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Ten sample composites totaling 311 kilograms from the principal gold zones at Douay (Northwest, Douay West, Main Porphyry, 10, 20, 531 and Main) as outlined by Duke (2012)*, were submitted for metallurgical testing at Base Metallurgical Laboratories in Kamloops (B.C.).

The average gold grade of the sample composites was 1.89 g/t gold. Gold was the primary economic element; other possible revenue generating metals including copper and silver were at trace levels in most of the samples. The samples also contained on average 1.50% sulfur.

Using gravity and flotation, gold recovery to the concentrates was very consistent. The average gold gravity recovery was 26% with flotation recovering an additional 66%, totaling an average 92% recovery. The tests indicated a strong correlation between gold recovery and sulfur recovery, indicating that gold may be associated with the sulfide minerals.

To understand the sulfur and gold relationship, another series of tests were performed to recover a gravity and flotation concentrate, followed by cyanidation leaching of the flotation concentrate. Leaching tests were performed on the flotation concentrate reground to 2 different leach sizes: 20 µm K80 and 15 µm K80. The finer regrind size produced the best performance. The average gold extraction for the gravity, flotation and leach process was 85%. The performance of the two Northwest Zone composites, from a felsic volcanic host rock, improved from the whole feed cyanide leaching (see below), but they still lagged in comparison to the other composites. The average recovery of this process, excluding the Northwest Zone samples was 88.9% in mafic volcanic and porphyry host rocks.

Mineralogical analysis of the zones indicated the sample composites contained relatively low levels of the iron-sulfide (pyrite), with only trace levels of other sulfide minerals. The remaining host rock was comprised of mainly feldspars (potassium-aluminium silicates), quartz (silicon oxide) and carbonate (iron-calcium rich carbonates) minerals.

A Bond Ball Mill Work Index (the “Work Index”) determination was performed on a combined composite sample of all the zones and the indicated mineralization is considered relatively hard. The Work Index value was determined to be 18.5 kWh/tonne. In addition to gravity concentration and flotation tests initial testing also examined whole feed cyanidation as a possible process to extract gold. The tests were all conducted at a nominal 75µm K80 primary grind size over 2, 6, 24 and 48 hour leach times. Most of the samples displayed relatively fast cyanide leach times reaching a plateau at about 6 hours. The whole feed cyanide leaching response was highly variable: four sample composites achieved greater than 90% extraction. However, the average performance extraction was 81%, with two samples from the Northwest Zone having only 52% extraction. Cyanide and lime consumption was low, averaging 0.3 kg/t and 1.4 kg/t, respectively.

The gravity-flotation-leach process (“GFL”) should result in capital and operating cost advantages over whole ore leach. Flotation process equipment would be required, but the subsequent leach circuit would be approximately one-tenth the size of the whole ore leach process. The cyanide and lime consumption of the GFL process is estimated at only 0.2 kg/t and 0.4 kg/t of the feed. The initial testing produced positive metallurgical response, with further metallurgical testing warranted to optimize metallurgical response and lower the cost of the process.

The “Douay Deposit National Instrument 43-101 Technical Report”, by Cliff Duke, P. Eng., of Riverbend Geological Services Inc., dated August 17, 2012, and filed under the Company’s SEDAR profile at www.sedar.com