THE LEADING CANADIAN GOLD DEVELOPER CORPORATE PRESENTATION - - PowerPoint PPT Presentation

the leading canadian gold developer corporate
SMART_READER_LITE
LIVE PREVIEW

THE LEADING CANADIAN GOLD DEVELOPER CORPORATE PRESENTATION - - PowerPoint PPT Presentation

THE LEADING CANADIAN GOLD DEVELOPER CORPORATE PRESENTATION WWW.FALCORES.COM | FPC:TSXV MIF - JANUARY 2017 CAUTIONARY STATEMENT Disclaimer This presentation contains a review of the Companys properties in Canada. Viewers are cautioned that


slide-1
SLIDE 1

THE LEADING CANADIAN GOLD DEVELOPER

CORPORATE PRESENTATION

MIF - JANUARY 2017 WWW.FALCORES.COM | FPC:TSXV

slide-2
SLIDE 2

Disclaimer This presentation contains a review of the Company’s properties in Canada. Viewers are cautioned that the projects are at an early stage of exploration and that estimates and projections contained herein are based on limited and incomplete data. More work is required before the mineralization on the projects and their economic aspects can be confidentaly modeled. Therefore, the work results and estimates herein may be considered to be generally indicative only of the nature and quality of the projects. No representation or prediction is intended as to the results of future work, nor can there be any promise that the estimates herein will be confirmed by future exploration or analysis, or that the projects will otherwise prove to be economic. The TSX Venture Exchange has not reviewed and does not accept responsibility for the accuracy or adequacy of this presentation, which has been prepared by

  • management. There can be no assurance that any of the assumptions in the resource estimates will be supported by a Pre-feasibility or Feasibility Study or that any

forward looking event will come to pass. The data is incomplete and considerable additional work will be required to complete further evaluation, including but not limited to drilling, engineering and socio-economic studies and investment. Past performance is no guarantee of future performance and all investors are urged to consult their investment professionals before making an investment decision. Investors are further cautioned that past performance is no guarantee of future performance Forward-Looking Statements Certain information included in this presentation constitutes forward-looking statements, including any information as to our projects, plans and future performance. All statements, other than statements of historical fact, are forward-looking statements. The words “expect”, “believe”, “anticipate”, “will”, “intend”, “estimate”, “forecast”, “budget”, “schedule” and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: changes to current estimates of mineral resources; labour availability; litigation; availability of and increased costs associated with contractors and exploration equipment; the speculative nature of mineral exploration and development, including the risks of obtaining necessary licenses and permits; contests over title to properties; uncertainty with the Company’s ability to secure capital to execute its business plans; changes in national and local government legislation in Canada; risk of loss due to sabotage and civil disturbances; risks arising from holding derivative instruments; and business opportunities that may be pursued by the

  • Company. Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in

any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Cautionary Note to U.S Investors Concerning Measured, Indicated and Inferred Resources This presentation uses the terms “measured,” “indicated” and “inferred resources. We advise investors that while those terms are recognized and required by Canadian regulations, the United States Securities and Exchange commission does not recognize them. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable.

CAUTIONARY STATEMENT

slide-3
SLIDE 3

TSXV: FPC | WWW.FALCORES.COM | 3

3

TSXV:FPC C$147M

MARKET CAP

~C$37.0M

CASH & CASH EQUIVALENTS

8.8M GOLD EQ OZ

TOTAL RESOURCES

236,000 GOLD OZ

ESTIMATED AVERAGE GOLD ANNUAL PRODUCTION

US$427 PER GOLD OZ

ALL-IN SUSTAINING COST

US$680M

DEVELOPMENT CAPITAL EXPENDITURE

17 YEARS

INITIAL MINE LIFE

slide-4
SLIDE 4

TSXV: FPC | WWW.FALCORES.COM | 4

FALCO RESOURCES – CAPITAL SUMMARY & SHAREHOLDER REGISTRY

CAPITAL STRUCTURE (AS OF NOV 21, 2016) SHAREHOLDER REGISTRY

Osisko Gold Royalties 14.2% Tocqueville 11.1% Raymond James 4.0% Quebec Funds 3.7% Pate Capital 2.5% Commodity Discovery Fund 1.0% AgaNola AG 1.0% Insiders (D&O) 4.0% Shares Outstanding (basic) 146,683,323 Stock Options 8,056,798 Warrants 12,091,675 Shares Outstanding (fully diluted) 166,831,796 Share Price C$0.95 Market Capitalization C$139.4 Cash Position ~C$37.0 Million

Source: Factset, Bloomberg, public filings and Company estimates

slide-5
SLIDE 5

TSXV: FPC | WWW.FALCORES.COM | 5

DOMINANT POSITION IN THE ESTABLISHED ROUYN- NORANDA CAMP

HIGHLY PROSPECTIVE LAND IN A TOP JURISDICTION § 13 former mines on 740 km2 of Falco properties § Over 80 years of data archives § Great land package with several high potential green and brown field prospects

slide-6
SLIDE 6

TSXV: FPC | WWW.FALCORES.COM | 6

ROUYN-NORANDA – THE BEST PLACE TO BUILD A MINE

TIER 1 LABOUR POOL TIER 1 SUPPLIERS TIER 1 POWER RAIL & HIGHWAY CLEAR PERMITTING NO CAMP NO WAREHOUSE NO SEASONALITY

  • Rouyn-Noranda and the region of Abitibi produce the most experienced

miners in the world. With underground and open pit experience & capabilities

  • Access to tier 1 mining equipment suppliers & mining contractors in the

world

  • ~80% of required suppliers & contractors located within 1 hour from

project

  • Access to one of the most affordable and reliable power source in the

world

  • Hydro power – clean & renewable
  • Rail: Reception of equipment, reagents, but also shipment for

concentrates

  • Highway access: Regional suppliers, miners, etc.
  • Québec Government: a strong supporter of the mining industry
  • Clear permitting process & BAPE process for operations over 2,000 tpd
  • Proximity to the town of Rouyn-Noranda eliminates the need for a camp
  • Access to better & experienced miners; better work-life balance &

conditions

  • Proximity to the town of Rouyn-Noranda eliminates the need for a

warehouse

  • Access to suppliers warehouse; reduced size of required working capital
  • Weather conditions allow to build and produce all-year round

CANADIAN DOLLAR

  • Majority of costs associated with project build in Canadian dollars
  • In underground operations >75% of operating costs are in local

currency

slide-7
SLIDE 7

TSXV: FPC | WWW.FALCORES.COM | 7

HIGH GRADE ZONES

HORNE 5 PROJECT| LONG & CROSS SECTIONS OF THE DEPOSIT

slide-8
SLIDE 8

TSXV: FPC | WWW.FALCORES.COM | 8

HORNE 5 PROJECT| THE NEW PROJECT – THE NEW VISION

§ A state-of-the-art UNDERGROUND MINING project § MAXIMIZE USE OF EXISTING INFRASTRUCTURE § Bulk tonnage operation § Highly efficient mining methods § 15,000 tonnes per day mill § Limited footprint on surface with use of historical voids and stopes for waste and tailings disposal § 236,000 ounces of avg. annual GOLD production § US$427 per ounce all-in cash cost § Development Capital Investments of US$680 million

NEW MINE: HORNE 5 PROJECT

slide-9
SLIDE 9

TSXV: FPC | WWW.FALCORES.COM | 9

Surface control underground operaTons:

  • Hoist – production and services
  • Teleoperation of loaders
  • Monitoring and management of

ventilation requirements

  • Monitoring of the paste backfill

distribution

  • Water pumping monitoring
  • Staff & equipment location monitoring

HORNE 5 PROJECT| HIGH LEVEL OF AUTOMATION

slide-10
SLIDE 10

TSXV: FPC | WWW.FALCORES.COM | 10

HORNE 5 PROJECT| HIGH LEVEL OF AUTOMATION

§ Bucket capacity of 21t (equivalent loading bucket size to 100t trucks used in

  • pen pits)

§ Scoop fleet operated from the surface by 2 technicians (4 scoops) § Allow to operate between working shifts (20h/day vs 14h/day for a conventional mine)

slide-11
SLIDE 11

TSXV: FPC | WWW.FALCORES.COM | 11

HORNE 5 PROJECT| MINING APPROACH FOR FEASIBILITY >17 YEARS OF LIFE

ß EXISTING SHAFT

slide-12
SLIDE 12

TSXV: FPC | WWW.FALCORES.COM | 12

HORNE 5 PROJECT| DEVELOPMENT CAPITAL EXPENDITURES US$680M

$186 $265 $16 $74 $14 $82 $45

Mining Processing Plant Electrical and Communication Site Infrastructure Tailings and Water Management Indirects Contingency

TOTAL PRE-PRODUCTION CAPITAL COSTS US$680M

Note: Amounts may vary due to rounding.

*FROM PEA

slide-13
SLIDE 13

TSXV: FPC | WWW.FALCORES.COM | 13

Margin (US$)

  • $200

$400 $600 $800 $1,000 $1,200 $1,400

HORNE 5 PROJECT| LOW ALL-IN SUSTAINING COSTS – PER GOLD OUNCE

Cash Cost Summary On-Site Mining $324 On-Site Processing $340 Tailings and water $70 On-Site G&A $47 Smelting and Refining $107 Royalties $35 By-Product Credit ($608) Sustaining $98 Closure $13 Total $427 Gold Margin $823

Gold Margin: US$823 per Au Oz. All-in Sustaining Cash Cost*: US$427 per Au Oz.

  • All-in Sustaining Costs are presented as defined by the World Gold Council ("WGC") less Corporate G&A
  • Margin at $1,250 Gold price

*FROM PEA

slide-14
SLIDE 14

TSXV: FPC | WWW.FALCORES.COM | 14

HORNE 5 PROJECT| FEASIBILITY ADVANCING – SURFACE

slide-15
SLIDE 15

TSXV: FPC | WWW.FALCORES.COM | 15

HORNE 5 PROJECT| FEASIBILITY ADVANCING – MILL

slide-16
SLIDE 16

TSXV: FPC | WWW.FALCORES.COM | 16

TIMELINE – ON THE ROAD TO FEASIBILITY & DEVELOPMENT

ACTIVITIES START COMPLETIO N

PEA COMPLETED Environmental Impact assessment Q2 2016 Q2 2017 Feasibility Study Q2 2016 Q2 2017 Dewatering phase 1 Q1 2017 Q2 2018 Detailed engineering Q1 2017 Q2 2018 Head frame and hoist construction (Exploration Phase) Q3 2017 Q2 2018 Public audiences – “BAPE” Q3 2017 Q1 2019 Permits for project construction Q1 2019 Processing plant construction Q1 2019 First mineralized ore in mine Q4 2020 Full Mine ramp up (Phase 1) H1 2021 End of process plant construction / plant commissioning H1 2021 Process plant ramp up H2 2021

slide-17
SLIDE 17

TSXV: FPC | WWW.FALCORES.COM | 17

HIGH MARGIN PROJECT – HIGHLY MECHANISED PROJECT

Goldex (Agnico Eagle) Young-Davidson (Alamos) LaRonde (Agnico Eagle) Horne 5 (Falco) Resource Grade (g/t AuEq) 1.8 2.8 5.1 2.9 Mining Method Long hole Transverse long hole Longitudinal Retreat / Transverse Open Stoping Transverse long hole Depth (m) 800 - 1,500 750 - 1,500 2,000-3,000 600 - 2,300 Stope Size 15-38 x 30 x 50 20-25 x 20 x 30 5-25 x 15 x 30 38 x 15 x 15 Mining Rate 5,100 tpd 8,000 tpd * 7,200 tpd 15,000 tpd Specific Gravity 2.8 2.69 3.3 3.45 Mining Dilution 15% 10%-20% 10%-20% < 4% Operating Cost/NSR $41/t * $53.50/t * $95/t $47.50/T* Annual Production (koz) 71,000 * 200,000 * 230,000 * 236,000* * Projected life-of-mine (LOM)

Source: Company website, technical reports and filings from SEDAR

slide-18
SLIDE 18

TSXV: FPC | WWW.FALCORES.COM | 18

FALCO RESOURCES – SENIOR LEADERSHIP TEAM

OFFICERS & TECHNICAL TEAM BOARD OF DIRECTORS Sean Roosen, Chairman Mario Caron, Lead Director Luc Lessard, President & CEO, Director Helene Cartier, Director Paola Farnesi, Director Claude Ferron, Director Paul Henri-Girard, Director Luc Lessard, President & CEO, Director Vincent Metcalfe, CFO Claude Léveillée, Vice-President Community Relations & HR Claude Bernier, Exploration Manager Sylvain Doire, Environment Claude Pilote, Senior Geologist TECHNICAL TEAM – OSISKO TECHNICAL SERVICES Francois Vezina, Director – Mining Christian Laroche, Director – Processing John-Paul McGrath – Project Manager Daniel Mathieu – Mechanical Designer Iain Farmer – Project Engineer

slide-19
SLIDE 19

TSXV: FPC | WWW.FALCORES.COM | 19

Head Office Falco Resources Ltd. 1100, avenue des Canadiens-de-Montréal Bureau 300 Montréal, QC H3B 2S2 Tél. : +1.514.905.3162 Toll Free : +1.888.915.2009 Courriel : info@falcores.com Investor Inquiries Vincent Metcalfe, CFO Tel: +1.514.905.3162 Email: vmetcalfe@falcores.com

CONTACT US

slide-20
SLIDE 20

TSXV: FPC | WWW.FALCORES.COM | 20

APPENDIX

Appendix A – PEA Additional Information Appendix B – Resource & Modeling Notes

slide-21
SLIDE 21

TSXV: FPC | WWW.FALCORES.COM | 21

OCTOBER RESOURCE UPDATE – @ C$55NSR

Note: Commodity Price Assumptions in US$ - $1,300/oz Au, $18.50/oz AG, $2.15/lb CU, $1.00/lb ZN

Resource Class Cut-off (NSR C$) Tonnes Au Equivalent g/t Au g/t Ag g/t Cu % Zn % Contained Au EQ (oz) Contained Au (oz) Contained Ag (oz) Contained Cu (lbs) Contained Zn (lbs) > 40 112,837,300 2.19 1.40 13.51 0.16 0.77 7,933,432 5,092,093 49,006,097 404,004,013 1,918,532,372 > 45 105,660,800 2.26 1.45 13.80 0.17 0.80 7,675,704 4,934,128 46,895,548 388,219,896 1,861,812,513 > 50 98,431,300 2.34 1.50 14.10 0.17 0.83 7,389,520 4,758,936 44,630,965 371,415,421 1,795,554,378 > 55 91,096,800 2.41 1.56 14.41 0.18 0.86 7,072,273 4,563,793 42,209,208 353,502,913 1,720,132,089 > 60 83,674,500 2.50 1.62 14.74 0.18 0.89 6,724,071 4,348,340 39,658,845 334,697,744 1,635,170,900 > 65 76,164,000 2.59 1.68 15.10 0.19 0.92 6,343,817 4,114,360 36,964,321 314,464,092 1,538,362,827 > 70 68,857,000 2.69 1.75 15.44 0.19 0.94 5,946,460 3,872,056 34,187,862 293,539,891 1,433,144,432 > 75 61,768,900 2.79 1.82 15.78 0.20 0.97 5,534,345 3,622,782 31,338,658 272,412,325 1,319,587,642 > 80 55,205,800 2.89 1.90 16.07 0.21 0.99 5,128,157 3,379,201 28,514,569 252,090,038 1,204,136,268 > 85 48,979,500 3.00 1.99 16.32 0.22 1.01 4,719,916 3,133,727 25,694,362 232,283,780 1,087,297,243 > 90 43,127,300 3.11 2.08 16.53 0.22 1.02 4,314,767 2,889,443 22,920,820 212,895,273 971,164,640 > 95 37,708,700 3.23 2.19 16.76 0.23 1.03 3,920,117 2,649,110 20,318,763 194,147,093 859,000,393 > 100 32,847,800 3.36 2.29 16.93 0.24 1.04 3,547,992 2,423,233 17,878,830 176,525,171 751,901,217 Resource Class Cut-off (NSR C$) Tonnes Au Equivalent g/t Au g/t Ag g/t Cu % Zn % Contained Au EQ (oz) Contained Au (oz) Contained Ag (oz) Contained Cu (lbs) Contained Zn (lbs) > 40 29,982,700 2.09 1.27 20.20 0.18 0.62 2,018,308 1,225,760 19,474,995 121,579,421 408,634,980 > 45 27,554,500 2.18 1.33 21.03 0.19 0.64 1,930,445 1,176,117 18,634,351 114,786,950 389,104,374 > 50 24,940,000 2.28 1.39 21.98 0.20 0.66 1,826,125 1,116,815 17,622,512 107,406,534 365,167,423 > 55 22,283,200 2.39 1.47 22.98 0.20 0.68 1,709,902 1,053,061 16,463,471 99,171,805 336,101,668 > 60 20,058,400 2.49 1.54 23.94 0.21 0.70 1,604,361 995,491 15,437,436 91,439,498 309,347,419 > 65 17,472,900 2.62 1.64 25.21 0.21 0.72 1,472,114 922,946 14,159,498 80,661,116 278,551,219 > 70 15,293,600 2.75 1.74 26.48 0.21 0.74 1,352,929 856,634 13,019,250 71,823,610 249,906,179 > 75 13,406,500 2.88 1.84 27.70 0.22 0.75 1,242,755 794,507 11,940,661 64,601,999 222,924,808 > 80 11,528,900 3.04 1.96 29.10 0.23 0.77 1,126,483 727,514 10,784,724 57,409,881 195,709,438 > 85 9,821,100 3.21 2.11 30.25 0.23 0.78 1,014,192 664,774 9,552,769 50,654,094 168,612,199 > 90 8,222,900 3.41 2.29 30.98 0.25 0.77 902,741 604,603 8,189,164 44,700,861 139,977,418 > 95 6,927,000 3.63 2.48 31.57 0.26 0.76 807,727 552,850 7,030,524 39,678,474 115,974,677 > 100 5,912,700 3.84 2.68 32.15 0.27 0.74 729,660 509,966 6,112,206 35,554,367 96,081,089 Inferred Measured + Indicated

slide-22
SLIDE 22

TSXV: FPC | WWW.FALCORES.COM | 22

Appendix A – Historical Drill Density of Horne 5 Deposit

600m HORNE QUEMONT

§ Exceptional Drill

Density

Ø 4,384 underground

drill holes at 15 m spacing (305,788m) drilled by Noranda

Ø Very high

confidence in historical drilling

Ø Great upside at

Depth – limited drilling vs. upper area

slide-23
SLIDE 23

TSXV: FPC | WWW.FALCORES.COM | 23

Appendix A – Horne 5 Deposit & 2015 Confirmation Drilling Program

HORNE QUEMONT

slide-24
SLIDE 24

TSXV: FPC | WWW.FALCORES.COM | 24

QUEMONT PRODUCTION SHAFT

?

WESTERN PLUNGE

Appendix A – Horne 5 Deposit – Near surface targets – Quemont Extension

slide-25
SLIDE 25

TSXV: FPC | WWW.FALCORES.COM | 25

  • NPV of $1.131 billion at a 5% discount rate and an IRR of 20.0% before taxes and mining duQes
  • NPV of $667 million at a 5% discount rate and an IRR of 16.0% aSer taxes and mining duQes
  • Peak-year producQon of 274 kozs and average LOM annual producQon of 236 kozs of gold
  • Net payable gold recovery of 86.8%
  • 3,051,000 gold ounces producQon at an average diluted grade of 2.60 g/t Au LOM
  • 2,903,000 ounces of payable gold LOM
  • 807 million pounds of payable zinc LOM
  • 194 million pounds of payable copper LOM
  • 23.8 million ounces of payable silver LOM
  • All-in sustaining costs* of US$427 PER PAYABLE GOLD OUNCE
  • All-in cost (CAPEX plus OPEX) is esQmated at US$660 per payable gold ounce
  • IniQal CAPEX of C$905 million (including a $60 million conQngency) or US$680 million
  • Payback Period of 3.8 years pre-tax and 4.1 years post-tax
  • Gross Revenue of $6.8 billion and OperaQng Cash-flow of $2.6 billion
  • Start of producQon in 2020
  • Full producQon in 2021
  • IniQal mine life of 12 years

*All-in Sustaining Costs are presented as defined by the World Gold Council ("WGC") less Corporate G&A Note: Commodity Price AssumpQons in US$ - $1,250/oz Au, $17.00/oz AG, $2.85/lb CU, $1.00/lb ZN

Appendix A – Horne 5 Project Key Highlights

slide-26
SLIDE 26

TSXV: FPC | WWW.FALCORES.COM | 26

AFTER TAX NPV AND IRR SENSITIVIT Y TO GOLD PRICES

Gold Price (US$/oz) $1,150 $1,200 $1,250 $1,300 $1,350 $1,400 Pre-Tax NPV 5% C$M $898 $1,015 $1,131 $1,248 $1,364 $1,481 After-Tax NPV 5% C$M $521 $594 $667 $739 $804 $874 Pre-Tax IRR 17.4% 18.7% 20.0% 21.3% 22.5% 23.7% After-Tax IRR 13.8% 15.0% 16.0% 17.1% 18.0% 18.9% Pre-Tax Payback Years 4.4 4.1 3.8 3.5 3.3 3.1 After-Tax Payback Years 4.7 4.4 4.1 3.8 3.6 3.4

Note: Commodity Price Assumptions in US$ - $1,250/oz Au, $17.00/oz AG, $2.85/lb CU, $1.00/lb ZN

Appendix A – PEA Sensitivities

slide-27
SLIDE 27

TSXV: FPC | WWW.FALCORES.COM | 27

Appendix A – Proposed Flowsheet of Horne 5 Project

slide-28
SLIDE 28

TSXV: FPC | WWW.FALCORES.COM | 28

Appendix B – Ramp-Up Example for Horne 5 Project

  • 23,500 tonne stopes

(38x15x15)

  • 20 effective hrs/day
  • 58-day stope cycle time
  • 4 mucking faces
  • 6-7 days mucking per stope
slide-29
SLIDE 29

TSXV: FPC | WWW.FALCORES.COM | 29

Appendix B – Example Sequence for a Single Pyramid – 1st level

slide-30
SLIDE 30

TSXV: FPC | WWW.FALCORES.COM | 30

Appendix B – Example of Active Pyramids during Ramp-up

  • 4 pyramids will be

active (mucking) at any given time

  • Full production

(15,000 tpd) expected to be reached in as quickly as 4.5 months

slide-31
SLIDE 31

TSXV: FPC | WWW.FALCORES.COM | 31

Source: Wood Mackenzie Ltd. And BMO Capital Markets * All-in Sustaining Costs are presented as defined by the World Gold Council ("WGC") less Corporate G&A

$0 $500 $1,000 $1,500 $2,000 $2,500

2016 Gold Mine, Composite, Total Cash + Sustaining Capex Cost Grouped By Mine and Ranked By Total Cash plus Sustaining Capex Total Cash + Sustaining Capex (US$/oz) 500 1000 1500 2000 Paid Gold (t)

Horne 5 Project AISC of US$427/oz

Appendix B – Low All-In Sustaining Cost, a Top Quartile Asset

slide-32
SLIDE 32

TSXV: FPC | WWW.FALCORES.COM | 32

Appendix B – Mineral Resource Estimates & Modeling Notes

1. The effective date of the resource estimate is September 26, 2016. The Independent and Qualified Persons for the Mineral Resource Estimate as required by National Instrument 43-101 are Carl Pelletier, P. Geo., B.Sc. and Guilhem Servelle, P.Geo., M.Sc., both employees of InnovExplo Inc. 2. Mineral Resources are not Mineral Reserves and have not demonstrated economic viability. 3. While the results are presented undiluted and in situ, the reported mineral resources are considered by the Qualified Persons to have reasonable prospects for economic extraction. 4. These estimates include six (6) low grade gold-bearing mineralized zones. 5. The principal low-grade gold-bearing mineralized zone includes six (6) high-grade gold-bearing zones, one (1) high-grade copper-bearing zone, one (1) high grade zinc-bearing zone, three (3) high-grade silver-bearing zones. Note that these high-grade zones may overlap each other. 6. Resources were compiled at NSR cut-offs of C$40, C$45, C$50, C$55, C$60, C$65, C$70, C$75, C$80, C$85, C$90, C$95, and C$100 per tonne for sensitivity purposes. 7. The official base case resource is reported at a C$55 per tonne NSR cut-off. 8. The appropriate NSR cut-off will vary depending on prevailing economic and operational parameters to be determined. 9. NSR estimates are based on the following assumptions: exchange rate of $C1.30/$US, metal prices of (all $US): gold $1,300/oz, silver $18.50, copper $2.15/lb, zinc $1.00/lb (Long term analyst consensus price forecast study). Net recoveries of 86.8% for gold, 74.9% for silver, 67.3% for zinc and 74.0% for copper. Smelting cost (including transportation) C$6.52 per tonne (based on the Cost Mine service as well as on non-public smelter contract obtained from one of the proposed destinations and on talks with transport providers).

  • 10. Gold equivalent calculations assume these same metal prices.
  • 11. Inferred resources are separate from Indicated Resources
  • 12. The quantity and grade of reported Inferred Resources in this estimate are uncertain in nature and there has not been sufficient work to define these Inferred Resources as

Indicated or Measured Resources. It is uncertain if further work will result in upgrading them to an Indicated or Measured mineral resource category.

  • 13. The resource was estimated using Geovia GEMS 6.7. The estimate is based on 5,977 diamond drill holes (478,281m) of which 4,138 crosscut mineralized zones for a total of

177,996m of core within these zones. For silver the estimate also uses the results of an exhaustive metallurgical test comprising 2,112 diamond drill holes assayed for silver

  • ver a total length of 75,540 meters. A minimum true thickness of 7.0 m was applied, using the grade of the adjacent material when assayed, or a value of zero when not
  • assayed. Only the silver interpolation in the Inferred resources does not use the material when not assayed.
  • 14. The estimate database contains also 14,799 channel samples for a total of 23,791m from drifts historically sampled. Channel sample data was only used for distance to

composite criterion for resource classification purposes.

  • 15. 91% of density values were estimated using historical drill hole iron assays data and Falco density data for an average of 3.41 g/cm3. Interpolation method use 3 pass ID2 for

the ENV_A and HG_A to HG_F zones. 8% of density values were fixed at 2.88 g/cm3 for ENV_B to ENV_E zones due to the scarcity of the data. 2.88 g/cm3 representing the median of the available data. 1% of density values were fixed at 2.67 g/cm3 for ENV_F zone due to the scarcity of the date and to adequately characterise this quartz-rich zone.

  • 16. Compositing was done on drill hole sections falling within the mineralized zones (composite = 3.0 metres). Tails shorter than 0.75 m were not created.
  • 17. Resources were evaluated from drill holes using an ID2 interpolation method in a block model (block size = 5 x 5 x 5 m).
  • 18. High grade capping was done on raw assay data and established on a per zone basis for gold (Au g/t): (HG_A: 35; HG_B: 35; HG_C: 25; HG_D: 35; HG_E: 25; HG_F: 35;

ENV_A: 35; ENV_B: 25; ENV_C: 25; ENV_D: 20; ENV_E: 35; ENV_F: 25) and for silver (Ag g/t): SG_HG:100; HG_D: 165; HG_F: 165; ENV_A_SG_Low: 110; ENV_B: 100; ENV_C: 100; ENV_D: 100. Capping grade selection is supported by statistical analysis. No capping was applied to the Cu and Zn data based on statistical analysis.

  • 19. The Mineral Resources presented herein are categorized as Measured, Indicated and Inferred. The Inferred category is only defined within the areas where blocks were

interpolated during pass 1 or pass 2 in areas where continuity is sufficient to avoid isolated blocks. The Indicated category is only defined by blocks interpolated in areas where the maximum distance to the closest drill hole composite is less than 25m for blocks interpolated in passes 1 and 2. The Measured category is only defined by blocks classified as indicated and in sufficient proximity to sampled drifts (< 15m). The average distance to the nearest composite is 6.97 meters for the Measured resources, 10.01 meters for the Indicated resources and 40.10 meters for the Inferred resources.

  • 20. Tonnage estimates were rounded to the nearest hundred tonnes. Any discrepancies in the totals are due to rounding effects. Rounding practice follows the recommendations

set out in Form 43-101F1.

  • 21. CIM definitions and guidelines were followed in estimating mineral resources.
  • 22. InnovExplo is not aware of any known environmental, permitting, legal, title-related, taxation, socio-political, marketing or other relevant issue that could materially affect the

mineral resource estimate.

RESOURCE ESTIMATE NOTES