Patagonia Gold has two operating assets – Lomada de Leiva which is nearing the end of its life and Cap-Oeste, the company’s flagship project which has just been brought into production. Production at Lomada totalled 81,614 ozs over its four year life and production at Cap-Oeste is forecast to be 82,000 ozs over its two year life.

The Cap-Oeste Project is the Company’s flagship project and is located within a structural corridor extending six kilometres from the La Pampa prospect in the northwest to the Tango prospect in the southeast. To date, the Cap-Oeste deposit has an identified and delineated strike extent of 1.2 kilometres.

Since acquiring the property from Barrick in 2007, the Company has drilled 563 holes to May 2015 for a total of 106,153 metres. During this time the Company has produced several resource updates with the latest JORC compliant resource estimate completed by CUBE Consulting Pty Ltd (based in Perth, Australia). The current Indicated Resource contains 14.1Mt @ 1.96 g/t Au and 59.29 g/t Ag for a contained 887,000 ounces of Au and 26.9m ounces of Ag with Inferred Resource category material of 7.7Mt @ 1.46 g/t Au and 23.39 g/t Ag for a contained 360,000 ounces of Au and 5.8m ounces of Ag.

Development of the Cap-Oeste asset is now under way and construction of a hybrid low cost version of the heap leach facility design produced for the PFS has been completed on time and within budget. Stacking and crushing stages have been removed along with the Merrill Crowe circuit and a standard carbon in column plant constructed. With mining having ceased at Lomada, the fleet has been transferred and is now on site at Cap-Oeste, along with the addition of four new CAT mining units which have more than doubled the fleet capacity and are now fully commissioned and operational.  Scheduled monthly earth movement targets have been met since start-up and the first parcel of ore was recently loaded to the completed pad and is now under irrigation. First gold shipments from Cap-Oeste are scheduled to commence in October.

Throughput will be similar to that of Lomada with an initial 1.55Mt @ 1.5 g/t Au and 30g/t Ag loaded to the new pad in the first 18 months. The initial open pit mine at Cap-Oeste is scheduled to produce 82,000 ozs Au/Eq at an all-in cash cost of US$800 – 850/oz over its projected life of 24 months. The Company has the ability to extend the mine life through the expansion and transition to underground mining at Cap-Oeste and COSE.

Underground mine development studies have been completed on the COSE and Cap-Oeste orebodies which contain deeper cyanide leachable resources. Processing options remain either the possibility to agglomerate and heap leach the ore or to assess third party treatment routes.  To date, no decision has been taken on which route will be adopted but final project economics are being evaluated with the objective to start the transition to underground operations in late 2017.

Test work continues on the sulphide material in search of a suitable solution to recover the gold trapped in the refractory portion and the non-refractory mineralisation. A mine design accessing only the super high grade portion of the Cap-Oeste mineralisation is under way with various treatment options including third party toll treatment as a potential route to unlock the contained value and produce positive cash flow. A mixture of very high grade COSE style mineralisation has been identified within areas previously classified as refractory sulphide. This mineralisation has abundant free gold and very high grade leachable silver sulphides present within the sulphide envelope. This data has now been included in the existing resource and underground mine study.


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