Geological Resources – Palito

On 25 January 2018, Serabi filed a report prepared as a Canadian National Instrument 43-101 (NI 43-101) Technical Report (“the Technical Report”) prepared by SRK Consulting (US) Inc. (“SRK”) on the Palito Mining Complex which consists of the Palito and Sao Chico gold deposits.

The  Technical Report established an independent Mineral Resource and Mineral Reserve for the Palito deposit as follows:

Mineral Resources as of 30 June 2017 Tonnage Gold g/t Contained Gold ounces
Measured – Underground 274,000 15.21 134,000
Indicated  – Underground 371,000 10.91 130,000
Measured – Surface Stockpiles 12,000 3.15 1,000
Measured – Tailings 60,000 2.70 5,000
Measured – Combined 346,000 12.62 140,000
Indicated  – Combined 371,000 10.91 130,000
TOTAL Measured and Indicated 717,000 11.74 271,000
TOTAL  Inferred – Underground 784,000 7.02 177,000

1)     Mineral Resources are not Mineral Reserves and have not demonstrated economic viability

2)     Mineral Resources are reported inclusive of Mineral Reserves.

3)     Figures are rounded to reflect the relative accuracy of the estimates.

4)     Mineral resources are reported within classification domains inclusive of in situ dilution at a cut off grade of 2.85 g/t gold assuming an underground extraction scenario, a gold price of US$1,500/oz, and metallurgical recovery of 95%.

3)     Polygonal techniques were used for Mineral Resource estimates.

Technical Report established an independent Mineral Resource and Mineral Reserve for the Palito deposit as follows:

Mineral Reserves as of 30 June 2017 Tonnage Gold g/t Contained Gold ounces
Proven – Underground 265,000 9.77 83,000
Probable  – Underground 276,000 7.64 68,000
Proven – Surface Stockpiles 12,000 3.15 1,000
Proven – Tailings 60,000 2.70 5,000
Proven – Combined 346,000 12.62 140,000
Probable – Combined 371,000 10.91 130,000
TOTAL Proven and Probable 717,000 11.74 271,000

1)     Mineral Reserves have been rounded to reflect the relative accuracy of the estimates. Proven underground Mineral Reserves are reported within the Measured classification domain, and Probable underground Mineral Reserves are reported within the Indicated classification domain. Proven and Probable underground Mineral Reserves are inclusive of external mining dilution and mining loss and are reported at a CoG of 3.70 g/t gold assuming an underground extraction scenario, a gold price of US$1,250/oz, a 3.5:1 Brazilian Real to U.S. Dollar exchange rate, and metallurgical recovery of 91%. Proven Mineral Reserves surface stockpiles and tailings are reported at a CoG of 1.95 g/t gold assuming a gold price of US$1,250/oz, a 3.5:1 Brazilian Real to U.S. Dollar exchange rate, and metallurgical recovery of 78%.

Serabi is the operator and owns 100% of the Palito Mine such that gross and net attributable mineral reserves are the same. The mineral reserve estimate was prepared by the Company in accordance with the standard of CIM and NI 43-101, with an effective date of 30 June 2017, and audited and approved by Mr. Timothy Olson of SRK Consulting (US) Inc., who is a Qualified Person under NI 43-101.