Sao Chico Gold Mine

The Sao Chico Gold Mine is located approximately 30 kilometres to the south west of the Palito mine and accessed by road from Palito along the Transgarimpeiro Highway via the town of Jardim do Ouro.

The current resources are identified in three vein structures namely the Main Vein, the Parallel Vein and the Highway Vein covering a strike length of some 600 metres. Past artisanal activity at the Main Vein included a shaft extending some 18 metres below surface giving access to a 58 metre long exploration drive.

Serabi commenced work early in 2014 on earthworks to allow the Group to expose the bedrock and construct a mine portal.  The portal was established shortly prior to the end of September 2014 and during the fourth quarter of 2014 the decline ramp was advanced towards the first two underground development levels.  The Main Vein was intersected in January 2015, and by the end of December 2015 the ramp development provided access to three development levels and the production of ore from the first stopes was underway. Commercial production at the Sao Chico Mine was declared to be effective as of 1 January 2016.   Ore from the Sao Chico Mine is transported by truck to the Palito gold process plant.

The Sao Chico Gold Mine is an area of some 200 artisanal workings, close to the Sao Chico village, in the form of shallow pits and shafts. The Main Vein comprises a gold-rich quartz/sulphide lens striking over 100 metres and with true widths between 0.9 metres and 2.9 metres wide. The lens is open along strike to the east and down dip to the west. The Parallel Vein is located 60 metres south of the Main Vein and has been defined over a strike length of 80 metres and to a depth of 75 metres, dipping steeply to the south. Surface workings in the form of small open pits exist 350 metres along strike from the known mineralisation at the Main Vein. Previous trenching has yielded high grades in this area which has not been thoroughly drill tested.

The Highway Vein is located 400 metres east along strike from the Main Vein and characterised by a number of artisanal workings in shallow (<15 metre deep) shafts and small open pits clustered in the area. One sub vertical west-northwest trending vein zone has been identified between 1.6 and 2.9 metres wide to a depth of 75 metres below surface.

The potential for discovery of blind sub parallel vein deposits has been demonstrated through the definition of inferred mineral resources in the Parallel Vein. Further exploration is also warranted in the immediate area around Sao Chico where some areas with artisanal workings on surface remain untested by drilling.

The Sao Chico deposit has now been defined over approximately 500 metres of strike length and to a depth of 150 metres through a combination of drilling intersections and underground development. As a greater understanding of the deposit has been achieved, it is clear the very high gold grades are hosted in discrete steeply plunging pay-shoot zones, which in turn are hosted inside an alteration shear zone. This shear zone itself is quite easily defined but there is no visual difference between high grade gold and low grade and sterile areas. It is therefore essential for mine planning to use closely spaced development levels and extensive in-fill underground drilling.

The gold mineralisation is amenable to direct cyanidation and following crushing and milling, the Sao Chico ore passes through a gravity concentration circuit with the concentrate produced being passed through an In-Line Leach Reactor (“ILR”), where gold is leached, and then recovered through conventional electro winning and smelting processes to produce bars of gold doré. The tailings from this process continue to pass to the CIP recovery plant where they are blended with the Palito flotation tailings.

The mining methodology is a combination of selective open stoping using the shrink stope method, much the same as Palito, and sub-level open stoping. In the former method, levels are vertically spaced 30 metres apart once ore blocks are geologically and economically defined, the ore/vein between the two levels is mined using conventional hand held pneumatic drilling equipment and drill and blast techniques. In the sub-level open stoping method, the levels are spaced closer together, normally 15 metres, and once ore blocks are defined, the ore between the sub-levels is drilled with a series of longer holes usually of 12 metres and sequentially blasted.