THE NUEVA ESPERANZA OR “NEW HOPE” PROJECT IS LOCATED IN THE MARICUNGA GOLD BELT OF THE ATACAMA REGION OF NORTHERN CHILE, 140 KM NORTH-EAST OF THE CITY OF COPIAPO, A REGIONAL MINING CENTRE.

Nueva Esperanza is 100% owned by Kingsgate Consolidated. It is a silver and gold project comprising several well-defined deposits hosted in a high sulphidation epithermal (hydrothermal) system and a number of undeveloped exploration targets. The main deposits are Arqueros, Chimberos and Teterita.

Kingsgate acquired Arqueros in 2009, with the subsequent acquisition of Chimberos and Teterita (Esperanza) in 2011, and consolidated the tenements into the Nueva Esperanza Project. This Project is a key bridgehead to expand Kingsgate’s production and cement its position as a premier intermediate precious metals producer.

Arqueros has been previously mined on a limited scale by underground methods, and Chimberos was exploited as an open pit. About 32 million ounces of silver were recovered from Chimberos ore over a 13 month period in 1998/99.

Following completion of the 2014/15 exploration program and a new Mineral Resource estimate, a number of significant outcomes were evident including:

• Discovery of the Chimberos Gold deposit, to the west of the current Chimberos pit;
• The addition of 250,000oz of gold and 5.1Moz ounces of silver to the August 2013 Mineral Resource estimate, taking total Mineral Resources to 34.6Mt at 1.7g/t AuEq60 for 1.9Moz gold equivalent;
• The relatively high grade nature of the recently discovered gold mineralisation has now led to reconsideration of agitated leach (milling) for the process route rather than heap leach; and
• Further high potential targets following initial results at Boulder, Rifle and Carachitas Central.

Following the discovery of Chimberos Gold and the substantial upgrade to the total Mineral Resources, Kingsgate has commenced a project optimisation study in conjunction with Ausenco that will utilise the comprehensive technical work completed to date and incorporate the newly enlarged Mineral Resources. It is also believed that significant opportunities may be available to benefit the project within the current mining landscape.

The study, which has an anticipated timeline of three months, is intended to deliver the following:

• Design parameters around a 2 million tonne per annum (Mtpa) agitated leach (milling) operation;
• Indicative capital and operating cost estimates;
• Updated Ore Reserve estimates; and
• Relevant information for amendments to existing permits.

While water and power options are currently in place, there has been a structural shift in the power generation and distribution market in Chile that is anticipated to significantly lower the cost of electricity for the project.

Geology

The mineralised silver and gold deposits are hosted within Tertiary-aged volcanic units in the case of Arqueros and Teterita, and Paleozoic sediments for Chimberos. The alteration and mineralisation are Miocene in age and associated with hydrothermal activity of the Cerro Bravo paleovolcano.

Mineralisation comprises two main components. These are silver-rich horizontal units called “mantos” and a series of cross-cutting gold-rich vertical units associated with silicified ledges and breccias. The mantos silver mineralisation is hosted by vuggy silica within leached dacitic lapilli tuffs. It occurs at Arqueros and Teterita where the mineralising process has replaced horizontal porous tuffs. At Chimberos, silver mineralisation is hosted in vuggy silica hydrothermal breccias superimposed on folded Paleozoic sediments

The vertical gold-rich mineralisation, also characterised by vuggy silica, is well-developed at Arqueros and Chimberos in silica ledges and hydrothermal breccias. The ledges have been interpreted as feeders for mineralising fluids indicating strong structural controls and understanding these has been instrumental in discovering additional high-grade gold mineralisation on the project area.

Resource

The mineral resource (Table 1) and ore reserve (Table 2) of the combined Arqueros, Chimberos and Teterita, is based on resource block modeling and mine optimisation.

Table 1. Nueva Esperanza mineral resources,
including reserves (30 June 2015)

Notes: Some rounding of figures has occurred. Cut-off grade for Nueva Esperanza is 0.5g/t Au. Silver Equivalent: Ag Equiv (g/t) = Ag(g/t)+Au(g/t)x60 Gold Equivalent: Au Equiv (g/t) = Au(g/t)+Ag(g/t)/60.

Table 2. Nueva Esperanza ore reserve (30 June 2014)

Notes: Some rounding of figures has occurred. Cut-off grade for Nueva Esperanza is 0.5g/t Au. Silver Equivalent: Ag Equiv (g/t) = Ag(g/t)+Au(g/t)x60 Gold Equivalent: Au Equiv (g/t) = Au(g/t)+Ag(g/t)/60. Reserve based on prices of US$1300/oz Au and US$21.50/oz Ag, and metallurgical recoveries of 70% Au and 75% silver estimated from test work by Kingsgate.