at site taking place over 24 months. The intended accuracy of this estimate is +/-25%. The high-level CAPEX estimate is shown in Table 1.8. The sustaining capital is carried over operating years 1 through 10, and closure costs are projected over years 11-16. Table 1.8: Summary of Life of Mine Capital Costs

Description Estimate (US$ M) Mining 108.7 On-Site Development 5.7 Ore Crushing and Handling 25.7 Process Plant 157.3 On-Site Infrastructure 63.7 Tailings 24.1 Project Indirects 52.5 EPCM 38.0 Owner's Cost 7.8 Contingency 56.2 Total Initial Capital 539.8 Sustaining Capital 162.3 Closure Cost 20.9 Contingency 12.8 Total Sustaining/Closure Capital 195.9 Total Capital Costs 735.6 Note: numbers may not add due to rounding Source: JDS (2016)

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The purpose of the pre-feasibility study capital cost estimate is to establish the Project budget to sufficient accuracy to allow an investment decision on the Project plan as put forth in this report. The estimate will serve as the control budget for moving forward into further project studies and project execution (procurement and field construction). This was achieved by implementing the practices and procedures outlined in the estimate plan, which is aligned with the Authority for Total Cost Management AACE recommended practices. 1.12.2 Operating Costs

The operating cost estimate in this study includes the costs required to mine, handle and transport ore to the mill, mill and process the ore to doré, general and administrative expenses (G&A), and water treatment plant operating costs. These items total the mine operating costs. The LOM costs are summarized in Table 1.9. Table 1.9: LOM Total Operating Cost Estimate

Description Estimate (US$ M) Mining 845.1 Milling 690.9 Rehandle 14.4 Water Treatment Plant 4.0 G&A 73.3 Total LOM Operating Costs 1,627.7 Source: JDS (2016)

The operating costs expressed as cost per tonne of ore are provided in Table 1.10. Table 1.10: Unit Operating Cost Estimate

Description Unit Estimate Mining US $/t processed 8.02 Milling US $/t processed 6.55 Rehandle US $/t processed 0.14 Water Treatment Plant US $/t processed 0.04 G&A US $/t processed 0.70 US $/t processed 15.44 LOM Unit Operating Cost/Tonne $/payable oz Au 582 Source: JDS (2016)

1.13 Economic Analysis An engineering economic model was developed to estimate annual cash flows and sensitivities of the Project. Pre-tax estimates of Project values were prepared for comparative purposes, while after- tax estimates were developed and are likely to approximate the true investment value. It must be noted, however, that tax estimates involve many complex variables that can only be accurately calculated during operations and, as such, the after-tax results are only approximations.

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Sensitivity analyses were performed for variations in metal prices, grades, operating costs, capital costs, and discount rates to determine their relative importance as Project value drivers. This Technical Report contains forward-looking information regarding projected mine production rates, construction schedules and forecasts of resulting cash flows as part of this study. The mill head grades are based on sufficient sampling that is reasonably expected to be representative of the realized grades from actual mining operations. Factors such as the ability to obtain permits to construct and operate a mine, or to obtain major equipment or skilled labour on a timely basis, to achieve the assumed mine production rates at the assumed grades, may cause actual results to differ materially from those presented in this economic analysis. Three foreign exchange rate (F/X) cases (US$:C$) were evaluated to better understand the value drivers in each scenario. The gold price that was used to evaluate the economics was US$1,200/oz, consistent across all three:  Base Case: $1,200/oz Au, 0.78 F/X rate;  $1,200/oz Au, 0.74 F/X Rate; and  $1,200/oz Au, 0.70 F/X Rate. The reader is cautioned that the gold prices and exchange rates used in this study are only estimates based on recent historical performance and there is absolutely no guarantee that they will be realized if the Project is taken into production. The price of gold is based on many complex factors and there are no reliable long-term predictive tools. All costs, metal prices and economic results are reported in US dollars (US$) unless stated otherwise All cases have identical LOM plan tonnage and grade estimates (Table 1.11). On-site and off-site costs and production parameters were also held constant for each scenario evaluated. Table 1.11: LOM Plan Summary

Category Unit Value Total LOM Ore Mt 105.4 Total LOM Waste Mt 398.5 LOM Strip Ratio w:o 3.8:1 LOM Au Head Grade g/t 0.89 Au Recovery % 93.5 Au Payable % 99.9 Payable Au LOM LOM koz 2,820 Average Au Payable LOM Koz/year 282.0 Source: JDS (2016)

Other economic factors include the following:

 Discount rate of 5% (sensitivities using other discount rates have been calculated);  Closure cost of $24.0M, including a 15% contingency (included in LOM capital cost);  Nominal 2016 dollars;  Canadian dollar (C$) to United States Dollar (US$) exchange rates of 1.28, 1.35 and 1.43;

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 Revenues, costs, taxes are calculated for each period in which they occur rather than actual outgoing/incoming payment;  Working capital calculated as one and a half months of operating costs in Year 1, the first production year (including mining, processing, WTP, G&A costs);  Results are presented on a 100% ownership basis;  No management fees or financing costs; and  Exclusion of all pre-development and sunk costs up to the start of detailed engineering and permitting (i.e. exploration and resource definition costs, engineering fieldwork and studies costs, environmental baseline studies costs, etc.).

Table 1.12 shows the economic results for all three scenarios described above. Table 1.12: Summary of Results

0.78 F/X Rate Results Unit 0.74 F/X Rate 0.70 F/X Rate (Base Case) Mine Life Years 10 10 10 Payable Au LOM LOM koz 2,820 2,820 2,820 Average Au Payable LOM koz 282 282 282 US$/Pay Au oz 582 560 537 Au Cash Cost US$/tonne Unit OPEX 15.44 14.84 14.23 milled Avg Annual Pre-Tax Cash flow during US$ M 160 167 173 production Pre-Production (excl. contingency) US$ M 483.5 466.4 449.2 Pre-Production Contingency US$ M 56.2 53.9 51.6 Total Pre-Production (incl. contingency) US$ M 539.8 520.3 500.8 Sustaining & Closure (excl. US$ M 183.1 179.0 174.9 contingency) Sustaining & Closure Contingency US$ M 12.8 12.1 11.5 Total Sustaining & Closure (incl. US$ M 195.9 191.1 186.4 contingency) Total Capital + Contingency US$ M 735.6 711.4 687.2

Pre-Tax NPV5% US$ M 610.3 676.5 742.4 Pre-Tax IRR % 27.6 30.7 34.0 Pre-Tax Payback Period Years 2.5 2.4 2.2

After-Tax NPV5% US$ M 414.5 459.1 503.6 After-Tax IRR % 22.9 25.3 28.0 After-Tax Payback Period Years 2.6 2.5 2.3 Source: JDS (2016)

The break-even gold price for the Project Base Case is approximately $910/oz, based on the LOM plan presented herein and the base-case scenario. The sensitivity analysis for the base case is shown in Table 1.13 and indicates the Project, as expected, is most sensitive to metal price and head grade.

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Table 1.13: Sensitivity Results for Base Case Scenario ($1,200/oz Au, 0.78 F/X Rate)

After-Tax NPV5% ($ M) Variable -15% 100% +15% Metal Prices 165 415 660 Head Grade 166 415 659 Operating Costs 533 415 295 Capital Costs 510 415 319 Source: JDS (2016)

1.14 Conclusions It is the conclusion of the QPs that the PFS summarized in this Technical Report contains adequate detail and information to declare mineral reserves and support the positive economic outcome shown for the Project. Standard industry practices, equipment and design methods were used in the PFS. The base case for Magino has been developed with sufficient detail to underpin a decision to continue to move the Project through subsequent stages of development and to a feasibility study. Improved capital and operating costs may be possible with a strong, focused and fit-for-purpose value engineering program. Improvement in gold price would provide the most upside to the Project. The most significant potential risks associated with the Project are uncontrolled dilution, uncontrolled groundwater inflow in the pit, operating and capital cost escalation, permitting and environmental compliance, unforeseen schedule delays, changes in regulatory requirements, ability to raise financing and metal price. These risks are common to most mining Projects, many of which can be mitigated with adequate engineering, planning and pro-active management. The major opportunities that could potential improve the Project are steepening pit slope angles, processing low grade stockpile, inclusion of additional resources, leasing primary mining equipment and utilization of used equipment. To date, the QPs are not aware of any fatal flaws for the Project.

1.15 Recommendations It is recommended that the Magino Project proceed to the feasibility study (FS) stage to further detail Project engineering, schedule, design, costs and revenue and to improve Project economic accuracy. It is also recommended that environmental and permitting continue as needed to support Argonaut’s Project development plans. It is estimated that a feasibility study and supporting work programs would cost approximately $2.7M.

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2 Introduction

2.1 Basis of Technical Report This Technical Report was prepared for Argonaut by JDS, RMI, SLR, Rockland, and DENM; collectively referred to as Consultants. The purpose of this report is to provide the results of the following:  The new mineral resource estimate (December 2015);  A preliminary feasibility study based on the new mineral resource estimate; and  The corresponding new mineral reserve estimate (December 2015) based on a 30,000 tpd operation. This document has been prepared following the guidelines of the Canadian Securities Administrator’s NI 43-101 and Form 43-101F1. The quality of information, conclusions, and estimates contained herein is consistent with the level of effort involved in the Consultant’s services, based on: i) information available at the time of preparation, ii) data supplied by outside sources, and iii) the assumptions, conditions, and qualifications set forth in this report. Given the nature of the mining business, these conditions can change significantly over relatively short periods. Consequently, actual results may vary significantly. The user of this document should ensure that this is the most recent Technical Report for the property as it may not be valid if a new Technical Report has been issued. The units of measure used in this report are as per the International System of Units (SI) or their derivatives except for Imperial units that are commonly used in industry (e.g., troy ounces (oz.) and pounds (lb.). All dollar figures quoted in this report refer to United States dollars (US$ or “$) unless otherwise noted. Frequently used abbreviations and acronyms can be found in Section 27.

2.2 Scope of Work This report summarizes the work carried out by the Consultants, all of which are independent of Argonaut. The scope of work for each company is listed below and combined, makes up the total Project scope. JDS scope of work included:  Compile the technical report that also includes the data and information provided by other consulting companies;  Mine planning, optimal pit design and production schedule;  Mining equipment selection;  Establish mineral reserve estimates;  Develop a processing flowsheet with material balance, specifications and the selection of main process equipment;

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 Design required plant infrastructure, estimate power requirements and identify proper sites, plant facilities and other ancillary facilities;  Estimate OPEX and CAPEX for the Project;  Prepare a financial model and conduct an economic evaluation including sensitivity and Project risk analysis;  Develop a project execution plan and schedule; and  Interpret the results and make conclusions that lead to recommendations to improve value, reduce risks and move toward a feasibility level study. RMI scope of work included:  Establish a mineral resource estimate for the Project following NI 43-101 guidelines. SLR scope of work included:  Collection of baseline environmental and geosciences field data;  Conduct the federal environmental assessment process;  Overall Project layout;  Geotechnical assessment of infrastructure foundations;  Design the waste rock management facility (WRMF);  Design the tailings management facility (TMF) and determine which methodology would be feasible, conventional or dry stack;  Design the potentially acid generating (PAG) stockpile (if necessary);  Determine the Project water balance;  Estimate initial and sustaining capital expenditure requirements and operating costs for waste storage, tailings disposal and water storage;  Review environmental and other permits requirements; and  Summarize waste disposal operating and post closure requirements and plans. DENM scope of work included:  Establish recovery estimates and design criteria values based on metallurgical testing results. Rockland scope of work included:  Determine mine geotechnical criteria and establish pit slope angles.

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2.3 Qualified Person Responsibilities and Site Inspections The Qualified Persons (QP) preparing this Technical Report are specialists in the fields of geology, exploration, mineral resource and mineral reserve estimation and classification, geotechnical, environmental, permitting, metallurgical testing, mineral processing, processing design, capital and operating cost estimation, and mineral economics. None of the QPs or any associates employed in the preparation of this report has any beneficial interest in Argonaut. The QPs are not insiders, associates, or affiliates of Argonaut. The results of this Technical Report are not dependent upon any prior agreements concerning the conclusions to be reached, nor are there any undisclosed understandings concerning any future business dealings between Argonaut and the QPs. The QPs are being paid a fee for their work in accordance with normal professional consulting practice. The following individuals, by virtue of their education, experience and professional association, are considered QP as defined in the NI 43-101 standard for this report, and are members in good standing of appropriate professional institutions. The QPs are responsible for specific sections as follows: Table 2.1: Qualified Person Responsibilities

QP Company Report Section(s) of Responsibility 1 (except for 1.2,1.3,1.5,1.6,1.7,1.8,1.9,1.10,1.11), 2, 3, 4, 5, 6, Mr. Michael Makarenko, P. Eng. JDS 19, 21 (except 21.2.2), 22 (except 22.2.3), 23, 24, 25, 26, 27, 28 Ms. Kelly McLeod, P. Eng. JDS 1.9, 17 Mr. Dino Pilotto, P. Eng. JDS 1.7, 1.8, 15, 16 (except 16.3), 21.2.2 and 22.2.3 Mr. Ali Sheykholeslami, P. Eng. JDS 1.10, 5.5.1,18.1, 18.4, 18.7, 18.8 Mr. Michael Lechner, P. Geo. RMI 1.3, 1.6, 7, 8, 9, 10, 11, 12, 14 Dr. Khosrow Aref, Ph.D., P. Eng. Rockland 16.3 Mr. David Salari, P. Eng. DENM 1.5, 13 Dr. Ian Hutchison, Ph.D., PE SLR 1.2, 1.11, 4.5, 18.2, 18.3, 18.5, 18.6, 18.9, 20 Source: JDS (2016)

QP site visits were conducted as follows:  Dino Pilotto, P. Eng., completed a site visit on October 16-17, 2013;  Michael Makarenko, P. Eng., Kelly McLeod, P. Eng. and Ali Sheykholeslami, P. Eng. did not visit the site and relied upon the observations of QPs Pilotto, Aref and Lechner;  Michael Lechner, P. Geo., visited the property on March 18-19, 2015;  David Salari, P. Eng., visited the property on November 6, 2015;  Khosrow Aref, PhD, P. Eng., completed a site visit on October 16-17, 2013; and  Ian Hutchison, PhD, P.E. completed site visits on March 14-15 and June 9-10, 2013.

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2.4 Sources of Information The sources of information include data and reports supplied by Argonaut personnel as well as documents cited throughout the report and referenced in Section 28. In particular, background Project information was directly taken from the historical technical report titled “Technical Report on the Magino Property, Wawa, Ontario” with an effective date of October 4, 2012 written by Patrick Huxtable, et al. of Tetra Tech Wardrop (Huxtable, 2012) and updated as appropriate.

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3 Reliance on Other Experts

The QP’s opinions contained herein are based on information provided to the Consultants by Argonaut throughout the course of the investigations. JDS has relied upon the work of other consultants in Project areas in support of this Technical Report. The Consultants used their experience to determine if the information from previous reports was suitable for inclusion in this Technical Report and adjusted information that required amending. This report includes technical information that required subsequent calculations to derive subtotals, totals and weighted averages. Such calculations inherently involve a degree of rounding and consequently introduce a margin of error. Where these occur, the QPs do not consider them to be material. Neither JDS nor the authors of this Technical Report are qualified to provide extensive comment on legal issues associated with the ownership or control of the Magino property. As such, portions of Section 4 dealing with the types and numbers of mineral tenures and licenses, the nature and extent of Argonaut’s title and interest in the Magino property, the terms of any royalties, back-in rights, payments or other agreements and encumbrances to which the property is subject, are descriptive in nature and are provided exclusive of a legal opinion.

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4 Property Description and Location

4.1 Location The Magino Project is an historic underground gold mine that is now being studied as a surface gold mine. The Project comprises about 2,261 ha 195 km north of Sault Sainte Marie, Ontario, Canada. It is in Finan Township, approximately 40 km northeast of Wawa, population about 3,000 (http://en.wikipedia.org/wiki/Wawa,_Ontario). It is approximately 10 km southeast of Dubreuilville, population about 600 (http://en.wikipedia.org/wiki/Dubreuilville). The Project is centered at Universal Transverse Mercator (UTM) 689049E 5351422N (North American Datum [NAD] 83 Zone 16U). The location of the Project is shown in Figure 4.1. Figure 4.1: Location Map of the Magino Property in Ontario

Source: Argonaut (2015)

4.2 Mineral Titles As of 9 January 2016, Argonaut's wholly owned (i.e., 100% Registered Ownership) land holdings forming the Magino property comprise 18 patented mining claims (mining and surface rights), 62 leased mining claims, and 17 unpatented mining claims with a combined area of 2,261 ha.

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On October 16, 2013, Argonaut entered into a land and mining rights agreement with Richmont Mining, owner of the Island Gold mine, whose land lies immediately to the east of the Magino Gold Project. Under the terms of the agreement Argonaut will receive surface and mining rights down to a depth of 400 m (0 m elevation above sea level) on six claims. It will also receive mining and surface rights on two claims down to a depth of 100 m (300 m elevation above sea level). In addition, surface and mining rights to a depth of 400 m (0 m elevation above sea level) on four claims may be transferred to Argonaut conditional upon results of additional exploration work to be completed by Richmont. This transaction will provide Argonaut greater flexibility in its Project development and provide potential to expand the mineable resource at Magino to the east. Under the terms of the agreement, Richmont will receive mining rights on five claims below a depth of 400 m and one claim in its entirety. Upon completion of the land transactions Argonaut will make a net payment of C$2.0 million in cash. Table 4.1 presents the land holdings forming the Magino property as of January 9, 2016. Title to the property is wholly owned by Prodigy Gold Inc. (i.e., 100% Registered Ownership), however, title ownership to certain claims or parts of claims is to be transferred between the parties (Prodigy and Richmont – see Table 4.3 for interpretation of ownership). Figure 4.2 shows the locations of the individual claims. Table 4.1: Project Area Dispositions

Disposition Type Number Claim Numbers Leases – Mining Rights Only 1 722481(1) Leases – Surface Rights Only 1 722481(2) Leases – Mining and Surface 581951, 581948(3), 581949(3), 581950(3), 581952(3), 8 Rights 581953(3), 543310(6), 825287(7) 2048(1), 2049, 2050, 2051, 2052, 2053(1), 2102(1), 2054(6), Patents – Surface and Mining 18 2055(6), AC42(6), AC43(6), 1770(6), 1771(6), 1778(7), 3859(6), Rights 3860(6), 3861(6), 3951(6) 4218037, 4218038, 1110086, 1118352, 1174399, 1174400, 1174401, 1174849, 1235583, 1235584, Lease CL520 – Surface and 4218043(4), 4218044, 698646 to 698656, 698662, 698664 52 Mining Rights to 698669, 711129, 711133, 809963, 809967 to 809972, 841257 to 841259, 841270, 847804 to 847807, 847814, 884901, 4262081, 4262082, 4262085 698645, 698657, 698659 to 698661, 698670, 698671, Unpatented Mining Claims 17 711131, 711132, 711134, 711135, 884902 to 884904, 4276606, 1234858(5), 827520(5) (1) Transfer of Mining Rights below -400 m to Richmont Mines (pending) (2) Surface Rights Lease (pending) (3) Surface and Mining Rights Lease renewal (pending) (4) Mining Rights Only (5) Transfer of Unpatented Mining Claim to Richmont Mines (pending) (6) Transfer of Surface and Mining Rights to -400 m to Argonaut Gold (pending) (7) Transfer of Surface and Mining Rights to -100 m to Argonaut Gold (pending)

Source: Argonaut (2015)

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Figure 4.2: Claim Map of the Magino Property

Source: Argonaut (2015)

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Legal access to the Project is gained from Goudreau Road, which is a public, dirt road that goes through the property linking Dubreuilville with the town of Goudreau. There are no obligations that must be met in order for Prodigy to retain the property other than those associated with maintaining the leases and claims in good standing. There are no interests to be earned from any other parties or entities. Table 4.2 shows the mining title types along with the requirements of each. Table 4.2: Description of the Mining Title Types in Ontario

Mining Titles Associated Rights Exploration for mineral substances Unpatented Mining Claims Right to subsurface only Work required for renewal of right 20-year period No obligation or work required Leased Mining Claims Payment of annual fee Surface rights limited to mining activities For life No obligation or work required Patented Mining Claims Payment of annual fee Surface rights limited to mining activities Source: Turcotte et al. (2009)

The expiration date of each claim is presented in Table 4.3. Tables 4.4 and 4.5 show unpatented mining claims and leases and patented claims respectively.

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Table 4.3: Property Mineral Claims - Lease CLM 520

Claim No. Units Area (ha) Record. Date Due Date Owner Option Comment 4218037 1 20.408 2008-Dec-18 2017-Dec-18 Prodigy 100% SR+MR Lease Request 4218038 4 66.965 2008-Dec-18 2017-Dec-18 Prodigy 100% SR+MR Lease Request 1110086 2 32.552 1993-Jun-14 2018-Jun-14 Prodigy 100% SR+MR Lease Request 1118352 1 14.590 1993-Oct-13 2018-Oct-13 Prodigy 100% SR+MR Lease Request 1174399 4 51.624 1993-Oct-13 2018-Oct-13 Prodigy 100% SR+MR Lease Request 1174400 6 102.197 1993-May-26 2018-May-26 Prodigy 100% SR+MR Lease Request 1174401 1 14.929 1993-May-26 2018-May-26 Prodigy 100% SR+MR Lease Request 1174849 1 9.301 1993-Nov-03 2018-Nov-03 Prodigy 100% SR+MR Lease Request 1235583 12 190.851 2001-Dec-21 2018-Dec-21 Prodigy 100% SR+MR Lease Request 1235584 14 168.027 2001-Dec-21 2018-Dec-21 Prodigy 100% SR+MR Lease Request 4218043 3 23.861 2009-Feb-05 2018-Feb-05 Prodigy 100% MR Lease Request 4218044 1 16.049 2009-Feb-05 2018-Feb-05 Prodigy 100% SR+MR Lease Request 698646 1 13.358 1983-Mar-15 2016-Mar-15 Prodigy 100% SR+MR Lease Request 698647 1 16.079 1983-Mar-15 2016-Mar-15 Prodigy 100% SR+MR Lease Request 698648 1 14.894 1983-Mar-15 2016-Mar-15 Prodigy 100% SR+MR Lease Request 698649 1 12.397 1983-Mar-15 2018-Mar-15 Prodigy 100% SR+MR Lease Request 698650 1 16.189 1983-Mar-15 2018-Mar-15 Prodigy 100% SR+MR Lease Request 698651 1 12.127 1983-Mar-15 2018-Mar-15 Prodigy 100% SR+MR Lease Request 698652 1 13.575 1983-Mar-15 2018-Mar-15 Prodigy 100% SR+MR Lease Request 698653 1 17.254 1983-Mar-15 2018-Mar-15 Prodigy 100% SR+MR Lease Request 698654 1 13.422 1983-Mar-15 2018-Mar-15 Prodigy 100% SR+MR Lease Request 698655 1 15.937 1983-Mar-15 2016-Mar-15 Prodigy 100% SR+MR Lease Request 698656 1 16.375 1983-Mar-15 2016-Mar-15 Prodigy 100% SR+MR Lease Request 698662 1 15.663 1983-Mar-15 2016-Mar-15 Prodigy 100% SR+MR Lease Request 698664 1 15.371 1983-Mar-15 2018-Mar-15 Prodigy 100% SR+MR Lease Request 698665 1 13.424 1983-Mar-15 2018-Mar-15 Prodigy 100% SR+MR Lease Request 698666 1 11.852 1983-Mar-15 2018-Mar-15 Prodigy 100% SR+MR Lease Request 698667 1 15.904 1983-Mar-15 2018-Mar-15 Prodigy 100% SR+MR Lease Request 698668 1 16.605 1983-Mar-15 2016-Mar-15 Prodigy 100% SR+MR Lease Request 698669 1 16.023 1983-Mar-15 2016-Mar-15 Prodigy 100% SR+MR Lease Request 711129 1 16.110 1983-Feb-28 2016-Feb-28 Prodigy 100% SR+MR Lease Request 711133 1 19.423 1983-Feb-28 2016-Feb-28 Prodigy 100% SR+MR Lease Request 809963 1 10.692 1985-Feb-08 2018-Feb-08 Prodigy 100% SR+MR Lease Request 809967 1 15.697 1985-Feb-05 2016-Feb-05 Prodigy 100% SR+MR Lease Request 809968 1 15.093 1985-Feb-05 2016-Feb-05 Prodigy 100% SR+MR Lease Request 809969 1 18.474 1985-Feb-05 2018-Feb-05 Prodigy 100% SR+MR Lease Request 809970 1 14.902 1985-Feb-05 2018-Feb-05 Prodigy 100% SR+MR Lease Request 809971 1 14.790 1985-Feb-05 2018-Feb-05 Prodigy 100% SR+MR Lease Request 809972 1 15.565 1985-Feb-05 2018-Feb-05 Prodigy 100% SR+MR Lease Request 841257 1 23.380 1986-Mar-25 2016-Mar-25 Prodigy 100% SR+MR Lease Request 841258 1 14.393 1986-Mar-25 2016-Mar-25 Prodigy 100% SR+MR Lease Request 841259 1 10.342 1986-Mar-25 2016-Mar-25 Prodigy 100% SR+MR Lease Request 841270 1 11.645 1986-Feb-12 2018-Feb-12 Prodigy 100% SR+MR Lease Request 847804 1 13.365 1986-May-13 2018-May-13 Prodigy 100% SR+MR Lease Request 847805 1 11.494 1986-May-13 2019-May-13 Prodigy 100% SR+MR Lease Request 847806 1 10.544 1986-May-13 2018-May-13 Prodigy 100% SR+MR Lease Request 847807 1 14.277 1986-May-13 2018-May-13 Prodigy 100% SR+MR Lease Request 847814 1 18.145 1986-Apr-11 2018-Apr-11 Prodigy 100% SR+MR Lease Request 884901 1 12.180 1986-Apr-02 2016-Apr-02 Prodigy 100% SR+MR Lease Request 4262081 9 104.334 2011-Jun-01 2018-Jun-01 Prodigy 100% SR+MR Lease Request 4262082 3 41.191 2011-Jun-01 2018-Jun-01 Prodigy 100% SR+MR Lease Request 4262085 1 2.731 2011-Jun-01 2018-Jun-01 Prodigy 100% SR+MR Lease Request Source: Argonaut (2015)

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Table 4.4 Magino Property – Unpatented Mining Claims (UMC)

Claim No. Units Area (ha) Record. Date Due Date Owners Option Comment 698645 1 16 1983-Mar-15 2016-Mar-15 Prodigy 100% UMC 698657 1 16 1983-Mar-15 2016-Mar-15 Prodigy 100% UMC 698659 1 16 1983-Mar-15 2016-Mar-15 Prodigy 100% UMC 698660 1 16 1983-Mar-15 2016-Mar-15 Prodigy 100% UMC 698661 1 16 1983-Mar-15 2016-Mar-15 Prodigy 100% UMC 698670 1 16 1983-Mar-15 2016-Mar-15 Prodigy 100% UMC 698671 1 16 1983-Mar-15 2016-Mar-15 Prodigy 100% UMC 711131 1 16 1983-Feb-28 2016-Feb-28 Prodigy 100% UMC 711132 1 16 1983-Feb-28 2016-Feb-28 Prodigy 100% UMC 711134 1 16 1983-Feb-28 2016-Feb-28 Prodigy 100% UMC 711135 1 16 1983-Feb-28 2016-Feb-28 Prodigy 100% UMC 884902 1 16 1986-Apr-02 2016-Apr-02 Prodigy 100% UMC 884903 1 16 1986-Apr-02 2016-Apr-02 Prodigy 100% UMC 884904 1 16 1986-Apr-02 2016-Apr-02 Prodigy 100% UMC 4276606 10 160 2013-Apr-10 2016-Apr-10 Prodigy 100% UMC UMC – Transfer to 1234858 1 16 2009-Feb-05 2018-Feb-05 Prodigy 100% Richmont (pending) UMC – Transfer to 827520 1 16 1985-Apr-18 2018-Apr-18 Prodigy 100% Richmont (pending) Source: Argonaut (2015)

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Table 4.5 Magino Property – Leases and Patented Claims

Claim No. Area (ha) Record. Date Due Date Owners Option Comment

SSM581948 19.349 1994-Dec-01 2015-Nov-30 Prodigy 100% SR+MR Lease (renewal pending)

SSM581949 27.251 1994-Dec-01 2015-Nov-30 Prodigy 100% SR+MR Lease (renewal pending)

SSM581950 10.183 1994-Dec-01 2015-Nov-30 Prodigy 100% SR+MR Lease (renewal pending)

SSM581951 4.772 1994-Jun-01 2036-May-31 Prodigy 100% SR+MR Lease

SSM581952 17.088 1994-Dec-01 2015-Nov-30 Prodigy 100% SR+MR Lease (renewal pending)

SSM581953 7.679 1994-Dec-01 2015-Nov-30 Prodigy 100% SR+MR Lease (renewal pending) MR Lease below -400m Transfer to Richmont SSM722481 18.806 2009-May-01 2030-Apr-30 Prodigy 100% (pending) - SR Lease (pending) Patented Claim – SSM2048 19.334 N/A N/A Prodigy 100% MR below -400m Transfer to Richmont (pending) SSM2049 19.065 N/A N/A Prodigy 100% Patented Claim

SSM2050 21.652 N/A N/A Prodigy 100% Patented Claim

SSM2051 21.427 N/A N/A Prodigy 100% Patented Claim

SSM2052 14.405 N/A N/A Prodigy 100% Patented Claim Patented Claim – SSM2053 27.884 N/A N/A Prodigy 100% MR below -400m Transfer to Richmont (pending) Patented Claim – SSM2102 1.391 N/A N/A Prodigy 100% MR below -400m Transfer to Richmont (pending) Patented Claim - Richmont Transferred Property – SSM2054 16 N/A N/A Richmont 100% SR & MR to -400m Transfer to Argonaut (pending) Patented Claim - Richmont Transferred Property – SSM2055 16 N/A N/A Richmont 100% SR & MR to -400m Transfer to Argonaut (pending) Patented Claim - Richmont Transferred Property – AC42 16 N/A N/A Richmont 100% SR & MR to -400m Transfer to Argonaut (pending) Patented Claim - Richmont Transferred Property – AC43 16 N/A N/A Richmont 100% SR & MR to -400m Transfer to Argonaut (pending) Patented Claim - Richmont Transferred Property – SSM1770 16 N/A N/A Richmont 100% SR & MR to -400m Transfer to Argonaut (pending) Patented Claim - Richmont Transferred Property – SSM1771 16 N/A N/A Richmont 100% SR & MR to -400m Transfer to Argonaut (pending) SR & MR Lease - Richmont Transferred Property – SSM543310 16 2009-Jul-01 2030-Jun-30 Richmont 100% SR & MR to -400m Transfer to Argonaut (pending) SR & MR Lease - Richmont License Lands – SSM825287 16 2009-Jul-01 2030-Jun-30 Richmont 100% SR & MR to -100m Transfer to Argonaut (pending) Patented Claim - Richmont License Lands – SSM1778 16 N/A N/A Richmont 100% SR & MR to -100m Transfer to Argonaut (pending) Patented Claim - Richmont Conditional Property – SSM3859 16 N/A N/A Richmont 100% SR & MR to -400m Transfer to Argonaut (pending) Patented Claim - Richmont Conditional Property – SSM3860 16 N/A N/A Richmont 100% SR & MR to -400m Transfer to Argonaut (pending) Patented Claim - Richmont Conditional Property – SSM3861 16 N/A N/A Richmont 100% SR & MR to -400m Transfer to Argonaut (pending) Patented Claim - Richmont Conditional Property – SSM3951 16 N/A N/A Richmont 100% SR & MR to -400m Transfer to Argonaut (pending) Source: Argonaut (2015)

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4.3 Royalties, Agreements and Encumbrances On November 1, 1985, an agreement was reached between Cavendish Investing Limited (Cavendish) and Muscocho Explorations Limited (Muscocho Explorations). At the time, Cavendish and McNellen Resources Inc. (McNellen Resources), formerly Rico Copper (1966) Inc. each owned a 50% interest in the Property.

The agreement stipulated that Muscocho Explorations would purchase all of Cavendish’s right, title and interest in and to the joint venture with McNellen, and that Cavendish would retain a 10% royalty of Muscocho Explorations’ share of net profits derived from its participation in the joint venture. The agreement further stipulated that if Muscocho Explorations assigns any or all part of its interest in the joint venture to another party or parties, it will cause the assignee(s) of such interest to enter into an agreement with Cavendish under which such assignee(s) will assume all of Muscocho Explorations’ obligations under the terms of the agreement, including the payment of said royalty to Cavendish.

Net profits for the purposes of the above paragraph shall mean the monies received by Muscocho Explorations from its interest in the joint venture after Cavendish has paid Muscocho Explorations for all its costs incidental to the joint venture incurred before and after the closing date of the agreement.

In 1996, three companies – Muscocho Explorations, McNellen Resources, and Flanagan McAdam Resources Inc. – combined to form Golden Goose Resources (GGR), which emerged with a 100% interest in the Property. GGR thus became an assignee of Muscocho Explorations’ obligation to pay Cavendish a 10% royalty for its share of the net profits, after reimbursement of all costs incurred by Muscocho Explorations since November 1985.

Argonaut cannot reasonably estimate the likelihood of a royalty being paid, nor the amount. Therefore, no royalty was included in this report’s economic analysis.

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4.4 Environmental Liabilities and Permitting 4.4.1 Environmental Liabilities

The Project is a brownfield site. The most recent mine development from 1987 to 1992, was put on a “care and maintenance” basis on September 8, 1992. Muscocho Explorations Limited, a precursor to Prodigy, submitted a closure plan in January 1993, which was amended in 2003 and which is still in effect. Some of the closure elements have been completed, however, as described below, additional site rehabilitation and closure of the tailings management facility are still required. The revised 2003 cost estimate for the work was $C271300. Surface water monitoring conducted as recently as November 2015 indicated that there are no water quality issues associated with the underground mine or the historic tailings facility. The historic tailings facility consists of a 1.3 Mm3 capacity pond formed by two compacted earth-fill dams (East Dam and Central Dam) and an 80,000 m3 capacity polishing pond located downstream from Central Dam. The most recent dam inspection was carried out in June 2012 and revealed there were no stability issues and recommended repairs to the polishing pond spillway. These repairs have been implemented. The closure plan indicates that “total abandonment” is achievable, as neither tailings nor waste rock is acid generating and there are no “time-dependent adverse factors.” Site inspections and evaluation of the data support this earlier finding. 4.4.2 Status of Environmental Approvals and Permits

Federal, provincial and municipal requirements and the status of the approvals, as well as ongoing consultations with the First Nations and Métis groups, are described in the following sections. 4.4.2.1 Environmental Assessment 4.4.2.1.1 Federal The Canadian Environmental Assessment Agency (the Agency) is the centre of expertise responsible for the overall administration of the federal environmental assessment process. The Agency is the primary coordinating authority for Projects regulated under the Canadian Environmental Assessment Act (CEAA). The Project meets the thresholds within the Regulations Designating Physical Activities under CEAA and as such, it requires the preparation of an Environmental Impact Statement (EIS). The Agency has approved Prodigy’s Project Description Report (PDR) and has issued guidelines for the preparation of the EIS in November 2013. Argonaut prepared a Working Draft Environmental Impact Statement (SLR 2014) for a smaller 12,500 t/d Project. The Working Draft was submitted in November 2014 to Federal and Provincial Government agencies and a number of identified interested Aboriginal groups. The comments received from this non-legislated voluntary review process will inform and enhance the formal Draft EIS submission. The Agency has furthermore confirmed that the Project will not be referred to a review panel, which is a process that can extend the timeframe required to obtain approvals.

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In January 2015 progress on the EIS document production was halted while comments on the Working Draft EIS were solicited and Argonaut undertook an exploration program to identify potential resources within lands acquired through the land and mining rights agreement with Richmont Mines Inc. The changes to the Project as previously described within the CEAA process will be incorporated into the effects evaluation and communicated to Federal and Provincial agencies, Aboriginal groups and local communities. The Agency will evaluate the scope of changes as they pertain to the main Project components and the EIS guidelines previously issued. If the Project changes are deemed substantive a new Project description may be required by the Agency for environmental assessment determination, EIS guideline development and consultation. 4.4.2.1.2 Provincial The Environmental Assessment Act (EAA) applies to municipal and provincial governments and public organizations such as conservation authorities. Certain regulations bring private sector Projects under the EAA. While there are no specific regulations subjecting mining Projects to the EAA, certain mining Project components have EAA requirements. These EA requirements are captured within one or more streamlined EA processes (Class EAs and Regulations) and are listed below:  MNR Class EA for Resource Stewardship and Facility Development Projects; including a municipal type waste landfill; and  An Environment Screening Document to comply with the Electricity Sector regulation for the proposed 3 MW of onsite, emergency diesel power generators. 4.4.2.2 Permits 4.4.2.2.1 Federal and Provincial Argonaut will submit applications for and obtain a series for Federal and Provincial Permits for various activities at the Project. The consultation activities associated with the Federal Fisheries Act will be integrated into the Federal Environmental Assessment process in order to coordinate activities and ensure the timely approval of permit applications under the Fisheries Act once environmental assessment process has been completed. Planning for those Project aspects that have specific permit implications will commence prior to completion of the environmental assessment processes in order to not delay the overall Project implementation. Section 20 of this report contains a list of all potential permits that Argonaut will need to obtain. 4.4.2.2.2 Municipal Finan Township is an “unorganized” township, and therefore is not subject to municipal laws or municipal zoning designations. However, there is a regional zoning order that includes Finan Township and prohibits camp facilities in certain locations and under specific circumstances. Additionally there are specific infrastructure components that may overlap with the township regulatory requirements, for example, nominating waste disposal. Argonaut is working with the township to resolve issues associated with the regional zoning order and identify the specific components that overlap.

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Table 4.6: Federal Approvals and Permits

Regulatory Agency Possible Applicability to the Project Fish habitat protection at water crossings, dams, dykes, and diversions Department of Fisheries and Oceans Canada (DOF) MMER wastewater systems effluent regulations Minimizes harmful alteration, disruption or destruction (HADD) for water-related development activities Waste management requirements Spill and leak prevention from petroleum products and allied petroleum products tanks and dispensers Reporting of onsite substances such as ammonia, cyanide, etc. Tailings impoundment area approval for potential fish impacts in natural water bodies Environment Canada Effluent discharge requirements for ongoing compliance and effects monitoring Species at risk and habitat protection in the Project area Preventing harm to migratory birds, nests, eggs, or waters frequented by migratory birds Assessment to protect historical, archaeological, paleontological, or architectural sites Licensing for explosives use and storage Natural Resources Canada Permits for explosives transportation, importation, purchase, and possession Emergency response assistance plan Accidental release and imminent accidental release report requirements Transport Canada Maximum allowable explosives quantity in a road vehicle Transpiration permit requirements Approvals for in-water work or for infrastructure crossing navigable waters Canadian Heritage Exporting permit for mineral specimens Source: Argonaut (2015)

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Table 4.7: Provincial Approvals and Permits

Province of Ontario Regulatory Agency Possible Applicability to the Project Electrical Safety Authority Site approval for electricity safety Independent Electricity System Operator Approvals for establishing or modifying electrical grid Ministry of Community Safety and Correctional Requirement to ensure safety of all equipment, systems, Services processes, structures, and fuels Environmental compliance requirements for operations- related air and noise emissions Environmental compliance requirements for operations- related discharges into the environment Waste management requirements Sewage works requirements Tailings management requirements Ministry of Environment (MOE) Permitting to take water for domestic and industrial uses Process overflow or cooling water effluent discharge compliance requirements Development of a spill prevention and contingency plan Financial assurance for landfill contingency plans and closure/post-closure care Compliance requirements for monitoring, testing, and dewatering wells on and around Project Approvals for the Project potable-water system supplied to Ministry of Health and Long-Term Care the camp and other facilities Ministry of Labour (MOL) Predevelopment review for drawings and specifications Requirements for the Regional Authority to govern Project works Fish collection and transportation licensing for scientific study Authorization required to remove a beaver dam Permitting to obtain aggregate and/or operate a pit for obtaining aggregate Licensing for clearing timber from areas around mine Minimize adverse and provide overall beneficial effects to Listed Species during Project construction and operation Permitting for burning of non-merchantable timber, brush, and wood scrap from around the Project Ministry of Natural Resources (MNR) Approval for construction of dams, culverts, causeways, dykes, or diversions, including tailings dams Permitting prior to constructing a building or water crossing road, dredge or fill shore lands or removal of aquatic vegetation on public land Land use permitting for right to occupy public lands for an authorized purpose of 10 years or less License of occupation for right to occupy public lands for an authorized purpose of up to 20 years Work permit for movement of heavy equipment to and from a work site not served by an existing road Work permit for construction of radio communications equipment Ministry of Northern Development Closure plan approval and Mines (MNDM) Operational policy for consultation Notice of Project status, closure plan, and consultation with

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Province of Ontario Regulatory Agency Possible Applicability to the Project Aboriginal groups Public Notice requirements to the Director of Mine

Rehabilitation Entrance permit requirements for constructing an entrance or access to a provincial highway, and encroachment permit requirements for works at a provincial right-of-way Ministry of Transportation (MOT) Major permits to erect and refurbish buildings on site, and for land use Class environmental assessment for facility construction adjacent to, or on a provincial highway Ontario Ministry of Tourism, Archaeological assessment requirements Culture and Sport Source: Argonaut (2015)

4.5 Other Significant Factors and Risks SLR is not aware of any significant risk factors associated with obtaining the necessary approvals and permits for the Project, or with the construction and operation of the TMF or the WRMF. The most significant challenges regarding approvals will be the creation or enhancement of aquatic habitat to offset the lakes taken by the Project, and on the Project engineering, in managing the TMF seepage during operation and closure and minimizing seepage from Goudreau Lake into the pit. There is precedence for creating offsets and for dealing with these engineering challenges so these aspects are not considered significant risks.

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5 Accessibility, Climate, Local Resources, Infrastructure & Physiography

5.1 Accessibility The Project is located in Finan Township, approximately 40 km northeast of Wawa, Ontario. The property can be accessed via a 14 km, all-weather gravel road (Chemin Goudreau) west of Dubreuilville, which is located on Highway 519, 30 km east of the junction of Highway 17 and Highway 519. This junction is approximately 40 km north of Wawa on Highway 17. Additional access to the Project is provided via Road 48, also from Dubreuilville, which is approximately a 24 km gravel road. Both of these roads include bridges across the Magpie River. While this latter road is longer, its bridge appears to have a higher load rating. Current access routes to the Project are shown in Figure 5.1.

5.2 Climate The region has a humid, continental climate characterized by warm summers and cold winters. The warmest month of the year is August with an average daily temperature of 14.9 °C. The coldest month of the year is January with an average daily temperature of -14.8 °C (Environment Canada Weather Normals for Wawa, 1971-2000). The average annual precipitation at Wawa is 1,002.2 mm, with rainfall the dominant form of precipitation from April through November, and snowfall dominant from December through March. The month with the highest rainfall is September, averaging 120.6 mm, and the month with peak snowfall is December with a monthly average of 82.9 cm. Exploration and mining activities can be conducted on the property year- round.

5.3 Physiography The property is located in the Boreal Shield physiographic region of Canada. The topography ranges from about 385 m to 450 m AMSL and the area is characterized by low ridges and hills up to 50 m high, flanked by generally flat areas of glacial outwash, swamps, and numerous lakes and bogs. A topographic map of the Project area is provided in Figure 5.2. The vegetation is comprised of mixed forest, which dominates the landscape, with secondary conifer occurrence. Hardwood trees in the area are largely composed of trembling aspen and white birch, with balsam poplar occurring on more moist areas. Conifer species common to the area include black spruce, white spruce, balsam fir, and jack pine. Undergrowth includes grass, ferns, moss, and berry plants, and numerous types of shrubs. Animals common to the area include moose, black bear, deer, lynx, bobcat, wolf, beaver, muskrat, hare, marten, squirrel, and chipmunk, as well as a variety of birds including grouse, raven, waterfowl and birds of prey.

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Figure 5.1: Accessibility of the Magino Property

Source: Argonaut (2014)

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Figure 5.2: Topography of the Magino Property

Source: Argonaut (2014)

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5.4 Local Resources The area is well serviced by mining and milling industries. The town of Dubreuilville, population 600, is the closest community. The Island Gold Mine (Richmont) is 1.5 km east of the historical Magino mine site, the Eagle River Mine (Wesdome Gold Mines) is 80 km to the southwest, and the Hemlo operations (Barrick Gold Corporation) are 150 km to the northwest. General labour, experienced workers, and mining supplies are readily available in Wawa (85 km by road; population approximately 3,000), Sault Ste. Marie (310 km by road; population approximately 75,000) and Thunder Bay (560 km by road; population approximately 108,000).

5.5 Infrastructure The Property is connected to the rail sidings of Lochalsh (14 km to the east, Canadian Pacific Railway) and Goudreau (7 km to the west, Algoma Central Railway) by means of a gravel road. A 44 kV power line extends from Goudreau to Lochalsh and includes the historical Magino mine site. Most of the former surface buildings on the mine site have been dismantled, and only the electrical and carpenter shops remain in service. The underground workings were in operation until 1993, and are currently flooded and sealed to prevent entry. 5.5.1 Power

An existing 44 kV power line owned by API is currently servicing the property. This circuit originates near Highway 101, south of Hawk Junction, and provides power to the towns of Hawk Junction and Dubreuilville, as well as the settlements of Goudreau, Lochalsh and Missanabie. The connected load is approximately 50 MW, with an average operating demand of 37.4 MW, which is more than the available capacity on the current transmission line. The plan to meet the power requirements for the Magino Project is to have API install an additional 44 kV line from Hawk Junction to site on the same right of way as the existing line. Great Lakes Power will upgrade their facilities at Hollingsworth and Hawk Junction to supply the necessary power to API, and API will provide an additional dedicated line to site. The existing API transmission line that traverses the Project area will need to be relocated around the mine pit area, and alternative power line re-routing alternatives are being considered. These include relocating the transmission line to follow the re-routed public access road around the west of the Project area, re-routing the line to pass between the proposed mine pit and the low-grade ore stockpile, or around the south of the Project area. The former alignment is preferred. 5.5.2 Water

Sources of make-up water are the local lakes that have significant catchment areas such as Goudreau Lake and possibly Herman Lake. Other sources will include the water collected in the pit, runoff water from the process plant, the waste management units, and potentially groundwater. To the extent groundwater supplies are developed, wells, well pumps, and pipelines are planned to be installed. If used, groundwater supplies are not expected to contribute a significant proportion of the total water supply, since there are no significant groundwater resources available in the area.

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5.5.3 Mining Personnel

General labour and experienced workers are available in Wawa, Sault Ste. Marie and Thunder Bay. During the construction phase of the Project, the workforce needed is estimated to be between 500 and 600 positions. Argonaut intends to fill as many of these positions locally as possible. During the operations phase, it is estimated that approximately 400 positions are planned to be required. It is expected that personnel that do not live locally can drive to the area and a camp facility is planned for the construction and operating phases of the Project. 5.5.4 Historic Tailings Management Facility

The historic tailings storage facility still exists, but is too small for the Project to utilize. As part of the closure plan, it will be rehabilitated. 5.5.5 Potential Tailings Management Areas

The method for managing the 105 Mt of tailings is planned to be as tailings slurry behind an earthen embankment constructed using waste rock. Slurry disposal is a practical option given the significantly increased cost and complexities associated with other methods of disposal such as filtering and drystacking. Studies are underway to determine to what extent the slurry tailings should be thickened before disposal. The tailings facility is planned to be located in the center of the site for the least amount of environmental impact. There are no alternative sites for tailings management due to the limited space available and need for a geotechnically sound location for the facility embankment. 5.5.6 Potential Waste Disposal Areas

5.5.6.1 Mining Waste Alternatives The area that can be used for both tailings and waste rock management is limited to the valley located between the two roughly east-west oriented ridgelines located north of the proposed pit. Moving the mine waste management area to the west or the north would result in greater impacts to the existing lakes and has not been pursued. The TMF is located on the west side of the management area, with the majority of WRMF adjacent to, and on the east, north and south side of the TMF. Locating a significant portion of the WRMF on the west side would increase the haul distance from the pit and increase diesel consumption without any environmental advantages. The WRMF cannot be moved further to the east because it would mean the relocation of the mine facilities and eliminate site access from Goudreau Road along the eastern property boundary. It cannot be located to the southeast because of the presence of the pit.

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5.5.6.2 Non-Hazardous, Non-Mining Solid Waste Alternatives Non-hazardous, non-mining solid waste, is planned to be disposed of either on-site, off-site, or both. These alternatives would be used only for inert or municipal-type non-hazardous solid waste such as food waste, cardboard, plastics, metal tins, glass, scrap metal, wood, and paper. The off- site facility would be a new community landfill for Dubreuilville. In the event this new landfill was not completed in time, a new landfill would be construction on site. 5.5.7 Potential Processing Plant Sites

Alternative process plant locations were considered during early project planning. Locations considered included the location selected for the preferred alternative and two additional locations approximately 300 and 500 m north of the pit rim, respectively. These latter two alternatives were eliminated from further consideration because they did not provide any environmental advantages and were not optimally located for mine operations. The site of the preferred alternative for ore processing is shown in the TMF and WRMF General Arrangement figure in Section 18 and is located for the following reasons:  It is out of the way of waste rock and tailings management facilities and associated haul roads  It allows for the nearby placement of the low-grade stockpile for improved economics and environmental efficiency (e.g., reduced fuel consumption and greenhouse gas emissions) for re-handling if the stockpiled material is processed  It is far enough from the pit rim to eliminate concerns about mill and process plant equipment being subject to damaging blasting vibrations and fly-rock from the mine pit  It minimizes future resource development constraints since it is located away from the pit rim where mineralized areas are known to occur.

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6 History

This section was taken nearly verbatim from the last Technical Report (JDS, 2014) and is repeated here for completeness. Table 6.1 was updated to reflect exploration work completed since the last Technical Report. The following account of the history of the Magino deposit is derived from Koskitalo (Nov 1983), Turcotte and Pelletier (May 2009), Turcotte, et al (2010), and Ross (2011), where a more detailed description of historical exploration on the Property can be found. The discovery of iron mineralized material around the turn of the 20th century in the Michipicoten area southwest of Wawa led to a search for similar deposits along the iron ranges further north. The iron formations near Goudreau were found to contain pyrite in sufficient quantity to form the basis of a mining industry of considerable importance at one time. Between 1916 and 1919, about 250,000 t of pyrite were produced, but a lack of markets for sulphuric acid at the close of World War I led to the abandonment of the mines and the dismantling of the acid plants that had been erected two miles east of Goudreau. Gold was discovered in 1918 near Goudreau, and prospecting and mining have continued since then, being particularly active from the mid-1920s to the beginning of World War II. Records show that gold production from the Goudreau area was sporadic. Various companies owned, operated, and explored the Property between 1917 and today with a 30-year gap of inactivity from 1942 to 1972. A summary of their activities can be found in Table 6.1.

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Table 6.1: Historical Work Summary for the Property

Year Company Work Description Results Reported By Mr. D. J. McCarthy, Mr. W. J. 1917 Staked patented claims Discovery of gold Koskitalo, 1983 Webb Development of claim group McCarthy-Webb, Goudreau 1918 to 1924 Sinking of two shallow shafts None available Koskitalo, 1983 Mines, Ltd. 335 m of surface diamond drilling McCarthy-Webb, Goudreau Test pits and trenching None available Koskitalo, 1983 Mines, Ltd. Constructed a 25-ton/day mill 1925 to 1933 Consolidated Mining and Drilled 5 surface DDH holes None available Koskitalo, 1983 Smelting Company 421 tons of ore milled McCarthy-Webb, Goudreau Test pits and trenching 144 oz gold produced 1934 Koskitalo, 1983 Mines, Ltd. Au grade ~ 0.342 oz/ton (10.6 g/t) Surface mining 47,785 tons milled 33° inclined shaft sunk 2,274 oz gold produced 1935 to 1937 Algoma Summit Gold Mines Underground development work Koskitalo, 1983 Au grade ~ 0.048 oz/ton (1.5 500 t/d mill constructed g/t) Underground diamond drilling 68,421 tons milled Inclined shaft sunk to 114 m 6,049 oz gold produced Algona Summit Gold Mines Underground diamond drilling Koskitalo, 1983 Au grade ~ 0.088 oz/ton (2.7 Drifting 1938 to 1939 g/t)

Mr. J. O'Brien Exploration drilling Discovery of E Zone Koskitalo, 1983

Detailed underground exploration 309 oz of Au from mill 1939 to 1942 Magino Gold Mines Koskitalo, 1983 Mine closed cleanup Detailed underground exploration New mineralized material 1972 Mr. C. McNellen Koskitalo, 1983 Exploration: 6 DDH's totaling 610 m intersections

McNellen Resources, Tested continuity of A, B, and 1981 Exploration drilling: 16 DDH's totaling 2,261 m Koskitalo, 1983 Incorporated E Zones

Underground drilling: 42 DDH's totaling 2,616 m Increased delineation of gold Relogging of old core resource 1982 Cavendish Investing, Limited Koskitalo, 1983 Underground channel sampling Surface core drilling: 38 DDH's totaling 2,073 m McNellen Resources, Underground development work 1986 to 1987 Incorporated, Muscocho Production stopes developed Nielsen, 1995

Explorations, Limited McNellen Resources, 768,678 tons of ore milled Underground mine production 1988 to 1992 Incorporated, Muscocho 105,543 oz. gold produced Nielsen, 1995

Explorations, Limited 0.137 oz/ton (4.3 g/t) grade DDH S-97-01 intersected Surface drilling: 10 DDH's totaling 2,088 m 1.548 g/t Au over 24 m Check sampling program Golden Goose Resources, DDH S-97-09 intersected 1997 Surface geochem study Ross, 2011 Inc. 1.502 g/t Au over 26 m IP survey of Webb Lake Stock DDH S-97-10 intersected Stripping, mapping & channel sampling 1.524 g/t Au over 22 m DDH 00-01 intersected 2.801 g/t Au over 13.72 m

Golden Goose Resources, DDH 00-07 intersected 3.358 2000 Surface diamond drilling: 19 DDH's totaling 1,231 m Prodigy, 2014 Inc. g/t Au over 10.36 m

DDH 00-18 intersected 0.987 g/t Au over 31.09 m DDH 02-02 intersected 2.231 g/t Au over 6.31 m

Golden Goose Resources, DDH 02-05 intersected 2002 Surface diamond drilling: 17 DDH's totaling 2,743 m Prodigy, 2014 Inc. 1.240 g/t Au over 14.02 m

DDH 02-15 intersected 0.609 g/t Au over 10.21 m DDH 2007-22 intersected 3.260 g/t Au over 19.00 m

Golden Goose Resources, DDH 2007-24 intersected 2006 Surface diamond drilling: 18 DDH's totaling 8,055 m Prodigy, 2014 Inc. 3.172 g/t Au over 30.20 m

DDH 2007-26 intersected 2.131 g/t Au over 21.00 m DDH 09-03 intersected 1.309 g/t Au over 13.00 m Surface diamond drilling: 8 DDH's totaling 2,371 m Golden Goose Resources, DDH 09-06 intersected 2009 plus 14 core holes from 2007 for 9,239m Prodigy, 2014 Inc. 4.733 g/t Au over 4.00 m

DDH 09-08 intersected 1.518 g/t Au over 10.00 m DDH 10-02 intersected 1.656 g/t Au over 8.00 m

DDH 10-02 intersected 1.138 2010 Kodiak Exploration Limited Surface diamond drilling: 14 DDH's totaling 4,006 m Prodigy, 2014 g/t Au over 8.50 m

DDH 10-03 intersected 2.867 g/t Au over 5.00 m DDH MA11-004 intersected 2.881 g/t Au over 65.60 m

DDH MA11-055 intersected 2011 Prodigy Gold Incorporated Surface diamond drilling: 211 DDH's totaling 58,685 m Prodigy, 2014 2.511 g/t Au over 42.00 m

DDH MA11-083 intersected 2.019 g/t Au over 62.00 m DDH MA12-256 intersected 1.346 g/t Au over 51.00 m

DDH MA12-264 intersected 2012 Prodigy Gold Incorporated Surface diamond drilling: 486 DDH's totaling 126,898 m Prodigy, 2014 1.685 g/t Au over 54.00 m

DDH MA12-429 intersected 2.403 g/t Au over 55.00 m Initial results suggest high Began sampling of old core bias with older data 2013 Argonaut Gold Inc. Selection of metallurgical samples Completed metallurgical Argonaut, 2015 Worked on PFS study (JDS) study Completed PFS Re-sample results suggest Continued sampling of old core 2014 Argonaut Gold Inc. high bias with older data Argonaut, 2015 Review of historical underground data Filed PFS in early January Surface diamond drilling: 50 DDH's totaling 11,288 m Extended mineralization Remodeled deposit (only 48 holes were available for model eastward 2015 Argonaut Gold Inc. update) Argonaut, 2015 Will file updated PFS in early Leased claims from Richmont 2016

Source: Modified by RMI (2015) and Argonaut (2014) after Ross (2011)

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6.1 Ownership In the fall of 1917, D.J. McCarthy and W.J. Webb of Sault Ste. Marie, Ontario staked the current patented claims for pyrite after Rand Consolidated and Nichols Chemical Company started their operations in the district. Gold was discovered on the property on what is now claim SSM 2050. McCarthy‐Webb Goudreau Mines Limited (MWG) was formed to take over and develop the claim group. Between 1925 and 1933, MWG excavated test pits and trenches on the property, built and operated a small test mill with a daily capacity of 25 tons, and tried to interest major companies in the property. One such company was Consolidated Mining and Smelting Company (Smelters), which drilled an unknown number of metres in five surface holes. In 1935, Algoma Summit Gold Mines (ASG) started underground development by sinking an inclined shaft at 33° on the Grey Vein to a vertical depth of 100 feet. During 1936, a 500 t/d mill was constructed, consisting of amalgamation and flotation sections. Toward the end of 1938, control of the property passed to a newly formed company called Magino Gold Mines, Limited who commenced a detailed underground exploration program consisting of diamond drilling, mapping, sampling, and drifting in an effort to develop a proven ore reserve inventory. It would also appear that just before Magino Gold Mines acquired the property, the M.J. O'Brien interests, who operated the nearby Cline Gold Mine, drilled a series of holes east of the mill buildings and discovered a new gold zone referred to as the "E" Zone (Koskitalo, 1983). On September 25, 1981, McNellen Resources, Incorporated (McNellen), formerly Rico Copper, Incorporated (Rico) entered into a joint venture with Cavendish Investing, Limited (Cavendish), and under the terms of the agreement, Cavendish could earn an undivided 50% interest in the property and project management control by expending $900,000 CAD on the property (Koskitalo, 1983) which they did. On November 1, 1985, an agreement was reached between Cavendish and Muscocho Explorations, Limited (Muscocho Explorations). At the time, Cavendish and McNellen each owned a 50% interest in the Property. Underground development began in 1986 under Project ownership of McNellen and Muscocho Explorations, with production beginning in 1988. Mining continued from 1988 to 1992, during which 768,678 t were processed at a recovered grade of 0.137 oz/t gold (4.3 g/t), producing 105,543 oz of gold (McBride, 1991; Nielsen, 1995; Perkins, 1999; Ross, 2011). Twenty-eight shrinkage stopes were mined totaling 177,486 t at a grade of 0.217 oz/t, producing 38,572 oz of gold. Thirty-four long-hole stopes were mined totaling 371,285 t at a grade of 0.118 oz/t (3.7 g/t) and producing 43,938 oz of gold. Three combined long-hole and shrinkage stopes were mined totaling 53,766 t at a grade of 0.177 oz/t (5.5 g/t), producing 9,534 oz of gold. The mine closed in mid-1992 due to high operating costs, and the underground workings were allowed to flood. Excess dilution within long-hole stopes seemed to be a major factor in the reduced grades from these stopes, and the lower operating costs of the long-hole mining method were not sufficient to offset the dilution factor (Nielsen, 1995).

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In 1996, three companies – Muscocho Explorations, McNellen Resources, and Flanagan McAdam Resources, Incorporated (Flanagan) – combined to form Golden Goose Resources (GGR), which emerged with a 100% interest in the Property. On August 31, 2010, Kodiak Exploration Limited (Kodiak) and GGR announced a definitive merger agreement and plan of arrangement dated August 30, 2010, whereby Kodiak would acquire all of the issued and outstanding shares of Golden Goose. The arrangement effectively combined the assets of both companies on a consolidated basis, with GGR becoming a wholly-owned subsidiary of Kodiak. On January 4, 2011, Prodigy announced that it was the named unification of Kodiak and GGR. On February 9, 2011, Prodigy signed an option agreement with MPH Resources allowing Prodigy to earn up to a 100% interest in the 128 ha Gould Gold Property, adjacent to the Property. The option property is identified as numbers 4218037 and 4218038 in Figure 4-2. In 2012 Prodigy earned 100% interest in the property. On December 11, 2012, an agreement was completed that made Prodigy a wholly-owned subsidiary of Argonaut.

6.2 Historic Mineral Resource Estimates There have been a number of mineral resource estimates completed for the Magino deposit over the past 30 years. Many of those estimates were completed in the 1980's and 1990's during a period of underground development and production. The Qualified Person responsible for this section has not done sufficient work to classify those historical estimates as current mineral resources nor recognizes those estimates as valid resources. Those estimates should not be relied upon. The Qualified Person responsible for this section is aware of eight NI 43-101 technical reports that were prepared for past and current owners of the Magino property. The Qualified Person responsible for this section has not done sufficient work to classify those historical estimates as current mineral resources. Those previously disclosed mineral resources are now considered to be obsolete and have been replaced by the mineral resources that are the subject of this Technical Report. Tables 6.2 summarizes obsolete historical Measured + Indicated mineral resources that were publicly disclosed by NI 43-101 technical reports from 2004 through 2013. Table 6.3 summarizes obsolete historical Inferred mineral resources that were publicly disclosed by NI 43-101 technical reports from 2004 through 2013. The Qualified Person responsible for this section notes that the February 3, 2012 Tetra Tech NI 43-101 Technical Report utilized the results from the November 2011 Snowden NI 43-101 Technical Report, resulting in identical resources.

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Table 6.2: Historical Measured and Indicated Mineral Resource Estimates

Technical Au Au Preparing TR Prepared Qualified Person Tonnes Au Report Cutoff Ozs Company For (Resources) (000) (g/t) Date 1 (g/t) (000) Snowden Golden Goose Mining Industry 2-Apr-04 Burns, N., P. Geo. 2 1.37 6,619 2.57 549 Resources, Inc. Consultants Turcotte, B., P. Golden Goose InnovExplo 25-Jun-08 Geo. & Pelletier, C., n/a n/a n/a n/a Resources, Inc. P. Geo. Turcotte, B., P. Golden Goose InnovExplo 28-May-09 Geo. & Pelletier, C., 3.00 2,092 6.74 453 Resources, Inc. P. Geo. Prodigy Gold CWA Engineers 29-Mar-11 Ross, A., P. Geo. 0.35 51,600 1.16 1,920 Inc. Snowden Mining Prodigy Gold Industry 2-Nov-11 Ross, A., P. Geo. 0.35 67,555 1.00 2,176 Inc. Consultants Tetra Tech Prodigy Gold 3-Feb-12 Ross, A., P. Geo. 0.35 67,555 1.00 2,176 Wardrop Inc. Tetra Tech Prodigy Gold McCracken, T., P. 4-Oct-12 0.35 223,480 0.87 6,251 Wardrop Inc. Geo. JDS Engineering Argonaut Gold Kirkham, G., P. 17-Dec-13 0.35 127,762 1.01 4,161 & Mining Inc. Inc. Geo.

1 The Qualified Person responsible for this section has not done sufficient work to classify these historical estimates as current and does not recognize these resources as current.

2 Burns reported the resource in Imperial units (short tons and ounces per ton) which were converted to metric units by RMI. Source: RMI (2015)

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Table 6.3: Historical Inferred Mineral Resource Estimates

Technical Au Au Preparing TR Prepared Qualified Person Tonnes Au Report Cutoff Ozs Company For (Resources) (000) (g/t) Date 1 (g/t) (000) Snowden Mining Golden Industry Goose 2-Apr-04 Burns, N., P. Geo. 1 1.37 1,081 2.43 85 Consultants Resources, Inc. Golden Turcotte, B., P. InnovExplo Goose 25-Jun-08 Geo. & Pelletier, C., 3.00 3,756 5.94 717 Resources, Inc. P. Geo. Golden Turcotte, B., P. InnovExplo Goose 28-May-09 Geo. & Pelletier, C., 3.00 5,829 6.29 1,178 Resources, Inc. P. Geo. CWA Prodigy Gold 29-Mar-11 Ross, A., P. Geo. 0.35 17,500 1.04 587 Engineers Inc. Snowden Prodigy Gold Mining Industry 2-Nov-11 Ross, A., P. Geo. 0.35 54,242 0.99 1,721 Inc. Consultants Tetra Tech Prodigy Gold 3-Feb-12 Ross, A., P. Geo. 0.35 54,242 0.99 1,721 Wardrop Inc. Tetra Tech Prodigy Gold McCracken, T., P. 4-Oct-12 0.35 13,809 0.80 355 Wardrop Inc. Geo . JDS Argonaut Kirkham, G., P. Engineering & 17-Dec-13 0.35 30,053 1.08 1,044 Gold Inc. Geo. Mining Inc. 1 The Qualified Person responsible for this section has not done sufficient work to classify these historical estimates as current and does not recognize these resources as current. 2 Burns reported the resource in Imperial units (short tons and ounces per ton) which were converted to metric units by RMI. Source: RMI (2015)

6.3 Historical Production Total historic production from the Magino property is 885,305 tons (803,135 t) of ore yielding 114,319 troy ounces (oz) at 0.129 oz/ton (4.43 g/t) gold (RMI, 2015).

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7 Geological Setting and Mineralization

7.1 Archean Superior Province The Archean Superior Craton forms the core of the North American continent and is surrounded and truncated on all sides by Proterozoic orogens, the collisional zones along which elements of the Precambrian Canadian Shield were amalgamated (Hoffman, 1988 and 1989). The Superior Province represents 2 M km2 of this craton that is free of significant post-Archean cover rocks and deformation (Card and Poulsen, 1998). A first order feature of the Superior Province is its linear sub-provinces of distinctive lithological and structural character, accentuated by subparallel boundary faults (e.g. Card and Ciesielski, 1986). Trends in the Superior Province are generally easterly in the south, westerly to north-westerly in the northwest, and north-westerly in the northeast (Figure 7-1). The southern Superior Province (to latitude 52° north) is a major source of mineral wealth. Owing to its potential for base metals, gold and other commodities, the Superior Province continues to attract mineral exploration in both established and frontier regions. Figure 7.1: Tectonic Subdivisions of the Superior Province of Northern Ontario

Source: Stott et al. (2007)

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7.2 Wawa Subprovince The Magino property is located in the Wawa Subprovince (Figure 7.2). Most geologists accept a correlation between the Wawa and Abitibi terranes across the transverse Kapuskasing uplift (Percival, 2007).

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Figure 7.2: Major Geological Elements of the Eastern Wawa Subprovince

Source: Card & Poulsen (1998)

Mineralization occurs in two main regions: the Michipicoten-Mishubishu belt in the Wawa area and the Shebandowan-Schreiber belt to the west (Percival, 2007). The Michipicoten-Mishubishu belt contains mainly iron and gold deposits with some nickel and copper-vein deposits (Figure 7.3). Iron deposits are in oxide-, sulphide- and carbonate-facies iron formations that lie stratigraphically above the 2.74 to 2.735 Ga Wawa assemblages. Gold deposits in this region occur within veins associated with shear zones in plutonic rocks of variable composition and age.

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The Shebandowan-Schreiber belt hosts important deposits of gold, iron and base metals (volcanic- hosted massive sulphide deposits; e.g. Manitouwadge) (Peterson and Zaleski, 1999; Zaleski et al, 1999), as well as intrusion-hosted nickel deposits. The most significant is the Hemlo gold camp, a large disseminated deposit (Muir, 2003) in a strongly deformed, circa 2.693 to 2.685 Ga volcano- sedimentary sequence (Davis and Lin, 2003). Gold was deposited during D2 sinistral wrench deformation between 2.680 and 2.677 Ga, likely from fluids derived from granitoid rocks. Figure 7.3: Mineral Belts in the Michipicoten-Shebandowan Region of the Wawa Subprovince

Source: Card & Poulsen (1998)

7.3 Michipicoten Greenstone Belt The Magino Mine is located within the Michipicoten greenstone belt (Figure 7.2 and Figure 7.3). This belt, including the adjacent Gamitagama and Mishubishu greenstone belts, is one of the key localities with respect to the Superior Province (Wawa Subprovince) geology, partly because of the importance of its Algoma-type iron formations, partly because many important concepts of greenstone belt geology are based there, and partly because it contains a record of volcanism, sedimentation and plutonism that spans at least 240 Ma of Archean time (Card and Poulsen, 1998).

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The Michipicoten greenstone belt is a structurally and stratigraphically complex assemblage of volcanic, sedimentary and intrusive rocks that were metamorphosed to greenschist and amphibolite facies (Attoh, 1981; Williams et al, 1991). Several suites of plutonic rocks ranging in composition from gabbro to monzogranite and syenite occur in and around the Michipicoten greenstone belt. Early tonalite, trondhjemite and granodiorite plutons with ages of 2747 to 2737 Ma, 2729 to 2721 Ma and 2698 to 2693 Ma, respectively – similar to the ages of the main volcanic cycles – are probably syn-volcanic and have characteristics consistent with derivation from melting of basaltic sources (Card and Poulsen, 1998). The rocks of the Michipicoten greenstone belt have been repeatedly deformed and metamorphosed under low-pressure, greenschist to lower amphibolite facies conditions (Ayres, 1969, 1983; Studemeister, 1983; McGill and Shrady, 1986; Arias and Helmstaedt, 1990; McGill 1992; Sage, 1993 and 1994). Early structures include major recumbent folds, thrusts and associated cleavages (Card and Poulsen, 1998). Later superimposed upright folds are accompanied by steep cleavages. The latest structures include northeast-trending shear zones that host auriferous vein systems (Heather, 1989) and northerly-trending sinistral faults. The Michipicoten-Mishubishu mineral belt is dominated by iron and gold deposits (Figure 7.3); lesser prospects include nickel sulphide and copper-vein deposits. Iron formation deposits are widely distributed in this region. Gold deposits also typify the Michipicoten-Mishubishu mineral belt. Most of these occur in a linear zone extending west-southwest from Renabie in the east, through the Goudreau-Lochalsh area, to Mishubishu Lake. Although the gold deposits of this area occur in a terrane with extensive iron formations, they display a remarkable association with altered shear zones and plutonic rocks regardless of composition or age (Studemeister, 1985; Studemeister and Kilias, 1987; Heather and Arias, 1987 and 1992).

7.4 Geology of the Magino Mine Area The Magino Mine is situated in the Goudreau-Lochalsh gold district of the Wawa gold camp. The geology of the Goudreau-Lochalsh gold district has been mapped by Sage and published over a ten- year period (Sage, 1983, 1984, 1985, 1987a, 1993, 1993a, 1993b, 1993c and 1993d). Supracrustal rocks in the Goudreau-Lochalsh district consist of Cycle 2 felsic to intermediate pyroclastic metavolcanics capped by pyrite-bearing ironstone. To the north are pillowed, massive and schistose, mafic to intermediate metavolcanics and minor intercalations of Cycle 3 mafic pyroclastic rock. Several medium- to coarse-grained quartz dioritic to dioritic sills and/or dikes intrude all metavolcanic rocks. Gold mineralization at the Magino mine is dominantly hosted by the Webb Lake Stock (Deevy, 1994), which intrudes isoclinally folded Cycle 3 mafic volcanic rocks (Sage, 1993). The Webb Lake Stock is a felsic intrusion interpreted by Sage (1993, 1994) as a trondhjemite, but continues to be called a granodiorite in mine terminology and by mine geologists. In this writing, The Webb Lake Stock will be referred to as a granodiorite. Subsequently the Lovell Lake granodiorite stock has also been found to contain gold mineralization of economic potential.

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The long axis of the Webb Lake Stock is parallel to the regional supracrustal rock stratigraphy (Sage, 1993; 1994). The Webb Lake Stock is east-north-east-striking and has a steep northerly dip (Deevy, 1992 and 1994). Its surface expression is at least 1,800 m long and up to 300 m wide. The aureole rocks of the Webb Lake Stock are predominately mafic volcanic rocks (Deevy, 1992 and 1994). The southern contact is quite linear and regular, consisting mostly of dark green mafic rocks. The northern contact is quite irregular and there is some interfingering of granodiorite and aureole rocks. The granodiorite is medium- to coarse-grained, green-grey, moderately hard, non-magnetic and massive (Sutherland, 1987). It is locally foliated and hydrothermally altered, and has been affected by greenschist facies metamorphism. The granodiorite contains 5 to 10% veins of carbonate, quartz, tourmaline and pyrite in various orientations. Figure 7.4 is a geologic map of the Project area.

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Figure 7.4: Magino Site Geology

Source: Argonaut (2014)

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Several diabase dykes up to 12 m wide, of probable Keweenawan age, strike north- northwest and cut all rock types (Bourne et al., 1987). Diamond drilling east of the diabase dyke marking the eastern limit of underground workings in the “old mine” indicates that the granodiorite- metavolcanic contact has been offset by approximately 50 ft (15 m), and that the dip of the contact at this location is vertical instead of 65° to the north as is found west of the dyke. The granodiorite intrusion is cut by numerous parallel shear zones related to the Goudreau Lake Deformation Zone and it is on these shear-hosted gold-bearing quartz veins that the Magino Mine occurs (Sage, 1994).

7.5 Gold Mineralization Gold mineralization at the Magino gold mine occurs primarily within the Webb Lake granodiorite Stock. The Webb Lake Stock underwent variable metasomatic alteration during deformation and gold mineralization (Heather and Arias, 1992). Distinct haloes of quartz-sericite-pyrite with minor iron-carbonate and hematite alteration are observed adjacent to the quartz vein systems. In addition, narrow zones of mineralization have also been identified in the Southern metavolcanics, south of the Webb Lake stock. Gold mineralization occurs in several sub-parallel high-strain zones striking 070° to 080° within the Webb Lake Stock and within mafic metavolcanic rocks immediately along the northern margin of the stock (Heather and Arias, 1992). Deevy (1992 and 1994) distinguished and described two types of mineralized material shoots, namely “zones” and “veins”. The “zones” are usually 2 to 4.5 m wide and have a strike length of 25 to 70 m. They consist of foliated, bleached and silica- flooded granodiorite. The zones are folded in places, which, during underground mining, produced mineable widths of up to 10.5 m. The “zones” dip at about the same angle as the foliation and have a vertical plunge. The vertical continuity of the “zones” is at a vertical to horizontal ratio of 2.5:1 (Deevy, 1994). Weak bleaching and silica flooding are the distinguishing features of the “zones” (Deevy, 1994). Silica flooding consists of incipient pale gray quartz occurring within the foliated granodiorite. Gold content is directly related to the amount of silica flooding and quartz veining. (Deevy, 1994). The “veins” consist of discrete pale grey to pale green to almost white quartz veins varying in width from a few to 45 cm. They have a strike length of several to 35 m. Gold values are distributed erratically within the veins, but overall grades can be quite high. The veins are folded in places, with gold sometimes concentrated in fold noses (Deevy, 1992 and 1994). Vertical continuity of the “veins” is similar to that of the “zones”, and the plunge is also vertical. Native gold occurs in zones of pervasive silicification and in narrow (i.e. less than 1 to 20 cm wide) quartz veins that form complex systems 1 to 3 m wide. Gold occurs within both quartz veins and foliated and altered wall rocks, but the better gold grades are in the veins (T. Deevy, Magino mine geologist 2001, pers. comm., as cited in Heather and Arias, 1992). Finely disseminated leaf- like visible gold can be observed in quartz veins exposed in diamond drill cores. (Koskitalo, 1983). The gold tends to form plates or leaves along fractures in quartz rather than coarse nuggets. The quartz hosting the gold tends to be fine-grained and dull milky grey (Koskitalo, 1983). Up to 10% disseminated pyrite is also present, most commonly found in alteration haloes around the gold-bearing quartz veins (Heather and Arias, 1992) (Figure 7.5).

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Figure 7.5: Historical G Zone in the 24+75E Drift

Source: Sutherland (1987)

The granodiorite is sericitized, carbonatized, silicified and chloritized. Gold-bearing quartz veins have diffuse boundaries. Figure 7.6 shows exposed gold bearing veins. The photographed area is 50 cm across (Sutherland, 1987).

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Figure 7.6: Gold-Bearing Veins on the Face of the 23+80E Drift

Note: The vein spacing and sericite alteration selvage along the vein contact. Centre vein is 15 cm wide

Source: Sutherland (1987).

7.6 Structures Associated with Gold Mineralization There is a strong structural control on the gold-bearing quartz vein system within the Webb Lake Stock with the mineralized zones generally parallel to the regional schistosity in this area, which strikes 070°. Underground at the Magino Mine, mine geologist T. Deevy noted that raise-mining on a single quartz vein structure revealed that the vein rolls from a dip of 80 to 60° and back to 80° over a vertical distance of roughly 15 m. The plunge of the Magino mineralization is sub-vertical and parallel to measured elongation lineations defined by stretched feldspar crystals (Heather and Arias, 1992). The mineralization of the Magino Mine is associated with varying amounts of alteration. In general; alteration levels are marked by an increasing amount of foliation, sericite alteration, silicification (veining, flooding, pervasive silicification) and pyrite mineralization. Generally four levels of alteration to the Webb Lake and Lovell Lake Stock granodiorite are recognized, as follows:

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 Granodiorite: Relatively unaltered, coarse grained, equigranular quartz – plagioclase – chlorite +/- carbonate with typically more than 10% chlorite, network texture, no planar fabric is observed.  Weakly Altered Granodiorite: Weakly developed planar fabric (foliation) caused by the alignment of sericite/chlorite grains, unit is finer grained than “Network Granodiorite” however relict texture can still be interpreted. Quartz +/- carbonate +/- tourmaline veining varies from 1 to 2%; pyrite mineralization is elevated in places but generally less than 0.5%.  Moderately Altered Granodiorite: Well-developed planar fabric (foliation) caused by alignment of sericite/chlorite grains which make up more than 20% of the rock. This planar sericite/chlorite alignment is referred to as “Sericite Lace”. Dependent on amount of chlorite this rock has a light green to light grey – grey colour. The unit is finer grained than weakly altered granodiorite, with rounded quartz crystals. Quartz +/- carbonate +/- tourmaline veining varies from 2 to 5%; pyrite mineralization is elevated in places but generally 0.5 to 1%.  Strongly Altered Granodiorite: Well-developed planar fabric (foliation) caused by alignment of sericite/chlorite/quartz grains which make up more than 80% of the rock, the remaining constituent being quartz +/- carbonate+/- tourmaline veining. Visible gold is most commonly observed in this alteration, and the presence of visible gold is believed to be dependent on the amount of smoky grey quartz veining/flooding (i.e. silica in the system at that locality). Gold bearing grey (altered) quartz veins are typically subparallel to foliation, millimetre-centimetre in scale with some five to ten grey quartz flooded zones. The rock has a green and more often a light tan – pink colouration, remnant intrusive texture is completely destroyed. Remnant quartz phenocrysts are often augen shaped and appear isolated in the sericite matrix. Visible gold is nearly always observed within silica (most typically small veinlets of smoky grey quartz). Gold emplacement within the moderate to strong altered zones is somewhat erratic due to the anastomosing nature of silica (quartz vein/flooding emplacement). As veins are typically less than 5 cm in thickness and pinch and swell in nature or are anastomosing, it is not realistic to model continuity amongst the individual veins. The more broadly altered zones which contain the erratic quartz units are more continuous in nature and can be modelled more readily. Logging of the Prodigy drill core has focused on describing foliation, sericite alteration, silica (quartz veining), pyrite mineralization and visible gold mineralization.

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8 Deposit Types

Lode gold deposits (gold from bedrock sources (Figure 8.1) occur dominantly in terranes with an abundance of volcanic and clastic sedimentary rocks of low to medium metamorphic grade (Poulsen, 1996). The Magino Mine is an orogenic gold occurrence related to longitudinal shear zones (greenstone-hosted quartz-carbonate vein deposit). Greenstone-hosted quartz-carbonate vein deposits are a subtype of lode-gold deposits (Poulsen et al., 2000). They correspond to structurally controlled, complex epigenetic deposits hosted in deformed metamorphosed terranes (Dubé and Gosselin, 2007). Figure 8.1: Schematic Diagram Illustrating the Inferred Crustal Levels of Gold Deposition

Source: Dubé et al. (2001); Poulsen et al., (2000)

Greenstone-hosted quartz-carbonate vein deposits consist of simple to complex networks of gold- bearing, laminated quartz-carbonate fault-fill veins in moderately to steeply dipping, compressional brittle-ductile shear zones and faults with locally associated shallow-dipping extensional veins and hydrothermal breccias. They are hosted by greenschist to locally amphibolite facies metamorphic rocks of dominantly mafic composition and formed at intermediate depth in the crust (5 to 10 km).

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They are distributed along major compressional to transtensional crustal-scale fault zones in deformed greenstone terranes of all ages, but are more abundant and significant, in terms of total gold content, in Archean terranes. Greenstone-hosted quartz- carbonate veins are thought to represent a major component of the greenstone deposit clan (Figure 8.1) (Dubé and Gosselin, 2007). They can co-exist regionally with iron-formation-hosted vein and disseminated deposits, as well as with turbidite- hosted quartz-carbonate vein deposits (Figure 8.2). Figure 8.2: Schematic Diagram Illustrating the Setting of Greenstone-Hosted Quartz Carbonate Vein Deposits

Source: Poulsen et al. (2000)

The main gangue minerals are quartz and carbonate, with variable amounts of white micas, chlorite, scheelite and tourmaline. The sulphide minerals typically constitute less than 10% of the mineralized material. The main mineralized material minerals are native gold with pyrite, pyrrhotite and chalcopyrite without significant vertical zoning (Dubé and Gosselin, 2007). The Magino gold deposit lies within the Goudreau Lake Deformation Zone, a major contact between Cycle 2 felsic to intermediate pyroclastic metavolcanic rocks to the south and Cycle 3 massive pillowed mafic metavolcanic rocks to the north (Heather and Arias, 1992). The Goudreau Lake Deformation Zone appears to be spatially related to a large, regionally mappable intrusive sheet. This rigid meta-intrusive body deformed in a brittle manner relative to the enclosing mafic metavolcanic rocks, thus acting as a competency contrast and thereby focusing the strain and associated mineralization (Heather and Arias, 1992).

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In the Magino gold deposit area, the Goudreau Lake Deformation Zone (Figure 8.3) is characterized as a 1 to 2 km wide, 070°-striking zone of subparallel ductile and brittle-ductile high- strain zones (Heather and Arias, 1992). Gold mineralization occurs in these high-strain zones. Regionally, two types of gold mineralization have been recognized in the Magino gold mine area (Heather and Arias, 1992): (1) quartz veins hosted by brittle and brittle-ductile high-strain zones; (2) brittle fault-hosted breccia-style mineralization.

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Figure 8.3: Location of the Goudreau Lake Deformation Zone

Source: Modified after Heather & Arias (1992)

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9 Exploration

Argonaut has not conducted any surface exploration on the property, other than drilling, which is described in Section 10 Drilling. Exploration conducted by previous issuers is discussed in Section 6 History.

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10 Drilling

10.1 Type and Extent of Drilling Table 10.1 summarizes the total drill hole data for the Magino Project by drilling type or "campaign". RMI notes that only assays from drilling type 1 were used to estimate the mineral resources that are subject of this Technical Report. RMI notes that drilling type 1 represents about 70% of the total assayed Magino drill hole data. RMI's review of drill hole data types 2 through 5 demonstrated that there is a material bias associated with the older (pre-2006) data and there was no supporting information regarding assaying methods or QA/QC backup. For that reason, those data were not used to estimate block grades. Table 10.1: Magino Drilling Data by Type/Campaign

Drilling Total Drilling Data Gold Assay Data % of Drilling Type/Campaign Drill Hole Count Metres Assay Count Metres Assayed 1 791 218,090 207,273 205,763 94% 2 923 58,578 72,335 47,206 81% 3 227 39,841 42,538 30,400 76% 4 29 5,011 6,251 4,428 88% 5 94 10,480 4,916 4,388 42% Grand Total 2,064 332,000 333,313 292,185 88% Type code Description 1 2006 and newer holes - only data used to estimate mineral resources 2 U series (small diameter underground core) 3 S-8n-nnn series (1980's era surface core) 4 MAG-85-nn series (1985 surface core holes) 5 All other holes Source: RMI (2015)

Table 10.2 breaks down the Magino drilling data by year. RMI notes that only the 2006 and younger drilling data were used to estimate mineral resources that are the subject of this Technical Report.

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Table 10.2: Magino Drilling Data by Year

Total Drilling Data Gold Assay Data Drilling by % of Drilling Drill Hole Year Metres Assay Count Metres Assayed Count 1939 13 676 49 41 6% 1972 6 611 300 305 50% 1981 15 2,108 858 746 35% 1982 79 4,688 3,496 2,903 62% 1984 25 1,558 1,415 1,300 83% 1985 38 5,672 6,681 4,801 85% 1986 76 12,535 15,987 10,560 84% 1987 277 32,333 41,198 29,148 90% 1988 221 23,408 28,374 17,886 76% 1989 298 19,305 18,033 11,379 59% 1990 166 4,626 4,988 3,161 68% 1991 13 329 386 210 64% 1997 10 2,088 1,971 1,926 92% 2000 19 1,231 1,330 1,194 97% 2002 17 2,743 974 860 31% 2006 18 8,055 7,297 6,944 86% 2007 14 9,239 8,244 7,544 82% 2010 14 4,006 3,791 3,785 94% 2011 211 58,685 56,726 56,241 96% 2012 486 126,898 121,870 121,904 96% 2015 48 11,207 9,345 9,344 83% Grand Total 2,064 332,000 333,313 292,185 88% Source: RMI (2015)

10.2 Drilling Procedures 10.2.1 2006

In 2006, 18 NQ diamond drill holes were completed for Golden Goose Resources, Inc. by Bradley Brothers Drill of Rouyn-Noranda, Quebec. The 2006 drilling program was designed to target mineralization below the historical workings from a depth of 130 to 400 m below the surface and within the vicinity of an envisioned extension of the existing decline. A total of 8,055 m were drilled by this campaign. In general, the holes from this program intersected numerous high-grade zones and tested the down-dip continuity of mineralization. Hole 06-12 had the deepest intersection of gold mineralization at about 440 m below the surface.

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All drill core from this program was logged and sampled at the current core logging facility located just outside Dubreuilville. The core samples were assayed by the ALS Chemex lab in Thunder Bay, ON. All drill core from this program is stored in tagged core boxes at the core Magino logging/storage facility. 10.2.2 2007

In 2007, 14 NQ diamond drill holes were completed for Golden Goose Resources, Inc. totaling 9,239 m. The drilling was completed by Bradley Brothers Drill of Rouyn-Noranda, Quebec. The 2006 drilling program was designed to outline and extend multiple known gold zones from 150 to 400 m below the surface, primarily below the historical underground targets. The 14 holes from the 2007 drill campaign demonstrated the presence of narrow high-grade steeply dipping zones. The core samples from this campaign were logged and sampled at the core logging facility located outside Dubreuilville. The samples were assayed by Accurassay Laboratories in Thunder Bay, ON. While employing no QA/QC program for this drill campaign, 363 Accurassay pulps were sent to ALS Chemex in Thunder Bay. The results of this check assaying program showed no bias in the original data obtained from Accurassay. All drill core from this program is stored in tagged core boxes at the Magino core logging/storage facility. 10.2.3 2010

Golden Goose Resources Inc. drilled 14 NQ core holes totaling about 4,006 m from November 2009 to March 2010. Most of these holes were drilled south of the historical mine area and succeeded in identifying some significant gold mineralization. Some of these holes showed some potential for gold mineralization in metavolcanic rocks located south of the historic underground mine. The core samples from this campaign were logged and sampled at the core logging facility located outside Dubreuilville. The samples were assayed by Accurassay Laboratories in Thunder Bay, ON. All drill core from this program is stored in tagged core boxes at the Magino core logging/storage facility. 10.2.4 2011-2015

Prodigy Gold and their successor, Argonaut Gold Inc. conducted major drill campaigns in 2011, 2012, and more recently, 2015. The assays from these three campaigns represent 91% of the total assay data that were used to estimate mineral resources that are the subject of this Technical Report. Argonaut's geologic staff has followed drilling and sampling procedures that were established in mid-2011 by their predecessor company, Prodigy (Prodigy Exploration Handbook, dated June 29, 2011).

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For the most part, drill holes were located and oriented to intersect mineralized zones at near right angles. The azimuth bearings for angle drill holes were set out by Argonaut's geologic staff using a Brunton compass and flagged wooden pickets for drill rig alignment. The dip angle for angle holes was set by the driller using a clinometer. The initial rig setup (azimuth and dip) was usually confirmed in the field by an Argonaut contract geologist. After completion of the drill hole, the collar was surveyed by high precision GPS methods (DGPS) with up to 1 cm accuracy. Down-hole surveys were collected for all holes at approximately 3m intervals using a reflex multi- shot down-hole survey tool. Drill core was boxed, covered, and sealed at the drill rig prior to being moved to the logging and sampling facility by Argonaut's geologic staff. The samples were always under the direct observation of Argonaut's geologic staff or their contract drilling crew. The drill core was photographed, logged, and sawn into representative samples at the Argonaut core logging facility located near Dubreuilville, ON. Most of the core logging was recorded onto laptop computers utilizing custom logging forms that recorded lithology, alteration, oxidation, structure, mineralization, veining, and sample intervals. After each hole was finished it was monumented with plugged casing which was identified with the drill hole name, collar coordinates, and hole orientation.

10.3 Interpretation of Results Older drilling and underground production from the Magino deposit outlined a large gold-bearing system. Drill campaigns during the 2011, 2012, and 2015 seasons infilled areas of wider spaced drilling. These holes helped to better define a series of discontinuous, narrow, lense-like gold- quartz-pyrite zones. The assay and geologic results from post 2005 drill holes confirmed that gold occurs as narrow, high-grade zones within silicified zones that tend to sub-parallel the hangingwall and footwall contacts of the Webb Lake Stock. These drill holes show that mineralized continuity is somewhat limited along strike and down-dip for any particular mineralized structure, however, there are numerous narrow zones in some areas.

10.4 Drilling, Sampling, and Recovery Factors In general, there were no impediments to drilling or sampling at Magino. Core recovery was generally very high averaging higher than 98% in these highly indurated Archean rocks. The only sampling/recovery issues were associated with drilling adjacent to or into old underground workings. In some cases, drilling recovery was re-established after hitting old workings by reducing from HQ to NQ tools.

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10.5 Relationship Between Sample Length and True Thickness In general, most drill holes were oriented to intersect the gold-bearing structures at near perpendicular angles but due to the steep orientation of the mineralized zones it was impossible to return intersections normal to the zones. Reported drill hole intersections through the gold-bearing zones are longer than the actual true thickness of the zones. Table 10.3 summarizes relevant continuous drill hole intersections above a 1 g/t cut-off grade and in excess of 3 m long for the 2015 drilling campaign. As mentioned above, these intersection lengths do not necessarily represent true thicknesses as the holes typically intersected the gold- bearing zones at obtuse angles. In general, extremely high-grade intercepts are often surrounded by a metre or more of lower grade mineralization. Capping of high-grade outliers and implementing outlier restriction during the grade estimation process (See Section 14) minimized smearing of the outliers.

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Table 10.3: Relevant 2015 Gold Drill Hole Intercepts

Drill Hole ID From Depth (m) To Depth (m) Length (m) Au (g/t) MA15-435 190.00 194.00 4.00 1.57 MA15-435 196.00 205.00 9.00 3.29 MA15-436 375.00 381.00 6.00 5.25 MA15-438 273.00 276.00 3.00 7.13 MA15-438 294.00 297.00 3.00 3.03 MA15-439 92.00 95.00 3.00 7.98 MA15-440 433.00 436.00 3.00 16.90 MA15-441 16.00 19.00 3.00 2.20 MA15-441 64.00 69.00 5.00 4.02 MA15-441 110.00 116.00 6.00 6.26 MA15-442 428.00 431.00 3.00 4.26 MA15-444 70.40 75.00 4.60 3.27 MA15-445 159.00 162.00 3.00 2.46 MA15-447 67.00 78.00 13.00 4.79 MA15-452 70.00 78.00 8.00 6.02 MA15-452 95.00 98.00 3.00 3.38 MA15-453 15.00 18.00 3.00 3.12 MA15-453 111.00 114.00 3.00 14.03 MA15-454 171.00 181.00 10.00 3.10 MA15-456 178.00 183.00 5.00 3.69 MA15-456 214.00 218.00 4.00 4.69 MA15-459 150.00 153.00 3.00 2.27 MA15-460 170.00 173.00 3.00 2.63 MA15-461 156.00 161.00 5.00 15.81 MA15-461 196.00 220.00 24.00 5.61 MA15-461 284.00 292.00 8.00 4.96 MA15-462 138.00 142.00 4.00 4.30 MA15-462 203.00 206.00 3.00 7.16 MA15-462 310.00 314.00 4.00 9.39 MA15-463 240.00 256.00 16.00 6.16 MA15-463 289.00 294.00 5.00 3.91 MA15-463 306.00 311.00 5.00 8.43 MA15-468 22.00 26.00 4.00 2.27 MA15-469 58.00 61.00 3.00 5.62 MA15-470 70.00 75.00 5.00 2.25 MA15-483 84.00 87.00 3.00 2.04

Source: RMI (2015)

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11 Sample Preparation, Analyses and Security

Very little is known about sample preparation and various analyses that were performed on drill hole samples collected prior to 2006. Comparisons of those sample results with newer data suggest that the older data may be biased high. Because of these reasons, those data were not used to estimate mineral resources. Approximately 91% of the diamond core hole data used to estimate mineral resources that are the subject of this Technical Report were collected by Argonaut and their predecessor company Prodigy. Snowden's 2011 Technical Report outlined sampling and assaying procedures that were undertaken for Golden Goose's 2006 and 2007 drilling campaigns. Details about sample preparation, analyses, and security for the 2010 drilling campaigns were discussed in prior technical reports (e.g. CWA, 2011). The following section describes sample preparation, analyses, and security for the 2011, 2012, and 2015 drill campaigns. Quality assurance, quality control (QA/QC) results for the 2011 and 2012 drilling was extensively covered in the last Technical Report (Kirkham, 2014) and will not be repeated here. QA/QC results will be presented for the 2015 drilling campaign.

11.1 Sample Security Drill core samples from the Magino property were always under the direct control of Argonaut employees and/or various contractors. Drill contractors or Argonaut's geologic staff delivered core from diamond drill rigs to the secure core logging facility located near the Project site. The core was methodically processed at the logging facility until bagged samples were picked up by a commercial transport company (Manitoulin Transport) and trucked to Actlab facilities located in Thunder Bay or Timmons Ontario.

11.2 Sample Selection/Transportation The following is a description of the sampling methods employed by Argonaut and their predecessor company Prodigy ("Company") for the 2011, 2012, and 2015 drill campaigns. Those drill campaigns represent 90% of the data that were used to estimate mineral resources that are the subject of this Technical Report:  Drill core was typically delivered to core logging facility by contract drilling personnel or Company geologists;  Sampled core was first logged by a Company geologist, and a cut-line was drawn on the core, perpendicular to the dominant structural fabric;  The core was cut into halves by Company employees using a table-fed circular diamond saw; one-half of the core was sent for analysis and the remaining half was labeled and retained in core boxes for future reference. Core cutting was supervised by those geologists responsible for logging the core who also ensured that a sequence of blanks, duplicates and standards were properly utilized;

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 Sampling occurred at a maximum of one m intervals, or less if it were necessary to account for lithological contacts;  Due to the high competency of the rock mass, zones of low core recovery are rare but were documented when they did occur. The half core selected for analysis was always taken from the same side, without regard for the presence of visible gold, in order to reduce sampling bias;  The sampled half of the core was placed into transparent plastic sample bags with one pre- printed sample tag (since laboratories use an internal numbering system). The sample bags were rolled and sealed with staples;  A metal tag was stapled in the core tray along with the meterage represented by the sample. The sample tag was also printed on the remaining sample card in sample booklets. Once all tags were used the booklets were stored in the core logging facility;  The sealed sample bags were placed in rice sacks in sequence for shipment to the laboratory. A copy of the sample submittal form was returned to the Project geologist/Project manager after being stamped by the receiving laboratory. Samples were transported by Company personnel or collected by the laboratories directly from the Project. If a third party transportation company was used, the number of rice sacks was accounted for and sealed with a numbered sealing tie. The number of bags was monitored by the laboratory to ensure they were not subject to tampering.

11.3 Laboratory Facilities Argonaut and their predecessor company (Prodigy) used Activation Laboratories Ltd. (Actlabs) as the primary assay lab for their 2011, 2012, and 2015 drilling campaigns. ALS Chemex was selected as their secondary "check" laboratory for the 2011-2015 drilling campaigns. Sections 11.3.1 through 11.5.1.5 were taken verbatim from the 2014 Magino PFS report and remain pertinent as of the date of this Technical Report: 11.3.1 Activation Laboratories Ltd.

Actlabs is located in Thunder Bay, Ontario. The following is an extract from the company website; www.actlabs.com Actlabs’ Quality System is accredited to international quality standards through the International Organization for Standardization /International Electrotechnical Commission (ISO/IEC) 17025 (ISO/IEC 17025 includes ISO 9001 and ISO 9002 specifications) with CAN-P-1758 (Forensics), CAN-P-1579 (Mineral Analysis) and CAN-P-1585 (Environmental) for specific registered tests by the SCC. The accreditation program includes ongoing audits which verify the QA system and all applicable registered test methods. We are also accredited by the National Environmental Laboratory Accreditation Conference (NELAC) program and Health Canada. Actlabs became the primary laboratory and commenced processing Prodigy’s Magino samples on May 14, 2012.

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11.3.2 ALS Chemex

ALS Chemex has a sample preparation facility located in, Timmins, Ontario. Prepared samples were shipped from Timmins to the ALS Chemex laboratory in Val D’Or, Québec. ALS Chemex laboratories are registered to ISO 9001:2008 certification, and analytical facilities have received ISO 17025 accreditations for specific laboratory procedures. ALS Chemex was used as the secondary laboratory for assay quality control. Approximately 10% of Actlabs samples were sent for analysis by ALS Chemex.

11.4 Sample Splitting and Reduction 11.4.1 Activation Laboratories

Upon arrival at Actlabs in Thunder Bay, Ontario, rock samples are entered into the Laboratory Information Management System (LIMS). Samples are then dried, if necessary, and jaw crushed to approximately eight mesh. A 250 to 500 g subsample is taken and pulverized to 90% at 150 mesh, and then matted to ensure homogeneity. Silica sand is used to clean out the pulverizing dishes between each sample to prevent cross-contamination. The homogenized sample is then sent to the fire assay laboratory or the wet chemistry laboratory, depending on the analysis required. 11.4.2 ALS Chemex

Upon arrival at the Timmins sample preparation facility, rock samples were entered into the LIMS. The average sample weight of split drill core is 2.2 kg. After drying, samples are crushed using a terminator jaw crusher such that 70% of material passes 2 mm. Crushed material is then riffle split and 1 kg is pulverized such that 85% of material passes 75 μm. An extra 1 kg pulp is created for every tenth sample, for check analysis.

11.5 Analytical Procedures 11.5.1 Activation Laboratories

Gold analysis is by way of fire assay of a 30 or 50 g pulp subsample. All samples are first subject to procedure 1A2-50 which uses atomic absorption spectroscopy (AAS). Any sample that returns grades higher than 1 g/t gold is re-assayed with a gravimetric finish, as per procedure 1A3. Details below are sourced from Actlabs with some minor edits to correct spelling, grammar and consistency. 11.5.1.1 Fire Assay-Gravimetric Procedure for Ore Grade Samples A sample size of 10 to 50 g can be used but the routine 30 g size is applied for rock pulps, soils or sediments (exploration samples). The sample is mixed with fire assay fluxes (borax, soda ash, silica, and litharge); the flux is free in silver. The mixture is placed in a fire clay crucible, the mixture is preheated at 850 °C, intermediate 950 °C and finish 1,060 °C, the entire fusion process should last 60 minutes.

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The crucibles are then removed from the assay furnace and the molten slag (lighter material) is carefully poured from the crucible into a mould, leaving a lead button at the base of the mould. The lead button is then placed in a preheated cupel which absorbs the lead when cupelled at 950°C to recover the silver (doré bead) + gold. The cupellation of bead is controlled in the final point by the volatile of the silver. The silver bead is weighed and silver value calculated from the weight. Gold is separated from the silver in the doré bead by parting with nitric acid. The gold (roasting) flake remaining is weighed gravimetrically on a micro balance for gold. The detection limit for this procedure is 30 ppb. 11.5.1.2 Gold Fire Assay with AA Finish For Low to Medium Grade Samples The method involves fire assay collection followed by cupellation, dissolution of the precious metal prill and a pre-concentration solvent extraction step. The final determination is by flame AAS, providing a detection limit of 5 ppb. 11.5.1.3 Metallic Screen Fire Assays for High-grade Samples A representative 500 g split is sieved at 100 mesh (149 microns) creating two size fractions. Then conventional fire assay methods are performed on the entire +100 mesh fraction and two splits from the -100 mesh fraction. The total amount of sample and the +100 mesh and -100 mesh fraction is weighed for assay reconciliation. Measured amounts of cleaner sand is used between samples and saved as gold may plate out on the mill. Argonaut setup a protocol with Actlabs whereby all samples assayed by conventional fire assay methods that returned values above certain thresholds (usually 3.0 g/t) were then subjected to metallic screen fire assay methods. The metallic screen fire assay results were used in favour of conventional fire assays with gravimetric finish which in turn took priority over fire assays with an AA finish. 11.5.2 ALS Chemex

Gold analysis is by way of fire assay of a 30 or 50 g pulp subsample. All samples are first subject to procedure Au-AA23 which uses AAS. Any sample that returns grades higher than 1 g/t gold is re-assayed with a gravimetric finish, as per procedure Au-GRA21. Mineralized material grade samples also had an inductively coupled plasma (ICP) finish as opposed to an AAS finish on occasions, especially for high-grade material. Details below are sourced from ALS Chemex with some minor edits to correct spelling, grammar and consistency. 11.5.2.1 Fire Assay-Gravimetric Procedure for Ore Grade Samples Gravimetric methods involve the use of balances to weigh the element of interest, either in its pure elemental form or as a chemical compound. One of the most common gravimetric determinations is that of gold and silver following a fire assay fusion cupellation. The precious metal bead that remains following cupellation is an alloy of silver and gold. Weighing this bead will give the total weight of silver and gold. If the bead is then treated with dilute nitric acid, it is possible to remove the silver quantitatively. The residual mass consists of pure gold which can then be weighed separately, thus allowing the silver to be determined by difference. The balances used for this purpose are microbalances capable of weighing to the nearest microgram (one millionth of a gram). Analysis of bullion for gold, silver and base metal content is another common procedure.

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The classical technique for determining gold is the fire assay fusion followed by cupellation and a gravimetric finish (method codes Au- GRA21, Au-GRA22 and Au-GRA24). This is still the preferred procedure for the analysis of high-grade ores. There is no upper quantitative limit applied for these procedures but clients should note that the detection limit is significantly higher than for procedures that use spectroscopic measurement techniques. 11.5.2.2 Fire Assay-Atomic Absorption Procedures for Low to Medium Grade Ore Samples The method involves fire assay collection followed by cupellation, dissolution of the precious metal prill and a pre-concentration solvent extraction step. The final determination is by flame AAS, providing a detection limit of 5 ppb.

11.6 2015 QA/QC Results For their 2015 drilling campaign, Argonaut submitted a total of 9,352 sawn drill core samples collected from the Magino deposit to Actlabs in Thunder Bay and Timmins. As a part of their QA/QC program, Argonaut also submitted a number of certified standard reference materials with their sawn drill hole core samples. Table 11.1 summarizes the various standard reference materials that were submitted by Argonaut for their 2015 drilling program. Table 11.1: 2015 QA/QC Reference Materials

Warning Limits Failure Limits Number Expected Type Name Submitted Value -2 Std. +2 Std. -3 Std. +3 Std. Dev. Dev. Dev. Dev. Certified Blank CDN-BL-10 503 0.010 n/a n/a n/a n/a Certified CDN-GS- 79 0.362 0.326 0.398 0.308 0.416 Standard P4C Certified CDN-GS- 79 0.827 0.749 0.905 0.710 0.944 Standard P8E Certified CDN-GS-1K 125 0.867 0.769 0.965 0.720 1.014 Standard Certified CDN-GS- 82 1.400 1.280 1.520 1.220 1.580 Standard 1P5F Certified CDN-GS- 1 1.460 1.340 1.580 1.280 1.640 Standard 1P5B Certified CDN-GS-2K 32 1.970 1.790 2.150 1.700 2.240 Standard Certified CDN-GS-2P 71 1.990 1.840 2.140 1.765 2.215 Standard Certified CDN-GS-2L 83 2.340 2.100 2.580 1.980 2.700 Standard Duplicate N/A 893 n/a n/a n/a n/a n/a Sample Source: RMI (2015)

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The assay results for control samples submitted to Actlabs in 2015 are presented in the following sections including the performance of blanks, 8 commercial standards, and duplicates. Note that the various QA/QC graphs in the following sections reflect the performance of both initial non- failures of SRM's (the majority of the data points) and the SRM that was re-assayed due to an earlier failure. 11.6.1 2015 Au Blank Performance

In 2015, Argonaut submitted 503 commercial gold blank samples (CDN-BL-10) that were purchased from CDN Resource Laboratories Ltd. This certified blank was prepared from barren granitic material. Control blanks were submitted at a frequency of about 1 blank for every 19 regular samples, well within typical industry standards. Figure 11.2 plots the performance of the commercial blanks as assayed by Actlabs for the 2015 drilling program. There was one failure of CDN-BL-10 associated with the 2015 drilling campaign which resulted in having nine core samples associated with that SRM re-assayed by Actlabs. Figure 11.2: CDN-BL-10 Gold Blank Performance Chart

Source: Argonaut (2015)

11.6.2 Performance of Low-Grade Au SRM's Submitted in 2015

Figure 11.3 shows the performance of a relatively low-grade commercial standard reference material (SRM) that was purchased from CDN Resource Laboratories Ltd. and assayed by Actlabs. This SRM was assayed 79 times and failed 15 times. One hundred five (105) samples associated with those failures were re-assayed and replaced the original values.

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Figure 11.3: SRM CDN-GS-P4C Performance Chart

Source: Argonaut (2015)

11.6.3 Performance of Medium-Grade Au SRM's Submitted in 2015

In this section, the performance of three, medium-grade commercial standard reference materials (SRM's) is presented (refer to Figures 11.4 through 11.6). A total of 287 medium-grade gold standards associated with the 2015 drilling campaign were submitted and analyzed by Actlabs. All of the medium grade SRM's were purchased from CDN Resource Laboratories Ltd. (CDN-GS-P8E, CDN-GS-1K, and CDN-GS-1P5F). SRM CDN-GS-1P5B was assayed once during the 2015 campaign so no graph is shown.

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Figure 11.3: SRM CDN-GS-P8E Performance Chart

Source: Argonaut (2015)

CDN-GS-P8E was assayed 79 times and failed two times. Twenty (20) core samples associated with those failures were re-assayed and replaced the original values.

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Figure 11.4: SRM CDN-GS-1K Performance Chart

Source: Argonaut (2015)

CDN-GS-1K was assayed 125 times and failed ten times. Sixty two (62) core samples associated with those failures were re-assayed and replaced the original values.

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Figure 11.5: SRM CDN-GS-1P5F Performance Chart

Source: Argonaut (2015)

CDN-GS-1P5F was assayed 82 times and failed once. Ten (10) core samples associated with that failure was re-assayed and replaced the original values. 11.6.4 Performance of High-Grade Au SRM's Submitted in 2015

In this section, the performance of three, relatively high-grade commercial standard reference materials (SRM's) is presented (refer to Figures 11.6 through 11.8). A total of 186 high-grade gold standards associated with the 2015 drilling campaign were submitted and analyzed by Actlabs. All three of the SRM's were purchased from CDN Resource Laboratories Ltd. (CDN-GS-2K, CDN-GS- 2P, and CDN-GS-2L).

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Figure 11.6: CDN-GS-2K Performance Chart

Source: Argonaut (2015)

CDN-GS-2K was assayed 32 times and failed four times. Forty four (44) core samples associated with those failures were re-assayed and replaced the original values.

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Figure 11.7: SRM CDN-GS-2P Performance Chart

Source: Argonaut (2015)

CDN-GS-2P was assayed 71 times and failed six times. Fifty (50) core samples associated with those failures were re-assayed and replaced the original values.

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Figure 11.8: SRM CDN-GS-2L Performance Chart

Source: Argonaut (2015)

CDN-GS-2L was assayed 83 times and failed two times. Twenty (20) core samples associated with those failures were re-assayed and replaced the original values. 11.6.5 Duplicate Sample Results for 2015

Figure 11.9 is a quantile-quantile (QQ) plot that compares the "original" sample results (X-axis) against a "duplicate" samples (Y-axis). These duplicates represent a second sample prepared from the coarse reject sample. Argonaut's geologic staff indicated on sample submittal forms which samples were to have a second sample prepared and assayed as a duplicate of the original.

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Figure 11.9: QQ Plot - Original Versus Duplicate Samples

3.0

2.4 (g/t)

1.8 Au

1.2 Duplicate

0.6

0.0 0.0 0.6 1.2 1.8 2.4 3.0 Au Original (g/t)

Source: RMI (2015)

11.7 Qualified Person's Comments Based on the results from standards, blanks, and duplicate samples, the Qualified Person responsible for this section believes that the 2015 Argonaut drill hole assay samples were adequately secured and properly prepared and assayed.

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12 Data Verification

12.1 Pre-2006 Drill Hole Data Both Kirkham Geosystems and RMI evaluated the underground core hole assays (pre-1999) and surface core hole samples that were obtained prior to 2006. Kirkham Geosystems and RMI both found potential issues related to the validity and accuracy of the data and whether these data were acquired and analyzed using appropriate techniques and best practices. Various comparisons between the older drilling data and newer, QA/QC supported data showed a distinct bias associated with the older data. Therefore, both Kirkham Geosystems and Resource Modeling Inc. elected to exclude all analytical results from pre-2006 drill holes from the estimate mineral resources for the Magino Project.

12.2 Prior Data Verification Efforts In 2012, Tetra Tech carried out several internal validations of the diamond drill hole data against the original drill logs and assay certificates. The validation of assay files against the certificates was carried out on 172 of the holes drilled by Prodigy between September 2011 and June 2012, which equates to 71% of the holes drilled in this period and 14% of the database provided as a whole. Of the 1,193 assay records checked that were greater than 2 g/t there was a 100% match between the database records and the certificates. Data verification was also completed on collar coordinates, end-of-hole depths, down-hole survey measurements, from and to intervals, measurements of assay sampling intervals, and gold grades for about 35% of the database provided, and no major issues were found. In 2013, Kirkham Geosystems performed internal validations on drill holes MA12-366 through MA12-434 and PDMA12-001 through PDMA12-121. Approximately 10% of the assay data was selected randomly for validation and verification. There were no errors or omissions encountered.

12.3 2015 Data Verification While conducting the site visit in March 2015, the Qualified Person responsible for this section randomly selected three holes from the 2011 campaign and compared the remaining half sawn core against drill logs and assays. This review showed that the core was logged in a professional manner with no material issues. Random core recovery checks performed by the Qualified Person confirmed that the electronic entries made by Argonaut's geologic staff were accurate. Random down-hole survey records were compared with the electronic database for a number of 2011 and 2012 drill holes. No errors were detected. The Qualified Person responsible for this section selected five drill holes from the 2015 drilling campaign (MA15-443, MA15-451, MA15-459, MA15-467, and MA15-475) representing 10% of the total 2015 drilling data. Electronic database gold grade assays for 922 intervals (922 m) were compared against Actlab certificates. No errors were encountered.

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12.4 QP's Opinion Based on previous validation efforts by others and an audit of 10% of the 2015 drill hole database, it is the opinion of the Qualified Person responsible for this section that the Magino drill hole data are accurate and of sufficient quality to be used to estimate mineral resources.

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13 Mineral Processing and Metallurgical Testing

13.1 Summary of Metallurgical Testing – Preliminary Prefeasibility Study – January 30, 2014 Results from metallurgical testing completed at McClelland Laboratories, Inc. (MLI) for the Magino Project were presented and detailed in the previous Preliminary Prefeasibility Study (PFS-2013) completed in 2013 and filed with a date of January 30, 2014. That report was based largely on the results from MLI as well it incorporated any and all of the relevant earlier work to evaluate the overall Project results at that time. The main highlights of this previous testwork were as detailed in the previous PFS-2013 - Section 13. Ore grade composites were readily amenable to whole ore milling / cyanidation treatment and responded well to gravity concentration treatment;  feed grind size of 75 microns;  Gold recoveries ranged from 94.4 % to 96.2 % (Locked cycle tests – 94 % approx. @ head grade of 1.3 g/t);  Reagent consumption was low;  Gravity tailings were readily amenable to carbon-in-pulp (CIP)/ cyanidation treatment;  Little metallurgical difference is seen between various areas, depths, or gold grades;  The test results indicate a great deal of consistency for the overall Magino resource; and  As a result of this work, general process criteria were selected and presented for the process design and the Project economics (Section 13 of the PFS-2013).

13.2 Summary of Metallurgical Testing – Phase 2 – 2015 Update Follow-up work carried out by MLI recently focused on the additional gravity recoverable gold testing and optimization of the agitated cyanidation of the gravity tailings. This recent work was carried out on the three ore grade composites from Magino (shallow, mid, and deep). This updated work also included optimization of cyanide concentration, regrind size, and sparging during leaching. The new and refined data have now been used as the basis for the Project economic evaluation part of this report. Based on this recent work, the previous grind size of 75 micons was maintained. The most recent series of tests performed by MLI gave a recovery range from 90% to 94% and average head grade of 1.31 g/t Au. Further review and analysis of this updated data resulted in the selection of a conservative LOM 93.5 % recovery that was used for the economic analysis for the present study. As previously confirmed, it is apparent that the Magino ore is relatively uncomplicated metallurgically and consistent throughout for all the various test programs (old and new), from a large variety of samples and work performed by multiple laboratories.

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This metallurgical data base provides confidence for the mill to achieve and maintain high gold recoveries (93.5%) for the life of mine from the Magino ore. These new test results from MLI in conjunction with the previous work completed for the PFS-2014 resulted in revised Project economics and a new modified flowsheet for the Project. The flowsheet includes relatively fine grinding, a gravity recovery circuit, cyanide leach, CIP gold adsorption, CIC gold adsorption, slurry detoxification and finally, discharge to a conventional slurry TMF. The modified and new flowsheet changes have incorporated the following:  Increased daily feed rate to the process – 30,000 t/d (increased from 12,500 t/d – PFS- 2014) and resultant equipment to suit the process design criteria;  Additional tankage to accommodate the extended leach residence time (increased to 36 hours); and  Two (2) stage tailings wash circuit to reduce incoming CN(WAD) concentration to the slurry detoxification process and reduce overall detoxification reagent requirements (SO2, lime, Cu2SO4). The general process criteria now selected for the process design and Project economics are shown in Table 13.1. Table 13.1: Selected General Design Criteria –2015

Parameter Units Value Overall Plant throughput, Nominal M t/y 10.95 Plant throughput, nominal t/d 30,000

Grind size, P80 micron 75 Leach time hours 36

Cyanide concentration, leach feed ppm NaCN 750

Gold recovery % 93.5 Cyanide consumption Kg NaCN/t 0.50 Lime required, CaO Kg/t 1.2

Detoxification method (Air) SO2 - Air Detoxification limit ppm WAD Cyanide <0.50 Source: DENM (2015)

As previously stated, gravity circuit tests indicate little, if any, overall recovery advantage as opposed to a straight leach circuit. However, the flowsheet will incorporate advanced removal of coarse, gravity recoverable gold to reduce gold in inventory in the leach and CIP circuits, followed by an extended 36-hour leach time.

Further indications confirm the finer P80 grind of 75 µm as the desired and optimized grind size for the process.

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In regard to cyanide consumption, previously a consumption of 0.75 kg NaCN/t was used for the process design criteria and flowsheet in the PFS-2013. The recent test work included an effort to optimize the cyanide consumption for the specific flowsheet proposed herein. It is believed that a new reduced consumption rate of 0.50 kg NaCN/t is now optimized for the Magino ore types and as result has been used in this reports process design criteria and associated operating cost economics.

13.3 MLI Testing 2015 The new information from this test program was from the previously received drill core samples, designated by Argonaut as Shallow (0 – 100m), Mid (100 – 200 m, and Deep (below 200m depth) and tested at MLI only. The samples represented ore grade material from the three depth ranges and were assigned corresponding sample numbers 3779-001, 002, and 003 by MLI. A master composite from the three depths was also prepared and assigned a sample number of 3779-004. Each composite was prepared from multiple drill core intercepts that covered the general extent of the mineralized zone at the three relative depths. 13.3.1 Objectives for the 2015 Test Program

This follow-up test program for the three ore grade composites was initiated to test:  Extended gravity recoverable gold (E-GRG) test on the master composite – 3779-004;  Optimization of agitated cyanidation of the gravity tailings for the three ore composites which included cyanide concentrations, effect of the regrind size, and the addition and effect of oxygen and sparging during leaching; and  No additional work from the previous study was completed in the areas of mineralogy, grinding work indices, carbon adsorption, thickening, filtration, and cyanide detoxification. 13.3.2 Ore Grade Composites Head Analysis

As mentioned, the as received drill core was separated into shallow, mid, and deep composites and were also combined into a master composite. Head assay results and associated screen assays and head grade comparisons are displayed in Table 13.2.

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Table 13.2: Gold Head Assay Results and Head Grade Comparisons

Head Grade, g Au/t ore 3779-001 3779-002 3779-003 Determination Method (Shallow) (Mid) (Deep) Direct Assay, AAS Finish 1.38 1.23 1.09 Direct Metallic Screen Assay 1.40 1.38 1.16

Calc’d. Bottle Roll, 75µm 1.30 1.61 1.27 Calc’d. Bottle Roll, 75µm 1.60 1.44 1.25

Calc’d. Locked Cycle 1, Grav./CN, 212/75µm 1.07 1.53 1.16 Calc’d. Locked Cycle 2, Grav./CN, 212/75µm 1.46 1.50 1.13 Calc’d. Locked Cycle 3, Grav./CN, 212/75µm 1.54 1.37 1.08 Calc’d. Locked Cycle 4, Grav./CN, 212/75µm 1.29 1.45 1.12 Calc’d. Locked Cycle 5, Grav./CN, 212/75µm 1.14 1.49 1.16 Calc’d. Locked Cycle 6, Grav./CN, 212/75µm 1.28 1.44 1.20

Calc’d. Gravity, 212µm 1.27 1.56 1.33

Calc’d. Grav./CN, 212/75µm, 0.1 g NaCN/L 1.15 1.33 1.14 Calc’d. Grav./CN, 212/75µm, 0.2 g NaCN/L 1.17 1.16 1.32 Calc’d. Grav./CN, 212/75µm, 0.3 g NaCN/L 0.96 1.39 1.26 Calc’d. Grav./CN, 212/75µm, 0.4 g NaCN/L 1.13 1.38 1.30 Calc’d. Grav./CN, 212/75µm, 0.5 g NaCN/L 1.14 1.41 1.36 Calc’d. Grav./CN, 212/75µm, 0.6 g NaCN/L 1.24 1.45 1.37 Calc’d. Grav./CN, 212/75µm, 0.7 g NaCN/L 1.24 1.41 1.24 Calc’d. Grav./CN, 212/75µm, 0.8 g NaCN/L 1.24 1.42 1.36 Calc’d. Grav./CN, 212/75µm, 0.9 g NaCN/L 1.18 1.34 1.27 Calc’d. Grav./CN, 212/75µm, 1.0 g NaCN/L 1.28 1.46 1.33

Calc’d. Grav./CN, 212/75µm, Ro. Tail Leach 1.12 1.29 1.25

Calc’d. Grav./CN, 212/75µm, CN Coast Down 1.24 1.45 1.35 Calc’d. Grav./CN, 212/75µm, CN Coast Down 1.29 1.52 1.32 Calc’d. Grav./CN, 212/75µm, CN Coast Down 1.28 1.55 1.40

Calc’d. Grav./CN, 212/75µm, O2 Sparge 1.23 1.54 1.37

Calc’d. Grav./CN, 212/75µm, O2 Sparge ------1.24

Calc’d. Grav/CN, Very Fine Grind ------1.28

Average 1.25 1.43 1.25 Std. Deviation 0.14 0.10 0.09 Precision, % 88.8 93.0 92.8

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The average head grades for the three composites as seen in the above table were 1.25, 1.43, and 1.25 g Au/t. for the shallow, mid, and deep. As a comparison, the head grades from the previous MLI-2013 tests used in PFS-2013 are displayed in Table 13.3. Table 13.3: Head Assay and Cyanide Solubility Results – Magino Ore Grade Composites

g Au/t ore CN Sol g Ag/mt ore CN Sol Met Composite Assay Met Screen CN Sol %, Au* Assay CN Sol %, Ag* Screen 3779-01 (Shallow) 1.38 1.40 1.11 80.6 0.2 <3 0.2 100.0 3779-02 (Mid) 1.23 1.38 1.13 91.9 0.2 <3 0.2 100.0 3779-03 (Deep) 1.09 1.16 0.89 81.8 0.4 <3 0.4 100.0

* (CN soluble/direct assay) x 100.

Source : MLI (2015)

13.3.2.1 Grind Size No additional testing was done in this area and it is assumed that gold extractions are maximized

at P80 -75-µm grind size. This was used for the process design criteria and milling equipment requirements. 13.3.2.2 Cyanide Optimization Tests Summary Agitated cyanidation tests were conducted on the gravity regenerated tailings from each of three individual ore grade composites – shallow, mid, and deep. The gravity concentrating work was completed at a target grind size of 80% passing 212 micron. In all cases, the material (gravity cleaner and rougher tails) was reground and maintained at an 80 % - 75 micron feed size for leach testing. This was done to simulate feed remaining after removal of a gravity cleaner concentrate from the cyclone underflow in the Magino milling circuit. A range of cyanide concentrations were evaluated these tests with the summary results displayed MLI Table 13.4 below.

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Table 13.4: Gold Summary Metallurgical Results

Reagent g Au/mt ore Au Recovery, % of total Requirements, Extracted kg/mt ore Composite/ CN Head Grade NaCN Lime Grav. Grav. CN NaCN Cons., 1) (Grav. 1) 1) 2) Conc. Comb. Conc. Leach Tail Calc’d. Avg. Cons. Added g/L Tail) 3779-001 (Shallow) 0.1 32.8 23.4 56.2 0.38 0.27 0.50 1.15 1.25 0.37 0.7 0.2 32.2 53.4 85.6 0.38 0.62 0.17 1.17 1.25 0.37 1.1 0.3 39.3 46.2 85.5 0.38 0.44 0.14 0.96 1.25 0.36 0.8 0.4 33.4 59.9 93.3 0.38 0.67 0.08 1.13 1.25 0.21 1.1 0.5 33.1 59.5 92.6 0.38 0.68 0.08 1.14 1.25 0.31 1.1 0.6 30.4 64.3 94.7 0.38 0.79 0.07 1.24 1.25 0.26 1.2 0.7 30.4 61.7 92.1 0.38 0.76 0.10 1.24 1.25 0.37 1.0 0.8 30.4 63.9 94.3 0.38 0.79 0.07 1.24 1.25 0.25 1.2 0.9 32.0 60.5 92.5 0.38 0.71 0.09 1.18 1.25 0.36 1.1 1.0 29.4 63.9 93.3 0.38 0.82 0.08 1.28 1.25 0.44 1.0 3779-002 (Mid) 0.1 21.8 66.8 88.6 0.29 0.89 0.15 1.33 1.43 0.16 1.1 0.2 25.0 60.3 85.3 0.29 0.70 0.17 1.16 1.43 0.17 1.0 0.3 20.8 70.8 91.6 0.29 0.98 0.12 1.39 1.43 0.14 1.4 0.4 21.0 65.1 86.1 0.29 0.90 0.19 1.38 1.43 0.19 1.4 0.5 20.5 71.9 92.4 0.29 1.01 0.11 1.41 1.43 0.14 1.2 0.6 20.0 72.9 92.9 0.29 1.06 0.10 1.45 1.43 0.28 1.0 0.7 20.5 71.8 92.3 0.29 1.01 0.11 1.41 1.43 0.21 1.0 0.8 20.4 72.7 93.1 0.29 1.03 0.10 1.42 1.43 0.24 0.9 0.9 21.6 68.2 89.8 0.29 0.91 0.14 1.34 1.43 0.28 1.0 1.0 19.8 71.3 91.1 0.29 1.04 0.13 1.46 1.43 0.53 1.1 3779-003 (Deep) 0.1 25.5 41.5 67.0 0.29 0.47 0.38 1.14 1.25 0.23 2.0 0.2 22.0 62.8 84.8 0.29 0.83 0.20 1.32 1.25 0.30 2.0 0.3 23.1 63.3 86.4 0.29 0.80 0.17 1.26 1.25 0.57 1.9 0.4 22.3 64.7 87.0 0.29 0.84 0.17 1.30 1.25 0.45 2.0 0.5 21.4 56.0 77.4 0.29 0.76 0.31 1.36 1.25 0.59 1.9 0.6 21.2 60.2 81.4 0.29 0.83 0.25 1.37 1.25 0.47 1.8 0.7 23.4 68.1 91.5 0.29 0.84 0.11 1.24 1.25 0.58 1.8 0.8 21.4 68.9 90.3 0.29 0.94 0.13 1.36 1.25 0.66 1.8 0.9 22.9 69.5 92.4 0.29 0.88 0.10 1.27 1.25 0.71 1.7 1.0 21.8 70.5 92.3 0.29 0.94 0.10 1.33 1.25 0.70 1.8 2) Average of all head grade determinations. 1) Includes gold reporting to the gravity cleaner concentrate, without discount for gold losses that may occur during subsequent processing of the concentrate. 2) Average of all head grade determinations. Note: Gravity Cyanide Optimization Tests, Magino Ore Grade Deposits, 80 % - 212µm Feed Size, 80 % - 75 µm Regrind Size

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Results from these tests on the gravity recombined tailings showed:  Optimized cyanide concentrations of 0.4 g NaCN/L (shallow), 0.5 g NaCN/L (mid), and 0.7 gNaCN/L (deep);  Utilizing these optimized cyanide concentrations resulted in a combined (gravity and cyanidation) recovery range of 90% to 94% (93.5% recovery has been used in the study and process design criteria);  Lowering of the cyanide concentrations reduces gold recoveries and leach rates as expected; and  A series of subsequent work on the recombined gravity tailings from each of the composites, near the optimized cyanide concentrations, were carried out to evaluate the effect of allowing the cyanide concentration to “coast down” during the leaching time. These summary results are displayed in MLI Table 13.5. Table 13.5: Gold Summary Metallurgical Results

Au Recovery, % of total g Au/t ore Reagent Composite/ CN Head Grade Requirements, Extracted NaCN Cons., Grav. Tail kg/mt ore 1) (Grav g/L Conc. Comb.1) Grav. CN NaCN Lime Tail) Calc’d. Avg.2) Conc.1) Leach Cons. Added 3779-001 (Shallow) 0.5 30.4 61.2 91.6 0.38 0.76 0.10 1.24 1.25 0.16 2.0 0.6 29.2 64.7 93.9 0.38 0.83 0.08 1.29 1.25 0.15 2.1 0.7 29.4 64.1 93.5 0.38 0.82 0.08 1.28 1.25 0.13 2.0 3779-002 (Mid) 0.5 20.0 69.6 89.6 0.29 1.01 0.15 1.45 1.43 0.44 2.6 0.6 19.0 73.1 92.1 0.29 1.11 0.12 1.52 1.43 0.39 2.6 0.7 18.7 72.3 91.0 0.29 1.12 0.14 1.55 1.43 0.29 1.9 3779-003 (Deep) 0.7 21.5 64.9 86.4 0.29 0.88 0.18 1.35 1.25 0.61 2.2 0.8 22.0 67.2 89.2 0.29 0.89 0.14 1.32 1.25 0.68 1.8 0.9 20.8 71.6 92.4 0.29 1.00 0.11 1.40 1.25 0.75 1.9 1) Includes gold reporting to the gravity cleaner concentrate, without discount for gold losses that may occur during subsequent processing of the concentrate. 2) Average of all head grade determinations.

Note: Gravity Cyanide Coast Down Tests, Magino Ore Grade Deposits, 80 % - 212µm Feed Size, 80 % - 75 µm Regrind Size Source: MLI (2015)

Overall, these “coast down” results indicate no adverse effect on the gold recovery, providing a sufficiently high cyanide concentration and long leaching cycle are employed on the Magino ore.

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13.3.2.3 Preliminary Sparging Testwork Summary Preliminary sparging work was conducted on the three composites (shallow, mid, deep) under the same procedures and conditions as the baseline tests. The summary results are displayed in the MLI Table 13.6 below. Table 13.6: Gold Summary Metallurgical Results

g Au/t ore Reagent Au Recovery, % of total Requirements, Extracted Head Grade Test Description/ kg/mt ore Tail Sparge Grav. CN Grav. CN NaCN Lime (Grav. Conc.1) Comb.1) Conc.1) Leach Calc’d. Avg.2) Cons. Added Tail) 3779-001 (Shallow), 0.5 g NaCN/L None 33.1 59.5 92.6 0.38 0.68 0.08 1.14 1.25 0.31 1.1 O2 30.6 64.7 95.3 0.38 0.79 0.06 1.23 1.25 0.06 1.1 3779-002 (Mid), 0.7 g NaCN/L None 20.5 71.8 92.3 0.29 1.01 0.11 1.41 1.43 0.21 1.0 O2 18.8 74.4 93.2 0.29 1.15 0.10 1.54 1.43 0.13 1.1 3779-003 (Deep), 1.0 g NaCN/L Baseline 21.8 70.5 92.3 0.29 0.94 0.10 1.33 1.25 0.70 1.8 O2 Sparge 21.2 71.4 92.6 0.29 0.98 0.10 1.37 1.25 0.31 2.6 O2 Sparge 23.4 70.0 93.4 0.29 0.87 0.08 1.24 1.25 0.45 1.2 1) Includes gold reporting to the gravity cleaner concentrate, without discount for gold losses that may occur during subsequent processing of the concentrate. 2) Average of all head grade determinations. Note: Gravity Cyanidation Oxygen Sparging Tests, Magino Ore Grade Composites, 80 % - 212µm Feed Size, 80 % - 75 µm Regrind Size Source: MLI (2015)

Although limited, the results show gold recoveries from the composites with and without oxygen during the leaching are essentially the same. Of particular note is the lower cyanide consumption for each composite with the oxygen (O2) sparging. Additional confirmatory work is required in this area to confirm the oxygen sparging effects on recovery and reagent requirements for the Magino ore. 13.3.2.4 Extended Gravity Recoverable Gold (E-GRG) – Master Composite An Extended Gravity Recoverable Gold (E-GRG) test program was conducted on the Magino master composite sample to determine the response of the ore to gravity concentration by determining the GRG content and also the associated distribution of the GRG by particle size. Standard E-GRG test procedures were carried out for the samples. E-GRG test results are presented in Tables 13.7 and 13.8 with GRG content versus grind size results shown in Figure 13.1. Further to this, the GRG results by particle size for each of the three grind sizes are shown in Figure 13.2.

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Table 13.7: Gold and Silver Summary E-GRG Test Results

Au Recovery, % of total Extracted kg/t ore Regrind (Leach Grav. CN Grav. CN Head Grade NaCN Lime Feed) Size (Grav. Conc.1) Comb.1) Conc.1) Leach Tail Calc’d. Avg.2) Cons. Added Tail) 80%-75µm 21.2 71.4 92.6 0.29 0.98 0.10 1.37 1.25 0.31 2.6 Very Fine (180 22.7 72.1 94.8 0.29 0.92 0.07 1.28 1.25 1.62 5.5 minute grind time) Note: A cyanide concentration of 1.00 gNaCN/L (maintained during leaching) was used for both tests. 1) Includes gold reporting to the gravity cleaner concentrate, without discount for gold losses that may occur during subsequent processing of the concentrate. 2) Average of all head grade determinations. Note: Magino 3779-004 Master Composite Source: MLI (2015)

Figure 13.1: Gravity Recoverable Gold and Silver vs. Grind Size

Note: Magino 3779-004 Master Composite Source: MLI (2015)

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Table 13.8: Extended Gravity Recoverable Gold (E-GRG) Test Results

Nominal Weight, Weight, Assays, g/t ore Distribution % Grind Size Product grams % Au Ag Au Ag 700µm Ro. Conc. 79.96 0.67 44.24 <3 25.4 6.5 Sampled Ro. Tail 227.21 1.89 1.08 0.5 1.8 2.8 250µm Ro. Conc. 81.28 0.68 34.76 <4 20.3 7.9 Sampled Ro. Tail 252.11 2.10 0.8 0.3 1.4 2.1 75µm Ro. Conc. 78.77 0.66 27.65 5.3 15.6 11.3 Sampled Ro. Tail 11275.31 94.00 0.44 0.2 35.5 69.4 Total 11994.64 100.00 1.17 0.3 100 100 Total Conc. 240.01 2.01 61.3 25.7

Note: Magino 3779-004 Master Composite Source: MLI (2015)

Figure 13.2: Gravity Recoverable Gold by Size Fraction

Note: Magino 3779-004 Master Composite Source: MLI (2015)

The results from the extended work on the ore grade master composite showed:  Good response to concentration upgrade via centrifugal gravity methods;  GRG values for 25.4%, 20.3%, and 15.6 % for the three grind sizes (850, 250, 75 micron);  Total Combined GRG values were equivalent to 61.3 % indicating a good-high response for gravity recovery; and  Composite Head Grade – 1.17 g Au/t with a final tailings grade of 0.44 g Au/t.

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13.3.2.5 Bulk Gravity Concentration Testing Summary Further to the extended gravity work on the Magino ore, a series of bulk gravity concentration tests were carried out on the three composites to generate tailings for the cyanidation optimization testing. It was also to determine concentrate grade, recovery, and concentration ratios for the closed circuit ball mill scenario for Magino. For this reason a “coarser” feed size of 80 % - 212µm was used. The following Tables 13.9, 13.10, and 13.11 show the overall results from the gravity testing for the shallow, mid, and deep composites. Table 13.9: Gravity Concentration Test Results

Distribution Cum. Product Wt., Assay, g/t ore Au Ag Wt., % % Au Ag % Cum. % % Cum. % Cl. Conc. 0.09 0.09 417 38 29.5 29.5 7.7 7.7 Cl. Tail 0.29 0.38 54.5 <3 12.5 42.0 2.0 9.7 Ro. Tail 99.62 100.00 0.74 0.4 58.0 100.0 90.3 100.0 Composite 100.00 1.27 0.4 100.0 100.0 Note: Magino 3779-001 (Shallow) Ore Grade Composite, 80 % -212µm Feed Size Source: MLI (2015)

Table 13.10: Gravity Concentration Test Results

Distribution Cum. Product Wt., Assay, g/t ore Au Ag Wt., % % Au Ag % Cum. % % Cum. % Cl. Conc. 0.10 0.10 289 37 18.5 18.5 8.2 8.2 Cl. Tail 0.28 0.38 76.2 6 13.7 32.2 3.7 11.9 Ro. Tail 99.62 100.00 1.06 0.4 67.8 100.0 88.1 100.0 Composite 100.00 1.56 0.5 100.0 100.0 Note: Magino 3779-001 (Mid) Ore Grade Composite, 80 % -212µm Feed Size Source: MLI (2015)

Table 13.11: Gravity Concentration Test Results

Distribution Cum. Product Wt., Assay, g/t ore Au Ag Wt., % % Au Ag % Cum. % % Cum. % Cl. Conc. 0.07 0.07 415 32 21.8 21.8 3.5 3.5 Cl. Tail 0.29 0.36 57.6 5 12.5 34.3 2.3 5.8 Ro. Tail 99.64 100.00 0.88 0.6 65.7 100.0 94.2 100.0 Composite 100.00 1.33 0.6 100.0 100.0 Note: Magino 3779-001 (Deep) Ore Grade Composite, 80 % -212µm Feed Size Source: MLI (2015)

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All the above test results showed that three composites responded well to centrifugally enhanced concentration treatment at the coarser feed size. Cleaner concentrate grades ranged from 289 – 419 g Au/t with recoveries ranging from 18.5% to 29.5%. The presence of visible gold (up to 0.1 mm in size) was observed in the cleaner concentrates from each composite. The gold cleaner concentration ratios averaged 275:1 with weight concentration ratios averaging 1,180:1. 13.3.2.6 Gravity Tailings Cyanidation Testing Details – Agitated Leach, “Coast down” Leach, and Sparging As part of this updated testing program, a series of agitated cyanidation tests were conducted on the gravity tailings from the three Magino ore grade composites. As discussed previously, the purpose of the tests was to optimize leaching conditions that included cyanide concentration, oxygen sparging, and regrind (ball mill overflow) size. From the previous work done in 2013 (MLI 2013 and PFS-2013) and work on this Stage 2 program (MLI-2015), all the tests were conducted at the selected final 80 % - 75µm regrind size with the exception of one test done on each composite at a very fine regrind size. A total of ten tests were completed for each composite to optimize the cyanide concentration for leaching that ranged from 0.1 g NaCN/L to 1.0 g NaCN/L (0.1 g NaCN/L increments). In each case for this first phase, the cyanide was maintained during leaching and no sparging (air or oxygen) was done. The resultant agitated gold leach profiles are shown graphically in Figures 13.3 to 13.8 with associated composite test highlights presented accordingly. “Coast down” profiles at the optimized cyanide concentration are shown graphically in Figures 13.9 to 13.17 with the sparging profiles shown graphically in Figures 13.18 to 13.20. Summary comments are provided for each test area.

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Figure 13.3: Gold Leach Rate Profiles, Gravity Cyanide Optimization Tests

Note: Magino 3779-001 (Shallow) Ore Grade Composite, 80%-212µm (75µm Regrind) Feed Size Source: MLI (2015)

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Figure 13.4: Gold Leach Rate Profiles, Gravity Cyanide Optimization Tests

Note: Magino 3779-001 (Shallow) Ore Grade Composite, 80%-212µm (75µm Regrind) Feed Size Source: MLI (2015)

Shallow Ore Results:  Optimum Cyanide Concentration – 0.4 g NaCN/L;  Combined (gravity+cyanidation) gold recovery of 93.3% ( 33.4 % + 59.9 %) for the 72 hour leach time;  Cyanide consumptions were low and ranged from 0.21 to 0.44 g NaCN/L; and  Lime consumption ranged from 0.7 to 1.2 kg/t.

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Figure 13.5: Gold Leach Rate Profiles, Gravity Cyanide Optimization Tests

Note: Magino 3779-002 (Mid) Ore Grade Composite, 80%-212µm (75µm Regrind) Feed Size Source: MLI (2015)

Figure 13.6: Gold Leach Rate Profiles, Gravity Cyanide Optimization Tests

Note: Magino 3779-002 (Mid) Ore Grade Composite, 80%-212µm (75µm Regrind (Feed Size) Source: MLI (2015)

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Mid Ore Results:  Optimum Cyanide Concentration – 0.5 g NaCN/L;  Combined (gravity+cyanidation) gold recovery of 92.4% ( 20.5% + 71.9%) for the 72 hour leach time;  Cyanide consumptions were low and ranged from 0.14 to 0.19 g NaCN/L for the lower 0.1 to 0.5 g NaCN/L tests; 0.21 to 0.28 g NaCN/L for the higher concentrations of 0.6 to 0.9 g NaCN/L . At 1.0 g NaCN/L, the consumption was 0.53 g NaCN/L; and  Lime consumption ranged from 0.9 to 1.4 kg/t. Figure 13.7: Gold Leach Rate Profiles, Gravity Cyanide Optimization Tests

Note: Magino 3779-003 (Deep) Ore Grade Composite, 80%-212µm (75µm Regrind) Feed Size Source: MLI (2015)

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Figure 13.8: Gold Leach Rate Profiles, Gravity Cyanide Optimization Tests

Note: Magino 3779-003 (Deep) Ore Grade Composite 80%-212µm (75µm Regrind) Feed Size Source: MLI (2015)

Deep Ore Results:  Optimum Cyanide Concentration – 0.7 g NaCN/L;  Combined (gravity+cyanidation) gold recovery of 91.5 % ( 23.4 % + 69.1 %) for the 72 hour leach time;  Cyanide consumptions were moderate ranging from 0.21 to 0.44 g NaCN/L; and  Lime consumption ranged from 1.7 to 2.0 kg/t.

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Figure 13.9: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests

Note: Magino 3779-001 (Shallow) Ore Grade Composite, 80%-212µm (75µm Regrind) Feed Size Source: MLI (2015)

Figure 13.10: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests

Note: Magino 3779-001 (Shallow) Ore Grade Composite, 80%-212µm (75µm Regrind) Feed Size Source: MLI (2015)

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Figure 13.11: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests

Note: Magino 3779-001 (Shallow) Ore Grade Composite, 80%-212µm (75µm Regrind) Feed Size Source: MLI (2015)

Figure 13.12: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests

Note: Magino 3779-002 (Mid) Ore Grade Composite, 80%-212µm (75µm Regrind) Feed Size Source: MLI (2015)

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Figure 13.13: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests

Note: Magino 3779-002 (Mid) Ore Grade Composite, 80%-212µm (75µm Regrind) Feed Size Sources: MLI (2015)

Figure 13.14: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests

Note: Magino 3779-002 (Mid) Ore Grade Composite, 80%-212µm (75µm Regrind) Feed Size Sources: MLI (2015)

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Figure 13.15: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests

Note: Magino 3779-003 (Deep) Ore Grade Composite, 80%-212µm (75µm Regrind) Feed Size Source: MLI (2015)

Figure 13.16: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests

Note: Magino 3779-003 (Deep) Ore Grade Composite, 80%-212µm (75µm Regrind) Feed Size Source: MLI (2015)

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Figure 13.17: Gold Leach Rate Profiles, Gravity Cyanide Coast Down Tests

Note: Magino 3779-003 (Deep) Ore Grade Composite, 80%-212µm (75µm Regrind) Feed Size Source: MLI (2015)

The overall metallurgical results from the details presented above for the three composites show that allowing cyanide concentration to coast down during the leaching generally did not affect the final gold recoveries. The leaching rates were slower during the coast down tests but important to note is that the testing indicated the requirement to provide high initial cyanide concentrations and extended leaching cycles.

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Figure 13.18: Gold Leach Rate Profiles, Gravity Cyanidation Oxygen Sparging Tests

Note: Magino Ore Grade Composites, 80%-212µm (75µm Regrind) Feed Size Source: MLI (2015)

Figure 13.19: Gold Leach Rate Profiles, Gravity Cyanidation Oxygen Sparging Tests

Note: Magino Ore Grade Composites, 80%-212µm (75µm Regrind) Feed Size Source: MLI (2015)

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Figure 13.20: Gold Leach Rate Profiles, Gravity Cyanidation Oxygen Sparging Tests

Note: Magino Ore Grade Composites, 80%-212µm (75µm Regrind) Feed Size Source: MLI (2015)

Oxygen sparging testwork indicated that the gold recoveries with and without sparging are essentially the same and a general indication that leach rates were more rapid with sparging than without. Important to note is that the test work indicates a drop in cyanide consumption from unsparged conditions. Confirmatory follow-up test work is required in this area for both air and oxygen sparging.

13.4 MLI 2015 – Air and Oxygen Sparging Testwork – Phase 3 A series of additional tests were carried out at MLI on the deep ore grade composites to see the effect of no sparging vs air sparged vs oxygen sparged in various conditions – pretreatment, lime addition rates. The coast down during leaching scenario was employed for these series of 12 tests. The summary is presented in Table 13.12 and Figure 13.21.

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Table 13.12: Combined Metallurgical Results, Gravity Cyanide Optimization Tests

Note: 3779-03 Magino Deep Ore Grade Composite, 80%-212µm (75µm Regrind) Feed Size, 1.0g NaCN/L :”Coast Down” Source: MLI (2015)

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Figure 13.21: Gold Gravity & Leach Rate Profiles, Mech. Agitated Tests

Note: 3799-03 Magino Deep Ore Grade Composite, 80%-212µm (75µm Regrind). Feed Size, 1.0g NaCN/L :”Coast Down” Source: MLI (2015)

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Figure 13.22: Gold Gravity & Leach Rate Profiles, Mech. Agitated Test

Note: 3799-03 Magino Deep Ore Grade Composite, 80%-212µm (75µm Regrind). Feed Size, 1.0g NaCN/L :”Coast Down” Source: MLI (2015)

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Figure 13.23: Gold Gravity & Leach Rate Profiles, Mech. Agitated Test

Note: 3799-03 Magino Deep Ore Grade Composite, 03 Magino Deep Ore Grade Composite, 80%-212µm (75µm Regrind). Feed Size, 1.0g NaCN/L: ”Coast Down” Source: MLI (2015)

This follow-up sparging work indicated some benefits along with the following reported results:  Gravity recovery to the rougher concentrates were similar to the earlier 2015 work;  Cleaner recovery was lower than the earlier 2015 work;  Better pH control by addition of lime in grinding (included in the process design);  Overall reduction in cyanide consumption and ranged from 0.23 to 0.32 kg NaCN/t ore for the deep composite; and  Air sparging is included as part of the process design and flowsheet for the Magino ore.

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The selected summary of the corresponding test programs and reports are shown below. Table 13.13: Summary of Test Results

Item Unit Source Value MLI - 3779- Gold extraction average of 3 depths % 93.5 2013/2015 Shallow % 94.8 MLI - 3779-2013 Mid % 93.1 MLI - 3779-2013 Deep % 93.1 MLI - 3779-2013 Gravity feed size P80 µm 212 MLI - 3779-2013 Lime consumption, leaching kg/t 1.3 MLI - 3779-2015 NaCN consumption kg/t 0.5 MLI - 3779-2015 SAG cyclone Underflow size to gravity P80 µm 212 MLI - 3779-2013

Overflow to pre-leach thickener P80 µm 75 MLI - 3779-2013 Thickener overflow to CIC Gold extraction from solution Gold extraction range % 17-29 MLI - 3779-2013 Gold extraction average 3 depths % 25 MLI - 3779-2013 Gravity concentrate to gravity cleaner Weight % Gold % extraction range % 25-55 MLI - 3779-2013 Gold % extraction average % 32.1 MLI - 3779-2013 % weight range % 0.52-0.89 MLI - 3779-2013 % weight average Shallow % 0.7 MLI - 3779-2013 Mid % 0.82 MLI - 3779-2013 Deep % 0.89 MLI - 3779-2013 CIP leach % solids 50 MLI - 3779-2013 NaCN, g/t pH 10.8-11.0 MLI - 3779-2013 time, hours 36 MLI - 3779-2015 Gold extraction range % 26-40 MLI - 3779-2013 Gold extraction average % 36 MLI - 3779-2013

Detoxification to <0.5-ppm CNWAD SO2/air Cyanco Canada SO2 g/g CNWAD 6 Inc. Copper sulfate ppm 30 PDC - 2015 Calcium hydroxide g/g CNWAD 7 PDC - 2015 PDC – 2015 – 2 NaCN detoxified ppm 87- < 0.5 wash Cyanco Canada Contact hours hours 2 Inc. Flocculent Pocock Industrial, Pre-leach thickener - high rate g/t 25-30 Inc. Pocock Industrial, Underflow density predicted % solids 69 Inc. Pocock Industrial, Tails thickener - high rate g/t 20-25 Inc. Pocock Industrial, Underflow density predicted % solids 69 Inc. Source: LJBMSLLC (2013), DENM (2015)

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13.5 Conclusions – Updated Testwork - MLI 2015 The sampling and metallurgical testing for this follow-up Phase 2 program including the previous Phase 1 program conducted for the Magino Project are sufficiently representative and complete to support this updated PFS and mineral reserve estimate. The process design criteria shown in Table 17.1 are reasonable and appropriate for use in this study’s process design and for the Project economic analysis.

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14 Mineral Resource Estimate

14.1 Introduction Mr. Michael J. Lechner, president of Resource Modeling Inc. (RMI) was contracted by Argonaut to prepare an updated estimate of mineral resources for the Magino Project. Mr. Lechner conducted a site visit in order to examine drill core, observe drilling operations, and to review core handling procedures. Mr. Lechner collaborated with Argonaut's geologic staff to prepare various wireframes to constrain the estimate of gold and conducted various statistical and geostatistical analyses prior to estimating block gold grades. The following sections detail various aspects concerned with the estimate of mineral resources for the Magino Project.

14.2 Drill Hole Assay Statistics Basic gold assay statistics were prepared for raw and capped drill hole assays for drill hole type 1 intervals, which are drill holes completed after 2005. RMI notes that approximately 94% of the type 1 drilling data was assayed for gold. Based on standard best practices, all unassayed intervals were set to zero grade. This resulted in 38 m of type 1 drilling data being set to zero. About half of the unassayed type 1 data consisted of overburden material for which no block grades were estimated. Table 14.1 summarizes basic gold assay statistics by select logged lithologies at four different gold cut-off grades where missing assay intervals were set to zero. Statistics for five lithologic units were not included in Table 14.1 because they were deemed not material due to the limited number of assay determinations for each unit. The data in Table 14.1 contain the metres of drilling above each cutoff grade along with the mean grade, grade-thickness product, standard deviation, and coefficient of variation (CV). Statistics are shown for uncapped and capped data (see Section 14.3 for details about capping). The data in Table 14.1 show that the synvolcanic and felsic intrusive rocks, primarily the Webb Lake Stock, appear to be the most favourable host rocks for gold mineralization. The highest gold grades are found in quartz vein lithologies but there is limited logged vein material in the drill hole database. The statistics also show that the diabase dyke that cuts through the eastern portion of the deposit is essentially barren of gold and because of that, no block grades were estimated for diabase blocks. The coefficient of variation (standard deviation divided by the mean) for all units is quite high, reflecting the presence of high-grade outliers. Grade capping of high grade gold helped to reduce the CV but most units display high CV's even after capping. Similar gold assay statistics are summarized in Table 14.2, which breaks down type 1 drilling assay statistics by grade estimation domain (see Section 14.7.2). The Webb Lake Stock was sub-divided into four nearly equal volumes as represented by domains 1 through 4. Domains 10 and 11 are located just beyond the hangingwall and footwall contacts of the Webb Lake Stock, respectively. Domain 13 is everything beyond domains 10 and 11 as illustrated in Figures 14.5 and 14.6.

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Table 14.1: Gold Assay Statistics by Select Lithologies

Uncapped Au Statistics Above Cutoff Capped Au Statistics Above Cutoff Lithologic Au Inc. Grd- Inc. Grd- Total Mean Std. Coeff. of Mean Au Inc. Std. Coeff. of Unit Cutoff Percent Thk Percent Thk Metres Au (g/t) Dev. Variation (g/t) Percent Dev. Variation (g/t) (%) (g/t-m) (%) (g/t-m) 0.00 205,801 88 0.28 57,478 14.4 2.48 8.88 0.26 53,374 15.5 1.60 6.18 0.35 24,079 7 2.04 49,190 15.2 7.00 3.43 1.87 45,086 16.3 4.36 2.33 All Data 1.00 9,046 2 4.47 40,469 11.3 11.00 2.46 4.02 36,365 12.1 6.57 1.63 2.00 4,382 2 7.76 33,990 59.1 15.12 1.95 6.83 29,883 56.0 8.59 1.26 0.00 52,348 96 0.11 5,676 19.3 1.78 16.39 0.10 4,997 22.0 0.83 8.69 0.35 2,176 3 2.10 4,579 14.0 8.47 4.03 1.79 3,899 15.8 3.67 2.05 Metavolcanics 1.00 819 1 4.62 3,787 10.9 13.44 2.91 3.79 3,107 12.4 5.42 1.43 2.00 367 1 8.62 3,169 55.8 19.32 2.24 6.78 2,490 49.8 7.02 1.04 0.00 17,765 96 0.09 1,580 19.9 1.09 12.25 0.08 1,442 21.8 0.64 7.94 Intermediate 0.35 633 2 2.00 1,265 13.4 5.43 2.72 1.78 1,127 14.7 2.93 1.65 Metavolcanics 1.00 269 1 3.91 1,053 12.6 7.93 2.03 3.40 915 13.9 3.96 1.16 2.00 127 1 6.71 854 54.0 10.87 1.62 5.62 715 49.6 4.87 0.87 0.00 2,340 89 0.31 718 17.9 2.15 7.02 0.27 622 20.6 1.26 4.76 Chemical 0.35 255 6 2.31 590 12.1 6.16 2.66 1.94 493 14.0 3.39 1.75 Metasediments 1.00 104 2 4.85 502 10.5 9.08 1.87 3.92 406 12.1 4.64 1.18 2.00 50 2 8.55 427 59.5 12.03 1.41 6.62 331 53.2 5.52 0.83 0.00 95,289 80 0.46 44,114 13.4 3.03 6.54 0.44 42,330 14.0 2.19 4.92 Synvolcanic 0.35 19,240 13 1.99 38,194 15.9 6.52 3.28 1.89 36,410 16.5 4.59 2.42 Intrusives 1.00 7,169 4 4.35 31,193 11.7 10.25 2.36 4.10 29,410 12.1 6.97 1.70 2.00 3,469 4 7.51 26,050 59.1 14.06 1.87 7.00 24,267 57.3 9.17 1.31 0.00 30,088 96 0.11 3,296 18.3 1.36 12.38 0.09 2,624 22.9 0.61 6.94 Mafic 0.35 1,147 2 2.35 2,694 12.2 6.56 2.79 1.76 2,023 15.3 2.58 1.46 Intrusives 1.00 453 1 5.06 2,292 8.7 9.83 1.94 3.58 1,621 10.9 3.36 0.94 2.00 247 1 8.13 2,006 60.9 12.51 1.54 5.41 1,334 50.9 3.66 0.68 0.00 1,940 83 0.45 879 10.7 5.17 11.40 0.30 584 16.2 1.01 3.36 Felsic 0.35 320 11 2.45 785 13.0 12.53 5.11 1.53 489 19.6 2.09 1.37 Intrusives 1.00 114 3 5.89 671 9.0 20.57 3.49 3.29 375 13.5 2.72 0.83 2.00 58 3 10.26 592 67.3 28.22 2.75 5.13 296 50.7 2.77 0.54 0.00 2,767 99 0.03 72 36.4 0.27 10.22 0.02 46 56.4 0.08 4.88 0.35 27 1 1.68 46 13.7 2.08 1.24 0.74 20 21.2 0.25 0.34 Diabase Dykes 1.00 10 0 3.47 36 12.2 2.49 0.72 1.00 10 22.4 0.00 0.00 2.00 5 0 5.53 27 37.7 2.20 0.40 0.00 0 0.0 0.00 0.00

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Table 14.2: Gold Assay Statistics by Estimation Domain

Uncapped Auzer Statistics Above Cutoff Capped Auzer Statistics Above Cutoff Domain Au Inc. Grd- Mean Grd- Inc. Total Mean Inc. Std. Coeff. of Std. Coeff. of Code Cutoff Percent Thk Au Thk Percent Metres Au (g/t) Percent Dev. Variation Dev. Variation (g/t) (%) (g/t-m) (g/t) (g/t-m) (%) 0.00 205,801 88 0.28 57,478 14.4% 2.48 8.88 0.26 53,374 15.5 1.60 6.18 0.35 24,079 7 2.04 49,190 15.2% 7.00 3.43 1.87 45,086 16.3 4.36 2.33 All Data 1.00 9,046 2 4.47 40,469 11.3% 11.00 2.46 4.02 36,365 12.1 6.57 1.63 2.00 4,382 2 7.76 33,990 59.1% 15.12 1.95 6.83 29,883 56.0 8.59 1.26 0.00 17,619 76 0.53 9,335 12.2% 3.39 6.39 0.50 8,823 12.9 2.13 4.25 0.35 4,314 15 1.90 8,200 16.8% 6.66 3.50 1.78 7,688 17.7 4.04 2.27 Domain 1 1.00 1,636 5 4.06 6,636 12.9% 10.46 2.58 3.74 6,123 13.6 6.06 1.62 2.00 772 4 7.04 5,435 58.2% 14.65 2.08 6.39 4,921 55.8 8.04 1.26 0.00 23,371 82 0.42 9,786 14.8% 4.22 10.07 0.37 8,607 16.8 1.94 5.27 0.35 4,204 12 1.98 8,338 16.5% 9.79 4.94 1.70 7,159 18.8 4.33 2.54 Domain 2 1.00 1,388 3 4.84 6,721 10.3% 16.68 3.44 3.99 5,542 11.7 6.98 1.75 2.00 661 3 8.64 5,711 58.4% 23.59 2.73 6.87 4,531 52.6 9.32 1.36 0.00 25,630 80 0.47 12,109 12.8% 2.86 6.05 0.45 11,660 13.3 2.26 4.96 0.35 5,041 12 2.09 10,560 14.7% 6.18 2.95 2.01 10,111 15.3 4.78 2.39 Domain 3 1.00 1,979 4 4.44 8,780 11.7% 9.40 2.12 4.21 8,331 12.2 7.09 1.68 2.00 955 4 7.71 7,359 60.8% 12.74 1.65 7.24 6,910 59.3 9.30 1.28 0.00 28,116 79 0.52 14,500 12.3% 2.92 5.66 0.49 13,904 12.9 2.42 4.88 0.35 5,847 13 2.17 12,713 14.2% 6.12 2.82 2.07 12,117 14.9 4.99 2.41 Domain 4 1.00 2,285 4 4.66 10,647 10.9% 9.26 1.99 4.40 10,051 11.4 7.40 1.68 2.00 1,152 4 7.87 9,068 62.5% 12.21 1.55 7.37 8,470 60.9 9.54 1.29 0.00 39,556 97 0.07 2,727 27.6% 0.74 10.79 0.06 2,537 29.7 0.49 7.72 0.35 1,190 2 1.66 1,974 16.2% 3.96 2.39 1.50 1,784 17.4 2.44 1.63 Domain 10 1.00 428 1 3.58 1,532 11.9% 6.15 1.72 3.13 1,342 12.8 3.51 1.12 2.00 199 1 6.07 1,207 44.3% 8.36 1.38 5.11 1,016 40.1 4.37 0.86 0.00 42,270 92 0.21 8,679 16.3% 2.00 9.72 0.18 7,512 18.8 1.08 6.07 0.35 3,371 5 2.15 7,265 13.9% 6.77 3.14 1.81 6,098 16.0 3.41 1.89 Domain 11 1.00 1,303 2 4.65 6,060 10.6% 10.40 2.24 3.76 4,894 12.3 4.89 1.30 2.00 632 1 8.13 5,139 59.2% 14.13 1.74 6.33 3,972 52.9 6.06 0.96 0.00 29,240 100 0.01 342 59.2% 0.17 14.51 0.01 332 61.0 0.13 11.64 0.35 113 0 1.24 140 13.9% 2.43 1.95 1.15 129 14.4 1.77 1.54 Domain 13 1.00 28 0 3.34 92 6.0% 4.25 1.27 2.96 82 6.0 2.89 0.97 2.00 12 0 6.00 71 20.9% 5.42 0.90 5.20 62 18.6 3.24 0.62

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The highest mean gold grades are found in domains 1 and 4, which represent the northern hangingwall and southern footwall contacts of the Webb Lake Stock, respectively. This reinforces visual observations that gold mineralization is often found preferentially along the contacts of the stock.

14.3 High-Grade Outlier Treatment As previously mentioned, there are a number of extremely high-grade gold assays in the Magino drill hole database, particularly with the older underground and surface core programs which were not used to estimate resources. Assays above a 0.025 g/t cutoff grade that were used to estimate mineral resources were broken down by decile and percentile increments as tabulated in Table 14.3. Table 14.3: Gold Assay Distribution by Deciles and Percentiles

Sample Min Grade Mean Grade Max Grade G-T Product % G-T of Decile Count (g/t) (g/t) (g/t) (g/t-m) Total 0 to 10 9,015 0.025 0.028 0.033 254 0.45 10 to 20 9,015 0.033 0.039 0.047 353 0.62 20 to 30 9,015 0.047 0.056 0.067 502 0.89 30 to 40 9,016 0.067 0.081 0.096 719 1.27 40 to 50 9,015 0.096 0.116 0.139 1,036 1.83 50 to 60 9,015 0.139 0.169 0.204 1,510 2.67 60 to 70 9,016 0.204 0.251 0.307 2,239 3.95 70 to 80 9,015 0.307 0.392 0.501 3,492 6.17 80 to 90 9,015 0.501 0.707 1.025 6,283 11.09 90 to 100 9,016 1.025 4.560 357.000 40,246 71.06 Total 90,153 0.025 0.635 357.000 56,633 100.00

Sample % G-T of Percentile Min Grade Mean Grade Max Grade G-T Product Count Total 90 to 91 902 1.025 1.079 1.139 961 1.70 91 to 92 901 1.140 1.203 1.270 1,067 1.88 92 to 93 902 1.270 1.358 1.450 1,204 2.13 93 to 94 901 1.450 1.558 1.680 1,371 2.42 94 to 95 902 1.680 1.835 1.990 1,639 2.89 95 to 96 901 1.994 2.205 2.450 1,950 3.44 96 to 97 902 2.450 2.716 3.050 2,417 4.27 97 to 98 901 3.050 3.774 4.660 3,304 5.83 98 to 99 902 4.660 6.345 8.590 5,583 9.86 99 to 100 902 8.592 24.165 357.000 20,750 36.64 Sub-total 9,016 1.025 4.560 357.000 40,246 71.06 Source: RMI (2015)

The data in Table 14.3 show that nearly 37% of the contained gold in the assay data used to estimate resources is associated with 1% of the data and over half of the gold is contained in the top (highest) 3% of the data.

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Numerous methods are used to detect high-grade outliers with one of the more common tools finding breaks in the distribution of metal through the use of cumulative probability plots. Figure 14.1 shows a cumulative probability plot for Webb Lake Stock assays and Figure 14.2 shows all other assays that were used to estimate mineral resources. Figure 14.1: Cumulative Probability Plot - Webb Lake Stock Assays

1000.000

100.000

10.000

Au(g/t) Log Normal Approximation 1.000 Webb Lake Stock

0.100

0.010 -2-1012345 Cumulative Normal Distribution Function

Source: RMI (2015)

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Figure 14.2: Cumulative Probability Plot - Non Webb Lake Stock Assays

1000.000

100.000

10.000

1.000 Au(g/t) Log Normal Approximation

0.100 All other units

0.010

0.001 -3-2-1012345 Cumulative Normal Distribution Function

Source: RMI (2015)

RMI elected to cap Webb Lake Stock gold assays at 60 g/t based on the erratic nature of the gold distribution above that threshold. All other assays were capped at 30 g/t based on an interpretation of the cumulative probability plot shown in Figure 14.2. Table 14.4 summarizes the effects of capping high-grade outlier values. Table 14.4: Metal Loss by Grade Capping

Metres % of Data Uncapped Au Capped Au Metal Loss Population Total Meters Capped Capped Grade (g/t) Grade (g/t) (%) Webb Lake Stock 94,735 39.4 0.042 0.483 0.454 -6.00 All Other Assays 110,066 13.6 0.012 0.106 0.093 -12.26 Grand Total 204,801 53.0 0.026 0.279 0.259 -7.17 Source: RMI (2015)

The data in Table 14.4 shows that capping a relatively small number of assays resulted in a gold loss of about 7% for all samples.

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14.4 Drill Hole Compositing The drill hole assays (both uncapped and capped) were composited into 5 m long down-hole composites. This composite length was chosen to provide a reasonable change of support for estimating grades into 5 m x 5 m x 5 m blocks. The 5 m composites were generated down-the-hole regardless of lithology or other geologic constraints. The composites were then coded with pertinent block model attributes prior to grade estimation.

14.5 Spatial Analysis - Variography RMI generated a number of grade and gold indicator variograms (correlograms) in order to assess mineralized continuity ranges and to confirm suspected anisotropy vectors. Figures 14.3 and 14.4 are modelled gold indicator correlograms for Webb Lake Stock composites using 0.35 g/t and 1.00 g/t indicator cutoff grades, respectively. The 0.35 g/t gold indicator correlogram (Figure 14.3) was modelled with a nested spherical model and has a 66% nugget effect. The total range is 145 m however, RMI highly discounts ranges beyond 85% of the total variance or approximately 24 m. Horizontal lines were drawn at 80%, 85%, 90%, and 95% of the total variance (sill). Extremely long ranges are possible given the flatness of the variogram model beyond 80-85% of the total variance. Ranges interpreted from a 1.0 g/t gold indicator correlogram are appreciably shorter than the 0.35 g/t indicator as illustrated by Figure 14.4. This corroborates the difficulties in attempting to construct wireframes due to lack of continuity at higher cutoff grades.

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Figure 14.3: 0.35 g/t Gold Correlogram - Webb Lake Stock Composites

MEA N = 0.30786 STD. DEV= 0.46161 NO. = 36985 LOG MEAN= -5.88639 LOG ST DV= 4.99147 C.V.= 1.50

2.0 NUGGET= 0.66157 SILL = 0.08809 RANGE = 17.8 SILL = 0.08515 1.5 RANGE = 41.7 0.14387 RANGE = 145.0

1.0 0.9 0.8 G A M M A ( H )

0.5

Along S trike 14m 24m 48m Dow n D ip

0.0 30 60 90 120 150 Range (m) 0.35 g/t Indi cator - Webb Lake Stock Composi tes

Source: RMI (2015)

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Figure 14.4: 1.00 g/t Gold Correlogram - Webb Lake Stock Composites

MEA N = 0.10661 STD. DEV= 0.30861 NO. = 36985 LOG MEAN= -8.05927 LOG ST DV= 3.33600 C.V.= 2.89

2.0 NUGGET= 0.74966 SILL = 0.02936 RANGE = 12.2 SILL = 0.12332 1.5 RANGE = 29.3 0.09766 RANGE = 100.6

1.0 0.9 0.8 G A M M A ( H )

0.5 HO RZ W I N= 15. 00 VERT WIN= 15. 00

Along strike Dow n dip

0.0 7m 11m 30 60 90 120 150

20m Range (m)

1 g/t Indic ator - Webb Lak e Stoc k

Source: RMI (2015)

14.6 Digital Data Argonaut provided RMI with various digital surfaces and solids. These data were used by RMI to code the block model. 14.6.1 Topography

A digital topographic surface apparently based on a 2011 aerial survey was used to code the percentage of rock (topo) in each block. The surface extent of the provided surface was not large enough to cover the eastern end of the model (area acquired from Richmont). Using new drill hole collars and a reasonable Projection of the existing digital topo, RMI extended the topographic surface to cover the area of interest. RMI notes that while the approximated surface does not represent any potential material differences in tonnage estimates, it is highly recommended that additional topographic data be obtained for future studies/estimates.

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14.6.2 Geologic Data

Argonaut provided RMI with three dimensional solids for several key lithologic units. These are the same solids that were used for the 2013 PFS block model. The Webb Lake Stock wireframe was extended eastward onto ground leased from Richmont. The geologic solids were used to code the block model. 14.6.3 Underground Workings

A wireframe representing the historic underground workings was supplied to RMI by Argonaut. The percentage of each model block within the underground wireframe was stored in the model. Block topo percent was then modified by subtracting the underground block percentage from the initial block topo percentage. The block model field "topo" accounts for both surface topography and historic mining so that a single field can be used for tabulating tonnage. 14.6.4 Land Ownership

Argonaut provided RMI with two digital claim files, one for the Argonaut/Prodigy claim package and another for select Richmont claims. Based on discussions with Mr. Curtis Turner from Argonaut, RMI created three dimensional solids for the Richmont claims. The current lease with Richmont has specific depth restrictions for the exploration/development/exploitation of the claims. One set of claims can be explored to an elevation of 0 m above sea level (masl) and the other set of claims has a restriction to the 300 masl. The block model was coded with these solids, which allows conceptual pit generation to honour land status. 14.6.5 Lakes

RMI was supplied with digital contour data for Goudreau Lake and Webb Lake. According to Argonaut's Curtis Turner, there is an understanding that a 50 m buffer around Goudreau Lake is to be honoured to prevent any disturbance/extraction of material near or beneath the lake. RMI generated a 50 m offset beyond the shore line of Goudreau Lake and created a three dimensional solid that was used to code the block model. This allows users to apply a mining restriction to conceptual pit exercises so as to keep from mining into the lake. A solid was generated for Webb Lake and the model subsequently coded. Due to the shallow nature of Webb Lake, it has been assumed that it will be possible to mine through the lake.

14.7 Block Model Construction 14.7.1 Model Extents

After reviewing the distribution of gold grades and the style of mineralization at Magino, RMI elected to construct a rotated block model with relatively small uniformly sized blocks in an attempt to develop the best in situ estimate of gold grades possible but recognizing that a likely selective mining unit will have dimensions measuring at least 10 m on a side. Table 14.5 summarizes the extent and orientation of the rotated Magino model that was the basis for the mineral resource that is the subject of this Technical Report.

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Table 14.5: Magino Block Model Setup – 5 m x 5 m x 5 m Model

Parameter Unit Value X Origin UTM Coordinate 687,450 Y Origin UTM Coordinate 5,350,000 Z Origin UTM Coordinate 0 Rotation Angle degrees 345 Block Dimension - X metres 5 Block Dimension - Y metres 5 Block Dimension - Z metres 5 Number of Rows number 600 Number of Columns number 300 Number of Levels number 160 Source: RMI (2015)

14.7.2 Model Coding

RMI used digital surfaces and solids that were provided by Argonaut to code block attributes like topographic percent, underground mining percent, lithology, property ownership, and lakes. Based on a review of gold distribution from drill holes and the geometry of the historic underground workings, it appears that mineralization crudely follows the contacts of the northeast trending Webb Lake Stock. Weak to moderately developed foliation within the stock also appears to follow the Webb Lake Stock contacts. No attempt was made to create gold grade wireframes to help constrain the estimate of block grades. Mineralization tends to occur as thin, discontinuous sheets or lenses of mineralization characterized by quartz flooding and/or quartz veinlets with associated fine to medium grain pyrite. Individual lenses of gold mineralization can seldom be traced very far along strike or down-dip, which makes modelling the zones exceedingly difficult. Because of these observations, the Webb Lake Stock wireframe was sub-divided into four nearly equal parts or "domains". The hangingwall and footwall contacts of the stock were used to interpolate a surface half way between the two contacts, or a 50% surface. Then two other surfaces were interpolated between the outer contacts and the 50% surface resulting in the creation of five surfaces: footwall contact, 25% surface, 50% surface, 75% surface, and hangingwall contact. These surfaces were used to build three dimensional domain solids which have completely coincident surfaces along their shared contacts. The five surfaces were then gridded to a 5 m x 5 m pattern. Each grid point lies precisely on one of the Webb Lake Stock surfaces. These grid points were treated as "pseudo" drill hole composites that were used to estimate a nearest neighbour dummy grade into the 5 m x 5 m x 5 m blocks for the sole purpose of capturing the distance between the grid point and the block centroid. This distance by default is the Cartesian distance perpendicular to a given surface. This operation was done for the hangingwall and footwall contacts for each of the four Webb Lake sub-domains. After the Cartesian distances were obtained a relative distance calculation was made for each block where the relative distance expression was:

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Relative Distance = footwall distance / (footwall distance + hangingwall distance) * 100 Therefore, larger relative distance values are associated with blocks located near the hangingwall contact and smaller values with blocks near the footwall contact. Figure 14.5 is a plan view showing colour coded relative distance values for the Webb Lake Stock domains. Warmer colours indicate closer distances to hangingwall contacts while cooler colors represent distances closer to the footwall contacts. Figure 14.6 is a cross sectional view of the relative distances to the Webb Lake Stock domain contacts. The domain codes are shown in both Figures 14.5 and 14.6 in bold black font. Figure 14.5: Webb Lake Stock Domain Relative Distances - 250 Level

Source: RMI (2015)

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Figure 14.6: Webb Lake Stock Domain Relative Distances - Cross-Section View

Source: RMI (2015)

The 5 m long drill hole composites were "back tagged" with the relative distances stored in the block model. These operations allowed RMI to use the relative elevation option in MineSight®. 14.7.3 Bulk Density

RMI examined available bulk density data that has been obtained from Magino drill core. Bulk density values were assigned to the block model based on lithology as summarized by Table 14.6.

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Table 14.6: Bulk Density Values in Model

Geologic Unit Model Lithologic Code Bulk Density (t/m3) Overburden 29 2.81 Metavolcanics 1 2.90 Metasediments (chemical and clastic) 5 3.11 Synvolcanic Intrusives (Webb Lake Stock) 6 2.72 Mafic Intrusives 7 2.93 Lovell Lake Stock 8 2.72 Felsic Intrusives 9 2.70 Diabase Dyke 11 3.02 Source: RMI (2015)

14.8 Block Gold Grade Estimation As discussed in Section 14.7.2, distances between model blocks and various Webb Lake Stock surfaces were used as the primary control for selecting eligible composites which were used in the gold grade estimation process. The four Webb Lake Stock domains were treated as soft boundaries, which allowed composites from adjacent domains to be used to estimate block grades, provided that the relative distance of those composites satisfied the user specified criteria. Figure 14.7 is a cross sectional view through the block model showing colour coded relative distance values. Notice the mirroring of values on either side of the domain contacts. For example, a block located just inside of Domain 3 with a relative distance value of 95 could conceivably use composites from Domain 2, provided that the relative distance from drill holes in Domain 2 met the criteria that were established. Treating the Webb Lake domains as soft boundaries helped to minimize artificial grade boundaries forming along the somewhat arbitrary domain boundaries. The relative distance each block is located from a hangingwall/footwall set of Webb Lake stock surfaces replaced the actual Z coordinate in both the block model and drill hole composites during the grade estimation routine. The X and Y coordinates of the blocks and drill holes were utilized along with the "relative Z" coordinate. The relative elevation option in the MineSight® interpolation routines provides an option for the user to specify a tolerance for selecting eligible composites based on the relative coordinate. For example, a block located in Domain 1 with a relative distance value of 50 (block is located half way between the footwall and hangingwall surfaces of Domain 1) could use composites located in Domain 1 that had a relative distance of 50 plus or minus 10 relative distance units which means that composites with relative distances ranging between 40 and 60 would be eligible (see Figure 14.8). This option allows the user to somewhat control the degree of smoothing or smearing of grade by opening or closing up the volume for selecting eligible composites. Figure 14.9 is the same cross sectional view as Figure 14.8 but shows estimated block gold grades along with 5 m long gold composites. The actual gold grade estimation was completed using an inverse distance cubed estimator. Three separate estimation passes were run using increasingly long search distances. Once blocks were estimated they were locked down and not eligible for subsequent estimation passes.

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Figure 14.7: Cross Sectional View of Domain Relative Distances Used as Soft Boundaries

Source: RMI (2015)

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Figure 14.8: Cross Sectional View of Domain Relative Distances - Blocks and Drill Holes

Source: RMI (2015)

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Figure 14.9: Cross Sectional View of Domain Relative Distances - Gold Grades

Source: RMI (2015)

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Table 14.7 summarizes key parameters used to estimate block gold grades using the inverse distance cubed estimator. Table 14.7: Inverse Distance Cubed Estimation Parameters

Maximum Search Number of Composites Relative Dist. Estimation Pass 1 (m) Min Max Max/hole Tolerance 1 5 1 3 1 5 2 30 1 3 1 5 3 90 3 6 2 5 4 90 1 6 2 5 1 For example, a block with a relative distance value of 50 could be estimated by composites with a relative distance of 50 ±5.

Source: RMI (2015)

14.9 Model Validation The grade model was validated using visual and statistical methods. RMI visually compared estimated block grades against 5 m long drill hole composite grades. It is RMI's opinion that there is a reasonable comparison between drilling and block grades. Two nearest neighbour models were generated, one of which was run at the same time as the inverse distance model. This nearest neighbour model which used the same criteria as the inverse distance model (i.e. domain matching, search distances, relative distance ranges, etc.) is referred to as the "conditional nearest neighbour model". The other nearest neighbour model was run with no constraints other than a maximum Projection distance of 90 m. Table 14.8 compares the inverse distance model to the two nearest neighbor models by resource category. Table 14.8: Global Bias Checks

Indicated Resource Blocks Estimation Method Unit Global NN 1 Conditional NN 2 Inverse Distance Au g/t 0.3390 0.3390 Nearest Neighbour Au g/t 0.3418 0.3387 %Diff % -0.82 0.09 Inferred Resource Blocks Estimation Method Global NN 1 Conditional NN 2 Inverse Distance Au g/t 0.1810 0.1810 Nearest Neighbour Au g/t 0.1771 0.1840 %Diff % 2.20 -1.63 Source: RMI (2015)

To check for local differences, a series of swath plots were drawn through block model columns (eastings), rows (northings), and levels. Figures 14.10 through 14.12 compare mean inverse distance and global nearest neighbour gold grades for Indicated Resource blocks by columns, rows, and levels, respectively.

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Figure 14.10: Gold Swath Plot - Columns

AUNNG AUOFF No. Blks

0.50 7500

0.40 6000

0.30 4500

0.20 3000 Mean Au (g/t) Au Mean

0.10 1500 Number of Blocks

0.00 0

Model Column (Easting)

Source: RMI (2015)

Figure 14.11: Gold Swath Plot - Rows

AUNNG AUOFF No. Blks

0.50 25000

0.40 20000

0.30 15000

0.20 10000 Mean Au (g/t) Au Mean

0.10 5000 Number of Blocks

0.00 0

Model Row (Northing)

Source: RMI (2015)

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Figure 14.12: Gold Swath Plot - Levels

AUNNG AUOFF No. Blks

0.50 30000

0.40 24000

0.30 18000

0.20 12000 MeanAu (g/t)

0.10 6000 Numberof Blocks

0.00 0

Elevation

Source: RMI (2015)

Figure 14.10 shows that the average gold grade increases steadily in going from the west end to the east end of the deposit. Figure 14.11 clearly shows a jump in gold grade approximately at the southern contact of the Webb Lake Stock and then a slight increase at the northern contact of the stock at its hangingwall contact. Figure 14.12 shows that the gold grade remains relatively constant (0.40 to 0.45 g/t) until about the -100 level where the grade begins decreasing. The swath plots (Figures 14.10 through 14.12) display some local differences between the inverse distance and nearest neighbour grades but in general they compare reasonably well.

14.10 Resource Classification RMI constructed a 3D wireframe solid that was used to flag blocks as Indicated Resources. This shape was designed using mineralized continuity and drill hole spacing. The average distance to drilling data for all of the Indicated Resource blocks is 18 metres. The remaining estimated blocks were classified as Inferred Resources provided that they were within 75 m (Domains 1-4, and 10-11) or 37.5 m (Domain 13). Figure 14.13 is a plan view showing the pink Indicated Resource solid nested within the Magino resource pit, along with drill hole traces.

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Figure 14.13: Indicated Resource Shape

Source: RMI (2015)

14.11 Mineral Resources Mineral resources were tabulated by RMI inside of a conceptual pit that was generated using cost, price, recovery, and slope parameters summarized in Table 14.9. Table 14.9: Conceptual Resource Pit Parameters

Parameter Unit Value Gold price US$/ounce 1,300 Gold price US$/gram 41.80 Gold recovery % 93.5 Mining cost US$/tonne mined 1.80 Processing + G&A cost US$/tonne processed 7.60 Slope angles degrees variable - 46 to 51 Source: RMI (2015)

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Note that the mining, processing, and G&A costs were initially estimated by JDS in terms of Canadian dollars. Using a currency exchange rate of 0.80, all costs were converted to US currency to match the US gold price (revenue). Table 14.10 tabulates undiluted Indicated and Inferred Mineral Resources constrained to the conceptual US$1,300 pit at a variety of gold cutoff grades. Mineral resources are being declared inside of the conceptual pit using a 0.25 g/t gold cutoff grade (data highlighted in yellow in Table 14.10). That cutoff was calculated using the price, recovery, and cost data summarized in Table 14.9. Table 14.10: Undiluted Mineral Resources

Indicated Resource Inferred Resource Au Cutoff (g/t) Contained Au Contained Au Tonnes (M) Au (g/t) Tonnes (M) Au (g/t) Ounces (000) Ounces (000) 0.10 251 0.57 4,601 76 0.50 1,222 0.15 205 0.68 4,475 61 0.60 1,181 0.20 170 0.78 4,269 51 0.68 1,123 0.25 144 0.88 4,069 43 0.76 1,058 0.30 123 0.98 3,876 37 0.84 1,001 0.35 107 1.08 3,704 32 0.93 949 0.40 93 1.18 3,542 28 1.01 901 0.45 83 1.28 3,399 24 1.09 853 0.50 73 1.39 3,280 22 1.17 815 0.55 66 1.49 3,148 19 1.25 780 0.60 59 1.59 3,024 17 1.33 741 0.65 54 1.69 2,917 16 1.40 706 0.70 49 1.78 2,798 14 1.48 677 0.75 45 1.88 2,702 13 1.56 638 0.80 41 1.98 2,626 11 1.66 605 0.85 38 2.06 2,538 10 1.74 578 0.90 36 2.15 2,463 10 1.81 556 0.95 33 2.24 2,403 9 1.88 537 1.00 31 2.33 2,338 8 1.96 514 Source: RMI (2015)

Figure 14.14 is a grade-tonnage graph for Indicated Resources contained inside of the conceptual resource pit. Points on the tonnage and grade curves correspond to the resource cutoff grade of 0.25 g/t gold.

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Figure 14.14: Undiluted Indicated Resource Grade-Tonnage Curves

Indicated Tonnes Indicated Au Grade

250 2.5

200 2.0 (g/t) (M)

150 1.5

100 1.0 Grade

Tonnes Au 50 0.5

0 0.0

Au Cutoff (g/t)

Source: RMI (2015)

14.12 General Discussion The Qualified Person responsible for this section is not aware of any known environmental, permitting, legal, title, taxation, socio-economic, marketing, or political factors that could materially affect the mineral resource estimate that is the subject of this Technical Report. Factors that could affect the mineral resource are significant changes in the price of gold or significant increases in mining and/or processing costs.

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15 Mineral Reserve Estimates

15.1 Introduction The Mineral Reserve documented in this section was estimated based on Canadian Institute of Mining (CIM) guidelines that defines mineral reserves as “the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined.” Mineral Reserves are those parts of Mineral Resources which, after the application of all mining factors, result in an estimated tonnage and grade which, in the opinion of the Qualified Person(s) making the estimates, is the basis of an economically viable Project after taking account of all relevant processing, metallurgical, economic, marketing, legal, environment, socio-economic and government factors. Mineral Reserves are inclusive of diluting material that will be mined in conjunction with the Mineral Reserves and delivered to the treatment plant or equivalent facility. The term ‘Mineral Reserve’ need not necessarily signify that extraction facilities are in place or operative or that all governmental approvals have been received. It does signify that there are reasonable expectations of such approvals. To convert Mineral Resources to Mineral Reserves, estimates of gold price, mining dilution, process recovery, refining/transport costs, royalties, mining costs, processing, and general and administration costs were used to estimate cut-off grades (COGs) for the deposit. Along with geotechnical parameters, the COGs formed the basis for the selection of economic mining blocks. The QPs have not identified any known legal, political, environmental, or other risks that would materially affect the potential development of the mineral reserves, except for the risk of not being able to secure the necessary permits from the government for development and operation of the Project. The QPs are not aware of any unique characteristics of the Project that would prevent permitting. A summary of the Mineral Reserve estimate for the Project is shown in Table 15.1. The effective date of the Mineral Reserve estimate contained in this report is January 18, 2016.

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Table 15.1: Summary of Mineral Reserves

Diluted Cut-off Diluted Contained Deposit Reserve Class Tonnage Grade Grade Gold (Mt) g/t Au g/t Au Au (koz) Total Mineral Reserve Probable 105.4 0.34 0.89 3,019 Notes: A gold price of US$1,200/ ounce is assumed An exchange rate of C$1.25 to US$1.00 is assumed Mineral Reserves are based on Indicated Mineral Resources only Elevated cut-off grade used Source: JDS (2016)

The Mineral Reserve estimations take into consideration on-site operating costs (e.g., mining, processing, site services, freight, general and administration), geotechnical analysis for open pit wall angles, metallurgical recoveries, and selling costs. In addition, the Mineral Reserves incorporate allowances for mining recovery and dilution, and overall economic viability.

15.2 Open Pit Mineral Reserves 15.2.1 Open Pit Mineral Reserve Basis of Estimate

The open pit reserves were calculated using Datamine NPVS™ (NPVS) software to optimize the mineral resource block model using COGs and mining factors to obtain economic mining shapes or shells. Only Indicated Mineral Resources were included in the optimization process. Inferred resources were considered as waste. A thorough analysis of the optimized shells was then conducted in order to select the shells to be used as guides to detailed pit design. 15.2.2 Mining Method and Mining Costs

The deposit at the Magino property is amenable to extraction by open pit methods. Mining costs of $US1.84/t mined for the open pit were assumed. The open pit mining cost estimate was generated from first principles and by benchmarking comparable Canadian operations in similar locations. The estimated mining cost includes the cost of a grade control program (use of a reverse circulation drill in order to better delineate ore zones). Open pit shells were developed for the deposits and provide the basis of estimation for the open pit Mineral Reserves. 15.2.3 Dilution

As input to the initial pit limit optimization and subsequent mine scheduling, and to reflect the bulk mining method chosen when compared to the block model parameters, an external mining dilution was calculated and applied to the deposit.

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This external mining dilution was based on a calculation of the number of waste blocks adjacent to an ore block in the mineral inventory block model (using Hexagon Mining MineSight™ “four side contact routine”). Only blocks which were contained within a given zone (in this case a resource classification of Indicated), and above a given gold cut-off grade, were considered as ore blocks. The current mine plan is based on starting with the original 5 m x 5 m x 5 m block model as supplied by Resource Modeling Inc. and then estimating the resulting dilution when going up to an assumed smallest mining unit (SMU) of 10 m x 10 m x10 m. The waste block edges for each block were calculated on each horizontal plane in the model, where for a typical bench, the number of waste edges can vary from zero (i.e., block is surrounded by all ore blocks) to four (i.e., block is surrounded by all waste blocks). Dilution was estimated using the number of waste edges for each block, an assumed grade of zero for all waste, and a dilution width of 0.9 m for each edge. The results of the above analyses are summarized in Table 15.2. As a result of the analyses an external dilution of 23% was applied to the Magino deposit. Table 15.2: Open Pit Dilution Estimate

Magino # of Waste Dilution Applied Contribution to Total Edges # of Blocks Distribution (%) (%) External Dilution (%) 0 99,909 27 0 0 1 120,225 33 18 5.9 2 97,231 27 36 9.6 3 40,943 11 54 6 4 7,630 2 72 1.5 Total 365,938 100 23 Source: JDS (2016)

15.2.4 Geotechnical Considerations

Rockland Ltd. carried out a geotechnical pre-feasibility level study of pit slope design for the proposed pit. The various pit slope design parameters, including geotechnical considerations, are discussed in detail in Section 16. Prior to this pre-feasibility, several geotechnical investigations have been completed for the Magino Gold Project. Since the 2015 pit shell is similar to previous designs and, in order to eliminate repetition, Rockland Ltd. reviewed previous information, compared pit shells, assessed analyses and evaluated pit slope design recommendations. This pre-feasibility study, where applicable, employed previous analyses and results, and provided pit design recommendations. Where analyses are unavailable or inapplicable, recommendations were made for the next stage of investigation. The previous investigations employed both geotechnical and hydrological assessments for pit slope design. The geotechnical program consisted of geotechnical drill holes and Acoustic Televiewer surveys.

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The geotechnical logs recorded rock types, geotechnical parameters and orientation of structural discontinuities encountered in the drill holes. The rock mass at the Magino pit was found to be generally “Strong to Very Strong” with “Good Rock” quality. The hydrogeological program consisted of packer testing and installation of vibrating wire piezometers. The results indicated that the water levels throughout the pit area are close to surface, requiring slope depressurization to facilitate stable slope development and water management plan such as dewatering walls, drainage holes and in-pit dewatering. The pit slope characterizations divided the pit slope into several domains. Since pit scale faults were not identified, rock fabric is likely the controlling factor and governing the stability of pit walls at bench, inter-ramp and overall slope scales. The kinematic analyses resulted in the inter-ramp slope angle ranging from 41.6o to 56º. The overall pit slope angle was assessed for several rock qualities and slope angles. A high factor of safety was calculated; indicating a low risk of large scale failure. It is important to note that the pit slope design recommendations assumed a water barrier is constructed between Goudreau Lake and the pit to prevent this lake from dewatering. 15.2.5 Lerchs-Grossman Optimization

The sizes and shape of the ultimate open pits were obtained using the optimizing Lerchs- Grossman (LG) algorithm as implemented in Datamine NPVS software. Key inputs used for the LG runs are shown in Table 15.3.

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Table 15.3: Optimization Parameters

Parameter Unit Value Revenue, Smelting & Refining Gold Price US$/oz Au 1,200 Payable Metal % 99 TC/RC/Transport US$/oz Au 4.00 Net Gold Value per Ounce US$/oz 1,184 Net Gold Value per Gram US$/g 38.07 OPEX Estimates OP Waste Mining Cost US$/t waste mined 1.84 OP Ore Mining Cost US$/t ore mined 1.84 Processing Cost US$/t milled 6.78 Mineralized Material Rehandle US$/t milled 0.17 G&A US$/t milled 0.84 Total Opex (excl. Mining) US$/t milled 7.79 Recovery and Dilution Process Gold Recovery % 93.5 External Mining Dilution % 23 Mining Recovery % 95 External Gold Cut-Off Grade g/t Au 0.27 Other Overall Pit Slope Angles degrees variable Discount Rate % 5 Mill Production Rate t/d 30,000 Mine design parameters in this table differ from final cost estimates but the QP considers the differences not to be material Source: JDS (2016)

A series of pit optimization runs was completed for the deposit and analysis of the NPV pit shells conducted. Ultimate and phase shells were chosen and used as the template for the detailed ultimate pit and phase designs. 15.2.6 Cut-Off Grade and Resource Classification Criteria

Once pit shapes were established, marginal cut-off grades were calculated. The marginal, or incremental, COG is specific to the mining method and is defined as the minimum grade at which mineralized material, already located at the pit rim (i.e., contained within the pit and already mined), pays for all additional costs incurred if it is sent for processing. According to this definition, the marginal COG (as shown in Table 15.3 above) corresponds to a break-even grade that excludes mining costs.

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The open pit Mineral Reserves for Magino are reported at a cut-off grade of 0.34 g/t. This elevated COG was chosen in order to increase the average grade of material processed and limit the amount of the lower grade, marginal material reporting to the mill. The Mineral Reserves reported comprise all mineralized material with grades equal to or above this elevated COG. 15.2.7 Mine Design

Detailed pit design involves the conversion of the optimized pit shells into an operational open pit mine design, which is discussed further in Section 16. Table 15.4 shows the main geometrical parameters used in the pit design. Table 15.4: Pit Design Parameters

Description Value Ultimate Pit Design Parameters 10 m (single, working) Bench Height 20 m (double; final pit) Face Angle 55° to 76° (double bench, final pit) Berm Width 8.5 m Inter-ramp Angle (IRA) 42° to 56° Ramp Width – Double Lane 31 m (total excavation) Ramp Width (Single lane -lower benches) 23 m Ramp gradient 10% Source: JDS (2016)

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16 Mining Methods

16.1 Introduction The Magino deposit is amenable to development as an open pit (OP) mine. Mining of the deposit is planned to produce a total of 105.4 Mt of ore and 398.5 Mt of waste (includes low grade material) for a 3.8:1 overall strip ratio, over a ten and a half year mine production life (including one year of pre-production). The current life-of-mine (LOM) plan focuses on achieving consistent ore production rates, and mining of higher grade material in the production schedule, as well as balancing grade and strip ratios. The average open pit ore gold mill head grade is estimated to be 0.89 g/t and contain 3.0 Moz of gold. Lower grade material is planned to be stockpiled and is not included in the Mineral Reserves or processed ore tonnages reported. Industry-standard mining methods, equipment, dilution calculations, and production rates were used throughout the planning process

16.2 Open Pit Mining 16.2.1 Open Pit Planning

Industry-standard methodologies were adopted for pit limit analysis, mining sequence, cut-off grade optimization design, and detailed design. The following main steps were part of the planning process:  Assignment of economic criteria to the geological resource model;  Definition of optimization parameters, such as gold price, preliminary operating cost estimates, pit wall angles, preliminary dilution and metallurgical recovery estimates;  Calculation of economic ultimate pit limits for the various deposits using the Datamine NPV Scheduler (NPVS) software. (This software applies the Lerchs-Grossman algorithm to define optimal mining shells. A series of nested envelopes was produced within a range of economic conditions);  Development of the economic scheduling sequence using the NPVS series of optimum nested pits as guides;  Development of the operational designs for the ultimate and phased pits using Hexagon Mining MineSight™ (MineSight) software;  Determination of incremental (or mill) cut-off grade based on economic parameters;  Determination of external mining dilution based on the mineral inventory block model;  Creation of life-of-mine (LOM) production schedule to maximize economic return, while satisfying the plant feed and mine production;  Calculation of hauling distances, per bench and phase, according to the LOM plan for each of the deposits and the defined haulage network; and

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 Estimation of equipment fleet requirements from the LOM production schedule. Creation of a spreadsheet model to estimate operating hours and number of units required. Application of this model to calculate equipment procurement schedules, workforce requirements, capital expenditures and operating costs In addition to the design criteria and cut-off grades noted in Section 15, some general assumptions and further design criteria were used in the mine planning and design of the Magino open pits. 16.2.1.1 General Assumptions  One year of pre-stripping prior to plant start-up;  Pit phases to be mined concurrently;  Waste rock is planned to be used in the construction of roads and other earthworks Projects during the construction period as well as construction material for the tailings management facility throughout the life of the Project;  In order to maximize mill head grades a run-of-mine (ROM) stockpile will be used as necessary for stockpiling of higher grade ore from the open pit  Low grade material that is below the elevated cut-off of 0.34 g/t Au to be stockpiled and is not included in the Mineral Reserves or processed ore tonnages reported;  Given the deposit and pit geometry and mining sequence, there is no opportunity for backfilling into mined out pits;  Conventional, diesel-powered truck-shovel mining methods;  Ultimate pit limits constrained to maintain a minimum 50 m offset from Goudreau Lake 16.2.1.2 Haul Road Design, Bench Height and Mining Widths Haul roads and in-pit ramps were designed at 10% gradient and a 31 m width, which will provide a running surface of triple the width of the primary haulage fleet consisting of 220 tonne haul trucks The road width will provide sufficient room for two-way road traffic, a safety berm and includes an allowance for a drainage ditch. The ramp width was narrowed to 23 m and steepened to a 12% gradient in the lower portions of the pits to reduce waste stripping by switching to single lane traffic. The 23 m width provides a running surface of two times the width of the 220 tonne trucks, a safety berm, and includes an allowance for a drainage ditch. A single ramp access (dual lane) was the basis for the pit designs for Magino. Mining bench heights of 10 m were selected to be within the safe and efficient digging envelope for 22 m3 bucket capacity diesel hydraulic shovels. The 10 m height takes into account swell and the maximum reach of the shovels (double benching to be incorporated into final pit high walls). For the 220 tonne trucks and 22 m3 shovel fleet, a minimum pit bottom width of 35 m has been selected. A minimum pushback distance of 80 m has been selected for this fleet. The majority of mine planning has been based on mining to the pit limits on each bench to take full advantage of the fleet capacity.

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16.2.1.3 Material Characteristics and Plant Constraints In-situ density values, used to report reserves and develop the LOM plan, were defined and incorporated into the 3D resource block model as provided by Resource Modeling Inc. (these models are explained in detail in Section 14 Mineral Resource Estimate) A 30% swell factor was assumed for all materials in the loading and hauling calculations as well as for Waste Rock Facility and Tailings Management Facility designs. A plant throughput of 30,000 dry metric tonnes per day (t/d) for 365 days per year was selected, after allowing for equipment availability.

16.3 Geotechnical Criteria The pit slope design of Magino has been investigated based on different pit shells in the past. Rockland Ltd. was retained to carry out the geotechnical PFS level pit slope design for the 2015 pit shell. The 2015 pit shell is similar to the 2013 pit shell which was evaluated by EBA (EBA, 2013). Rockland Ltd. reviewed previous investigations, compared pit shells, assessed previous analyses and recommended the pit slope design for the 2015 pit shell (Rockland Ltd., 2015). 16.3.1 Pit Geotechnical Characterization

A combined geotechnical and hydrological field investigation was employed for the pit slope design. The geotechnical investigations consisted of 12 inclined geotechnical drill holes between the depth range of approximately 146 m and 296 m. In addition, Acoustic Televiewer surveys were carried out on six exploration holes for the collection of structural data between the depth range of 140 m and 354 m. The geotechnical logs recorded total recovery, rock strength, weathering, rock quality designation, the number of natural and mechanical fractures, as well as characterization and orientation of structural discontinuities. The results of joint set analyses indicated a good correlation between Televiewer and geotechnical drill holes data. The major rock types within the pit are mafic metavolcanics, felsic to intermediate intrusives, and mafic intrusive. The rock mass at Magino was found to be generally “Strong to Very Strong” based on the ISRM terminology with a Rock Mass Rating (RMR76) of generally 70-80 throughout the pit, suggesting “good rock” quality. The hydrogeological program consisted of packer testing and installation of vibrating wire piezometers. The results indicated that the water levels throughout the pit area are close to surface and that the permeability of the rock units is around 6 x 10-7 m/s. This requires slope depressurization to facilitate stable slope development and a water management plan such as dewatering wells, drainage holes and in-pit de-watering.

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16.3.2 Pit Slope Stability

For the purpose of pit slope design, as illustrated in Figure 16.1 below, three structural domains of footwall (Domain 1), ore (Domain 2) and hangingwall (Domain 3) were identified and each domain was divided into eight design sectors (K1 through K8). Since the rock quality is good throughout the pit, the instability potential is structurally controlled. The kinematic analyses were carried out for two bench heights of 16 m and 20 m with the bench widths of 8 m and 8.5 m. The Bench Face Angle (BFA) was restrained to 76° to account for the uncertainty level. The analyses, as shown in Table 16.1 below, resulted in the Inter Ramp Angle (IRA) ranging from 41.6° to 56°. The overall pit slope was evaluated for the height of 350 m and three overall slope angles of 45°, 48° and 51°, GSI of 65 and 75 with water tables at 5 m, 55 m and 105 m below the pit crest. The minimum factor of safety for the overall pit slope was found to be 1.6, suggesting low risk of large scale failure. It is important to note that pit slope design assumed a water barrier will be constructed between Goudreau Lake and the pit to prevent this lake from dewatering.

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Figure 16.1: 2013 Pit Shell Outline, Structural Domains and Design Sectors

Source: EBA (2013) and Rockland (2015)

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Table 16.1: Pre-Feasibility BFA and IRA

Slope Dip Direction Bench Configuration Optimum Structural Optimum Required Sector I.D. From To Height IRA Domain BFA Bench (°) (°) (m) (°) (°) Width 16 ()8 53.2 K1, K2 & K3 157.5 292.5 76 20 8.5 56 16 8 39.8 Domain 2 K4 & K5 292.5 22.5 55 20 8.5 41.6 16 8 47.9 K6, K7 & K8 22.5 157.5 68 20 8.5 50.3 16 8 53.2 K3, K4, K5 & K6 247.5 67.5 76 20 8.5 56 Domain 1 16 8 47.9 K7 67.5 112.5 68 20 8.5 50.3 16 8 47.9 K7 & K8 67.5 157.5 68 20 8.5 50.3 Domain 3 16 8 53.2 K1, K2 & K3 157.5 292.5 76 20 8.5 56 Source: Rockland (2015)

The review of currently available drilling information, the geological model, discontinuity measurements data, laboratory and field tests, and stability analyses suggest that the recommended pit slope design of the 2013 pit shell is also applicable for the proposed 2015 pit shell. However, a number of investigations are essential for the next stage of pit slope design. The geotechnical characteristics of overburden, which have not been investigated previously, should be evaluated through field and laboratory programs to recommend the overburden slope design. No faults or major structures have been incorporated in the pit slope design. An additional geotechnical drilling program is required for the completion of the geological model and incorporation of major structural features, as well as the weathering and alteration characteristics. Given the proximity of Goudreau Lake and high water tables to the pit, an additional hydrogeological study should be performed to provide a prediction of pore water pressure in the pit slopes at various stages of development and to establish the slope depressurization and water management plan. Using this information, the fully coupled numerical modelling of seepage/stability analyses should be carried out to recommend the final pit slope design.

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16.4 Open Pit Optimization Mine planning for the Magino deposit was conducted using a combination of Hexagon Mining MineSight™ (MineSight) software and DataMine NPV Scheduler (NPVS) software. The mineral inventory block models used were produced by Resource Modeling Inc. using MineSight. NPVS was used for the open pit optimization and life-of-mine scheduling, while MineSight was used to created detailed pit and phase designs. As discussed in Mineral Reserve Estimate Section 15, the mineral inventory block model for the Magino deposit was used with the NPVS software to determine optimal mining shells and pit phasing based on the Design Criteria summarized in Section 15. Only indicated mineral resources were included in the pit optimization process (no resource has been classified in the measured category). A series of optimized shells were generated for the Magino gold deposit based on varying revenue factors. The results were analyzed with shells chosen as the basis for ultimate limits and preliminary phase selection. The results of the pit optimization evaluation on the deposit for varying revenue factors values are summarized in Table 16.1 and Figures 16.2 and 16.3 for Indicated Resources. The total diluted feed tonnes and gold grade are based on the marginal diluted cut-off grade calculated of 0.27 g/t. Note that the NPV in this optimization summary does not take into account capital expenditures and is used only as a guide in shell selection and determination of the mining shapes. The actual NPV of the Project is summarized in Section 22 of this report. NPVS produces both a best case (i.e., mine out shell 1, the smallest shell, and then mine out each subsequent shell from the top down, before starting the next shell) and a worst case (mine each bench completely to final limits before starting next bench) scenarios. These two scenarios provide a bracket for the range possible outcomes. The shells were produced based on varying revenue factors (0.06 through to 1.2 of base case) to produce the series of nested pit shells with the NPV results shown.

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Table 16.2: Pit Optimization Results

Shell# Rev Factor Life Total Diluted Feed Waste Strip Total TCF NPV Best NPV Worst Incr. Diluted Incr. Incr. Strip NPV BEST NPV WRST (yrs) (Mt) Au (g/t) Au (k Oz.) (Mt) Ratio (Mt) (M $) (M $) (M $) Millfeed (Mt) Waste (Mt) Ratio incr. M$ incr. M$ Pit 1 0.06 0 0 8.1 1 0 2.4 0 2 2 2 0 0 0 0 0 Pit 2 0.08 0 0 4.9 7 0 1.6 0 9 9 9 0 0 1.51 7 7 Pit 3 0.1 0 0.1 4.1 13 0 1.7 0 17 17 17 0.1 0 1.75 9 9 Pit 4 0.12 0 0.2 3.6 18 0 1.6 0 23 23 23 0.1 0 1.43 6 6 Pit 5 0.14 0 0.3 3.4 29 1 2.2 1 35 35 35 0.1 0 3.02 12 12 Pit 6 0.16 0 0.4 2.8 39 1 1.8 1 47 47 47 0.2 0 1.3 11 11 Pit 7 0.18 0.1 0.7 2.3 56 1 1.8 2 66 66 66 0.3 1 1.64 19 19 Pit 8 0.2 0.1 0.9 2.1 65 2 1.6 2 75 75 75 0.2 0 1.08 9 9 Pit 9 0.22 0.1 1.2 2.02 76 2 1.7 3 87 87 86 0.2 0 1.86 12 12 Pit 10 0.24 0.1 1.5 1.83 89 2 1.5 4 101 100 100 0.4 0 0.88 14 14 Pit 11 0.26 0.2 2.1 1.64 111 3 1.4 5 122 121 121 0.6 1 1.23 21 21 Pit 12 0.28 0.2 2.6 1.53 126 4 1.4 6 137 136 136 0.5 1 1.12 15 15 Pit 13 0.3 0.3 3.8 1.36 165 5 1.4 9 172 170 170 1.2 2 1.58 34 34 Pit 14 0.32 0.4 4.3 1.32 185 7 1.5 11 189 188 187 0.6 1 2.03 17 17 Pit 15 0.34 0.5 5.1 1.27 208 8 1.5 13 210 208 207 0.8 1 1.73 20 20 Pit 16 0.36 1.7 18.9 1 609 33 1.7 51 543 519 516 13.8 25 1.79 311 309 Pit 17 0.38 3.5 37.9 0.9 1,099 60 1.6 98 930 854 836 19 27 1.42 335 321 Pit 18 0.4 3.9 42.4 0.9 1,224 68 1.6 111 1,030 936 914 4.5 9 1.97 82 78 Pit 19 0.42 4.4 47.9 0.9 1,385 82 1.7 130 1,154 1,037 1,008 5.5 14 2.53 100 94 Pit 20 0.44 4.6 49.9 0.89 1,431 85 1.7 135 1,188 1,064 1,032 2 3 1.37 27 24 Pit 21 0.46 5 54.4 0.88 1,541 94 1.7 148 1,266 1,125 1,086 4.5 9 1.95 61 54 Pit 22 0.48 5.8 63 0.86 1,739 110 1.7 173 1,401 1,228 1,174 8.6 16 1.83 103 88 Pit 23 0.5 6 65.3 0.86 1,795 115 1.8 181 1,438 1,255 1,198 2.3 6 2.5 28 24 Pit 24 0.52 6.4 70.5 0.85 1,925 130 1.8 201 1,521 1,316 1,250 5.2 15 2.84 60 51 Pit 25 0.54 7.2 79.2 0.84 2,136 155 2 235 1,651 1,407 1,327 8.7 25 2.89 91 77 Pit 26 0.56 7.6 82.9 0.83 2,221 166 2 248 1,700 1,441 1,355 3.6 10 2.8 34 28 Pit 27 0.58 7.9 86.4 0.83 2,303 177 2 263 1,747 1,473 1,379 3.5 11 3.16 32 25 Pit 28 0.6 8.1 88.9 0.83 2,361 184 2.1 273 1,779 1,494 1,395 2.5 8 3.09 21 16 Pit 29 0.62 8.8 96.6 0.81 2,522 205 2.1 302 1,861 1,547 1,432 7.7 21 2.66 53 37 Pit 30 0.64 9 98.4 0.81 2,560 211 2.1 309 1,880 1,559 1,440 1.8 6 3.13 12 8 Pit 31 0.66 10.1 110.2 0.8 2,833 257 2.3 367 2,008 1,638 1,495 11.8 47 3.93 78 55 Pit 32 0.68 10.5 115.5 0.8 2,958 280 2.4 396 2,065 1,671 1,519 5.3 23 4.39 33 24 Pit 33 0.7 10.7 117.3 0.79 2,996 287 2.4 404 2,081 1,680 1,525 1.8 6 3.55 9 6 Pit 34 0.72 11.2 122.4 0.79 3,106 307 2.5 430 2,124 1,705 1,537 5.1 20 4.01 25 12 Pit 35 0.74 11.7 128.3 0.78 3,235 333 2.6 461 2,173 1,732 1,550 5.9 26 4.39 27 13 Pit 36 0.76 11.9 130.6 0.78 3,287 345 2.6 475 2,190 1,742 1,554 2.3 12 5.08 10 4 Pit 37 0.78 12.2 133.7 0.78 3,348 358 2.7 491 2,209 1,752 1,555 3.1 13 4.21 10 1

Effective Date: January 18, 2016 16-8

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Shell# Rev Factor Life Total Diluted Feed Waste Strip Total TCF NPV Best NPV Worst Incr. Diluted Incr. Incr. Strip NPV BEST NPV WRST (yrs) (Mt) Au (g/t) Au (k Oz.) (Mt) Ratio (Mt) (M $) (M $) (M $) Millfeed (Mt) Waste (Mt) Ratio incr. M$ incr. M$ Pit 38 0.8 12.3 135 0.78 3,372 362 2.7 497 2,216 1,756 1,555 1.3 5 3.73 4 0 Pit 39 0.82 12.5 137 0.78 3,418 374 2.7 511 2,228 1,762 1,556 2 12 5.78 6 1 Pit 40 0.84 12.7 138.9 0.77 3,460 385 2.8 524 2,237 1,767 1,553 1.9 11 5.85 5 -3 Pit 41 0.86 12.7 139.6 0.77 3,473 388 2.8 528 2,240 1,768 1,552 0.7 3 4.88 1 -1 Pit 42 0.88 13.7 150.3 0.77 3,696 450 3 600 2,280 1,788 1,537 10.7 61 5.72 20 -14 Pit 43 0.9 13.8 151.3 0.76 3,719 456 3 608 2,284 1,790 1,536 1 6 6.19 2 -1 Pit 44 0.92 13.9 151.9 0.76 3,731 460 3 612 2,285 1,790 1,535 0.6 3 5.34 1 -1 Pit 45 0.94 13.9 152.3 0.76 3,737 461 3 614 2,286 1,791 1,534 0.4 2 4.73 0 -1 Pit 46 0.96 13.9 152.5 0.76 3,739 462 3 614 2,286 1,791 1,533 0.2 1 3.4 0 0 Pit 47 0.98 14 153.3 0.76 3,757 468 3.1 621 2,287 1,791 1,530 0.9 6 7 0 -4 Pit 48 1 14.1 154 0.76 3,771 473 3.1 627 2,287 1,791 1,527 0.6 5 7.94 0 -2 Pit 49 1.02 14.1 154.3 0.76 3,777 475 3.1 629 2,287 1,791 1,526 0.3 2 5.33 0 -1 Pit 50 1.04 14.1 154.4 0.76 3,780 475 3.1 630 2,287 1,791 1,525 0.2 1 4.18 0 -1 Pit 51 1.06 14.1 154.6 0.76 3,782 476 3.1 631 2,286 1,791 1,525 0.1 1 5.86 0 0 Pit 52 1.08 14.2 155.2 0.76 3,794 481 3.1 636 2,285 1,791 1,521 0.7 5 6.95 -1 -3 Pit 53 1.1 14.2 155.8 0.76 3,804 484 3.1 640 2,284 1,790 1,519 0.6 4 6.4 -1 -3 Pit 54 1.12 14.2 155.9 0.76 3,806 485 3.1 641 2,284 1,790 1,518 0.1 0 3.6 0 0 Pit 55 1.14 14.3 156.5 0.76 3,816 489 3.1 645 2,282 1,789 1,515 0.6 4 7.01 -1 -4 Pit 56 1.16 14.3 156.6 0.76 3,819 490 3.1 646 2,281 1,789 1,514 0.2 1 6.35 0 -1 Pit 57 1.18 14.3 156.8 0.76 3,821 491 3.1 647 2,281 1,788 1,513 0.2 1 5.76 0 -1 Pit 58 1.2 14.3 156.9 0.76 3,822 491 3.1 648 2,280 1,788 1,512 0.1 1 5.84 0 0

Source: JDS (2016)

Effective Date: January 18, 2016 16-9

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Figure 16.2: Pit Optimization Results - Overall Summary

Magino Project - PFS Scenario - LG Shells Overall Results

2,000 700

1,800 600 1,600

1,400 500

1,200 400 1,000 300 800

Value ($Millions) 600

200 Tonnage (Millions)

400 100 200

0 0 Pit 1 Pit 11 Pit 21 Pit 31 Pit 41 Pit 51 Pit

Waste Total Diluted Millfeed (Mt) NPV Best NPV Worst

Source: JDS (2016)

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Figure 16.3: Pit Optimization – Incremental Results

Magino Project - PFS Scenario - LG Shells Incremental Value

400

350

300

250

200

150 Value ($Millions) 100

50

0

-50 Pit 1 Pit 11 Pit 21 Pit 31 Pit 41 Pit 51 Pit NPV BEST NPV WRST

Source: JDS (2016)

For the Magino deposit, shells beyond Pit Shell 38 (revenue factor 0.8) add mineralized rock and waste tonnages to the ultimate pit, but have higher incremental strip ratios with minimal positive impact on the NPV. To better determine the optimum shell on which to base the phasing and scheduling and to gain a better understanding of the deposit, the shells were analyzed in a preliminary schedule. The schedule assumed a maximum processing rate of 10.9 Mt/yr. No stockpiles were used in the analysis and no CAPEX was added. Based on the analysis of the shells and preliminary schedule, Pit Shell 38 was chosen as the base case ultimate shell for the deposit. In addition, pit phases were also selected based on the optimization results and used as the basis for the detailed ultimate pit and phase, or pushback, designs.

Effective Date: January 18, 2016 16-11

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16.5 Open Pit Mine Design Based on the pit optimization analysis, the detailed ultimate pit and phase designs incorporated geotechnical parameters (bench face angle, inter-ramp angles, and berm widths) for the various geotechnical domains and pit sectors and included 10% gradient access ramp design and take into account minimum mining widths (based on open pit mining equipment selected). Table 16.3 below summarizes the resulting detailed pit and phase design ore tonnages and grades for the open pit deposit (using the elevated cut-off grade and dilution from the Mineral Reserve Estimate section) along with summary of waste rock tonnages. Figure 16.4 represents a plan view of the detailed pit and phase designs for Magino with typical sections through the pits and phases shown in Figure 16.5 and Figure 16.6. The ultimate Magino pit design is approximately 1,500 m long and 800 m wide. The base of the pit is at an elevation of -45 masl, resulting in a maximum pit depth of approximately 435 m. Table 16.3: Open Pit and Phase Design Summary

Gold Grade Contained Waste Total Strip Ore Deposit (Diluted) Au OVB Rock* Total Material Ratio (Mt) (g/t) (koz) (Mt) (Mt) (Mt) (Mt) (t:t) Phase 1 16.3 0.86 449 5.3 31.6 36.8 53.2 2.3 Phase 2 35.3 0.89 1,010 7.2 95.3 102.5 137.9 2.9 Phase 3 53.8 0.90 1,560 8.8 250.4 259.2 312.9 4.8 Total 105.4 0.89 3,019 21.3 377.2 398.5 503.9 3.8 Note: Rock Waste includes Low grade material Source: JDS (2016)

Effective Date: January 18, 2016 16-12

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Figure 16.4: Plan View Magino Pit/Phase Designs

Source: JDS (2016)

Figure 16.5: Typical Cross-Section (looking E) - Magino Pit/Phase Designs

Source: JDS (2016)

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Figure 16.6: Typical Long Section (looking NW) - Magino Pit/Phase Designs

Source: JDS (2016)

The detailed pit design for Magino was divided into three pushbacks, or phases, for the mine plan development in order to provide flexibility in the schedule, maximize grade in the early part of the schedule, reduce pre-stripping requirements, provide independent accesses to each phase, while providing the required mill feed production per period. The mining schedule maximizes the attainable mill throughputs based on an elevated cut-off grade strategy, which focuses on higher grade ore, particularly early on in schedule, and allows for stockpiling of lower grade material for potential future processing. Figure 16.7 further summarizes the phase designs for the deposit, illustrating mineralized rock and waste tonnages, gold grade and strip ratio. Waste rock from the open pit at Magino is planned to be deposited in various engineered waste rock facilities to the north of the deposit as well as in the construction of the tailings management facility. Tailings from the process plant are proposed to be delivered to a tailings management facility northwest of the proposed plant location. Higher grade ore is planned to be hauled directly to the process plant site, or high-grade stockpile, while low grade material is planned to be redirected to a stockpile for potential future processing.

Effective Date: January 18, 2016 16-14

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Figure 16.7: Open Pit Phase Summary

Magino Project ‐ Phase Tonnages, Grade and Strip Ratio 350 6.00

300 5.00 ) (t:t 250

4.00 Ratio

)

200 Strip

(Mt

3.00 and 150 (g/t) Tonnes

2.00 Grade

100 ld

1.00 Go 50

0 0.00 123 Year

Ore Waste Gold Grade Strip Ratio

Source: JDS (2016)

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16.6 Mine Production Schedule 16.6.1 Material Movement

The open pit mine production schedule for the Magino deposit was based on an elevated cut-off strategy with processing of higher grade ore, while stockpiling any lower grade material mined for potential future processing. The plant throughput was planned at a net yearly production of 10.95 Mt/a. Pre-production stripping was planned to occur within Year -1 with Year 1 representing the commencement of full- scale processing. The maximum amount of planned total material to be moved from the open pit is approximately 150,000 t/d. The life-of-mine (LOM) average total open pit mining rate is 125,000 t/d. Only Indicated mineral resources were used in the LOM plan (no Measured resources have been currently modelled). Table 16.4 below is a summary of total material movement by year for the LOM mine production schedule. In addition, the processing schedule and stockpile balance are illustrated..

Effective Date: January 18, 2016 16-16

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Table 16.4: Open Pit Production Schedule – Magino Project

Year Description Unit -1 1 2 3 4 5 6 7 8 9 10 Total Mining Schedule Ore Feed M tonnes 6.9 11.7 14 16.5 3.8 3.4 9.4 10.9 12.7 9.2 6.9 105.4 Gold Grade g/t 0.84 0.83 0.82 0.97 0.87 0.78 0.73 0.97 1.05 0.98 0.76 0.89 Contained Gold k Oz. 185 312 368 514 106 85 221 340 430 287 168 3,019 Waste M tonnes 18.1 43.3 41 38.5 51.2 51.6 45.6 44 42.3 18.3 4.6 398.5 Strip Ratio t:t 2.6 3.7 2.9 2.3 13.4 15.2 4.9 4 3.3 2 0.7 3.8 Total Material M tonnes 25 55 55 55 55 55 55 55 55 27.5 11.4 503.9 Processing Schedule Ore processed M tonnes 10.9 10.9 10.9 10.9 10.9 11 10.9 10.9 11 6.9 105.4 Average Gold grade g/t 1.12 0.96 1.29 0.54 0.5 0.68 0.97 1.16 0.88 0.76 0.89 Contained Gold k Oz. 395 339 453 192 175 238 340 409 309 168 3,019 High-Grade Stockpile Ore at Beginning of year M tonnes 6.9 7.7 10.7 16.2 9.1 1.6 1.8 Gold Grade g/t 0.84 0.42 0.38 0.37 0.36 0.34 0.37 Contained Gold k Oz. 185 102 131 192 106 17 21 Ore Feed in M tonnes 6.9 7.7 4.7 5.5 0.9 0.8 1.8 28.2 Gold Grade g/t 0.84 0.42 0.33 0.34 0.31 0.31 0.37 0.48 Contained Gold k Oz. 185 102 50 61 9 8 21 437 Ore Feed Out M tonnes 6.9 1.6 0 8 8.3 1.6 1.8 28.2 Gold Grade g/t 0.84 0.42 0.38 0.37 0.36 0.34 0.37 0.48 Contained Gold k Oz. 185 22 0 95 97 17 21 437 Source: JDS (2016)

Effective Date: January 18, 2016 16-17

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The Magino open pit mine will produce a total of 105.4 Mt of mill feed and 398 Mt of waste rock (includes low grade material) over a ten and a half year mine operating life (including one year of pre-production), yielding an overall open pit strip ratio of 3.8:1. The mine schedule focuses on achieving the required plant feed production rate, mining of higher grade material early in the schedule, while balancing grade and strip ratios. Pre-production covers the period prior to first commercial gold production. Open pit mining activities during this period are scheduled to provide sufficient ore exposure for plant start-up and commissioning, which takes place in the first quarter of Year 1. Mining also focuses on providing sufficient waste rock for the construction of site roads, laydown areas, with the majority of the waste rock used in the construction of the tailings management facility. Ore mined during the pre- production period is planned to be stockpiled and re-handled to the mill during operations. Mining in the pre-production period will create a high-grade stockpile to maximize mill head grades in the early part of the production schedule. Run-of-mine (ROM) stockpiles were designed (as per gold grades indicated in the production schedule). The stockpiles are north of the proposed pit limits and immediately adjacent to the waste rock facilities. The high-grade ore stockpile reaches a maximum tonnage of 16 Mt of ore. The lower grade is stockpiled for potential future processing and is classified as waste in this report. The low grade stockpile reaches a maximum tonnage of 26 Mt of material. The Magino deposit is most economical when the open pit phases are mined concurrently. Figure 16.8 summarizes mined ore/waste tonnages and grade by year, while Figure 16.9 illustrates the processing schedule. In Figure 16.10 the annual bench advances (based on 10 m bench heights) are summarized along with average mining rates per phase and period.

Effective Date: January 18, 2016 16-18

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Figure 16.8: LOM Mined Tonnes, Grade and Strip Ratio

Magino Project ‐ LOM Schedule ‐ Mined Tonnes, Grade and Strip Ratio 60 16.0

14.0 50 (t:t) 12.0 Ratio

40 10.0 Strip

(Mt)

30 8.0 and (g/t) Tonnes 6.0 20 Grade 4.0

10 Gold 2.0

0 0.0 ‐112345678910 Year

Ore Feed Waste Gold Grade Strip Ratio

Source: JDS (2016)

Effective Date: January 18, 2016 16-19

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Figure 16.9: Processing Schedule

Magino Project ‐ LOM Schedule ‐ Contained Ounces and Grade 600 1.2

500 1.0

400 0.8 (g/t)) ('000s)

Grade

300 0.6 Ounces

Gold

200 0.4 Head Contained

100 0.2

0 0.0 ‐112345678910 Year

Contained Gold Gold Grade

Source: JDS (2016)

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Figure 16.10: Annual Open Pit Mined Benches

Magino Project ‐ LOM Schedule ‐ Bench Progression and Total Material Mined 16 160,000

14 140,000

12 120,000 (#)

10 100,000 (t/day)

Benches 8 80,000 Mined 6 60,000 Total Equivalent 4 40,000

2 20,000

0 0 ‐112345678910 Year

Phase 1 Phase 2 Phase 3 Material Mined

Source: JDS (2016)

To further illustrate the progression of mining of the Magino deposit, Table 16.5 provides the LOM mining schedule broken down by phase with Figure 16.11 illustrating the various mined phase tonnages by year. Figures 16.12 through to 16.18 provide various layout drawings with the status of the open pit configuration, waste rock facilities advances, and the tailings management facility, at the end of each year.

Effective Date: January 18, 2016 16-21

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Table 16.5: LOM Schedule by Phase

Description Unit Year -1 1 2 3 4 5 6 7 8 9 10 Total Phase 1 Ore Mined Mt 6.89 9.02 0.4 16.32 Gold Grade g/t 0.84 0.86 1 0.86 Contained Gold koz 185 250 13 449 Overburden Mt 5.28 5.28 Rock Mt 12.83 18.16 0.57 31.56 Total Waste Mt 18.11 18.16 0.57 36.84 Strip Ratio t:t 2.6 2 1.4 2.3 Total Material Mt 25 27.18 0.98 53.16 Phase 2 Ore Mined Mt 2.69 13.62 16.46 2.56 35.34 Gold Grade g/t 0.72 0.81 0.97 0.96 0.89 Contained Gold koz 62 355 514 79 1,010 Overburden Mt 7.21 7.21 Rock Mt 17.92 40.4 33.02 3.97 95.31 Total Waste Mt 25.13 40.4 33.02 3.97 102.52 Strip Ratio t:t 9.3 3 2 1.5 2.9 Total Material Mt 27.82 54.03 49.48 6.53 137.86 Phase 3 Ore Mined Mt 0 1.25 3.39 9.4 10.95 12.74 9.16 6.87 53.76 Gold Grade g/t 0.35 0.67 0.78 0.73 0.97 1.05 0.98 0.76 0.9 Contained Gold koz 0 27 85 221 340 430 287 168 1,560 Overburden Mt 3.33 5.48 8.81 Rock Mt 2.18 41.74 51.61 45.6 44.05 42.26 18.34 4.58 250.36 Total Waste Mt 5.52 47.22 51.61 45.6 44.05 42.26 18.34 4.58 259.17 Strip Ratio t:t 1446.9 37.8 15.2 4.9 4 3.3 2 0.7 4.8 Total Material Mt 5.52 48.47 55 55 55 55 27.5 11.45 312.93 Total Mine Ore Mined Mt 6.89 11.71 14.03 16.47 3.81 3.39 9.4 10.95 12.74 9.16 6.87 105.42 Gold Grade g/t 0.84 0.83 0.82 0.97 0.87 0.78 0.73 0.97 1.05 0.98 0.76 0.89 Contained Gold koz 185 312 368 514 106 85 221 340 430 287 168 3,019 Overburden Mt 5.28 7.21 3.33 5.48 21.3 Rock Mt 12.83 36.08 40.97 35.2 45.71 51.61 45.6 44.05 42.26 18.34 4.58 377.23 Total Waste Mt 18.11 43.29 40.97 38.53 51.19 51.61 45.6 44.05 42.26 18.34 4.58 398.53 Strip Ratio t:t 2.63 3.7 2.92 2.34 13.44 15.21 4.85 4.02 3.32 2 0.67 3.78 Total Material Mt 25 55 55 55 55 55 55 55 55 27.5 11.45 503.95 Note: Rock Tonnage includes low grade material Source: JDS (2016)

Effective Date: January 18, 2016 16-22

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Figure 16.11: LOM Tonnage by Phase

Magino Project ‐ LOM Schedule ‐ Phase Tonnage and Average Mine Gold Grade 60.00 1.20

50.00 1.00

40.00 0.80 ) (Mt

30.00 0.60 Tonnes 20.00 0.40

10.00 0.20

0.00 0.00 ‐112345678910

Phase 1 Ore Phase 1 Waste Phase 2 Ore Phase 2 Waste Phase 3 Ore Phase 3 Waste Average Grade

Source: JDS (2016)

Effective Date: January 18, 2016 16-23

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Figure 16.12: Site Plan Year -1

Effective Date: January 18, 2016 16-24

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Figure 16.13: Site Plan Year 1

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Figure 16.14: Site Plan Year 2

Effective Date: January 18, 2016 16-26

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Figure 16.15: Site Plan Year 3

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Figure 16.16: Site Plan Year 5

Effective Date: January 18, 2016 16-28

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Figure 16.17: Site Plan Year 7

Effective Date: January 18, 2016 16-29

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Figure 16.18: Site Plan Year 10

Effective Date: January 18, 2016 16-30

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16.6.2 Open Pit Development

Year -1: Open Pit mining commences with development and pre-stripping of Phase 1 of the Magino pit. A total of 18 Mt of waste is mined in the period along with 6.9 Mt of ore, at a mined gold grade of 0.84 g/t. The ore produced in this first period is planned to be stockpiled and processed as the mill ramps up to full production in Year 1. The majority of the waste rock will be used in the construction of the tailings management facility. Year 1: First year of full-scale processing (at planned throughput rate of 30,000 t/d or 10.95 mt/a) with mining continuing in Phase 1 as well as commencing in Phase 2. A total of 11.7 Mt of ore is mined in the year and 43.3 Mt of waste produced for an average strip ratio of 3.7:1 (waste tonnes: ore tonnes). The steady state mining rate of 150,000 t/d is achieved. Mill head grade for the year averages 1.12 g/t Au. Year 2: Mining in Phase 1 is completed early in the year and continues in Phase 2. A total of 14.0 Mt of ore is mined from the open pit phases along with 41.0 Mt of waste produced. The ROM stockpile continues to be utilized in order to maximize mill head grades. Average mill head grade over the period is 0.96 g/t Au. Year 3: Mining in Phase 2 continues while pre-stripping of Phase 3 commences in the year. Average mill head grade reaches a Project maximum of 1.29 g/t Au. The waste produced over the period is 38.5 Mt with a total of 16.5 Mt of ore mined for a strip ratio of 2.3:1. The ROM stockpile reaches a LOM maximum closing balance of 16.2 Mt. Year 4: Phase 2 mining is completed in the period and continues in Phase 3. The waste produced for the period totals 51.2 Mt with a total of 3.8 Mt of ore mined. Average mill head grade drops to 0.54 g/t Au. Years 5 to 7: Mining is focused in Phase 3 for remainder of mine life. Average mill head grade over the period is 0.71 g/t Au. The waste produced over the three year period totals 14.3 Mt at an average strip ratio of 5.9:1. Years 8 to 10: The last years of the schedule result in an average mill head grade over this period of 0.93 g/t Au for an overall average grade of 0.89 g/t and 3,019 contained gold ounces produced. Total ore tonnages for the LOM are 105.4 Mt with 398.5 Mt of waste at an overall strip ratio of 3.8:1. This LOM waste tonnage includes 26.2 Mt of low grade material that is stockpiled for potential future processing.

16.7 Mine Equipment Requirements The open pit mining activities for the Project were assumed to be undertaken by an owner operated fleet. The equipment was selected based on a standard open pit mining operation with conventional drill, blast, load and haul activities; selection also considered bulk excavation of waste using hydraulic excavators, and bulk-selective loading of ore using a front-end loader or smaller hydraulic backhoe. Given the overall scale of operations and equipment requirements, a diesel- powered only fleet was selected. Any reference to a specific supplier or piece of equipment should not be seen as an endorsement; this information is provided for reference purposes only. Additional analysis regarding equipment selection is planned to be carried out at the engineering and procurement stages of the Project. Effective Date: January 18, 2016 16-31

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The initial major open pit mining equipment requirements are indicated in Table 16.6. Table 16.6: Initial Primary Open Pit Mining Equipment

Description # Units 311 mm diameter Rotary, Crawler Drill 4 115 mm diameter Percussion, Crawler Drill 1 22 m3 Front Shovel 3 20 m3 Wheel Loader 1 220 t Haul Truck 18 Komatsu D375 Class - Tracked Dozer 5 Komatsu WD600 Class - Rubber-tired Dozer 2 Komatsu GD825 Class - Grader 4 140 t - Water Truck 1 Source: JDS (2016)

16.7.1 General Operating Parameters

The open pits are designed with 10 m benches in both the waste and ore headings with adequate phase geometry to achieve a maximum production level of 55 Mt/a. The design is to accommodate a maximum annual mill throughput of approximately 11 Mt of ore. Mining is scheduled to advance sequentially through the pit, with up to two phases active at any time. Given the required production rate and pit geometries, vertical advance rates were limited to 10 benches per year. The LOM production schedule was focused on producing higher grade mill feed in the early years of the Project life by implementing a stockpiling strategy, and as such, was used to estimate the mining equipment fleet needed (as well as comparing to similar sized open pit gold operations) Time definitions, work regime structure, and standard standby and delay parameters were applied to the mine equipment section. Estimates for effective utilization of major equipment were based on vendor recommendations, cost services, factors and JDS experience. Initially, effective utilizations of 69% for the drilling equipment, 72% for the loading equipment, 68% for the hauling equipment, and 68% for support and auxiliary equipment were assumed. For Year 5 and beyond, a reduction in mechanical availability of 5% has been applied causing a reduction in effective utilization in the later part of the mine life. See Table 16.7.

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Table 16.7: Availability, Target Use of Availability, and Effective Utilization of Major Equipment

Mechanical Use of Effective Open Pit Equipment Availability (Yr 5+) Availability Utilization (%) (%) (%)

311 mm dia. Rotary, Crawler Drill 85 90 65 Diesel, 22 m³ Front Shovel 85 95 68 Diesel, 20 m³ Wheel Loader 85 95 68 220 t Haul Truck 85 95 65 Definitions: Mechanical availability: measure of maintenance down time which is (total available hours less mechanical downtime) divided by total available hours. For Year 5 and beyond a reduction in mechanical availability of 5% has been applied. Use of availability: operational hours divided by total available hours. Effective utilization: product of mechanical availability, utilization, operator efficiency and operational losses. Source: JDS (2016)

16.7.2 Blasthole Drilling, Grade Control Program and Blasting

16.7.2.1 Blasthole Drilling Based on the selected bench height (drilling is planned to occur on 10 m high benches) and the production schedule, a 311 mm diameter production drill was selected. Drill pattern details are shown in Table 16.8. Table 16.8: Drilling Parameters

Item Unit Waste/Ore Diameter mm 311 Dry density (in situ) t/m³ 2.7 Drill bench height m 10 Burden m 8 Spacing m 10 Sub drill m 2.5 Total hole length m 12.5 Stemming m 6 Tonnes rock/hole t 2,176 Drilling factor t/m 174 Penetration rate m/hr 15.8 Source: JDS (2016)

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Based on these parameters, annual drill production capacity was estimated for each period of the mine plan. 16.7.2.2 Grade Control Consideration has been given to what type of grade control procedures would be effective for successfully defining "ore feed" for the relatively large open pit operation that is proposed at Magino to mine 10 m benches to supply a 30,000 t/d mill. In general, the mineralized zones at Magino are narrow, sub-vertical lenses of altered, silicified intrusive material that have limited continuity along strike and down-dip based on visual, statistical, and geostatistical measures. Most of the gold mineralization, in general, follows the geometry (orientation) of the intrusive-wall rock contacts and the weakly developed metamorphic foliation. The average "thickness" for 90% of the drill hole gold grade intercepts of continuous mineralization above 0.35 and 1.00 g/t cutoffs is eight and four metres, respectively. Those thicknesses are not true widths but are somewhat overstated because the holes have not intersected the zones at a normal angle. The spatial continuity of gold mineralization above critical cutoff grades is definitely limited based on modelled variograms (correlograms) and points to potential difficulties in defining ore/waste boundaries with the typical blast pattern that is planned. Conventional vertical blasthole drilling and sampling methods may miss many of the narrow, strongly mineralized zones or be highly biased if drilled "straight down" a mineralized zone. As such, operating costs have been included in the overall mining cost to better define the location and grade of the narrow mineralized zones through angled reverse circulation (RC) drilling. An angle RC grade control program (assumed to be undertaken by a drilling contractor) would feature drilling rows or fences of angle drill holes oriented perpendicular to the strike of the gold system. The spacing of the drill fences and holes along each fence should initially be designed to intersect the mineralized zones in order to confidently be able to confirm the location of the "ore" zones. The depth of the angle RC holes should be designed to test three 10-metre benches (e.g. 60° inclined angle holes would need to be drilled approximately 35 metres long). An effective RC grade control program would need to be designed to achieve different coverage for various locations within the deposit. It is estimated that approximately 80% of the Webb Lake stock would need to be covered with angle RC holes. This results in approximately 500,000 drill metres in total over the life of the Project. 16.7.2.3 Blast Design The blast design used ammonium nitrate fuel oil (ANFO) as the main explosive for blast holes. Given the climatic conditions at the Property, to account for some wet blast holes, emulsion explosive was assumed to average 15% of the total explosives consumed and was included in the cost estimate. Table 16.9 shows the planned blasting parameters for both ore and waste.

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Table 16.9: Blasting Parameters

Item Unit Value Column charge m 6.5 Column charge for dry hole kg 424 Powder factor for dry hole kg/t 0.2 Source: JDS (2016)

An explosives supplier is planned to be contracted to mix ANFO and provide blasting accessories. The owner would supply AN, fuel oil, explosives magazines and delivery trucks. Owner personnel are assumed to be responsible for loading and pattern tie-ins. 16.7.3 Loading

The main criterion for the selection of loading equipment is the ability to mine selectively given the nature of the ore bodies and pit design configurations. Primary loading is planned to be performed by diesel hydraulic front shovels with a 22 m³ bucket. A wheel loader with a 20 m³ bucket would be used for secondary loading, rehandle and shovel support. Operating hours for the loading fleet were estimated by calculating the amount of material required to be moved within a given period with appropriate productivity factors applied. Fleet size was then calculated using total operating hours for the period and the operating hours per unit within the period. Productivities showing the number of passes and fill factors are summarized in Table 16.10 for both waste and ore. In addition to the loading time, the loading unit productivities include estimates for waiting, maneuvering time, and unproductive time. Based on these parameters, the annual production capacity was estimated for each type of loading unit for each period of the mine plan. Dig rates reflect the selective nature of the mining operation.

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Table 16.10: Loading Unit Productivity

Ore/Waste Item Units 20 m3 22 m3 Excavator FEL In-situ material density t/m3 2.7 2.7 Material swell factor loose:bank 1.3 1.3 Loose material density t/lcm 2.1 2.1 Bucket size m3 22 20 Bucket fill factor % 90 85 Tonnes per bucket t 41.5 35.2 Size of truck to load t 220 220 Theoretical buckets to load # 5.3 6.2 Average buckets to load # 6 7 Average loading cycle time sec 35 50 Average spot time between loads sec 45 45 First bucket time sec 15 15 Total time to load truck min 4.25 6.6 Theoretical loading time per day min 1,210 1,210 Theoretical avg. truck loads per day # 284 184 Truck load factor % 95 95 Average truck load t 207 207 Estimated loading productivity t/day 59,000 38,000 Estimated loading productivity t/ophr 2,900 1,900 Source: JDS (2016)

16.7.4 Hauling

The truck haulage fleet for the Project was selected to match the selected loading fleet; this resulted in the selection of trucks with a payload of 220 t. Haulage profiles were estimated for the mine plan for every bench of the Project pits in the different years of the mine life and for each material type (waste/ore). Separate values were calculated for haulage within the pits (between the bench and the pit exits) and outside of the pit limits (between the pit exit and the final destination, e.g., primary crusher/stockpile or WRFs). The distances were split between ramp and horizontal haulage. Table 16.11 summarizes the haul cycle parameters used to calculate truck productivities. Truck performance was calculated for every loading unit and period of the plan, with allowance for the travel time and other fixed times of the cycle such as loading. This varies according to the loading equipment used, dumping, waiting, and spot times.

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Table 16.11: Haulage Cycle Parameters

Description Unit Value Rated payload tonnes 220 Fill factor % 95 Adjusted average payload tonnes 207 Wait and spot at loading point min/load 0.8 Wait and spot at dump point min/load 0.5 Dump time min/load 0.7 Effective utilization % 65 Source: JDS (2016)

16.7.5 Support/Ancillary Equipment

The selection of auxiliary and support equipment considered the size and type of the primary loading and hauling fleet, the geometry of the open pit, and the number of roads and WRFs that would be in operation at any given time. The selection of the type of equipment was based on vendor recommendations as well as JDS experience in similarly sized operations. The auxiliary equipment fleet is planned to be composed of one type of track dozer (Komatsu D375A-class), one type of wheel dozer (Komatsu WD600 - class), one type of grader (Komatsu GD825-class), and one size of water truck (140 t). The major tasks to be completed by the support equipment include the following:  Bench and road maintenance;  General maintenance;  Reclamation support;  Tailings facility construction support; and  Shovel support/cleanup. The primary support equipment unit functions are as follows:  Komatsu D375A Track Dozer – primarily used for shovel support/cleanup, WRF maintenance, road construction, highwall cleaning and other Projects as needed;  Komatsu WD600 Wheel Dozer – used to support WRF maintenance, drill pattern cleanup, and support for shovel floor maintenance;  Komatsu GD825 Grader – primarily used for road maintenance and pit and WRF floor maintenance, road construction and service road maintenance; and  Water Truck – primarily used for dust suppression on haul roads.

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The following items were also included as support equipment:  Drill (115 mm) for secondary blasting and pre-split drilling;  Fuel trucks to supply diesel fuel to all the hydraulic diesel excavators, dozers, drills, as required;  Lube truck to supply lubricants, hydraulic fluids, and cooling water to all open pit equipment;  Mobile mechanical trucks, equipped with tools, welding machine, worktable with press, and replacement parts, to provide preventative and corrective maintenance in the field;  Small excavator (3 m³) for road and pit maintenance;  Low-boy transporter truck (100 t) to transport dozers, drills, small backhoe and major components;  Tire manipulator for tire maintenance;  Mobile crane (65 t) for field maintenance; and  Mobile lights to illuminate waste dumps and construction areas.

16.8 Mine Maintenance The key elements provided by maintenance to satisfy the requirements of open pit mine production are equipment safety, availability, reliability, and operability. The strategy for repair and maintenance of the open pit mobile equipment fleets for the Project is planned to be a balance between minimizing risk and minimizing costs to Argonaut. All on-site maintenance would be carried out by Argonaut personnel using Argonaut's own installations. On- site work would consist of mainly preventative maintenance and major-component exchange. Any major rebuilds, if required, would be performed on site by contractors. Single original equipment manufacturers (OEM) are planned for the shovels and excavators, drills, trucks and support equipment. A single site-wide engine power supplier for haul trucks and support equipment is recommended and serves to significantly reduce maintenance and supply chain direct and indirect costs. The on-site OEM maintenance support personnel are reduced to one supplier over the entire fleet; parts procurement, shipping and storage is minimized; shop space and tooling is reduced; safety and training is reduced; and parts are interchangeable between all units

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16.9 Mine Personnel and Organization Structure 16.9.1 Basis

The work schedule assumes a 24 hours/day, 7 days/week and 365 days/year mining. Operations and mining personnel would work on two 12-hour shifts per day. Production, maintenance and technical personnel are planned to be primarily on a 1-week-in / 1-week-out rotation. With the exception of the blasting crew, all hourly labour and supervisory personnel would rotate between day and night shifts. Management and technical staff would work the day shift only, with the exception of ore control technicians who would rotate with the crews. Equipment-operator labour requirements are based on equipment hours calculated from engineering estimates of productivities and activities, quantities of the various materials moved, and hourly equipment operating rates. Other support labour requirements within the open pit mining operation are determined by engineering estimates of activities. Maintenance labour requirements are based on the number of equipment units to be maintained, estimates of mechanical availability, and maintenance labour intensities for each open pit fleet type. 16.9.2 Personnel Levels and Structure

The open pit labour requirements are based on experience for similar gold operations of this size. The labour requirements are divided into salaried and hourly personnel and the mine operations consists of four areas:  Supervision – The Supervision area is responsible for the direction of the mine equipment, drilling and blasting operations and the safety and welfare of the equipment operators and blast loading personnel;  Load and Haul – The Load and Haul area includes equipment operators skilled in running shovels, loaders, excavators, trucks, tracked dozers and graders;  Drill and Blast (D&B) – The Drill and Blast area includes skilled drill operators, as well as blast loading personnel. Also included are any contract explosives personnel;  Mine Maintenance – The Mine Maintenance area will consist of supervisors who will monitor the skilled owner maintenance personnel who will be responsible for maintaining, repairing, fueling and lubricating the mobile mine equipment. The owner maintenance team is supplemented with contract maintenance specialists for Komatsu equipment, tires, light vehicles, and non-mining support fleet; and  In addition, Technical services personnel are responsible for mine engineering, geology, surveying and IT/communication services. The open pit mine operations require a total of 136 personnel, mine maintenance requires 52 personnel and supervision/technical needs a total of 36 personnel.

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17 Recovery Methods

17.1 Summary This section of the report describes the recovery methods used for the design of the Magino Gold Project crushing and process facilities. Flowsheet development and design criteria were based on results from metallurgical test work results presented in Section 13. The gold recovery was designed based on a 30,000 t of ore per day with an average gold head grade of 0.89 g/t at an overall 93.5% recovery. The process plant flowsheet design follows conventional crushing, a semi-autogenous mill with a pebble crushing circuit, a ball mill grinding circuit using cyclones for classification and a gravity circuit to remove coarse gold. Prior to the leaching and the Carbon-in-Pulp (CIP) circuit, the ground product will be thickened in the pre-leach thickener to reduce the slurry volume. The thickener overflow will be treated in a Carbon-in-Column (CIC) circuit for the recovery of gold and any silver present in the process water or circulated back to the grinding circuit for make-up water. The thickener underflow will enter the leach circuit, and then flow into the CIP circuit to recover gold and any silver from the leached slurry. Loaded carbon from the CIP and the CIC circuits will be treated in carbon acid wash, carbon stripping and electrowinning circuits on a daily basis. Smelting to produce gold doré will occur two to three times a week using the electrowinning products. CIP tailings will be washed in the two tailings wash thickeners to reduce the amount of cyanide that is destroyed during cyanide detoxification and to recover cyanide for reuse in the leach circuit. The thickener overflow will be sent to the leach tanks as dilution water and make-up water in the grinding circuit. The second tailings thickener underflow will be sent to the cyanide detoxification tanks to reduce to the cyanide concentrate to acceptable environmental levels prior to disposal to the tailings management facility, TMF. Process water recycled from the first tailings wash thickener overflow, and reclaim water from the TMF will supply the required process water for the plant. Fresh water will be used for gland service and reagent preparation. The 30,000 t/d process plant will consist of the following unit operations and facilities:  ROM material receiving and primary crushing;  Crushed rock stockpile and reclaim;  SAG mill, pebble crusher, ball mill in closed circuit with cyclones and gravity concentration;  Pre-leach thickening, leaching, CIP and CIC circuits;  Carbon acid wash, stripping, and reactivation;  Electrowinning;  Smelting (gold refining);  CIP tailings washing and thickening and cyanide detoxification;  Tailings deposition;  Process water reclamation;

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 Reagent preparation facilities; and  Utilities. The simplified flowsheet is shown in Figure 17.1.

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Figure 17.1: Simplified Process Flowsheet for 30,000 t/d

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17.2 Plant Design 17.2.1 Design Criteria

The concentrator has been designed to treat gold-bearing material at the rate of 30,000 t/d (10,950,000 t/a). The key process design criteria are outlined in Table 17.1. Table 17.1: Key Process Design Criteria

Criteria Unit Value Overall Plant Feed- t/d 30,000 Operating Year d 365 Primary Crushing Circuit Utilization % 75 Grinding, Leach and Carbon Circuits % 92 Utilization Primary Crushing Circuit Throughput Rate t/h 694 Grinding and Leach Process Rate t/h 566 SMC Value A*b 31.6 SMC Value T10@1 kWh/t 26.4 Starkey WSAG to 1.7 mm kWh/t 11.5 Bond Crushing Work Index kWh/t 21.5 Bond Ball Mill Work Index kWh/t 14 Bond Abrasion Index g 0.218 Specific Gravity Feed - 2.72 Moisture Content Feed % 5 Grinding Circuit Feed Size, 80% Passing µm 150,000 Grinding Circuit Product Size, 80% Passing µm 75 Ball Mill Circulating Load % 300 Leach Circuit Retention Time h 36 CIP Circuit Retention Time-Design h 3 Elution/stripping Circuit Capacity t 10 Gold Head Grade, LOM Average Au, g/t 0.89 Anticipated Gold Recovery, Design Au, % 93.5 Source: JDS PFS Report January 2015 and Section 13

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17.2.2 Operating Schedule and Availability

The processing plant is designed to operate for two 12-hour shifts per day, 365 days per year. The primary crusher is expected to operate at a utilization of 75% and the grinding, leaching, CIP, CIC and carbon circuit at a utilization of 92%. These utilization factors allow for sufficient downtime for scheduled and unscheduled maintenance of the crushing and process plant equipment. The crushing circuit will also have enough capacity to allow for increased throughput if required.

17.3 Process Plant Description 17.3.1 Primary Crushing

The crushing circuit will reduce the mined material from a nominal top size of 850 mm to a product size of 80% passing (P80) 150 mm in preparation for grinding. The primary crushing circuit includes the following major equipment:  ROM feed hopper;  Oversize feed rock breaker;  Vibrating grizzly;  Gyratory crusher;  Apron feeder;  Conveyor belts;  Belt scale/ belt magnet; and  Dust collection system. Haul trucks will bring feed material from the mining operations to the crushing plant. The material is dumped from the trucks into the 400 t capacity primary crusher feed hopper. The delivery area is equipped with a coarse rock breaker to handle oversized material. The feed hopper will have a capacity to accommodate approximately two truck-loads of plant feed material. The material from the dump pocket is reclaimed by an apron feeder and transferred to a vibrating grizzly that feeds the gyratory crusher. The gyratory crusher, 1,250 x 1,625 - 373 kW, will process 1,667 t/h of material based on a 75% utilization factor. The gyratory discharge will be conveyed by the stockpile feed conveyor to the crushed rock stockpile.

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17.3.2 Crushed Rock Stockpile and Reclaim

The crushed rock stockpile will provide production surge capacity to allow for a steady feed of material to the process plant. The major equipment and facilities in this area includes:  Crushed rock stockpile; 20,000 t live capacity;  Reclaim apron feeders;  Conveyor belts, metal detectors, self-cleaning magnets;  Lime silo and screw feeder;  Belt weigh scale; and  Dust collection system. Material will be reclaimed from the 20,000 t crushed rock stockpile by three apron feeders at a nominal controlled rate of 1,359 t/h. The apron feeders will feed the SAG mill feed conveyor which in turn will feed the SAG mill. The SAG feed conveyor is equipped with a belt weigh scale to provide a constant feed to the SAG mill. The coarse rock stockpile and reclaim area will be equipped with a dust collection system. 17.3.3 Grinding Circuit

The grinding circuit will reduce the size of the crushed material to a final product size P80 of 75 µm. The grinding process is a two-stage operation at a nominal throughput of 1,358 t/h. The SAG mill will be followed by a ball mill and gravity concentrator operating in closed circuit with the classifying cyclones. A pebble crusher will operate in closed circuit with the SAG mill to handle screen oversized material. The grinding circuit will include the following major equipment:  SAG mill; 11.0 m diameter x 6.4 m long (36’ x 21’) 17 MW installed power;  Pebble crusher; 450 kW installed power;  Ball mill; 8.2 m diameter by 12.8 m long (27 ft by 42 ft); 17 MW installed power;  Two centrifugal gravity concentrators including vibrating screens, storage tank, shaking belt magnet and shaking table, pumpbox, and pumps;  Mill discharge pumpbox;  Cyclone feed slurry pumps;  Classification cyclone cluster equipped with 20” - 24 operating, and 4 standby cyclones;  Mass flow meter;  Grinding area sump pump; and  Plant feed sampler system.

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Water is added to the SAG mill feed to maintain the slurry density at 72% solids. The SAG mill discharges onto a screen with the underflow reporting to the discharge pumpbox. The oversize material (15-25% of new feed) will be sent to the pebble crusher using a series of belt conveyors.. The crushed material from the pebble crusher will discharged onto the pebble crusher discharge conveyor which in turn combines with the crushed material on the SAG mill feed conveyor to feed the SAG mill. In the event of pebble crusher or pebble crusher discharge conveyor failure, the material is diverted to the scats stockpile and returned to SAG mill feed and SAG mill discharge will combine with the ball mill discharge and gravity tailings to become the feed to the classification cyclones. The cyclone overflow, P80 =75 µm, will flow by gravity to the pre-leach thickener. The cyclone overflow will feed the ball mill and gravity circuit. Steel ball grinding media will be added to both the SAG and ball mills in order to maintain the grinding efficiency. 17.3.4 Pre-leach Thickener

The cyclone overflow from the classification circuit will initially feed a vibrating trash screen before entering the pre-leach thickener. The trash from the screen will be collected in totes and emptied as required. The trash screen underflow will constitute the feed to the leach circuit via the pre-leach thickener. The pulp density of the screen underflow slurry is approximately 36.6% solids. The pre-leach thickener circuit includes the following equipment:  Vibrating trash screen;  Pre-leach feed thickener; 45 m diameter;  Pre-leach feed thickener overflow standpipe;  Thickener area sump pump;  Thickener overflow water pumps;  Thickener underflow slurry pumps; and  Sampler. The screen undersize material will be thickened to a pulp density of 65% solids and the thickener underflow will be pumped to the leach circuit. The thickener will have an overflow launder which will direct the overflow solution to the subsequent CIC circuit or the process water tank. Flocculant will be added to the thickener feed to aid the settling process. A mass flow meter will monitor the process feed rates.

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17.3.5 Leach Circuit

The thickened slurry will be diluted to 50% solids and leached with cyanide under alkaline conditions to dissolve the gold present in the thickened slurry. The leach circuit will have the following equipment:  Ten leach tanks; 18 m diameter by 22 m high, each equipped with an upcomer and agitator; and  Spillage sump pump. The leach circuit will consist of ten mechanically agitated leach tanks. The feed slurry is pumped to the first leach tank and slurry will successively gravitate through each of the leach tanks to the final leach tank for a total leach time of approximately 36 hours. Lime will be added to the leach circuit as required to maintain the pH value between 10.5 and 11.0. Cyanide will be added at a solution strength of 20% sodium cyanide and maintained at approximately 750 ppm cyanide at the head of the leach circuit. Cyanide will be added as required throughout the leach and CIP circuits to maintain the cyanide concentration. The leach tanks will be equipped with air spargers to optimizing the overall leaching time required by maximizing leach kinetics. 17.3.6 CIP Circuit

In the CIP circuit gold is adsorbed onto activated carbon from the leached slurry. Loaded carbon is transferred to the elution/stripping circuit to recover the gold. The major equipment in the CIP circuit are listed below:  Seven Kemix Pumpcells - CIP tanks; 9.0 m diameter by 12 m high; each equipped with an agitator;  Carbon transfer pump;  Loaded carbon screen;  Carbon safety screen;  Pump boxes and pumps;  Spillage sump pump; and  Sampler. The CIP Carousel circuit is designed to provide approximately 3 hours of total retention time. The CIP Carousel circuit operates as a modified traditional CIP circuit. Leached slurry feeds a distribution launder. From the distribution launder valves and piping are adjusted to feed any of the CIP tanks. There will be a carbon inventory in each of the CIP tanks, but they will not be pumped counter-current to the slurry flow. Instead, when CIP tank 1 carbon is loaded, the distribution launder will send fresh leach slurry to CIP tank 2. CIP tank 1 loaded carbon will be pumped to the carbon handling plant for gold refining, and newly reactivated carbon will fill CIP tank 1.

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CIP tank 1 will become the last tank in the train, tank 6, and CIP tank 2 will be the head tank 1. This practice will be continued through the tanks with CIP tank 1 eventually becoming the head tank again. Each CIP tank will have a single inter-stage screen/agitator to retain carbon particles in the tank and to allow discharge of slurry to the next tank. All CIP tanks will be at the same elevation. As the slurry proceeds through the circuit, metal values in the solids and solution will progressively decrease. Once the carbon is fully loaded in the CIP tank that is acting as the head tank, a loaded carbon pump will pump slurry containing carbon to the loaded carbon screen. Loaded carbon will be collected and transferred to the acid wash tank on a daily basis. The tailings stream from the CIP Carousel circuit will flow by gravity onto a carbon safety screen to capture any carbon particles that may have escaped from the final CIP tank. Captured carbon particles will be collected in bins and disposed of periodically. Safety screen undersize will then be pumped to the tailings thickener for dewatering and washing prior to Cyanide detoxification. 17.3.7 CIC Circuit

The CIC carbon circuit will treat the solution from the pre-leach thickener overflow. Any gold that is in the solution is adsorbed onto the activated carbon in the solution tanks. Loaded carbon will be transferred to the elution/stripping circuit to recover the gold. A conventional gravity flow CIC circuit is planned to be employed. The main equipment includes:  CIC feed collection box;  Three CIC adsorption columns; 3.8m diameter by 4.0m high;  Carbon transfer pump system;  Carbon safety screen;  Pump boxes and pumps;  Spillage sump pump; and  Sampler. Pre-leach thickener overflow feeds the CIC circuit. The CIC feed collection box will function as the collection facility and mixing station combining the feed streams and reagents prior to entering the CIC circuit. Cyanide solution, if required, is added to the collection box. Each column will contain approximately 2.0 t of 6 x 12 mesh activated carbon and will operate as an expanded bed contactor. The three columns will be arranged for gravity flow from the first into the next column (stepped columns). A flow rate will be maintained to sufficiently fluidize the bed of activated carbon without overflowing the carbon to the next stage in the circuit. To minimize carbon attrition, a recessed impeller pump will be used periodically to transfer carbon counter-current up the carbon train. As the carbon

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progresses up the circuit, the carbon from the first column, which has been fully loaded with gold, will be sent to the acid wash tank. The barren solution will be pumped to the process water tank. 17.3.8 Carbon Acid Wash, Elution, and Regeneration

17.3.8.1 Carbon Acid Wash Loaded carbon will be treated with a 3% hydrochloric acid solution in the acid wash tank to remove calcium deposits, magnesium, sodium salts, silica, and fine iron particles. Organic foulants such as oils and fats are unaffected by the acid and will be removed after the elution step by thermal reactivation utilizing a kiln. The acid wash circuit will have the following equipment.  Acid wash vessel;  Carbon transfer pump;  Acid solution tank;  Acid solution pump;  Acid wash sump pump; and  Acid wash drain pump. The carbon will first be rinsed with fresh water. Acid will then be pumped from the dilute acid wash circulation tank to the acid wash vessel. Acid will be pumped upward through the acid wash vessel and overflow back to the dilute acid wash circulation tank. The carbon will then be rinsed with fresh water to remove and neutralize the acid and any mineral impurities. A recessed impeller pump will transfer acid washed carbon from the acid wash vessel into the elution/stripping vessel. Carbon slurry will discharge directly into the top of the elution vessel. Under normal operation, one elution of 10 tonnes of carbon will take place each day.

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17.3.8.2 Carbon Stripping (Elution) The carbon stripping (elution) process will utilize barren solution to strip the carbon to create a pregnant solution, which will be pumped through electrowinning and back to the barren solution tank. The striping circuit includes the following equipment:  Elution vessel;  Carbon transfer pumps;  Barren/pregnant solution pumps;  Hot water boiler with heat exchangers;  Barren solution tank; and  Solution samplers. The stripping vessel has a capacity of approximately 10 t of carbon or 22 m3. During the stripping cycle, solution containing approximately 1% sodium hydroxide and 0.1% sodium cyanide at a temperature of 140°C (284°F) and 450 kPa (65 psi) will be circulated through the strip vessel. Solution exiting the top of the vessel will be cooled below its boiling point by the heat recovery heat exchanger. Heat from the outgoing pregnant solution will be transferred to the incoming cold barren solution, prior to the cold barren solution passing through the solution heater. A diesel-powered boiler will be used as the primary solution heater. 17.3.8.3 Carbon Reactivation Carbon from the stripping circuit will be transferred to the carbon reactivation circuit. The major equipment includes the following:  Eluted carbon dewatering/sizing screen;  Reactivation kiln;  Kiln feed bin;  Kiln screw feed conveyor;  Carbon quench tank;  Reactivated carbon sizing/dewatering screen;  Reactivated carbon holding tank;  Carbon transfer pumps;  Fine carbon feed tank;  Fine carbon filter feed pump;  Fine carbon filter press; and  Fine carbon collector bin.

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A recessed impeller pump will transfer the stripped carbon from the elution vessel to the kiln feed dewatering screen. The kiln feed screen doubles as a dewatering screen and a carbon sizing screen, where fine carbon particles will be removed. Oversize carbon from the screen will discharge by gravity to the carbon regeneration kiln feed hopper. Screen undersize carbon, containing carbon fines and water, will drain by gravity into the carbon fines tank. Subsequently, the carbon fines will be filtered and then collected in bags for disposal. A diesel-fired horizontal kiln will be utilized to treat 10 t of carbon per day, equivalent to 100% regeneration of the stripped carbon. The regeneration kiln discharge will be transferred to the carbon quench tank by gravity, cooled by fresh water and/or carbon fines water prior to being pumped back into the processing circuit. To compensate for carbon losses by attrition, new carbon is added to the carbon attrition tank along with fresh water to mix and slurry the carbon. The new carbon will then be transferred into the quench tank. 17.3.9 Electrowinning and Refinery

Pregnant solution from the stripping vessel will be pumped to the refinery for electrowinning to produce a gold sludge. The electrowinning and refinery circuit will have the following equipment.  Electrowinning cells with anodes and cathodes;  Sludge/cathode washing tank;  Filter press;  Filter feed pump;  Drying oven;  Flux mixer;  Induction smelting furnace;  Bullion safe (or gold vault);  Dust and fume collection system; and  Sump pump. The pregnant solution is pumped through one of three 3.54 m3 electrowinning cells. The resulting barren solution will be pumped back into the barren solution tank for reuse, with periodic bleeding from the circuit. Gold-rich sludge will then be washed off the steel cathodes in the electrowinning cells using high pressure water into the sludge holding tank. Periodically, the sludge will be drained, filtered, dried, mixed with fluxes and smelted in an induction furnace to produce gold doré. This process will take place within a secure and supervised area. The gold doré will be stored in a vault to await shipment off-site.

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17.3.10 Tailings Wash Thickeners

The CIP circuit residue is thickened in the two tailings wash thickeners to 55% solids prior to transferring to the cyanide detoxification circuit. The tailings will be thickened in the first tailings wash thickener and the underflow pumped to the second tailings wash thickener. The overflow from first tailings wash thickener will be pumped to the process water tank. The second tailings wash thickener underflow will feed cyanide detoxification. The overflow will be circulated back to the first tailings wash thickener as dilution water. Fresh water reclaimed from the TMF will be added to the second tailings wash thickener as dilution water. Washing the slurry will reduce the cyanide concentration to the detoxification circuit resulting in a reduction in the cyanide to the detoxification tanks for treatment, and the amount of reagents required. The main items of equipment are planned to be:  Two tailings wash thickeners, 45 m diameter;  Thickener area sump pump;  Thickener underflow slurry pumps;  Thickener overflow standpipe; and  Thickener overflow water pumps. 17.3.11 Cyanide Detoxification

The underflow from the second tailings wash thickener is pumped to cyanide detoxification tanks prior to discharge to the TMF. The main equipment includes:  Three cyanide detoxification tanks; 13 m diameter by 14.0 m; each equipped with agitators;  Air supply system; and  Reagent supply system. The tailings thickener underflow will be pumped to the first of two detoxification tanks, which will operate in series for a total residence time of 2 hours, to reduce cyanide levels to an acceptable environmental level prior to tailings disposal to the TMF. The slurry is pumped into the first cyanide detoxification tanks and reagents and air are added to reduce the cyanide concentration from approximately 87 ppm to less than 1 ppm CNWAD. The reagents required include lime, copper sulphate, and liquid SO2. The cyanide detoxification tanks are equipped with air addition points as well as with an agitator to enable the air and the reagents to be thoroughly mixed with the tailings slurry. An additional standby tank has been included in the circuit. An oxidation-reduction potential meter will be used to monitor the degree of oxidation of the cyanide. The overflow from the cyanide detoxification tank is directed to the tailings pumpbox. From the tailings pumpbox, the detoxified slurry is pumped to the TMF for final deposition.

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17.3.12 Tailings Handling & Reclaim

The tailings handling and reclaim include the following:  Tailings pumpbox;  Tailings pumps;  Reclaim barge; and  Reclaim pumps. Cyanide detox discharge slurry is pumped from the tailings pumpbox directly to the TMF, for deposition. Process water is reclaimed from the TMF via a reclaim water barge and pump system to the second tailings wash thickener with the excess water, if required, reporting to the process water tank for distribution in the process plant. Water for initial start-up and the first year of plant operations will be provided from the TMF starter dam. 17.3.13 Reagent Handling and Storage

Fresh water will be used in the making up or the dilution of the various reagents that are supplied in powder/solids form, or which require dilution prior to the addition to the slurry. The reagent solutions are added to the addition points of the various circuits and streams using metering pumps. To ensure spill containment, the reagent preparation and storage facility will be located within a containment area designed to accommodate 110% of the content of the largest tank. In addition, each reagent will be prepared in its own containment area in order to limit spillage and facilitate its return to its respective mixing tank. The storage tanks are equipped with level indicators and instrumentation to ensure that spills do not occur during normal operation. Appropriate ventilation, fire and safety protection, eye wash stations, and Material Safety Data Sheet (MSDS) stations will be located throughout the facility. The following reagent systems are required for the process: quicklime, flocculant, sodium cyanide, hydrochloric acid, sodium hydroxide, copper sulphate, and liquid SO2. 17.3.13.1 Activated Carbon Activated carbon is delivered in bulk bags. The carbon is introduced into the carbon conditioning tank where the slurry is conditioned by removing the jagged edges of the carbon particles and the adhering carbon dust. The slurry is pumped over the sizing/dewatering screen with the coarse carbon particles added to the CIP and CIC circuits, and the carbon fines discharged to the fine carbon tank. The carbon is added to the carbon attrition tank and pumped to the carbon sizing/dewatering screen for transfer to the CIP or CIC circuit as required.

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17.3.13.2 Assay and Metallurgical Laboratory The assay laboratory is equipped with the necessary analytical instruments to provide all routine assays for the mine, the process facility, and the environmental departments. The metallurgical laboratory will undertake all necessary test work to monitor metallurgical performance and to improve process flowsheet unit operations and efficiencies. The metallurgical laboratory will be equipped to perform sample preparation and assays, by atomic absorption, fire assay, and CN soluble analyses. 17.3.14 Water Supply

17.3.14.1 Fresh Water Supply System Fresh and potable water is supplied to a fresh/fire water storage tank from Goudreau Lake. Fresh water is used primarily for the following:  Fire water for emergency use;  Cooling water for mill motors and mill lubrication systems;  Gland water for pumps;  Reagent make-up;  Potable water supply; and  The fresh/fire water tank is equipped and piped to ensure that the tank is always holding a two-hour supply of fire water. The potable water from the fresh water source is treated and stored in the potable water storage tank prior to delivery to various service points. The water treatment system is included in the camp facility. 17.3.14.2 Process Water Supply System Barren solution, generated from the CIC circuit and the first tailings wash thickener overflow will be re-used in the process circuit via the process water tank. Reclaimed water from the TMF will supply dilution water to the second tailings wash thickener and provide any additional make-up water required in the process. 17.3.15 Air Supply

The air distribution system to supply instrument, plant, and process air will be centralized, except for the crushing area air system. The following compressed air supply centres will be located in the crushing and process plant:  Crushing plant air compressor;  Five 18000 Nm3/hr @ 550kPag air compressor will supply low pressure process air to the cyanide detoxification tanks; and leach tanks; and

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 An instrument and plant air system with compressors (one duty and one standby), dryers, filters, and receivers will be provided and located with the process air compressors in a compressor room inside the process building. 17.3.16 Sample Analysis

Specific samples will be taken for metallurgical accounting purposes from the leach circuit feed and CIP tailings and various solution streams. These samples in addition to the grinding, gravity and final tailings samples will be collected, prepared and assayed on a per shift basis.

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18 Project Infrastructure

The Project infrastructure is designed to support the operation of a 30,000 t/d mine and processing plant, operating on a 24 hour per day, 7 day per week basis. It has been developed for the most economical operation at this production rate, and will require further expansion and development for any increases in throughput. The overall site layout showing location of the mining pit, processing plant and waste management is provided in Figure 18.1.

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Figure 18.1: Overall Site Plan – Stage 3

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18.1 Road and Railway Access 18.1.1 Access Road

Access to the Project is planned to be via Goudreau Road for transport of crew, supplies, and other transport to and from the site. Vehicles are likely to be a combination of buses, personal vehicles (cars, pick-up trucks), tractor-trailers, and armoured vehicles. Since the PDR was submitted, Argonaut Gold has consulted with the Ontario Ministry of Transportation (MoT) and determined that Goudreau Road, including the bridge over the Magpie River near Dubreuilville, is adequately rated to accommodate the heaviest loads expected to be needed for the Project, making this a feasible alternative without the need for an alternate heavy load route. Improvements to the existing road would be made as necessary. 18.1.2 Public By-Pass Road

A public by-pass road, or “Ring Road”, is planned to be constructed on the property to surround the entire site. Currently the road from Dubreuilville to Goudreau crosses the planned future pit, and an alternative route is required. The proposed route will connect to the Goudreau Rd. in the north east portion of the property, and will go around the site as shown in Figure 18.1 from the north east, to west, then south and back east before it connects with the existing route to Goudreau, south of the Project. A small, 700 m section of Goudreau Road will also have to be re-aligned. The route is approximately 8.2 km long, and will require at least two major creek crossings in the south west portion. The plan is to dewater the areas during construction as necessary, build up the road with native fill, and install arch culverts at the creek crossings. The road is planned to be constructed to local municipal specifications as a gravel road. This will keep the operations isolated from public traffic. 18.1.3 Haul and Service Roads

Haul roads are planned to be constructed on site for transporting ore and waste from the pit to their designated destinations. Mine haul road and service roads are planned to be constructed to accommodate 220-tonne trucks carrying ore from the pit to the crusher, and waste to the waste rock dump and tailings facility. The waste haul road will connect with the crusher pad and also serve as the access to the truckshop for the pit and primary crusher.

18.1.4 Railway Access

Railway sidings are located in the town of Dubreuilville which are connected to a greater railway network by Algoma Central Railway. Algoma Central Railway is now operated as part of CN's Eastern Division. The railway connects at its northernmost point with the Ontario Northland Railway and with CN's eastern division to the south. It also intersects with the Canadian Pacific Railway at Franz, ON and with the Huron Central Railway at its southernmost point in Sault Ste. Marie.

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18.2 Site Geotechnical Conditions The surficial deposits include cobbles, sands and silts, and organic material. These materials are suitable for construction and mine reclamation materials. Lighter structures such as camp housing, administrative buildings, warehouses, etc. can be constructed on them with the appropriate preparation, which may include the removal of some materials. The surficial deposits are also considered suitable for the construction of the waste rock and tailings management facilities. It may be necessary in some instances to excavate up to two metres in order to remove less suitable loose or organic materials. Surface deposits are likely not suitable for the construction of low permeability liners or other water containment features. Geotechnical characterization is planned to be completed during the design stages of the Project. Providing for seepage control may involve vertical barriers, seepage collection trenches and wells, or horizontal liners. Bedrock at the Project is considered competent and suitable as foundation material for larger process equipment such as crushers and grinding mills. The structural characteristics of the bedrock, such as faults and fractures, will control the final design of the pit slopes. A geotechnical and hydro-geological drilling and test pitting program was conducted in 2012 and 2013. The program consisted of a number of boreholes and test pits within the proposed waste rock and tailings management facility sites to characterize the geotechnical parameters, stability, and depth of the overburden and bedrock. Samples from representative soil units were collected during the investigations and were subjected to further index testing and characterization. Additional geotechnical field investigations for the purposes of preparing construction level designs will be performed at the appropriate time.

18.3 Foundations Structural foundations are planned to be primarily reinforced concrete on top of either bedrock, structural back fill, or on native till with topsoil and organics stripped off. All foundations are planned to be designed by civil engineers for specific loading, Projected lifespan and take into account the geotechnical conditions and site conditions applicable to each application.

The Project facilities that will require constructed (structural) foundations can be separated into three main groups:

 Light buildings, e.g. administrative buildings, sleeping quarters, and laboratories;  Heavy industrial facilities such as the crusher, conveyors, and other ancillary structures such as large storage tanks; and  Light industrial facilities such as warehouses and truck maintenance facilities.

Foundation designs are planned to be performed by qualified geotechnical engineers, registered in Ontario.

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18.3.1 Light Buildings

These will either be founded on slabs on grade or on elevated, post-type foundations (pedestals). The foundations are planned to be designed in accordance with Section 4.2 of the Ontario Building Code. Generally, materials under foundation slabs should be reworked as follows:

 Remove vegetative cover and any organic material;  Rework the exposed soil and rework and compact the material in place to a depth of at least 30 cm; and  In some instances the areas are planned to be over-excavated, partially back-filled and compacted.

It is anticipated that the camp and administrative buildings will be built in an area underlain by glacial till. The geotechnical investigation indicate that groundwater in the area is at least two metres below grade or below frost depth penetration. Therefore frost effect on the foundation should not be a concern.

The site is planned to be graded to allow for positive drainage and removal of snow and minimize the risk of saturating the soil under the foundations.

Where appropriate, the recommendations of the manufacturers of modular or prefabricated housing units will be followed.

18.3.2 Heavy Industrial Facilities

These heavy structures can also vibrate and can be susceptible to foundation settlement. They will generally be founded on bedrock which is typically at a depth of 1 to 2 m. Overburden is planned to be removed to expose the bedrock.

For the primary crusher and the grinding circuit (SAG and Ball mills) that are extremely heavy and induces vibrations, the top of bedrock is planned to be examined to assess the level of weathering if any. The zone of excessive weathering as assessed by the geotechnical engineer will be removed to the extent possible. If needed, and based on the recommendations from the manufacturer, foundations may be anchored into the bedrock to increase the overall foundation mass participating in the dynamic response of the crusher and grinding mills-foundation systems.

Other heavy structures such as the conveyor belt and above ground storage tanks will also be founded on bedrock unless the depth to bedrock is such that the excavation is impractical or cost prohibitive. In the latter case the structures would be founded on fill compacted to a dry density equal at least 95 percent of the maximum density as obtained from ASTM D 1557 to provide adequate bearing capacity and so that estimated settlements meet the equipment manufacturer requirements.

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18.3.3 Light Industrial Facilities

Warehouses and maintenance facilities for mining equipment tend to be lightweight but tall structures, often exceeding the equivalent of two typical building stories. Such structures are sensitive to distortion due to differential settlement. Therefore the foundations will be designed to minimize differential settlement that lead to distortions.

These structures are most likely to be founded on isolated footings down to bedrock if it is relatively shallow (less than 1 to 2 m) or on the native material (i.e. glacial till or glacio-fluvial sediments) where bedrock is deeper. The bottom of the excavation for the isolated footing should be prepared as discussed in Section 18.3.1.

18.4 Power Supply Power for the site is planned to be supplied by local utility company API. Currently API owns and operates a 44 kV powerline from Hawk Junction which is currently supplying power to the Magino site, as well as continuing on to the neighbouring operation, Richmont Mines. The existing line does not have sufficient spare capacity for the operation, as it has only 15 MW spare capacity available. An electrical load list was developed for the Project operations, based on the process design and mechanical equipment list. The summarized load list is provided in Table 18.1. Table 18.1: Summarized Electrical Load List

Connected Load Average Demand Consumption Service Area (kW) (KVA) (kWh/a) Crusher & Stockpile Area 1775.6 1360.9 9,001,778 Process Plant 47,275 40,952.9 307,707,527 Camp, Admin, Lab, Maint. Facilities 1,169.4 1,268.8 8,179,785 Truck Shop Area 387 407.3 2,626,451 Power Distribution Losses @ 3% 9,825,466 Totals 50,156 43,989.8 337,341,006 Source: JDS (2016)

The connected load is approximately 50 MW, with an average operating demand of 37.4 MW, which is more than the available capacity on the current transmission line. The plan to meet the power requirements for the Magino Project is to have API install an additional 44 kV line from Hawk Junction to site on the same right of way as the existing line. Great Lakes Power will upgrade their facilities at Hollingsworth and Hawk Junction to supply the necessary power to API, and API will provide an additional dedicated line to site. The planned work by API is as follows:  Power will be supplied from both API’s existing 44 kV line and the new line to the mine site from the same new transmission station. As a result, each 44 kV line could potentially supply up to 30 MW of load. The mine needs to split its loads between two separate services (one from each 44 kV line), and then API may be able to connect 40-45 MW at 44 kV (30 MW from the new line and 10-15 MW on the existing). The power transmission line

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from Hawk Junction to Magino will be along the existing right of way with a combination of new poles, and or upgraded structures to carry both old line and new 44 kV conductors;  Currently the existing 44 kV line crosses the site and planned mining pit, and will have to be re-routed around the Project site;  The 44 kV line reroute is planned to be built following the same right of way as the new public by-pass road. It will follow the bypass road to the Dubreuilville Rd, and then continue south along the road to supply power for Richmont Mines. This will allow API to have access to the line for maintenance and emergency repair without having to enter the Magino operating site; and  The new 44 kV line that is planned to be built to supply Magino power will follow the same route around the site along the by-pass road, and access the Project site from the north beside the site access road. 18.4.1 Main Substation

The incoming power lines will terminate on the dead end structures within the main substation. The main substation will contain two transformers rated at 44 kV- 25 kV, one of the transformers will have 30 MVA capacity and the other one 15 MVA. The main transformers will feed power to a 25 kV outdoor switchgear unit located inside a prefab building within the substation area. The installation will include grounding grid and be fenced in on a pad in close proximity to the grinding area (within 100 m), the single biggest draw on power. 18.4.2 Site Power Distribution

The power from the 25 kV outdoor switchgear is planned to be distributed throughout the plant site at 25 kV to substations located at the process plant, crusher installation, coarse ore stockpile, and truck shop. The secondary power distribution will consist of 25kV-4160 V transformers and 25 kV – 600 V transformers. These transformers will be oil filled, outdoor rated transformers and will be located adjacent to the electrical rooms. 18.4.3 On-Site Power Lines

Power transmission from the main substation to the process plant substation and electrical control room is planned to be by 25 kV overhead power lines. The power to the administration, warehouse and camp areas is planned to be by buried 600 V conduit and cable from process plant substation. The electrical loads outside the process building area are planned to be supplied power by a 25 kV overhead power line using wooden poles and structures to the following areas:  Coarse ore storage area;  Primary crushing area;  Truck shop;  Tailing are reclaim pumps; and  Fresh water supply pumps.

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A combination of overhead structures and buried conduit and cable are planned to be designed during detailed engineering for the tailings area requirements. A dedicated E-house with 4160V/600V substation will supply power for reclaim pumps. 18.4.4 Back-up Power

Three gen sets of 1 MW each are planned to be installed on site to supply power to the following three areas:  Grinding/Leach area – for process plant agitators and thickener mechanism;  CIC/CIP area – for process plant agitators and thickener mechanism; and  Admin building and camp.

18.5 Water Management 18.5.1 Water Management Plan

A comprehensive water management plan has been developed and includes the following elements (Figure 18.2):

 The mine’s facilities will be designed to minimize the effects on the environment to the maximum extent practicable, using a “mitigation by design” approach;  Natural runoff will be diverted away from, and around, areas disturbed by the mining and processing activities;  Detention storage will be provided for runoff from disturbed areas to allow suspended particles to settle out. The water will then be discharged under a permit, recycled to the process plant, or pumped to the TMF for re-use. Compliant water may also be used for dust control and progressive reclamation;  Waters that contain, or potentially contain, elevated dissolved metals when precipitation infiltrates mined materials will be collected in water quality control ponds and recycled for reuse in the process plant;  Provide for treatment of stored waters and discharge in a controlled manner in order to meet applicable discharge and receiving water standards;  Sufficient water storage will be provided in the TMF and water quality control ponds to store water during the initial approximately four years of operations and to prevent uncontrolled discharges during extreme wet periods;  Recycling of all mine waters will be maximized, thereby minimizing the need for make-up from local lakes; and  A tailings water treatment plant will be constructed in approximately year 4 and will be available thereafter to treat water that has contacted tailings and discharge water as needed to maintain a reasonable TMF pond volume.

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Process fresh water make-up will be sourced from Goudreau Lake. Water treatment will be performed using a water treatment plant, designed and constructed in approximately year 4 based on the measured water quality experienced in the TMF during operations.

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Figure 18.2: Surface Water Management Systems

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18.5.2 Project Water Balance

A preliminary Project water balance has been developed to establish the size and quantity of water quality control ponds and detention ponds, and in order to determine the need for fresh water makeup and the size of the water treatment system. A visual representation of the Project Water Balance is shown on Figure 18.3. A summary of the key water balance components and estimated average flows for the various stages of mining and processing is provided on this figure and on Table 18.2.

Figure 18.3: Magino Project Water Balance

Source: SLR (2015)

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Table 18.2: Average Annual Water Balance

Input m3/hour USGPM Output m3/hour USGPM Tailings Slurry 1,120 4,920 Recycle to Plant 1,080 4,770 Runoff & Snow Melt 80 360 Stored in Tailings 370 1,630 Pit Dewatering1 230 1,020 Decant3 70 280 WRMF Infiltration 110 470 Storage Increase 20 90 Totals 1,540 6,770 1,540 6,770 Process Plant Recycle to Plant 1,080 4,760 Tailings Slurry 1,120 4,920 Ore Moisture 60 260 Dust Control 100 450 Makeup Fresh2 - - (10 m3/hr) 70 310 Minimum Fresh - - (60 m3/hr) Site Runoff & Snow Melt 10 40 - - Totals 1,220 5,370 1,220 5,370 NOTES: (1) Pit dewatering varies from an average of 160 m3/hr during Year 1 to 295 m3/hr during the last year of operation. (2) Make-up fresh water requirement varies from 45 m3/hr during Year 1 to 0 m3/hr at the end of mine life. (3) The amount of decant varies from 0 m3/hr during Year 1 to 110 m3/hr at the end of mine life. Source: SLR (2015)

18.5.2.1 Pit During mining operations, groundwater seepage and surface water from precipitation and snowmelt, and runoff from adjacent undiverted catchment areas, will collect in the open pit. This water is planned to be pumped to the TMF, or a water quality control pond or ponds for storage and recycled to the process plant, or used for dust control if it is of suitable quality. Some of the collected water may need to be treated and discharged. Dewatering of the pit is planned to be accomplished using sumps to collect inflowing water and pumps and pipelines to remove the water from the pit to allow mining to continue in dry conditions. The water is planned to be stored and recycled or treated and discharged. During snowmelt and heavy rainfall periods, water is expected to pond in the low lying areas of the pit. The pit is planned to be designed and mined to create areas that can tolerate temporary flooding while mining is conducted in higher lying and drier areas. Engineering measures will be installed to limit the amount of groundwater seepage from the adjacent Goudreau Lake. These measures are described in Section 16.3.2, Pit Slope Stability.

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18.5.2.2 Waste Rock Management Facility Runoff from the WRMF will be routed to detention ponds. Water from these ponds will be discharged to a natural drainage, providing water quality objectives are met. Infiltration through the waste rock will be collected in rock drains and conveyed to water quality control ponds to recycle to the site TMF (Figure 18.4). This component of flow is provided for in the site water balance (Table 18.2). As necessary, the water will be pumped to a water quality control pond and recycled to the process plant.

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Figure 18.4: Seepage Management System

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18.5.2.3 Tailings Management Facility The TMF will be provided with seepage controls to limit groundwater seepage that migrates to the lakes to prevent the quality of these lakes from exceeding applicable standards. These controls include engineered seepage barriers along the inside faces of the embankments and through the underlying overburden material. Seepage collection includes a system of seepage collection trenches under the inside and outside toes of the TMF containment embankment (Figure 18.4). In addition groundwater extraction wells will be located in the higher permeability bedrock areas around the outer perimeter of the TMF as required. Collected seepage will be pumped back into the TMF” 18.5.2.4 Site Runoff Controls Water is planned to be conveyed around the site by a network of sediment controls, ditches, pipes, pumps, and sumps. The pit will have diversion ditches located around its perimeter to intercept runoff water and divert it away from the pit, thus minimizing dewatering requirements. There is potential for mine-impacted water to run off from both the WRMF and other site infrastructure. By placing interception ditches immediately down gradient of these facilities, impacted water can be captured, recycled, or treated prior to release to the environment. This is planned to be accomplished with a series of ditches and flow diversion berms. 18.5.2.5 Water Supply Fresh make-up water will be required during the start-up of the process plant and TMF, thereafter makeup water for the plant and potable water for the facilities will be required on an ongoing basis during operations. The start-up water will be obtained from water that is impounded naturally within the TMF when the initial retaining embankment is constructed, from the existing tailings facility and from local lakes that have adequate capacity including Webb Lake. Start-up water required is estimated to be on the order of 250,000 to 500,000 m3.

Fresh make-up water requirements (fresh water that is required in addition to the re-cycled water) are estimated to be in the approximately 110 m3/hr (based on 60 + 50, Table 18-2, minimum fresh plus make-up fresh) during the early years of Project operations when there is limited water available from the pit area. As the pit expands more recycled water will become available and the need for makeup water will reduce to the minimum required by the process plant; 60 m3/hr by the end of operations when the pit becomes fully developed and maximizes the capture of surface and groundwater. This fresh make-up water will be obtained by pumping from Goudreau Lake, or if necessary from both Goudreau and Herman Lake. The predicted effects of extracting water on the lake levels are not significant.

A relatively small quantity of potable water amounting to approximately 100 m3/day will be required for the camp, the mine and the process plant. This supply will be obtained from local lakes and/or groundwater wells in the Project area and filtered and treated before use. It should be noted that the water flow rates cited above are annual average. Several of the water balance components

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vary seasonably such as the pit dewatering, fresh water make-up, WRMF infiltration, and recycle from the TMF, amongst others.

18.5.2.6 Mine Water Treatment Water impacted by mining activities typically contains elevated levels of suspended solids and dissolved metals and salts, as well as nitrates and ammonia associated with blasting activities. Suspended solids will be treated using detention ponds to allow the suspended particles to settle out. Metal and nitrate/ammonia effected waters will be separately collected and recycled to the TMF. Excess water from the TMF will be discharged into the Herman Lake drainage system. As necessary, the water will be treated by either engineered wetlands or by a biological or physical/chemical treatment plant. The standards to be applied to site discharge will meet MMER and the requirements of the provincial Environmental Compliance Approval. Ambient water quality standards (CCME or Provincial Water Quality Objectives [PWQO]) and site-specific water quality objectives, or background concentrations will also be met in the receiving streams and lakes.

The estimated amount of water to be discharged from the TMF ranges from 0 m3/hr during the first year of operation to an average of 170 m3/hr during the final year.

18.6 Waste Management 18.6.1 Waste Rock Management

Over the life of the mine, a total of approximately 400 Mt of waste rock is planned to be produced (including low grade material). Mostly, waste rock from the open pits is planned to be deposited in various engineered waste rock facilities north of the pit from which the waste is sourced. In addition, waste rock will be used to construct the various stages of the tailings management facility. The low grade material will be placed in a stockpile near the crushing facility. This material is classified as waste in this report but has the potential for future processing. Given the deposit geometry and preferred phase design and mining sequence, no backfilling of waste rock into the mined out pit is currently planned

The waste rock not used for constructing the TMF will be disposed of in three Waste Rock Management Facilities (WRMF’s) located to the north, east and west of the TMF. These WRMF’s are the North WRMF, the Lovell WRMF and the Wrap WRMF and are shown in Figure 18.5. These facilities will cover an area of approximately 270 ha and range in height up to 110 m (from its lowest point).

In addition, an area of 40 ha to the east of the crusher location has been reserved for a Low Grade Ore Stockpile (LGO) which provides sufficient space for approximately 22 Mt of low grade ore. Additional space for the remaining 4 Mt of LGO is reserved in the upper portion of the Lovell WRMF from elevation 466 to approximately elevation 500 and this is also shown in Figure 18.6. Prior to waste rock disposal, and if required to generate the volume required for re-vegetation and rehabilitation, topsoil and growth media will be selectively removed from the footprint area of the WRMF's and LGO stockpile and stockpiled.

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Figure 18.5: Overall Site Plan – Stage 3 (Completion of Mining)

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Figure 18.6: Overall Site Plan – Stage 1

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Kinetic testing of waste rock and tailings was initiated in June 2013. The testing includes humidity cells and field cells in accordance with procedures of the Mine Environment Neutral Drainage (MEND) Manual. The results after 27 weeks confirm that only the relatively small amount of massive sulfide only (Unit 5E) is potentially acid generating, Metal-leaching concentrations are either non-detectable in the effluent from the humidity cells and field cells, or are below levels that represent a concern. The tailings samples as well as the unit with ARD potential (5E) yield low copper concentrations which are being further evaluated. Nearly all of the waste rock (>99%) is anticipated to be non-acid generating (NAG) based on the above testing. The small amount of Potentially Acid Generating (PAG) waste rock will be segregated and placed in designated areas within the WRMF. The thickness of the PAG material in these areas will be limited and it will be placed at a sufficient distance from the edge and bottom of the WRMF to allow any acid drainage to be attenuated within the waste rock mass. During operations the infiltration through the WRMF will be collected and pumped into the TMF.

Humidity cell testing of both the waste rock and the low grade ore has been completed to assess its potential to impact water quality. Argonaut continues to operate on-site large scale test cells.

Surface diversion ditches will be provided, as necessary, around the outside of deposited waste rock to minimize any run-on. Runoff from un-reclaimed waste rock surfaces and disturbed areas will be routed through detention ponds to allow suspended solids to settle out before the water is either discharged under a permit, pumped back to the plant or the TMF for re-use, or used for dust control.

18.6.2 Tailings Management

The TMF will be completed in stages over the life of the Project. The stage 1 layout is shown in Figure 18.7 and represents the Project at the start of gold recovery. The stage 2 layout is shown in Figure 18.8 and represents the Project at about year 2 of operations when the tailings dam embankment has been raised for the next four years of operations. The final stage is shown in Figure 18.5. A typical cross-section through the embankment is shown in Figure 18.8.

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Figure 18.7: Overall Site Plan – Stage 2

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Figure 18.8: Tailings Management Facilities – Embankment Cross-Section

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Preliminary design planning shows that the TMF would encompass up to 140 ha (Figure 18.5). The maximum thickness of the stored tailings would range up to 61 m. Tailings would be conveyed by pipeline from the plant and spigotted around the perimeter of the TMF. The surface of the tailings would form a sloped “beach” allowing for a pond to form at the lowest part. The design of the TMF will include embankments constructed of waste rock to Canadian Dam Standards (Canadian Dam Association, Dam Safety Guidelines, 2007) to contain the tailings slurry and allow it to consolidate to a more stable solid mass.

The solid to liquid ratio in the slurry is designed for the specific characteristics of the ore properties and processing circuit and will be approximately 55% tailings particles by total slurry weight. The tailings particles/liquid ratio for the tailings slurry is controlled by thickening of the mill tailing slurry at the process plant.

Precipitation, snowmelt, runoff, and water released from the deposited tailings as they consolidate, will be collected in the TMF and recycled to the process plant.

The TMF will be provided with seepage controls to limit groundwater seepage that migrates to the lakes to prevent the quality of these lakes from exceeding applicable standards. These controls include engineered seepage barriers along the inside faces of the embankments and through the underlying overburden material. Seepage collection includes a system of seepage collection trenches under the inside and outside toes of the TMF containment embankment (Figure 18.4). In addition and groundwater extraction wells will be located in the higher permeability bedrock areas around the outer perimeter of the TMF will be installed as required Collected seepage will be pumped back into the TMF.

18.7 Plant Site Facilities The plant site consists of the process plant and equipment as described in Section 17, and the necessary infrastructure to support the processing operations. All equipment is planned to be sized and designed to meet the process design criteria and PFD’s for the 30,000 t/d operation. All plant site and infrastructure buildings and structures are planned to be built and constructed to all applicable codes and regulations. All cyanide contacting equipment and processes are planned to be designed and constructed with cyanide contact material secondary containment as per the Cyanide code. The process plant is planned to be equipped with samplers located as indicated on the PFD’s, and a metallurgical lab is planned to be on site equipped to provide the required analysis of samples. Plant site layout showing facilities is provided in Figure 18.9.

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Figure 18.9: Plant Site Layout

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18.7.1 Crushing and Coarse Ore Stockpile

The primary crusher equipment is planned to be installed on a prepared pad near the open pit, outside the blast zone safety radius. Haul trucks will deliver ore directly to the receiving hopper or onto an ore stockpile. A loader is planned to be stationed at the stockpile to feed the crusher. The crusher is planned to be an enclosed installation with a removable roof and two sides dump and will be serviced by a mobile crane for maintenance activities. The installation will have its own substation, Motor Control Centre (MCC) and control room located at crusher in an E-house. The crusher layout is provided in Figure 18.10.

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Figure 18.10: Primary Crusher Layout

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An overland stockpile feed conveyor will transport the crushed ore to the coarse ore stockpile. A service road and utility corridor is planned to be installed along the stockpile feed conveyor between the crusher installation and coarse ore stockpile. The coarse ore stockpile is planned to be constructed on a pad with concrete tunnel housing the reclaim apron feeders. The coarse ore stockpile and reclaim system is illustrated in Figure 18.11.

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Figure 18.11: Coarse Ore Stockpile and Reclaim

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The reclaim feeders will transfer material to an overland conveyor, which will then transfer material to the SAG feed chute. The SAG mill feed conveyor is planned to be in a fully enclosed galley. A 90 t lime silo, complete with pebble lime measuring and screw feeding system will dispense lime onto the SAG mill feed conveyor. 18.7.2 Mill Building

The process plant building is planned to be a pre-engineered structure, specifically designed for the process equipment layout. It consists of two buildings- a grinding building 73 m x 37 m footprint with a 35 m high eave height, and a refinery building 90 m x 50 m footprint with a 27.5 m eave height, not including lean-to structures. Both buildings will be multi-story structures. These buildings will house the majority of the processing plant equipment, with the leach tanks and thickeners being placed outside due to their size. All equipment supports will be with structural steel and concrete engineered separately from the building, with the exception of the overhead bridge cranes. A plan view of the plant is provided in Figure 18.12.

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Figure 18.12: Processing Plant Layout

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The plant grinding media storage and electrical & MCC room are planned to be attached to the process buildings as lean-to structures. 18.7.2.1 Grinding and Classification The grinding and classification equipment is planned to be in its own building separate from the rest of the processing plant, with its own sump, laydown and clean out area. A single overhead bridge crane, with 40 t hoists and a single liner handler will service both mills. The concrete stem walls in the grinding area, with floor slab sloped into sump pit will provide required containment for the area. The grinding area is planned to be equipped with HCN monitoring and alarm system. 18.7.2.2 Gravity Circuit The gravity circuit is located within the grinding building, in a separate secured room, equipped with security system and closed circuit television (CCTV) monitoring. Coarse gold liberated from the concentrators and shaker table is planned to be collected and transferred to the refinery using concentrate bins. The final security plan will be completed during the detailed design phase. 18.7.2.3 Leaching Area The thickener and leach tanks are planned to be installed outside the process plant. The thickener is planned to be insulated for winter operation, with an insulated dog house over the drive and control station. Leach tanks are planned to be supported on concrete foundations. The tank area will have concrete containment using slab and containment wall, connected and sloped to drain into the process plant. A sump and sump pump are planned to be located outside with the leach tanks, and the sumps inside the process plant will act as a back-up sump system. 18.7.2.4 CIP & CIC Circuit The tanks are planned to be placed inside the process plant on concrete foundations, and will have an overhead crane for maintenance in the CIP area. CIP tank containment is planned to be by concrete slab and containment wall of the process plant containment with sump and sump pump. The CIP area will be equipped with HCN monitoring and alarm system. 18.7.2.5 Carbon Plant and Refinery Area The carbon plant and refinery are planned to be spilt up into three separate areas:  Carbon elution/desorption/stripping;  Electrowinning and refinery; and  Carbon re-activation. The refinery area is planned to be a separate security controlled access area. The area will be equipped with CCTV cameras for security monitoring.

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18.7.2.6 Reagents There will be one main reagent area at the South East end of the refinery building. The exception is for the caustic and HCL used for the acid wash and stripping circuits. There will be concrete containment and an unloading area at the reagent area for the NaCN and caustic, NaOH, unloading and storage areas. The HCL area by the acid wash circuit will also have concrete containment for the HCL unloading and storage area. The NaCN and HCL unloading, handling, and storage areas are kept in separate areas of the process plant. The grades will be sloped away from each other so that rain water runoff from the two areas will be kept separate to avoid any contact between the NaCN and HCL. 18.7.2.7 Process Control Systems The process control system is planned to be a PLC (Programmable Control System) based system. The PLC’s will be used to control and monitor all the operations of the plant. The plant is broken into different process areas. Each process area is controlled by a single PLC system. The PLC’s will be tied together to form a plant wide control system by the use of an Ethernet communication system. The motor starter, VFD’s as well as some of the field devices will be controlled by the PLC via a Device net communication system. Process control and monitoring for the facility will be performed in a two operator control room utilizing Human Machine Interface (HMI) operator stations. These HMIs will contain the graphical representation of the process equipment and will interface to the PLCs via the ethernet network. There will be two operator control rooms: The control rooms are located in:  Primary Crusher Area; and  Grinding Building.

18.7.2.8 Plant Utilities The plant will also be equipped with following plant utility systems:  Air Compressor;  Process & fire water tanks, system; and  Blowers.

18.7.3 Pebble Crusher Installation

The pebble crusher circuit is planned to be in a separate pre-engineered building, specifically designed to house the crusher layout. A general arrangement of the plant is provided in Figure 18.13. The building will support an overhead bridge crane for crusher maintenance and include a laydown area for maintenance.

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Figure 18.13: Pebble Crusher Installation

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It will be heated, insulated, and have concrete foundation and floor slab. The installation will have a sump pit and pump, with piping back to the process plant.

The pebble crusher building will be equipped with HCN monitoring and alarm system, and CCTV monitoring.

18.7.4 Assay Laboratory

The assay laboratory is planned to be in a separate pre-engineered building located in close proximity to the processing plant. The lab will be housed on concrete foundation and concrete slab floor, equipped with its own lighting, heating and ventilation. It will have a fume extraction system installed with a dust collector. 18.7.5 Warehouse & Maintenance Shop Building

A separate pre-engineered building is planned to be on the plant site for warehouse storage and plant maintenance. It will have concrete foundation and concrete slab floor, lighting, heating and ventilation. 18.7.6 Administration, Security and First Aid Buildings

The administration, security office, and first aid building are planned to be combined in one pre- engineered building with concrete foundations and floor slab. The building will include a garage for emergency response vehicles. Access to the gold refinery and gold vault will be fenced with security controlled access for entry and exit to the area. The security office in the administration building will have full visual access to the outside entry and exit of the gold refinery and vault area. A separate guardhouse and gate will be located at the entrance of the site for security in and out of the site.

18.8 Ancillary Facilities 18.8.1 Truck Shop

A truck shop is planned to be built to service the mine fleet mobile equipment. It will be designed and built to accommodate the 220-tonne haul trucks. The truck shop will be a pre-engineered structure with concrete foundations and floor slab. The truck shop will be located on its own prepared earthworks pad separate from the plant site, and in closer proximity to the pit and haul route from the pit to the waste dumps. It will have space allocated for the down vehicles, a ready line, and room for the equipment to maneuver. The pad will be graded to ensure surface water drainage is collected in a containment pond.

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18.8.2 Detonator and Explosives Facilities

Detonator and explosives storage is planned to be on separate pads located outside the blast radius of the pit, and away from the process plant and waste management facilities. The explosive magazine will be sized for up to 24 t of product, and the cap magazine will be sized for up to 3.6 t of product. 18.8.3 Fuel Storage

There will be a fuel storage tank and dispensing station for the mine haul fleet located on the truck shop pad. The facility will be complete with the requisite spill storage capacity, and will meet the fuel storage requirements of the Technical Standards & Safety Authority (TSSA). 18.8.4 Permanent Camp and Mine Dry

A permanent camp facility for 150 people is planned to be on site. The camp will be self-contained with kitchen and dining facility, laundry, recreation, potable water treatment and sewage treatment. Prefabricated modular structures will be purchased and installed during the initial year of Project construction, and used throughout the construction period. The mine dry will also be a modular pre-fabricated structure shipped to site for final assembly, and be connected to the camp for access, water and sewage systems. The camp and mine dry will be located on their own prepared pad, and mounted on prepared cribbing and mud slab foundations. 18.8.5 Communications Systems

The site will be connected to land line based telephone and internet service for communication off- site. The site will have an internal business Ethernet communication system which shall be 1000/100 based Ethernet system. The business systems, office computers, and telephone (IP) systems will be connected to this system. There will be a site wide fiber optic backbone interconnecting all buildings. A mine dispatch radio system will be used for communication between mobile equipment, mine pit control and the process plant site and crusher facilities.

18.9 Sewage Collection and Treatment Other sources of impacted water are sewage from camp housing and offices, workshops, and laboratories. Package sewage treatment plants will be used to treat these waters. For smaller isolated sources of sewage, septic tanks and leach fields may also be used. A sewage treatment plant will be supplied with the construction camp and remain on site to provide long-term sewage treatment requirements during operations.

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19 Market Studies and Contracts

19.1 Market Studies 19.1.1 Gold

At this time, no market studies have been completed as the gold to be produced at Magino can be readily sold in the open market. Gold refining charges were estimated to be US$5.00/payable oz with 99.9% of the gold assumed to be payable.

19.2 Contracts No contractual arrangements for refining exist at this time. Furthermore, no contractual arrangements have been made for the sale of gold doré at this time.

19.3 Royalties The Project may be subject to a net profits interest (NPI) (Section 4.3) however, Argonaut assumes that there is no obligation. Therefore, no royalties/NPI’s were considered in the Magino economic model.

19.4 Metal Prices The base and precious metal markets benefit from terminal markets around the world (London, New York, Tokyo, Hong Kong) and fluctuate on an almost continuous basis. Historical metal prices for gold are shown in Figure 19.1 and demonstrate the change in metal price from 2000 through to December 2015.

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Figure 19.1: Average Gold Cash Price as at December 22, 2015

Kitco Gold Cash Price 2,000 1,800 1,600 1,400 1,200 1,000 800 US$/Au oz US$/Au 600 400 200 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Year 12-mo Avg 24-mo Avg. 36-mo Avg. 60-mo Avg. PM Fix

Source: JDS (2016)

Table 19.1 summarizes the metal price and exchange rate used to run various scenarios in the economic analysis. Table 19.1: Metal Price and Foreign Exchange Rate Used in Economic Analysis Scenarios

Parameter Units Base Case 0.74 F/X Rate 0.70 F/X Rate Gold Price US$/oz 1,200 1,200 1,200 Exchange Rate US$:C$ 0.78 0.74 0.70 Source: JDS (2016)

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20 Environmental Studies, Permitting and Social or Community Impact

20.1 Factors Related to the Project Although the Project is located within a brownfield site that supported previous mining activity, there is still the potential to effect the environment. The Project design will take many factors into account over the environmental setting to avoid creating impacts where possible. The Project will be designed, built, operated and closed under an approach of “mitigation by design” to minimize long-term environmental impacts. Where avoidance is not possible, effective mitigation options, adaptive management planning, and/or compensation plans will be developed. These plans will include maximizing the use of existing disturbed areas for mine infrastructure and progressively reclaiming disturbed areas to minimize erosion and encourage the re-establishment of productive ecosystems. A summary of the potential environmental and socio-economic effects are provided in Table 20.1.

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Table 20.1: Potential Environmental Effects and Mitigation Measures

Mitigation Measures Media or Aspect of Potential Effects (these include Management, Monitoring, and Project Adaptive Management Plans)

Recover and re-use soils for reclamation Removal and replacement Minimize opening sand and gravel areas Pit lake results in permanent Surface Soils Develop a pit lake as an aquatic resource loss Stockpile sand and gravel resources not required for Sand and gravel source areas the Project for use by other authorized parties

Utilize new efficient equipment with lower emissions Increases in Project emissions, Use dust control measures (water sprays) including greenhouse gas Air Quality Minimize greenhouse emissions through equipment Increases in dust selection, operational protocols, monitoring of activities and corrective actions. Minimize Project footprint and avoid surface water Loss of lakes, small ponds and bodies as practicable streams Maximize water recycling Effects on water quality Provide erosion protection Surface Water and Effects on stream flow and Provide passive and/or active water treatment Sediment lake levels Progressive reclamation all stages of the mine life Stream diversions Enhance local wetlands and small lakes and ponds as Effects on sediment quality part of creating aquatic habitat compensation Drawdown of water levels Engineered controls as necessary, including: Effects on lake levels and Barriers to reduce groundwater flow into pit stream flow Groundwater Seepage barriers and/or liner systems for mine waste Effects on water quality impact management facilities by seepage Effects on fish and fish habitat Approved habitat compensation as required by removal of lakes Approved blasting programs with monitoring and Aquatic Resources Effects from mine activities adaptive management. such as blasting Progressive reclamation of habitat

Effects on terrestrial Avoidance of critical habitat where possible and Ecosystems and ecosystems progressive reclamation throughout mine life Vegetation

Fencing as necessary Avoidance of area Re-creation of habitat as practicable Wildlife and Wildlife Effect on potential species at Implement wildlife protection programs Habitat risk and migratory species

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500 to 600 construction jobs 400 operations jobs Provide job training opportunities for local work force Increased indirect spending & Provide for a balance in accommodations between Socio-Economics jobs local communities and an on-site supplemental camp. Increased municipal and provincial tax base Community programs Increased earning potential Human resource policies Social issues Health and safety policies Individuals, Family Income fluctuations Provisions for daily commuting and Community Increased demand for social Consult with mine site personnel and identify best services practices

Effect on traditional lifestyle Through consultation, develop mitigation measures Traditional Culture and and culture Land Use Potential effects with recreational and tourist Through consultation, develop mitigation measures Land Use and activities Resource Competition for labor and Development social services Surface and groundwater Consultation and coordination with other mines and systems industries Regional aquatic and terrestrial Support establishing regional programs ecology Cumulative Effects Improvement in the regional economy and employment

Increased power demand Notes: http://climate.weatheroffice.gc.ca/climate_normals/results_e.html?stnID=4099&lang=e&dCode=0&province=ONT &provBut=Search&month1=0&month2=12. Based on data from the following stations: White River, Franz, Chapleau and Wawa Airport. Source: SLR (2015)

20.2 Environmental Study Results 20.2.1 Climate

The Wawa area climate is humid continental. Temperature extremes are moderated and precipitation patterns are altered by its proximity to Lake Superior. The average annual temperature is 1.7 °C with average annual minimum and maximum temperatures of -14.8°C and 14.9 °C recorded in January and August, respectively. Extreme temperatures of -50°C and 33.2°C were recorded at Environment Canada’s Wawa A station (ID 6059D09). Average total annual precipitation is estimated at 850 mm of which approximately 70% falls as rain and 30% as snow (converted to snow water equivalents based on data from White River, Franz, Chapleau and Wawa Airport stations. On average, rainfall occurs on 105 days each year and snowfall on 80 days.

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Nearly half of the annual snowfall occurs in December and January while maximum rainfall occurs from June to October. Snow is present on the ground from November to April. The area is free of permafrost. The monthly mean precipitation and evaporation for the Project site is shown in Figure 20.1. Winds are calm (less than one m/s) 42% of the time. Prevailing winds from the southwest and south-southwest directions occur about 20% of the time. The next most predominant wind direction from the north-northwest and north directions occurs about 14% of the time. 20.2.2 Air Quality

Dispersion modelling is being conducted in accordance with the Air Dispersion Modelling Guideline for Ontario and Ontario Regulation 419/05. A baseline air quality data collection program has been completed to collect data to feed accurate model predictions. The Project will require an Environmental Compliance Approval for emissions. Figure 20.1: Monthly Mean Precipitation and Evaporation

Source: SLR (2015)

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20.2.3 Noise

The major sources of noise include blasting, mobile equipment operations (particularly backing up alarm systems) and to a lesser extent the larger, fixed processing equipment such as those used for crushing and milling. Noise emissions are primarily a concern for the human health of personnel on site, and to a lesser extent, wildlife that may utilize the area. There are no nearby residents and the closest seasonally, potentially occupied cottage is located at Herman Lake, which is approximately 1.5 km to the west of the WRMF and approximately 4.0 km from the mine and process plant. Open air noises will be more audible than those from operations that will be enclosed or housed within structures. Baseline noise levels are being evaluated and noise sources/emissions are being modelled for consideration in the engineering and design of site facilities and equipment selection. 20.2.4 Surficial Geology

The Regional Study Area (RSA) for the Project is located in the Boreal Shield physiographic region of Canada. It is free of permafrost and was last glaciated 9,000 years ago. The current topography ranges from about 385 m to 450 m above mean sea level (AMSL). Some of the hills and cliffs in the Lake Superior watershed were used as viewpoint, vantage points and lookout areas by aboriginal people. The RSA is characterized by low ridges and hills up to 50 m high, flanked by generally flat areas of glacial outwash, swamps, and numerous lakes and bogs. The glacial deposits in the region date to the Late Wisconsinan glaciation and were formed by the Laurentide Ice Sheet. These deposits include till, and glaciofluvial and glaciolacustrine sediments, while fluvial and organic deposits developed in the Holocene Epoch (the last 9,000 years). Matrix supported till is the most common and most extensive surficial deposit within the Project area. It consists of very poorly sorted bouldery diamicton with a silty, fine to very coarse sand matrix. Granitic and metavolcanic clasts (stones) contained within the till make up 30% of the deposit, on average. Typically, it is moderately well to well drained, however, till units found in low-lying areas may be imperfectly to poorly drained. Bedrock is exposed between Miller Lake and the area just east of Herman and Otto lakes (see Figure 20.2). This area is characterized by thin discontinuous till found between Maskinonge Lake and Dreany Lake and in areas to the north of these lakes. Thicker till is present in the Maskinonge, Miller, and Mountain lakes area north of the Project site. Several recessional moraines consisting of till and glaciofluvial ice-contact material are found in this area. The regional pattern of sand and gravel outwash with localized organic deposits that fill low-lying areas is locally apparent in the spring, Lovell, Webb, and Goudreau lake areas. Much of the southern portion of the site and study area is covered by glaciofluvial sediments. These deposits consist of sand and gravel in varying proportions and form undulating to hummocky terrain, terraces, flat-lying planar units, esker ridges, and blankets or veneers. They are generally moderately to well drained, except for deposits found in low-lying areas, which may be poorly drained.

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Colluvial deposits are uncommon within the study area. The few colluvial sites that are encountered in the field include rock falls, sand and collapsed tills. Only one fluvial site north of Lovell Lake has been identified. This deposit consists of clayey, sandy silt that is rich in organic material and overlies very fine sand and till. Fluvial deposits form poorly drained, planar floodplains surrounding small creeks.

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Figure 20.2: Surficial Geology

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Organic deposits are found in association with bogs and fens and can vary widely in terms of the vegetation conditions they may support. Peat probe tests show that wetland peat is commonly 1.0 to over 2 m thick. Thicker wetlands thin to veneers at the edges. Organic deposits commonly form planar units and are poorly drained. 20.2.5 Soils

Much of the area is characterized by acidic, coarse-textured mineral podzols with varying humic content near the surface. Rock outcrops and rapidly drained thin soils are common on uplands, with thicker well drained soils in lower lying areas. Organic soils and gleysols are commonly found in depression areas. Field inspections have been conducted for terrain mapping with soil interpretation throughout the Project area. The soil profiles were excavated using a hand shovel and hand auger to a depth of 1.0 m or until the C horizon was located. The field-described soils were compared with known soil units for the area. A total of seven soil units from two catenas were identified and classified. 20.2.6 Ecosystems

The Regional Study Area for the Project is located within Ecoregion 3E: Lake Abitibi. The ecoregion classification is used in North America to provide a systematic view of climate, landforms and habitat. Ecosystem 3E is characterized as boreal forest underlain generally by granitic or gneissic bedrock. Soils in the western portion of the Ecoregion are generally poorly developed. Over the entire Ecoregion, mixed forest and coniferous forest comprise approximately 30% of the land area each, while sparse forest comprises 11% and deciduous forest comprises 7%. Eight percent of the Ecoregion has been cut over, and 7% is comprised of lakes and watercourses. The boreal forest as a whole is subject to fire as the dominant disturbance regime. Fires are stand- replacing, with varied cycles, and are logically shorter for upland forest than for lowland forest. The forest is dominated by typical boreal forest species. 20.2.7 Vegetation

Hardwood forests in the area are largely composed of trembling aspen (Populus tremuloides) and white birch (Betula papyrifera), with balsam poplar (Populus balsamifera ssp. balsamifera) occurring on more moist sites. Conifer species common to the area include black spruce (Picea mariana), white spruce (Picea glauca), balsam fir (Abies balsamea), and jack pine (Pinus banksiana). Wetlands, which are largely associated with the drainage patterns are predominantly organic (swamps, fens and bogs on organic soils), with the remaining marsh and thicket swamps on inorganic substrates. The swamps are characterized by black spruce (Picea mariana) with tamarack (Larix laricina) and balsam fir (Abies balsamea), speckled alder (Alnus incana), which is often dominant, red- osier dogwood (Cornus stolonifera), sweet gale (Myrica gale) and dwarf birch (Betula pumila).

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Bogs are dominated by black spruce (Picea mariana) with lesser amounts of balsam fir (Abies balsamea) and tamarack (Larix laricina). Fens are dominated by stunted tamarack (Larix laricina) and black spruce (Picea mariana) and a slightly more nutrient-rich mix of sedges and herbs. Lichen and bryophytes include reindeer lichen (Cladina rangiferina) and coral lichens. 20.2.8 Wildlife

Four surveys were undertaken following protocols provided in “Wildlife Monitoring Programs and Inventory Techniques for Ontario” (Konze and McLaren, 1997) and other accepted methods such as BC’s Resource Inventory Standards Committee (RISC) Standards and Protocols and supplemented with species-specific protocols when necessary. The Marsh Monitoring Program Protocols (Bird Studies Canada et al. 2009) and the Standardized North American Marsh Bird Monitoring Protocol (Conway, 2009) were used for amphibians and marsh birds. Significant wildlife habitat is being identified (MNR, 2000). These are areas that are ecologically important in terms of features, functions, representation, or amount, and which contribute to the quality and diversity of an identifiable geographic area or Natural Heritage System. Areas or features such as moose (Alces alces) over wintering habitat, snake hibernacula, bat roosts, marten (Martes americana) and fisher (Martes pennanti) dens, habitat for species of conservation concern, rare vegetation communities, interior forest habitat, animal movement corridors, and woodlands supporting amphibian ponds are all examples of significant wildlife habitat. Bird surveys have identified 86 species of birds within the Project and its surroundings. Of these, 71 are listed under the Migratory Birds Convention Act. Species such as grouse, several owls, chickadees, jays, finches, Common Raven and Red-breasted Nuthatch (20 in total), all of which are resident species. 20.2.9 Surface Hydrology

Approximately 18 lakes are located within the McVeigh, Webb-Goudreau and Herman lake watersheds within or adjacent to the Project area. This includes Dreany Lake, which is a reference area outside the Project area (used for comparison purposes in the EA). Surface flows to the north of the Project, from the Dreany Lake area, as well as McVeigh Creek, which drains the central portion of the Project, flow to the west and then southwards. These flows drain through Herman Lake to Lake Superior by way of the Magpie River. The Webb and Goudreau lake systems, located along the southern boundary of the Project, drain to the east and then to the south via the Michipicoten River to Lake Superior. Development of the Project will involve drainage and filling of Webb and Lovell Lakes and several small unnamed lakes and ponds to facilitate the construction of mine-related infrastructure. Diversions will be established to reduce the volume of surface water entering the mine pit and divert clean water away from mine contact areas, causing slight changes in surface flow patterns. Grading plans will keep diverted waters within their watersheds and hydrologic events such as storm response will be minimally affected. Water will be drawn from Goudreau Lake on and near the Project site to provide potable water for the mine camp, makeup water for processing, and for other uses such as dust suppression. Water will be withdrawn within acceptable limits to protect fish habitat, as well as under the regulation of a

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Permit to Take Water from the Ontario MoE. Water for ore processing will be minimized by recirculating water from the open pit and recycling from the TMF. Construction of the pit will alter local surface water flows by reducing the catchment areas of local streams and by capturing some surficial groundwater that would normally follow into local streams. These changes in flows will be modelled and appropriate mitigation employed to maintain hydrologic and ecological processes. A surface water hydrology study and complete site water budget will be completed for the construction, operations, and closure phases to quantify and evaluate these impacts in detail and to conceptualize appropriate mitigation measures that will minimize effects should flooding or other ecologic conditions occur. In addition, a water management plan is being prepared to protect the environment while at the same time providing for a sufficient operational water supply. 20.2.10 Surface Water Quality

Close to 50 lakes, streams, former tailings ponds and seep sites were sampled between October 2011 and November 2015. Water quality is neutral to slightly alkaline and moderately well buffered (pH 6.9-8.5, alkalinity 35 milligrams per litre [mg/L]) and low in dissolved solids, with a conductivity of 67 µS/cm and total hardness of 35-46 mg/L. Dissolved organic carbon concentrations are low and metals concentrations are, with few exceptions, either not detected or within the guidelines for protection of aquatic life (CCME, 2012). Nutrient concentrations show that lakes are in the oligo- mesotrophic range. Water bodies in previously mined areas of the site showed similar water quality with the exception of slightly higher metals concentrations that could indicate either the natural mineralization of the area, or residual impacts from previous mining activities. Lakes in the mineralized areas also showed higher levels of hardness (~95 mg/L) and conductivity (>200 µS/cm). Creeks draining the study area showed higher alkalinity than lakes, but were otherwise similar in water quality; with higher metals concentrations in mineralized areas of where former mining activities occurred. Some historic tailings deposits have been located and sampled in Webb and portions of Goudreau Lakes. Sediment quality was determined at lake and stream sites as part of the 2012 baseline studies. Lake sediments were generally enriched in organic carbon and nitrogen, which is a typical condition for Precambrian Shield lakes. Metals concentrations were variable and frequently exceeded guideline values in lake samples. This is to be expected in a mineralized region and in lakes in previously mined areas. Creek sediment samples have lower levels of organic carbon and nutrients, which is to be expected as they would not accumulate to the same extent in a creek as in a lake environment. Metals in creek sediments were variable and frequently exceeded guideline values for protection of aquatic life. Prevention of significant adverse effects to surface water and sediments from mine activities will help prevent impacts to the aquatic ecological environment (fish, invertebrates and algae) and minimize the potential for uptake of contaminants into the aquatic or human food chain. Surface water quality is not anticipated to be affected by the Project. Geologic materials present at the mine are mostly low in metals content and are predominately non-acid generating.

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20.2.11 Hydrogeology

Groundwater levels are typically near surface, varying up to five metres deep. In some low lying areas, groundwater levels occur at the surface. Groundwater sampling was initiated in late 2012 and is still being conducted in concert with surface water quality sampling to examine the relationship between the two. No private water supply wells are present in the watersheds hosting the Project. Groundwater migration mimics topography and generally occurs from the higher elevations in the east and central part of the Project area towards lower elevations to the west, north and south. The open pit mine is on the south flank of this groundwater “mound”. Groundwater is a potassium-sodium-chloride system and is bicarbonate-poor. The groundwater PH is nearly neutral, ranging from 6.5 to 7.8. Total dissolved solids (TDS) in the water are low and range from 80 to 240 mg/L in the natural setting. The water is more mineralized at depth with higher TDS, indicating longer residence time for the deep groundwater in the deeper bedrock. Iron concentrations are typically 0.1 to 0.9 mg/L, occasionally reaching 2.0 mg/L. 20.2.12 Aquatic Resources

Baseline studies were undertaken in 2011 through 2012 and include physical habitat characteristics, periphyton (attached algae), phytoplankton (floating algae), zooplankton, benthic invertebrates, forage and predator fish, and fish tissue contaminant studies in the lakes and streams of the Project area. There are no known commercial fisheries in the area. Recreational fishing occurs at Goudreau and Herman lakes where there are cottages or camps, and also at Otto, Dreany and Mountain lakes. Preliminary assessment of commercial, recreational and aboriginal or subsistence fisheries have been completed for 11 of the lakes and ponds as follows:  Dreany Lake (reference lake) – Contains the following sport fish species: Walleye, Yellow Perch and Northern Pike. A moderately diverse forage base supports piscivorous sport fish in the lake. Recreational fishing is known to occur on this lake;  Mountain Lake (reference lake) – Contains Lake Trout and Whitefish. Northern Pearl Dace represents the forage base supporting the piscivorous sport fish in the lake. Recreational fishing is known to occur on this lake;  Herman Lake – Contains Northern Pike, Walleye and Whitefish. This lake has a trophic system with a suitable food supply for lower trophic-level fish (Northern Pearl Dace and Spottail Shiner) that in turn support the dietary needs of the piscivorous sport fish in the lake. Recreational fishing is known to occur on this lake;  Goudreau Lake –Walleye, Yellow Perch and Northern Pike. A moderately diverse forage base supports piscivorous sport fish in the lake. Recreational fishing is known to occur on this lake;  Otto Lake - Northern Pike and Whitefish. This lake supports a trophic system with a suitable food supply for lower trophic-level fish that in turn support the dietary needs of the

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piscivorous sport fish species in the lake. Recreational fishing is known to occur on this lake;  Webb Lake –Yellow Perch and Northern Pike. No forage base fish species to support piscivorous sport fish in the lake were collected during fish sampling events. Recreational fishing may occur on this lake. Most of the water volume in Webb Lake appears to occur behind a series of Beaver Dams that increase its elevation to approximately 5 m above that of Goudreau Lake. Prior to the occurrence of the Beaver Dams, Webb Lake was likely a small extension of Goudreau, much smaller than it currently is;  Spring Lake and Lovell Lake – Contain a relatively diverse forage base which supports a limited sport fish community in these lakes. Although sport fish captured from Lovell Lake includes Yellow Perch and sport fish captured from Spring Lake includes Northern Pike and Walleye, no recreational fishing is observed;  Lakes 8 and 9 – Contain limited forage base which supports piscivorous sport fish collected from these lakes. No recreational fishing is observed for these lakes;  Lakes 1, 2, 3, 6 and 7, and the Tailings Polishing Pond – No sport fish were collected from these water bodies during fish sampling events, although a diverse forage fish base is observed in some of these lakes; and  Lakes 4 and 5, and the Tailings Pond – No fish were collected during fish sampling events. As part of the Project, several areas of the site development are anticipated to affect natural resources such as lakes (Webb and Lovell), wetlands (1, 2, 3, and 6) and tributaries (McVeigh Creek). These resources have both surface area and fisheries impacts which will require a mitigation plan to be submitted to the appropriate government agencies. Several near term (during construction) and long term (at closure) possibilities have been examined for their potential to offset both the fish values based on Lake Weighted Useable Areas (LWUA’S) and surface area impacted by the Project. Elements considered providing offsets in a mitigation plan may include:  Dam construction at appropriate locations to provide lake expansion;  New habitat construction to provide spawning areas for sport fish species;  Stream realignment(s); and  Fish stocking in appropriate water bodies of either forage or sport species to add or enhance LWUA values. As the Project is developed and the actual impacts are determined it is anticipated that a combination of the above elements will enable a mitigation plan to be developed. The mitigation plan will be developed with feedback from Aboriginal groups and local land users prior to submission to regulatory authorities. In addition to the above fisheries data, the following sampling has been conducted in accordance with the British Columbia Field Sampling Manual (Clark, 2003) and in Ontario Stream Assessment Protocol, Version 7.0 (Standfield, 2005):

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 Benthic invertebrates;  Periphyton;  Phytoplankton; and  Zooplankton. 20.2.13 Archaeological Resources

Archaeological resources are protected through various federal and provincial legislation and regulations. Stage 1 archaeological assessments have been concluded on the entire Project site which identified areas for further archaeological investigation. The Stage 1 assessment process included a records review, the consultation of existing databases on known and registered archaeological sites, review of the cultural prehistory, and satellite and air photo interpretation and field inspections. Specific field archaeological investigations were conducted in June and September 2012 for the proposed pit and Webb Lake areas and in June 2013 in the rest of the Project area. A Stage 2 assessment was recommended for the area west of the Goudreau Lake narrows. The assessment field work in this area was conducted in September 2015 with solicited participation of representatives of Aboriginal groups. The field assessment concluded that the area does not have elevated archaeological potential. These investigations complied with the Ontario Ministry of Tourism, Culture and Sport’s (MTCS’s) 2011 Standards and Guidelines and addressed comments provided to Argonaut by MTCS through the working draft EIS process

20.3 Environmental Issues Argonaut has completed a Project Description (SLR, 2013) and a Working Draft Environmental Impact Statement (SLR, 2014) for a smaller 12,500 t/d Project. Technical and administrative comments have been received from Federal and Provincial Government agencies as well as a number of identified interested Aboriginal groups. The comments from this non-legislated voluntary review process will be utilized to enhance the formal Draft EIS submission. Federal Agencies that provided feedback on the Working Draft Environmental Impact Statement are; the Canadian Environmental Assessment Agency (the Agency), Environment Canada, Health Canada, Fisheries and Oceans Canada, Natural Resources Canada and Transport Canada. The Ontario Provincial government agencies that provided comment are the Ministry of Tourism, Culture and Sport and the Ministry of Natural Resources and Forestry. Comments were received from Missanabie Cree First Nations, Michipicoten First Nation, Red Sky Independent Métis Nation and the Métis Nation of Ontario. In addressing the comments received and completing the EA, Argonaut will identify potential environmental effects (positive or negative); propose measures to mitigate any adverse effects; and predict whether there will be net adverse environmental effects after technically and economically feasible mitigation measures are implemented. Key components of the EA include consultation with government agencies, Aboriginal peoples and the public; consideration and evaluation of a reasonable range of project alternatives; the assessment of the advantages and disadvantages associated with the Project; and the management of potential environmental effects.

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Argonaut has developed an approach that involves incorporating mitigation measures into the planning and design process, and the designs for closure. Designing for closure means that sustainable closure plans are established and that the designs of facilities will accommodate those plans.

20.4 Closure Planning The Ontario Mining Act deals with surface water and groundwater, as well as biological factors under Parts 5 and 6, Schedule 1 of Ontario Regulation 240/00, as amended by O. Reg. 304/07 Mine Development and Closure, under Part VII of the Act. In Ontario, proponents cannot commence, or recommence, mining operations until a certified Closure Plan and associated Financial Assurances are in place. Closure involves the decommissioning of the site through the removal of infrastructure that will not be needed in the post-closure phase, as well as the closing of waste management areas in an environmentally acceptable manner. Closure will be conducted in accordance with the approved Closure Plan. The Closure Plan will assess alternative methods for the decommissioning and closure phase, which will include activities designed to ensure that the Project site is closed in a manner that reduces potential impacts on the social and natural environment. Proposed closure concepts are described in Section 20.7. A Certified Closure Plan will be issued at the conclusion of the EA process. 20.4.1 Post-Performance and Reclamation Bonds

As required by Ontario's Mining Act and Ontario Regulation 240/00 (240/00), financial assurance will be provided for closure and rehabilitation of the Project along with the Certified Closure Plan. The financial assurance amount will cover the cost of closure and rehabilitation and be provided in a Certified Closure Plan filed for the Project to be acknowledged by the MNDM in order to satisfy the requirements under the Mining Act and or 240/00. Under Ontario's Mining Act, Argonaut is required to take all reasonable steps to progressively rehabilitate the mine site. Argonaut, or the MNDM Director, may at any time amend or require an amendment to the certified Closure Plan and the associated financial assurance amount. This will allow Argonaut to take credit for rehabilitation work that has been performed under the filed Certified Closure Plan and provide for reducing the amount of financial assurance accordingly. Preliminary discussions with Dominion Bond Rating Service Limited indicate Argonaut will be able to meet the corporate financial test provided in Ontario's mining act and 240/00 as a means of financial assurance. In the event Argonaut was not able to meet the requirements of this financial test, alternative forms of assurance would be provided, including but not limited to, a letter of credit from a Schedule I bank, a bond issued by an insurer licensed under the Insurance Act to write surety and fidelity insurance, a mining reclamation trust as defined in the Income Tax Act, or such other form of security or guarantee that is acceptable to the MNDM Director.

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Most of the closure and rehabilitation work will be completed in a 2 to 3-year period. After that time, the pit will continue to fill, which will take several decades. Ground and surface water monitoring, as well as site maintenance, may be required (See Section 20.7). These ongoing activities will be included in the Certified Closure Plan and financial assurance information.

20.5 Social and Community Three communities potentially affected by the proposed Project include the Township of Dubreuilville, the Municipality of Wawa and the Township of White River. All three communities are in the Algoma District. The closest community in the neighbouring Sudbury District is the Township of Chapleau, which is approximately 50 km east of Wawa. It is expected that the Project will draw workers principally from Dubreuilville, White River and Wawa, the closest service communities. 20.5.1 Community of Dubreuilville

Dubreuilville is situated in the Magpie Forest at the end of Highway 519, east of the TransCanada Highway approximately 14 km northwest of the mine site. It is a predominantly francophone community of approximately 600 people. Historically, forestry and mining have been major contributors to Dubreuilville’s economy. In November 2007, Dubreuil Lumber Inc. filed for bankruptcy protection and ceased its logging operations. In 2008, the company was reduced to four employees. The collapse of the forestry industry has dramatically impacted the town, leaving hundreds without work (Ross, 2011). The creation of a “basic underground hard-rock miner common-core program” offered by the Northern College in partnership with Richmont Mines, reflects an effort to address the challenge of a labour force lacking mining experience (Cowan, 2012). Richmont Mines operates the underground Island Gold Mine and Mill located near Dubreuilville. Regionally, the resource-based economy is trying to recover from a recession which started in 2009. A number of obstacles remain, including:  Out-migration of the younger population looking for work in Southern Ontario;  An aging workforce; and  A shortage of skilled and trained labour to support industrial development. Statistics Canada data shows that Dubreuilville’s population steadily decreased from 990 people in 1996 to 635 people in 2011. The median age of the total population in 2006 was 36.8 years and in 2011 it was 35.4 years. Educational facilities include a Catholic elementary school and a public high school, both of which are francophone and have small class sizes. Students must travel to Wawa for English education. Daycare services are also offered. Residents have access to Contact North, which offers access to university and college courses through distance learning and online education. The Dubreuilville Health Centre has two full-time registered nurses and receives six physician visits per month. The community also offers homecare, tele-health video consultations and mental health referrals. In addition, Dubreuilville provides community support services such as a food bank. The nearest hospital is the Lady Dunn Health Centre, approximately 75 km away by road in Wawa.

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Dubreuilville is accessible by car or train. The town is on the Algoma Central Railway and is served by the train three days per week, year round. Permanent federal funding for the rail service has been withdrawn and the operation of the railway is under review. If the service is continued modifications to schedule and service may be necessary to secure a third party operator arrangement.

20.5.1.1 Consultation to Date Initial consultation activities were started with the Township of Dubreuilville in 2011. Formal meetings with Mayor and Council, Council meeting presentations, community meetings, community-wide mailouts, closed circuit television announcements, bulletins and emails have been utilized to keep the community leaders and community members of Dubreuilville up to date with Project activities and planning. The Corporation du Développement Économique et Communautaire de Dubreuilville is being supported by the Canadian Environmental Assessment Agency funding program to participate in the environmental assessment process.

20.5.1.2 Topics raised The Township of Dubreuilville provided formal comments to the Canadian Environmental Assessment Agency expressing strong support for the Project and outlining human element valued components they felt should be considered in the environmental assessment. These included; mine employees being accommodated within permanent housing established in the community of Dubreuilville, construction camps being installed within the town and connected to municipal services, a new waste disposal site in Dubreuilville, road upgrading of Highway 519 and a method for compensating the municipality for the provision of municipal services. Consultation activities within the community have indicated that the community members are focused on the opportunities for businesses, real-estate and potential employment associated with the mine development.

20.5.1.3 Status of Negotiations and Agreements The community and Argonaut have worked together to develop a framework, inclusive of the other potentially effected towns of White River and Wawa, that will be used to create an multi-party agreement that establishes the scope and methods for working together to ensure mutual benefits. It is anticipated that the agreement will cover items such as; ongoing consultation, issue communication and resolution, education and training, policing, social services, employment, infrastructure, sponsorship and associated execution processes. 20.5.2 Community of Wawa

20.5.2.1 Community The Municipality of Wawa (Municipality) is located approximately 40 km southwest of the mine site. Administration for Wawa consists of a Mayor, a Chief Administrative Officer and four councilors. Wawa and the surrounding area have a long history of resource development, including multiple “boom and bust” cycles associated with mining. There are currently two active gold mines in the area including the Island Gold Mine and the Eagle River Mine.

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A number of mining claims have also been staked around these mines. Following a mining downturn in 1997, there was recognition that economic diversification was needed and forestry, tourism and other economic activities have since contributed to the local economy. In 2013, Rentech acquired a non-operating strandboard plant in Wawa and has converted it to a wood pellet manufacturing facility. The pellets are woody biomass fuel for power generation and Rentech has contract commitments to export 400,000 tonnes of wood pellets annually to the United Kingdom. The plant is expected to employee 30 full-time people and create or support a further 150 forestry jobs within the region. In 2010, there were 290 businesses operating in the Municipality (Economic Development Corporation of Wawa, 2010), however, since then the number of businesses has decreased, a trend consistent with the population decline. Tourism in the Municipality is an increasing component of the local economy. The Municipality’s natural surroundings and availability of outdoor activities attract visitors from the surrounding area and beyond. The Municipality‘s population has been steadily declining since 1986. In 2011, the population was reported to be approximately 2,975 persons (Statistics Canada, 2012a and 2012b), down from 4,145 in 1996. The Municipality is served by seven schools providing education from junior kindergarten up to Grade 12. There are options for both French and English learning environments. One of nine Confederation College campuses is located in Wawa. The College, which serves aboriginal and non-aboriginal communities in the surrounding area provides a range of program and degree opportunities. The Municipality is a sub-regional centre for health and social services. Residents have access to physicians, dentists, and specialists through a regional hospital: the Lady Dunn Health Centre. A 20-person Ontario Provincial Police (OPP) detachment patrols an area of approximately 482 km2 in the Wawa area. The Municipality is protected against fire by a Volunteer Fire Department. Wawa is situated at the intersection of the TransCanada Highway (Highway 17) and Highway 101. Freight and passenger service are provided in the region by CN and the Algoma Central Railway (Economic Development Corporation of Wawa, 2010). Permanent federal funding for the Algoma Central Railway service has been withdrawn and the operation of the railway is under review. If the service is continued modifications to schedule and service may be necessary to secure a third party operator arrangement.

20.5.2.2 Consultation to date Initial consultation activities were started within the community of Wawa in 2011. The community leaders and members of Wawa have been kept up to date on Project activities and planning by formal meetings with Mayor and Council, Council meeting presentations, community meetings, radio spots, bulletins and emails

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20.5.2.3 Topics raised The Municipality of Wawa has provided formal communications to the Ministry of North Development, Mines and Forestry (MNDMF) relaying that they are generally supportive of the Project and recognize the social and economic advantages the Project will bring to the region adding that the municipality would like a process in place to ensure that specific opportunities are recognized. The formal planning structure cited in the communications to MNDF was the legislated Growth Plan for Northern Ontario (2011), created under the Places to Grow Act 2005, and is adhered to through the development process. Consultation activities within the community have indicated that community members are focused on the opportunities for businesses and potential employment associated with the mine development.

20.5.2.4 Status of Negotiations and Agreements The community and Argonaut have worked together to develop a framework, inclusive of the other potentially effected towns of White River and Wawa, that will be used to create an multi-party agreement that establishes the scope and methods for working together to ensure mutual benefits. It is anticipated that the agreement will cover items such as; ongoing consultation, issue communication and resolution, education and training, policing, social services, employment, infrastructure, sponsorship and associated execution processes. 20.5.3 Community of White River

20.5.3.1 Community The Township of White River is located approximately 90 km northwest of the proposed Project by road at the intersection of the TransCanada Highway and Highway 631. White River is situated approximately half way between Sault Ste. Marie and Thunder Bay, making it a service area for travel between these two major centres. White River is also centrally located among its neighbouring communities; approximately 100 km from Hornepayne, Manitouwadge, Marathon, Dubreuilville, and Wawa, respectively. Though forestry activity is returning to the region, its role in the local and regional economy has diminished compared to years ago. Presently, White River is looking to strengthen its existing tourism sector, as well as diversify into new areas, such as attracting new business/ entrepreneurs to fill service gaps in the community. White River’s economy is primarily based on the forest industry and the Canadian Pacific Railway; industries as a whole that have been affected by national and global economic trends leading to “boom-bust” cycles. After a six-year hiatus, the Mill in White River has reopened as a successful partnership between White River, the Pic Mobert First Nation, and private investors. Tourism in White River is tied to Winnie-the-Pooh, as the birthplace of the original black bear that inspired the story. Tourism in White River has historically been driven by outdoor recreation and to a lesser extent, Winnie-the- Pooh, but is waning. The need for additional tourism infrastructure to attract people ‘passing through the town’ is seen as a priority. The community is now looking to diversify its economic activities in a manner that will contribute to employment and overall stability, sustainability, and growth in the community.

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White River’s population has steadily decreased since 1996. Residents have noted that the population decline has stabilized in the last few years, perhaps even grown with the reopening of the Mill in 2013. The population is aging at a higher rate than either the District or the Province as a whole. Many residents were forced to leave the community to seek employment following the closure of the Mill in 2007. Residents who do not work locally may commute elsewhere in the region (e.g., Richmont’s Island Gold Mine, Barrick Gold Mines, or to mines in Northwestern Ontario) or beyond (e.g., to Alberta), while choosing to keep their families in White River. 20.5.3.2 Consultation to date

Consultation activities were initiated with the Township of White River in May, 2014. Formal meetings with Mayor and Council, Council meeting presentations, community meetings, and emails have been utilized to keep the community leaders and community members of White River up to date with Project activities and planning.

20.5.3.3 Topics raised Consultation activities within the community have indicated that the municipality and community members are focused on the opportunities for employment, business development and, real-estate associated with the mine development. 20.5.3.4 Status of Negotiations and Agreements The community and Argonaut Gold have worked together to develop a framework, inclusive of the other potentially effected towns of Dubreuilville and Wawa, that will be used to create an multi-party agreement that establishes the scope and methods for working together to ensure mutual benefits. It is anticipated that the agreement will cover items such as; ongoing consultation, issue communication and resolution, education and training, policing, social services, employment, infrastructure, sponsorship and associated execution processes.

20.6 First Nations and Métis Communities The Magino Gold Project is likely to affect Aboriginal Treaty Rights and other Aboriginal interests. Argonaut has received direction from both Federal and Provincial Crown agencies regarding the Aboriginal communities (i.e., First Nations and Metis) that need to be engaged by Argonaut. Argonaut has commenced its engagement program with these communities. The aim for this program is to assist the Crown in fulfilling its duty to consult and to define reasonable accommodation for Project-related effects on Aboriginal rights. 20.6.1 Michipicoten First Nation

The Michipicoten First Nation are members of the Ojibway community in Northern Ontario. They are descendants of the earliest ancestors and inhabitants of the harbour at the mouth of the Michipicoten River, located on the northeast shore of Lake Superior. The 1850 Robinson-Superior Treaty recognized the traditional territory of the Michipicoten First Nation, which now has access to approximately 590 ha for their use and benefit, which incorporates the Project site.

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Traditionally, Michipicoten First Nation citizens lived, hunted, and trapped throughout the area surrounding the Michipicoten River and harbour. For centuries, their ancestors lived a traditional way of life: “making a large part of their livelihood by fishing and trading furs with the Hudson’s Bay Company and other settlers”. Their lifestyle required travelling throughout the area at various times of the year for hunting and trapping. Michipicoten First Nation is a community of approximately 1,055 members, 70 of whom live on the reserve. There has been no population growth as a result of births, so population growth on the reserve is due to in-migration. Based on the 2006 Census data, Michipicoten First Nation members worked in: agriculture and other resource-based industries, construction, and manufacturing (Statistics Canada, 2007). Michipicoten First Nation on the Gros Cap Indian Reserve #49 work primarily in trades; transport and equipment operators and related occupations; occupations unique to processing, manufacturing and utilities; occupations unique to primary industry; sales and service occupations; occupations in social science, education, government science and religion; and business, finance and administration. 20.6.1.1 Consultation to date Engagement and consultation activities have been undertaken with Michipicoten First Nation since 2012 and are on-going. A variety of techniques are utilized to ensure that the leadership, administration and community are kept up to date on Project activities and progress. Information sharing techniques utilized to date have included; exchange of key Project documents, written correspondence, site visits, participation in archaeology field investigations, and Project update presentations. Additional information was shared through the development and execution of a Community Capacity Survey and the participation of Michipicoten First Nation in socio-economic interviews. Traditional Knowledge Studies/Traditional Land Use Studies related to the proposed Magino Project have been completed by Michipicoten First Nation. These studies provide an important source of information gained through Aboriginal engagement. This information assists Argonaut Gold in describing the existing environment, and predicting potential Project effects. Michipicoten First Nation has recently provided Argonaut with a Consultation and Accommodation Policy in September 2015 (Michipicoten First Nation Consultation and Accommodation Policy, April 2014, Final Draft). 20.6.1.2 Topics Raised At this time, no specific comments relating to the Project have been received by Michipicoten First Nation. Argonaut has received specific technical comments on baseline documents relating to aquatics and archaeology.

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20.6.1.3 Status of Negotiations and Agreements A Memorandum of Understanding (MOU) pertaining to the manner in which consultation and accommodation will be undertaken was completed February 2013. Since that time, a number of changes have been introduced to the process and a formal request by Michipicoten First Nation to amend or replace the original MOU has been agreed to. The process of finalizing a MOU to address the processes for consultation and accommodation is underway. 20.6.2 Missanabie Cree First Nation

The traditional territory of the Missanabie Cree First Nation is situated in and around Missanabe Lake in the Treaty 9 area. The Project is situated outside of this treaty area, approximately 20 km south of its southern boundary The Missanabie Cree First Nation has filed a claim with the Government of Canada and discussions are ongoing. As of 2012, the First Nation and the Government of Ontario signed an agreement for a land transfer of 15 square miles of Crown land located in the Dog Lake area, approximately 25 km to the east of the Project. The First Nation and the Government of Canada are also negotiating for loss of use compensation under the Treaty Land Entitlement claim. There are 360 members of the First Nation, but because they do not have a reserve, they live in different communities in the region, as well as dispersed throughout Ontario and Canada. 20.6.2.1 Consultation to Date Consultation with the Missanabie Cree First Nation was initiated in October of 2011. Consultation and engagement activities to date have included; exchange of key Project documents, written correspondence, site visits, participation in archaeology field investigations, Project postings on Missanabie Cree First Nation website and Project update presentations. Traditional Knowledge Studies/Traditional Land Use Studies relating to the Magino Project have been completed by the Missanabie Cree First Nation. These studies provide an important source of information that will assist Argonaut Gold in describing the existing environment and predicting potential Project effects. 20.6.2.2 Topics raised The Missanabie Cree First Nation has submitted comments to Argonaut Gold relating to documents provided for their review and have identified the potential benefits to the Missanabie Cree First Nation that they would like to have realized in the development of the Magino Project. 20.6.2.3 Status of Negotiations and Agreements Argonaut Gold and the Missanabie Cree First Nation have signed Participation Agreements that include a workplan that addresses future consultation and accommodation efforts.

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20.6.3 Métis Nation of Ontario

In 1993, the Métis Nation of Ontario was established. They have a centralized registry of over 15,000 Métis citizens and have approximately 30 Chartered Community Councils across the province, which represent Métis citizens at the local level. Community councils nearest to the Project site include Chapleau, Terrace Bay, Thessalon, and Thunder Bay. Membership numbers are not available. 20.6.3.1 Consultation to Date Consultation and engagement activities with the Métis Nation of Ontario have been on-going since June 2012. Consultation activities have included; distribution of key Project documents, meetings with the designated consultation and negotiation committees, Project update presentations and participation in the Métis Nation of Ontario Collaborative Mining Forum. A Traditional Knowledge and Land Use Study Report was completed by the Métis Nation of Ontario and submitted to Argonaut. This report is an important source of information gained through Aboriginal engagement and will assist Argonaut in describing the existing environment, and predicting potential Project effects. 20.6.3.2 Topics raised The Métis Nation of Ontario have submitted comments to Argonaut Gold relating to documents provided for their review and have identified the potential benefits to Métis Nation of Ontario citizens that they would like to have realized in the development of the Magino Project. 20.6.3.3 Status of Negotiations and Agreements The Métis Nation of Ontario and Argonaut have a signed Memorandum of Understanding that sets out the principles that guide consultation and accommodation matters between the two parties. Discussions are ongoing relating to the identification and mitigation of potential effects of the Project on Métis rights and interests. 20.6.4 Pic Mobert First Nation

The Pic Mobert First Nation is an Ojibway community located along the northern coast of Lake Superior, within the Robinson-Superior Treaty. The community is situated on the southern shores of White Lake. Pic Mobert First Nation identifies itself as being part of the Anishinabek Nation, and more specifically, as part of the Netamisakomik people. Pic Mobert First Nation is one of five member nations of the Nokiiwin Tribal Council. The Pic Mobert First Nation community has two separate, but adjacent, reserve lands on White Lake with a combined land area of 2.07 km² (Statistics Canada, 2007). The CP rail corridor runs through this community as it moves east-to-west across the southern extent of White Lake. The Pic Mobert First Nation community is comprised of approximately 942 registered members, 352 of whom live on the reserve (Aboriginal Affairs and Northern Development Canada [AANDC], 2006). In recent years, the on-reserve population has shown a decline.

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20.6.4.1 Consultation to Date Argonaut Gold initially contacted Pic Mobert First Nation to request a meeting with Chief and Council to discuss the Magino Project in July, 2013. Participation in consultation relating to the Magino Project was declined by Pic Mobert First Nation. Argonaut has committed to keeping Pic Mobert First Nation informed on Project updates, key milestones and changes to the Project design. 20.6.5 Red Sky Metis Independent Nation

20.6.5.1 Red Sky Metis Independent Nation The Red Sky Métis Independent Nation are an autonomous group distinct from the Métis Nation of Ontario. There are approximately 8,000 members living within the Robinson-Superior Treaty area, Canada, and abroad (Red Sky Métis Independent Nation, 2013). 20.6.5.2 Consultation to Date Consultation activities with Red Sky Métis Independent Nation (RSMIN) were initiated in July, 2013. Consultation to date has included; presentations to the Executive Director and key staff, the delivery of key Project documents and the inclusion of Sky Métis Independent Nation attendees at Project update meetings given in local municipalities. A Traditional Use Report relating to the land use practices exercised by Sky Métis Independent Nation citizens was prepared for the Magino Project and received in December, 2014. 20.6.5.3 Topics Raised Sky Métis Independent Nation personnel have submitted comments to Argonaut Gold relating to documents provided for their review. The items raised relate to items they were requested be incorporated in the environmental assessment. 20.6.5.4 Status of Negotiations and Agreements At this time, no agreement discussions are being undertaken with Red Sky Métis Independent Nation. 20.6.6 Batchewana First Nation

20.6.6.1 Batchewana First Nation The Batchewana First Nation are descendants of the earliest ancestors of Bawahting, the rapids of what is now referred to as Sault Ste. Marie (Government of Batchewana First Nation of Ojibways 2011), located on the north-eastern corner of Lake Superior and the St. Mary’s River area, adjacent to the City of Sault Ste. Marie. The Batchewana First Nation is a member of the Ojibway community in Northern Ontario. The elders indicate that the Batchewana First Nation original territory extended from the area surrounding Bawahting up the Lake Superior shoreline to what is now Pukaskwa National Park, including islands in the lake and lands to the north and northeast beyond the height of land.

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In 1849, the Batchewana First Nation’s territory was confirmed when two government agents, Vidal and Anderson, were sent to enquire into the traditional territories of various First Nations. Crown Commissioner Robinson negotiated two treaties at Sault Ste. Marie in 1850, the Robinson Huron and Robinson Superior Treaties. The original territory of Batchewana First Nation extends into both treaty areas. However, it is also reflected in the 1859 Pennefather Treaty, signed June 9, 1859 at Gros Cap. The Batchewana First Nation has a total registered membership of 2,745; of these, 1,970 live off- reserve and 775 live on one of the four reserves (Rankin Reserve, Goulais Bay Reserve, Obadjiwan Reserve, and Whitefish). 20.6.6.2 Consultation to Date Argonaut and Batchewana First Nation engagement activities began in January 2014. Engagement and consultation activities to date include; presentations to select representatives from Batchewana First Nation administration, letters, emails, site visits and the distribution of key documents. Traditional Knowledge/Traditional Use studies have been undertaken by Batchewana First Nation relating to the Magino Project, and a report has been provided to Argonaut Gold for use in the assessment processes. 20.6.6.3 Topics Raised At this time, no specific comments relating to the Project have been received by Batchewana First Nation. 20.6.6.4 Status of Negotiations and Agreements Argonaut and the Batchewana First Nation have a signed a Participation Agreement with an associated work plan that addresses future consultation efforts.

20.7 Mine Closure 20.7.1 Historic Mine Facility

Closure of the existing historic mine will be accomplished during the construction and operation of the Project. The historic tailings from the mine are planned to be reprocessed during the early years of Project operation for their residual gold values. The area will then be used for a low grade ore stockpile (LGO) and access and haul roads. In the event that these tailings are not reprocessed, they will be closed, either by covering or being incorporated into the design of the LGO stockpile. Closure of the remaining historic mine facilities occurs within the Project pit’s footprint and will be closed as the pit is mined. The existing buildings will be removed and appropriately disposed of. The non-mining waste will be removed and disposed of in a licensed facility.

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20.7.2 Project Closure

The proposed rehabilitation approaches for the various Project components are described below. These measures will incorporate the results of the progressive rehabilitation activities undertaken during the operations phase of the Project, as well as the information gained from the various reclamation test plots in this Project area. 20.7.2.1 Existing Mine Facilities The existing mine facilities will be closed during the construction and early operations phase of the Project. The existing Tailings Pond and Polishing Pond may initially be used for water storage for both the construction phase and startup of operations. Following any use, the ponds will be drained and the tailings removed for reprocessing for their gold values. Portions of the area covered by the tailings facility will be incorporated into the Project facilities for haul roads while the remaining area will be used for the long term storage of low-grade ore (LGO). This approach represents an amendment to the existing closure plan for these facilities. In the event the existing tailings are not reprocessed, the closure of the existing tailings facility will be integrated with the final closure plan for the LGO stockpile and roads in the area. In all cases the existing landfill will be excavated and the waste disposed of in an approved off-site facility or the new on-site landfill. 20.7.2.2 Primary Crushing Facility and Crushed Ore Stockpiles These facilities include the primary crusher, the ore conveyor systems, and the crushed ore stockpile used during the operations phase. Any remnants of crushed ore will be placed in and rehabilitated as part of the WRMF. The equipment will be demolished and removed from the Project area for reuse or appropriate disposal. Surface soils in the vicinity will be inspected and tested as necessary to determine if there are any fuel spill residues requiring cleanup. Soil remediation will be conducted as necessary and to accepted risk based standards. Above grade concrete structures will be demolished and the rubble placed in the WRMF. The remaining concrete slabs will be covered with overburden and soil to promote revegetation. The general area will be graded to allow surface drainage and seeded, as necessary, to initiate natural rehabilitation. Steeper rock cuts will be reclaimed as rock outcrops; these will weather and assume a natural appearance over time. 20.7.2.3 Gold Processing & Ancillary Facilities These facilities include the process plant and outside tanks and piping systems, offices, the laboratory, stores, electrical substations, truck maintenance shop, the chemical and fuel storage areas, and other features associated with ore processing. The mechanical, hydraulic and electrical systems, including water supply and sewage plants, will be demolished and removed as their need is eliminated. Major equipment will be cleaned and decontaminated as necessary. Hazardous materials or liquid wastes will be removed from the Project area for management and disposal in accordance with applicable regulations.

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Inert demolition debris such as concrete, bricks and timber will be disposed of under a thick waste rock cover in the WRMF. Live electrical systems will be removed, or those that are needed will be fenced and locked for as long as necessary, until removed. Mechanical, hydraulic and electrical systems, including water supply and sewage plants, will be demolished and removed as their need is eliminated. Site offices, the laboratory, stores, substations, truck shop, chemical and fuel storage, etc. and electrical systems will be removed, or those that are needed will be fenced and locked for as long as necessary, until removed. The Project power distribution systems and substations that are not needed after closure will be removed. Power lines no longer required by the Project or local communities may be transferred to a third party or, alternatively, will be decommissioned and removed and the cable and poles salvaged or disposed of in an appropriate manner. The surface soils in the vicinity will be inspected and tested as necessary to determine if there are any fuel spill residues requiring cleanup. Soil remediation will be conducted as necessary and to accepted risk based standards. Above grade concrete structures will be cleaned as necessary, demolished, and the rubble placed in the WRMF. The remaining concrete slabs will be covered with overburden and soil to promote revegetation. Disturbed areas will be seeded to initiate natural rehabilitation. Steeper rock cuts will be reclaimed as rock outcrops; these will weather and assume a natural appearance over time. 20.7.2.4 Explosives Management Area The explosives materials would have been removed during the progressive rehabilitation activities. As part of the final closure, the structures housing the explosives and the surrounding vicinity, fence and gate will be removed, the area revegetated, covered with soil as necessary, and seeded to initiate natural revegetation. 20.7.2.5 Soil and Overburden Stockpiles After their removal for final rehabilitation, the disturbed areas will be graded and seeded with native plant mixtures to initiate natural rehabilitation. 20.7.2.6 Open Pit Upon cessation of mining the pit will be allowed to fill as a lake. Pit filling is expected to take approximately 90 years. The pit filling rate may be increased after the process plant is shut down by pumping the Goudreau Lake water, normally used for the process plant, into the pit. A shallow littoral zone, suitable for fish habitat, will be created around portions of the perimeter of the pit lake. While the pit lake fills, an earthen/rock berm will be erected around the perimeter of the pit to limit access. The pit rim will be partially revegetated; this will include leaving some areas as open gravel areas and covering the remaining areas with topsoil and vegetating. A substantial portion of the rim will be left to allow nature to form a natural littoral zone when the pit water level finally reaches the rim area. This rim area will be covered with organic matter and old trees and tree stumps to help create conditions suitable for fish and amphibian breeding.

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The perimeter berms and pit rim grading will be completed and the pit filling would have commenced as part of progressive rehabilitation. Ongoing pit lake level and water quality monitoring will be conducted until it can be demonstrated that the water quality is stable and the projected pit lake levels can be achieved. When the pit lake level reaches equilibrium it is proposed to excavate a channel between the pit lake and Goudreau Lake to facilitate water exchange and fish passage between the two water bodies. It is not proposed to cut this channel earlier since it needs to have an invert (bottom) level that is lower than the low water levels in Goudreau Lake in order to act as a fish passage. At this elevation, such a ditch would divert Goudreau Lake water into the pit until such time the pit fills to a level that is comparable to the Goudreau Lake level. This would likely result in unacceptably low Goudreau Lake levels. 20.7.2.7 Low Grade Ore Stockpile The low grade ore stockpile(s) may not be removed by the end of the operations phase. The area in which the Lovell LGO is located will be rehabilitated along with the activities for the WRMF. The LGO stockpile north of the pit in the historic tailings area will be closed and rehabilitated in the same manner as waste rock in the WRMF. 20.7.2.8 Waste Rock Management Facility Rehabilitation of the WRMF will commence as soon as practical, generally a few years after the start of mining. The placed waste rock will be graded to flatter overall slopes in some areas while in others the individual bench slopes will be retained and smoothed out or flattened to a lesser degree. The intent is to create a more natural looking waste pile with uneven shapes and to provide different surfaces ranging from almost flat surfaces to steep rock slopes in order to provide for varying types of wildlife and avian habitats. Wildlife access ramps will be graded into the waste rock to allow wildlife access to the surface of the WRMF. The mine’s haul truck roads will be used to the maximum extent to provide access. Overburden and soil cover will be selectively placed in the flatter and gently sloping areas to promote vegetative growth. Selective seeding will be undertaken to initiate natural re-vegetation and rehabilitation. The areas of the WRMF that were not closed and rehabilitated during the operations phase will be rehabilitated at the end of mining. There may also potentially be other areas where rehabilitation is required, such as where the overburden needed for closure was stored. The rehabilitation that is undertaken in these areas will be similar to that conducted over the WRMF during progressive rehabilitation. 20.7.2.9 Tailings Management Facility Closure will include the removal of the tailings discharge and water return system piping and associated facilities. Water stored in the TMF will either be discharged to the pit lake or to local receiving waters until quality is suitable for discharge over the spillway. The operational spillway will be lowered and enlarged to allow it to pass the probable maximum flood event safely.

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A cover will be placed over the tailings surface consisting of the tailings themselves, overburden, soil and any amendments necessary to support vegetation. The surface will be seeded to initiate natural rehabilitation, as required. The TMF seepage collection system will continue to be operated until flows can be released to local receiving waters and meet water quality goals in these waters. On cessation of seepage collection, well pumps, collection pipes and pipelines will be removed and the associated disturbed areas will be rehabilitated by soil placement and seeding to initiate natural revegetation. Wells no longer used for seepage collection and monitoring will be appropriately sealed. 20.7.2.10 Water Management Systems The pumps, pipelines and electrical systems will be removed. Detention and water quality control ponds will be retained as appropriate to create wetland habitat. Some of the detention ponds may have already been converted to lakes or wetlands as part of progressive rehabilitation. The water quality control ponds will be used to collect impacted water for as long as necessary and then, as feasible, converted to permanent wetlands. Plastic liners will be removed and disposed of appropriately. 20.7.2.11 Accommodations Camp The mine camp will be demolished and removed, or transferred to another party for potential future use. If demolished, the area will be graded, covered with soil and overburden as necessary and seeded to initiate natural rehabilitation. 20.7.2.12 Landfill The landfill will be closed in accordance with regulatory requirements. This will likely include a revegetated cap. 20.7.2.13 Linear Infrastructure This infrastructure includes the access, perimeter and mine haul roads and transmission lines. The connector transmission lines no longer needed after closure will be demolished and the disturbed areas rehabilitated. Access and haul roads no longer needed, will be graded, and covered with soil and seeding as necessary to initiate natural rehabilitation. Certain access roads needed for long- term post closure activities will be retained. Ownership of the perimeter public road will be transferred to MNRF. 20.7.2.14 Water Supply and Sewage Treatment Systems The plants, pumps, pipelines and ancillary facilities will be removed and the disturbed areas will be rehabilitated. 20.7.2.15 Site Security Appropriate access barriers such as soil and/or rock berms will be provided to limit access to the pit area. Ultimately the site’s security facilities such as guard shacks and fences will also be removed, as and when they are no longer needed.

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20.8 Required Permits and Status Table 20.2 and 20.3 represent a preliminary list of anticipated provincial and federal approvals and permits and approvals required to implement the Project and additional details regarding each anticipated permit/approval, including: the regulatory Agency with jurisdiction, and the applicable Act or Regulation. The list of required approvals and permits presented is not to be considered all- inclusive as it may contain items that are not ultimately applicable, or it may be missing some items that are needed when changes are made to the Project. Argonaut will consult with federal, provincial, and municipal agencies to refine this list as the Project design evolves and as the revised EIS is completed. Federal environmental assessment is regulated under the Canadian Environmental Assessment Act, 2012 (CEAA), S.C. 2012, c. 19, s. 52. Under the CEAA, only Projects identified in the Regulations Designating Physical Activities (Regulations), SOR/2012-147, may require a Federal EA. The Agency determined that an EA was required for the prior Project proposal (CEAA, 2013). Argonaut submitted a Working Draft EIS Report (SLR, 2014) and the Agency provided comments on November 26, 2014. It is anticipated that the Draft EIS Report will be revised to reflect the revised Project described in this PFS and at the same time address the comments raised by the Agency and others. A revised Project Description Report may also be necessary.

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Table 20.2: Preliminary List of Required Federal Approvals and Permits

Federal Regulatory Agency Act and/or Regulation Permit, Authorisation or Approval Canadian Environmental Canadian Environmental Assessment Act Assessment Agency (The Environmental Assessment Approval (CEAA) Agency) Fisheries Act Fish Habitat Authorization Authorisation to deposit deleterious substance in Fisheries Act; Metal Mining Effluent waters frequented by fish if MMER Sec. 5 applies, Regulations (MMER) or a specific site is added to Schedule 2 Department of Fisheries and Oceans Canada MMER; Environmental Effects Monitoring N/A (DFO) When Harmful Alteration or Disruption or Destruction (HADD) is contemplated, DFO must Fisheries Act (Sec. 35 [1]) governs alteration issue an Authorisation in advance usually including of, or harm to, fish-bearing waters a Habitat Compensation Agreement or equivalent action Canadian Environmental Protection Act Compliance requirement Canadian Council of Ministers of the Environment (CCME) Code of Practice for Compliance requirement storage tanks Fisheries Act; Regulations for wastewater Compliance requirement effluent monitoring and reporting Requirement to comply with annually-updated National Pollutant Release Inventory (NPRI) Substances List Requirement for certification of compliance or, if Canadian Environmental Protection Act; substance and volume warrant, submit report to Regulations (Environmental Emergencies) Env. Canada confirming preparation of an Environmental Emergency Plan. Environment Canada A Permit or Agreement may be required if a SARA- Species at Risk Act (SARA) (Sec. 73, Sec. registered species, its residences, or critical habitat, 79) may be affected Migratory Birds Convention Act (Sec. 5.0, 5.1 Compliance requirement. Scientific Permit to be [1]-[2]) Migratory Birds Regulations ([Sec. 4 acquired for study purposes [1], [11]). Archaeological assessment to ensure protection of a Environmental Assessment Act 2012 "site or thing that is of historical, archaeological, (Environmental Affects section, 5. [1] [c] [iv]) paleontological or architectural significance" Licences for magazines, permits for vehicles for Explosives Act, (Sections 7-9); Explosives transportation, permits for importation, permits for Regulations c.599 Part III purchase and possession, and certificates for storage Transportation of Dangerous Goods Act; Regulations (Part 7 -Emergency Response Compliance requirement (SOR/2008-34) Assistant Plan) Transportation of Dangerous Goods Act Compliance requirement (SOR/2011-239) (Part 8 - Accidental Release) Transportation of Dangerous Goods Act; Compliance requirement (SOR/2008-34) Transport Canada Regulations (Part 9 - Road) Transportation of Dangerous Goods Act (Sec. 31); Regulations (Part 14 - Permit for Permit requirement (SOR/2011-239) Equivalent Level of Safety) Navigable Waters Protection Act (Part 1 - Approval of Works); Regulations (CRC, Approval of works c1232) Source: SLR (2015)

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Table 20.3: Preliminary List of Required Provincial Approvals and Permits

Province of Ontario Regulatory Agency Act and/or Regulation Permit, Authorisation or Approval Electrical Safety Authority ON Electrical Safety Code Approval Ontario Environmental Assessment Act; Hydro One Class Environmental Assessment for Minor Class Environmental Assessment (Class EA) Transmission Facilities Independent Electricity Electricity Act; Ontario Electrical Distribution Connection assessment and approval System Operator Safety 22/04, Sections 4 and 6-8 Ministry of Community Fire Protection and Prevention Act; Requirement to ensure safety of all equipment, Safety and Correctional O. Reg. 388/97 (updated as 213/07) systems, processes, structures and fuels on a work Services (Fire Code) site Environmental Assessment Act, R.S.O. 1990, Environmental Assessment preparation Chapter E.18 Environmental Protection Act (Sec. 14[1]); O. Reg. 419/05 (Air Quality); noise is controlled Environmental Compliance Approval (ECA) for via the Act itself and via Noise Pollution operations-related air and noise emissions up to Control (NPC) guides, e.g., NPC-232. certain thresholds; Notification of Exceedances; Federal rather than Ontario jurisdiction is Abatement Plans; Audits contemplated for control of rail noise and vibration ECA for operations-related discharge of any Environmental Protection Act contaminant into any part of the environment except (Sec.19)]; O. Reg. 255/11 water Environmental Protection Act; O. Reg. 347/90 (Waste Management - General). For ECA for a broad range of site-related waste oil-water separators, reference is: management activities. Registration of a Waste Registration Guidance Manual for Generators Generation Facility of Liquid Industrial and Hazardous Waste (Dec. 2009) Ministry of Environment Water Resources Act; O. Reg. 129/04 Licence required for operators of sewage works (MoE) (Licensing Sewage-Works Operators) (operations which collect and treat sewage waste) Water Resources Act (Sec. 53) (Industrial ECA required for operation of a sewage works or Sewage Works) tailings management facility Water Resources Act (Sec. 34); O. Reg. Permit required to take water for domestic and 387/04 (Taking Water) industrial use Compliance requirement when >50 m³/per day of process or overflow effluent or cooling water is to be discharged from a "plant" (workings, facility, disposal site or mill)

Environmental Protection Act; O. Reg.560/94 (Metal Mining Effluent Monitoring [MMER] and Limits)

Spill Prevention and Contingency Plan is to be prepared prior to approval of a mine plant. Penalty is Environmental Protection Act; O. Reg. assessed by a designated Director if undertaking 224/07 (Spill Plans); O. Reg. 222/07 presents as lacking environmental due diligence MoE (continued) (Environmental Penalties)

Environmental Protection Act; O. Reg. Although O. Reg. 268/98 as amended (268-11)

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Province of Ontario Regulatory Agency Act and/or Regulation Permit, Authorisation or Approval 232/98 (Landfilling Sites) applies only to large municipal-waste-only landfill sites (Part II), the Act allows for a discretionary requirement for financial assurance for a landfill's contingency plans (Part IV) and closure/post-closure care Obtain Well Technician Licence, keep Log and Field Environmental Protection Act; O. Reg. 903 Notes, complete a Well Report and affix a Well Tag (Wells) amended as O Reg. 372/07 (if well is cased) Registration Guidance Manual for Generators Obtain Well Technician Licence, keep Log and Field of Liquid Industrial and Hazardous Waste Notes, complete a Well Report and affix a Well Tag (Dec. 2009) (if well is cased) Ontario Environmental Assessment Act; Electricity Projects Regulation 116/01; Environmental Assessment Approval or screening Section 3 Approval for operation of a non-municipal, non- Safe Drinking Water Act; O. Reg. 248/03 Ministry of Health and residential water system; water-works permit for the (Lab Licensing); O. Reg.170/03 (System Long-Term Care system itself; operator/owner to use licenced testing Operator/Owner to use Licenced Lab) lab; certificate for System Operator Occupational Health and Safety Act, (Section Ministry of Labour (MoL) 29 [2] and [3]) and Mines and Mining Plants Pre-development Review Process Regulation 854, (Section 22) Conservation Authorities Act. NOTE: A Regional Authority may alter or divert watercourses and conduct associated works on land in the area of its authority. Such an Authority does not currently exist for the Regional Authority would conduct the works or order Project regional area; this area would have to the conduct of the works through an Agreement with be added to the Act by amendment and a Ministry of Natural an owner within the regulated area Resources (MNR) specific regulation enacted. If the requirement to alter a watercourse or alter/stabilize a shoreline should occur on Crown land, then Environment Canada and the Fisheries Act would govern Fish and Wildlife Conservation Act; Licence required to collect fish for scientific O. Reg. 664/98 (Fish Licensing), Part IV purposes and to transport fish for such purpose Fish and Wildlife Conservation Act Section Authorization to remove beaver dam 8.(3) and (5) Aggregate Resources Act, Part II (aggregate Permit or Licence required in order to obtain

licence), Part V (aggregate permits); O. aggregate and/or operate a pit/quarry for obtaining Reg. 44/97 (472/09) aggregate Source: SLR (2015)

A preliminary schedule for regulatory permits is provided in Figure 20.3.

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Figure 20.3: Federal EA Timeline

Source: SLR (2014)

20.8.1 Environmental Compliance Approvals

Recent amendments to the Environmental Protection Act and the Ontario Water Resources Act came into effect in 2011, resulting in the need for companies to apply for an Environmental Compliance Approval (ECA) from the MOE when Project activities will impact the environment. It applies to all companies whose environmental interactions are beyond those covered under the Environmental Activity and Sector Registry. The ECA sets out legally enforceable rules of operation, including effluent limits and monitoring requirements, which aim to protect the natural environment against emissions, discharges and wastes from daily operations. An ECA will be required for a variety of mine activities including disposal of pit water, disposal of treated sewage effluent, treatment and disposal of pit runoff, and the generation of dust through blasting. The ECA will require monitoring of the quality of water discharged from the Project and its effects on the aquatic environment. These will be harmonized with the requirements of the Effluent Effects Monitoring (EEM) program under the Metal Mining Effluent Regulations (MMER) to avoid duplication of sampling effort and reporting.

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20.8.2 Permits

A permit to take and discharge water will be required under the MOE’s Water Resources Act. Permits for construction aggregate may be required under the Aggregate Resources Act, if sufficient material cannot be located within the disturbed footprint of the Project.

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21 Capital Costs

21.1 Summary of Capital Cost Estimates Preparation of the capital cost estimate (CAPEX) is based on the JDS philosophy that emphasizes accuracy over contingency, and uses defined and proven project execution strategies. The estimates were developed using first principles, applying directly related Project experience, and the use of general industry factors. Almost all of the estimates used in this Project were obtained from engineers, estimators, contractors, and suppliers who have provided similar services to existing operations and have demonstrated success in executing the plans set forth in this study. The following cost estimates are described in this section:  Initial Capital Cost – includes all costs incurred to develop the Property to a state of nameplate production (30,000 t/d); and  Sustaining Capital Cost – includes all costs incurred during production for initial and ongoing open pit installations and development, life of mine equipment acquisitions and replacements, and annual tailings expansions. Sunk costs and Owner’s reserve are not considered in this section. All cost estimates are based on the following key parameters:  Owner-performed pre-production mining; and  The specific scope and execution plans described in this study. Deviations from these plans will affect the capital costs. Table 21.1 summarizes the capital cost estimate by area and activity. Table 21.2 shows the capital cost distribution, as percentage of the total. Figure 21.1 and Figure 21.2 are graphical representatives of the initial and sustaining capital expenditures. A Work Breakdown Structure (WBS) was established for the initial capital cost estimate. Costs have been classified into the various WBS areas to ensure that the entire Project scope has been captured.

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Table 21.1: Summary of Capital Costs by Category

Capital Cost Initial $M Sustaining $M LOM $M Mining 108.7 98.1 206.8 On-Site Development 5.7 4.8 10.5 Ore Crushing & Handling 25.7 0.0 25.7 Process Plant 157.3 0.0 157.3 On-Site Infrastructure 63.7 2.0 65.7 Tailings 24.1 57.4 81.5 Indirects 52.5 0.0 52.5 EPCM 38.0 0.0 38.0 Owner's Costs 7.8 0.0 7.8 Closure 0.0 20.9 20.9 Subtotal 483.5 183.1 666.6 Contingency 56.2 12.8 69.0 Total Capital Costs 539.8 195.9 735.6 *numbers may not add due to rounding

Source: JDS (2016)

Table 21.2: Summary of Capital Cost Distribution

Initial Capital Sustaining Capital Capital Cost Distribution (%) Distribution (%) Mining 20.1 50.1 On-Site Development 1.1 2.4 Ore Crushing & Handling 4.8 0.0 Process Plant 29.1 0.0 On-Site Infrastructure 11.8 1.0 Tailings 4.5 29.3 Indirects 9.7 0.0 EPCM 7.0 0.0 Owner's Costs 1.4 0.0 Closure 0.0 10.6 Contingency 10.4 6.5 Total Initial Capital Cost Distribution 100.0 100.0 Source: JDS (2016)

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Figure 21.1: Breakdown of Pre-Production Capital Costs

Source: JDS (2016)

Figure 21.2: Breakdown of Capital Expenditures During Production

Source: JDS (2016)

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21.2 Basis for Capital Cost Estimates The accuracy of the capital cost estimate is in the range of +/-25%, which represents a JDS Pre-Feasibility Study Budget / AACE Class 3 Estimate. This estimate was prepared with a base date of Q4-2015 and does not include any escalation beyond this date. The quotations used for this study were obtained in Q4-2015 and are valid for a period of 90 calendar days. All capital costs in this report are expressed in US$. Where necessary, Canadian dollar costs have been converted at an exchange rate of 0.78. Duties and taxes are not included in the capital estimate.

21.2.1 Basis of Cost Estimate for the Ore Handling, Process Plant, Infrastructure and Tailings

The basis of cost estimate describes the methods, organization, assumptions and exclusions used to develop the capital cost estimate for the Project. The cost estimate includes the following elements:

Quantity Development  CAPEX was developed largely from engineering quantities obtained from material takeoffs. In-house benchmarks were used where the engineering information were not sufficiently developed to prepare accurate quantities. Direct Field Labour  Direct field labour is the skilled and unskilled labour generally supplied by the contractor to install the permanent equipment and bulk materials at the Project site. Direct field installation man-hours were developed using estimated unit man-hours for each commodity multiplied by the quantity. Adjustments to standard man-hours were made to each commodity using a productivity factor (PF) to reflect the specific conditions at the Project site. These conditions include climate, physical extent of the site, working schedule, industrial environment, labour availability, etc. Labour Rate  A set of ‘All-In Labour Rates’ was developed for each commodity, each based on a specific crew mix and proposed work cycle, and applied against direct field man-hours to generate direct field labour costs. Rates are based on an agreement between Ledcor Industrial Alberta and CLAC Local 63 valid to July 2012, and have been adjusted for inflation at 2% annually to reflect 2015 costs. The rates have been ‘built-up’ to include all wages, benefits, government assessments, incentive pay, overtime costs, contractor indirects and contractor profit. Productivity Factors for Labour  A productivity factor has been applied to the standard base hours where the basis for the estimated work hours differs from the actual work environment. Factors for each commodity have been applied to reflect cold weather work environments. The factors apply

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to productive labour only and do not affect non-productive labour (travel to the workface, tool box meetings, safety inductions etc.). Equipment Costs  Estimates for major mechanical equipment are based on budget quotations. Major equipment is loosely defined as equipment costing greater than a million dollars and a delivery time greater than 10 months. For minor equipment, prices were obtained from budget quotations or from similar recent equipment quotes. Miscellaneous and or undefined equipment has been factored based on historical data where time and cost efficiencies can be achieved without significant impact on the estimate accuracy. Bulk Material Costs  Bulk material costs have been calculated as either part of the built-up rates applied to engineering MTO’s or factored costs or allowances. Built-up unit rates are based on Project specific supply costs. Waste factors applied to bulk materials are shown in Table 21.3. Table 21.3: Waste Factors

Waste Factor Commodity (%) Civil & Earthworks 5 Concrete 2 Steel 1 Piping 4 Electrical Bulks 10 Instrumentation Bulks 10

Source: JDS (2016)

Bulk material costs that were incorporated into the estimate include the following components:

 Site development and bulk earthworks;  Concrete;  Steel work;  Mechanical bulks;  Architectural;  Piping;  Electrical and instrumentation bulks; and  Facilities. The costs developed for facilities are a combination of unit rates, allowances and budget quotes. These costs were assessed based on specifications and requirements outlined by engineering. The methodologies for costing of the major facilities are set out in Table 21.4.

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Table 21.4: Facility Cost Basis

Facility Cost Basis Database pricing has been carried based on recent quotes for Permanent Camp similar Projects. Database pricing has been carried based on recent quotes for Ancillary Buildings similar Projects. Budget quote has been obtained based on the overhead line Powerline requirements outlined in the previous PFS. Database pricing has been carried based on recent quotes for Incinerators similar Projects. Database pricing has been carried based on recent quotes for Truck Shop & Wash Bay similar Projects. Major pipelines have been quantified by engineering and priced based on Project commodity costs. The potable water Fresh, Fire, Process and Potable Water treatment plant, holding tanks and water supply and distribution system costs are allowances. Database pricing has been carried based on recent quotes for Sewage Treatment similar Projects.

Source: JDS (2016)

21.2.2 Mining

The mining is described in Section 16 of the report and contains detailed descriptions of the development methodology and equipment. A summary of the estimated costs for mining development and equipment are shown in Table 21.5. Table 21.5: On-Site Development Cost Estimate (WBS 1000)

LOM Initial Sustaining WBS Description Total ($M) ($M) ($M) 1000 Mining 1200 Pre-Stripping 41.0 0.0 41.0 1600 Mining Equipment 67.7 98.1 165.8 Total Mining Costs 108.7 98.1 206.8 Source: JDS (2016)

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21.2.3 On-Site Development

The on-site development is described in Section 18 of the report and contains detailed descriptions of the site earthworks, drainage, and internal roads. A summary of the estimated costs for on-site development are shown in Table 21.6. Table 21.6: On-Site Development Cost Estimate (WBS 2000)

LOM Initial Sustaining WBS Description Total ($M) ($M) ($M) 2000 On-Site Development 2100 Bulk Earthworks 3.9 0.0 3.9 2200 Site Water Management (includes discharge WTP) 0 4.8 4.8 2400 Infrastructure 1.8 0.0 1.8 Total On-Site Development Costs 5.7 4.8 10.5 Source: JDS (2016)

21.2.4 Ore Crushing and Handling and Process Plant

The ore crushing and handling facilities and process plant are described in Section 17 of the report. A summary of the estimated costs for ore handling and process plant are shown in Table 21.7. Table 21.7: Ore Crushing & Handling and Process Plant Cost Estimate (WBS 3000 & 4000)

Sustaining LOM Total WBS Description Initial ($M) ($M) ($M) 3000 Ore Crushing & Handling 25.7 0.0 25.7 3100 Primary Crushing 18 0.0 18 3200 Coarse Ore Stockpile 7.7 0.0 7.7 Process Plant 157.3 0.0 157.3 4100 Process Plant Building 45.7 0.0 45.7 4200 Grinding and Classification 40.6 0.0 40.6 4300 Pebble Crusher 3.5 0.0 3.5 4400 Leaching 20 0.0 20 4500 CIP & CIL 11.8 0.0 11.8 4700 Gold Plant 11.3 0.0 11.3 4800 Cyanide Destruct 9.4 0.0 9.4 4900 Reagents 10.7 0.0 10.7 4950 Process Utilities 4.4 0.0 4.4 Total Crushing & Process Plant Costs 183 0.0 183 Source: JDS (2016)

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The ore handling and process plant sections of the estimate include the following scope:  Detailed earthworks;  Concrete;  Internal steel (equipment supports and access platforms);  Mechanical equipment;  Platework;  Piping;  Electrical;  Instrumentation and process control; and  Buildings (as a separate WBS section, including process plant piping).

21.2.5 Infrastructure

21.2.5.1 On-Site Infrastructure The on-site infrastructure is described in Section 18 of the report. A summary of the on-site infrastructure costs are shown in Table 21.8. Table 21.8: On-Site Infrastructure Capital Cost Estimate (WBS 6000)

LOM Initial Sustaining WBS Description Total ($M) ($M) ($M) 6000 On-Site Infrastructure 63.7 2.0 65.7 6100 Electrical Supply & Distribution 40.4 2.0 42.4 6200 Water Supply & Distribution 2.0 0.0 2.0 6300 Assay Laboratory 1.1 0.0 1.1 6400 Construction Camp / Permanent Camp 4.0 0.0 4.0 6500 Waste Management & Removal 0.4 0.0 0.4 6600 Ancillary Facilities 8.4 0.0 8.4 6700 Bulk Fuel Storage & Distribution 3.6 0.0 3.6 6900 Site Mobile Fleet 3.9 0.0 3.9 Total On-Site Infrastructure Costs 63.7 2.0 65.7 Source: JDS (2016)

21.2.5.2 Tailings Management Facility Tailings Management Facility (TMF) comprises of the Stage 1 TMF and tailings discharge and reclaim pond. The TMF is described in Section 18 of the report. A summary of the TMF costs are shown in Table 21.9.

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Table 21.9: Tailings Storage Facility Capital Cost Estimate (WBS 7000)

WBS Description Initial ($M) Sustaining ($M) LOM Total ($M) 7100 Tailings Storage Facility 7110 TMF Phase 1 Earthworks 22.0 0.0 22.0 7120 Tailings Discharge & Reclaim Pond 2.1 57.4 59.5 Total TSF Costs 24.1 57.4 81.5 Source: JDS (2016)

21.2.6 Indirect Costs

Indirect costs include items that are necessary for the completion of the Project but are not part of the direct costs. They are considered Project indirects and are in addition to contractor indirects. The indirect costs are shown in Table 21.10. Table 21.10: Indirect Capital Cost Estimate (WBS 9000)

WBS Description Initial ($M) Sustaining ($M) LOM Total ($M) 9000 Indirects 9100 Camp & Catering 4.9 0.0 4.9 9300 Construction Field Indirects 11.1 0.0 11.1 9400 Freight & Logistics 13.8 0.0 13.8 9500 Vendors Reps. 3.6 0.0 3.6 9600 Startup & Commissioning 5.4 0.0 5.4 9700 Spares 10.9 0.0 10.9 9800 First Fills 2.7 0.0 2.7 Total Indirect Costs 52.5 0.0 52.5 Source: JDS (2016)

21.2.6.1 Camp & Catering Camp and catering costs have been estimated based on the approximate camp size and construction schedule. Database pricing has been carried based on similar Projects per man-day.

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21.2.6.2 Construction Field Indirects Construction field indirect costs include the following items:  Construction support;  Equipment rentals and purchases;  Water management equipment;  Temporary construction facilities  First aid & medical;  Waste management;  Mobilization/demobilization; and  Contractor supervision. Construction field indirect costs are 4% of the direct costs, less mining. 21.2.6.3 Freight / Logistics Freight costs include the following items:  Freight to staging port costs;  Air freight costs;  Backhaul costs;  Sea-container rental costs; and  Sealift support costs. Freight and logistics costs are 7% of the total equipment and materials less mining fleet and mobile equipment. 21.2.6.4 Vendor Representatives Vendor representatives will be required at the Project site during construction to verify that the installation of the main equipment has been performed in compliance with technical specifications. Representatives will also be required during the pre-commissioning stage. Vendor representative costs are 2% of the total equipment and materials less mining fleet and mobile equipment. 21.2.6.5 Commissioning and Start-up Commissioning and start-up costs were based on supervision required for the plant and major equipment. Commissioning costs are 3% of the total equipment and materials less mining fleet and mobile equipment. 21.2.6.6 Spare Parts Spare parts have been considered for start-up, one year of operations and capital. Spare parts costs are 6% of the total equipment and materials less mining fleet and mobile equipment.

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21.2.6.7 First Fills First fills are required for start-up and include the following:  Mill balls and grinding media;  Lime and reagents;  Lubricants;  Glycol for district heating; and  Other fills for initial set-up. First fills costs are 2% of the total equipment and materials less mining fleet and mobile equipment.

21.2.7 Engineering, Procurement, and Construction Management (EPCM)

EP costs are based on 14 months of detailed engineering and the CM costs are based on 20 months of construction. The EPCM costs are summarized in Table 21.11. Table 21.11: EPCM Capital Cost Estimate (WBS 10000)

WBS Description Initial ($M) Sustaining ($M) LOM Total ($M) 10110 Engineering & Procurement – EP 16.4 0.0 16.4 10120 Construction Management – CM 21.6 0.0 21.6 Total EPCM Costs 38.0 0.0 38.0 Source: JDS (2016)

Associated services include the following:  Detailed engineering;  Procurement;  Contract management;  Construction management and supervision;  Administration and document control;  Field engineering;  Quality assurance / quality control (QA/QC);  Health and safety;  Surveying; and  Commissioning.

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21.2.8 Owner’s Costs

Owner’s costs that are included in the cost estimate are based on the following:  Owner’s team and consultants during the implementation phase. This includes Owner’s labour, offices, Owner’s consultants, and head office overhead and costs during detailed engineering and construction period;  Third-party costs, such as environmental studies, permits and geotechnical studies;  Insurances and fees;  Owner’s start-up and commissioning crew;  Recruitment and training of operation and maintenance staff;  Community associated costs;  Corporate affairs and administration; and  All internal fees and costs. A summary of the Owner’s costs are shown in Table 21.12.

Table 21.12: Owner's Cost Estimate (WBS 11000)

Initial Sustaining LOM Total WBS Description ($M) ($M) ($M) 11000 Owner’s Costs 7.8 0.0 7.8 Total Owner’s Cost 7.8 0.0 7.8 Source: JDS (2016)

21.2.9 Contingency

Contingency is a provision of funds for unforeseen or inestimable costs within the defined Project scope relating to the level of engineering effort undertaken and estimate/engineering accuracy. The contingency is meant to cover events or incidents that occur during the course of the Project, which cannot be quantified during the estimate preparation and do not include any allowance for Project risk. No provision is made, or contingency allowed, for design changes or changes to the scope of work. It is important to note that contingency does not cover force majeure, adverse weather conditions, government policy changes, currency fluctuations, escalation and other Project risks. As well, the contingency will be based solely on the capital estimate and no other Project risks, such as schedule delays or HAZOP assessments. An overall 15% contingency has been applied to the Project CAPEX excluding mining costs. A summary of the contingency costs are shown in Table 21.13.

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Table 21.13: Contingency Costs (WBS 12000)

Sustaining LOM Total WBS Description Initial ($M) ($M) ($M) 12000 Contingency Costs 56.2 12.8 69.0 Total Contingency Costs 56.2 12.8 69.0 Source: JDS (2016)

21.2.10 Sustaining Capital

The main sustaining capital cost comprises of the tailings management facility and open-pit mining during the operations phase. The following sustaining capital items will be required for the site:  Open pit sustaining capital is used for the addition and replacement of equipment over the mine life.  On-site infrastructure sustaining capital is used for additional gensets.  Tailings sustaining capital is used for running additional pipelines for the tailings management system and additional earthworks.

21.2.11 Closure Cost Estimate

 Labour and equipment allowance to dismantle buildings and equipment in year 10 through 13. It is assumed salvage value of buildings and equipment will offset the cost of removal of the equipment and material;  Cover the site pads (crusher pad, explosives storage pad, ore stockpile, plant site, camp and truck-shop) with $0.2M of topsoil using the owner’s equipment and operators; and  Cover the site pads with re-vegetation at unit cost per Ha for re-vegetation, seed and mulch at unit cost developed by SLR.

A summary of the closure costs are shown in Table 21.12. Table 21.14: Closure Costs

Sustaining LOM Total Description Initial ($M) ($M) ($M) Closure Costs 0.0 20.9 20.9 Total Closure Costs 0.0 20.9 20.9 Source: JDS (2016)

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21.2.12 Tailings Management Facility

 Construct main drain down, with geotextile and rip rap allowance using owner’s equipment and operators;  Allowance to pump residual water from the TMF to pit for approximately 3 years while cover construction is underway;  Cover the top of the TMF with 0.6 m of mine waste rock (winter placement while TMF frozen), using Owner’s equipment and operators;  Cover the top of the TMF with 0.2 m of topsoil using owner’s equipment and operators.  Cover the top of the TMF for revegetation with seed and mulch at unit cost developed by SLR; and  Close pipe/roadway – regrade and cover with 0.2 m topsoil using Owner’s equipment and operators, and revegetation with seed and mulch at unit cost developed by SLR.

21.2.13 Low-Grade Ore Stockpile(s)

 Cover the LGS embankment with 0.2 m of topsoil using Owner’s mine fleet and operators followed by revegetation at unit cost developed by SLR.

21.2.14 Waste Rock Management Facility

 Construct side slope drain downs as required every 15 m (nominally), with erosion control allowance of 5% of area;  Cover with 0.2 m of topsoil using Owner’s equipment and operators; and  Revegetation with seed and mulch at unit cost developed by SLR.

21.2.15 Miscellaneous Site Closure Allowances

 Allowance to remove and revegetate sediment basins no longer required  Regrade roads and stockpile areas;  Revegetate stockpile areas; and  Allowance to grade out drainage ditches no longer required.

21.2.16 Capital Cost Exclusions

The following items have been excluded from this capital cost estimate:  Working or deferred capital;  Financing costs;  Refundable duties;  Currency fluctuations;  Lost time due to severe weather conditions;  Lost time due to force majeure;

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 Additional costs for accelerated or decelerated deliveries of equipment, materials or services resulting from a change in Project schedule;  Warehouse inventories, other than those supplied in initial fills, capital spares, or commissioning spares;  Any Project sunk costs (studies, exploration programs, etc.);  Escalation cost;  Depreciation and depletion allowances;  Environmental permits;  Performance bond;  Builders risk insurance;  Surface land rights, including water and wildlife compensation;  Water rights acquisition; and  Hiring and relocation.

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22 Operating Cost Estimates

22.1 Summary of Operating Cost Estimates The operating cost estimate in this study includes the monies required to mine, handle and transport ore to the mill, mill and process the ore, general and administrative expenses (G&A), and water treatment plant costs. These total the project operating costs. The total life of mine (LOM) costs are summarized in Table 22.1 and Figure 22.1. All operating costs are expressed in US dollars of Q4-2015 value. Costs incurred in Canadian dollars have been converted at an exchange rate of 0.78. Table 22.1: LOM Total Operating Costs

Description Total (US$ M) Mining 845.1 Milling 690.9 Rehandle 14.4 Water Treatment Plant 4.0 G&A 73.3 Total LOM Operating Costs 1,627.7 Source: JDS (2016)

Figure 22.1: Operating Costs Percentage by Area

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The operating costs expressed as cost per tonne of processed ore are provided in Table 22.2. Table 22.2: Unit Operating Cost

Description Unit Estimate Mining (excluding pre-stripping) US $/t processed 8.02 Milling US $/t processed 6.55 Rehandle US $/t processed 0.14 Water Treatment Plant US $/t processed 0.04 G&A US $/t processed 0.70 US $/t processed 15.44 LOM Unit Operating Cost $/payable oz Au 582 Source: JDS (2016)

22.2 Basis for Operating Cost Estimates Operating costs are partitioned into three main sections. These are estimated on an annual basis and include general and administrative operating, processing and mining costs. Each area is discussed further in the sections below. 22.2.1 G&A Operating Costs

22.2.1.1 Labour Mill labour positions and rates were estimated based on knowledge of similar operations. It was assumed that all mill personnel would be based at the mine site and operate on either 4 x 3 or 7 x 7 shifts. Salaries were estimated to be competitive with industry standards in the region and include 38% burden. A schedule of position titles and requirements are provided in Table 22.4.

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Table 22.3: G&A Labour Staffing Schedule

Department G&A Labour Shift Main Office Site Admin General Manager 5 x 2 1 Admin Executive Assistant 5 x 2 1 Admin Community Relations Coordinator 5 x 2 1 Admin Community Relations Admin 5 x 2 0 HSEC Environmental Superintendent 5 x 2 1 HSEC Environmental Technicians (Env Monitor) 4 x 3 2 HSEC Safety Manager (H&S Officer) 5 x 2 1 HSEC Safety Admin 5 x 2 1 HSEC Safety Coordinators 7 x 7 2 HSEC Clinic PA 5 x 2 0 HSEC Clinic Nurse (Contract) 7 x 7 2 HSEC Security Supervisor 7 x 7 1 HSEC Security (Contract) 7 x 7 4 HSEC Security (For Furnace Room) 7 x 7 4 HR HR Manager 5 x 2 1 HR HR Coordinators 4 x 3 0 HR Training Officer 5 x 2 1 Finance Accounting Manager/Financial Controller 5 x 2 1 Finance Payroll Coordinator 5 x 2 2 Finance Accountants 5 x 2 2 Finance Accounting Clerks 5 x 2 2 Facilities General Services Manager 5 x 2 0 Facilities Administrative Assistant 5 x 2 1 Facilities Contracts Administrator 4 x 3 1 Facilities Camp Administrator (Contract) 5 x 2 0 Facilities Purchasing Superintendent 5 x 2 1 Facilities Purchasing Agents 5 x 2 1 Facilities Warehouse Supervisor 7 x 7 1 Facilities Site Services - Supervisor 7 x 7 1 Facilities IT Network Admin 7 x 7 1 Facilities - SS Equipment Operators 7 x 7 6 Facilities - SS Laborers 7 x 7 8 Facilities - SS Janitors 5 x 2 2 Facilities - SS Warehouse Attendant 7 x 7 4 Facilities - SS Warehouse (shipper/receiver) 7 x 7 2 Total 18 41 Source: JDS (2016)

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22.2.1.2 Site Services Site services costs include the operating, maintenance, and fuel costs for 8 light vehicles (pickups), one skid steer loader and one front-end loader. The labour for site services is included in Table 22.3. 22.2.1.3 Camp Operations Camp operations cost are based on the personnel required at site to determine man days. A unit rate of $ 75 per man day camp catering cost plus an additional $ 3.0 per man day for camp maintenance and miscellaneous was used for calculating yearly camp cost. 22.2.1.4 Insurance A yearly allowance of $250,000 for insurance is included in the G&A costs. 22.2.2 Mill Operating Costs

22.2.2.1 Labour Mill labour positions and rates were estimated based on knowledge of similar operations. It was assumed that all mill personnel would be based at the mine site and operate on either 4 x 3 or 7 x 7 shifts. Salaries were estimated to be competitive with industry standards in the region and include 38% burden. A schedule position titles and requirements is provided in Table 22.4.

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Table 22.4: Mill Operations Labour Staffing Schedule

Department Operating Labour Shift Site Maintenance Mill Maintenance Superintendent 4 x 3 1 Maintenance Maintenance Foreman 7 x 7 2 Maintenance Maintenance Planner 7 x 7 2 Maintenance Electrical Supervisor 7 x 7 1 Operations Mill Operations Superintendent 4 x 3 1 Operations Plant Operation Foreman 7 x 7 4 Operations Mill Admin Assistant (Secretary) 7 x 7 1 Tech Services Sr. Metallurgical Engineer (Chief Metallurgist) 4 x 3 1 Tech Services Metallurgical Engineer (Process Control) 7 x 7 1 Tech Services Metallurgy Technicians 7 x 7 2 Tech Services Chief Assayer 7 x 7 1 Tech Services Assay Technician (Fire Assay) 7 x 7 6 Tech Services Laboratory Technicians (Chemical Technicians) 7 x 7 4 Operations CIC/CIP Operator 7 x 7 4 Operations Control Room Operator 7 x 7 4 Operations Crusher Operator 7 x 7 4 Operations Grinding Operator 7 x 7 4 Operations Elution / Regen Operator 7 x 7 4 Operations Tailings/Detox Operator 7 x 7 4 Operations Reagents helpers/Operators 7 x 7 8 Operations Mill Labourer 7 x 7 8 Maintenance Electrician Apprentice 7 x 7 2 Maintenance Electrician 7 x 7 4 Maintenance Instrumentation Technician 7 x 7 2 Maintenance Millwright 7 x 7 6 Maintenance Pipefitter 7 x 7 4 Maintenance Welder 7 x 7 4 Total 89 Source: JDS (2016)

22.2.2.2 Reagents and Grinding Media Reagent and grinding media consumption was calculated based on Project test work and experience with similar processing facilities. Unit costs were based on budgetary quotations from suppliers, delivered to site. Annual consumption was communicated to regional suppliers in order to receive accurate costs.

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22.2.2.3 Support Equipment and Maintenance The pieces of equipment allowed for in the process plant operating costs are provided in Table 22.5. Table 22.5: Support Equipment

Support Equipment Quantity Light Vehicles 6 Crane – 60 t 1 Bob Cat 1 Deck truck - boom truck 1 All terrain fork lift 1 Front end loader - IT38 1 Source: JDS (2016)

Maintenance, lube and fuel requirements for this equipment are estimated based on experience with similar Projects, and the quoted fuel supply cost of US$0.62 per litre. An allotment of $133,000 per month is provided for maintenance parts and supplies. Support equipment and maintenance labour are covered in the Labour section above. 22.2.2.4 Electricity and Heating Annual consumption was estimated based on the electrical loading plan prepared for the CAPEX. This includes operation of the plant and auxiliary buildings, as well as tailings management facility infrastructure. Electricity consumption for the process plant is estimated to be 324,427,513 kWh per year.  Electricity rate cost of US$0.08 per kWh was used. This includes an anticipated reduction for the North Industrial Rebate Program (NIER) in Ontario; and.  A yearly allowance of $237,500 per annum is provided to cover the cost of propane for plant and building heat. 22.2.3 Mine Operating Costs

The open pit mining activities for the Magino Project were assumed to be undertaken by the owner as the basis for this pre-feasibility study. They are presented in Q4-2015 US dollars and do not include allowances for escalation or exchange rate fluctuations. Open pit mining costs are a summation of operating and maintenance labour, administrative labour, parts and consumables, fuel, and miscellaneous operating supplies. The mining unit rate was calculated from first principles based on equipment required for the mining configuration of the operation as described in Section 16 of this report, as well as a comparison to similar sized open pit gold operations. Local labour rates along with quotes from equipment suppliers and explosives suppliers were taken into consideration in determining the mining cost. The open pit mining costs encompass pit and dump operations, road maintenance, mine supervision and technical services cost.

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The average open pit operating costs for the LOM plan are presented in Table 22.6 and Table 22.7, both by mining function and category. These costs are based on the LOM schedule presented in Section 16 of this report and account for the material tonnages mined and their associated costs. Table 22.6: Open Pit Operating Cost Estimate – by Function

Cost Function Average Cost (US$ /Tonne Mined) Drilling 0.12 RC Grade Control 0.03 Blasting 0.22 Loading 0.25 Hauling 0.77 Roads & Dumps 0.17 General Mine/Maintenance 0.12 Supervision & Technical 0.08 Total Open Pit Operating Cost 1.76 Source: JDS (2016)

Table 22.7: Open Pit Operating Cost Estimate – by Category

Cost Category Cost (US$/Tonne Mined) Operating Labour 0.19 Maintenance Labour 0.21 Supervision & Technical 0.07 Operating and Maintenance Consumables (parts, 0.79 consumables, oil & lube, GET, Tires, explosives) Fuel (including explosive mixture and mobile equipment 0.46 operation) Leases, Outside Services, Misc. (contractors) 0.04 Total Open Pit Operating Cost 1.76 Source: JDS (2016)

Table 22.8 below summarizes the overall estimated mine operating costs on an annual basis. Additional variables which contribute to mine operating costs are discussed in the sections below.

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Table 22.8: Summary of Mining Costs by Year

Year Description -1 1 2 3 4 5 6 7 8 9 10 Total Ore Production (Mt) 8.5 14.6 17.3 19.8 4.6 4.3 10 15.8 18.4 11.4 6.9 131.6 Waste Production (Mt) 16.5 40.4 37.7 35.2 50.4 50.7 45 39.2 36.6 16.1 4.6 372.3 Total Material (Mt) 25 55 55 55 55 55 55 55 55 27.5 11.4 503.9 Strip Ratio 1.9 2.8 2.2 1.8 10.8 11.9 4.5 2.5 2 1.4 0.7 2.8 Mining Opex US$/t mined) $1.64 $1.44 $1.60 $1.72 $1.63 $1.69 $1.75 $1.82 $1.98 $2.37 $2.61 $1.76 Note: The total mining cost per tonne includes Year -1 preproduction capitalized mining costs.

Source: JDS (2016)

22.2.3.1 Mobile Equipment A summary of equipment requirements can be found in Table 16.6 (Fleet Requirements of section Life-of-Mine Schedule) above. Operating costs for each piece of equipment were calculated taking into account operating hours per year, fuel consumption, lube, overhaul, and maintenance costs. Fuel costs were estimated at US$0.62 per litre delivered Parts, non- energy consumables, and miscellaneous operating costs were based on the mining fleet requirements described in Section 16 of this report which included detailed haul profiles calculations, major equipment requirements and the LOM material schedule. 22.2.3.2 Labour The open pit labour requirements used for determining the overall mining cost are based on experience for similar gold operations of this size. Positions were broken into three major groups: technical services, mine operations, and maintenance. Technical services includes engineering and geology positions which support mine activities, mine operations refers to equipment operators and supervisory roles, and maintenance positions deal exclusively with mine equipment. The number of maintenance personnel required was based on the number of units operating during each time period. The labour requirements are further divided into salaried and hourly personnel. The open pit mine operations require an average of 136 personnel, mine maintenance requires 52 personnel and supervision/technical needs a total of 36 personnel. Local labour rates are based on information gathered regarding salaries of various skill levels. Quotes from equipment and explosives suppliers were also taken into consideration as well as mining cost service information and factors based on experience. Each estimate also considers burdens including CPP, EI, Stat Holiday, RSP, and Health and Wellness contributions. These burdens amount to roughly 38% of the base annual salary. Hourly positions factor in unscheduled overtime based on an additional 5% of total scheduled.

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22.2.3.3 Explosives For blasting agents, a mixture of 85% ANFO (94% ammonium nitrate prill, 6% fuel oil) to 15% emulsion was assumed. Annual explosive consumption was calculated based on mine scheduling and drill productivity. 22.2.3.4 Dewatering As part of the water balance, SLR provided the amount of water to be removed from the pit daily. It was assumed that all water could be removed using a series of in-pit pumps which would evacuate water from the pit at 27 m3/hr, and route it to the plant where it could be used in process. The volume of water to be removed increases with depth of excavation, therefore it was assumed that additional pumps would be acquired in a staged manner with additional HDPE pipe at each stage for lengthening the line, and replacements. 22.2.3.5 Open Pit Development Tables 22.9 through 22.12 provide further details supporting the open pit mining operating costs arrived at for the study. Table 22.9: Open Pit Operating Cost Details

Item Unit Average Cost Details Diesel Fuel US$/litre 0.62 Lube cost US$/litre 3.6 Tires - Haul Trucks US$/each 17,000 Blasting Supplies Ammonium Nitrate US$/kg 0.72 Cast boosters US$/unit 6.0 Nonel downline delay US$/unit 5.0 Drill/Blast Pattern Details Item Unit Ore/Waste Bench Height (m) 10 Hole Diameter (mm) 311 Burden (m) 8 Spacing (m) 10 Powder Factor (kg/t) 0.2 Source: JDS (2016)

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Table 22.10: Open Pit Operating Unit Costs

Operating Costs US$/hr (excluding operating/mtce labour) Open Pit Equipment Fuel Lube Parts Tires Wear Items Total 311 mm dia. Rotary, Crawler Drill 86.90 42.18 53.53 - 18.45 201.15 Diesel, 22 cu-m Front Shovel 174.21 50.70 187.12 - 13.35 425.38 Diesel, 20 cu-m Wheel Loader 113.37 33.39 51.55 57.25 1.83 257.39 220 tonne Haul Truck 111.66 34.26 37.46 106.85 - 290.23 D375A-class Track Dozer 45.10 8.73 14.42 - 16.33 84.58 GD825-class Grader 22.99 5.77 15.88 2.16 1.35 48.15 Source: JDS (2016)

Table 22.11: Open Pit Equipment Effective Utilization

Mechanical Availability Use of Effective Open Pit Equipment (Yr 5+) (%) Availability (%) Utilization (%) 311 mm dia. Rotary, Crawler Drill 85 90 65 Diesel, 22-m³ Front Shovel 85 95 68 Diesel, 20-m³ Wheel Loader 85 95 68 220 tonne Haul Truck 85 95 65 Definitions: Mechanical availability: measure of maintenance down time which is (total available hours less mechanical downtime) divided by total available hours. For Year 5 and beyond a reduction in mechanical availability of 5% has been applied. Use of availability: operational hours divided by total available hours. Effective utilization: product of mechanical availability, utilization, operator efficiency and operational losses.

Source: JDS (2016)

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Table 22.12: Open Pit Equipment Hours

Year Open Pit Equipment -1 1 2 3 4 5 6 7 8 9 10 Fleet Size Crawler-Mounted, Rotary Tri-Cone, 311 mm Dia 2 4 4 4 4 4 4 4 4 2 2 Diesel, 22-cu-m Front Shovel 2 3 3 3 3 3 3 3 3 2 1 Diesel 20-cu-m Wheel Loader 1 1 1 1 1 1 1 1 1 1 1 220-t class Haul Truck 5 12 15 18 17 17 19 21 24 14 13 Crawler-Mounted, Rotary Tri-Cone, 115mm Dia 1 1 1 1 1 1 1 1 1 1 1 D375A-class Track Dozer 4 5 5 5 5 5 5 5 5 5 5 WD600-class Rubber Tire Dozer 2 2 2 2 2 2 2 2 2 2 2 GD825-class Grader 4 4 4 4 4 4 4 4 4 4 4 140 t-class Water Truck 1 1 1 1 1 1 1 1 1 1 1 Total Units 22 33 36 39 38 38 40 42 45 32 30 Unit hours (each) Crawler-Mounted, Rotary Tri-Cone, 311 mm Dia 5,328 5,860 5,860 5,860 5,860 5,860 5,860 5,860 5,860 5,860 2,439 Diesel, 22-cu-m Front Shovel 4,056 6,120 6,010 5,907 6,524 6,539 6,304 6,069 5,965 4,337 3,352 Diesel 20-cu-m Wheel Loader 3,191 6,221 6,733 7,209 4,344 4,274 5,364 6,459 6,939 3,892 2,020 220-t class Haul Truck 7,316 7,237 7,065 7,193 6,754 7,071 6,832 6,766 6,997 6,816 3,426 Crawler-Mounted, Rotary Tri-Cone, 115mm Dia. 4,162 4,162 4,162 4,162 4,162 4,162 4,162 4,162 4,162 4,162 2,081 D375A-class Track Dozer 5,940 5,940 5,940 5,940 5,940 5,940 5,940 5,940 5,940 5,940 2,970 WD600-class Rubber Tire Dozer 5,940 5,940 5,940 5,940 5,940 5,940 5,940 5,940 5,940 5,940 2,970 GD825-class Grader 5,940 5,940 5,940 5,940 5,940 5,940 5,940 5,940 5,940 5,940 2,970 140 t-class Water Truck 3,917 3,917 3,917 3,917 3,917 3,917 3,917 3,917 3,917 3,917 1,959 Unit hours (each) cumulative Crawler-Mounted, Rotary Tri-Cone, 311 mm Dia 5,328 11,187 17,047 22,907 28,767 34,627 40,487 46,347 52,207 58,067 60,506 Diesel, 22-cu-m Front Shovel 4,056 10,176 16,185 22,093 28,617 35,155 41,460 47,528 53,494 57,831 61,184 Diesel 20-cu-m Wheel Loader 3,191 9,412 16,145 23,355 27,698 31,972 37,336 43,796 50,735 54,627 56,647 220-t class Haul Truck 7,316 14,553 21,618 28,811 35,564 42,635 49,467 56,233 63,230 70,046 73,472 Crawler-Mounted, Rotary Tri-Cone, 115mm Dia. 4,162 8,325 12,487 16,649 20,812 24,974 29,136 33,299 37,461 41,623 43,704 D375A-class Track Dozer 5,940 11,880 17,821 23,761 29,701 35,641 41,582 47,522 53,462 59,402 62,373 WD600-class Rubber Tire Dozer 5,940 11,880 17,821 23,761 29,701 35,641 41,582 47,522 53,462 59,402 62,373 GD825-class Grader 5,940 11,880 17,821 23,761 29,701 35,641 41,582 47,522 53,462 59,402 62,373 140 t-class Water Truck 3,917 7,835 11,752 15,670 19,587 23,505 27,422 31,340 35,257 39,175 41,133

Source: JDS (2016)

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23 Economic Analysis

An engineering economic model was developed to estimate annual cash flows and sensitivities of the Project. Pre-tax estimates of Project values were prepared for comparative purposes, while after-tax estimates were developed and are likely to approximate the true investment value. It must be noted, however, that tax estimates involve many complex variables that can only be accurately calculated during operations and, as such, the after-tax results are only approximations. Sensitivity analyses were performed for variations in metal prices, grades, operating costs, capital costs, and discount rates to determine their relative importance as Project value drivers. This Technical Report contains forward-looking information regarding projected mine production rates, construction schedules and forecasts of resulting cash flows as part of this study. The mill head grades are based on sufficient sampling that is reasonably expected to be representative of the realized grades from actual mining operations. Factors such as the ability to obtain permits to construct and operate a mine, or to obtain major equipment or skilled labour on a timely basis, to achieve the assumed mine production rates at the assumed grades, may cause actual results to differ materially from those presented in this economic analysis. The estimates of capital and operating costs have been developed specifically for this Project and are summarized in Section 21 and 22 of this report (presented in 2015 dollars). The economic analysis has been run with no inflation (constant dollar basis). The economic cash flow model is available in Figure 23.10.

23.1 Assumptions Three scenarios using different exchange rates were evaluated to better understand the value drivers in each case. All costs, metal prices and economic results are reported in US dollars unless stated otherwise. All cases have identical LOM plan tonnage and grade estimates (Table 23.1). On-site and off-site costs were also help constant for each scenario evaluated. Table 23.1: LOM Plan Summary

Category Unit Value Operating days LOM days 3,650 Mine Life Years 10 Total LOM Ore Mtonnes 105.4 Total LOM Waste Mtonnes 398.5 LOM Strip Ratio w:o 3.8:1 LOM Au Head Grade g/t 0.89 Au Recovery % 93.5% Au Payable % 99.9% Payable Au LOM LOM koz 2,820 Average Annual Au Payable LOM koz 282.0 Source: JDS (2016)

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Other economic factors include the following:  Discount rate of 5% (sensitivities using other discount rates have been calculated;  Closure cost of $24.0 M (including a 15% contingency);  Nominal 2015 dollars;  Revenues, costs, taxes are calculated for each period in which they occur rather than actual outgoing/incoming payment;  Working capital calculated as one and a half months of operating costs in Year 1, the first production year (including mining, processing, rehandle, G&A costs);  Results are presented on 100% ownership;  No management fees or financing costs (equity fund-raising was assumed); and  Exclusion of all pre-development and sunk costs up to the start of detailed engineering (i.e. exploration and resource definition costs, engineering fieldwork and studies costs, environmental baseline studies costs, etc.). Table 23.2 outlines the metal prices and C$:US$ exchange rates assumptions used in the economic analyses. The reader is cautioned that the gold prices and exchange rates used in this study are only estimates based on recent historical performance and there is absolutely no guarantee that they will be realized if the Project is taken into production. The price of gold is based on many complex factors and there are no reliable long-term predictive tools. Table 23.2: Metal Price and Foreign Exchange Rates Used in Economic Analysis Scenarios

Parameter Units Base Case F/X at 0.74 F/X at 0.70 Gold Price US$/oz 1,200 1,200 1,200 Exchange Rate US$:C$ 0.78 0.74 0.70 Source: JDS (2016)

23.2 Revenues and NSR Parameters Mine revenue will be derived from the sale of doré into the international marketplace. No contractual arrangements for refining exist at this time. Revenues from doré production were assumed to begin in the first production year and end 10 years later. Table 23.3 indicates the NSR parameters that were used in the economic analysis. The Project is not subject to a royalty (Section 4.3). Therefore, no royalties were considered in the Magino economic model. Figure 23.1 shows a breakdown of the amount of gold estimated to be recovered during the mine life – a total of 2.8 Moz. The LOM Net Smelter Return amount to $3,369.6 M. Figure 23.1 shows the annual payable gold to be produced over the life of the Project.

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Table 23.3: NSR Parameters Used in Economic Analysis

Parameter Unit Value Au Recovery % 93.5 Refinery Au Payables % 99.9 Refining Costs US$/payable Au oz 5.00 Source: JDS (2016)

Figure 23.1: Payable Gold Doré Production by Year

Source: JDS (2016)

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23.3 Taxes The Project has been evaluated on an after-tax basis in order to provide a more indicative, but still approximate, value of the potential Project economics. A tax model was prepared by a specialized mining tax accountant with applicable Ontario mineral tax regime. The tax model contains the following assumptions:  15% federal income tax rate;  11.5% Ontario provincial tax rate;  Ontario Mining Tax Rate of 10%; and  Carry-forward loss (as indicated by Argonaut of $131.6 M during the construction of the Project). Total taxes for the Project amount to $301.8 M.

23.4 Economic Results The Project is economically viable with an after-tax internal rate of return (IRR) of 22.9% and a net present value using a 5% discount rate (NPV5%) of $414.5 M. These results used a gold price of $1,200/oz and an F/X rate of 0.78 (Base Case). F/X Rate sensitivity was evaluated by running the model at three different scenarios: 0.78, 0.74 and 0.70. Tables 23.4, 23.5 and 23.6 summarize the economic results of each scenario evaluated. The scenario that used the 0.70 F/X Rate resulted in the highest performance and Project value. The other two scenarios also showed strong economic results, demonstrating the robustness of the Project. The NPV was calculated using end of year discounting. The break-even gold price for the Base Case scenario of the Project is approximately $910/oz, based on the LOM plan presented herein and Figure 22.2, Figure 22.3 and Figure 22.4 show the projected cash flows for the Project in each scenario.

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Table 23.4: Summary of Results (Base Case, $1,200/oz Au, 0.78 F/X Rate)

Results Unit Value Mine Life Years 10 Payable Au LOM LOM koz 2,820 Average Au Payable LOM koz 282.0 Au Cash Cost US$/Pay Au oz 582 Unit OPEX US$/tonne milled 15.44 Avg Annual Pre-Tax Cash flow during production US$ M 160.0 Pre-Production Capital (excl. contingency) US$ M 483.5 Pre-Production Contingency US$ M 56.2 Total Pre-Production (incl. contingency) US$ M 539.8 Sustaining & Closure (excl. contingency) US$ M 183.1 Sustaining & Closure Contingency US$ M 12.8 Total Sustaining & Closure (incl. contingency) US$ M 195.9 Total Capital + Contingency US$ M 735.6

Pre-Tax NPV5% US$ M 610.3 Pre-Tax IRR % 27.6 Pre-Tax Payback Period Years 2.5

After-Tax NPV5% US$ M 414.5 After-Tax IRR % 22.9 After-Tax Payback Period Years 2.6 Source: JDS (2016)

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Figure 23.2: Annual After-Tax Cash Flows (Base Case, $1,200/oz Au, 0.78 F/X Rate)

Source: JDS (2016)

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Table 23.5: Summary of Results ($1,200/oz Au, 0.74 F/X Rate)

Results Unit Value Mine Life Years 10 Payable Au LOM LOM koz 2,820 Average Au Payable LOM koz 282 Au Cash Cost US$/Pay Au oz 560 Unit OPEX US$/tonne milled 14.84 Avg Annual Pre-Tax Cash flow during production US$ M 167 Pre-Production (excl. contingency) US$ M 466.4 Pre-Production Contingency US$ M 53.9 Total Pre-Production (incl. contingency) US$ M 520.3 Sustaining & Closure (excl. contingency) US$ M 179.0 Sustaining & Closure Contingency US$ M 12.1 Total Sustaining & Closure (incl. contingency) US$ M 191.1 Total Capital + Contingency US$ M 711.4 Pre-Tax NPV5% US$ M 676.5 Pre-Tax IRR % 30.7 Pre-Tax Payback Period Years 2.4 After-Tax NPV5% US$ M 459.1 After-Tax IRR % 25.3 After-Tax Payback Period Years 2.5 Source: JDS (2016)

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Figure 23.3: Annual After-Tax Cash Flows ($1,200/oz Au, 0.74 F/X Rate)

Source: JDS (2016)

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Table 23.6: Summary of Results ($1,200/oz Au, 0.70 F/X Rate)

Results Unit Value Mine Life Years 10 Payable Au LOM LOM koz 2,820 Average Au Payable LOM koz 282.0 Au Cash Cost US$/Pay Au oz 537 Unit OPEX US$/tonne milled 14.23 Avg Annual Pre-Tax Cash flow during production US$ M 173 Pre-Production (excl. contingency) US$ M 449.2 Pre-Production Contingency US$ M 51.6 Total Pre-Production (incl. contingency) US$ M 500.8 Sustaining & Closure (excl. contingency) US$ M 174.9 Sustaining & Closure Contingency US$ M 11.5 Total Sustaining & Closure (incl. contingency) US$ M 186.4 Total Capital + Contingency US$ M 687.2 Pre-Tax NPV5% US$ M 742.4 Pre-Tax IRR % 34.0 Pre-Tax Payback Period Years 2.2 After-Tax NPV5% US$ M 503.6 After-Tax IRR % 28.0 After-Tax Payback Period Years 2.3 Source: JDS (2016)

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Figure 23.4: Annual After-Tax Cash Flows ($1,200/oz Au, 0.70 F/X Rate)

Source: JDS (2016)

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23.5 Sensitivities A sensitivity analysis was performed on all scenarios to determine the factors that most affected the Project economics. The analysis revealed that the Project is most sensitive to metal prices, followed by head grades and F/X rates. The Project showed the least sensitivity to capital costs. The sensitivity to F/X rate was evaluated by running full cost models at two additional F/X rates: 0.74 and 0.78 as outlined in Section 23.4. Tables 23.7, 23.10 and 23.13 and their accompanying figures 23.5, 23.6 and 23.7 outline the results of the sensitivity tests performed on after-tax NPV5% for each scenario. Tables 23.8, 23.11 and 23.14 display the NPV, IRR and payback sensitivity to the gold price for each scenario. Tables 23.9, 23.12 and 23.15 show the effect of the discount rate on pre-tax and after-tax Project NPV. In addition, various scenarios were evaluated showing the Project’s sensitivity to gold price. Table 23.8 shows the economic results of the Project using various gold prices. The Project breaks even at about $910/oz gold price (NPV5%) in the base case scenario. Table 23.7: Sensitivity Results (Base Case, $1,200/oz Au, 0.78 F/X Rate)

After-Tax NPV5% ($M) Variable -15% 100% +15% Metal Prices 165 415 660 Head Grade 166 415 659 Operating Costs 533 415 295 Capital Costs 510 415 319 Source: JDS (2016)

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Figure 23.5: Sensitivity Results (Base Case, $1,200/oz Au, 0.78 F/X Rate)

Source: JDS (2016)

Table 23.8: Project Sensitivity to Au Price (Base Case, $1,200/oz, 0.78 F/X Rate)

Au Price US$/oz After-Tax NPV5% (US$M) After-Tax IRR (%) After-Tax Payback (Yrs) 1,000 136.7 11.1 6.6 1,100 277.9 17.2 2.9 1,200 414.5 22.9 2.6 1,250 482.8 25.6 2.4 1,300 551.1 28.4 2.3 1,400 687.7 33.8 2.0 1,500 823.8 39.1 1.8 Source: JDS (2016)

Table 23.9: Project Sensitivity to Discount Rate (Base Case, $1,200/oz, 0.78 F/X Rate)

Discount Rate Pre-Tax NPV ($M) After-Tax NPV ($M) 0% 1,016.4 714.6 5% 610.3 414.5 8% 445.9 292.5 10% 359.1 228.1 Source: JDS (2016)

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Table 23.10: Sensitivity Results ($1,200/oz Au, 0.74 F/X Rate)

After-Tax NPV5% ($M) Variable -15% 100% +15% Metal Prices 212 459 705 Head Grade 213 459 704 Operating Costs 573 459 345 Capital Costs 551 459 367 Source: JDS (2016)

Figure 23.6: Sensitivity Results ($1,200/oz Au, 0.74 F/X Rate)

Source: JDS (2016)

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Table 23.11: Project Sensitivity to Au Price ($1,200/oz, 0.74 F/X Rate)

After-Tax IRR Au Price US$/oz After-Tax NPV5% (US$M) After-Tax Payback (Yrs) (%) 1,000 183.7 13.4 6.1 1,100 322.5 19.6 2.7 1,200 459.1 25.3 2.5 1,250 527.5 28.2 2.3 1,300 595.8 31.0 2.2 1,400 732.3 36.6 1.9 1,500 867.7 41.9 1.7 Source: JDS (2016)

Table 23.12: Project Sensitivity to Discount Rate ($1,200/oz, 0.74 F/X Rate)

Discount Rate Pre-Tax NPV ($M) After-Tax NPV ($M) 0% 1,103.9 771.9 5% 676.5 459.1 8% 502.8 331.7 10% 411.0 264.2 Source: JDS (2016)

Table 23.13: Sensitivity Results ($1,200/oz Au, 0.70 F/X Rate)

After-Tax NPV5% ($M) Variable -15% 100% +15% Metal Prices 258 504 749 Head Grade 259 504 748 Operating Costs 613 504 394 Capital Costs 593 504 414 Source: JDS (2016)

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Figure 23.7: Sensitivity Results ($1,200/oz Au, 0.70 F/X Rate)

Source: JDS (2016)

Table 23.14: Project Sensitivity to Au Price ($1,200/oz, 0.70 F/X Rate)

Au Price US$/oz After-Tax NPV5% (US$M) After-Tax IRR After-Tax Payback (Yrs) 1,000 230.3 16.0 2.9 1,100 367.0 22.0 2.6 1,200 503.6 28.0 2.3 1,250 571.9 30.9 2.2 1,300 640.2 33.8 2.0 1,400 776.1 39.5 1.8 1,500 911.5 44.9 1.6 Source: JDS (2016)

Table 23.15: Project Sensitivity to Discount Rate ($1,200/oz, 0.70 F/X Rate)

Discount Rate Pre-Tax NPV ($M) After-Tax NPV ($M) 0% 1,191.0 829.1 5% 742.4 503.6 8% 559.6 370.7 10% 462.7 300.1 Source: JDS (2016)

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Unit Pre-Production Production LOM -3 -2 -1 12345678910Years 11-25 Au Price US$/oz 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 F/X Rate US$:C$ 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 0.78 Mine Production Schedule Ore Mined tonnes 6,892,849 98,524,638 105,417,488 0 0 6,892,849 11,708,077 14,028,104 16,467,334 3,809,830 3,393,481 9,399,990 10,949,983 12,741,358 9,158,382 6,868,100 0 Waste Mined tonnes 18,109,751 380,419,062 398,528,812 0 0 18,109,751 43,289,823 40,972,896 38,531,866 51,191,670 51,605,119 45,601,510 44,049,517 42,259,142 18,340,218 4,577,300 0 Total Mined tonnes 25,002,600 478,943,700 503,946,300 0 0 25,002,600 54,997,900 55,001,000 54,999,200 55,001,500 54,998,600 55,001,500 54,999,500 55,000,500 27,498,600 11,445,400 0 Strip Ratio w:o 0.0 3.6 3.8 0.0 0.0 0.0 4.0 3.7 3.5 4.7 4.7 4.2 4.0 3.9 1.7 0.7 0.0 Mining Rate tpd 68,500 135,363 130,991 0 0 68,500 150,679 150,688 150,683 150,689 150,681 150,689 150,684 150,686 75,339 31,357 0 Processing Schedule Ore Milled tonnes 0 105,417,536 105,417,536 0 0 0 10,949,795 10,949,999 10,949,818 10,949,998 10,949,998 10,950,058 10,949,983 10,949,713 10,950,026 6,868,146 0 Au Head Grade g/t 0.00 0.89 0.89 0.00 0.00 0.00 1.12 0.96 1.29 0.54 0.50 0.68 0.97 1.16 0.88 0.76 0.00 Contained Au oz 0 3,018,776 3,018,776 0 0 0 395,291 339,428 453,222 191,825 174,508 238,193 340,315 409,026 308,717 168,251 0 Recovery % 93.5% 93.5% 93.5% 93.5% 93.5% 93.5% 93.5% 93.5% 93.5% 93.5% 93.5% 93.5% 93.5% 93.5% 93.5% 93.5% 93.5% Recovered Au oz 0 2,822,556 2,822,556 0 0 0 369,597 317,365 423,762 179,356 163,165 222,711 318,194 382,439 288,651 157,315 0 Processing Rate tpd 0 29,271 29,271 0 0 0 29,999 30,000 30,000 30,000 30,000 30,000 30,000 29,999 30,000 18,817 0 Rehandle tonnes 0 28,248,852 28,248,852 0 0 0 6,892,849 1,629,431 0 8,049,603 8,335,256 1,550,068 0 0 1,791,645 0 0 Payable Metal Total Contained Au oz 0 3,018,776 3,018,776 0 0 0 395,291 339,428 453,222 191,825 174,508 238,193 340,315 409,026 308,717 168,251 0 Total Recovered Au oz 0 2,822,556 2,822,556 0 0 0 369,597 317,365 423,762 179,356 163,165 222,711 318,194 382,439 288,651 157,315 0 % 99.9% 99.9% 99.9% 99.9% 99.9% 99.9% 99.9% 99.9% 99.9% 99.9% 99.9% 99.9% 99.9% 99.9% 99.9% Au Payable oz 0 2,819,733 2,819,733 0 0 0 369,227 317,048 423,338 179,177 163,002 222,488 317,876 382,057 288,362 157,157 0 US$ 0 3,383,679,622 3,383,679,622 0 0 0 443,072,795 380,457,491 508,006,132 215,011,876 195,602,418 266,985,760 381,451,455 458,468,324 346,034,621 188,588,751 0 US$/oz 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 Refining Costs US$ 0 14,098,665 14,098,665 0 0 0 1,846,137 1,585,240 2,116,692 895,883 815,010 1,112,441 1,589,381 1,910,285 1,441,811 785,786 0 % 0%0%0%0%0%0%0%0%0%0%0%0%0%0%0% Royalties US$00000000000000000 NSR After Royalties US$ 0 3,369,580,957 3,369,580,957 0 0 0 441,226,659 378,872,251 505,889,440 214,115,993 194,787,408 265,873,320 379,862,074 456,558,039 344,592,810 187,802,964 0 Operating Costs US$/t mined 1.76 1.76 0.00 0.00 1.64 1.44 1.60 1.72 1.63 1.69 1.75 1.82 1.98 2.37 2.61 0.00 Mining USD$ 0 845,139,045 845,139,045 0 0 0 79,217,280 88,139,271 94,744,781 89,415,391 93,162,985 96,234,488 100,311,375 108,873,813 65,163,768 29,875,892 0 US$/t processed 6.55 6.55 0.00 0.00 0.00 6.55 6.55 6.55 6.55 6.55 6.55 6.55 6.55 6.55 6.55 0.00 Processing US$ 0 690,869,649 690,869,649 0 0 0 71,761,125 71,762,465 71,761,278 71,762,458 71,762,458 71,762,848 71,762,358 71,760,589 71,762,642 45,011,427 0 US$/t re-handled 0.51 0.51 0.00 0.00 0.00 0.51 0.51 0.00 0.51 0.51 0.51 0.00 0.00 0.51 0.00 0.00 Re-handle US$ 0 14,371,786 14,371,786 0 0 0 3,506,782 828,984 0 4,095,287 4,240,615 788,607 0 0 911,511 0 0 US$/t processed 0.04 0.04 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.07 0.07 0.07 0.07 0.07 0.04 0.00 Water Treatment Plant US$ 0 4,000,000 4,000,000 0000000750,000 750,000 750,000 750,000 750,000 250,000 0 US$/t processed 0.70 0.70 0.00 0.00 0.00 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.00 G&A US$ 0 73,346,379 73,346,379 0 0 0 7,618,541 7,618,683 7,618,557 7,618,682 7,618,682 7,618,724 7,618,672 7,618,484 7,618,702 4,778,651 0 US$/t processed 0.00 15.44 15.44 0.00 0.00 0.00 14.80 15.37 15.90 15.79 16.21 16.18 16.48 17.26 13.35 11.64 0.00 Total Operating Costs US$ 0 1,627,726,859 1,627,726,859 0 0 0 162,103,728 168,349,403 174,124,616 172,891,819 177,534,740 177,154,667 180,442,406 189,002,886 146,206,622 79,915,971 0

Net Operating Cash Flow US$ 0 1,741,854,098 1,741,854,098 0 0 0 279,122,931 210,522,848 331,764,823 41,224,174 17,252,667 88,718,652 199,419,669 267,555,153 198,386,187 107,886,993 0

Au Cash Cost US$/oz 0 582 582 0 0 0 444 536 416 970 1,094 801 573 500 512 514 0

Capital Costs Pre-Stripping US$ 41,003,268 0 41,003,268 0 0 41,003,268 00000000000 Mining Equipment US$ 67,662,525 98,118,300 165,780,825 0 0 67,662,525 42,011,550 12,288,150 12,288,150 0 3,171,000 7,879,200 8,192,100 12,288,150 0 0 0 Direct Costs US$ 276,527,410 1,950,000 278,477,410 0 27,652,741 248,874,669 1,950,000 0000000000 Indirects US$ 90,535,950 0 90,535,950 0 9,053,595 81,482,355 00000000000 Owner's Costs US$ 7,800,000 0 7,800,000 0 780,000 7,020,000 00000000000 TMF Sustaining US$ 0 57,440,369 57,440,369 0 0 0 12,836,155 9,876,993 9,690,571 7,549,058 6,932,126 7,915,696 441,302 567,507 815,481 815,481 0 WTP Sustaining US$ 0 4,750,000 4,750,000 0000002,750,000 1,000,000 1,000,000 00000 Closure US$ 0 20,859,665 20,859,665 000000000000020,859,665 Subtotal US$ 483,529,153 183,118,334 666,647,487 0 37,486,336 446,042,817 56,797,705 22,165,143 21,978,721 10,299,058 11,103,126 16,794,896 8,633,402 12,855,657 815,481 815,481 20,859,665 Contingency US$ 56,229,504 12,750,005 68,979,509 0 5,622,950 50,606,554 2,217,923 1,481,549 1,453,586 1,544,859 1,189,819 1,337,354 66,195 85,126 122,322 122,322 3,128,950 Total CAPEX US$ 539,758,657 195,868,339 735,626,996 0 43,109,286 496,649,370 59,015,628 23,646,692 23,432,307 11,843,916 12,292,945 18,132,250 8,699,597 12,940,783 937,803 937,803 23,988,615 Working Capital US$ 20,262,966 -20,262,966 0 0 0 20,262,966 000000000-20,262,966 0 Deposit Repayment US$ 0 10,140,000 10,140,000 0 0 0 2,028,000 2,028,000 2,028,000 2,028,000 2,028,000 000000

Net Pre-Tax Cash Flow US$ -560,021,623 1,576,388,725 1,016,367,102 0 -43,109,286 -516,912,336 222,135,302 188,904,156 310,360,517 31,408,258 6,987,723 70,586,402 190,720,071 254,614,370 197,448,385 127,212,157 -23,988,615 Cumulative Net Cash Flow US$ 0 -43,109,286 -560,021,623 -337,886,320 -148,982,165 161,378,352 192,786,610 199,774,332 270,360,734 461,080,806 715,695,175 913,143,560 1,040,355,717 1,016,367,102 Pre-Tax NPV US$ 610,327,338 Pre-Tax IRR % 27.6% Pre-Tax Payback Years 2.5 1100000000

Taxes USD$ 0 301,812,846 301,812,846 000052,157,856 6,221,310 245,102 21,614,719 58,902,053 82,990,980 61,109,866 32,438,802 -13,867,841

Net After-Tax Cash Flow US$ -560,021,623 1,274,575,879 714,554,256 0 -43,109,286 -516,912,336 222,135,302 188,904,156 258,202,661 25,186,947 6,742,621 48,971,683 131,818,018 171,623,390 136,338,519 94,773,355 -10,120,774 Cumulative After-Tax Cash Flow US$ 0 -43,109,286 -560,021,623 -337,886,320 -148,982,165 109,220,496 134,407,443 141,150,064 190,121,747 321,939,766 493,563,156 629,901,675 724,675,030 714,554,256 After-Tax NPV US$ 414,471,394 After-Tax IRR % 22.9% After-Tax Payback Years 2.6 1110000000 A RGONAUT G OLD INC. M AGINO PRE-FEASIBILITY STUDY TECHNICAL R EPORT

24 Adjacent Properties

Richmont Mines Inc. (Richmont) controls most of the land adjacent to Argonaut's Magino property. Richmont has approximately 7,772 ha of patented, leased, and staked mining claims that are divided into nine parts or "properties" (InnovExplo, 2015). Richmont's Island Gold Mine, located about 1.5 km east of Argonaut's Magino property, and is an active underground gold mine that has been in production since October 2007, producing approximately 337,000 oz of gold (InnovExplo, 2015). Like the Magino deposit, gold mineralization within the Island Gold Mine area is controlled by the Goudreau Lake Deformation Zone (GLDZ). Richmont has identified five major zones of intense sericitization and silicification within the GLDZ: the Island Zone, the Lochalsh Zone, the North Shear/Shore Zone, the 21 Zone, and the Goudreau Zone (InnovExplo, 2015). Figure 24.1 is a southwesterly looking aerial view of Richmont's Island Gold Mine complex with respect to Argonaut's Magino property. The black arrow in Figure 24.1 is pointing toward the historic Magino underground area. Figure 24.1: Aerial View of Island Gold Mine

Source: InnovExplo (2015)

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25 Other Relevant Data and Information

On October 16, 2013 the Company announced that it had entered into a surface and mining rights exchange agreement with Richmont Mines Inc. ("Richmont"; TSX:RIC). Pursuant to this agreement, Argonaut will expand land access associated with its Magino Gold Project by obtaining both surface rights and mining rights up to 400 m in depth on certain Richmont claims surrounding the Project. Argonaut will transfer its interest in certain claims to Richmont, to enable it to expand its exploration potential at its Island Gold Deep Project (Figure 25.1). The terms of this agreement provide a CA$2 million payment from Argonaut to Richmont upon approval of the exchange by the appropriate government agencies. This claim exchange provides additional exploration and development potential for Argonaut in an area immediately adjacent to the Project. The potential impacts to the Project will be evaluated as exploration plans are developed and executed.

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Figure 25.1: Argonaut and Richmont - Surface and Mining Rights Exchange

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26 Interpretations and Conclusions

It is the opinion of the QPs that the PFS summarized in this Technical Report contains adequate detail and information to declare mineral reserves and support the positive economic outcome shown for the Project. Industry-standard mineral resource/reserve estimation, mining, scheduling, process design, construction methods and economic evaluation practices were used to assess the Project to a PFS level. As of the effective date of the report, the QPs are not aware of any Project fatal flaws.

26.1 Risks As with most mining Projects there are many risks that could affect the economic viability of the Project. Many of these risks are based on lack of detailed knowledge and can be managed as more sampling, testing, design, and engineering are conducted at the next study stage. Table 26.1 identifies what are currently deemed to be the most significant internal Project risks, potential impacts, and possible mitigation approaches. The most significant potential risks associated with the Project are uncontrolled dilution, uncontrolled groundwater inflow in the pit, operating and capital cost escalation, permitting and environmental compliance, unforeseen schedule delays, changes in regulatory requirements, ability to raise financing and metal price. These risks are common to most mining Projects, many of which can be mitigated with adequate engineering, planning and pro-active management. External risks are, to a certain extent, beyond the control of the Project proponents and are much more difficult to anticipate and mitigate, although, in many instances, some risk reduction can be achieved. External risks are things such as the political situation in the Project region, metal prices, exchange rates and government legislation. These external risks are generally applicable to all mining Projects. Negative variance to these items from the assumptions made in the economic model would reduce the profitability of the mine and the mineral resource and reserve estimates.

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Table 26.1: Main Project Risks

Risk Explanation/Potential Impact Possible Risk Mitigation The management of water on-site is a critical component of the Continued collection and analysis of data relating to Project design. Basic assumptions were made for surface and ground ground and surface water needs to be continued on-site Water Inflow into Pit water flows based on preliminary drilling and hydrogeologic over the near-term to enhance the local hydrological information. Unexpected water inflow from Goudreau Lake into the pit knowledge. could slow down mining and increase OPEX. The ore zones are somewhat discontinuous and the Project requires A well planned and executed grade control plan is good grade control to be able to match the LOM plan grades. Higher necessary immediately upon commencement of mining. than expected dilution has a severe impact on Project economics. The Dilution open pit mine must ensure accurate drilling and blasting practices are maintained to minimize dilution, minimize secondary breaking and optimize extraction. The ability to segregate higher grade material, early in the mine life, is critical to Project economics.

The higher grade ore zones are discontinuous and as noted above Excavation of a bulk sample would help to prove the Grade Variability can have a big impact on economics if they cannot be mined mining selectivity and expected mining grades. selectively. Changes to metallurgical assumptions could lead to reduced metal Additional sampling and testwork optimization could be recovery, increased processing OPEX costs, and/or changes to the conducted if applicable. Metallurgical Recoveries processing circuit design. If LOM gold recovery is lower than assumed, the Project economics would be negatively impacted. The ability to achieve the estimated CAPEX and OPEX costs are Further cost estimation accuracy with the next level of important elements of Project success. study, as well as the active investigation of potential cost-reduction measures would assist in the support of CAPEX and OPEX If OPEX increases then the mining cut-off grade would increase and, reasonable cost estimates. all else being equal, the size of the optimized pit would reduce yielding fewer mineable tonnes. The ability to secure all of the permits to build and operate the Project The development of close relationship with the local is of paramount importance. Failure to secure the necessary permits communities and government along with a thorough could stop or delay the Project. Environmental and Social Impact Assessment and a Permit Acquisition Project design that gives appropriate consideration to the environment and local people is required.

Geochemistry and Water The estimated proportion of Potentially Acid Generating (PAG) The current block model will be updated to include PAG Management material has been based on the prior smaller pit geometry. There is a characteristics and for the current pit

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low risk that this proportion will change by a significant amount when recalculated for the current pit. Furthermore, any increase in proportion of PAG is unlikely to increase the costs of PAG disposal, since the PAG material is to be disposed of within the Non Acid Generating (NAG) material. Seepage control may need to be beyond the level stated in this report for the tailings facility and the waste rock dump. Water treatment at closure may last longer than anticipated due to seepage and pit filling

The Project development could be delayed for a number of reasons If an aggressive schedule is to be followed, FS field work and could impact Project economics. should begin as soon as possible. Development Schedule

A change in schedule would alter the Project economics. The geotechnical nature of the open pit wall rock, including the nature Improved geotechnical knowledge and modelling if of faults and secondary geological structures could impact pit slopes. necessary Mine Geotech Pit slopes could be increased or decreased and thus alter the pit designs, mineable tonnes, and strip ratio. The ability to attract and retain competent, experienced professionals The early search for professionals as well as the is a key success factor for the Project. potential to provide living arrangements other than in a Ability to Attract camp may help identify and attract critical people. Experienced Professionals High turnover or the lack of appropriate technical and management staff at the Project could result in difficulties meeting Project goals. Source: JDS (2016)

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26.2 Opportunities There are significant opportunities that could improve the economics, timing, and/or permitting potential of the Project. The major opportunities that have been identified at this time are summarized in Table 26.2, excluding those typical to all mining Projects, such as changes in metal prices, exchange rates, etc. Further information and assessments are needed before these opportunities should be included in the Project economics.

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Table 26.2: Identified Project Opportunities

Opportunity Explanation Potential Benefit Pit Slope Pit slope angles could potentially be improved which may increase An increase in overall pit slopes for all domains in all pits would reduce Steepening slope angles (conversely it could also make them shallower). the strip ratio and increase the ounces mined. With additional detailed planning and a series of strategic option Planning and executing the Project with the optimum mine Project Strategy and reviews the Project may be able to add value. design/schedule and processing systems would result in the maximum Optimization possible value to shareholders and other economic stakeholders. Potential to process The LGS contains 215,000 ounces of gold in 26M tonnes and could be Additional gold recovery. material in the Low processed for an economic benefit depending on metals prices at the Grade Stockpile end of the mine life. Potential to add The agreement with Richmont extended access to the east. Some Additional resources resources on the widely spaced drilling has confirmed that mineralization extends this eastern extension of direction but additional drilling is required to upgrade this material to an the deposit Indicated level and allow it to potentially be added to the mine plan. Potential to convert Targeted in-fill drilling has the potential to upgrade some Inferred Additional reserves. Inferred material to resources into Indicated and allow their inclusion in the mine plan. Indicated Lease primary Leasing primary mining equipment instead of purchasing. This would reduce initial capital required. mining equipment Potential to There is considerable used equipment on the market that could be Capital cost reduction. purchase good used utilized. equipment Potential to add Additional deep drilling could prove up more deep resources and allow Additional reserves deeper resources for the underground exploitation of deeper material for potential future underground Source: JDS (2016)

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27 Recommendations

It is recommended that the Magino Project proceed to the feasibility study (FS) stage and engineering and design to further detail the Project schedule, design, costs and revenue and to improve Project economic accuracy. It is also recommended that environmental and permitting continue as needed to support Argonaut’s Project development plans. It is estimated that a feasibility study and supporting work programs would cost approximately $2.7M. A breakdown of the key components of the next study phase is summarized in Table 27.1 Table 27.1: Cost Estimate to Advance Magino to FS Stage

Estimated Component Comment Cost (M$) Mining 0.5 Mine Design and Planning Processing & Crushing 0.6 Process & Crushing Plant Design Geotechnical/ 0.4 Structural Geology, Geotechnical Drilling, ATV (Acoustic Televiewer) Hydrology/Hydrogeology Tailings & Environment 0.8 Tailings and Waste & Water Management Design & Planning Environment 0.4 Permitting Total 2.7 Source: JDS (2016)

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28 Units of Measure, Calculations & Abbreviations

Table 28.1: Units of Measure

' Foot " Inch µm Micron (micrometre) Amp Ampere Ac Acre C$ Canadian dollars cfm Cubic feet per minute cm Centimetre dpa Days per annum dmt Dry metric tonne ft Foot ft³ Cubic foot g Gram hr Hour ha Hectare hp Horsepower In Inch kg Kilogram km Kilometre km² Square kilometer KPa Kilopascal kt Kilotonnes Kw Kilowatt KWh Kilowatt-hour L Litre lb or lbs Pound(s) m Metre M Million m² Square metre m³ Cubic metre mi Mile min Minute mm Millimetre Mpa Mega Pascal mph Miles per hour Mtpa Million tonnes per annum

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Mt Million tonnes ºC Degree Celsius oz Troy ounce ppb Parts per billion ppm Parts per million s Second t Metric tonne t/d Tonnes per day tph Tonnes per hour US$ US dollars V Volt W Watt wmt Wet metric tonne

Table 28.2: Abbreviations & Acronyms

% or pct Percent AAS Atomic absorption spectrometer ABA Acid base accounting ADIS Automated Digital Imaging System Ag Silver Au Gold AMSL Above mean sea level ANFO Ammonium Nitrate/Fuel Oil AP Acid potential API Algoma Power, Inc. ARD Acid rock drainage Argonaut Argonaut Gold Inc. BC British Columbia BIF Banded iron formation BLS Barren leach solution Btu British Thermal Unit BWi Bond work index CaCO3 Calcium carbonate CAPEX Capital costs CAT Caterpillar CCME Canadian Council of Ministers of the Environment CEAA Canadian Environmental Assessment Act CIC Carbon-in-Column CIL Carbon-in-Leach CIM Canadian Institute of Mining

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CIP Carbon-in-Pulp Class EA Class Environmental Assessment CLU Change of land-use authorization CPM Critical path method COSEWIC Committee on the Status of Endangered Wildlife in Canada CRM Certified reference material Cu Copper CV Coefficient of variation CWi Bond crusher work index DFO Department of Fisheries and Oceans DO Dissolved oxygen EA Environmental Assessment EAA Ontario Environmental Assessment Act EASR Environmental Activity and Sector Registry ECA Environmental Compliance Approval EEM Effluent Effects Monitoring Elev Elevation above sea level ESIA Environmental-Social Impact Assessment ETF Exchange traded fund FA/grav Fire assay with gravimetric finish FEL Front-end loader FLOT Flotation FS Feasibility Study GMV Gross metal value GPS Global positioning system H:V Horizontal to vertical HADD Harmful Alternation or Disruption or Destruction HDPE High density polyethylene HVAC Heating, ventilation and air conditioning ICP-MS Inductively coupled plasma mass spectrometry ID2 Inverse distance squared IMSS Immigrant and Multicultural Services Society IRA Inter-ramp angles IRR Internal rate of return ISN Payroll tax ISRMR In situ rock mass rating JDS JDS Energy & Mining Inc. LGEEPA General Law of Equilibrium and Environmental Protection LGPGIR General Law for Prevention and Integral Management of Waste LIO Land Information Ontario LOM Life of mine

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LSA Local Study Area MARC Maintenance and repair contract MIA-P Environmental impact manifest MIBC Methyl isobutyl carbinol ML/ARD Metal leaching/acid rock drainage MLI McClelland Laboratories, Incorporated MMER Metal Mining Effluent Regulations MNR Ministry of Natural Resources MoE Ministry of Environment MoT Ontario Ministry of Transportation MSE Mechanically stabilized earth MTCS Ontario Ministry of Tourism, Culture and Sport N,S,E,W North, South, East, West NI 43-101 National Instrument 43-101 NAD North American Datum NAG Non potentially acid generating NN Nearest Neighbour NP Neutralization potential NPC Noise Pollution Control NPRI National Pollutant Release Inventory NPV Net present value NSR Net Smelter Return Ø Diameter OEM Original equipment manufacturer OK Ordinary Kriging OP Open Pit OPEX Operating costs PAG Potentially acid generating PAX Potassium Amyl Xanthate PDR Project Description Report PEA Preliminary economic assessment PFS Preliminary feasibility study PLS Pregnant leach solution PM Project management POX Pressure oxidation PPM Project procedures manual PPV Peak Particle Velocity Prodigy Prodigy Gold Inc. Project Magino Gold Project PSA Project Study Area PWQO Provincial Water Quality Objectives

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QA/QC Quality assurance/quality control QMS Quality management system RC Reverse circulation RISC Resource Inventory Standards Committee ROM Run-of-mine RQD Rock quality designation RSA Regional Study SARA Species at Risk Act SG Specific gravity SAG Semi-autogenous grinding STP Sewage treatment plant ToR Terms of Reference Report TMF Tailings management facility The Agency Canadian Environmental Assessment Agency UG Underground UPS Uninterrupted power system UTM Universal Transverse Mercator VA Voluntary Agreement VOC Volatile Organic Compound Vulcan Maptek Vulcan ™ Whittle Gemcom Whittle- Strategic Mine Planning ™ WRMF Waste rock management facility X,Y,Z Cartesian coordinates, also Easting, Northing and Elevation

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29 References

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Arias, Z., and Helmstaedt, H., 1990. Structural evolution of the Michipicoten (Wawa) greenstone belt, Superior Province; in Geoscience research Program, Summary of Research 1989-1990; Ontario Geological Survey, Miscellaneous Paper 150, pages 107 114.

Attoh, K., 1981. Pre- and Post-Doré sequences in the Wawa volcanic belt, Ontario; in Current Research, Part B; Geological Survey of Canada, Paper 81-1B, pages 49-54.

Ayres, L. D., 1969. Geology of Townships 31 and 30, Ranges 20 and 19; Ontario Department Mines, G.R-69, 100 pages.

Ayres, L. D., 1983. Bimodal volcanism in Archean greenstone belts exemplified greywacke composition, Lake Superior Park, Ontario; Canadian Journal of Earth Sciences, v. 20, p. 1168-1194.

Bourne, D. A., Botsford, J. N., and Ross, M., 1987. Report on the Magino Gold Project. Commissioned by Muscocho Explorations Ltd. Report presented to Muscocho Explorations Ltd and McNellen Resources Inc. Internal Report. 172 pages.

Buchan, K. L., and Ernst, R. E., 2004. Diabase dyke swarms and related units in Canada and adjacent regions (with accompanying notes): Geological Survey of Canada, Map 2022A, 1:5,000,000.

Card, K. D. and Ciesielski, A. 1986. DNAG #1. Subdivisions of the Superior province of the Canadian Shield. Geoscience Canada 13. p. 5-13.

Card, K. D., and Poulsen, K. H., 1998. Geology and mineral deposits of the Superior Province of the Canadian Shield; Chapter 2 in Geology of the Precambrian Superior and Grenville Provinces and Precambrian Fossils in North America, (co- ord.) S. Lucas; Geological Survey of Canada, Geology of Canada, no. 7, pages 12-194.

Corfu, F., and Sage, R. P., 1992. U-Pb constraints for deposition of clastic metasedimentary rocks and late-tectonic plutonism, Michipicoten belt, Superior Province; Canadian Journal of Earth Sciences, v. 29, pages 1640-1651.

Corfu, F., and Stott, G. M., 1986. U-Pb ages for late magmatism and regional deformation in the Shebandowan belt, Superior Province, Canada. Canadian Journal of Earth Sciences, v. 35, pages 1075-1082.

Davis, D. W., and Lin, S., 2003. Unravelling the geologic history of the Hemlo Archean gold deposit, Superior Province, Canada: A U-Pb geochronological study. Economic Geology, v. 98, pages 51-67.

Deevy, A. J., 1992. Magino, The making of a mine. Muscocho Explorations Ltd. Internal Report. 28 pages.

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G&T Metallurgical Services Ltd. November 2012. Feasibility Metallurgical Testing – Magino Gold Project.

Goodwin, A. M., 1962. Structure, stratigraphy and iron formation, Michipicoten area, Algoma District, Ontario, Canada; Geological Society of America Bulletin, v. 73, pages 561-586.

Goodwin, A. M., Ambrose, J. W., Ayers, L. D., Clifford, P. M., Currie, K. L., Ermanovics, I. M., Fahrig, W. F., Gibb, R. A., Hall, D. H., Innes, M. J. S., Irvine, T. N., MacLaren, A. S., Norris, A. W., Pettijohn, F. J., and Ridler, P. H., 1972. The Superior Province. In: Variations in Tectonic Style in Canada, (eds.) R. A. Price and R. W. Douglas; Geological Association of Canada, Special Paper 11, pages 528-623.

Government of Canada Canadian Climate Normals 1971-2000 Station Data. Growth Plan for Northern Ontario 2011, Ministry of Infrastructure; Ministry of Northern Development, Mines and Forestry. March 3, 2011. http://climate.weatheroffice.gc.ca/climate_normals/results_e.html?stnID=4099&lang=e&dCode=0&province=ONT&p rovBut=Search&month1=0&month2=12

Government of Batchewana First Nation of Ojibways. 2011. Batchewana First Nation Notice of Assertions. Published by The Ottawa Citizen p.A11

Heather, K. B., and Arias, Z., 1992. Geological and structural setting of gold mineralization in the Goudreau- Lochalsh area, Wawa gold camp. Ontario Geological Survey, Open File Report 5832. 159 pages.

Heather, K. B., 1989. The geological and structural setting of gold mineralization in the Renabie portion of the Missanabie-Renabie gold district, Wawa gold camp; in Summary of Field Work and Other Activities 1989, Ontario Geological Survey, Miscellaneous Paper 146, pages 99-107.

Hoffman, P. F. 1988. United plates of America, the birth of a craton: Early Proterozoic assembly and growth of Laurentia; Annual Review of Earth and Planetary Science, v. 16, pages 543-603.

Hoffman, P. F., 1989. Precambrian geology and tectonic history of North America; in The Geology of North America – An overview, (ed.) A. W. Bally and A. R. Palmer; Geological Society of America, The Geology of North America, Volume A, pages 447 512.

Jackson, S. L., and Sutcliffe, R. H., 1990. Central Superior Province geology; evidence for an allochthonous, ensimatic, southern Abitibi greenstone belt; Canadian Journal of Earth Sciences, v. 27, pages 582-589.

Kappes, Cassiday & Associates. January 1999. Magino Project Report of Metallurgical Tests.

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Koskitalo, L. O., 1983. Magino Gold Project, Wawa Area, Ontario. Report presented to McNellen Resources Inc. James Wade Engineering Ltd. Toronto. Project No. WE83 068. Internal Report. 67 pages.

McBride, D. E., 1991. Report of the geology, reserves and potential of the Magino Deposit, Finan township, Ontario. Internal Report. 19 pages.

Magino Gold Project – Project Description Report; SLR Ref: 200.03005.00004, July 8, 2013, Version 1.0

Magino Gold Project Environmental Impact Statement WORKING DRAFT; SLR Ref: 200.03005.00001, October 15, 2014, Revision 1

Muir, T. L., 2003. Structural evolution of the Hemlo greenstone belt in the vicinity of the world-class Hemlo gold deposit. Canadian Journal of Earth Sciences, v. 40, pages 395-430.

Nielsen, F. W., 1995. Summary and Review of Past Work and Options for Future Work, Magino Mine, Wawa Area, Ontario. Report presented to Muscocho Explorations Ltd. Prepared by R. Bruce Graham and Associates Ltd. Internal Report. 38 pages.

Nielsen, F. W., 1997. Diamond Drilling Program, Magino Mine, Wawa Area, Ontario, September 1997. Report presented to Golden Goose Resources Inc. Prepared by Pearson, Hofman and Associates Ltd. Internal Report. 19 pages.

McGill, G. E., 1992. Structure and kinematics of a major tectonic contact belt, Ontario; Canadian Journal of Earth Sciences, v. 29, pages 2118-2132.

McGill, G. E., and Shrady, C. H., 1986. Evidence for a complex Archean deformational history, southwestern Michipicoten greenstone belt, Ontario; Journal of Geophysical Reports, v. 91, pages E281-E289.

McClelland Laboratories, Inc. March 2015 Report on 2014 Miling/Cyanidation and Gravity Concentration Testing - Magino Ore Grade Drill Composites , MLI Job # 3779 , March 20, 2015 109 pages.

Ontario Building Code. http://www.e-laws.gov.on.ca/html/regs/english/elaws_regs_060350_e.htm).

Percival, J. A., 2007. Geology and Metallogeny of the Superior Province, Canada. In Goodfellow W. D., ed., Mineral Deposits of Canada: A Synthesis of Major Deposit Types, District Metallogeny, the Evolution of Geological Provinces, and Exploration Methods: Geological Association of Canada, Mineral Deposits Division, Special Publication No. 5, p. 903-928.

Perkins, M. J., 1999. Structural Geology and Gold Magino Mine Project, Wawa Area, Ontario. Report prepared for Golden Goose Resources Inc. Internal Report 9 pages.

Peterson, V. L., and Zaleski, E., 1999. Structural history of the Manitouwadge greenstone belt and its volcanogenic Cu-Zn massive sulphide deposits, Wawa Subprovince, south-central Superior Province. Canadian Journal of Earth Sciences, v. 36, pages 605-625.

Places to Grow Act, 2005, S.O. 2005, c. 13; Ministry of Infrastructure; Ministry of Northern Development, Mines and Forestry. June 13, 2005.

Polat, A, and Kerrich, R., 1999. Formation of an Archean tectonic mélange in the Schreiber-Hemlo greenstone belt, Superior Province, Canada: Implications for Archean subductionaccretion processes. Tectonics, v. 18, p. 733-755.

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Polat, A., and Kerrich, R., 2001. Magnesian andesites, Nb-enriched basalts- andesites, and adakites from late Archean 2.7 Ga Wawa greenstone belts, Superior Province, Canada: Implication for late Archean subduction zone petrogenetic processes. Contribution to Mineralogy and Petrology, v. 141, pages 36-52.

Polat, A., Kerrich, R., and Wyman, D., 1998. The late Archean Schreiber-Hemlo and White River-Dayohessarah greenstone belts, Superior Province: Collage of oceanic plateaus, oceanic arcs, and subduction-accretion complexes. Tectonophysics, v. 289, pages 295-326.

Poulsen, K. H., 1996. Lode Gold : in Geology of Canadian Mineral Deposits Types, (ed.) O. R. Eckstrand, W. D. Sinclair, and R. I. Thorpe; Geological Survey of Canada, Geology of Canada, no 8, p. 323-328.

Poulsen, K. H., Robert, F., and Dubé, B., 2000. Geological classification of Canadian gold deposits: Geological Survey of Canada, Bulletin 540, 106 pages.

Rockland Ltd. 2015. Geotechnical Pre-feasibility of Pit Slope Design for Magino Gold Project – Argonaut Gold Inc. November. Ross, A.F., 2011. Mineral Resource Estimate, Magino Gold Project, Sault Ste. Marie Mining District, Ontario. Report presented to Prodigy Gold Inc. Report prepared by Snowden Mining Industry Consultants Inc. Report published on SEDAR website dated 28 February 2011. 93 pages.

Sage, R. P., 1984. Goudreau-Lochalsh Area, District of Algoma; in Summary of Field Work and Other Activities 1984; Ontario Geological Survey, Miscellaneous Paper 119, pages 56-61.

Sage, R. P., 1985. Josephine-Goudreau Area, District of Algoma; in Summary of Field Work and Other Activities 1985; Ontario Geological Survey, Miscellaneous Paper 126, pages 90-94.

Sage, R. P., 1987. Preliminary interpretation of the relationship between economic mineralization and volcanic stratigraphy in the Wawa area; Ontario Geological Survey, Miscellaneous Paper 100, pages 41-44.

Sage, R. P., 1987a. Geology of the Goudreau-Lochalsh and Kabenung Lake Areas, District of Algoma; in Summary of Field Work and Other Activities 1987; Ontario Geological Survey, Miscellaneous Paper 137, pages 134-137.

Sage, R. P., 1993. Geology of Aguonie, Bird, Finan and Jacobson townships, District of Algoma. Ontario Geological Survey, Open File Report 5588, 286 pages.

Sage, R. P., 1993a. Geology of Abotossaway, Corbiere, LeClaire and Musquash and part of Dunphy township. Ontario Geological Survey, Open File Report 5587, 308 pages.

Sage, R. P., 1993b. Precambrian geology Aguonie Township. Ontario Geological Survey, Open File Map 217, Scale 1: 15 840.

Sage, R. P., 1993c. Precambrian geology Abotossaway Township. Ontario Geological Survey, Open File Map 223, Scale 1: 15 840.

Sage, R. P., 1993d. Precambrian geology Dunphy Township. Ontario Geological Survey, Open File Map 224, Scale 1: 15 840.

Sage, R. P., 1994. Geology of the Michipicoten greenstone belt. Ontario Geological Survey, Open File Report 5888, 592 pages.

Sage, R. P., Lightfoot, P. C., and Doherty, W., 1996a. Bimodal cyclical Archean basalts and rhyolites from the Michipicoten(Wawa) greenstone belt, Ontario: Geochemical evidence for magma contributions from asthenospheric

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Sage, R. P., Lightfoot, P. C., and Doherty, W., 1996b. Geochemical characteristics of granitoid rocks from within Archean Michipicoten greenstone belt, Wawa Subprovince, Superior Province, Canada: Implications for source regions and tectonic evolution. Precambrian Research, v. 76, page 155-190.

SGS Lakefield Research. October 1997. An Investigation of the Recovery of Gold from Magino Project Samples.

SLR Consulting (Canada) Ltd., July 8, 2013. Magino Gold Project – Project Description Report Version 1.0.

a. SLR, 2013 - Magino Gold Project – Project Description Report; July 8, 2013. b. SLR, 2014 - Magino Gold Project Environmental Impact Statement WORKING DRAFT; October 15, 2014.

Starkey & Associates Inc. October 2011. Magino Project SAG Design Comminution Analysis and Mill Design.

Stott, G.M., Buse, S and Préfontaine, S., 2007. A possible Meso-archean Anticlinorium in the Berens River Region and its Tectonic Significance. Summary of Field Work and Other Activities 2007, Ontario Geological Survey, Open File Report 6213, pages 38-1 to 38-5.

Studemeister, P. A., 1983. The greenschist facies of an Archean assemblage near Wawa, Ontario. Canadian Journal of Earth Sciences, v. 20, pages 1409-1420.

Studemeister, P. A., 1985. Gold-bearing veins around a felsic stock near Wawa, Ontario: implications for gold exploration; Canadian Institute of Mining and Metallurgy Bulletin, v. 78, pages 43-47.

Studemeister, P. A., and Kilias, S., 1987. Alteration pattern and fluid inclusions of gold-bearing quartz veins in Archean trondhjemite near Wawa, Ontario, Canada Economic Geology, v. 82. pages 429-439.

Sutherland, K. S., 1987. Report on the Magino Gold Project. Report commissioned by Muscocho Explorations Ltd. Queen’s University, Kingston, Ontario. Internal Report. 60 pages.

Tetra Tech Wardrop, February 9, 2012, Magino Property Preliminary Economic Assessment and Technical Report, Ontario, Canada, Report submitted to Prodigy Gold Inc.

Tetra Tech Wardrop, October 4, 2012 Technical Report on the Magino Property, Wawa, Ontario, written by Patrick Huxtable, et al.

Turcotte, B., and Pelletier, C., 2009. Technical Report and Mineral Resource Estimate for the Magino Mine (according to Regulation 43-101 and 43-101F1). Report prepared by InnovExplo for Golden Goose Resources Inc. Report published on SEDAR website dated 29 May, 2009. 116 pages.

Turcotte, B., Pelletier, C., and Poirier S., 2010. Technical Report on the Preliminary Economic Assessment prepared by InnovExplo for Golden Goose Resources Inc. Unpublished draft report dated 3 June, 2010. Internal Report, Golden Goose Resources Inc. 176 pages.

Williams, H. R., Scott, G. M., Heather, K. B., Muir, T. L., and Sage, R. P., 1991. Wawa Subprovince; in Geology of Ontario, (eds.) P. C. Thurston, H. R. Williams, R. H., Sutcliffe, and G. M. Scott; Ontario Geological Survey, Special Paper 4, pt.1, pages 485 539.

Witteck Development Inc. February 1987. Magino Ore Heap Leached.

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Zaleski, E., van Breemen, O., and Peterson, V. L., 1999. Geological evolution of the Manitouwadge greenstone belt and Wawa-Quetico subprovince boundary, Superior Province, Ontario: Constrained by U-Pb zircon dates of supracrustal and plutonic rocks. Canadian Journal of Earth Sciences, v. 36, pages 945-966.

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APPENDIX A QP Certificates

PARTNERS IN JDS Energy & Mining Inc. ACHIEVING Suite 900 – 999 West Hastings Street MAXIMUM Vancouver, BC V6C 2W2 RESOURCE t 604.558.6300 DEVELOPMENT VALUE jdsmining.ca

CERTIFICATE OF AUTHOR

I, Michael E. Makarenko, P. Eng., do hereby certify that:

1. This certificate applies to the Technical Report entitled “Pre-feasibility Study Technical Report on the Magino Project, Wawa, Ontario, Canada”, with an effective date of January 18, 2016, (the “Technical Report”) prepared for Argonaut Gold Inc.;

2. I am currently employed as a Senior Project Manager with JDS Energy & Mining Inc. with an office at Suite 900 – 999 West Hastings Street, Vancouver, British Columbia, V6C 2W2;

3. I am a graduate of the University of Alberta with a B.Sc. in Mining Engineering, 1988. I have practiced my profession continuously since 1988;

4. I have worked in technical, operations and management positions at mines in Canada, the United States, Brazil and Australia. I have been an independent consultant for over eight years and have performed mine design, mine planning, cost estimation, operations & construction management, technical due diligence reviews and report writing for mining projects worldwide;

5. I am a Registered Professional Mining Engineer in Alberta (#48091) and the Northwest Territories (#1359);

6. I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101. I am independent of the Issuer and related companies applying all of the tests in Section 1.5 of NI 43-101;

7. I did not visited the Magino project site;

8. I am responsible for Sections 1 (except for 1.2,1.3,1.5,1.6,1.7,1.8,1.9,1.10,1.11), 2, 3, 4, 5, 6, 19, 21, except 21.2.2), 22 (except 22.2.3), 23, 24, 25, 26, 27, 28 of this Technical Report;

9. I have had no prior involvement with the property that is the subject of this Technical Report;

10. As of the effective date of this Technical Report, to the best of my knowledge, information and belief, this Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading;

11. I have read NI 43-101, and the Technical Report has been prepared in accordance with NI 43-101 and Form 43-101F1.

Effective Date: January 18, 2016 Signing Date: February 22, 2016 (original signed and sealed) “Michael Makarenko, P. Eng.”

Michael Makarenko, P. Eng.

VANCOUVER | TORONTO | KELOWNA | WHITEHORSE | YELLOWKNIFE | TUCSON | HERMOSILLO

PARTNERS IN JDS Energy & Mining Inc. ACHIEVING Suite 900 – 999 West Hastings Street MAXIMUM Vancouver, BC V6C 2W2 RESOURCE t 604.558.6300 DEVELOPMENT VALUE jdsmining.ca

CERTIFICATE OF AUTHOR

I, Dino Pilotto, P.Eng., do hereby certify that:

1. This certificate applies to the Technical Report entitled “Pre-feasibility Study Technical Report on the Magino Project, Wawa, Ontario, Canada”, with an effective date of January 18, 2016, (the “Technical Report”) prepared for Argonaut Gold Inc.;

2. I am currently employed as Mine Engineering Lead with JDS Energy & Mining Inc. with an office at Suite 900-999 West Hastings Street, Vancouver, BC, V6C 2W2;

3. I am a Professional Mining Engineer (P.Eng. #14782) registered with the Association of Professional Engineers, Geologists of Saskatchewan. I am also a registered Professional Mining Engineer in Alberta and Northwest Territories. I am a graduate of the University of British Columbia with a B.Sc. in Mining and Mineral Process Engineering (1987). I have practiced my profession continuously since June 1987. I have been involved with mining operations, mine engineering and consulting covering a variety of commodities at locations in North America, South America, Africa, and Eastern Europe;

4. I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101.

5. I have visited the Magino Project site from October 16-17, 2013;

6. I am responsible for Section numbers 1.7, 1.8, 15, 16 (except 16.3) , 21.2.2 and 22.2.3 of the Technical Report;

7. I am independent of the Issuer and related companies applying all of the tests in Section 1.5 of the NI 43-101;

8. I was involved in the previous Preliminary Feasibility Study Technical Report For the Magino Project, Wawa, Ontario, Canada, with an effective date of December 17, 2013 that is the subject of the Technical Report;

9. I have read NI 43-101, and the Technical Report has been prepared in compliance with NI 43-101 and Form 43-101F1;

10. As of the effective date of the Technical Report and the date of this certificate, to the best of my knowledge, information and belief, this Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading;

Effective Date: January 18, 2016 Signing Date: February 22, 2016 (original signed and sealed) “Dino Pilotto, P.Eng.”

Dino Pilotto, P.Eng.

VANCOUVER | TORONTO | KELOWNA | WHITEHORSE | YELLOWKNIFE | TUCSON | HERMOSILLO

PARTNERS IN JDS Energy & Mining Inc. ACHIEVING Suite 900 – 999 West Hastings Street MAXIMUM Vancouver, BC V6C 2W2 RESOURCE t 604.558.6300 DEVELOPMENT VALUE jdsmining.ca

CERTIFICATE OF AUTHOR

I, Ali Sheykholeslami, P.Eng., do hereby certify that:

1. This certificate applies to the Technical Report entitled “Pre-feasibility Study Technical Report on the Magino Project, Wawa, Ontario, Canada”, with an effective date of January 18, 2016, (the “Technical Report”) prepared for Argonaut Gold Inc.;

2. I am currently employed as a Engineering Manager with JDS Energy & Mining Inc. with an office at Suite 900 – 999 West Hastings Street, Vancouver, British Columbia, V6C 2W2;

3. I am a graduate of the Sharif University of Technology with a B.Sc. in Mechanical Engineering, 1991. I have practiced my profession continuously since 1991;

4. I have worked in technical, constructions positions at mines in Canada. I have performed process plant design, cost estimation & construction management, technical due diligence reviews and report writing for mining projects worldwide;

5. I am a Registered Professional Mechanical Engineer in Alberta;

6. I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101. I am independent of the Issuer and related companies applying all of the tests in Section 1.5 of NI 43-101;

7. I did not visited the Magino project site;

8. I am responsible for Sections 1.10, 5.5.1, 18.1, 18.3, 18.4, 18.7,18.8 of this Technical Report;

9. I have had no prior involvement with the property that is the subject of this Technical Report;

10. As of the effective date of this Technical Report, to the best of my knowledge, information and belief, this Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading;

Effective Date: January 18, 2016 Signing Date: February 22, 2016 (original signed and sealed) “Ali Sheykholeslami, P.Eng.” Ali Sheykholeslami, P.Eng.

VANCOUVER | TORONTO | KELOWNA | WHITEHORSE | YELLOWKNIFE | TUCSON | HERMOSILLO

ROCKLAND LTD. Rock Engineering and Mine Backfill Specialist

CERTIFICATE OF AUTHOR

I, Khosrow Aref, P. Eng., do hereby certify that:

1. This certificate applies to the Technical Report entitled “Pre-feasibility Study Technical Report on the Magino Project, Wawa, Ontario, Canada”, with an effective date of January 18, 2016, (the “Technical Report”) prepared for Argonaut Gold Inc.;

2. I am currently employed as the Principal with Rockland Ltd. with an office at 1011 West Keith Road, North Vancouver, B.C. V7P 3C7;

3. I am a university graduate with B.Sc., M.Sc., and Ph. D. degrees in Mining Engineering. I have practiced my profession continuously since 1988;

4. I have worked in technical, management and consulting positions at mines in Canada, the United States, South America, Asia and Africa. I have been an independent consultant for over twenty years and have performed geotechnical assessment, mine engineering, supervision, technical due diligence reviews and report writing for mining projects worldwide;

5. I am a Registered Professional Geotechnical Engineer in British Columbia (#16847) and Ontario (#1273705);

6. I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101. I am independent of the Issuer and related companies applying all of the tests in Section 1.5 of NI 43-101;

7. I visited the Magino project site on October 16 and 17, 2013;

8. I am responsible for Sections 16.3 of this Technical Report;

9. I have been involved with the 2013 pre-feasibility study of Magino project;

10. As of the effective date of this Technical Report, to the best of my knowledge, information and belief, this Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading;

11. I have read NI 43-101, and the Technical Report has been prepared in accordance with NI 43-101 and Form 43-101F1.

Effective Date: January 18, 2016 Signing Date: January 22, 2016 (Original signed and sealed) “Khosrow Aref, P. Eng.”

Khosrow Aref, P. Eng.

______Rockland Ltd. 1011 W. Keith Rd. N. Vancouver, B. C. Canada V7P 3C7. Tel: (604) 983 0925 email [email protected]. Fax: (604) 985 0945

CERTIFICATE OF AUTHOR

I, David J. Salari, P.Eng., of 59 West Street, Oakville, ON, L6L 2Y8, do hereby certify that:

1. This certificate applies to the Technical Report entitled “Pre-feasibility Study Technical Report on the Magino Project, Wawa, Ontario, Canada”, with an effective date of January 18, 2016, (the “Technical Report”) prepared for Argonaut Gold Inc.;

2. I am a metallurgical engineer with an office at Suite 300-10, 1100 Burloak Drive, Burlington, ON, L6L 2Y8;

3. I am a graduate of the University of Toronto with a Bachelor's of Applied Science (BASc) – Metallurgy and Material Science;

4. I have been actively involved in mining and mineral processing since 1980 with extensive experience in metallurgical and mill testing and design, mill capital and operating costs, construction, commissioning, and mill operations;

5. I am a member in good standing of the Professional Engineers Ontario - #40416505 and I am the designated P.Eng. for D.E.N.M. Engineering Ltd. – Certificate of Authorization – Professional Engineers Ontario - #100102038 and Designation as a Consulting Engineer – Professional Engineers Ontario - # 4012;

6. I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43- 101) and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101. I am independent of the Issuer and related companies applying all of the tests in Section 1.5 of NI 43-101;

7. I visited the Magino project site on November 6, 2015;

8. I am responsible for Section 1.5 of Chapter 1 and Chapter 13;

9. I have had no prior involvement with the property this is subject to this Technical Report;

10. As of the effective date of this Technical Report, to the best of my knowledge, information and belief, this technical report contains all scientific and technical information that is required to be discussed to make the Technical Report not misleading;

11. I have read NI43-101, and the Technical Report has been prepared in accordance with NI 43-101 and Form 43-101F1.

Effective Date : January 18, 2026 Signing Date : this xxth day of February, 2016

"David J. Salari" (original signed and sealed)

David J. Salari, P.Eng.

Suite 300-10, 1100 Burloak Dr. Tel: (905) 332-2323 [email protected] Burlington, ON Fax: (905) 332-3007 www.denmengineering.com CANADA L7L 6B2

CERTIFICATE OF AUTHOR

I, Ian P.G. Hutchison, Ph D., P.E., do hereby certify that:

1. This certificate applies to the technical report entitled “Pre-feasibility Study Technical Report for the Magino Project, Wawa, Ontario, Canada” with an Effective Date of January 18, 2016, “the “Technical Report”) prepared for Argonaut Gold Inc.;

2. I am employed by SLR International Corporation at 17701 Cowan Avenue, Suite 210, Irvine, California, 92614, and carried out this assignment as an Associate of JDS Energy & Mining Inc.;

3. I hold the following academic qualifications:  B.S., Civil Engineering, University of Capetown, South Africa, 1967.  M.S., Hydraulic and Soils Engineering, University of the Witwatersrand, South Africa, 1974.  Ph.D., Hydrology, University of the Witwatersrand, South Africa, 1976.

4. I am a Canadian Citizen and a member of the Professional Engineers Ontario (License #R106733066);

5. I have worked as a civil engineer in the minerals industry for over 37 years;

6. I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43- 101) and past relevant work experience, I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101. I am independent of the Issuer and related companies applying all of the tests in Section 1.5 of the National Instrument 43-101;

7. I completed site visits on March 14-15 and June 9-10, 2013;

8. I am responsible for and/or shared responsibility for Sections numbers 1.2, 1.11, 4.5, 18.2, 18.3, 18.5, 18.6, 18.9, and 20;

9. My prior involvement with the property that is the subject of the Pre-feasibility Study Technical Report for the Magino Project is limited to the preparation of the prior Pre-feasibility report issued on January 30, 2014;

10. I have read NI 43-101, and the Technical Report has been prepared in compliance with NI 43-101 and Form 43-101F1; and

11. As of the date of this certificate, to the best of my knowledge, information and belief, this technical report contains all scientific and technical information that is required to be disclosed to make the technical report not misleading.

Effective Date: January 18, 2016 Signing Date: February 22, 2016

Original signed and sealed Ian P.G. Hutchison, PhD., P.Eng

SLR International Corporation 17701 Cowan, Suite 210, Irvine, CA 92614 T: (949) 553-8417 F: (949) 553-8423 www.slrconsulting.com Offices throughout USA, UK, Ireland, Canada, Australia, Namibia, and South Africa

RESOURCE MODELING INC.

CERTIFICATE OF QUALIFIED PERSON

I, Michael J. Lechner do hereby certify:

1. That I am an independent consultant and owner/president of Resource Modeling Incorporated, an Arizona Corporation;

2. That this certificate applies to the Technical Report entitled "Pre-feasibility Study Technical Report on the Magino Project, Wawa, Ontario, Canada", with an effective date of January 18, 2016 (the "Technical Report") prepared for Argonaut Gold Inc.;

3. That I am a registered professional geologist in the State of Arizona (#37753), a Certified Professional Geologist with the AIPG (#10690), a P. Geo. in British Columbia (#155344) and a registered member of SME (#4124987). I am a graduate of the University of Montana (1979) with a Bachelor of Arts degree in Geology;

4. That I have practiced my profession continuously since 1977 and have worked as an exploration geologist, mine geologist, engineering superintendent, resource modeler, and consultant on a wide variety of base and precious metal deposits throughout the world;

5. I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with professional associations (as defined in NI 43-101) and past relevant work experience I fulfill the requirements to be a "qualified person" for the purposes of NI 43-101. I am independent of the Issuer and related companies applying all of the tests in Section 1.5 of NI 43-101;

6. I visited the Magino Project (the Project) from March 18 to 19, 2015;

7. I am responsible for sections 1.3, 1.6, 7, 8, 9, 10, 11, 12, and 14 of the Technical Report;

8. I have had no prior involvement with the property that is the subject of this Technical Report. I have acted as a "qualified person" for Argonaut Gold for their San Agustín Project located in Mexico;

9. I have read NI 43-101 and Form 43-101F1 and fully believe that the Technical Report has been written in complete accordance with that Instrument and Form;

10. As of the effective date of this Technical Report, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

"signed and sealed"

Michael J. Lechner

February 22nd, 2016

RESOURCE MODELING INC. 124 LAZY J DRIVE • STITES, ID • 83552 PHONE: (208) 926-4948 • FAX: (208) 926-4950 [email protected] BRITISH COLUMBIA P. GEO. #155344