Notes to the Mineral Resource Estimate:
1. Mineral resources are reported using a long term gold price of $1400/oz.2. Rounding of tons and contained gold results in apparent differences in totals and is in accord with reporting guidelines.3. "Fill" refers to previously mined waste placed on top of the original topography that must be mined in the future to develop the resource. Fill is assumed to be sterile waste.4. A portion of the resource in the Wedge deposit is under or directly adjacent to current facilities.5. Mineral resources are as of June 1, 2013.6. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Mineral Resource Expansion Potential
Within Telesto's resource block model there is approximately an additional 1.5 million tons of mineralized material outside the floating cone economics that is above a cutoff grade of 0.02 opt gold. The areal extent of this mineralization is presented in a plan section of the resource model wireframes available at: www.scorpiogold.com/i/maps/mr/Satellite_wireframes.jpg. Cross-section views of the mineralized wireframe envelopes that extend or lie outside of the pit shells is available at www.scorpiogold.com/i/maps/mr/Satellite_grademodels.pdf. With additional drilling; some or all of these areas could potentially be added to the mineral resource estimate after applying a floating cone economic model.
Satellite Deposits - Development Plan
Scorpio Gold's plans for development of the satellite deposits include the following:
-- Drilling of 75 reverse circulation ("RC") holes to attempt to confirm and expand the mineralization at the Solberry, Bluelite, and Brodie deposits.-- Compilation of all mineralized drill hole sample rejects for metallurgical and density testing.-- Continued collection of baseline data for permitting.
A conceptual layout of pits, waste dumps, and haul roads for the Brodie, Bluelite, and Solberry deposits has been developed for planning, scheduling and permitting purposes. Due to the location of the three deposits, the Solberry and Bluelite deposits would be exploited first in order to access the haul road to the crushing facility. Exploitation of the Brodie deposit would follow their completion, given that the current Brodie pit design overlaps the haul road to the crusher.
Scorpio Gold has outlined a conceptual operational schedule with potential commencement of mining of the Solberry and Bluelite deposits beginning in the third quarter of 2014 with the Brodie pit mined in 2015. With several high priority exploration targets in close proximity to the mine still to be tested, this schedule could easily change.
Mineral Resource Database
The mineral resource study by Telesto was conducted on five deposits in total, using data from a total of 631 drill holes and 25,208 assay values. Included in the study was the Oromonte deposit; however, generation of a floating cone resource for Oromonte was not possible due to insufficient drill hole density. Near surface and relatively high-grade mineralized material was intercepted by drilling in the east-central portion of the Oromonte deposit, and additional drilling is recommended.
Of the 631 drill holes used in the resource study, 460 are legacy holes drilled from 1986 to 2008 and 171 holes were drilled by Scorpio Gold during its 2010-2012 drilling campaigns. Scorpio Gold has been unable to locate laboratory assay certificates corresponding to documented assays in some of the legacy holes, amounting to thirty-two percent of the overall drill hole assay database. Telesto notes that the assay database for the Mineral Ridge project has been scrutinized by several reputable mining consulting companies, including Mineral Resources Development Inc., Behr Dolbear, Pincock, Allen & Holt and Micon International. The conclusions drawn from previous intensive database analyses is that the assay database of the Mineral Ridge project, including the satellite areas, is sufficient to support a mineral resource estimate. However, because the original assay sources for 32% of the assay data could not be located for verification, Telesto's opinion is that the database has a significant component of uncertainty and is sufficient to support an estimate of inferred mineral resources only.