Impressions on the nature of Lamaque`s flat veins

Although the Lamaque Flats likely houses a decent size amount of gold, I don`t think our Lamaque 43-101 resource total will ever include most of this gold.

These veins are narrow and flat. I believe they pinch in spots and swell in other spots as well, in likely a somewhat unpredictable manner - I think. On the Lamaque property, flat veins are also very continuous - most of them are very continuous and some of them even extend up to 1 or 2 km. I think all of these factors make these veins difficult to drill extensively in advance. It would be extremely expensive to drill sufficient number of holes to qualify for 43-101 status. Benefits of such efforts likely do not warrant the up front costs. It is likely better to inject the capital into mining the continuous flat stopes, especially since the area represents only 1 of 3 mining zones of the current / near-future mine plan.

As mentioned before, I believe the company has been saving the higher grade reserve ounces in the flats. This is partly due the continuous nature of the current veins being mined, coupled with it being more expensive to open up new mining stopes. The extra ounces we get from the existing open stopes are at lower grades relative to what the reserves in new stopes can provide, but the high $1,425 now and the future $1,500 - $2,000 gold price provides incentive to go after these ounces, especially if the company is able to eventually use the higher grade Bedard Dyke and North Wall ounces to better balance the overall grade of the Lamaque operation.

There are other gold properties / companies around the world with this type of up front drilling challenge for 43-101 resource calculation purposes. For example, Dynacor Gold has a small operating plant in Peru, but they have never ever drilled any holes on their extensive (good potential) gold property in Peru (about 20 - 25 km from Century`s San Juan Mine). Dynacor Gold does not show any 43-101 resource for that property. They use the milling operation to process ore from small miners in the area (they purchase the ore at a high price which minimizes their margins, but they also incur no capital for exploration, mine development and mining). I think they show current run rate production of about 30,000 oz of gold, annualized. The small miners mine the ore from various properties within the region, but I believe they also mine ore from Dynacor`s property (the one that has never been drilled and has no 43-101 resource). I think Dynacor is planning to expand the milling facility to 50,000 oz capability (all from small miners still - Dynacor still has no plans on drilling this property, yet the property and similar nearby properties seem to deliver plenty of ounces to them).

As such, when one uses the official 43-101 resource report for Lamaque, one should remember that not only does it exclude any resources drilled at the Bedard Dyke (should eventually be included once the Russians get around to it) but it will always likely exclude much of the gold sitting in the Lamaque Flats.