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Frequently Asked Questions from Investors

1/ Given the Company's resource having a relatively low average grade, is it fair to assume that it requires a much higher gold price in order to be economically feasible?

2/ Does the project always require a large initial capital cost to build? The last PEA suggested $750m.

3/ Does the metallurgical recovery process prove to be a challenge in recovering gold from the resource?

4/ How do you square the currently low market valuation with the large (multi-million ounce) resource? Is SPA a worthwhile investment?

5/ The pending PEA will only cover the First Zone, does that mean the Second Zone has no value at this point?

6/ Does the mine tailing accident near your project area create big hurdles for your project?


1/ Given the Company's resource having a relatively low average grade, is it fair to assume that it requires a much higher gold price in order to be economically feasible?

When we did our last PEA in 2012, gold was trading near its all-time high of $1,900. We assumed a relatively conservative gold price of $1,462 (3-yr trailing) and produced a value of approximately $300M (NPV@5%). In other words, our project does not need gold price to get back to an all-time high in order to deliver significant value. More importantly, we believe that our new Two-Zone project approach will significantly reduce capital costs while delivering robust economics and production profile for 20 years or more. Other favourable factors that occurred subsequent to our last PEA include a/ new ounces added from drilling programs; b/ lower input costs; c/ favourable exchange rates and; d/ savings identified by internal & external studies. Undoubtedly these will further improve the project's value when we deliver our new PEA in the near future.

2/ Does the project always require a large initial capital cost to build? The last PEA suggested $750m.

The market environment at the time of our last PEA in 2012 encouraged building largest operations possible given a seemingly lack of constraints in raising capital. As we have a very large resource, which can clearly sustain a large mining operation, we elected to maximize the throughout (at 40,000 t/d). Since then, we re-examined each and every variable and concluded that mining the high grade core (the First Zone) more selectively at lower throughput (at 20,000 t/d) would likely generate higher profitability while requiring less capital. We expect to demonstrate in the new PEA a robust production profile at an initial capital cost that is significantly less than $750m.

3/ Does the metallurgical recovery process prove to be a challenge in recovering gold from the resource?

We are aware of UNSUBSTANTIATED rumours about challenges in liberating gold for recovery in the metallurgical process hence the overall recovery from the ore is expected to be very low. The truth is ever since Dr. Morris Beattie's (a highly respected metallurgist with 40+ years of experience; formerly COO & CEO) involvement in the project since 2009, the metallurgical process is one of the technical areas where we have the highest level of confidence. The high level of gold recovery (approximately 90%) has been substantiated with extensive sample testing. Dr. Beattie has also been instrumental in developing the streamlined flowsheet, which we expect to result in savings in capital and operating costs.

4/ How do you square the currently low market valuation with the large (multi-million ounce) resource? Is SPA a worthwhile investment?

There are reasons to believe that the relatively lower average resource grade and the old PEA contribute to the perception that our project requires a higher gold price (than today's) in order to demonstrate robust economics. The fact that we are moving ahead with a new PEA should highlight our confidence in the value of our project even at today's relatively low gold price. We are hopeful that once we release the new data reflecting current market conditions and our new Two-Zone project approach, investors can objectively appraise our project. We do not give investment advice. But we believe that if our project attains similar valuation as our peers', our shareholders will be richly rewarded. Part of our job is to allow investors to make informed decisions.

5/ The pending PEA will only cover the First Zone, does that mean the Second Zone has no value at this point?

We chose to focus on the First Zone as a standalone operation because we believe this scenario represents the best trade off between the use of capital and project returns. There are a few ways to see how the Second Zone can also amount to significant value. First, the Second Zone is also sizable and can easily contain 3 to 4 million ounces of gold located WITHIN the existing resource and likely minable WITHIN the existing pit expanded. These ounces can expand and/or extend the already robust production profile of the First Zone once it is developed. Keep in mind that once the initial development costs (i.e. infrastructure & equipment etc.) are paid for with the First Zone, the economic cut-off grade will inevitably be lower increasing the margin from the ounces in the Second Zone. There is another way to "conceptualize" the value of the Second Zone. The market generally has no problem assigning value to lower grade ounces if they can be recovered with heap leach due to lower costs of construction/ operations etc. Similarly, costs associated with developing ounces from the Second Zone would be much lower as many cost items were already "sunk" or "spent" by the First Zone. Besides, hardly any heap leach projects would get 90% metal recovery!

6/ Does the mine tailing accident near your project area create big hurdles for permitting your project?

We have a long history of community engagement and transparency in operating our business. Community members have direct access to senior management to express any concerns they have about our project. We have not received any negative feedback regarding our project or the way we run our business in the aftermath of the accident. More importantly we believe that there are many significant differences in our proposed tailing design and water/ discharge management so that community's concerns can be adequately addressed. At this point, changes in the permitting process in light of the accident do not appear to have materially impacted our project.