The Cerro de Oro Project is planned as a conventional open pit operation that will utilize 100-t haul tucks and front-end loaders. Material will be drilled and blasted, before being loaded and hauled to a waste dump, crusher, or direct to the heap leach pad. Mining activities will be completed by a contractor who will supply all of the required mine equipment and personnel working under the supervision of the Company's technical staff.

Using a nested pit shell that is based on a gold price of $1,500/oz and the economic parameters applied to the resource estimate as a guide, a full open pit mine plan was completed. Upon completion of the ultimate pit designs a check was completed that considered both revisions to the Company's gold price forecast and its operating cost estimates for the Project. A LOM gold price of $1,600/oz was selected for use in the final mine planning economics.

Based on available metallurgical data for the project and an evaluation of the host rock lithologies it was assumed that the majority of mineralization mined will be placed directly on the heap leach as run-of-mine ("ROM") with approximately 30% of the mineralization reporting to the crusher for size reduction (equivalent to crushing cut-off grade of approximately 0.40- 0.45 g/t Au). The mine production schedule anticipates that mining starts at the beginning of year 1 following the completion of all required earthworks activities such as road, dump and starter leach pad construction. Due to the low LOM strip ratio (0.30:1) and the size of the mineralization the PEA did not adjust the planned mining physicals to account for mining losses or dilution (magnitude of losses likely similar to dilution).

Mine planning efforts going forward will be aimed at cut-off grades and the smoothing of the mining activities later in the mine life that may provide additional economic upside for the project. Over the life of mine of 8.2 years a total of 59Mt of mineralization grading 0.37 g/t gold (700koz of contained gold) are anticipated to be mined. Pit bench heights were selected at 5m intervals in order to provide good ore/waste selectivity although use of larger bench heights in zones of primarily waste and on final open pit walls should be considered as part of future optimization studies.

Overall average pit slopes with the benches/ramps in place range between approximately 30-43 degrees in the north pit and 34 - 38 degrees in the south pit. It is assumed that all drilling/blasting/loading/hauling operations at the Project are planned to be completed via an open pit mining contractor. Mining costs were developed for the project utilizing recent Mexican cost information for similar heap leach operations and as part of the Company's recent work at its Santana mine.

Contractor availability in northern Mexico is currently high and rates are competitive. An additional cost was applied to the mineralized material to account on average for longer hauls to the heap leach pads over the mine life. Mine planning and supervision activities will be performed by Company personnel and these costs are excluded from contractor rates.

The process flowsheet for the Cerro de Oro project is similar to that utilized by the Company at their recently constructed Santana gold heap leach project. Metallurgical testwork completed to date on samples from the Cerro de Oro deposit indicate that the gold mineralization is well disseminated throughout the host rock and that the oxide mineralization responds positively to cyanidation. Residual gold contents following leaching in multiple series of bottle roll tests (conventional and coarse particle) appear to trend towards a typical range of ultimate values near 0.10 g/t Au.

Leach kinetics were generally rapid in nature with low to moderate reagent consumptions (lime and cyanide). A limited number of column tests have been completed resulting in leach extractions consistent with those observed from bottle roll studies. Additional studies have been recommended to better define leaching parameters and any variability that may exist between the different mineralized zones and lithologies.

The process design for the Cerro de Oro gold project includes crushing of high grade material to less than 3/4-7/8" (30-35% of total with remaining low grade sent to leach pad as run-of-mine), a heap leaching pad, solution ponds and carbon column recovery of gold from pregnant leach solutions. The current design excludes carbon desorption and gold refining facilities as gold-loaded carbon will be shipped off-site for final dore production. The overall plant design was based on a nominal rate of 7,000,000 tonnes per year of mineralized material stacked to the leach pad at an average grade of 0.4 g/t Au.

Sufficient excess capacity is included in the design to allow for expected annual variations in mine production around these nominal values. Base case leach solution flow rate to the carbon column recovery area was set at 800 m3/h with allowances to expand to 1,200 m3/h to accommodate increases in annual production rates and/or an expansion in the overall project resources. The overall Cerro de Oro gold recovery facilities consist of the following unit operations and support facilities:Low grade run-of-mine material leach pad loading via direct truck dump; Two stage crushing (jaw and cone) and screening operations for higher grade mine material with conveyor/stacker transport to leach pad; Lined heap leach pad area sufficient to handle current life-of-mine resource (40-50% constructed initially as Phase 1 with subsequent expansions); Lined leach solution ponds adjacent to the leach pad - barren, pregnant and emergency overflow solution capacity; Four trains of 4 stage carbon in columns with area to expand to six trains; All required process pumping and loaded and barren carbon handling; Reagent preparation and storage facilities; Metallurgical laboratory (necessary production samples only); and Utilities including water supply system (surface wells) and diesel power generation.