NI 43 101 2011 Technical Report On The La Colorada Project Hermosillo Mexico2

NI 43-101 Preliminary Economic Assessment
La Colorada Project
Sonora, Mexico
Effective Date: October 15, 2011
Report Date: December 30, 2011
Report Prepared for
Argonaut Gold Inc.

77 King Street West
Toronto-Dominion Centre, Suite 400
Toronto, ON M4K 0A1
Canada
Report Prepared by
SRK Consulting (U.S.), Inc.

7175 West Jefferson Avenue, Suite 3000
Lakewood, CO 80235
SRK Project Number: 203900.020
Contributors:
Bart Stryhas, Ph.D., C.P.G.
Bret Swanson, BE Mining, MMSAQP
Alberto Orozco, Argonaut Gold, Inc.
Richard J. Taylor, P.E., Kappes, Cassiday & Associates
Mark Allan Willow, M.Sc., C.E.M
Qualified Persons:
Bart Stryhas, Ph.D., C.P.G.
Bret Swanson, BE Mining, , MMSA
Richard J. Taylor, P.E., Kappes, Cassiday & Associates
Mark Allan Willow, M.Sc., C.E.M

NI 43-101 Preliminary Economic Assessment La Colorada Project
Page i
Summary (Item 1)
Property Description and Ownership
The La Colorada Project (La Colorada or the Project) hosts several gold deposits located near the
historic mining town of La Colorada, Sonora, Mexico. The project consists of approximately 37 titled
concessions in three irregular blocks. The total land package aggregates 21,412.03 ha. The deposit
was exploited during two historic mining phases. The first was an underground operation from 1860
to 1916 and the second was an open pit mine from 1994 through 2000. The mineralization is
centered about UTM coordinates 541,665m E and 3,185,795m N. The property lies about 53 km
southeast of Hermosillo, the State Capital. Compaia Minera Pitalla S.A. de C.V. (Minera Pitalla) is
the owner of the Project. Minera Pitalla is 100% owned by Argonaut Gold Inc. (Argonaut).
Geology and Mineralization

The geology of La Colorada consists of Paleozoic to Early Mesozoic metasediments cut by Upper
Cretaceous volcanics. All of these units are intruded by Tertiary intrusives that include granitic to
dioritic phases and andesitic porphyry. Late-Cretaceous to Tertiary volcanic rocks and associated
continental clastic rocks unconformably overlie the Triassic and older rocks. There are two distinct
divisions of the volcanics. A lower 100 to 45 My Lower Volcanic Complex is composed mainly of
andesite with interstratified rhyolitic ignimbrites and minor interstratified basalt. The overlying Upper
Volcanic Complex has been dated at 34 to 27 My and is composed of extensive rhyolite and
rhyodacite ignimbrites with minor interstratified basalt. It constitutes the largest ignimbrite field in the
world. The upper sequence unconformably overlies on the older sequence and infills deeply incised
paleotopography in the older rocks. Late Cretaceous to Early Tertiary plutonic rocks (diorite,
granodiorite to granite) of the Sonoran Batholith outcrop throughout the region and have been dated
from 90 to 40 My.
The La Colorada Gold District has many of the characteristics of a low sulfidization epithermal-vein
type gold-silver deposit. The district underwent a complex hydrothermal history related to
Cretaceous plutonic activity, later higher level plutonic events, and finally a mid-Tertiary vein system
which shares characteristics in common with both a deep epithermal environment and a high-level
mesothermal system. Alteration can be seen in the older metamorphic and intrusive units mostly as
silicification, hematization and argillic alteration. The Tertiary volcanic rocks in the district are clearly
post-mineral and are unaltered.
Exploration
The exploration work is composed primarily of the drillhole database which supports the resource
estimation of this report. It consists of two main data sets. The older dataset was generated by
Explorationes Eldorado S.A. de C.V. (EESA) during their work on the project in the late 1990s. The
more recent dataset was generated by Pediment and Argonaut beginning in 2007.
The resource estimation is supported by 1,319 drillholes, totaling 154,918 m. The drillhole database
has 80,187 samples. The drillholes are generally located in a wide range of spacing and
orientations. The maximum drillhole depth is 479 m and the average is 117 m.
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Mineral Resource Estimate

The mineral resource estimations are based on geologic models consisting of a single rock type, cut
by numerous fault/vein zones. All model blocks are 5 m x 5 m x 5 m in the x,y,z directions,
respectively. Each model block is assigned a unique specific gravity based on direct measurement
of the various rock types. All block grade estimates were made using 3 m down-hole composites.
An Inverse Distance Weighting to the second power estimation algorithm was used for all gold grade
and silver estimations. The results of the resource estimation provided a CIM classified Indicated
and Inferred Mineral Resource. The mineral resources have been classified as Indicated and
Inferred based primarily on sample support. All resources supported primarily by drilling at 25 m
centers are classified as indicated and all resources supported by wider spaced drilling were
classified as inferred.
The La Colorada Mineral Resource estimate is reported below at a 0.1 ppm cut-off grade. The cutoff based on a mining cost of US$1.20/t, a processing cost of US$2.70/t, Au and Ag recoveries of
60% and 30% respectively, G&A cost of $0.20/t, a no NSR and Au, Ag prices of US$1,500/oz,
US$20.00/oz respectively. The mineral resources are confined within a conceptual Whittle pit
design based on the same parameters used for the cut-off grade and a 50 pit slope. The estimates
used in determining the resource cut-off grades do not necessarily conform to those stated in the
economic model.
Table 1: La Colorada Project Resource Statement(1)
Deposit
La Colorada
El Crestn
Veta Madre
RoM Pad
All Deposits
Class
Au Cut-off
Indicated
Inferred
Indicated
Inferred
Indicated
Inferred
Indicated
Inferred
Indicated
Inferred
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
Tonnes
(000s)
29,900
2,500
14,400
2,200
2,900
0
2,700
50,000
4,700
Au (g/t)
0.724
1.204
0.618
0.887
0.491
0.665
0.429
0.664
1.044
Au oz
(000s)
696
95
287
63
46
0.2
38
1,067
158
Ag (g/t)
5.1
8.4
12.1
13.3
3.3
2.4
36.5
8.7
10.6
Ag oz
(000s)
4,905
661
5,635
944
307
0.7
3,200
14,047
1,605
Source: SRK
(1) Rounded to reflect approximation
Mineral Resources that are not mineral reserves do not have demonstrated economic viability.
Mineral resource estimates do not account for mineability, selectivity, mining loss and dilution.
These mineral resource estimates include inferred mineral resources that are normally considered
too speculative geologically to have economic considerations applied to them that would enable
them to be categorized as mineral reserves. There is also no certainty that these inferred mineral
resources will be converted to Measured and Indicated categories through further drilling, or into
mineral reserves, once economic considerations are applied.
Infrastructure
The site currently has various mine site buildings, a water supply, heap leach pads, leach ponds,
power supply, access roads and plant foundations. This entire infrastructure is being upgraded and
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Page iii
improved. Due to the sites extensive mining history and its regional proximity to established cities
and country infrastructure, the mine is unlikely to suffer adverse logistical or consumable supply
constraints.
Development and Mine Operations

The La Colorada mine is a historical mining area located in the state of Sonora close to the regional
mining center of Hermosillo. The Project is located in dry desert terrain surrounded by a
combination of flat alluvial plains intersected by steep mountains. The El Crestn, La Colorada and
Gran Central (La Colorada/Gran Central) deposits have been mined by open pit methods. A third
resource area, Veta Madre, has not seen previous development. Open pit mining at the Project is
expected to begin with re-leaching of historical run of mine (RoM) pads. The removal and reprocessing of the RoM pad will provide space for the construction of a new leach-pad. By late 2012,
it is expected that the necessary permits will be in place for open pit mining at the La Colorada/Gran
Central pit followed by El Crestn and Veta Madre.
For the PEA, an ultimate pit for La Colorada was constructed by SRK with three possible phases. El
Crestn and Veta Madre were designed to meet mining width limitations. The resultant pit designs
defined 32.8 Mt of potentially minable resource with an average grade of 0.72 g/t Au and average
strip ratio of 3.7:1 (W:O). At a 4 Mt production rate, it is expected the potential mine life of to be in
excess of 9 years. The production schedule targeted a consistent total mine tonnage of 24 Mt/y from
year 3 onwards and any resources mined above 4 Mt/y is stockpiled for use in years where not
enough direct RoM feed is possible.
Final dimensions of the proposed open pits detail the potential magnitude of operations and have not
been limited to infrastructure restrictions. Potential restrictions may include additional required
permitted space for future heap leach pads and partial relocation of the La Colorada Township. As
detailed engineering continues the effect of these restrictions or the elimination of the restriction
resulting from further land negotiations will be addressed during reserve estimation.
Process and Metallurgy

The La Colorada Project is designed as a heap leach operation. Leach grade material is processed
by crushing and heap leaching.
Crushing is accomplished by a two-stage, closed-circuit crushing system. The final product from the
crusher circuit is conveyed directly to the active stacking area on the leach pad by a conveying and
stacking system.
The stacked material is leached using an irrigation system for solution application. Gold and silver
bearing solutions drain to a pregnant pond where it is collected and pumped to an activated carbon
ADR (adsorption-desorption-recovery) plant.
Metallurgical test work has been ongoing with several column tests on various composite samples
and crush sizes from the various deposits have been and are being performed at the Kappes,
Cassiday & Associates (KCA) facility in Reno, Nevada.
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Environmental and Permitting

Under the approval and conditions of the Informe Preventivo (IP) issued by SEMARNAT on October
20, 2011, Minera Pitalla has initiated construction of a secondary leach facility (including newly lined
process water ponds and completely new ADR plant) for the existing run-of-mine (RoM) heap.
These facilities were known sources of groundwater contamination, as was indicated historically by
the presence of cyanide in down-gradient monitoring wells. The local agencies are aware of this
issue and agreed to allow Argonaut to proceed based on the elimination of the source of
contamination by reconstruction of the RoM pad and relining the processing ponds. The IP allowed
SEMARNAT to expedite the approval process, since these facilities are all on previously disturbed
areas, and were evaluated by the agency during the original permitting of the project. These new
facilities represent industry best-practice construction to allow for improved control and monitoring of
process solutions.
Once the original RoM heap has been offloaded and relocated onto new liner, the area can be
reconstructed to meet current Mexican and international standards for cyanide heap leaching, and
reloaded with material from the expanded La Colorada/Gran Central open pit. Relocating of the
RoM heap will take approximately ten months, during which time the Manifestacin de Impacto
Ambiental (MIA) should be approved by SEMARNAT for the construction of new heap leaching
facilities to receive additional material. The MIA is expected to be submitted to SEMARNAT in early
January 2012, with an anticipated approval during the third quarter of 2012. The as designed
expansion of the La Colorada/Gran Central open pit will require the relocation of several residences
and a community plaza. While Minera Pitalla has developed and implemented a social management
plan and program, a specific plan to deal with possible involuntary resettlement is being prepared
and preliminary discussions have taken place with state and municipal governments. The outcome
of these discussions may impact the development schedule of this expansion phase of the project.
Overall, Argonaut/Minera Pitalla are being proactive in their approach to restart the La Colorada
Mine. Remediation of the existing mine-related contamination issues are being dealt with through
the use of newer equipment and compliance with updated and more comprehensive guidelines and
standards (e.g., NOM-155-SEMARNAT-2007). Expansion of the facilities to incorporate additional
mining and processing appears to be on schedule to receive the necessary permits and
authorization in the timeframe needed.
Project Financials
The financial analysis results, shown in Table 2, indicate an NPV5% of US$278 million on a pre-tax
basis. Payback will be the first year of production assuming that permits and land purchases are in
place by mid-2012 allowing for mine production to supplement RoM stockpile processing. The
following provides the basis of the SRK LoM plan and economics:
Measured, Indicated and Inferred resources are included;
A mine operating life of 8 years with 9 years of production;

An overall average metallurgical recovery rate of 55.1% Au and 27.1% Ag over the LoM;
A net operating cost of US$613/Oz.Au on a gold equivalent basis;
Capital costs of US$26million, comprised of initial capital costs of US$14.4 million, and
sustaining capital over the LoM of US$11.7 million;
Mine closure cost, included in the above estimates is US$4 million;
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The analysis does not include provision for salvage value; and
Operating costs are 47% of revenue.
Table 2: Economic Results Pre-Tax as of December 27, 2011

Description
Production Summary
Waste Mined
Potentially Mineable Resource Mined
Oz-Au Refined
Estimate of Cash Flow
Gross Income
Refining
Gross Revenue
Royalty
Net Revenue
Operating Costs
Mining
Processing
G&A
Silver Credit
Total Operating
Operating Margin
Initial Capital
LoM Sustaining Capital
Income Tax
Cash Flow Available for Debt Service
NPV 5%
Value
Units
121,219
32,753
438
kt
kt
koz
$722,668
($3,505)
$719,163
($10,323)
$708,840
000s
000s
000s
000s
000s
$/t-crushed
$7.22
$2.36
$0.55
($1.93)
$8.20
000s
000s
000s
$236,371
$77,288
$18,000
($63,166)
$268,493
$440,347
$14,488
$11,700
$0
$414,159
$278,274
Units
$/oz-Au
$539.51
$176.41
$41.08
($144.18)
$612.83
000s
000s
Table 3 illustrates the effect on NPV if a 31% tax is applied to the economic model.
Table 3: Economic Results After-Tax as of December 27, 2011
Description
Operating Margin
Initial Capital
Income Tax
NPV 5%
Value
$440,347
$14,488
$11,700
$93,919
$320,240
$200,899
Conclusions and Recommendations Process and Metallurgy

Gold and silver recovery based on an ongoing program of 20 column tests conducted at the KCA
laboratory in Reno, Nevada running from 48 to 72 days resulted in recoveries of 55% for gold and
35% for silver at a 9.5 mm minus crush size. Material will be sourced either from existing RoM leach
pad or by mining from one of four open pits considered in the study. Material will be processed
crushed to 9.5 mm, belt-agglomerated with up to 2.5 kg/t cement as required, and conveyor stacked
on a dedicated leach pad where it will be leached using a diluted cyanide solution. The gold bearing
solution will be pumped to an ADR plant for further processing and production of dor bars. The
plant will initially begin as an adsorption plant only during start-up processing of the RoM-rehandle
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Page vi
material with carbon stripping conducted off-site, and eventually expanded to the full plant prior to
initiation of mining from the open pits.
Opportunities exist to optimize throughput and recovery of the potentially mineable resource which
will be studied through additional column tests and equipment reviews. Additional column test work
is being completed by KCA at the present time on core material from the Project. Further work is in
progress to define metal recoveries from the El Creston and Veta Madre mining areas as well as
additional agglomeration tests to better define cement addition requirements (if any).
The use of High Pressure Grinding Rolls (HPGR) is being looked at as an option for further finer
crushing by many projects at the present time and is an option that could be examined at La
Colorada with future metallurgical programs.
The recovery curves indicate relatively slow leaching and it is almost certain that several percent
more gold recovery would be realized with a 120 day leach cycle. All future column tests should be
run at this leach cycle as a minimum.
Any additional improvements in recovery may have a significant impact on the economics of the
project.
Conclusions and Recommendations - Environmental

Minera Pitalla is currently constructing new liner and leach facilities (including process water ponds
and ADR plant site) for the existing RoM heap that are potential sources of groundwater
contamination. These activities were approved by SEMARNAT through the IP process, as all
facilities are situated on previously disturbed areas that were evaluated by the agency during the
original permitting of the project. These new facilities represent state-of-the-art construction to allow
for control and monitoring of process solutions.
Environmental baseline data collection was initiated in 2011 in support of the MIA application for the
expansion of the La Colorada/Gran Central open pit, and construction of new heap leaching
facilities. The MIA is expected to be submitted to SEMARNAT in early January 2012, with an
anticipated approval during the third quarter of 2012.
Visual inspection of the site suggested that the mine waste materials are benign in nature. However,
preliminary geochemical testing of the spent potentially mineable resource and waste rock materials
indicates the need for longer-term kinetic testing in order to more precisely evaluate these materials
to develop reclamation and closure plans for the site. Minera Pitalla is expected to initiate this
program during 2012.
The expansion of the La Colorada/Gran Central open pit to its full potential will require the relocation
of several residences, businesses and a community plaza. While Minera Pitalla has developed and
implemented a social management plan and program, a specific plan to deal with any involuntary
resettlement has not yet been prepared.
The current accumulations of water in the open pits suggest that lakes will be present subsequent to
mine closure. This is especially true after the pits are expanded and deepened. While the existing
water in the pits appears to be of good quality, additional studies will be necessary to determine if
the deeper pits will have an adverse effect on long-term water quality.
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Conclusions and Recommendations - Mining

Mining will be carried out through the use of local contractors well versed in mine operation within
the Sonoran region. Pit optimization and preliminary mine designs indicate a moderately sized
operation is possible given gold price and operating cost assumptions. The sequencing of the
operation will be important to overcome high initial strip ratios for both pits along with limited heap
leach pad space. Through the purchase of additional land positions and relocation of a portion of the
La Colorada Township, the full potential of mineral extraction should be achievable. As the
operation moves towards production in late 2012, additional geological, geotechnical, water and
mine sequencing studies are recommended.
SRK is of the opinion that the drilling has not fully delineated the northeast projection of the El
Crestn deposit. Limited deep drilling in this area has identified potentially economic mineralization
that remains open along strike and to depth. Further drilling is required to establish the extent and
importance of this mineralization. Successful exploration in this area would lower strip ratios and
partially mitigate mining width restrictions related to a required push-back of the north east pit wall.
Additional geotechnical studies should be completed to better establish the effect of groundwater
pore-pressure on pit-wall stability.
Mine sequencing, heap leach phasing and waste dump progressions should be monitored to
anticipate additional land purchases to accommodate new leach pads and/or expanded waste
dumps. This would be especially critical if potential resource expansions are realized.
Underground voids created during past mining will require continued surveying and identification to
better ensure correct potentially mineable resource dilution and hazard identification.
There is an aggressive schedule in place for 2012 with the commencement of in-situ mining and
reprocessing of old RoM stockpiles, it is vital permits and additional land purchases are fast-tracked
to allow for full production.
Financial Conclusions
The economic analysis indicates that the profitability of the potential operation will be driven by gold
price, metal recovery and operating cost. Given the high strip ratio and low grade nature of the
deposit, there is 47% of revenue consumed by operating cost. Seventy percent of the operating
costs are mine contractor related so contract negotiations will be vital for the future profitability of the
project. To improve the project economics, increasing the metallurgical recovery, reducing stripping
ratio and continued high gold prices will be of critical importance.
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Table of Contents
Summary (Item 1) ......................................................................................................................................... i
Table of Contents .......................................................................................................................................viii
1 Introduction (Item 2) .................................................................................................... 1

1.1 Terms of Reference and Purpose of the Report ................................................................................. 1
1.2 Qualifications of Consultants (SRK).................................................................................................... 1
1.2.1 Details of Inspection ................................................................................................................ 2
1.3 Reliance on Other Experts (Item 3) .................................................................................................... 2
1.3.1 Sources of Information and Extent of Reliance ....................................................................... 2
1.4 Effective Date ...................................................................................................................................... 2
1.5 Units of Measure ................................................................................................................................. 3
2 Property Description and Location (Item 4) ............................................................... 4

2.1 Property Description and Location ...................................................................................................... 4
2.2 Mineral Titles ....................................................................................................................................... 4
2.2.1 Nature and Extent of Issuers Interest ..................................................................................... 5
2.3 Royalties, Agreements and Encumbrances ........................................................................................ 6
2.4 Environmental Liabilities and Permitting ............................................................................................. 6
2.4.1 Required Permits and Status .................................................................................................. 7
2.5 Other Significant Factors and Risks.................................................................................................... 7
3 Accessibility, Climate, Local Resources, Infrastructure and Physiography (Item 5)15

3.1 Topography, Elevation and Vegetation ............................................................................................. 15
3.2 Climate and Length of Operating Season ......................................................................................... 15
3.3 Sufficiency of Surface Rights ............................................................................................................ 15
3.4 Accessibility and Transportation to the Property .............................................................................. 15
3.5 Infrastructure Availability and Sources.............................................................................................. 15
4 History (Item 6) ........................................................................................................... 16

4.1 Prior Ownership and Ownership Changes ....................................................................................... 16
4.2 Previous Exploration and Development Results ............................................................................... 16
4.3 Historic Mineral Resource and Reserve Estimates .......................................................................... 17
4.4 Historic Production ............................................................................................................................ 17
5 Geological Setting and Mineralization (Item 7) ........................................................ 18

5.1 Regional, Local and Property Geology ............................................................................................. 18
5.2 Significant Mineralized Zones ........................................................................................................... 19
6 Deposit Type (Item 8) ................................................................................................. 26

6.1 Mineral Deposit ................................................................................................................................. 26
6.2 Geological Model Applied ................................................................................................................. 26
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7 Exploration (Item 9) ................................................................................................... 29

7.1 Relevant Exploration Work ............................................................................................................... 29
7.2 Surveys and Investigations ............................................................................................................... 29
7.2.1 Exploration Rock and Soil Sampling ..................................................................................... 29
7.3 Significant Results and Interpretation ............................................................................................... 29
8 Drilling (Item 10) ......................................................................................................... 30

8.1 Type and Extent ................................................................................................................................ 30
8.2 Procedures ........................................................................................................................................ 31
8.2.1 Pediment, Reverse Circulation (RC) Drilling ......................................................................... 31
8.2.2 Pediment Core Drilling. ......................................................................................................... 31
8.2.3 Argonaut Reverse Circulation (RC) Drilling........................................................................... 31
8.2.4 Argonaut Core Drilling. .......................................................................................................... 32
8.2.5 Argonaut RoM Pad Drilling .................................................................................................... 32
8.3 Interpretation and Relevant Results.................................................................................................. 32
9 Sample Preparation, Analysis and Security (Item 11)............................................. 35

9.1 Methods ............................................................................................................................................ 35
9.1.1 Reverse Circulation Drill Samples ......................................................................................... 35
9.1.2 Diamond Drill Core Samples ................................................................................................. 35
9.2 Security Measures ............................................................................................................................ 35
9.3 Sample Preparation .......................................................................................................................... 35
9.4 QA/QC Procedures and Results ....................................................................................................... 36
9.5 Opinion on Adequacy ........................................................................................................................ 37
10 Data Verification (Item 12) ......................................................................................... 43

10.1 Procedures ........................................................................................................................................ 43
10.2 Limitations ......................................................................................................................................... 44
10.3 Data Adequacy.................................................................................................................................. 44
11 Mineral Processing and Metallurgical Testing (Item 13)......................................... 45

11.1 Testing and Procedures .................................................................................................................... 45
11.2 Relevant Results ............................................................................................................................... 45
11.3 Recovery Estimate Assumptions ...................................................................................................... 48
11.4 Additional Test Work ......................................................................................................................... 50
12 Mineral Resource Estimate (Item 14)........................................................................ 52

12.1 Qualified Persons for the Mineral Resource Estimate ...................................................................... 52
12.2 Drillhole Database ............................................................................................................................. 52
12.3 Geology ............................................................................................................................................. 52
12.4 Block Model....................................................................................................................................... 52
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12.5 Compositing ...................................................................................................................................... 53

12.6 Density .............................................................................................................................................. 54
12.7 Variogram Analysis ........................................................................................................................... 54
12.8 Grade Estimation .............................................................................................................................. 54
12.8.1 La Colorada ........................................................................................................................... 54
12.8.2 El Crestn .............................................................................................................................. 55
12.8.3 Veta Madre ............................................................................................................................ 56
12.8.4 RoM Pad ............................................................................................................................... 56
12.9 Model Validation................................................................................................................................ 57
12.10Resource Classification .................................................................................................................... 59
12.11Mineral Resource Statement ............................................................................................................ 59
12.12Mineral Resource Sensitivity ............................................................................................................. 60
13 Mining Methods (Item 16) .......................................................................................... 63

13.1 Pit Optimization ................................................................................................................................. 63
13.1.1 Whittle Parameters .............................................................................................................. 64
13.1.2 Whittle Results and Analysis ............................................................................................... 67
13.1.3 La Colorada/Gran Central Whittle Results .......................................................................... 67
13.1.4 El Crestn Whittle Results ................................................................................................... 68
13.1.5 Veta Madre Whittle Results ................................................................................................. 68
13.2 Open Pit Design ................................................................................................................................ 68
13.2.1 Pit Design Parameters and Construction .............................................................................. 68
13.3 Phase Design .................................................................................................................................... 69
13.3.1 Phase Design Criteria ........................................................................................................... 69
13.4 Schedule Inventory Results .............................................................................................................. 70
13.5 Production Schedule ......................................................................................................................... 70
13.5.1 Royalty Schedule .................................................................................................................. 74
13.5.2 Dilution, SMU and Bench Configuration................................................................................ 74
13.6 Development Requirements ............................................................................................................. 74
13.6.1 Waste dumps ........................................................................................................................ 75
13.6.2 UG Voids ............................................................................................................................... 75
13.7 Mining Fleet and Requirements ........................................................................................................ 75
13.7.1 Expected Mine Fleet.............................................................................................................. 75
13.7.2 Expected Operating Cost ...................................................................................................... 76
13.7.3 Manpower .............................................................................................................................. 76
14 Recovery Methods (Item 17) ..................................................................................... 88

14.1 Processing Methods.......................................................................................................................... 88
14.2 Flowsheet .......................................................................................................................................... 91
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14.3 Plant Design and Equipment Characteristics ................................................................................... 91

14.5 Consumable Requirements .............................................................................................................. 99
15 Project Infrastructure (Item 18) ............................................................................... 102

15.1 Infrastructure and Logistic Requirements ....................................................................................... 102
15.1.1 Port access .......................................................................................................................... 102
15.1.2 Power .................................................................................................................................. 102
15.1.3 Water Supply ....................................................................................................................... 102
15.1.4 Site Structures ..................................................................................................................... 103
15.1.5 Waste Disposal ................................................................................................................... 103
15.1.6 Potential Heap Leach Pad Areas ........................................................................................ 103
16 Market Studies and Contracts (Item 19) ................................................................. 109

16.1 Summary of Information .................................................................................................................. 109
16.2 Commodity Price Projections .......................................................................................................... 109
16.3 Contracts and Status....................................................................................................................... 109
17 Environmental Studies, Permitting and Social or Community Impact (Item 20) 110
17.1 Related Information ......................................................................................................................... 110
17.1.1 Mining Law and Regulations ............................................................................................... 110
17.1.2 General Environmental Laws and Regulations ................................................................... 110
17.1.3 Other Laws and Regulations ............................................................................................... 113
17.1.4 Expropriations ..................................................................................................................... 114
17.1.5 NAFTA ................................................................................................................................. 114
17.2 Operating and Post Closure Requirements and Plans ................................................................... 114
17.2.1 Permitting Process .............................................................................................................. 114
17.2.2 Environmental Impact Permit .............................................................................................. 115
17.2.3 Other Permits and Licenses ................................................................................................ 115
17.2.4 Concession Title for Underground Water Extraction ........................................................... 115
17.3 La Colorada Environmental and Permitting Status ......................................................................... 116
17.3.1 Environmental Baseline Data .............................................................................................. 116
17.3.2 Environmental Permitting .................................................................................................... 117
17.4 Social and Community .................................................................................................................... 118
17.4.1 Social Management Planning ............................................................................................. 118
18 Capital and Operating Costs (Item 21) ................................................................... 121

18.1 Capital Cost Estimates .................................................................................................................... 121
18.1.1 Basis for Capital Cost Estimates ......................................................................................... 122
18.2 Operating Cost Estimates ............................................................................................................... 122
18.2.1 Basis for Operating Cost Estimates .................................................................................... 122
19 Economic Analysis (Item 22) .................................................................................. 123

BAS/SC
December 30, 2011

Page xii
19.1 Principal Assumptions ..................................................................................................................... 123

19.2 Project Financials ............................................................................................................................ 123
19.3 Taxes, Royalties and Other Interests.............................................................................................. 124
19.4 Sensitivity Analysis.......................................................................................................................... 124
20 Adjacent Properties (Item 23) ................................................................................. 126

21 Other Relevant Data and Information (Item 24) ..................................................... 127
22 Interpretation and Conclusions (Item 25) .............................................................. 128
22.1 Environmental Conclusions ............................................................................................................ 128
22.2 Mining Conclusions ......................................................................................................................... 128
22.3 Financial Conclusions ..................................................................................................................... 128
22.4 Process and Metallurgy Conclusions .............................................................................................. 128
22.5 Significant Risks and Uncertainties................................................................................................. 129
22.5.1 Exploration .......................................................................................................................... 130
22.5.2 Mineral Resource Estimate ................................................................................................. 130
22.5.3 Mineral Resource Estimate ................................................................................................. 130
22.5.4 Metallurgy and Processing .................................................................................................. 131
23 Recommendations (Item 26) ................................................................................... 132

23.1 Environmental ................................................................................................................................. 132
23.2 Mining 132
23.2.1 Mining Related Study Costs ................................................................................................ 132
23.3 Metallurgy and Processing .............................................................................................................. 133
24 References (Item 27) ................................................................................................ 134

25 Glossary.................................................................................................................... 135
25.1 Mineral Resources .......................................................................................................................... 135
25.2 Mineral Reserves ............................................................................................................................ 135
25.3 Definition of Terms .......................................................................................................................... 136
25.4 Abbreviations .................................................................................................................................. 137
List of Tables
Table 1: La Colorada Project Resource Statement(1) ........................................................................................ ii
Table 2: Economic Results Pre-Tax as of December 27, 2011 ........................................................................ v
Table 3: Economic Results After-Tax as of December 27, 2011 ...................................................................... v
Table 2.2.1: Concession Details ........................................................................................................................ 5
Table 2.2.1.1: Concession Payment Liabilities .................................................................................................. 6
Table 8.1.1: EESA Drilling Summary............................................................................................................... 30
Table 8.1.2: Pediment Drilling Summary ......................................................................................................... 30
BAS/SC
December 30, 2011

Page xiii
Table 8.1.3: Argonaut Drilling Summary.......................................................................................................... 31

Table 10.1.1: MacMillian et al (2001) Comparative Sampling Results ............................................................ 43
Table 11.2.1: La Colorada Project Column Test Results on RoM Leach Pad Material .................................. 46
Table 11.2.2: La Colorada Project Column Test Results on Core Material Gold ......................................... 46
Table 11.2.3: La Colorada Project Column Test Results on Core Material Silver ....................................... 47
Table 11.3.1: La Colorada Project Estimated Field Recoveries by Crush Size .............................................. 49
Table 11.3.2: La Colorada Estimated Field Recoveries (Gold) at 100% Passing 9.5mm............................... 49
Table 11.3.3: La Colorada Estimated Field Recoveries (Silver) at 100% Passing 9.5mm ............................. 50
Table 12.4.1: Block Model Limits ..................................................................................................................... 53
Table 12.5.1: Assay Capping Parameters ....................................................................................................... 54
Table 12.8.1.1: La Colorada Indicator Estimation Parameters........................................................................ 55
Table 12.8.1.2: La Colorada Grade Estimation Parameters ........................................................................... 55
Table 12.8.2.1: El Crestn Grade Estimation Parameters .............................................................................. 56
Table 12.8.3.1: Veta Madre Grade Estimation Parameters ............................................................................ 56
Table 12.8.4.1: RoM Pad Grade Estimation Parameters ................................................................................ 56
Table 12.9.1: Grade Estimation Characteristics .............................................................................................. 58
Table 12.9.2: Statistical Model Validation........................................................................................................ 59
Table 12.9.3: Nearest Neighbor Model Validation ........................................................................................... 59
Table 12.11.1: La Colorada Project Resource Statement (1) ........................................................................... 60
Table 12.12.1: Gran Central Grade Tonnage .................................................................................................. 61
Table 12.12.2: El Crestn Grade Tonnage...................................................................................................... 61
Table 12.12.3: Veta Madre Grade Tonnage .................................................................................................... 62
Table 13.1.1.1: La Colorada/Gran Central Model Parameters ........................................................................ 64
Table 13.1.1.2: La Colorada/Gran Central Financial Assumptions ................................................................. 65
Table 13.1.1.3: El Crestn Model Parameters ................................................................................................ 65
Table 13.1.1.4: El Crestn Financial Assumptions.......................................................................................... 66
Table 13.1.1.5: Veta Madre Model Parameters .............................................................................................. 66
Table 13.1.1.6: Veta Madre Financial Assumptions ........................................................................................ 67
Table 13.2.1.1: La Colorada Project Pit Parameters ....................................................................................... 69
Table 13.4.1: La Colorada/Gran Central Phase Inventory .............................................................................. 70
Table 13.4.2: El Crestn Phase Inventory ....................................................................................................... 70
Table 13.4.3: Veta Madre Phase Inventory ..................................................................................................... 70
Table 13.5.1: La Colorada/Gran Central Production Schedule ....................................................................... 72
Table 13.5.2: Crusher and Heap Leach Schedule .......................................................................................... 73
Table 13.5.1.1: La Colorada/Gran Central Royalty Schedule ......................................................................... 74
Table 13.7.3.1: Projected General and Administration Staff for La Colorada ................................................. 77
Table 14.1.1: La Colorada Metallurgical Recovery Design Criteria Only ..................................................... 89
BAS/SC
December 30, 2011

Page xiv
Table 14.1.2: La Colorada Crushing and Processing ...................................................................................... 90

Table 14.3.1: General Design Basis ................................................................................................................ 91
Table 14.3.2: Crushing and Stacking Design Criteria .................................................................................. 92
Table 14.3.3: Leach Pads and Irrigation Design Criteria.............................................................................. 92
Table 14.3.4: Absorption Design Criteria...................................................................................................... 93
Table 14.3.5: Desorption Design Criteria ..................................................................................................... 93
Table 14.3.6: Electrowinning Design Criteria ............................................................................................... 93
Table 14.3.7: Smelting Design Criteria ......................................................................................................... 93
Table 14.4.1: Preliminary Equipment List ........................................................................................................ 94
Table 14.5.1: La Colorada Consumables ........................................................................................................ 99
Table 15.1.6.1: Golder Associates Heap Leach Pad Design Capacity ......................................................... 104
Table 15.1.6.2: Conceptual Pad Space ......................................................................................................... 104
Table 16.2.1: SRK Moving Averages for Gold .............................................................................................. 109
Table 16.3.1: La Colorada Contracts as of November 2011 ......................................................................... 109
Table 18.1.1: LoM Capital Cost Summary ($000s) as of December 27, 2011 ............................................. 121
Table 18.1.2: Initial Capital Breakdown as of December 27, 2011 ............................................................... 121
Table 18.1.3: Sustaining and Closure Costs as of December 27, 2011 ....................................................... 122
Table 18.2.1: LoM Operating Cost Summary as of December 27, 2011 ...................................................... 122
Table 19.1.1: Market Inputs as of December 27, 2011 ................................................................................. 123
Table 19.2.1: Economic Results Pre-Tax as of December 27, 2011 ............................................................ 124
Table 19.2.2: Economic Results After-Tax as of December 27, 2011 .......................................................... 124
Table 19.4.1: Project Sensitivities as of December 27, 2011 ........................................................................ 125
Table 19.4.2: Project Sensitivities After Tax as of December 27, 2011 ........................................................ 125
Table 23.2.1.1: Mining Cost Studies for 2012 ............................................................................................... 133
Table 26.3.1: Definition of Terms .................................................................................................................. 136
Table 26.4.1: Abbreviations ........................................................................................................................... 137
List of Figures
Figure 2-1: Project Location Map ...................................................................................................................... 8
Figure 2-2: Project Site Map .............................................................................................................................. 9
Figure 2-3: Regional Concession Map ............................................................................................................ 10
Figure 2-4: Local Concession Map .................................................................................................................. 11
Figure 2-5: Detailed Concession Map ............................................................................................................. 12
Figure 2-6: Royalty Concession Map .............................................................................................................. 13
Figure 2-7: Surface Ownership Map................................................................................................................ 14
Figure 5-1: La Colorada Project Regional Geology......................................................................................... 22
BAS/SC
December 30, 2011

Page xv
Figure 5-2: La Colorada/Gran Central Pit Area Geology................................................................................. 23

Figure 5-3: El Crestn Pit Area Geology ......................................................................................................... 24
Figure 5-4: La Colorada/Gran Central Area Cross Section Geology .............................................................. 25
Figure 8-1: 2011 Argonaut Drillhole Location Map .......................................................................................... 34
Figure 9-1: Blank Analyses Performance Chart .............................................................................................. 38
Figure 9-2: Certified Standard OxE86 Performance Chart.............................................................................. 39
Figure 9-3: Certified Standard OxF65 Performance Chart .............................................................................. 40
Figure 9-4: Certified Standard SG40 Performance Chart ............................................................................... 41
Figure 9-5: Field Duplicate Performance Chart ............................................................................................... 42
Figure 11-1: Metallurgical Drillhole Locations ................................................................................................. 51
Figure 13-1: La Colorada Site Overview ......................................................................................................... 78
Figure 13-2: La Colorada/Gran Central Whittle Results ................................................................................ 79
Figure 13-3: La Colorada/Gran Central Pit Shell Section View ....................................................................... 80
Figure 13-4: El Crestn Pit Graph ................................................................................................................... 81
Figure 13-5: El Crestn Pit Shell Section View ............................................................................................... 82
Figure 13-6: Veta Madre Pit Shells .................................................................................................................. 83
Figure 13-7: Veta Madre Pit Shells .................................................................................................................. 84
Figure 13-8: Location of La Colorada/Gran Central Phase 1 and Phase 2 Designs ...................................... 85
Figure 13-9: Location of El Crestn Phase and Phase 2 Designs .................................................................. 86
Figure 13-10: Current Understanding of UG Workings ................................................................................... 87
Figure 14-1: Process Flow Sheet .................................................................................................................. 100
Figure 14-2: Process Flow Sheet Phase 2 Fine Crushing to 9.5 mm New Potentially Mineable Resource . 101
Figure 15-1: La Colorada 10 MVA Substation ............................................................................................... 105
Figure 15-2: Wyman Shaft and 10 Dewatering Line .................................................................................... 106
Figure 15-3: Mine Site Office Buildings ......................................................................................................... 107
Figure 15-4: Heap Leach Pad Design ........................................................................................................... 108
Figure 17-1: Construction and Start-up Authorization for Industrial Facilities ............................................... 120
Appendices
Appendix A: Certificate of Author
BAS/SC
December 30, 2011

Introduction (Item 2)
1.1
Terms of Reference and Purpose of the Report
Page 1
SRK Consulting (U.S.), Inc. (SRK) has been retained by Argonaut Gold Inc. (Argonaut), to prepare a
Canadian National Instrument 43-101 (NI 43-101) compliant Technical Report for the La Colorada
Project located in Sonora, Mexico (La Colorada or the Project). The quality of information,
conclusions, and estimates contained herein is consistent with the level of effort involved in SRKs
services, based on: i) information available at the time of preparation, ii) data supplied by outside
sources, and iii) the assumptions, conditions, and qualifications set forth in this report. This report is
intended for use by Argonaut subject to the terms and conditions of its contract with SRK and
relevant securities legislation. The contract permits Argonaut to file this report as a Technical Report
with Canadian securities regulatory authorities pursuant to NI 43-101, Standards of Disclosure for
Mineral Projects. Except for the purposes legislated under provincial securities law, any other uses
of this report by any third party is at that partys sole risk. The responsibility for this disclosure
remains with Argonaut. The user of this document should ensure that this is the most recent
Technical Report for the property as it is not valid if a new Technical Report has been issued.
This report provides mineral resource estimates, and a classification of resources in accordance with
the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and
Reserves: Definitions and Guidelines, November 27, 2010 (CIM).
1.2
Qualifications of Consultants (SRK)

The Consultants preparing this technical report are specialists in the fields of geology, exploration,
mineral resource and mineral reserve estimation and classification, underground mining,
geotechnical, environmental, permitting, metallurgical testing, mineral processing, processing design,
capital and operating cost estimation, and mineral economics.
None of the Consultants or any associates employed in the preparation of this report has any
beneficial interest in Argonaut. The Consultants are not insiders, associates, or affiliates of
Argonaut. The results of this Technical Report are not dependent upon any prior agreements
concerning the conclusions to be reached, nor are there any undisclosed understandings concerning
any future business dealings between Argonaut and the Consultants. The Consultants are being
paid a fee for their work in accordance with normal professional consulting practice.
The following individuals, by virtue of their education, experience and professional association, are
considered Qualified Persons (QP) as defined in the NI 43-101 standard, for this report, and are
members in good standing of appropriate professional institutions. The QPs are responsible for
specific sections as follows:
Bart Stryhas Ph.D., CPG, is the QP responsible for Sections 3 through 10 and 20. He is the
QP responsible for the Mineral Resource estimation in Section 12.
Bret Swanson BE (Mining), MMSA is the QP responsible for Sections 13, 15, 16, 18, 19, 21,
22 and 23.
Mark Willow, M.Sc., NV C.E.M., is the QP responsible for Section 17.
Richard J. Taylor, P.E., is the QP responsible for Sections 11 and 14.
BAS/SC
December 30, 2011

Page 2
1.2.1 Details of Inspection

Bart Stryhas conducted a site visit of the project on June 16, 2011. Dr. Stryhas spent one day on
site reviewing the regional and local geology, drilling, logging and sampling procedures, In addition,
the QA/QC procedures were reviewed and resource estimation strategy was formulated with site
geologist and engineers.
Bret Swanson conducted a site visit to the project on November 14, 2011. Mr. Swanson spent one
day reviewing the potential pit sites, waste dump locations, heap leach pads, crusher, process plant
construction and general site layout.
1.3
Reliance on Other Experts (Item 3)

The Consultants opinion contained herein is based on information provided to the Consultants by
Argonaut throughout the course of the investigations. SRK has relied upon the work of other
consultants in the project areas in support of this Technical Report. The sources of information
include data and reports supplied by Argonaut personnel as well as documents referenced in Section
24.
Information on mineral titles was provided by Argonaut as compiled by Mr. Alberto Orozco,
Argonauts Mexico Exploration Manager. Additionally, a legal opinion on titles was compiled by
Mexico City law firm Vazquez & Associates in 2011. Specifically, Mr. Alberto Orozco and Vazquez &
Associates are responsible for Sections 2.2 and 2.3.
The Consultants used their experience to determine if the information from previous reports was
suitable for inclusion in this technical report and adjusted information that required amending. This
report includes technical information, which required subsequent calculations to derive subtotals,
totals and weighted averages. Such calculations inherently involve a degree of rounding and
consequently introduce a margin of error. Where these occur, the Consultants do not consider them
to be material.
1.3.1 Sources of Information and Extent of Reliance

Mr. Alberto Orozco has contributed the majority of the information contained within Sections 4, 5, 9,
10 and 11.
SRK has worked with Ms. Xochitl Valenzuela Verdugo (the mine planning engineer for Argonaut) on
the development of the pit, phase and production schedule of the Gran Central deposit. Ms.
Valenzuela also designed the waste dumps and potential heap leach expansions within the La
Colorada site. Ms. Valenzuela contributed to Section 13.
Infrastructure, operating and capital cost assumptions (used in the economic model and stated in the
tables) were provided by Mr. Curtis Turner of Argonaut Gold. His contributions were reviewed by
SRK and are pertinent to Sections 15 and 18.
1.4
Effective Date
The effective date of this report is October 15, 2011.
BAS/SC
December 30, 2011

1.5
Page 3
Units of Measure
The metric system has been used throughout this report. Tonnes are metric of 1,000 kg, or 2,204.6
lb. All currency is in U.S. dollars (US$) unless otherwise stated.
BAS/SC
December 30, 2011

Property Description and Location (Item 4)
2.1
Property Description and Location
Page 4
The Project consists of an historic, open pit, heap leach gold mine. The mine consists of two main
pits, La Colorada/Gran Central and El Crestn, a partially reclaimed heap leach pad and several
office and support buildings. The pits and facilities are located within 37 titled mineral concessions
totaling 21,412.03 ha. The project is located in northwestern Mexico, in the town of La Colorada,
Sonora State, 53 km southeast of the city of Hermosillo, the State Capital. The mineralization is
centered about UTM coordinates 541,665m E and 3,185,795m N. (Figures 2-1 and 2-2)
2.2
Mineral Titles
The following information on the mineral titles was provided by Argonaut Gold Inc. as compiled by
Mr. Alberto Orozco, Argonauts Mexico Exploration Manager. Additionally, a legal opinion from
Mexico City law firm Vazquez & Associates was compiled in October of 2011 (Vazquez, 2011). The
results of this work conclude that all 37 of Argonauts concessions are valid in full force and effect.
The La Colorada property consists of 37 titled concessions in three irregular blocks separated by
ground held by other interests (Figures 2-3 through 2-5). The total land package aggregates
21,412.03 ha. The concession details are listed in Table 2.2.1. The Ext. Sonora IV concession was
one of 19 concessions optioned from Exploraciones La Colorada S.A. de C.V. The option purchase
was subsequently exercised on 18 of these concessions; however, Ext. Sonora IV concession was
cancelled by the Direction of Mines. Exploraciones La Colorada believes it has a case for the
removal of such cancellation and is appealing the decision. For this reason Pediment signed a
second option agreement with Exploraciones La Colorada establishing that, should they win the case
against the Direction of Mines, they would transfer the concession to Compaia Minera Pitalla S.A.
de C.V. for a payment of Pediment stock. This agreement has since expired. As of this moment a
decision by the courts is still pending. Although the concession has been cancelled it has not yet
been declared free. Until that time, the concession is not available for others to claim.
BAS/SC
December 30, 2011

Page 5
Table 2.2.1: Concession Details

Concession
Title
No.
187663
199425
199424
198975
Valid
Surface
(ha)
From
To
8.8206 17-Sep-1990 16-Sep-2040
19.6494 19-Apr-1994 18-Apr-2044
0.1300 19-Apr-1994 18-Apr-2044
5.8738 11-Feb-1994 10-Feb-2044
Acquired By
Sonora II
Contract with Exploraciones La Colorada
Sonora VI
El Crestn
Lulu
Demasas del
199929
0.7715 17-Jun-1994 16-Jun-2044 Contract with Exploraciones La Colorada
Crestn
Sonora V
211758
Sonora III
211974
51.0269 18-Aug-2000 17-Aug-2050 Contract with Exploraciones La Colorada
Sonora I
211856
157.9862 28-Jul-2000 27-Jul-2050 Contract with Exploraciones La Colorada
Fraccin
211958
Sonora III
La Muculufa
211945
Sonora IV
211788
Vicenza
211757
La Cruz
217502
Crestn Dos
3-Dec-2002 2-Dec-2052 Contract with Exploraciones La Colorada
218680
109.7378
Fracc.III
Crestn Dos
218679
4.4918
Fracc.II
Crestn Dos
218678
344.5873
Fracc. I
Crestn Tres
218869
466.5758 23-Jan-2003 22-Jan-2053 Contract with Exploraciones La Colorada
Neri
232307
Ext Sonora IV
207597
443.0047
Pending
Pending Pending
Sandra Luz
199219
12.9455 16-Mar-1994 15-Mar-2044 Contract with Peoles
Las Tinajitas
206409
140.0000 16-Jan-1998 15-Jan-2048 Contract with Peoles
Vicky
206407
24.0000 16-Jan-1998 15-Jan-2048 Contract with Peoles
Rosala
213745
7.9760 12-Jun-2001 11-Jun-2051 Contract with Peoles
Claudia
213214
32.7380
6-Apr-2001
5-Apr-2051 Contract with Peoles
Sandra Luz Fracc.1
216046
0.3766
2-Apr-2002
Sandra Luz Fracc.2
216047
0.0173
2-Apr-2002
Carmelita
214065
150.0000 10-Aug-2001 9-Aug-2051 Contract with Minera Recami, S. A. de C. V.
Los Pilares
214187
249.0328 10-Aug-2001 9-Aug-2051 Contract with Minera Recami, S. A. de C. V.
El Crestoncito
231252
1.1693 25-Jan-2008 24-Jan-2058 Contract with Minera Recami, S. A. de C. V.
LCA
231232 13233.3690 25-Jan-2008 24-Jan-2058 Staking
LCA2
232278 2000.0000 16-Jul-2008 15-Jul-2058 Staking
Dos Fracc.I
231247
117.8470 25-Jan-2008 24-Jan-2058 Staking
Dos Fracc.II
231248
5.2974 25-Jan-2008 24-Jan-2058 Staking
Dos Fracc. III
231249
22.7623 25-Jan-2008 24-Jan-2058 Staking
Noria
235259
18.2630
4-Nov-2009 3-Nov-2059 Staking
Red Norte 1
237088 3325.9782 29-Oct-2010 28-Oct-2060 Staking
Mabelina
237242
0.1600 26-Nov-2010 25-Nov-2060 Staking
(1) Royalties with Exploraciones La Colorada, S. A. de C. V.
a. 2% NSR for underground-mining production
b. 3% NSR for open-pit production
c. Buy-out clause only exists for underground production royalty. The 2%NSR can be bought out for
payment of USD$300,000.00
d. There is no buy-out clause for open-pit mining royalty.
Associated
Royalties
(1)
Yes
(1)
Yes
(1)
Yes
(1)
Yes
(1)
Yes
(1)
Yes
(1)
Yes
(1)
Yes
(1)
Yes
(1)
Yes
(1)
Yes
(1)
Yes
(1)
Yes
(1)
Yes
Yes
(1)
Yes
(1)
(1)
Yes
(1)
Yes
Pending
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
single cash
2.2.1 Nature and Extent of Issuers Interest

All mineral titles are held through Argonauts wholly owned Mexican subsidiary, Compaia Minera
Pitalla S.A. de C.V. (Minera Pitalla). Under Mexican mining regulations, it is necessary to pay a tax
for the Mining Rights twice annually (first and second semester). This tax is calculated based on
the surface area of a concession and does increase over time. The amounts payable (in Mexican
pesos) for each individual concession are shown in Table 2.2.1.1. The company has informed the
writers that all payments have been made for 2011. The next payments are due before the end of
December 2011. Argonaut holds the surface rights and legal access to 1,048 ha of the concession
package. This is shown in Figure 2-7.
BAS/SC
December 30, 2011

Page 6
Table 2.2.1.1: Concession Payment Liabilities

Concession
Carmelita
Los Pilares
Crestoncito
NeriI
Sonora V
Sonora III
Sonora I
Fracc Sonora II
La Muculufa
La Cruz
Creston Tres
Creston Dos Fracc. III
Creston Dos Fracc. II
Creston Dos Fracc. I
Sonora IV
Vicenza
Sonora VI
El Creston
Lulu
Demasias El Creston
Sonora II
LCA
LCA2
Dos Fracc I
Dos Fracc II
Dos Fracc III
Las Tinajitas
Vicky
Sandra Luz
Sandra Luz Fracc. 1
Sandra Luz Fracc. 2
Rosalia
Claudia
Noria
Red Norte 1
Mabelina
2.3
Title number
214065
214187
231252
232307
211758
211974
211856
211958
211945
217502
218869
218680
218679
218678
211788
211757
199425
199424
198975
199929
187663
231232
232278
231247
231248
231249
206409
206407
199219
216046
216047
213745
213214
235259
237088
237242
1st Semester
Payment (Pesos)
2010
9,483.00
15,744.00
9.00
2.00
31,263.00
3,226.00
9,988.00
2,389.00
1,518.00
49.00
14,754.00
3,470.00
143.00
10,896.00
35,054.00
164.00
2,187.00
15.00
654.00
86.00
982.00
100,574.00
15,200.00
896.00
41.00
173.00
15,578.00
2,671.00
1,441.00
24.00
2.00
505.00
2,070.00
-
nd
2 Semester
Payment (Pesos)
2011
9,483.00
15,744.00
9.00
2.00
31,263.00
5,678.00
17,580.00
4,204.00
2,671.00
98.00
29,497.00
6,938.00
284.00
21,785.00
61,696.00
164.00
2,187.00
15.00
654.00
86.00
982.00
100,574.00
15,200.00
896.00
41.00
173.00
15,578.00
2,671.00
1,441.00
24.00
2.00
888.00
3,643.00
139.00
16,896.00
1.00
Royalties, Agreements and Encumbrances

Certain claims held by Argonaut have a royalty payment. These claims and the royalty burdens are
listed in Table 2.2.1. The specific concession with royalty burdens are shown in Figure 2-6.
2.4
Environmental Liabilities and Permitting

Exploration activities at La Colorada operate under the NORMA-120 issued by the Federal
environmental agency SEMARNAT. The NORMA-120 is not an issued permit, but rather a set of
regulations that allow exploration to take place. To work under the NORMA, a Company can present
a report of initiation of exploration activities and then carry out its exploration staying under a
percentage of affectation and observing a set of rules that include, road and pad dimensions,
disposal of waste, etc.
BAS/SC
December 30, 2011

Page 7
Much of the exploration activities at La Colorada, however; occur in areas which have already
received a change of use in soils for mining activities.
2.4.1 Required Permits and Status

Exploration activities at La Colorada operate under the NORMA-120 issued by the Federal
environmental agency SEMARNAT. The NORMA-120 is not an issued permit, but rather a set of
regulations that allow exploration to take place. To work under the NORMA, a Company can present
a report of initiation of exploration activities and then carry out its exploration staying under a
percentage of affectation and observing a set of rules that include, road and pad dimensions,
disposal of waste, etc.
Much of the exploration activities at La Colorada, however; occur in areas which have already
received a change of use in soils for mining activities.
Permits relating to the initiation of mining activities are addressed below in Section 17.
2.5
Other Significant Factors and Risks

SRK is unaware of any other significant factor or risks to access, title or the right to perform work on
the project.
BAS/SC
December 30, 2011
La Colorada Project
Sonora, Mexico
Source: Argonaut Gold Inc., 2011
Figure 2-1
Project Location Map
La Colorada Project
Sonora, Mexico
Figure 2-2
Project Site Map
La Colorada Project
Sonora, Mexico
Figure 2-3
Regional Concession Map
La Colorada Project
Sonora, Mexico
Figure 2-4
Local Concession Map
La Colorada Project
Sonora, Mexico
Figure 2-5
Detailed Concession Map
La Colorada Project
Sonora, Mexico
Figure 2-6
Royalty Concession Map
La Colorada Project
Sonora, Mexico
Figure 2-7
Surface Ownership Map

Accessibility, Climate, Local Resources,

Infrastructure and Physiography (Item 5)
3.1
Topography, Elevation and Vegetation
Page 15
The project is located in the basin-and-range geological province which is dominated by alternating
ranges and valleys bound by normal faults. This general geomorphology predominates in the district
of La Colorada with the hills being easily identifiable by Tertiary volcanic rocks that have been tilted
about 15 to the west. Elevations at La Colorada range between 400 and 650 meters above sea
level. The pit areas and the current exploration zones of Veta Madre and La Verde at located in
rather smooth-topography zones. Argonaut completed a flight and photogrammetric reconstitution
during 2011 that covers a total area of 3,343 hectares with the main historic production areas at its
center. Vegetation consists of extensive mesquite and paloverde trees, cactus and sparse grass
cover.
3.2
Climate and Length of Operating Season

The La Colorada property lies within the Sonora Desert climatic region. It has an arid climate, with
summer temperatures sometimes exceeding 47 C. Winter temperatures vary from mild to cool in
January and February. Rainfall is affected by the North American Monsoon, with over two-thirds of
the average, 19.3 cm of rain falling between the months of July and September. The weather at the
project allows for operation during the entire year.
3.3
Sufficiency of Surface Rights

Since 2008, Pediment Gold Corp. acquired the main surface rights for the La Colorada mine and the
La Primavera Ranch that cover an area of 1,046.8 ha.
The surface rights are adequate for disposal of waste. The full exploitation of the La Colorada/Gran
Central pit and expansion of heap leach pads will require additional surface rights. It is expected that
as studies continue, the location and trade-offs governing the purchase of additional land will
become clearly defined.
3.4
Accessibility and Transportation to the Property

The village of La Colorada and the La Colorada Property are located 40 km southeast of Hermosillo
city, in the State of Sonora, Mexico. Access is via paved Highway 16, which continues east to the
town of Ycora and the city of Chihuahua.
3.5
Infrastructure Availability and Sources

Please refer to Section 15.
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History (Item 6)
4.1
Prior Ownership and Ownership Changes
Page 16
The original La Colorada concessions were staked by Jesuit missionaries in 1740. By 1790,
Spanish miners had taken ownership. In 1860, an English company installed pumps and worked the
concessions until 1877 when they sold out to the Creston-Colorado Company. In 1888 the property
was sold to the Pan American Company. In 1895, the London Exploration Company purchased the
concessions. In 1902, the Mines Company of America took ownership. During the Mexican
Revolution in 1916, the mine closed and the facility was eventually dismantled.
In the mid 1980s Minerales de Sotula S.A. de C.V. and Industrias Peoles, S.A.B. de C.V. began reacquiring the mineral concessions. In 1991 Cia. Minera Las Cuevas S.A. de C.V a Mexican
Subsidiary of Noranda acquired an option on the project. Later that same year, HRC Development
Corp and Rotor International S.A. formed a joint venture ownership of the project called
Explorationes Eldorado S.A. de C.V. (EESA). EESA held the project until 2000 when it sold out to
Grupo Minero FG S.A.de C.V. In 2001, ownership was transferred to Explorations La Colorada, S.A.
de C.V. In 2007, Pediment Gold Corp. optioned and eventually, purchased the key concessions,
surface ownership and infrastructure mine from Exploraciones La Colorada.
Further key
concessions were also acquired in 2008 and 2010 by Pediment. In 2010, Argonaut Gold acquired
Pediment Gold Corp. including the La Colorada project held under Pediments wholly owned
Mexican subsidiary, Compaia Minera Pitalla S.A. de C.V. (Minera Pitalla).
4.2
Previous Exploration and Development Results

In the early nineties, Compaa Minera Las Cuevas invested $350,000.00 in exploration at La
Colorada, including reverse-circulation drilling. Later, EESA carried out systematic exploration on
the Project, focusing mostly in the El Crestn-Minas Prietas zone, but with great detail also in the La
Colorada/Gran Central zones. During the 1990s, EESA continued its exploration program and
explored other zones such as Veta Madre, La Verde and Los Duendes. EESA conducted geological
mapping, surface sampling of rock and soils, geophysical programs, trenching and core and reversecirculation drilling. Other studies were also conducted by request of EESA, such as geotechnical
studies for pit-slope stability, metallurgical tests and mineralogical and petrographical studies. EESA
operated an open-pit, heap-leach operation starting in the El Crestn pit and in later years in the La
Colorada/Gran Central areas. Small-scale production also took place in the Los Duendes area,
southeast of the El Crestn pit.
In 2007, Pediment Gold Corp. optioned the project from Exploraciones La Colorada, S.A. de C.V.
and began compiling the previous work accompanied by an exploration program that included
surface sampling and mapping. A drill program commenced in 2008 focusing in the known
mineralization zones of El Crestn, La Colorada/Gran Central, Veta Madre and La Verde. The
results were followed up by the +10,000 m drill program of 2009 which combined diamond and RC
drilling and had a greater focus on the Veta Madre zone.
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4.3
Page 17
Historic Mineral Resource and Reserve Estimates

Various historical resource estimations have been completed on the project including; Nordin 1992,
Giroux and Charbonneau 1992 and Giroux 1999. All of the historical estimations are super
seceded by the current NI 43-101 compliant resource estimation discussed in Section 12 of this
report.
4.4
Historic Production
Mining activity in the district dates as far back as the mid 1700s when Jesuit missionaries
discovered and later began mining the Minas Prietas zone. In the mid 1800s and English company
installed pumps which allowed them to reach deeper levels and expanded the mining capacity at La
Colorada. The Pan American Company of New York began the first cyanidation process at La
Colorada by the late 1800s. Several foregoing companies conducted underground mining from the
Minas Prietas, La Verde, Gran Central and Amarillas zones from this time until the early 1900s;
however, political unrest related to the Mexican revolution caused mining to stop as the facilities had
to be evacuated. Only small-scale gambusino activity continued after that until exploration activity
resumed in 1991.
In 1993, Mr. Chester Millar successfully undertook a pilot heap leach test of 30,760 t of run-of mine
(RoM) material, producing approximately 1,500 oz of gold. Following this, a positive feasibility study
resulted in mine construction beginning in the same year. The industrial scale phase started
successfully as a conventional open pit, RoM, cyanide heap leach operation with an activated carbon
recovery process. Mine construction started in September of 1993, with the first gold poured in
January 1994. During the second year of operations the recovery process was replaced with a
conventional Merrill-Crowe (MC) circuit. Next, a two stage crushing circuit was implemented to treat
potentially mineable resource coming from the La Colorada/Gran Central pit this was required to
achieve economical recovery levels. Construction started during 1996 and the crushing facility
became operational in 1997. Approximately 30% of the ore was treated as RoM and dumped
directly onto the pads, with the rest being crushed in the two stage crushing plant to a size of -3/4.
The leaching-MC circuit had a processing capacity of approximately 8,000 t of ore daily at its peak
capacity. The mine operated an average of 315 days/yr. During commercial production between
1994 and 2000, EESA produced approximately 290,000 oz of gold and about 1 million oz of silver.
EESA sold the mine and plant to a local Hermosillo mine contractor, Grupo Minero FG S.A. de C.V.
(FG), who continued limited production and decommissioning for a year or so after 2000, and is
estimated to have produced approximately 70,000 additional oz of gold. EESA and FG production
statistics cited from Diaz, 2007 and Herdrick, 2007.
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Page 18
Geological Setting and Mineralization (Item 7)
5.1
Regional, Local and Property Geology

The following is cited directly from McMillian et al (2009) with minor modifications of text and
formatting.
Physiographically, the La Colorada Property is located in the western foothills of the Sierra Madre
Occidental mountain chain, 110 km east of the Gulf of California. Tectonically the property is located
at the boundary between the Sonoran Basin and Range Province and the Sierra Madre Occidental
Province. These intrusive rocks are contiguous with the broad batholithic belt extending along the
western margin of North America. West-directed folding and thrust faulting occurred during the Late
Cretaceous Laramide Orogeny. Basin and Range faulting, followed in the Tertiary, and constitutes
the dominant structural event in the area.
Bedrock ranges in age from Proterozoic through Cenozoic and includes high-grade metamorphic
gneisses, shelf facies sedimentary strata, extensive andesitic to rhyolitic volcanic deposits and
dioritic to granitic intrusive rocks. Basement rocks consisting of gneisses, schists and quartzites cut
by plutons dated at 1,710 and 1,750 million years are some of the oldest rocks exposed in Mexico
and reach their southernmost limit just north of La Colorada property these rocks are considered
the cratonic basement of North America (Zawada et al, 2001). Upper Triassic clastic sedimentary
strata (conglomerate, sandstone and siltstone) of the Barranca Group unconformably overlie the
metamorphic basement rocks in scattered locations throughout east-central and southern Sonora.
Late-Cretaceous to Tertiary volcanic rocks and associated continental clastic rocks unconformably
overlie the Triassic and older rocks. These units thicken considerably eastward, where they form
extensive sequences underlying the high plateau of the Sierra Madre Occidental Mountains. There,
two distinct divisions are apparent. A lower 100-45 Ma Lower Volcanic Complex composed mainly
of andesite with interstratified rhyolitic ignimbrites and minor interstratified basalt. The overlying
Upper Volcanic Complex has been dated at 34-27 My and is composed of extensive rhyolite and
rhyodacite ignimbrites with minor interstratified basalt. It constitutes the largest ignimbrite field in the
world. The upper sequence unconformably overlies on the older sequence and infills deeply incised
paleotopography in the older rocks. Late Cretaceous to Early Tertiary plutonic rocks (diorite,
granodiorite to granite) of the Sonoran Batholith outcrop throughout the region and have been dated
from 90-40 Ma.
The area of La Colorada is covered by Mid-Cambrian to lower Ordovician quartzites and
metalimestones; carboniferous limestones and sandstones; Triassic oligomictic conglomerate,
limestones and shales; and Upper Cretaceous volcanic tuffs ranging in composition from andesite to
rhyolite. The previous units are intruded by Paleocene to Oligocene age intrusives that include
granite, granodiorite, diorite and andesitic porphyry. These intrusives are interpreted to be the result
of the active continental margin stage of this region with the subduction of the Farallon Plate beneath
the North American plate. This was followed by a continental extension stage and continental rifting
of the Basin and Range province during the Tertiary which generated the youngest lithological units
represented in the area. The base of this tectonic stage is represented in the area by the Early
Miocene Bucarit formation, which is composed of continental conglomerates and sandstones
interbedded with basaltic to andesitic volcanic rocks. This is overlain by the Late Miocene Lista
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Page 19
Blanca formation composed by bimodal volcanism of rhyolitic tuff and andesite. The youngest unit
during the Tertiary is an extension-related olivine basalt unit.
Alteration can be seen in the older metamorphic and intrusive units mostly as silicification,
hematization and argillic alteration. The Tertiary volcanic rocks in the district are clearly post-mineral
and are unaltered.
On a regional scale, basin and range faults are characterized by north-northwest striking normal
faults. Crustal blocks formed by the Basin and Range faults have moderate to steep regional dips.
Steeply-dipping east-northeast trending regional faults transverse to the main trend are also common
throughout Sonora.
5.2
Significant Mineralized Zones

The significant mineralized zone of this Technical Report include the El Crestn, La Colorada/Gran
Central, and Veta Madre Zones. The following descriptions are cited directly from McMillian et al
(2009) with minor modifications of text and formatting.
El Crestn
The El Crestn and Minas Prietas veins constitute the largest vein system on the La Colorada
Property and were originally mined as separate orebodies; however they are now recognized as
being part of the same mineralized zone. El Crestn refers to the current open pit area, while Minas
Prietas is located to the east of the pit. The following description is paraphrased from Ball (1911),
quoted in Lewis (1995): The veins generally strike east to east-northeast, dipping an average of 75
N. The veins have well-defined walls and below the 100 m level are simple with few spurs and
parallel veins. Apparently the best values are found where the veins were thickest. The veins of El
Crestn Mine are from north to south: New Vein, North Vein, Perry Vein, South Middle Vein and
South Vein. Although the veins are separate entities, they coalesce and bifurcate in a subparallel
series of veins. The veins are all fault controlled, with the faulting preceding the veining, but small
post-ore fault offsets of a few meters is common. Again, the following descriptions are paraphrased
from Ball (1911), quoted in Lewis (1995): New Vein apparently averaged 3 to 4 m in thickness,
approximately 250 m in length and more than 225 m deep. Its surface exposure was low grade, and
had particularly rich grades at depths of 100 to 225 m. The North Vein was traced for more than
1,100 m. It averages 2.5 m in width, with poor grades except near surface, where it was stoped for a
length of 325 m. Ball (1911), described the South Vein as being 850 m long with an average north
dip of 820, although it locally flattens to about 400 north. The vein averages 2.5 m in width and is
higher grade near surface for a length of 525 m, but only for 170 m in the deeper levels of the mine.
The Perky (or North Middle Vein) is a splay from the west end of the South Vein. It was about 180 m
long, with a maximum width of 1 m. According to Ball (1911) the mineralized zone was wider near
the surface because the veins converge towards each other and because there is a vein stockwork
these two factors allowed for mining by open cut methods. Ball (1911) states that the greater
widths and higher grades near the surface were due to a combination of greater fracturing and
secondary (supergene) enrichment. Lithologies in the El Crestn-Minas Prietas deposit include
siltstone, shale and chert of the Paleozoic Mine Sequence; diorite, monzonite and quartz feldspar
porphyry of the intrusive suite as well as hornfels and skarn derived from the sedimentary sequence
and andesite (Lewis, 1995). Alteration styles include hematization, manganese oxides, silicification,
argillic, potassic, sericitic and chloritic affecting all rock types. Deep red hematite is a prominent and
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Page 20
obvious feature. Manganese oxides are apparently associated with some of the higher gold values.
Structurally, the Colorada Sur Fault is the main controlling feature. It has a variable strike which
averages 60E and dips vertically to steeply north. Although the underground mines selectively
mined individual veins over narrow widths as described above, EESAs open pit extracted larger
scale stockwork zones and areas of multiple veining over cumulative thickness of up to 90 m (Lewis,
1995).
Gran Central Deposit
Gran Central is geologically similar to El Crestn-Minas Prietas, and again is composed of quartz
veins and stockworks localized in the Gran Central Fault. It is hosted in a diorite stock which
contains roof pendants of siltstone and lesser calc-silicate hornfels. Quartz feldspar porphyry dykes
up to 2 m in width cut the diorite. The youngest rocks are a few small pre-mineral mafic dikes up to 2
m in thickness. At the eastern end of the deposit, the diorite is in fault contact with and covered by
an andesite cap. The andesite is less altered and oxidized than the underlying diorite and devoid
of gold values (Lewis, 1995). EESA tested the zone over a length of 450 m and a depth of 150 m,
but the old underground extends 200 to 300 m further to the west and to a depth of 300 m. The
east-west trending Gran Central Fault is the controlling structure and has a north dip averaging 50.
The Gran Central Fault consists of a number of sub-parallel splays, where quartz veins, stockworks
and breccias zones are associated with clay-chlorite gouge. Alteration minerals are similar to those
found at El Crestn-Minas Prietas; however calcite is a common gangue mineral, and siderite veins
as well local amethyst are present (Lewis, 1995). Footwall rocks tend to be more heavily altered
than hanging wall rocks. Fine native gold is present in the deposit and some areas with visible gold
posed a minor nugget effect problem for EESA at Gran Central (Lewis, 1995). Sulfide minerals
ranging between 1 and 3% by volume are characteristic in the unoxidized portion of the deposit. In
the sulfide portion of the deposit, the minerals include galena, sphalerite, lesser chalcopyrite, minor
tetrahedrite and traces of chalcocite and covellite.
La Colorada Deposit
Gold-bearing quartz veins and stockworks at La Colorada are hosted in an east-west striking fault
with a north dip averaging 45. It is hosted by rhyolite porphyry and diorite. It is within and adjacent
to the same dioritic stock which hosts the Gran Central Deposit. EESA traced the mineralization for
500 m along strike and for 100 m down dip. The zone is an average of 20 m thick. Lewis (1995)
state that according to historical records, mineralization is terminated at a depth of approximately
200 m by a flat fault, below which non-mineralized granite is present. Mineralogy and alteration are
similar to El Crestn-Minas Prietas.
Veta Madre Zone
Veta Madre is located 1.5 km. east of El Crestn-Minas Prietas Pit. It consists of a zone of extensive
alteration associated with the Colorada Sureste Fault. Historical miners sunk three deep sub-vertical
shafts. Rock types include siltstone, diorite, monzonite, granite, rhyolite feldspar porphyry and
dacite. EESA completed 11 trenches of different lengths and 1,566 samples were taken which
returned gold values of between 0.15 and 0.8 ppm with sporadic higher values of between 1.5 and
5.0 ppm Au. Anomalous zinc values were encountered at one location with one 4 m section grading
1.5% Zn. EESA drilled twenty one reverse-circulation drillholes totaling 2,372 m. A single diamond
hole was drilled in the area (249.9 m). These holes intersected mineralization along an east-
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Page 21
northeast trending structure, with a strike length of close to 500 m. Pediment has since completed
25 RC drillholes (2,098 m) in 2008- 2009, with follow-up drilling.
Regional and local geologic maps complied by Argonaut are presented in Figures 5-1 through 5-3. A
representative, geologic cross section through the La Colorado/Gran Central area is presented in
Figure 5-4.
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December 30, 2011
La Colorada Project
Sonora, Mexico
Figure 5-1
Regional Geology
La Colorada Project
Sonora, Mexico
Figure 5-2
La Colorada/Gran Central Pit Area Geology
La Colorada Project
Sonora, Mexico
Figure 5-3
El Crestn Pit Area Geology
La Colorada Project
Sonora, Mexico
Figure 5-4
La Colorada/Gran Central Area
Cross Section Geology

Page 26
Deposit Type (Item 8)

The following descriptions of deposit types are cited directly from McMillian et al (2009) with minor
modifications of text and formatting.
6.1
Mineral Deposit
La Colorada Gold District has many of the characteristics of a low sulfidization epithermal-vein type
gold-silver deposit. Although there are differences, such as the more sheared and deformed nature
of the La Colorada deposits, the authors (McMillian et al, 2009) believe that La Colorada could be an
outlier of the prolific Sierra Madre Occidental trend of gold-silver deposits that traverses much of
central Mexico. Zawada et al (2001) from fluid inclusion studies, state that La Colorada district
underwent a complex hydrothermal history related to Cretaceous plutonic activity, later higher level
plutonic events, and finally a mid-Tertiary vein system which shares characteristics in common with
both a deep epithermal environment and a high-level mesothermal system. Zawada et al (2001) go
on to state that features indicative of a deep epithermal environment include abundant multistage
coarse and fine grained crystalline quartz bands, with gold deposition more abundant in the finer
grained stages; abundant primary growth zones indicative of open-space filling under hydrostatic
pressure conditions; and the absence of low temperature silica phases such as chalcedony or
recrystallized amorphous silica, which are typically present within the mineralized zones of higher
epithermal systems .
The current authors (McMillan et al) believe that the deposits are epithermal in nature and of the lowsulfidization type in particular. The La Colorada deposits however have been subject to burial and
as a consequence to shearing and elevated temperatures prior to being exhumed and re-exposed.
These suppositions are not merely academic, and are believed to have exploration implications in
particular in tracing the key structural-stratigraphic traps for mineralization down-dip in the relevant
fault blocks generally west from the known mineral deposits below the Tertiary volcanic cover.
6.2
Geological Model Applied

Discussion of the general characteristics of epithermal Au-Ag deposits follows and is believed to be
relevant. Recently epithermal-type Au-Ag deposits in the Pacific Rim and in Eurasia have been the
source of much of the worlds new gold supply. This has resulted in an improved understanding of
epithermal-type precious metal deposits and has allowed for construction of models which could be
very useful in future exploration of the La Colorada Property. The following comments are based
largely on recent papers by Hedenquist et al (2000) and Simmons et al (2005).
Epithermal deposits are found in the shallow parts of subaerial high-temperature hydrothermal
systems and are very important in Tertiary to Recent calc-alkaline and alkaline volcanic rocks. They
are particularly important in the Circum Pacific Volcanic Arcs and in the Mediterranean and
Carpathian regions of Europe. Host rocks are variable and include volcanic and sedimentary rocks,
diatremes and domes. Structural controls include dilatant zones related to extensional faulting and
favorable lithologies in permeable and/or brecciated host strata in the near-surface environment.
Although some mineralization can be disseminated, most common mineralization is hosted by
steeply-dipping vein systems. Both open-pit bulk mining and selective underground mining methods
are employed to exploit the deposits, depending upon the nature of the mineralized bodies. Heap-
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Page 27
leach treatment is possible in some oxidized deposits. In contrast some high-sulfidation deposits
can be refractory, with the gold encapsulated by sulf-arsenide minerals.
Mineral textures include banded, crustiform-colliform and lattice textures composed of platey calcite
sometimes pseudo morphed by quartz. An important feature of epithermal deposits is a pronounced
vertical zonation, with quartz veins carrying base metal sulfide mineralization at depth, becoming
silver-rich higher in the system and finally gold-rich near the top. Both low-sulfidation and highsulfidation epithermal deposits can be overlain by a discontinuous blanket of kaolinite-smectite,
sometimes with alunite and native sulfur, within an opaline rock that is easily eroded (Hedenquist et
al, 2000). Although some deposits display intermediate characteristics, two end member types of
deposit are generally recognized.
High-sulfidation deposits are characterized by a silicic core of leached residual vuggy silica as the
main host to the mineralization (Hedenquist et al, 2000). Major metallic minerals can include pyrite,
enargite/luzonite and covellite, with lesser quantities of native gold and electrum, chalcopyrite and
tennantite/tetrahedrite. Upward from the silicic core there is generally an upward-flaring advanced
argillic zone consisting of quartz-alunite, barite and kaolinite, and in some cases pyrophyllite, or
zunyite (Hedenquist et al, 2000). High sulfidation deposits are commonly proximal to and in some
cases hosted by a high level subvolcanic intrusive or dome calderas constitute a particularly
important environment.
Low-sulfidation deposits typically range from veins, through stockworks and breccias to disseminated
zones. Mineralized bodies in low-sulfidation systems are commonly associated with quartz and
adularia, with carbonate minerals or sericite as the major gangue minerals. Major metallic minerals
can include pyrite/marcacite, pyrrhotite, arsenopyrite and high-iron sphalerite. Less abundant
metallic minerals include native gold and electrum, cinnabar, stibnite, Au-Ag selenides, Se sulfosalts,
galena, chalcopyrite and tetrahedrite/tennantite. Hedenquist et al (2000) state that hot spring sinter
can form above a low-sulfidation deposit and that the clay alteration associated with a deposit can
mushroom above the deposit towards the surface and have an aerial extent two orders of
magnitude larger than the actual ore deposit. In some cases mercury mineralization, and/or
geochemically anomalous As, Sb and Tl, is found near the top of the deposit and in the overlying
siliceous sinter.
According to Herdrick (2007), the La Colorada project area contains at least three parallel vein
trends on which underground and open pit mining has been conducted. Targeting of drillholes is
based on structural analysis and vertical zoning recognized in the district, as well as fluid inclusion
and alteration studies which indicate that gold mineralization exposed in the pits resulted from boiling
in the epithermal system. The upper parts of a boiling system are typically recognized as barren
alteration zones, overlying potentially gold bearing parts of the vein structure at depth. Veins are
focused along east-west and northeast-southwest trending structures that dip moderately to the
north and northwest, and cut across local skarn alteration and intrusive bodies. Surface mining was
focused along three structures, the upper parts of which flare out into stockwork zones. Eight
different structures in the La Colorada mine area appear to have older underground workings in gold
bearing quartz veins.
Age dating was undertaken on three hydrothermal sericite samples. Two are from the La Colorada
Pit and one from the Gran Central Pit (Zawada et al, 2001). The samples were subject to 40Ar/39Ar
analyses at the New Mexico Institute of Science and Technology Geochronology Research Lab in
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Socorro, New Mexico, yielding respectively: 27.1 +/- 2.0 Ma, 22.45 +/-0.19 Ma and 23.83 +/- 1.6 Ma.
Two biotite samples collected from dioritic intrusions from the Gran Central Pit yielded ages of 70.4
+/-0.2 Ma and 69.9 +/- 2.2 Ma. These dates suggest that the hydrothermal alteration and associated
gold mineralizing event was Miocene in age and probably related to the Tertiary volcanic event. The
Cretaceous age for the biotite in the diorite suggests the intrusive event for the granitic plutonic rocks
was much earlier and not associated with the hydrothermal gold mineralizing event.
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Exploration (Item 9)
7.1
Relevant Exploration Work
Page 29
Argonaut has conducted surface exploration consisting of rock chip and soil sampling.
7.2
Surveys and Investigations
7.2.1 Exploration Rock and Soil Sampling

Selected surface rock samples were collected by qualified Mexican geologists together with
appropriate geological-technical data, including UTM coordinates, lithology and mineralization
recorded in field books. The samples are placed in standard plastic rock sample bags, tagged and
the locations recorded in a master database. The plastic bags are sealed using plastic pull ties. All
samples are taken to the office facilities within the La Colorada project.
During 2011, Argonauts regional exploration program at La Colorada included soil sampling from the
Sombreretillo and the Los Duendes areas. Sampling was made over a spacing array of 50 m by 100
m, and nearly all samples consisted of material from the B and C horizons, with depths ranging from
20 to 45 cm. Detailed information for all samples was recorded in paper and later included in the
Surface Database. All samples were placed mainly in cloth bags, and were shipped to the laboratory.
So far, Argonauts geologists have taken 99 samples in the Los Duendes area, to the south of El
Creston open pit; as well as 61 soil samples from Sombreretillo, located to the Northeast of the Veta
Madre area.
7.3
Significant Results and Interpretation

Small outcrops of Qtz+Ox mineralized structures with anomalous Au values were sampled at the
Sombreretillo area, to the northeast of Veta Madre; these structures are hosted by dacitic rocks with
strong presence of Qtz veinlets, and they are parallel to the mineralization trend of the Veta Madre
area. Recently received assay results of around 50 rock samples from the Sombreretillo area, have
helped Argonauts exploration personnel to design a new drill program, which is currently under
review and it is programmed to be implemented in the near future.
In addition, a siltstone-hosted mineralized structure trending to the northwest was sampled at the Los
Duendes area, from where several rock samples with anomalous Au assays were found; turning the
area into a possible further exploration target.
General reconnaissance of two new properties, Red Norte and Red Sur, located to the south of the
La Colorada mine, has been carried out; results from that work shows presence of several NorthSouth trending veins and structures, which are accompanied of anomalous values of Au and Ag that
may lead to more aggressive exploration in the near future.
Soil sampling results in both areas have been positive; and, as mentioned before, a new drilling
program , partially based on surface sampling and intended to expand the resource has been
already made.
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Page 30
Drilling (Item 10)

The majority of the drilling which supports the current resource estimation was conducted by the
three most recent owners of the project including; EESA, Pediment and Argonaut.
8.1
Type and Extent

EESA completed 874 drillholes on the project during their ownership. The details of the EESA
drilling are outlined in Table 8.1.1.
Table 8.1.1: EESA Drilling Summary
Drilling by Area and DH Type:
El Crestn Pit
Gran Central Pit
La Colorada Pit
La Verde
NE Extension
Veta Madre
El Represo
Los Duendes
Colorada Norte
Colorada Sur
Total
RC/Percussion
Number
m
381 42,047.62
150 18,358.70
158 23,254.71
33
1,439.00
28
2,266.00
21
2,372.00
1
279.20
24
639.00
32
3,526.00
46
4,226.00
874 98,408.23
Diamond Core
Number
m
26
3,327.85
27
3,400.10
18
3,439.10
0
0.00
2
314.00
0
0.00
3
204.00
32
1,670.00
0
0.00
0
0.00
108 12,355.05
Pediment completed 133 drillholes on the project during their ownership.

Pediment drilling are outlined in Table 8.1.2.
Total Drilled
Number
m
407
45,375.47
177
21,758.80
176
26,693.81
33
1,439.00
30
2,580.00
21
2,372.00
4
483.20
56
2,309.00
32
3,526.00
46
4,226.00
982
110,763.28
The details of the
Table 8.1.2: Pediment Drilling Summary

Total Drilling:
RC
DD (with precollar)
Total
Drilling By Area:
El Crestn Pit
Gran Central Pit
La Colorada Pit
La Verde
NE Extension
Veta Madre
Leach pads
Waste Pads
Total
2008
Number
m
22 4,314.64
0
0.00
22 4,314.64
2
3
1
7
5
4
0
0
22
358.20
580.60
341.40
1,327.60
964.70
742.14
0.00
0.00
4,314.64
2009
Number
m
105 7,533.86
5 1,518.70
110 9,052.56
36
9
13
18
4
21
4
5
110
2,886.78
1,214.28
1,580.15
1,109.46
237.75
1,356.36
60.96
606.82
9,052.56
2010
Number
m
1 353.57
0
0.00
1 353.57
1
0
0
0
0
0
0
0
1
353.57
0.00
0.00
0.00
0.00
0.00
0.00
0.00
353.57
Total
Number
m
128 12,202.07
5
1,518.70
133 13,720.77
39
12
14
25
9
25
4
5
133
3,598.55
1,794.88
1,921.55
2,437.06
1,202.45
2,098.50
60.96
606.82
13,720.77
Argonaut has completed 245 drillholes on the project to date. The details of the Argonaut drilling are
outlined in Table 8.1.3.
BAS/SC
December 30, 2011

Page 31
Table 8.1.3: Argonaut Drilling Summary

Total drilling:
RC
DD (with precollar)
Total
Drilling by area:
El Crestn Pit
Gran Central Pit
La Colorada Pit
La Verde
NE Extension
Veta Madre
Leach Pads
Waste Pads
Total
Number
142
76
218
m
23,810.95
11,635.07
35,446.02
12
69
64
9
0
64
16
11
245
2,470.40
12,045.27
10,451.15
1,908.05
0.00
8,571.15
385.55
402.33
36,233.90
Source: Minera Pitalla Drilling Summary 2011
8.2
Procedures
8.2.1 Pediment, Reverse Circulation (RC) Drilling

Pediment used Layne de Mxico and Globexplore Drilling S.A. de C.V., both of Hermosillo, for the
reverse circulation drilling. Drillholes were generally oriented on azimuths 180 and 160 and
inclined with dips between -45 and -90 to the south because of the predominant north dip to the
veins and stockwork zones. Brunton compass was used for marking the direction of drilling on the
pads. All drillholes contained a systematic code numbering, using a prefix indicating the year and
type of drilling and had continues numbering. Initial pads were located by handheld GPS. Upon
completion, further surveying with precision instruments was completed to obtain the exact drillhole
coordinates. RC pipe diameter was 5 1/8 inch for Lyne RC or 5.0 inch for Globexplore RC. RC
cuttings were logged coincidentally with drilling using hand lens and binocular field microscope . RC
samples were taken every 5 ft (1.52 m) regardless of lithology, alteration or mineralization. Chip
trays were set up at this sample interval. After completion of a drillhole, the site was monumented by
a marker composed of down-hole PVC pipe encased in a cement block which was labeled with the
drillhole number.
8.2.2 Pediment Core Drilling.

Pediment used Layne de Mexico of Hermosillo for its core drilling. Layne drilled with a skid mounted
Cummins B-20 diamond drill rig. This equipment was used to drill five new holes, and two existing
holes were re-entered. All holes were drilled using HQ diameter bits. The entire hole was sampled.
In the mineralized zones samples were collected at regular 1.0 m or less, intervals. In zones with no
obvious mineralization, samples were collected at 3.0 m intervals.
8.2.3 Argonaut Reverse Circulation (RC) Drilling.

Argonaut used Layne de Mxico and Major Drilling de Mexico S.A, de C.V., both of Hermosillo, for its
RC drilling. Drillholes were oriented on azimuth 180 and inclined with dips between -45 and -90 to
the south following Pediments drill scheme. The drill plan design was to infill at 25 m spacing.
Brunton compass was used for marking the direction of drilling on the pads. All drillholes contained
BAS/SC
December 30, 2011

Page 32
a systematic code numbering, using a prefix indicating the year and type of drilling and had
continuous numbering follow the system of Pediment. Initial pads were located by handheld GPS.
Upon completion, further surveying with precision instruments was completed to obtain the exact
drillhole coordinates. RC pipe diameter was 5.0 in for Lyne RC or 5 1/8 in for Major RC. RC cuttings
were logged coincidentally with drilling using hand lens and binocular field microscope. RC samples
were taken every 5 ft (1.52 m) regardless of lithology, alteration or mineralization. Chip trays were
set up this sample interval. After completion of a drillhole, the site was monumented by a marker
composed of down-hole PVC pipe encased in a cement block which was labeled with the drillhole
number.
8.2.4 Argonaut Core Drilling.

Argonaut used Landdrill International Mexico S.A. de C.V. and Falcon Perforaciones de Mexico S.A.
de C.V. both of Hermosillo and GDA Servicios Mineros S.A. de C.V. of Chihuahua for its core drilling.
Two drills were skid-mounted and two were buggy-mounted diamond drill rigs. Some of the holes
were drilled using PQ diameter bits in order to obtain metallurgical samples, others used HQ
diameter bits to obtain exploration samples. Sampling procedures followed the protocols established
by Pediment as described above.
8.2.5 Argonaut RoM Pad Drilling

A Becker-Hammer rig contracted from Layne de Mexico was used to drill test the RoM leach pad and
Waste dumps at La Colorada. This type of drilling drives casing with a percussion hammer without
the necessity of rotation. The casing is a double wall drive pipe with a large center opening which
allows even large cobbles to be lifted without prior crushing. Since drilling and casing are combined
in one operation, this method provides a continuous and generally, more accurate sample of the
geological formation being drilled. Since the RoM pad and waste dumps consist of uncrushed rock,
the Becker was chosen to get as much recovery in the coarse size as possible. The Becker hammer
used at La Colorada had a 9-in outer diameter and 6-in inner diameter with dual tube drill pipe.
Layne reported the rig being able to commonly lift 4-in cobbles.
All Becker hammer drillholes were drilled at a -90 angle and were drilled without introducing water.
The sampling procedure on this type of drilling was similar to the one used in RC samples, with the
exception that none of the sample portions were discarded. Routinely, the sample was discharged
and split by half; 50% of the sample was bagged and stored at the storage house and the other 50%
was split again to obtain two 25% portions of the total; one of which was bagged and stored as a lab
sample witness and the other 25% was bagged, marked and shipped to the preparation laboratory.
Whenever a duplicate sample was needed, both 25% portions were split again, so four 12.5% splits
were obtained, two of which were shipped to the preparation lab and the other two were stored at the
storage house.
8.3
Interpretation and Relevant Results

Reputable contractors using industry standard techniques and procedures have conducted the La
Colorada drilling. The historic drilling was conducted to the industry best practices of the time. This
work has defined several large zone of anomalous gold mineralization within the El Crestn, La
Colorada/Gran Central, and Veta Madre Zones. Figure 8-1 shows the locations of the Argonaut
drillholes. The drillholes are generally located in a wide range of spacing and orientations. They
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December 30, 2011

Page 33
typically bear to the south, inclined steep to moderately. This orientation provides an oblique angle
of intersection between the predominate plane of mineralization and the drillhole. Based on the wide
range of drillhole orientations most of the sample lengths do not represent true thickness of
mineralization. In general, the drillhole intercept length is greater than the true thickness of
mineralization.
SRK is of the opinion that the drilling operations were conducted by professionals, the RC chips and
core were handled and logged in an acceptable manner by professional geologists, and the results
are suitable for support of an NI 43-101 compliant resource estimation.
BAS/SC
December 30, 2011
La Colorada Project
Sonora, Mexico
Figure 8-1
Drillhole Location Map

Page 35
Sample Preparation, Analysis and Security (Item 11)
9.1
Methods
9.1.1 Reverse Circulation Drill Samples

RC samples were collected every 5 ft or 1.52 m. The rig is equipped with a cyclone with both a
vertical and a lateral discharge. Material from the vertical discharge passes through a second splitter
to obtain two samples. One of the splits is discarded and the other is split again to obtain two new
samples. These final two samples are bagged in previously-marked plastic (dry material) or
micropore bags (wet material) and sealed with plastic pull ties. One of the bags is weighed and
collected for assay, while the other reject is stored at the La Colorada warehouse as a duplicate in
case further checks are required. QA/QC field duplicates are prepared by splitting the reject once
and keeping one half for storage, the other half is then split again and bagged as a field duplicate to
go for assay. The sampling process is performed by trained local workers under the supervision of
one experienced worker and a project geologist. At the end of the day or shift, all sample bags for
assay are taken to the La Colorada office and organized there, inserting the corresponding QA/QC
samples containing blanks and standards.
9.1.2 Diamond Drill Core Samples

Samples were first marked by the geologist after geological logging, RQD and photography was then
completed. Sample splits were collected dry, using either a manual or a hydraulic core splitter. In
the case of filed duplicates, the samples had to be split twice, making sure representative parts were
used in both sample bags. Weights for all samples were recorded prior to sending to the lab.
Sample splitting was performed by local trained workers under the supervision of Argonauts
qualified geologist. Core boxes are stored at a warehouse in La Colorada using plastic boxes which
are properly marked with drillhole number and intervals contained in meters.
9.2
Security Measures
All Argonaut drill and surface samples taken at the Project were stored and secured in the Projects
office. Sample transfer to the assay lab were regularly scheduled three times a week. The samples
were collected by Inspectorate directly at the site. Personnel from the lab would sign off after the
samples were loaded into the truck, then the samples were delivered to the preparation laboratory in
Hermosillo. The laboratory itself would ship processed pulps for assay in their laboratories in the
U.S.
9.3
Sample Preparation
All of Argonauts samples were prepared and analyzed by Inspectorate Labs, Hermosillo, Mexico.
Inspectorate is fully independent of Argonaut; it is not an ISO certified laboratory but does follow the
Bureau Veritas code of ethics.
All samples were dried, crushed, split and pulverized in Inspectorates Hermosillo prep facility. The
pulps were then sent to Inspectorates main U.S. facility in Reno Nevada for fire assay gold and
silver analysis.
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December 30, 2011

Page 36
As part of routine procedures, Inspectorate uses barren wash material between sample preparation
batches and, where necessary, between highly mineralized samples. This cleaning material is
tested before use to ensure no contaminants are present and results are retained for reference.
Inspectorates sample preparation and fire assay procedures are as follows:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Sample is logged in and weighed.

Sample is dried in ovens.
Sample is crushed to 80% <2 mm or better.
The crusher is cleaned with compressed air after each sample.
Sample is split using Jones Riffle until up to 250 g sample remains.
Sample is packed and the reject is returned to original bag and stored.
Sample from step 5 is pulverized to 85% passing -200 mesh or better.
Pulps are shipped to Reno, Nevada.
Au and Ag are assayed by fire assay using Atomic Absorption Spectrometry (AAS) finish,
with 50 g nominal sample weight.
10. 30 additional elements are assayed by ICP using aqua regia digestion and read with ICPAES.
9.4
QA/QC Procedures and Results

Argonauts practice is to insert one control sample (standards, blanks and duplicates) at 10-sample
intervals through an entire drillhole. The control sample inserted each time is in sequence as
standard, blank and field duplicate. This repeats for as many QA/QC sample intervals as the
drillhole requires. Standards used are commercially produced by Rocklabs and include different gold
grades and two material types: oxide and sulfide. The material type is selected to match the type of
mineralization being sampled in the drillhole. Commercial blanks are also purchased from Rocklabs.
Field duplicates are prepared during drilling as described in Section 9.1.
After certified assay results are received from Inspectorate labs, statistical and/or graphic QA/QC
analyses are applied to all control samples. Argonaut does not include any analytical batch results in
its final database that have not passed the QA/QC procedure satisfactorily.
Duplicate samples are evaluated mainly using the Spearman Ranks correlation coefficient (R2),
which considers differences in Au-values sorting-ranks and is calculated to assure a good positive
correlation represented by the proximity of R2 to 1. In addition, the Pearson correlation coefficient is
also calculated for the original data, to verify the direct correlation level.
Figures 9-1 through 9-5 show that all Standards and Blank samples fell within acceptable limits.
Repeatability on duplicate samples results was highly acceptable; requests for several re-assays on
duplicates were triggered by high differences in results, and almost all the issues were attributed to
the presence of a minor nugget effect, seen also in previous drilling programs. Statistically, the
Spearman coefficient demonstrated a very good positive correlation level for the duplicates in the
2011 program (0.8875). The Pearson coefficient value reflects the heterogeneity of the duplicates.
Certificates of results for all reference material are issued by RockLabs, these documents contain
mainly the mean Au values and the Standard Deviation for each standard they manufacture, and this
information is taken into account to establish the tolerance limits which determine if a re-assay is
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December 30, 2011

Page 37
required. Reference material results that Argonaut receives from Inspectorate are graphically
analyzed as part of the QA/QC procedures.
9.5
Opinion on Adequacy
SRK is of the opinion that the analytical work performed by Inspectorate is valid and suitable for use
in resource estimation. The fire assay method is an industry accepted analytical technique to
determine Au and Ag content in exploration samples. The QA/QC program employed by Argonaut
meets current industry standards and the results of this work indicate good precision and accuracy of
the analytical results.
BAS/SC
December 30, 2011
La Colorada Project
Sonora, Mexico
Source: Argonaut Gold Inc, 2011
Figure 9-1
Blank Analyses Performance Chart
La Colorada Project
Sonora, Mexico
Figure 9-2
Certified Standard OxE86 Performance Chart
La Colorada Project
Sonora, Mexico
Figure 9-3
Certified Standard OxF65 Performance Chart
La Colorada Project
Sonora, Mexico
Figure 9-4
Certified Standard SG40 Performance Chart
La Colorada Project
Sonora, Mexico
Figure 9-5
Field Duplicate Performance Chart

Page 43
10 Data Verification (Item 12)

10.1 Procedures
Two data verification procedures have been employed to verify the data in this technical report. The
first involves 11 character samples collected by McMillian et al (2009); the second is verification of
the electronic data base completed by SRK.
The following description of data verification by character samples is cited directly from McMillian et
al (2009) with minor modifications of text and formatting.
During the property visit by two of the authors (McMillan and Dawson) on October 3, 2009, eleven
character samples were taken. The samples collected ranged between 0.64 and 6.03 kg., averaging
about 2 kg. They were collected with a geological pick into a plastic sample bag and delivered
personally by McMillan and Dawson on October 3 to the ALS Chemex preparation facility in
Hermosillo. The analytical results and comparative Pediment results are presented in Table 10.1.1.
The riffle split samples of the reverse circulation drill cuttings show good correlation as was
expected. The chip samples show poorer correlation perhaps reflecting to greater variability and or
more personal bias in chip sampling.
Table 10.1.1: MacMillian et al (2001) Comparative Sampling Results
Duplicate and Character Rock Chip and RC Drill Cutting Samples La Colorada Mine area
Sample No
(1)
Easting
(1)
Northing
MD001
54282
3185654
MD002
542840
3185640
MD003
542920
3185760
MD004
542920
3185760
MD005
542920
3185760
MD006
541233
3185777
MD007
541345
3185642
Description
El Crestn pit ramp. 2 m chip sample on bench between
Pediment Samples 324282 and 324283. N-trending
vuggy quartz veinlets to 1 cm. cutting red weathering
hornfelsed argillite. 20 cm. N-trending, steeply-dipping
felsic dyke cuts sediments.
El Crestn pit ramp. 2 m chip sample on bench between
Pediment Samples 324264 and 324265. Quartz vein
stockwork cutting altered argillite. ~75 to 80% quartz.
El Crestn pit. 2 m chip sample on bench duplicating
Pediment Sample 324224. 0.5 to 2 cm. quartz vein swarm
trends SW cutting red baked argillite. Broken granodiorite
intrusive dykes to 0.5 m.
El Crestn pit. 2 m chip sample on bench duplicating
Pediment Sample 324223. 0.5 to 2 cm. quartz vein swarm
trends SW cutting red baked argillite. Broken granodiorite
intrusive dykes to 0.5 m.
El Crestn pit. 10 to 15 cm. gouge zone in same location
as MD003. Duplicates Pediment Sample 324222.
La Colorada pit. 1.5 m sample of La Colorada vein. Vein
is intensely oxidized but contains fine pyrite, galena and
sphalerite and some vuggy quartz. Vein (which is a
stockwork of fine veinlets) dips ~ 500 N. Duplicates
Pediment Sample 434696.
Gran Central pit. 3 m chip sample of 1.4 m highly altered
shear zone dipping NE ~450. Drusy quartz, maroon and
red Fe oxides and some Mn. Duplicates Pediment
Sample 434806.
Duplicate riffle split of RC hole sample 40556.
MD008
MD009
MD010
MD011
(1) NAD 27 Mexico, Zone 12K
(2) All samples assayed by ALS-CHEMEX
BAS/SC
Au ppm
(2)
this work
Au ppm
Pediment
(2)
Gold
0.11 0.014 0.026
0.53 0.197 0.111
0.18
0.138
0.35
0.103
2.45
0.485
0.95
0.164
0.32
4.71
0.77
1.77
1.55
1.3
0.776
2.289
1.472
0.969
December 30, 2011

Page 44
SRK verified the electronic database to the original source data to assure validity of the data
supporting the resource estimation of this report. Argonaut supplied SRK with scanned copies of the
original drill logs or assay certificates where possible. SRK then manually compared the collar
locations, orientations/down-hole surveys and assay data within the electronic database to the
original sources. Assay certificates were only available for 67% of the assay data used to support
the current resource estimation. Eleven percent of these were validated by direct checks, no input
errors were found. Drill collar location from the EESA program were located in mine grid coordinates
and then transformed into UTM coordinates. The EESA mine grid is a truncated version of and older
UTM grid. Some of the original EESA collar coordinates are available in drill logs but due to the
transformation, direct comparison to the current coordinates was not possible. All drill collar
locations from the Pediment and Argonaut drilling were verified to the original sources. No errors
were found. Three percent of the hole orientation/down-hole surveys were verified to original data,
no errors were found.
10.2 Limitations
SRK was not limited in its access to any of the supporting data used for the resource estimation or
describing the geology and mineralization in this Technical Report.
The database verification is limited to the procedures described above. All mineral resource data
relies on the industry professionalism and integrity of those who collected and handled it. SRK is of
the opinion that appropriate scientific methods and best professional judgment were utilized in the
collection and interpretation of the data used in this report. However, users of this report are
cautioned that the evaluation methods employed herein are subject to inherent uncertainties.
10.3 Data Adequacy

It is SRKs opinion that the drillhole data is adequate to support to resource estimation of this report.
BAS/SC
December 30, 2011

Page 45
11 Mineral Processing and Metallurgical Testing (Item

13)
All information contained within this section was provided by Kappes, Cassiday & Associates (KCA)
in Reno, Nevada.
Metallurgical test work has been completed and ongoing during 2011 on material drilled from the
existing RoM Leach Pad at La Colorada as well as on new PQ and HQ core drilled from the La
Colorada, La Colorada West, Gran Central and Gran Central West pit designations.
The metallurgical drillhole locations are included in the map presented in Figure 11-1.
In both cases, the amount of drilling completed for the test programs completed by KCA in 2011
would appear to be representative of the areas being examined.
11.1 Testing and Procedures

For the RoM Leach Pad sample a group of 19 buckets of material were received at KCA in Reno,
Nevada. The received material was stage crushed to 100% passing 25 millimeters and a portion of
this material then crushed to 100% passing 12.5 mm in order to develop crushed material for head
characterization, bottle roll leach test work, agglomeration test work and column leach test work.
For the metallurgical core drillholes developed at La Colorada, KCA received 189 five-gallon buckets
containing HQ and PQ core (1/2 split and whole core was received) and assay control sample pulps
from the La Colorada Project of Argonaut Gold, Inc. located near Hermosillo, Mexico. The core
intervals received were prepared and assayed by Inspectorate in Sparks, Nevada for gold and silver.
An additional group of core samples were received. These core samples were contained in 21
buckets and were intervals of split HQ core previously assayed by La Colorada personnel. These
core intervals were from the Gran Central West area.
A total of 206 intervals were received from four separate areas of the La Colorada project. The
intervals received were representative of 13 drillholes developed from across these areas.
A total of four core composites were developed for head characterization, bottle roll leach test work,
preliminary agglomeration and column leach test work. These composites were representative of
the La Colorada, La Colorada West, Gran Central and Gran Central West areas.
Column leach tests were conducted on each of the four composites utilizing material crushed to
100% passing 25, 16, 12.5, for the La Colorada West and the Gran Central West composites and
material crushed to 100% passing 25, 16, 12.5 and 8.0 mm for the La Colorada and Gran Central
composites. An additional column test of 100% passing 9.5 mm is in progress for La Colorada West,
and core samples are in transit for planned column tests of El Creston and Veta Madre at 100%
passing 9.5 mm crush size.
11.2 Relevant Results

The results of the column leach tests conducted on the RoM Leach Pad material are summarized in
Table 11.2.1.
BAS/SC
December 30, 2011

Page 46
The column leach tests were completed on material crushed to 100% passing 25 and 12.5 mm.
Screen analyses of the column tailings indicated that the two (2) column leach tests conducted had
similar particle sizes with 80% of the material crushed to minus 25 mm being finer than 10.5 mm and
80% of the material crushed to minus 12.5 mm finer than 8.2 mm. Gold recoveries for the two (2)
columns ranged from 43% to 46% after 78 days of leaching. Sodium cyanide consumption averaged
0.34 kg/t NaCN and ranged from 0.30 to 0.38 kg/t NaCN.
The feed material for both column leach tests were agglomerated with cement prior to leaching. The
cement added during agglomeration was approximately 2 kg/t.
Table 11.2.1: La Colorada Project Column Test Results on RoM Leach Pad Material
Source: KCA, 2011
The results of the column leach tests conducted on the core composites are summarized in Tables
11.2.2 and 11.2.3.
Table 11.2.2: La Colorada Project Column Test Results on Core Material Gold
Source: KCA, 2011
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December 30, 2011

Page 47
Table 11.2.3: La Colorada Project Column Test Results on Core Material Silver
Source: KCA, 2011
It should be noted that some degree of variability was noted during the course of the column test
program reported here with regard to head assays and calculated head assays completed for
individual tests. While the exact source of this variability was not determined from the test work the
relative standard deviation for the calculated head gold values for each group were all less than 13%
and this would indicate generally good agreement between column tests.
For this test program the minus 25 mm material was leached for 48 days. The minus 16 and minus
12.5 mm material were crushed for 63 days and the material crushed to minus 8 mm were leached
for 72 days. Examination of the leach curves does indicate that leaching was continuing to some
extent when the column leach tests were ended. Although some additional recovery could possibly
be obtained with longer leaching it is believed that the crushed size of the material is the most
important factor with regard to metal recovery.
For most sets of column leach tests the minus 16 mm crushed material and the minus 12.5 mm
crushed material indicated similar type recoveries and in some cases the recoveries from the minus
12.5 mm material were lower than recoveries obtained at the 16 mm crushed size. This similarity
may be attributed to the screen analyses of these crushed products. The finer size fractions in these
two (2) crushed sizes, in some cases, were not different in weight percent.
The general recovery trend does indicate that both gold and silver recoveries do improve with finer
crushing.
For the Gran Central core composite gold recoveries ranged from 30% for material crushed to minus
25 mm to 55% on material crushed to minus 8 mm. Silver recoveries ranged from 19 to 45%.
BAS/SC
December 30, 2011

Page 48
The consumption of sodium cyanide ranged from 0.16 to 1.79 kg/t NaCN. Hydrated lime addition
averaged approximately 2 kg/t Ca(OH)2 for the material crushed between 12.5 and 25 mm. The
minus 8 mm crushed material was agglomerated with the addition of 2.01 kg/t cement.
For the Gran Central West core composite gold recoveries ranged from 41% for material crushed to
minus 25 mm to 48% on material crushed to minus 12.5 mm. Silver recoveries ranged from 24 to
40%.
averaged approximately 2 kg/t Ca(OH)2 for the material crushed between 12.5 and 25 mm.
For the La Colorada core composite gold recoveries ranged from 44% for material crushed to minus
25 mm to 70% on material crushed to minus 8 mm. Silver recoveries ranged from 17 to 47%.
averaged approximately 2 kg/t Ca(OH)2 for the material crushed between 12.5 and 25 mm. The
minus 8 mm crushed material was agglomerated with the addition of 2.01 kg/t of cement.
For the La Colorada West core composite gold recoveries ranged from 32% for material crushed to
minus 25 mm to 46% on material crushed to minus 12.5 mm. Silver recoveries ranged from 30 to
47%.
averaged approximately 2 kg/t Ca(OH)2 for the material crushed between 12.5 and 25 mm.
From KCAs field experience, cyanide consumption in production heaps is usually 25 to 33% of the
laboratory column test consumption. Therefore, at the 9.5 mm crush size, a field cyanide
consumption of 0.38 kg/t can be expected. It should be noted that at the 8 mm crush size there is a
substantial increase in cyanide consumption compared to the coarser crush sizes.
In the fine crushed column tests (9.5 and 8mm) cement was used to agglomerate at 2.5 kg/t, as a
matter of standard practice for first-round fine-crush column tests. It has not been determined that
this cement agglomeration is actually required. Additional testwork is to be conducted to determine
cement requirements (if any) for each of the mining areas. In the case of fine crushing it should be
tentatively assumed that 2 kg/t cement can replace lime.
11.3 Recovery Estimate Assumptions

When examining the results from laboratory column test work and projecting this to estimated field
recoveries the recoveries obtained from laboratory columns are typically reduced by 3 percentage
points. In a similar manner, silver recoveries are typically adjusted by up to 5 percentage points.
After review of historical processing data from La Colorada it was determined that no reduction from
laboratory column test work was needed as the recovery curves indicate relatively slow leaching, it is
almost certain that several percent more gold recovery would be realized with a 120 day leach cycle.
Gold recovery in the field from RoM Pad Leach material crushed to 100% passing 25 mm with a p80
size of 10.5 mm would be estimated to be 43%.
Column test recoveries along with estimated field recoveries for the four (4) areas defined by the
core material are presented in Table 11.3.1.
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December 30, 2011

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Table 11.3.1: La Colorada Project Estimated Field Recoveries by Crush Size
Source: KCA, 2011
From existing data normalized to a common crushing size of 100% passing 9.5 mm, projected metal
recoveries are presented in tables 11.3.2 and 11.3.3.
Table 11.3.2: La Colorada Estimated Field Recoveries (Gold) at 100% Passing 9.5mm
Sample Material
Gran Central
(60501)
Gran Central West
(60502, 60553)
La Colorada
(60503)
La Colorada West
(60504)
Intermediate
(60560)
Intermediate West
(60561)
Veta Madre
El Creston
Head Grade (g/t)

Gold Recovery
Head Grade (g/t)
Gold Recovery
Head Grade (g/t)
Gold Recovery
Head Grade (g/t)
Gold Recovery
Head Grade (g/t)
Gold Recovery
Head Grade (g/t)
Gold Recovery
25 mm 16 mm 12.5 mm
0.870
0.940
1.179
29%
35%
38%
1.294
1.315
1.389
38%
44%
45%
0.802
0.970
1.115
39%
53%
47%
0.724
0.598
0.744
29%
45%
41%
--1.011*
--42%
--1.066*
--59%
Core Samples En Route
9.5 mm
1.061
47% Interpolated
1.126*
49%
1.275
61% Interpolated
0.935 In progress
48% Provisional Extrapolated
1.011*
49%
1.066*
76%
8.0 mm
0.900
52%
--0.971
68%
-------
*Note: Columns still in progress (minimum 50 days)

Head values are estimated from head assays, head screens, and bottle roll leach tests
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Table 11.3.3: La Colorada Estimated Field Recoveries (Silver) at 100% Passing 9.5mm
Sample Material
Gran Central
(60501)
Gran Central West
(60502, 60553)
La Colorada
(60503)
La Colorada West
(60504)
Intermediate
(60560)
Intermediate West
(60561)
Veta Madre
El Creston
25 mm 16 mm 12.5 mm
6.50
3.56
5.90
20%
42%
33%
46.27
44.46
47.32
25%
35%
42%
10.01
7.97
7.90
16%
34%
36%
12.93
11.29
14.28
31%
48%
41%
--4.04*
--24%
--20.59*
--10%
Head Grade (g/t)

Silver Recovery
Head Grade (g/t)
Silver Recovery
Head Grade (g/t)
Silver Recovery
Head Grade (g/t)
Silver Recovery
Head Grade (g/t)
Silver Recovery
Head Grade (g/t)
Silver Recovery
9.5 mm
4.85
44% Interpolated
15.50*
49%
7.04
46% Interpolated
12.11 In progress
48% Provisional Extrapolated
4.12*
26%
20.74*
13%
8.0 mm
4.97
46%
--7.29
50%
-------
*Note: Columns still in progress (minimum 50 days)

Head values are estimated from head assays, head screens, and bottle roll leach tests
Review of historical reports and production records show that overall gold recovery during operations
achieved a combined recovery of 67.3% between RoM and 25 mm crush size from all mining areas.
It is believed that using a 9.5mm crush size, a scoping-level tentative gold recovery of 60% may be
reasonably assumed for El Creston and Veta Madre mining areas until column testing of these areas
is complete. Similarly, during historical operations the silver recovery achieved was 14%. It should be
noted that the KCA testwork has shown considerably higher silver recovery in La Colorada and Gran
Central. A reasonable scoping-level tentative silver recovery of 28% may be reasonably assumed for
El Creston and Veta Madre mining areas until column testing of these areas is complete.
11.4 Additional Test Work

Additional column test work is being completed by KCA at the present time on core material from the
Project. An additional column test of 100% passing 9.5 mm is in progress for La Colorada West, and
core samples are in transit for planned column tests of El Creston and Veta Madre at 100% passing
9.5 mm crush size.
Additional agglomeration tests are planned to thoroughly define cement requirements (if any).
The use of High Pressure Grinding Rolls (HPGR) is being investigated as an option for crushing
material for heap leaching by many projects at the present time and is an option that can be
considered for further downstream finer crushing at La Colorada.
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December 30, 2011
La Colorada Project
Sonora, Mexico
Figure 11-1
Metallurgical Drillhole Locationss

Page 52
12 Mineral Resource Estimate (Item 14)

12.1 Qualified Persons for the Mineral Resource Estimate
Dr. Bart Stryhas constructed the geologic and mineral resource model discussed below. He is
responsible for the resource estimation methodology, mineral resource classification and resource
statement. Dr. Stryhas is independent of the issuer applying all of the tests in Section 1.5 of NI 43101.
The resource estimation is based on the current drillhole database, digitized as-built topography of
open pits, interpreted fault structures, geologic controls and current topographic data. The
estimation of mineral resource was completed utilizing a computerized resource block model by
VULCAN modeling software.
12.2 Drillhole Database

The drillhole database was compiled by Argonaut and is determined to be of good quality. The
database consists of four, Microsoft Excel spreadsheets containing collar locations surveyed in
UTM grid coordinates, drillhole orientations with some down hole deviation surveys, assay intervals
with gold and silver analyses by fire assay and geologic intervals with rock types.
orientations. They typically bear to the south, inclined steep to moderately. This orientation provides
an oblique angle of intersection between the predominate plane of mineralization and the drillhole.
The maximum drillhole depth is 479 m and the average is 117 m. The historic drillholes are generally
short and lack down-hole surveys. Nearly all of the modern, longer holes do have down-hole
surveys. The appropriate codes for missing samples and no recovery were used during the
modeling procedures.
12.3 Geology
The resource estimation is based on a generalized geologic model consisting of a single rock type.
The mineralization is hosted all lithologies, primarily controlled by the fault and vein development.
The principal mineralization occurs as quartz veinlets and silica replacement within the La Colorada,
Gran Central, El Crestn and Veta Madre fault/vein zones. The Intermediate Zone is defined as
diffuse zone of mineralization located parallel, and midway between the Gran Central and La
Colorada structures.
Overall, the resource area has a deep level of oxidation controlled primarily by the fault/vein
development. The bedrock is typically well oxidized within the mineralized zones and less oxidized
in the barren zones. To date, Argonaut has been unable to map a discrete oxide/sulfide boundary.
All material within the current resource models is considered oxidized or transitional.
12.4 Block Model

Four block models were used to estimate the current resources. Each block model was constructed
within the UTM coordinate limits listed in Table 12.4.1. A 5 m x 5 m x 5 m (x,y,z) block size was
chosen as an appropriate dimension based on the current drillhole spacing and a potential open pit,
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smallest mining unit. Two topographic surfaces were used to flag the location of bedrock in the block
model. Within the mined areas, open pit as-built topography was generated from historic mapping.
These were digitized and wire framed into a top of bedrock surface. Outside of the mined areas, the
top of bedrock was defined by the current topographic data. Wire frame solids of the historical
underground workings were provided by Argonaut. These were used to flag the block model so that
no resources could be tabulated from the previously mined blocks. Soil thickness varies slightly over
the deposit and is generally very thin or non-existent.
Table 12.4.1: Block Model Limits
Model
La Colorada
El Crestn
Veta Madre
RoM Pad
Orientation
Easting
Northing
Elevation
Easting
Northing
Elevation
Easting
Northing
Elevation
Easting
Northing
Elevation
UTM Minimum
540,850
3,185,365
100
542,000
3,185,200
100
543,900
3,185,325
220
541,725
3,186,125
390
UTM Maximum
541,845
3,186,160
550
543,250
3,186,300
550
545,000
3,186,075
500
542,175
3,186,400
430
Block Size(m)
5
5
5
5
5
5
5
5
5
5
5
5
12.5 Compositing
The raw assay from each of the resource estimation domains was plotted on histograms and
cumulative distribution plots to assess appropriate capping and compositing parameters.
The
original assay sample lengths range from 0.1 to 111 m with an average of 1.8 m. For the modeling,
these were composited into 5.0 m down-hole lengths. This length was chosen mainly so that at least
two average samples would be composited together and the composites would comprise each 5 m
block diameter. The histogram of the drillhole database shows a strongly negative skewed
distribution, typical for most gold deposits. The cumulative distribution curves illustrate a continuous
population set with a distinct break in slope and continuity at the upper levels of mineralization. Each
unique dataset for each resource model domain was capped independently based on the break in
slope and distribution of the cumulative distribution plot. The capping parameters and results are
listed in Table 12.5.1.
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Table 12.5.1: Assay Capping Parameters

Model
Total Number
of Samples
La Colorada
3,101
Intermedia
2,187
Gran Central
4,760
El Crestn
7,184
Veta Madre
1,067
RoM Pad
270
Metal
Au
Ag
Au
Ag
Au
Ag
Au
Ag
Au
Ag
Au
Ag
Capping
Level (ppm)
50
200
27
150
33
281
13
140
2.1
15
1.4
65
Number of
Samples
Capped
13
9
6
5
12
10
68
89
32
19
15
32
Minimum
Capped
Maximum
Capped
51.7
222
33.1
200
50
288
13.2
142
2.1
15.2
1.41
65.2
356
1,031
67
420
224
499
432
1,874
25
49
17
155
Net Loss of
Metal From
Capping (%)
8.4
2.2
1.8
12.5
4.8
0.2
14.7
2.3
7.2
2.6
15.3
2.4
12.6 Density
Argonaut conducted density testing on the core drilling conducted in 2011. Density determinations
were made on 136 samples collected from a wide range of locations and rock types. The average
density from the Argonaut test work was 2.694 g/cm3. This test work correlates very well to historical
density test work reported by MacMillian et al (2009) who used an average density of 2.62 g/cm3.
The SRK resource models assigned the average density of 2.694 g/cm3 for all bedrock material in
the block models. The RoM pad and all waste dump material was assigned a standard density of
2.0 g/cm3.
12.7 Variogram Analysis

Variogram analysis was attempted on the composite samples to quantify the geo-statistical
characteristics of the Au data. The resultant variograms were predominantly of very poor quality
regardless of orientation. For this reason, all grade estimations were made using an Inverse
Distance Squared (ID2) algorithm.
12.8 Grade Estimation

Four unique block models were used to generate the total resource estimation of this report. The
grade estimation procedures of each are addressed below.
12.8.1 La Colorada
The La Colorada grade estimation was conducted within four independent estimation domains.
Three of these are wireframe grade shell generated by Argonaut at a 0.1 ppm grade threshold. The
fourth is an indicator domain located external to the wireframes. The wireframe solids are referred to
as La Colorada, Intermediate and Gran Central. Within these wireframes, SRK flagged all blocks
that were located within 60 m along strike or dip and 20 m normal to strike and dip of all samples.
Only these flagged blocks were allowed to be estimated for grade. The indicator blocks were flagged
external to the wireframes in order to pick up any significant mineralized zones which were too small
or discontinuous to wireframe. The indicator flagging was conducted using a three pass search
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strategy according to the parameter listed in Table 12.8.1.1. Length weighting was used for all three
passes.
Table 12.8.1.1: La Colorada Indicator Estimation Parameters
Search Rotation
(z,y,x)
355,-46,0
Estimation
Pass
First
Second
Third
Search Distances
(z,y,x) m
5,5,5
30,30,5
60,60,5
Min/Max #
Samples
3/5
3/5
Octant
Restriction
None
2/octant
2/octant
The Au and Ag grade estimation was conducted according to the parameter listed in Table 12.8.1.2.
Only indicator blocks with a value of 0.5 and above were selected for grade estimation. This equates
to a 50% probability of being locate within the 0.1 ppm grade shell. All grade estimations used
sample length weighting. As part of the grade estimation, model validation was conducted within
each domain. Certain domains required that higher grade sample distance restrictions be applied so
the model would validate. A high-grade restriction, as listed in Table 12.8.1.2, means that any block
located beyond the distances listed cannot use any composite sample above the listed grade.
Table 12.8.1.2: La Colorada Grade Estimation Parameters
Estimation
Domain
Search
Rotation
(z,y,x)
La Colorada
Intermedia
355,-46,0
Gran
Central
Indicator
Blocks
Estimation
Pass
First
Second
Third
First
Second
Third
First
Second
Third
First
Second
Third
Search
Distances
(z,y,x) m
5,5,5
35,35,15
85,85,25
5,5,5
35,35,15
85,85,25
5,5,5
35,35,15
85,85,25
5,5,5
35,35,15
85,85,25
Min/Max #
Samples
1/3
3/8
3/8
1/3
3/8
3/8
1/3
3/8
3/8
1/3
3/8
3/8
Octant
Restriction
None
2/octant
2/octant
None
2/octant
2/octant
None
2/octant
2/octant
None
2/octant
2/octant
Au High
Grade
Distance
Restriction
None
>35ppm<40m
None
>20ppm<30m
None
Ag High
Grade
Distance
Restriction
None
>25ppm<20m
>25ppm<20m
None
>25ppm<20m
>25ppm<20m
None
>8ppm<50m
12.8.2 El Crestn
The El Crestn grade estimation was conducted within a single estimation domain. This was defined
by a wireframe grade shell generated by Argonaut at a 0.1 ppm grade threshold. Within this
wireframe, SRK flagged all blocks that were located within 60 m along strike or dip and 30 m normal
to strike and dip of all samples. Only these flagged blocks were allowed to be estimated for grade.
All grade estimations used sample length weighting. No higher grade sample distance restrictions
were required in order to validate the model.
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Table 12.8.2.1: El Crestn Grade Estimation Parameters

Search Rotation
(z,y,x)
340,-50,0
Estimation Pass
First
Second
Third
Search Distances
(z,y,x) m
5,5,5
35,35,20
85,85,45
Min/Max #
Samples
1/3
3/8
3/8
Octant Restriction
None
2/octant
2/octant
12.8.3 Veta Madre

The Veta Madre grade estimation was conducted within a single estimation domain. This was
defined by a wireframe grade shell generated by Argonaut at a 0.1 ppm grade threshold. Within this
wireframe, SRK flagged all blocks that were located within 30 m along strike or dip and 30 m normal
to strike and dip of all samples. Only these flagged blocks were allowed to be estimated for grade.
The Au and Ag grade estimation was conducted according to the parameter listed in Table 12.8.3.1
below. All grade estimations used sample length weighting. No higher grade sample distance
restrictions were required in order to validate the model.
Table 12.8.3.1: Veta Madre Grade Estimation Parameters
Search Rotation
(z,y,x)
60,0,0
Estimation
Pass
First
Second
Third
Search Distances
(z,y,x) m
5,5,5
50,25,25
75,35,35
Min/Max #
Samples
1/3
3/8
3/8
Octant
Restriction
None
2/octant
2/octant
12.8.4 RoM Pad

The RoM Pad grade estimation was conducted within a single estimation domain. This was defined
by a wireframe solid generated by SRK. The solid is based on surveyed topography of the existing
RoM Pad assuming a planer base. This material represents previously mined and partially leached
RoM potentially mineable resource. All grade estimations are based on the Becker hammer drill
samples discussed in Section 8.2.5.
All grade estimations used sample length weighting. No higher grade sample distance restrictions
were required in order to validate the model. As part of the grade estimation, model validation was
conducted within the estimation domain. Both the Au and Ag estimations required that higher grade
sample distance restrictions be applied so the model would validate. A high-grade restriction, as
listed in Table 12.8.4.1, means that any block located beyond the distances listed cannot use any
composite sample above the listed grade.
Table 12.8.4.1: RoM Pad Grade Estimation Parameters
Search
Rotation
(z,y,x)
0,0,0
BAS/SC
Estimation
Pass
First
Second
Third
Search
Distances
(z,y,x) m
5,5,5
35,35,10
100,100,15
Min/Max #
Samples
1/3
3/5
2/5
Octant
Restriction
None
2/octant
2/octant
Au High Grade
Distance
Restriction
None
Ag High Grade
Distance
Restriction
>1.2ppm<35m
>60ppm<50m
December 30, 2011

Page 57
12.9 Model Validation

Four techniques were used to evaluate the validity of the block model. First, during the ID2 grade
estimation; the estimation pass, the number of samples used, the number of drillholes used and the
average distance to samples was stored. This data was checked to evaluate the performance of the
sample selection parameters discussed above. The results for each estimation are listed are listed
in Table 12.9.1. Second, the interpolated block Au grades were visually checked on sections and
bench plans for comparison to the composite assay grades. Third, statistical analyses were made
comparing the estimated block grades in each domain to the composite sample data supporting the
estimation. The results in Table 12.9.2 show average block grade slightly below the average sample
grades. Fourth, nearest neighbor estimations were run using a single composite to estimate each
block model within the same parameters used for the ID2 grade model. The total contained gold
ounces, at a zero cut-off grade in the nearest neighbor model were compared to the Au ID2 grade
model at the same cut-off. The results are listed in Table 12.9.3. These show that in general, metal
is not being manufactured during the modeling process. All four-model validation tests described
above provided good confidence in the resource estimation.
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Table 12.9.1: Grade Estimation Characteristics

Model/Domain
LC-La Colorada
LC Intermedia
LC-Gran Central
LC-Indicator
El Crestn
Veta Madre
RoM Pad
BAS/SC
Criteria
% Blocks Estimated in 1st Pass
% Blocks Estimated in 2nd Pass
% Blocks Estimated in 3rd Pass
Average Number of Samples Used Per Block
Average Number of Drillholes Used Per Block
Average Distance to Samples
Result
11
72
17
5.8
2.8
23
10
65
25
5.6
3.1
25
13
72
15
6
2.7
21
16
55
29
4.6
2.8
24
12
72
16
6
2.5
22
7
72
21
5
2.2
25
3
40
57
4.0
2.3
36
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Table 12.9.2: Statistical Model Validation

Structural
Domain
LC_La Colorada
LC- Intermedia
LC- Gran
Central
LC-Indicator
El Crestn
Veta Madre
RoM Pad
Metal
Au
Ag
Au
Ag
Au
Ag
Au
Ag
Au
Ag
Au
Ag
Au
Ag
Average Composite Grade

Au (g/t)
1.215
8.072
0.592
4.579
1.139
8.946
0.405
5.154
0.729
13.991
0.402
2.451
0.446
36.247
Average Block Grade

Au (g/t)
1.210
6.570
0.585
4.572
1.054
8.601
0.402
4.319
0.674
13.545
0.316
2.112
0.415
36.177
% Difference Comps to
Blocks
0.4
18.6
1.1
0.1
7.4
3.9
0.6
16.2
7.5
3.2
21.5
13.8
7.0
0.2
Table 12.9.3: Nearest Neighbor Model Validation

2
Model
La Colorada
El Crestn
Veta Madre
RoM Pad
ID Au
Grade
0.026343
0.682285
0.315806
0.428428
ID Tonnes
(M)
1,225.0
21.081
5.897
2.724
ID Au
Metal
(M)
32.265
14.383
1.862
1.167
NN Au
Grade
0.026226
0.715987
0.331218
0.421483
NN
Tonnes
(M)
1,225.0
21.081
1.862
2.724
NN Au
Metal
32.122
15.094
1.953
1.148
% Diff Au
Metal ID2 to
NN
0.44
-4.9
-4.9
1.6
12.10 Resource Classification

Mineral Resources are classified under the categories of Measured, Indicated and Inferred according
to CIM guidelines. Classification of the mineral resources reflects the relative confidence of the
grade estimates and the continuity of the mineralization. This classification is based on several
factors including; sample spacing relative to geological and geo-statistical observations regarding the
continuity of mineralization, data verification to original sources, specific gravity determinations,
accuracy of drill collar locations, accuracy of topographic surface, quality of the assay data and many
other factors, which influence the confidence of the mineral estimation. No single factor controls the
mineral resource classification rather each factor influences the end result.
The mineral resources have been classified as Indicated and Inferred based primarily on sample
support. Within the La Colorada, El Crestn and Veta Madre resource models, wire frame solids
were constructed about the areas where the majority of drillholes are spaced 25 m apart. The
wireframe was limited to the base of drilling. All resources within the wire frame solids were
classified as indicated. All resources located external to the wireframe solids were classified as
inferred. The RoM Pad is all classified as indicated mineral resource.
12.11 Mineral Resource Statement

The La Colorada Mineral Resources are reported below in table 12.11.1 based on a 0.1 g/t Au cut-off
grade. The cut-off is supported by a mining cost of US$1.20/t, a processing cost of US$2.70/t, Au
and Ag recoveries of 60% and 30% respectively, G&A cost of $0.20/t, a no NSR and Au, Ag prices
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December 30, 2011

Page 60
of US$1,500/oz, US$20.00/oz respectively. The mineral resources are confined within a conceptual
whittle pit design based on the same parameters used for the cut-off grade and a 50 pit slope.
Table 12.11.1: La Colorada Project Resource Statement (1)
Deposit
La Colorada
El Crestn
Veta Madre
RoM Pad
All Deposits
Class
Indicated
Inferred
Indicated
Inferred
Indicated
Inferred
Indicated
Inferred
Indicated
Inferred
Au Cut-off
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
Tonnes
(000s)
29,900
2,500
14,400
2,200
2,900
0
2,700
50,000
4,700
Au (g/t)
0.724
1.204
0.618
0.887
0.491
0.665
0.429
0.664
1.044
Au oz
(000s)
696
95
287
63
46
0.2
38
1,067
158
Ag (g/t)
5.1
8.4
12.1
13.3
3.3
2.4
36.5
8.7
10.6
Ag oz
(000s)
4,905
661
5,635
944
307
0.7
3,200
14,047
1,605
Source: SRK
(1) Rounded to reflect approximation
Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Mineral resource estimates do not account for mineability, selectivity, mining loss and dilution.
These mineral resource estimates include inferred mineral resources that are normally considered
too speculative geologically to have economic considerations applied to them that would enable
them to be categorized as mineral reserves. There is also no certainty that these inferred mineral
resources will be converted to Measured and Indicated categories through further drilling, or into
mineral reserves, once economic considerations are applied.
12.12 Mineral Resource Sensitivity

The grade versus tonnage distributions of the Mineral Resources are presented in Table 12.12.1
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Table 12.12.1: Gran Central Grade Tonnage

Cut-off
0
0.1 (1)
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2
Indicated
Au (g/t)
Tonnage
0.22 101,339,238
0.72
29,835,081
0.90
22,925,487
1.09
17,745,032
1.28
14,094,104
1.47
11,533,243
1.64
9,633,684
1.83
8,172,323
2.01
6,973,649
2.20
5,942,912
2.40
5,179,647
2.58
4,546,734
2.78
4,001,432
2.96
3,576,774
3.13
3,222,616
3.29
2,945,339
3.47
2,676,859
3.61
2,474,382
3.77
2,290,715
3.92
2,121,061
4.07
1,971,199
Ounces
716,693
694,126
662,771
621,167
579,074
543,950
508,632
479,999
451,146
421,216
399,176
377,061
357,861
340,431
324,385
311,675
298,844
287,563
277,821
267,467
257,768
Cut-off
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2
Inferred
Au (g/t)
Tonnage
0.06 49,257,396
1.21
2,451,354
1.43
2,024,967
1.62
1,739,185
1.79
1,536,588
1.98
1,344,792
2.16
1,194,302
2.34
1,071,583
2.51
965,254
2.71
865,474
2.91
773,695
3.01
735,062
3.1
702,874
3.2
667,410
3.27
640,005
3.37
607,610
3.5
569,274
3.57
547,541
3.64
527,736
3.71
507,367
3.77
491,054
Ounces
95,020
95,363
93,099
90,584
88,430
85,607
82,939
80,618
77,894
75,407
72,386
71,135
70,053
68,665
67,286
65,833
64,059
62,846
61,760
60,518
59,520
Total Ounces
811,713
789,490
755,870
711,751
667,504
629,557
591,571
560,617
529,041
496,624
471,561
448,196
427,914
409,096
391,671
377,509
362,903
350,409
339,581
327,985
317,287
(1) Base Case
Table 12.12.2 illustrates the grade tonnage relationship of gold within pit 36 of the Whittle analysis
for El Crestn.
Table 12.12.2: El Crestn Grade Tonnage
Cutoff
0
0.1 (1)
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2
Au (g/t)
0.17
0.62
0.75
0.89
1.03
1.18
1.33
1.48
1.63
1.78
1.94
2.1
2.24
2.38
2.51
2.64
2.76
2.89
2.99
3.11
3.22
Indicated
Tonnage
54,830,616
14,438,662
11,224,319
8,875,845
6,949,397
5,541,893
4,483,904
3,694,548
3,066,198
2,578,409
2,155,377
1,836,350
1,588,897
1,394,817
1,248,174
1,107,780
993,965
896,602
821,916
743,696
679,647
Ounces
299,683
287,812
270,652
253,975
230,131
210,248
191,734
175,798
160,686
147,558
134,436
123,984
114,429
106,730
100,726
94,026
88,200
83,308
79,011
74,361
70,361
Cutoff
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2
Au (g/t)
0.06
0.89
1.04
1.2
1.36
1.54
1.67
1.82
1.95
2.09
2.25
2.36
2.46
2.56
2.66
2.76
2.85
2.96
3.04
3.13
3.22
Inferred
Tonnage
33,088,488
2,199,713
1,830,869
1,518,096
1,270,077
1,064,923
941,923
824,301
732,400
649,313
571,543
522,598
481,969
444,976
411,685
379,954
352,761
323,796
304,349
281,141
262,517
Ounces
63,829
62,943
61,218
58,569
55,534
52,727
50,573
48,233
45,917
43,631
41,345
39,653
38,119
36,624
35,208
33,716
32,323
30,814
29,746
28,292
27,177
Total
Ounces
363,513
350,755
331,871
312,544
285,665
262,974
242,307
224,031
206,603
191,189
175,781
163,636
152,548
143,354
135,933
127,742
120,524
114,123
108,758
102,653
97,538
(1) Base Case
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Table 12.12.3 illustrates the grade tonnage relationship of gold within pit 36 of the Whittle analysis
for Veta Madre.
Table 12.12.3: Veta Madre Grade Tonnage
Cutoff
0
0.1 (1)
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2
Inferred
Au (g/t)
Tonnage
0.27
5,264,158
0.45
3,183,008
0.52
2,540,084
0.64
1,789,691
0.74
1,330,645
0.83
1,013,543
0.92
771,974
1.01
574,880
1.09
440,856
1.16
337,190
1.24
245,491
1.32
169,657
1.43
104,393
1.56
59,942
1.67
41,084
1.76
29,297
1.84
21,552
1.94
13,470
2
10,103
2.05
7,745
2.07
6,398
Ounces
45,697
46,051
42,466
36,826
31,658
27,047
22,834
18,668
15,449
12,575
9,787
7,200
4,800
3,006
2,206
1,658
1,275
840
650
510
426
(1) Base Case
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13 Mining Methods (Item 16)

The La Colorada mine is a historical mining area located in the state of Sonora close to the regional
mining center of Hermosillo. The deposit is located in dry desert terrain surrounded by a
combination of flat alluvial plains intersected by steep sided mountains and both El Crestn and
Gran Central have been mined by open pit methods. The third deposit of Veta Madre has not been
mined.
Historical underground mining operations began in 1704 with the initial placer discovery on the site
followed by more advanced methods in the late 1800s and early 1900s when an estimated 3 million
ounces may have been mined from the high grade vein structures within the deposit. In 1994
Eldorado Gold commenced open pit and heap leach operations with the excavation of the El Crestn
and Gran Central Pits. Eldorado ceased mining in 2002 but operations continued through 2004
under the ownership of Minera FG.
Production at the Project is expected to begin with re-leaching of historical RoM pads thus allowing
room for additional heap leach pad space. By mid- to late 2012, it is expected that the necessary
permits will be in place for open pit mining at the Gran Central pit followed by El Crestn and Veta
Madre.
An economic model was constructed to internally test the economics of the complete resource
through achieving a positive NPV. This confirmed Argonauts resources detailed in the SRK report
NI 43-101 Technical Report on Resources La Colorada Project Sonora, Mexico are valid producing
a NPV 5% of over $120 million. After review by SRK and Argonaut, it was decided that optimization
of the production rate and more detailed phase design would add to project viability. As a result, a
smaller resource quantum was included for analysis in the Preliminary Economic Assessment which
concentrated on lowering the overall strip ratio and utilizing multiple cut-off grades to bring forward
high grade in the production schedule while maintaining a consisted overall mining rate.
For the PEA, an ultimate pit for La Colorada was constructed by SRK with three possible phases. El
Creston and Veta Madre were designed to meet mining width limitations. The resultant pit design
defined 32.8 Mt of potentially minable resource with an average grade of 0.72 g/t Au and average
strip ratio of 3.7:1 (W:O). At a 4 Mt production rate, it is expected the potential mine life of to be in
excess of 9 years. The production schedule targeted a consistent total mine tonnage of 24Mt/y from
year 3 onwards and any resources mined above 4 Mt/y was stockpiled for use in years where not
enough direct RoM feed was possible.
Final dimensions of the proposed open pits detail the potential magnitude of operations and have not
been limited to infrastructure restrictions. Potential restrictions may include additional required
permitted space for future heap leach pads and partial relocation of the La Colorada Township. As
detailed engineering continues the effect of these restrictions or the elimination of the restriction
resulting from further land negotiations will be addressed during reserve estimation.
A site overview is detailed in Figure 13-1.
13.1 Pit Optimization

As part of the resource evaluation, Whittle pit optimizations were carried out on La Colorada mine
region, in particular, areas defined as Gran Central, Veta Madre and El Crestn. As part of the PEA,
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the pit optimization results have been used as a guide for pit and waste dump construction. Inputs
used for the optimization do not necessarily conform with those quoted in the final preliminary
economic model. In all cases, measured, indicated and inferred resources have been considered
during pit optimization.
13.1.1 Whittle Parameters

Both the La Colorada/Gran Central and El Crestn deposits have been previously worked by both
open pit and underground methods. They both contain areas where the pit has been backfilled and,
as such, the slope angles that intersect old waste have been considered during the optimization
process.
Underground voids have been depleted from the resource model for both La
Colorada/Gran Central and El Crestn.
The block model parameters used for La Colorada/Gran Central are detailed in Table 13.1.1.1.
Table 13.1.1.1: La Colorada/Gran Central Model Parameters
Whittle Parameter
Block Model Restriction
Base Units
Measured, Indicated, Inferred
Type
Gran Central
Value
Au
Ag
grams
grams
Block Model Dimensions
Re-block in Whittle
Slope
Geological
X
Y
Z
No. X
No. Y
No. Z
Combine 2 2 1
Value
5
5
5
260
220
90
Slope Angle
Zone
1 Mix
2 Dump
50
30
The financial assumptions made at the time of optimization are detailed in Table 13.1.1.2. The initial
capital is used to determine the mining risk associated during the optimization run and was applied to
the deposit as a whole.
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Table 13.1.1.2: La Colorada/Gran Central Financial Assumptions

Whittle Parameter
Mining Cost
Type
Reference Mining Cost
Processing Cost
Rock Type
Process Name
Rock type 1
Ore Selection Method
Process Cost ($/crushed-t)
General and Administration
Au
Ag
Recoveries
Value
1.2
Heap
Mix
Cash Flow
2.70
0.20
0.6
0.3
Revenue and Selling Cost

Au Units
Ag Units
Au Price($/t.oz)
Ag Price ($/t.oz)
t.oz
t.oz
$1,500
$20
Royalty, Refining, Transport etc.

Au Selling Cost ($/t.oz)
Ag Selling Cost ($/t.oz)
5
0.20
Optimization
Revenue factor range
0.3-2 86 factors
Operational Scenario Time Costs

Initial Capital Cost
Discount Rate Per Period
$32,000,000
8%
Operational Scenario Limits

Mining Limit
Process Limit (Heap)
3,000,000
The block model parameters used for El Crestn are detailed in table 13.1.1.3.
Table 13.1.1.3: El Crestn Model Parameters
Whittle Parameter
Base Units
Type
El Crestn
Value
Au
Ag
grams
grams
Re-block in Whittle
Slope
Geological
X
Y
Z
No. X
No. Y
No. Z
Combine 2 2 1
Value
5
5
5
250
220
90
Slope Angle
Zone
1 Mix
2 Dump
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50
30
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The financial assumptions made at the time of optimization for El Crestn are detailed in Table
13.1.1.4. The initial capital is used to determine the mining risk associated during the optimization
run and was applied to the deposit as a whole.
Table 13.1.1.4: El Crestn Financial Assumptions
Whittle Parameter
Mining Cost
Type
Value

Processing Cost
Rock Type
1.2
Process Name
Rock type 1
Selection Method
Process Cost ($/ore t)
Au
Ag
Recoveries
Heap
Mix
Cashflow
2.70
0.20
0.6
0.3

Au Units
Ag Units
Au Price ($/t.oz)
Ag Price ($/t.oz)
t.oz
t.oz
1,500
20
5
0.20
Optimization
0.3-2 86 factors

Discount Rate Per period
$32,000,000
8%

Mining Limit
3,000,000
The block model parameters used for Veta Madre are detailed in table 13.1.1.5.
Table 13.1.1.5: Veta Madre Model Parameters
Whittle Parameter
Base Units
Type
Veta Madre
Value
Au
Ag
grams
grams
Geological
X
Y
Z
No. X
No. Y
No. Z
Combine 2 2 1
5
5
5
220
150
56
Value
1 Mix
Slope Angle
50
Re-block in whittle
Slope
Zone
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The financial assumptions made at the time of optimization for Veta Madre are detailed in Table
13.1.1.6. The initial capital was not used for Veta Madre given the small resource.
Table 13.1.1.6: Veta Madre Financial Assumptions
Whittle Parameter
Mining Cost
Type
Processing Cost
Rock Type
Process Name
Rock type 1
Selection Method
Au
Ag
Recoveries
Value
1.2
Heap
Mix
Cash Flow
2.70
0.20
0.6
0.3

Au Units
Ag Units
Au Price ($/t.oz)
Ag Price ($/t.oz)
t.oz
t.oz
1,500
20
5
0.20
Optimization
0.3-2 86 factors

Discount Rate Per Period
0
8%

Mining Limit
3,000,000
13.1.2 Whittle Results and Analysis

As a result of the pit optimization, the relationship of potential pit shells is based on stripping ratio
variability and subject to a revenue of $1,500/oz Au and $20/oz Ag, respectively. By looking at the
relationship of potentially mineable resource to waste and the associated best case (blue line) and
worst case (red line) cash flows (Figure 13-2) generated at each incremental pit, the risk profile and
revenue generating potential of the deposit can be estimated. For illustration purposes, pit 36
represents the maximum possible cash flow at $1,500/oz Au, pit 86 represents a pit constructed
using $3,000/oz Au gold (But dependent on $1,500/oz Au revenue) and pit 1 represents a pit
constructed using $420/oz Au.
13.1.3 La Colorada/Gran Central Whittle Results

With reference to Figure 13-2, the Whittle analysis for La Colorada/Gran Central indicated that the
best value within the deposit can be obtained from pit 0 through pit 20. After this time the majority of
resource is depleted and only incremental increase in value can be achieved. SRK would consider
this deposit to be resource limited at $1,500/oz Au.
Figure 13-3 illustrates a cross sectional view of pit 36 when compared to underground workings,
drillholes and current topography.
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13.1.4 El Crestn Whittle Results

With reference to Figure 13-4, the whittle analysis for El Crestn is similar to that for La
Colorada/Gran Central where the best value can be found between pit 0 through pit 25. After this
time the majority of resource is depleted and only incremental increase in value can be achieved.
SRK would also consider the El Crestn deposit to be resource limited at $1500 gold.
Figure 13-5 illustrates a cross sectional view of pit 36 when compared to underground workings,
drillholes and current topography for El Crestn.
13.1.5 Veta Madre Whittle Results

The Whittle analysis as detailed in Figure 13-56 illustrates that the Veta Madre is an early stage pit
which is challenged by low grade resource but benefiting from low strip profile. As there is potential
for additional resources above $1500 oz Au and SRK would not consider this pit resource limited.
Figure 13-7 illustrates a cross sectional view of pit 36, drillholes and current topography for Veta
Madre.
13.2 Open Pit Design

The El Crestn and La Colorada/Gran Central pit design combine current site access, mining width
requirements and generalized geotechnical parameters to explore the possible extraction of the
resources through open pit techniques in a practical manner. As such, no restrictions were placed
on either pit. However, during the PEA process the following issues were identified and will need to
be resolved moving forward:
La Colorada/Gran Central pit wall may be limited by La Colorada township if land purchases
cannot be made;
Heap leach pad sequencing may be modified to account for overlap between pit crests and
heap footprint;
Geotechnical buffers between pit crest, dump and heap toe must be defined; and
Geotechnical zones updated based on pit depth and ground water level.
There is historical geotechnical information for both La Colorada/Gran Central and El Crestn open
pits. Due to the preliminary nature of this study, a consistent inter-ramp angle of 49.10 was applied
to all designs in a triple bench configuration.
13.2.1 Pit Design Parameters and Construction

For all three pits, the ramp width has been sized at 27 m (truck factor of 4) which can safely support
Cat 777 (or equivalent) sized mining trucks. While this ramp size penalizes the stripping ratio, the
operational savings in using the larger equipment during stripping campaigns will be vital especially
given that El Crestn and Gran Central are both waste bound. One way access of 15 m has been
applied at the pit bottom after stripping requirements have been met.
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Table 13.2.1.1: La Colorada Project Pit Parameters

Parameter
Overall Slope Angle
Batter Angle
Bench Height
Berm Width
Ramp Width 2 way
Ramp Width 1 way
Ramp Gradient (Shortest)
Unit
Degrees
Digress
m
m
m
m
%
Value
49.1
65
15
6
27
15
10
13.3 Phase Design

Phase designs for both pits are largely driven by the effective mining widths and its influence on
access to the resource. The same design parameters used in the final pit design have been
incorporated into the phase designs.
13.3.1 Phase Design Criteria

La Colorada/Gran Central Phase Design
La Colorada/Gran Central has been designed with three mining phases (Figure 13-8). Phase 1 and
2 are independent of each other with access for Phase 1 originating on the south wall of the historic
pit and Phase 2 from the current central access. Phase 1 utilizes a full road width to RL 330 before
transitioning to a single access ramp whereas Phase 2 has single access for the entire phase (same
as current ramp system).
The Phase 3 pit expands from Phase 1 ramp access to a pit shell corresponding to pit shell 15 as
defined in Figure 13-2. The main ramp begins on the southern side of the pit and wraps around to
the west as the pit gets deeper. By utilizing the natural geometry of the orebody, ramps are placed
where natural pit shell variation occurs and stays away from sharp mineralization boundaries.
The southern exit of the access ramp is driven by the location of the waste dump and crusher. The
La Primavera waste dump is located to the south with capacity for the 100% of total waste produced
in Gran Central pit.
El Crestn Phase Design
The open pit design at El Crestn is highly sensitive to ramp location and its effect on stripping ratio,
so careful placement of ramps on the southern wall was considered optimal.
The Phase 1 design at El Crestn was focused on diving into the current open pit by moving the
north wall half way to the final pit wall. There is very little opportunity to do the same on the east,
west and south walls due to mining width constraints. As the pit access currently is on the south
wall, it is envisaged that a new access on the north wall will be needed. This will provide a duel
access into and out of the pit.
Phase 2 is a simple design mining to the final pit limits.
Figure13-9 illustrates the location of Phase 1 and phase 2 in relation to the current topography.
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13.4 Schedule Inventory Results

As a result of pit and phase design, a schedule inventory of resources is detailed in Tables 13.4.1,
13.4.2 and 13.4.3. The phase tonnage and volumes are separated into bench triangulations and
form the basis of the production schedule.
Table 13.4.1: La Colorada/Gran Central Phase Inventory
Gran Central Variables
Total Tonnes
Mineable Resource Tonnes
Waste Tonnes
Stripping Ratio (W:O)
Gold Ounces
Silver Ounces
Gold Grade (0.1<Au)
Silver Grade (0.1<Au)
Phase 1
15,788,765
4,856,112
10,932,653
2.25
116,254
882,098
0.74
5.65
Phase 2
7,016,348
1,751,735
5,264,613
3.01
86,711
382,528
1.54
6.79
Phase 3
52,373,539
10,927,982
41,445,557
3.79
256,385
1,947,112
0.73
5.54
Total
75,178,652
17,535,829
57,642,823
3.29
459,349
3,211,738
0.81
5.70
Table 13.4.2: El Crestn Phase Inventory

El Crestn Variables
Total Tonnes
Waste Tonnes
Gold Ounces
Silver Ounces
Gold Grade (0.1<Au)
Phase 1
14,046,258
1,640,484
12,405,774
7.56
43,626
783,440
0.83
14.85
Phase 2
59,211,668
10,574,919
48,636,749
4.60
211,460
4,168,218
0.62
12.26
Total
73,257,926
12,215,403
61,042,524
5.00
255,086
4,951,658
0.65
12.61
Table 13.4.3: Veta Madre Phase Inventory

Veta Madre
Total Tonnes
Waste Tonnes
Gold Ounces
Silver Ounces
Gold Grade (0.1<Au)
Total
5,535,267
3,002,090
2,533,177
0.84
43,841
285,387
0.45
2.96
13.5 Production Schedule

The production schedule is used as the basis of the economic model and comprises of predicted
waste, resource tonnes, silver and gold grade. The bench scale inventory for each phase design
within each pit was accumulated and the life of mine schedule performed with the Chronos
scheduling package.
Two scheduling passes were performed to ensure the mine will run with a consistent tonnage profile
and manage the variation in stripping ratios from the various phases ensuring a consistent crusher
feed. As such, the first or RoM schedule provided the feedstock for a second Crusher schedule.
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The RoM schedule mined Gran Central followed by El Creston and finally Veta Madre using a total
tonnage limit of 24 Mt from year 3 onwards. When mined resources above 4 Mt/y are excavated, it
is assumed that 4 Mt is fed directly to the crusher and excess is stockpiled. The first schedule
determined the quantity of high grade (Au above 0.4), mid-grade (Au between 0.2 and 0.4) and low
grade (Au between 0.1 and 0.2). The crusher schedule balances material mined in the RoM
schedule to a flat 4 Mt after year 3 using the different grade classifications in the year they were
produced. If there is an excess, high grade is sent to the crusher first, followed by mid-grade and a
proportion of low grade is sent to a stockpile. Where there is not enough mined material, stockpile
material from previous periods is added to the high grade and mid-grade mined in a particular year.
No stockpiled material is added to the crusher schedule before it has been mined as defined in the
RoM schedule.
Comments about the schedule include:
High grade, mid-grade and low grade were split for reporting purposed but are combined to
meet the production limit (crusher) within the economic model;
Only Veta Madre does not experience high initial strip ratios;
When combined, over 9 years of operating life is possible at 4 Mt resource per year; and
All schedules use the 5 m bench/phase volumes and follow precedent relationships.
Table 13.5.1 illustrates the annual RoM schedule for the three pits and mine costs are applied
annually based on this schedule. Table 13.5.2 shows the material fed to the crusher and forms basis
for annual crushing and processing costs.
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Table 13.5.1: La Colorada/Gran Central Production Schedule

La Colorada
Total Tonnes
Waste Tonnes
Gold Ounces
Silver Ounces
Gold Grade (0.1<Au)
El Crestn
Total Tonnes
Waste Tonnes
Gold Ounces
Silver Ounces
Gold Grade (0.1<Au)
Veta Madre
Total Tonnes
Waste Tonnes
Gold Ounces
Silver Ounces
Gold Grade (0.1<Au)
Total Tonnes
Waste Tonnes
Gold Ounces
Silver Ounces
Gold Grade (0.1<Au)
BAS/SC
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
6,000,000
1,152,641
4,847,359
4.21
45,047
273,835
1.22
7.39
12,000,000
2,663,632
9,336,368
3.51
90,422
589,994
1.06
6.89
24,000,000
4,018,013
19,981,987
4.97
89,905
853,003
0.70
6.60
23,627,390
4,947,177
18,680,213
3.78
89,257
781,109
0.56
4.91
7,096,084
3,064,470
4,031,613
1.32
85,989
454,249
0.87
4.61
2,455,178
1,689,896
765,283
0.45
58,730
259,547
1.08
4.78
372,610
0
372,610
16,903,916
1,648,022
15,255,895
9.26
43,673
783,908
0.82
14.79
21,544,822
925,908
20,618,914
22.27
13,832
235,293
0.46
7.90
6,000,000
1,152,641
4,847,359
4.21
45,047
273,835
1.22
7.39
12,000,000
2,663,632
9,336,368
3.51
90,422
589,994
1.06
6.89
24,000,000
4,018,013
19,981,987
4.97
89,905
853,003
0.70
6.60
24,000,000
4,947,177
19,052,823
3.85
89,257
781,109
0.56
4.91
24,000,000
4,712,492
19,287,508
4.09
129,662
1,238,157
0.86
8.17
24,000,000
2,615,803
21,384,197
8.18
72,562
494,841
0.86
5.88
Year 7
Year 8
Total
75,178,652
17,535,829
57,642,823
3.29
459,349
3,211,738
0.81
5.70
24,000,000
5,191,084
18,808,916
3.62
99,302
2,259,253
0.59
13.54
10,436,578
4,450,389
5,986,189
1.35
98,279
1,673,203
0.69
11.69
73,257,926
12,215,403
61,042,524
5.00
255,086
4,951,658
0.65
12.61
24,000,000
5,191,084
18,808,916
3.62
99,302
2,259,253
0.59
13.54
5,535,267
3,002,090
2,533,177
0.84
43,841
285,387
0.45
2.96
15,971,845
7,452,479
8,519,366
1.14
142,120
1,958,590
0.59
8.17
5,535,267
3,002,090
2,533,177
0.84
43,841
285,387
0.45
2.96
153,971,845
32,753,322
121,218,523
3.70
758,276
8,448,782
0.72
8.02
December 30, 2011

Page 73
Table 13.5.2: Crusher and Heap Leach Schedule

Period
Crushed Tonnes From Pits
La Colorada Crushed Tonnes
EC & VM Crushed Tonnes
Gold Ounces
Silver Ounces
Gold Grade
Silver Grade
Required From Stockpile
BAS/SC
1
1,152,641
1,152,641
45,047
273,835
1.22
7.39
2
2,663,632
2,663,632
90,422
589,994
1.06
6.89
3
4,000,000
4,000,000
89,820
851,257
0.70
6.62
4
4,000,000
4,000,000
84,741
694,692
0.66
5.40
5
4,000,000
2,640,311
1,359,689
126,252
1,141,757
0.98
8.88
6
4,000,000
2,968,840
1,031,160
79,176
639,097
0.62
4.97
1,384,197
7
4,000,000
4,000,000
93,442
2,008,642
0.73
15.62
8
4,000,000
4,000,000
116,767
1,393,550
0.91
10.84
9
4,937,049
110,406
4,826,644
32,609
855,958
0.21
5.39
4,937,049
Total
32,753,322
17,535,829
15,217,493
758,276
8,448,782
0.72
8.02
6,321,246
December 30, 2011

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13.5.1 Royalty Schedule

Both La Colorada/Gran Central and El Crestn are subject to a 3% NSR royalty on gold and silver
ounces mined on the deposit. As there are multiple royalties and the royalties are not subject to
payment until the resources are mined, a production schedule for royalty obligations is reported in
Tables 13.5.1.1. Royalty ounces are defined within the pit designs and vertical projection from
polygons defining the royalty. Ounces not defined in the schedule below are not subject to royalty
payments.
Table 13.5.1.1: La Colorada/Gran Central Royalty Schedule
Values
In-situ Royalty
Ag Ounces
(000s)
In-situ Royalty
Au Ounces
(000s)
Payable Recovered
Ag Ounce
(000s)
Payable Recovered
Au Ounces
(000s)
10
Total
31.0
46.1
47.7
45.4
64.9
48.7
53.5
67.3
29.6
3.9
31.0
235.3
238.2
303.6
275.9
399.9
281.0
659.1
576.2
366.1
65.0
235.3
0.6
1.2
1.2
1.1
1.2
0.8
0.3
0.3
0.1
0.0
0.6
2.6
5.6
8.1
6.6
9.0
5.3
9.4
6.5
4.1
0.0
2.6
13.5.2 Dilution, SMU and Bench Configuration

The block model is based on 5 m x 5 m x 5 m blocks and represents the Selective Mining Unit (SMU)
in relation to cut-off grade and subsequent dilution. Where the interpretation of the mineralization
rock intersects a block model block, the percentage of the block within the mineralized shape is
recorded. The estimated Au and Ag grade is then discounted to the SMU creating a diluted grade.
In effect, this creates a fuzzy boundary to any geological interpretation. As with the percentage of
mineralization within a block, the percentage of underground workings is used to reduce the density
of a block that contains workings.
13.6 Development Requirements

The current development plan (November 2011) calls for in-situ mining to commence late 2012 when
the appropriate permits are in place. Before that time, Argonaut is working under permit which
allows for site disturbance within the current site footprint. The main aim of the development is to
open up heap leach pad space by relocating the old RoM stockpile while generating cash-flow during
this period. The main development programs include:
BAS/SC
Development of heap leach pad for placement of relocated RoM;
Relocation of RoM;
Crushing of RoM;
Leaching of RoM;
Construction of new leach ponds;
Construction of Carbon tanks;

Construction of Gold room; and
December 30, 2011

Page 75
Continuation of royalty and land purchases.
13.6.1 Waste dumps

Two primary waste dumps have been located to store waste from La Colorada/Gran Central and El
Crestn and are located on land owned by Argonaut.
Dumps are constructed in 15 m lifts with space for a 10 m berm. The resultant overall slope angle is
26 degrees and ramp widths of 25 m have been applied.
The El Crestn dump has been designed to a maximum height 80 m and contains storage for
144,273,860 m3.
The Primavera dump has been designed to a height of 135 m and contains storage for 71,638,642
m3.
Please refer to Figure 13-1 for the location of the waste dumps and relative size.
13.6.2 UG Voids
Underground voids are evident in the highwalls of both La Colorada/Gran Central and El Crestn pits
and SRK understands that there are extensive historical workings.
Eldorado attempted to digitize the underground workings from historical plan maps. For La
Colorada/Gran Central the location of the UG surveys appear reasonably accurate when checked
against exploration drilling and zones of high grade. For the El Crestn pit, the survey does not
appear to be complete or entirely accurate and may have been incorrectly located at the present
time. SRK is of the opinion that a concerted effort should be made to accurately locate and estimate
where potential mining voids exist for both pits. Figure 13-10 illustrates the current understanding of
UG workings.
13.7 Mining Fleet and Requirements

A detailed mine fleet estimation has not been completed for La Colorada given the status of potential
development plans, level of study and understanding that owner operations will be unlikely given the
strong contractor base within the town of Hermosillo. SRK is of the opinion that the strength of
contractors within the local area, the ability to raise capital for fleet expansions by potential
contractors should not be a problem going forward.
13.7.1 Expected Mine Fleet

Based on discussions with local Argonaut staff, there are conversations going on with several local
contractors. Based on past performance and common practice for this size of mine, it is likely
Caterpillar 777 (100t or equivalent) size trucks will be used along with Caterpillar 992 (or equivalent)
front end loaders. If it is determined that excavators will be beneficial to operations, the selected
contractor will need to source new equipment and obtain trained operators from other mines. Atlas
Copco Roc 9s are used in similar operations by contractors for drill and blast operations therefore, it
is likely that a similar sized machine will be employed at La Colorada.
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December 30, 2011

Page 76
13.7.2 Expected Operating Cost

As mining will be conducted by contractors, the mine operating cost will follow the standard Mexican
model where costs are quoted for drilling, load, haul and ancillary operations. For the purposes of
this PEA and founded on initial contractor discussions, a $1.10/t-mined estimate has been included.
Explosives and diesel are traditionally supplied by the mine owner and are added to the basic
contractor cost. This has been estimated at $0.40/t, giving a total mining cost of $1.50/t.
Costs are linked to haul distance under 1 km and usually a $0.15 c/km hauling costs are added if
hauls are over 1 km.
Mobilization and demobilization are frequently under US$500 k and are not a risk in Mexican mine
operations.
The RoM re-handle cost has been quoted by Sinergia at $0.60/t.
13.7.3 Manpower
Due to the proximity of potential mining operations to the La Colorada village, Argonaut will focus on
hiring as many un-skilled positions locally as possible. For skilled operators, La Colorada is only a
40 min drive from the town of Hermosillo which is generally considered the center for mine personnel
within the Sonoran region. In addition, many operators and mine professionals have either been
employed at La Colorada or would like to relocate back to Hermosillo if the opportunity were to
present itself. Therefore, the hiring and retention of both operational and technical staff is unlikely to
be a limiting feature for further development of the La Colorada operation.
During operations, the projected labor force for general and administration purposes are detailed in
Table 13.7.3.1. Contractors will employ labor at their own discretion.
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December 30, 2011

Page 77
Table 13.7.3.1: Projected General and Administration Staff for La Colorada

G&A
GM
SHE Supervisor
Senior Accountant
Accounting Clerk
HR supervisor
Receptionist
G&A Subtotal
Mine
Superintendent
Engineer
Supervisor
Surveyors
Geology Supervisor
Geology
Mine Subtotal
Crusher
Supervisor
Operator
Maintenance
Crusher Subtotal
Plant
Superintendent
Supervisor
Operators Plant
Operators Pads
Maintenance
Supervisor
Lab Technician
Sample Preparation
Plant Subtotal
Total
BAS/SC
No. of People
1
1
1
1
1
1
6
1
1
3
2
1
2
10
2
5
4
11
1
2
6
4
8
1
3
2
27
54
December 30, 2011
La Colorada Project
Sonora, Mexico
Source: SRK, 2011
Figure 13-1
La Colorada Site Layout
La Colorada Project
Sonora, Mexico
Source: SRK, 2011
Figure 13-2
La Colorada/Gran Central Whittle Results
La Colorada Project
Sonora, Mexico
Source: SRK, 2011
Figure 13-3
La Colorada/Gran Central Pit Shell Section View
La Colorada Project
Sonora, Mexico
Source: SRK, 2011
Figure 13-4
El Crestn Pit Graph
La Colorada Project
Sonora, Mexico
Source: SRK, 2011
Figure 13-5
El Crestn Pit Shell Section View
La Colorada Project
Sonora, Mexico
Source: SRK, 2011
Figure 13-6
Veta Madre Pit Shells
La Colorada Project
Sonora, Mexico
Source: SRK, 2011
Figure 13-7
Veta Madre Pit Section
La Colorada Project
Sonora, Mexico
Source: SRK, 2011
Figure 13-8
Location of La Colorada/Gran Central
Phase 1, 2 and Phase 3 Designs
La Colorada Project
Sonora, Mexico
Source: SRK, 2011
Figure 13-9
Location of El Crestn
Phase 1 and Phase 2 Designs
La Colorada Project
Sonora, Mexico
Source: SRK, 2011
Figure 13-10
Current Understanding of
Underground Workings

Page 88
14 Recovery Methods (Item 17)

14.1 Processing Methods
The first portion of processed potentially mineable resource will consist of previously leached mine
run ores currently residing on the leach pad which will be removed, crushed to P100 19 mm, and
placed back on the existing leach pad supplemented with newly constructed leach pads. Once this
reprocessing step is complete (during the first year of operation), new potentially mineable resource
mined from the nearby pits will be treated by crushing to P100 9.5mm, agglomerated with cement as
required, and conveyor stacked on the leach pads. The design criteria are presented in Section
14.3.
Gold recovery predicted from the fresh potentially mineable resource mined from the respective pits
is presented in the following table. The recovery is based on 20 column leach tests which were
conducted at the KCA laboratory in Reno, Nevada. The column leach tests were run from 48 to 72
days before termination. Gold recovery from the column tests was increasing at an average rate of
0.11% per day for the last 10 days prior to termination and it is likely overall recovery will increase
slightly with extended leach times. Based on continued extractions at a low rate with extended
leaching (120 days), KCA feels confident in predicting field extraction equal to column leach test
extraction at a minimum.
BAS/SC
December 30, 2011

Page 89
Table 14.1.1: La Colorada Metallurgical Recovery Design Criteria Only

Area
Tonnes
Gran Central
La Colorada
Intermediate
Veta Madre
El Creston
Total
12,351,289
9,398,839
8,910,673
2,577,878
12,215,403
45,454,082
Au
Grade
g/t
0.809
0.855
0.488
0.500
0.650
0.695
Ag
Grade
g/t
6.97
5.18
3.32
3.24
12.61
5.24
Au Contained
Ounces
Ag Contained
Ounces
321,137
258,484
139,804
41,440
255,277
1,016,143
2,767,809
1,565,291
951,130
268,533
4,952,380
10,505,143
Au Recovery
Estimate @ P100
9.5 mm
48%
55%
63%
60%
60%
55%
Ag Recovery
Estimate @ P100
9.5 mm
47%
47%
20%
28%
28%
35%
Au Recovered
Ounces
Ag Recovered
Ounces
154,146
140,874
87,378
24,864
153,166
560,428
1,300,870
735,687
190,226
75,189
1,386,666
3,688,639
Source: KCA Laboratory
BAS/SC
December 30, 2011

Page 90
During the Phase 1 the RoM potentially mineable resource will be mined and delivered to a centrally
located crushing system and crushed with a primary jaw crusher. The potentially mineable resource
will then be conveyed to a triple deck screen with aperture sizes of 75 mm, 38 mm and 19 mm. All
material not passing the 19 mm aperture will be conveyed to a cone crusher with a closed side
setting of 19 mm and crushed. The material will then be conveyed back to the screen to remove the
P100 19 mm material product. The potentially mineable resource product passing the 19 mm
aperture will be conveyed to the leach pad with portable field conveyors and stacked with a radial
stacker in 8 m lifts. The total crushing and stacking processing rate for the previously leached mine
run potentially mineable resources on the leach pad will be 8,400 t/d.
Before mining fresh ores from the pits, an additional two cone crushers and two triple deck screens
in a closed circuit configuration will be added to the crushing circuit allowing the new potentially
mineable resource to be processed at a rate of 11,206 t/d at a 100% passing 9.5 mm crush size. All
of the triple deck screens will have aperatures of 75 mm, 38 mm and 9.5 mm. The secondary cone
crusher will operate at a 25 mm closed side setting and the tertiary crushers will operate at a 9.5 mm
closed side setting. Lime or cement, as needed, will be added to the potentially mineable resource at
approximately 2 kg/t on a conveyor for binding and protective alkalinity for cyanide leaching.
Conveyor stacking will continue to be used to stack the potentially mineable resource on the leach
pads during new potentially mineable resource processing. The production rate is depicted in the
Table 14.1.2.
Table 14.1.2: La Colorada Crushing and Processing
Unit
TPH Nominal
TPH Design
Operating Days (24 hr)
%Availability
TPD
TPY
Phase 1
350
500
360
70%
8,400
3,024,000
Phase 2
467
667
360
70%
11,206
4,034,016
After stacking the potentially mineable resource will be irrigated with a dilute cyanide solution. The
solution will be applied utilizing drip tubing to minimize evaporation. Solution will be applied at a rate
of 8-10 l/hr/m2 for 120 days. Gold bearing leach solutions, now pregnant, draining from the leach
pad will be directed to the pregnant pond. The pregnant solution will be pumped from the pond to
two 5-column trains of carbon columns, arranged in a cascade fashion, each containing 5 t of
activated 6x12 coconut-shell carbon. The carbon will absorb the gold and silver from the pregnant
solution. The solution will drain from the carbon columns to a barren tank where it will be refortified
with cyanide and pumped back to the leach pad.
Approximately every other day, the carbon will be removed from the first column in series and
pumped to a tank for acid washing with a dilute hydrochloric acid solution. Carbon from the
subsequent columns in series will be advanced to replace the carbon removed. After acid washing
the carbon will be pumped to a pressure vessel with a capacity of 5 t of carbon where the gold and
silver will be stripped from the carbon and placed back into solution. The gold and silver bearing
solutions will be pumped through two electrowinning cells where the precious metals will be
electroplated onto stainless steel-wool cathodes. After stripping, the carbon will be placed back into
the carbon column train in the last column in series. Periodically the carbon will be thermally
regenerated to maintain desired activity levels.
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December 30, 2011

Page 91
The gold and silver will be removed from the stainless steel cathodes by high pressure washing then
dried, mixed with flux reagents and smelted on-site to dor bullion. The dor bullion will be shipped
off-site for further refinement and sale. The General Project Flowsheet is presented in Section 14.2.
14.2 Flowsheet
Flowsheets have been developed for the Phase 1 RoM rehandle using a standard two stage 19mm
crushing and conveyor stacking system, with the solutions processed using conventional carbon
columns. During Phase 1 carbon stripping will be conducted by others offsite. Phase 2 uses an
expanded crushing circuit incorporating three stage crushing to 9.5 mm, conveyor stacking, carbon
adsorption columns, and full carbon stripping (pressure Zadra), acid wash, regeneration, and
electrowinning circuits.and modified Zadra pressure stripping of the loaded carbon, followed by
electrowinning.
Figures 14-1 and 14-2 present the process flow sheets designed by KCA.
14.3 Plant Design and Equipment Characteristics

Preliminary designs, equipment characteristics and sizes have been established based upon site
specific metallurgical data from La Colorada and industry norms for typical heap leach circuits of this
size.
Table 14.3.1 lists the global design basis derived from the mining plan and the metallurgical data.
Table 14.3.1: General Design Basis
Design Basis
New Potentially Mineable Resource Delivery to Heap Leach, tonnes/monthyear
New Potentially Mineable Resource crush size, mm
Rehandle and Releach Potentially Mineable Resource crush size, mm
Operation, d/y
New Potentially Mineable Resource Grade, g Au/t (average)
New Potentially Mineable Resource Grade, g Ag/t (average)
Rehandled Potentially Mineable Resource Grade, g Au/t (average)
Rehandled Potentially Mineable Resource Grade, g Ag/t (average)
New Potentially Mineable Resource Field Recovery, Au
Rehandled Potentially Mineable Resource Field Recovery, Au %
New Potentially Mineable Resource Field Recovery, Ag
Rehandled Potentially Mineable Resource Field Recovery, Ag %
Lift Height, m
Total Heap Height Above Plant, m
Initial Stacked Density, t/m3
NaCN Consumption (Overall), kg/t
Lime or Cement Consumption (Overall), kg/t
Unit
336,000 / 4,000,000
P100 9.5mm
P100 19mm
360
0.7 g/t
6 g/t
0.40 g/t
50 g/t
55%@P1009.5mm
45%@P10019mm
35%@P1009.5mm
6%@P10019mm
8
86
1.55
0.38
2
Tables 14.3.2 through 14.3.7 detail the specific design criteria needed for each major process area
to derive sizings and characteristics for specific equipment selection and cost estimation.
BAS/SC
December 30, 2011

Page 92
Table 14.3.2: Crushing and Stacking Design Criteria

New Potentially Mineable Resource Crushing& Stacking
Availability
Production Rate
Nominal
Design
Crusher Work Index, kWh/mt
Abrasion Index, g
Operation, d/a
Operation, shifts/d
Operation, h/shift
Crushing Configuration
Primary Feed Hopper
Capacity
Method of Feeding
Oversize Protection
Primary Crusher Type
Target Crush Size
Secondary Crusher Type
Target Crush Size
Tertiary Crusher Type
Target Crush Size
Screen System
Screen Deck Apertures:
Upper
Middle
Lower
Discharge Conveyor
Belt Width, mm
Automatic Sampler Yes/No
Weigh Scale, Yes/No
Bulk Density of Potentially Mineable Resource
System Type
Conveyor Belts
Size
Stacker
Size
Method of Stacker Movement
Unit
70%
467 tonne/hr
667 tonne/hr
9.00
0.1973
365
2
12
Jaw, Screen and 2 cones recycle to 2 screens
TBD
Loader/Trucks
Fixed Grizzly
Jaw
5 CSS
Cone
25mm
Cone
9.5mm
3 each 3 Deck Horizontal
38 mm
19 mm
9.5 mm
36 inch
No
Yes
1.6
Field Conveyor Stacker
36 inch
36 x 136
Radial wheel drive
Table 14.3.3: Leach Pads and Irrigation Design Criteria

Leach Pads
Soil Bedding
Liner
Ponds
Pregnant
Barren
Storm
Leak Detection yes/no
Solution Application
Solution Application Method
Solution Application Rate, L/h/m2
Leach Cycle, days
Solution Application Flow, m3/h, Nominal
Flow, m3/h, Design
Solution Flow Measurement
% Availability
BAS/SC
0.3m clay
1.5mm LLDPE (single)
1.5mm HDPE (double)
1.5mm HDPE (double)
1.5mm HDPE (single)
yes
Drip Emitters
8 10
120
1060
1270
Magnetic Flowmeter with Totalizer
97%
December 30, 2011

Page 93
Table 14.3.4: Absorption Design Criteria

Location
Solution Processing Method
Type
Specific Flow Rate
Quantity of Trains
Number of Columns/Train
Adsorption Flow,m3/h, Nominal
m3/h, Design
Metal Recovery from Solution
Carbon Loading
Open to Atmosphere
Carbon Adsorption
Cascade Columns
61.2m3/h/m2
2
5
1060
1270
95%
5,000 g Au Ag metal
Table 14.3.5: Desorption Design Criteria

Capacity
Location
Carbon Desorption Method
Strip Schedule, Batches
Carbon Bulk Density
Strip Solution Rate
Strip Temperature
Strip Pressure
5-tonne circuit
Open to Atmosphere
Pressure Zadra
3 to 5/Week
0.48 t/m3
2.5by/h
135C
450 kPa
Table 14.3.6: Electrowinning Design Criteria

Capacity
Location
Precious Metal Recovery Method
Type
Temperature
2 cells in parallel
Indoors
Electrowinning
SS Anodes
85 C
Table 14.3.7: Smelting Design Criteria

Location
Furnace Type
Smelt Schedule, Batches/Week
Mercury Retort
Indoors
Tilting
3 to 4 max
Assumed Not Required
The above criteria provide sufficient detail to allow for appropriate cost estimations for the processing
plant and equipment to be made.
BAS/SC
December 30, 2011

Page 94
14.4 Preliminary Equipment List

Table 14.4.1: Preliminary Equipment List
Equipment Description
110 Crushing
Dump Hopper
Apron Feeder
Mesabi Screen
Under Mesabi Conveyor
Jaw Crusher
Under Jaw Conveyor
Secondary Screen Feed conv
Fines Bypass conv
Fines Transfer conv
Fines Collection conv
Kolberg Radial stacker 125 conv
Stacker Radial Travel
Stacker Hydraulic Pump
Reclaim Tunnel Belt Conv
Reclaim Tunnel Feeder
8x20 OC Screen
Open Circuit Cone Crusher
Open Circuit Cone Motor 1
Open Circuit Cone Motor 2
Cone Lubrication
Cone Fan
Cone Hydraulic Pump
Cone Under Belt
Kolberg Radial Stacker
Stacker Radial Travel
Stacker Hydraulic Pump
Reclaim Tunnel Belt Conv
Screen Feed Conveyor 1
Screen 1
Screen 1 Under Conveyor
Screen 1 Cross Conveyor
Cross Conveyor
Cone 1 Feed Belt Conv
Closed Circuit Cone Crusher 1
Closed Circuit Cone 1 Motor 1
Cone 1 Lubrication
Cone 1 Fan
Cone 1 Hydraulic
Cone 1 Under Belt Conv
Screen Feed Conveyor 2
Screen 2
Screen 2 Under Conveyor
Screen 2 Cross Conveyor
Cross Conveyor
Cone 2 Feed Belt
Close Circuit Cone Crusher 2
Cone 2 Lubrication
BAS/SC
Design Parameters
200 ton rock box
Pioneer 48x22 XHD Apron Feeder w/drive
Pioneer 60x14 HD Mesabi screen w/ stand, conveyor
Pioneer 3055 jaw plant
48x60 secondary screen feed conveyor
36x60 conveyor
36x100 grasshopper to bypass surge
42x120 fines collection conveyor with stands
Kolberg 42x125 radial stacker
Goodfellow 80 reclaim tunnel w/apron feeders, 42 conv.
8x20 screen
JCI Kodiak 400 portable cone plant
Kolberg 42x125 radial stacker
Goodfellow 80 reclaim tunnel, aprons, 100 conv
42x60 screen feed conveyor w/ supports

8x20 JCI screen with fines conv., semi-portable
36x20 cross-conveyor for screen plant

36x80 cone feed conveyor
JCI Kodiak 400 Portable cone plant
42x60 screen feed conveyor w/ supports

8x20 JCI screen with fines & cross conv., semi-port
36x20 cross-conveyor for screen plant

36x80 cone feed conveyor
JCI Kodiak 400 Portable cone plant
Attached
hp
Attached
kW
52
65
21
240
240
40
27
34
40
96
3.4
11
77
14
14
77
39
48
16
179
179
30
20
25
30
72
3
8
57
10
10
57
240
240
4.8
2.1
21
14
96
3.4
11
77
14
14
27
77
14
14
14
34
179
179
4
2
16
10
72
3
8
57
10
10
20
57
10
10
10
25
240
240
4.8
2.1
21
14
27
77
14
14
14
34
179
179
4
2
16
10
20
57
10
10
10
25
240
240
4.8
179
179
4
December 30, 2011

Cone 2 Fan
Cone 2 Hydraulic
Cone 2 Under Belt
Jaw Circuit Trio Magnet
Cleaning Belt
Circuit 2 Trio Magnet
Cleaning Belt
Circuit 3 Trio Magnet
Cleaning Belt
Weightometer
115 Stacking
Grasshopper Conveyor 1
Superior Stacker Conveyor
Superior Stacker Conveyor
Stinger
Superior Stacker Hydraulic
122 Solution Handling
VFD - 300 HP Barren Booster
Pump
Pump
Pump
Pump
Barren Wye Filter
Barren Wye Filter
Barren Wye Filter
Barren Wye Filter
Barren Wye Filter
Barren Wye Filter
Pregnant Solution Flowmeter
Barren Solution Flowmeter
Pregnant Solution Flowmeter
Barren Solution Flowmeter
Adsorption Feed Pumps
Submersible Barren Pump
Submersible Barren Pump
Barren Booster Pump
BAS/SC
Design Parameters
Trio CR42 self-cleaning magnets with stands

36" x 101'
36" x 101'
36" x 101'
36" x 101'
36" x 101'
36" x 101'
36" x 101'
36" x 101'
36" x 101'
36" x 101'
36" x 101'
36" x 101'
36" x 101'
36" x 101'
Superior 36" x 136' incl 66' telescoping conveyor
Page 95
Attached
hp
2.1
21
14
10.8
7.6
10.8
7.6
10.8
7.6
0.5
Attached
kW
2
16
10
8.1
5.7
8.1
5.7
8.1
5.7
0.4
34
34
34
34
34
34
34
34
34
34
34
34
34
34
40
25.4
25.4
25.4
25.4
25.4
25.4
25.4
25.4
25.4
25.4
25.4
25.4
25.4
25.4
29.8
40
29.8
14
10.4
xxx pulse, 300HP, 480VAC, amps, with RTD inputs VFD

Keckley Style A, 150LB Strainer With 80 Mesh Screens
12" Endress Hauser, 10W3H, with polyurethane liners,
150lb flanges
150lb flanges
150lb flanges
150lb flanges
372 m3/hr @ 22.2m TDH, Tsurumi pumps, GSZ 237-4
372 m3/hr @ 12m TDH, Tsurumi pumps, GSZ 237-6
372 m3/hr @ 12m TDH, Tsurumi pumps, GSZ 237-6
NA
NA
NA
NA
NA
NA
NA
N/A
NA
N/A
50
50
50
50
50
50
300
37
37
37
37
37
37
224
December 30, 2011

Design Parameters
Barren Booster Pump

Barren Booster Pump
Barren Booster Pump
Process Solution Pump
80 m3/hr @ 40 m TDH
Excess Solution Pump
80 m3/hr @ 10 m TDH
Pregnant Solution Sampler
SS with 1 liter collector
Barren Solution Sampler
Pond slides
Pond slides
Pond slides
Pond slides
Pond slides
Pond slides
Pond slides
Pond slides
Barren Tank
4.5x7 Open Top Tank,
Barren Tank
4.5x7 Open Top Tank,
Area 128, Adsorption, Acid Wash, Recovery
Instrument Air Receiver
0.2227 m3 volume
Press Blowdown Air Receiver
2 m3 volume
Hot Water Solution Boiler
2.62 mBTU output fuel oil fired hot water heaters
Press Blowdown Air Compressor
180 CFM @ 90 PSI
Instrument Air Compressor
15 CFM @ 90 PSI
Instrument Air Dryer
Ingersoll Rand D25in Refrigerated Dryer
Baghouse Air Dryer
Ingersoll Rand Dxxxxx Refrigerated Dryer
Electrolytic cell
KCA Model 120, SS, with basket cathodes
Electrolytic cell
KCA Model 120, SS, with basket cathodes
Acid Area Eye Wash & Shower
Safety shower, non-heated
Carbon Handling Area Eye Wash
& Shower
Recovery Area Eye Wash &
Shower
Carbon Fines Filter Press
82 m2 filter area, 0.9 m3 cake volume.
Cathode Sludge Filter Press
30m2 filter area, 0.3 m3 cake volume.
Ecell exhaust fan
1700 CFM, ss, with explosion proof motor, static grounding
Carbon Attritioning Hoist
1 Tonne Hoist
Primary Heat Exchanger (aka.
SS plates, EPDM seals, Trantor Model
Recovery Heat Exchanger)
Secondary Heat Exchanger (aka.
Heat Up Heat Exchanger)
Tertiary Heat Exchanger (aka.
Cool Down Heat Exchanger)
Carbon Regeneration Kiln
125 KG/HR KILN
Carbon Attritioning Mixer
Top mount, fixed speed, Lightnin 14Q1, single axial flow
impeller
Eluant Return Pump
20 m3/h @ 10 m TDH
Acid Injection pump
3m3/hr @ 6 m TDH
Carbon Transfer Pump
Wemco DK3, 40m3/hr @ 16m TDH
Acid Wash Circulation Pump
20m3/hr @ 15m TDH, Teflon lined pump, for 32% HCL
service
Acid Area Sump Pump
20m3/hr @ 25m TDH, non metalic pump, for 32% HCL
service
Carbon Area Sump Pump
20m3/hr @ 25m TDH, metallic pump for 5% carbon solids
Eluant pump Circuit 1
20m3/hr @ 60m TDH, Carbon steel pump
BAS/SC
Page 96
Attached
hp
300
300
300
25
15
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Attached
kW
224
224
224
19
11
N/A
N/A
40
5
7.5
30
0.1
0.3
NA
NA
N/A
N/A
N/A
NA
NA
1.5
1
NA
1.1
0.7
NA
NA
1.5
10
1.1
3
1
7.5
7.5
7.5
7.5
7.5
2.2
0.7
5.6
5.6
5.6
5.6
5.6
7.5
5.6
10
15
7.5
11.2
December 30, 2011

Design Parameters
Eluant drain pump

Carbon Fines Press Feed Pump
Boiler Hot Water Recirc pump
Elution Vessel
Rectifier
Rectifier
Adsorption Safety Screen
Kiln Feed Hopper Dewater Screen
Carbon Sizing Screen
Strip Solution Outlet Screen
Strip Solution Outlet Screen
Strip Solution Inlet Screen
Acid Wash Vessel Inlet Screen
Acid Wash Vessel Inlet Screen
Acid Wash Vessel Outlet Screen
Acid Wash Vessel Outlet Screen
Carbon Column #1 Train 1

Pending
ASME vessel 1.524 x 7.8 + heads, 14.4m3
2000 amp, 0-6 VDC
2000 amp, 0-6 VDC
SS with 1 liter collector,
KCA standard Model, SS with 1 liter collector,
KCA standard Model, SS with 1 liter collector,
static safety screen, 2mx4m - 24mesh
KCA standard screen
4x8 Sizetec, dual motors each at 2.8 HP
SS, 3" Johnson screen, 20 mesh, mounted in pipe
PVC 3" Johnson screen, 20 mesh, tank mounted
4.06 X 4 M, With Wear Plates, Dart Valves, Perforated SS
Distribution Plates
Distribution Plates
Distribution Plates
Distribution Plates
Distribution Plates
1.1x4.95x .75m Open Top Box
Distribution Plates
Distribution Plates
Distribution Plates
Distribution Plates
Distribution Plates
1.1x4.95x .75m OPEN TOP BOX
9 m3 working volume, 1.8m D x 4.0 m cylinderical section
with cone bottom, open top
1.45x1.45x1.3 Sloped Bottom Tank

Feed Box
Feed Box
Carbon Storage Tank
Stripped carbon tank, 500 kg
carbon
Dewatered Carbon Holding Tank
Eluant Solution Storage Tank
Carbon Attritioning Tank
Carbon Fines Tank
Carbon Storage Tank
Quench Tank
Carbon Regeneration Kiln Feed
Tank
Acid Wash Vessel
Acid Wash/Neutralization Mix
Tank
BAS/SC
Page 97
Attached
hp
3
30
25
N/A
16
16
N/A
N/A
N/A
N/A
N/A
5.6
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
4.2
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Sloped Bottom Tank

22 m3 working capacity with 50 mm insulation & 29 ga
304SS cladding
2 m3, with 3 baffles, cone bottom
Carbon steel, xxx m3 working volume
13 m3 working volume, carbon steel, cone bottom
13 m3 working volume, carbon steel, cone bottom
13 m3 working volume, carbon steel, sloped bottom
N/A
N/A
14 m3 working volume, rubber or FRP lined

.7 m3 working capacity hdpE
N/A
N/A
Attached
kW
2.2
22.4
18.6
N/A
N/A
N/A
N/A
N/A
December 30, 2011

Design Parameters
Cathode Wash Box

Ecell Discharge Pump Tank
Steel box with vapor shield

1.5m diameter x 1.5 meter high
0.98m diameter x 0.872 meter high, 6mm rubber indise,
painted outside
0.98m diameter x 0.872 meter high, painted
0.98m diameter x 0.872 meter high, painted
Acid Mix sump bucket

Carbon handling sump bucket
E-Cell sump bucket
Slag steel trench
Area 131, Refinery
Baghouse Dust Collector
Dryer
Refinery Area Eye Wash &
Shower
Smelting Furnace
Baghouse Dust Collector Exhaust
Fan
Refinery exhaust fan
Smelting Furnace Fume Hood
Smelting Furnace Hydraulic
Power Unit
Cathode hoist
Slag mill
Cathode Sludge Filter Feed Pump
Recovery Area Sump Pump
Slag Sump Pump
Slag Solution Pump
Gravity Table Tails Pump
Slag Mill Discharge Pump
Slag Mill Feed Pump
Granulation Water Tank
Slag Holding Tank
Platform Scale for Fluxes
Cathode Spray Washer
Gravity Table
Vault Door
Dore Bar Cleaner: needle Gun
Area 134, Reagents
NaCN Mixer
NaCN Area Eye Wash & Shower
NaCN Hoist
NaCN Mix Tank
NaCN Storage Tank
NaCN Area Sump Pump
NaCN Transfer Pump
NaCN Addition Pump
NaCN Addition Pump
NaOH Pump
Antiscalant pump (Elution Circuit)
Antiscalant pump (Barren Circuit)
Antiscalant pump (Pregnant
Circuit)
Antiscalant pump (Pregnant
Circuit)
NaOH Mix Tank
BAS/SC
17000 m/h, 150 C, NOMEX bags, SP = 100 mm H2O, with

HEPA secondary filter
GRIEVE AB 700 OR SIMILAR
Page 98
Attached
hp
N/A
N/A
N/A
Attached
kW
N/A
N/A
N/A
NA
9
N/A
Fuel oil fired, 430 HT crucible, with 1/2 hp burner blower

pending
1
30
0.7
22.4
3600 CFM @ Static Pressure 0.5"

pending
pending
NA
5
3.7
1/2ton hoist
QUINN 16 X32 Ball Mill & Charge
10m3/hr @ 73m TDH, Horizontal Centrifugal
20 m3/h @ 25 m TDH
150 m3/h @ 10 m TDH
150 m3/h @ 12 m TDH
Denver Sand Pump
Denver Sand Pump
Denver Sand Pump
24M3 Tank
1.2M3 Working Capacity
1
3
15
10
20
15
1
1
1
NA
NA
0.2
1
2
Pending
Diester
Vault Structures Inc, Thor III Vault Door Class 2
Air Flow 26 CFM, Stroke 1-1/16", blow p/min 4000
Ingersoll Rand mod. 182K1
Lightnin 15Q2 mixer
Electric Hoist,
2.13x2.7 tank with bag ripper (no dust cover), lid over bag
ripper
2.8X3.5M CLOSED TOP TANK
3298 1.5x1 x 5, SEAL LESS PUMP,
WIER RP20 PUMP
WIER RP20 PUMP
20m3/hr @ 12m TDH, Horizontal Centrifugal
Vendor Supplied pumps (220 VAC, 1 Ph)
2
N/A
1
N/A
N/A
5
2
1
1
3

27M3 WORKING CAPACITY
Total Attached KW
0.7
2.2
11.2
7.5
14.9
11.2
0.7
0.7
0.7
1.5
3.7
1.5
0.7
0.7
2.2
0.2
0.2
0.2
0.2
N/A
4281
December 30, 2011

Page 99
14.5 Consumable Requirements

The consumable requirements are estimated based upon a 4,000,000 t/y operation.
Table 14.5.1: La Colorada Consumables
Item
Jaw Liners - Primary
Cone Liners-Secondary/Tertiary
Lime or cement
NaCN (Leaching)
NaCN (Elution)
NaOH (Cyanide Mixing)
NaOH (Elution)
NaOH (Acid Wash))
HCl
Antiscale Agent
Carbon (loss)
Fluxes
Diesel Solution Heating
Diesel Carbon Regeneration
Diesel - Smelting
BAS/SC
Consumption Unit
kg/t
kg/t
kg/t
kg/t
kg/strip
kg/batch
kg/strip
kg/strip
L/t Carbon
ppm
kg/strip
kg/troy oz
L/strip
L/regen batch
L/smelt
Consumption
0.03
0.1
2
0.38
48
50
9.8
480
150
6
150
2
1,239
2,891
156
Annual Consumption
121
403
8,064
1,532
193,536
201,600
3
125
195
41,522
39
1,018
322
433
32
Unit
tonnes/year
tonnes/year
tonnes/year
tonnes/year
tonnes/year
tonnes/year
tonnes/year
tonnes/year
m3/year
l/year
tonnes/year
tonnes/year
m3/year
m3/year
m3/year
December 30, 2011
La Colorada Project
Sonora, Mexico
Source: Kappes, Cassiday & Associates, 2011
Figure 14-1
Process Flow Sheet
La Colorada Project
Sonora, Mexico
Source: Kappes, Cassiday & Associates
Figure 14-2
Process Flow Sheet Phase 2 Fine Crushing to 9.5 mm New Ore

Page 102
15 Project Infrastructure (Item 18)

Due to the extensive mining history at the site and regional proximity to established cities and
country infrastructure, the mine is unlikely to suffer any adverse logistical or consumable supply
constraints based on mine location.
The site currently (2011) has mine site buildings, water supply, heap pads, leach ponds, power
supply, access roads and plant foundations that are being upgraded and improved.
15.1 Infrastructure and Logistic Requirements

Access to the property is good with total driving time from Hermosillo of less than 1 hour. Driving
distance is 53 km from the Center of Hermosillo heading south on Federal Highway 16, all of which
is paved.
The village of La Colorada is located adjacent to the site and contains a small supply of labor (275
inhabitants) and some basic equipment. The city of Hermosillo (900,000 inhabitants) is located 45
km from the site with a large supply of skilled and unskilled labor along with most supplies and
contractors for construction and operations available. There are daily flights to Hermosillo from
Mexico City, Phoenix and Los Angeles. Hermosillo is a major mining center for Northern Mexico with
access to vendors, contractors and consultants for most reagents, supplies, equipment or services
need for exploration, construction, operations and closure.
In addition, equipment and reagents can be sourced through several major cities in the U.S., the
closest of which is through Nogales, Arizona, 177 miles north of Hermosillo via Federal Highway 15,
with an estimated travel time of 3.5 to 4 hours.
15.1.1 Port access

Equipment or reagents that are not available in Hermosillo can be accessed by the port of Guaymas,
an industrial sized port on the located in Sonora on the California Gulf Coast. Travel from Guaymas
to Hermosillo is 138 km on Federal Highway 15, with an approximate travel time of 1.5 to 2 hours.
15.1.2 Power
La Colorada has a dedicated 33 KV power line and 10 MVA substation which were built by Eldorado
in 1997. The main transmission line is 23 km from the community of Estacion Torres to the Mine
site. La Coloradas operations plan calls for a peak power load of 2.5 MVA for ADR plant, 1000 KVA
for crushing and 1500 KVA for conveying. Therefore, no upgrade to the power infrastructure is
expected at this time.
15.1.3 Water Supply

The water supply used during production by Eldorado Gold Ltd. (1994-2000) and Grupo Minero FG
(2000-2003) came from the dewatering of underground workings, the Wyman shaft and Open pit
dewatering.
With regards to water rights, any water taken from open pit operations either ground water or surface
run-off can be used without a special permit. Water from the underground workings requires a
permit and is defined by the CNA (National Water Commission).
BAS/SC
December 30, 2011

Page 103
It is estimated that the combined water storage of El Crestn and Gran Central total at least 1 million
cubic meters of water. Dewatering will likely use an 8 inch pipe pumping a head of 150 m when prestrip operations encounter the water level.
15.1.4 Site Structures

The mine site structures are composed of:
A main office building built with masonry walls and metal insulated sheet roof which is big
enough for geology and site administration personnel;
A laboratory built with metal sheeting and a three unit office trailer;
A Warehouse comprised of two 48 ft containers;

A Lunch room built with a metal frame and combo sheet walls with capacity for 120 people,
including a cooking area;
A process ADR plant foundation covering 800 m2; and
A 500 m2 metal framework undergoing refurbishment.
15.1.5 Waste Disposal

Domestic waste from offices and lunch rooms is sent to the municipality sanitary landfill located 2 km
from the site. This landfill has enough capacity for both the town La Colorada and waste generated
during mine operations.
15.1.6 Potential Heap Leach Pad Areas

Golder Associates have completed a heap leach design plan within the current site footprint. Table
15.1.6.1 illustrates the sequencing and design capacity of these lifts. Tonnages have been
estimated using a 1.7 density.
BAS/SC
December 30, 2011

Page 104
Table 15.1.6.1: Golder Associates Heap Leach Pad Design Capacity

Lift
Pad Phases 8, 10, 11
Lift 1
Lift 2
Lift 3
Lift 4
Lift 5
Lift 6
Lift 7
Lift 8
Lift 9
Lift 10
Lift 10
Lift 10
Subtotal
Pad Phase 9
Lift 1
Lift 2
Lift 3
Lift 4
Lift 5
Lift 6
Lift 7
Lift 8
Lift 9
Subtotal
Total
Volume
Tonnes
Accumulated Tonnes
102,368
572,953
738,325
752,258
712,584
678,376
647,523
615,328
572,741
516,915
404,004
185,617
174,026
974,020
1,255,153
1,278,839
1,211,393
153,239
1,100,789
1,046,058
973,660
878,756
686,807
315,549
174,026
1,148,046
2,403,198
3,682,037
4,893,430
6,046,669
7,147,458
8,193,515
9,167,175
10,045,931
10,732,738
11,048,286
11,048,286
198,976
209,183
219,648
218,189
211,807
235,012
329,658
327,596
203,296
338,259
355,611
373,402
370,921
360,072
399,520
560,419
556,913
345,603
338,259
693,870
1,067,272
1,438,193
1,798,265
2,197,786
2,758,204
3,315,117
3,660,720
3,660,720
14,887,745
As Golder Associates have only a design for 15 Mt of potentially minable resource, the remainder of
pad space required must come from additional land purchases. SRK and Argonaut have located a
Pad to the Northeast which would accommodate the additional pad space but no land purchases
have been made at this time and there is no guarantee that the pad location will be finalized.
Table 15.1.6.2: Conceptual Pad Space
Lift
9 Lifts
Pad Northeast
Volume
21,786,409
Tonnes
37,036,895
Accumulated Tonnes
37,036,895
Figure 15-4 illustrates the pad sequencing and footprint as designed.
BAS/SC
December 30, 2011
La Colorada Project
Sonora, Mexico
Figure 15-1
La Colorada 10 MVA Substation
La Colorada Project
Sonora, Mexico
Figure 15-2
Wyman Shaft and 10 Dewatering Line
La Colorada Project
Sonora, Mexico
Figure 15-3
Mine Site Office Buildings
La Colorada Project
Sonora, Mexico
Source: Argonaut Gold, Inc., 2011
Figure 15-4
Heap Leach Pad Design

Page 109
16 Market Studies and Contracts (Item 19)

16.1 Summary of Information
Gold markets are mature, global markets with reputable smelters and refiners located throughout the
world. Demand is presently high with prices for gold showing an increase during the past year.
Markets for dor are readily available. La Colorada will possess a gold room for the production of
dor; the final decision on metal refining has not been made at this time.
16.2 Commodity Price Projections

The one year moving average for gold as of October 2011 was close to $1,500 oz Au. As such,
$1,500 oz Au has been used for resources and long term gold price in the economic model. By
estimating gold at $1,700 Oz.Au for the remainder of 2011, the gold price used in the economic
model was raised to $1,575 for 2012.
Table 16.2.1: SRK Moving Averages for Gold
Year
2011
Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov(1)
Dec(1)
PM Fix
1,356
1,373
1,424
1,474
1,510
1,529
1,573
1,756
1,772
1,665
1,700
1,700
12 mo Average
1,245
1,268
1,294
1,321
1,346
1,371
1,402
1,447
1,489
1,516
1,544
1,569
24 mo Average
1,120
1,137
1,158
1,183
1,207
1,231
1,258
1,291
1,324
1,350
1,373
1,397
36 mo Average
1,036
1,049
1,061
1,077
1,094
1,112
1,130
1,155
1,181
1,205
1,231
1,256
Source: Based on Kitco pricing Internal SRK document

(1) Estimated through the end of 2011
16.3 Contracts and Status

Because of the pre-development operations on site, Table 16.3.1 illustrates the contracts Argonaut is
currently committed to. Early discussions for the mine contract are proceeding with local mine
contractors.
Table 16.3.1: La Colorada Contracts as of November 2011
Contract
SOLMAX
Goodfellow
Kappes Cassiday
Construplan
Sinergia
Degussa
Electrica Bustamante
Dicanosa
BAS/SC
Site Area
Geomembrane
Crusher and Grasshoppers
Process Plant
Construction Of Heap Pad
RoM Pad Relocation
Cyanide
Electrical Installation
Electrical Installation
Amount (US$)
572,228
1,567,900
2,875,176
1,013,216
3,301,991
945,000
229,481
143,926
December 30, 2011

Page 110
17 Environmental Studies, Permitting and Social or

Community Impact (Item 20)
17.1 Related Information
17.1.1 Mining Law and Regulations
Through the Mining Law, approved on June 26, 1992 and amended by decree on December 24,
1996, Article 27 of the Mexican Constitution was regulated.
Article 6 of the Mining Law states that mining exploration; exploitation and beneficiation are public
utilities and have preference over any other use or utilization of the land, subject to compliance with
laws and regulations.
Article 19 specifies the right to obtain easements, the right to use the water flowing from the mine for
both industrial and domestic use and the right to obtain a preferential right for a concession of the
mine waters.
Articles 27, 37 and 39 rule that exploration; exploitation and beneficiation activities must comply with
environment laws and regulations and should incorporate technical standards in matters such as
mine safety, ecological balance and environmental protection.
The Mining Law Regulation of February 15, 1999 repealed the previous regulation of March 29,
1993. Article 62 of the regulation requires mining projects to comply with the General Environmental
Law, its regulations, and all applicable norms.
17.1.2 General Environmental Laws and Regulations

Mexicos environmental protection system is based on the General Environmental Law known as Ley
General del Equilibrio Ecolgico y la Proteccin al Ambiente LGEEPA (General Law of Ecological
Equilibrium and the Protection of the Environment), approved on January 28, 1988 and updated
December 13, 1996.
The Mexican federal authority over the environment is the Secretara de Medio Ambiente y Recursos
Naturales SEMARNAT (Secretariat of the Environment and Natural Resources). SEMARNAT,
formerly known as SEDESOL, was formed in 1994, as the Secretara de Medio Ambiente Recursos
Naturales y Pesca (Secretariat of the Environment and Natural Resources and Fisheries). On
November 30, 2000, the Federal Public Administration Law was amended giving rise to SEMARNAT.
The change in name corresponded to the movement of the fisheries subsector to the Secretara de
Agricultura, Ganadera, Desarrollo Rural, Pesca y Alimentacin SAGARPA (Secretariat of
Agriculture, Livestock, Rural Development, Fisheries and Food), through which an increased
emphasis was given to environmental protection and sustainable development.
SEMARNAT is organized into a number of sub-secretariats and the following main divisions:
BAS/SC
INE Instituto Nacional de Ecologa (National Institute of Ecology), an entity responsible for
planning, research and development, conservation of national protection areas and approval
of environmental standards and regulations;
December 30, 2011

Page 111
PROFEPA Procuradura Federal de Proteccin al Ambiente (Federal Attorney General for

the Protection of the Environment) responsible for law enforcement, public participation and
environmental education;
CONAGUA Comisin Nacional del Agua (National Water Commission), responsible for
assessing fees related to water use and discharges;
Mexican Institute of Water Technology; and
CONANP Comisin Nacional de Areas Naturales Protegidas (National Commission of
Natural Protected Areas).
The federal delegation or state agencies of SEMARNAT are known as Consejo Estatal de Ecologa
COEDE (State Council of Ecology).
PROFEPA is the federal entity in charge of carrying out environmental inspections and negotiating
compliance agreements. Voluntary environmental audits, coordinated through PROFEPA, are
encouraged under the LGEEPA.
Under LGEEPA, a number of regulations and standards related to environmental impact
assessment, air and water pollution, solid and hazardous waste management and noise have been
issued. LGEEPA specifies compliance by the states and municipalities, and outlines the
corresponding duties.
Applicable regulations under LGEEPA include:
Regulation to LGEEPA on the Matter of Environmental Impact Evaluations, May 30, 2000;
Regulation to LGEEPA on the Matter of Prevention and Control of Atmospheric

Contamination, November 25, 1988;
Regulation to LGEEPA on the Matter of Environmental Audits, November 29, 2000;
Regulation to LGEEPA on Natural Protected Areas, November 20, 2000;
Regulation to LGEEPA on Protection of the Environment Due to Noise Contamination,

December 6, 1982; and
Regulation to LGEEPA on the Matter of Hazardous Waste, November 25, 1988.
Mine tailings are listed in the Regulation to LGEEPA on the Matter of Hazardous Waste. Noms
include:
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Norma Oficial Mexicana (NOM)-CRP-001-ECOL, 1993, which establishes the characteristics

of hazardous wastes, lists the wastes, and provides threshold limits for determining its
toxicity to the environment;
NOM-CRP-002-ECOL, 1993 establishes the test procedure for determining if a waste is
hazardous;
On September 13, 2004, SEMARNAT published the final binding version of its new standard
on mine tailings and mine tailings dams, NOM-141-SEMARNAT-2003. The new rule has
been renamed since the draft version was published in order to better reflect the scope of
the new regulation. This NOM sets out the procedure for characterizing tailings, as well as
the specifications and criteria for characterizing, preparing, building, operating, and closing a
mine tailings dam. This very long (over 50 pages) and detailed standard sets out the new
criteria for characterizing tailings as hazardous or non-hazardous, including new test
methods. A series of technical annexes address everything from waste classification to
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construction of the dams. The rule is applicable to all generators of non-radioactive tailings
and to all dams constructed after this NOM goes into effect; and
Existing tailings dams will have to comply with the new standards on post-closure. The
NOM formally went into effect sixty (60) days after its publication date.
This Official Mexican Standard, NOM-155-SEMARNAT-2007, establishes specifications for

characterization of leached or spent potentially mineable resource from heap leach pads, as well as
requirements of environmental protection measures to be employed during site preparation,
construction, operation, and closure. Monitoring requirements are also specified.
PROFEPA Clean Industry
The Procuradura Federal de Proteccin al Ambiente (the enforcement portion of Mexicos
Environmental Agency, referred to as PROFEPA), administers a voluntary environmental audit
program and certifies businesses with a Clean Industry designation if they successfully complete
the audit process. The voluntary audit program was established by legislative mandate in 1996 with
a directive for businesses to be certified once they meet a list of requirements including the
implementation of international best practices, applicable engineering and preventative corrective
measures.
In the Environmental Audit, firms contract third-party PROFEPA accredited auditors, considered
experts in fields such as risk management and water quality, to conduct the audit process. During
this audit, called Industrial Verification, auditors determine if facilities are in compliance with
applicable environmental laws and regulations. If a site passes, it receives designation as a Clean
Industry and is able to utilize the Clean Industry logo as a message to consumers and the
community that it fulfills its legal responsibilities. If a site does not pass, the government can close
part or all of a facility if it deems it necessary. However, PROFEPA wishes to avoid such extreme
actions and instead prefers to work with the business to create an Action Plan to correct problem
areas.
The Action Plan is established between the government and the business based on suggestions of
the auditor from the Industrial Verification. It creates a time frame and specific actions a site needs
to take in order to be in compliance and solve existing or potential problems. An agreement is then
signed by both parties to complete the process. When a facility successfully completes the Action
Plan, it is then eligible to receive the Clean Industry designation.
PROFEPA believes this program fosters a better relationship between regulators and industry,
provides a green label for businesses to promote themselves and reduces insurance premiums for
certified facilities. The most important aspect, however, is the assurance of legal compliance
through the use of the Action Plan, a guarantee that ISO 14001 and other Environmental
Management Systems cannot make.
SIGA
Many companies in Mexico adopt the corporate policy, Sistema Integral de Gestin Ambiental
(SIGA) (Integral System of Environmental Management), for the protection of the environmental and
prevention of adverse environmental impacts. SIGA emphasizes a commitment to environmental
protection along with sustainable development, as well as a commitment to strict adherence to
environmental legislation and regulation and a process of continuous review and improvement of
company policies and programs. The companies continue to improve their commitments to
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environmental stewardship through the use of the latest technologies that are proven, available, and
economically viable.
17.1.3 Other Laws and Regulations

Water Resources
Water resources are regulated under the National Water Law, December 1, 1992 and its regulation,
January 12, 1994 (amended by decree, December 4, 1997). In Mexico, ecological criteria for water
quality is set forth in the Regulation by which the Ecological Criteria for Water Quality are
Established, CE-CCA-001/89, dated December 2, 1989. These criteria are used to classify bodies of
water for suitable uses including drinking water supply, recreational activities, agricultural irrigation,
livestock use, aquacultural use and for the development and preservation of aquatic life. The quality
standards listed in the regulation indicate the maximum acceptable concentrations of chemical
parameters and are used to establish wastewater effluent limits.
Discharge limits have been established for particular industrial sources, although limits specific to
mining projects have not been developed. NOM-001-ECOL-1996, January 6, 1997, establishes
maximum permissible limits of contaminants in wastewater discharges to surface water and national
goods (waters under the jurisdiction of the CONAGUA).
Daily and monthly effluent limits are listed for discharges to rivers used for agricultural irrigation,
urban public use and for protection of aquatic life; for discharges to natural and artificial reservoirs
used for agricultural irrigation and urban public use; for discharges to coastal waters used for
recreation, fishing, navigation and other uses and to estuaries; and discharges to soils and to
wetlands. Effluent limitations for discharges to rivers used for agricultural irrigation, for protection of
aquatic life, and for discharges to reservoirs used for agricultural irrigation have also been
established.
Ecological Resources
In 2000, the National Commission of Natural Protected Areas (CONANP) (formerly CONABIO, the
National Commission for Knowledge and Use of Biodiversity) was created as a decentralized entity
of SEMARNAT. As of November 2001, 127 land and marine Natural Protected Areas had been
proclaimed, including biosphere reserves, national parks, national monuments, flora and fauna
reserves, and natural resource reserves.
Ecological resources are protected under the Ley General de Vida Silvestre (General Wildlife Law).
(NOM)-059-ECOL-2000 specifies protection of native flora and fauna of Mexico. It also includes
conservation policy, measures and actions, and a generalized methodology to determine the risk
category of a species.
Other laws and regulations include:
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Forest Law, December 22, 1992, amended November 31, 2001, and the Forest Law
Regulation, September 25, 1998;
Fisheries Law, June 25, 1992, and the Fisheries Law Regulations, September 29, 1999; and
Federal Ocean Law, January 8, 1986.
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Regulations Specific to Mining Projects

All aspects related to Mine Safety and Occupational Health are regulated in Mexico by NOM-023STPS-2003 issued by the Secretariat of Labor. Appendix D of this regulation refers specifically to
mine ventilation and establishes all the requirement underground mines should comply with, which
are subject of regular inspections.
New tailings dams are subject to the requirements of NOM-141-SEMARNAT-2003, Standard that
Establishes the Requirements for the Design, Construction and Operation of Mine Tailings Dams.
Under this regulation, studies of hydrogeology, hydrology, geology and climate must be completed
for sites considered for new tailings impoundments. If tailings are classified as hazardous under
NOM-CRP-001-ECOL/93, the amount of seepage from the impoundment must be controlled if the
facility has the potential to affect groundwater. Environmental monitoring of groundwater and tailings
pond water quality and revegetation requirements is specified in the regulations. This regulation is
still under review.
NOM-120-ECOL-1997, November 19, 1998 specifies environmental protection measures for mining
explorations activities in temperate and dry climate zones that would affect xerophytic brushwood
(matorral xerofilo), tropical (caducifolio) forests, or conifer or oak (encinos) forests. The regulation
applies to direct exploration projects defined as drilling, trenching, and underground excavations. A
permit from SEMARNAT is required prior to initiating activities and SEMARNAT must be notified
when the activities have been completed. Development and implementation of a Supervision
Program for environmental protection and consultation with CONAGUA is required if aquifers may be
affected. Environmental protection measures are specified in the regulations, including materials
management, road construction, reclamation of disturbance and closure of drillholes. Limits on the
areas of disturbance by access roads, camps, equipment areas, drill pads, portals, trenches, etc.,
are specified.
17.1.4 Expropriations
Expropriation of ejido and communal properties is subject to the provisions of agrarian laws.
17.1.5 NAFTA
Canada, the United States and Mexico participate in the North American Free Trade Agreement
(NAFTA). NAFTA addresses the issue of environmental protection, but each country is responsible
for establishing its own environmental rules and regulations. However, the three countries must
comply with the treaties between themselves and the countries must not reduce their environmental
standards as a means of attracting trade
17.2 Operating and Post Closure Requirements and Plans

No Detailed post closure and operating plans have been developed for La Colorada at this time. A
$4,000,000 provision has been included in the economic model for rehabilitation and mine closure
expenses starting two years before the mine schedule ends.
17.2.1 Permitting Process

Environmental permits are required from various federal and state agencies. The general process
for obtaining authorization to construct a new industrial facility is shown in Figure 17-1.
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Environmental permits are required in Mexico for exploration activities and road construction as well
as mining activities and infrastructure development.
17.2.2 Environmental Impact Permit

The most important environmental permit is the Environmental Impact Permit. The LGEEPA
environmental impact assessment regulation, revised on May 30, 2000, outlines the procedure for
obtaining the permit. All mining projects and certain exploration projects must prepare an
environmental impact assessment. The type of study required a Risk Study, a Preventive Study or
an Environmental Impact Statement (Manifestacin de Impacto Ambiental) (MIA) depends on the
characteristics of the project. Mining projects would most likely be required to prepare a MIA.
SEMARNAT will provide guidelines for the MIA. The time period for reviewing the MIA is 60 days,
although this period may be extended for complex projects. Three resolutions are possible: 1)
approval of the project; 2) conditional approval of the project, or 3) denial of the project. A bond will
be established based on the type of project and the cost for rehabilitation.
17.2.3 Other Permits and Licenses

Other permits and licenses are listed below. All permits and licenses have annual reporting
requirements and fee schedules.
Operating License (and Air Quality Permit)
Article 18 and 19 of the Regulation of LGEEPA, on the Prevention and Control of Atmospheric
Contamination, requires mining operations to obtain an Operating License. The license largely
addresses air emissions but additional conditions can be included. Additional conditions may
prescribe activities associated with hazardous materials, safety, remediation and reclamation.
Land Use Permit
A land use permit is required before an Operating License can be acquired.
17.2.4 Concession Title for Underground Water Extraction

A permit is required for the extraction and use of groundwater and surface water (e.g., wells to
supply potable water). The use of groundwater is regulated by CONAGUA and mine operators must
pay for the water used. However, mine dewatering is regulated under the Mining Law and no permit
is required to extract mine water.
Wastewater Discharge Permit
Water discharge is regulated by CONAGUA and a permit is required for most industrial discharges.
The quality of the discharge must meet NOMs, although CONAGUA may issue particular limits.
Stream Diversions
An authorization is required for the deviation, extraction or diversion of national waters.
Hazardous Waste Registration
A mine site must submit a Hazardous Waste Notification to SEMARNAT prior to generating the
waste or using a hazardous waste management facility.
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Mine Closure Regulations

Currently, there are no legal provisions for mine closure, although regulations issued for the
construction and operation of new mining facilities such as tailings dams refer to the need to
implement post-closure measures to ensure the protection of the surrounding environment.
17.3 La Colorada Environmental and Permitting Status

17.3.1 Environmental Baseline Data
Environmental baseline data collection at La Colorada was initiated in 2011 in support of the MIA
application for the expansion of the La Colorada and Gran Central open pits, and construction of new
heap leaching facilities.
Fauna
Wildlife data were collected in April (dry season) and again in September (wet season). Forty-four
species amphibians and reptiles were identified in the study area; 97 species of birds, and 57
species of mammals were also identified. Of these, nine species of birds and three species of
mammals fall under some protective status according to Mexican NOMs.
Flora
Vegetation data collected during the same periods support the classification of the site into forest
and subtropical scrubland and brush zones. The studies identified 49 families, 158 genus, and 210
species of vascular plants.
Surface Water
Surface water in the area is generally of good quality, with minor exceptions. Fluoride is elevated in
both pit lakes (NOM-127-SSA1-1994), as well as Total Dissolved Solids (TDS) for use as agricultural
water (NOM-001-SEMARNAT-1996).
Groundwater
The current campaign of groundwater monitoring includes only three of the many wells installed
during the previous operations. Well MW97-5 continues to be used to monitor the potential release
and flow of process solutions from the existing heap leach facilities and process water ponds. Well
MW95-27 is also located down-gradient of the heap leach facilities, near the project property
boundary with the community. A third groundwater monitoring point being used to establish baseline
data for the current operation is the Agua de Caseta, the domestic water well for the town of La
Colorada.
Monitoring well samples collected in April 2011 were compared to NOM-001SEMARNAT-1996; for the domestic well, it was compared to NOM-127-SSA1-1994. In general, the
monitoring well waters appear similar to the domestic well water, with exceedences in conductivity
and nitrite in the domestic well.
Geochemistry
In accordance with NOM-155-SEMARNAT-2007, the geochemical characteristics of the exposed
waste rock was characterized using Meteoric Water Mobility Procedure (MWMP) and Acid-Base
Accounting (ABA) testing programs. Included in the initial program was spent potentially mineable
resource from the existing heap leach pads as well as waste rock . The leach tests indicate non-
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hazardous materials according to Mexican NOMs. The initial ABA testing resulted in overall AcidGenerating Potential to Acid-Neutralizing Potential (AGP:ANP) of 1.9 suggesting an indeterminate
acid rock drainage (ARD) potential. Minera Pitalla is therefore in the process of developing a kinetic
testing program to include humidity cell testing (HCT). This program has not yet been implemented.
17.3.2 Environmental Permitting

Informe Preventivo
Permitting of La Colorada has essentially been divided into two phases. First, the existing facilities
and operations are being restarted through the expedited Preventative Notice (Informe Preventivo, or
IP). The IP is intended to provide a preliminary presentation of the project, its location and potential
environmental impacts. The purpose of the IP is to provide the SEMARNAT with general information
on the project to determine whether an MIA will be required and on what basisregional or specific
(particular). In certain instances, projects may be exempted from filing an MIA and may simply file
an IP. The exemption applies to projects for which there are NOMs in place that are implemented in
the context of pre-approved development plans or within industrial parks already approved by
SEMARNAT.
An IP was submitted by Minera Pitalla (pH Consultores Ambientales, 2011) to SEMARNAT in
September 2011 as part of the restart of the La Colorada existing operations on previously disturbed
ground. Approval was issued by SEMARNAT on October 20, 2011 to authorize the construction of
new process water ponds (meeting both Mexican and international standards), a new heap leach
pad onto which the previous RoM leach pad material will be relocated, and new plant site. The
original ponds and pad are known to have leaked in the past, as is demonstrated through
groundwater monitoring and the detection of cyanide in the down-gradient wells. The expedited IP
approval process is allowing Minera Pitalla to proceed with reconstruction of these facilities, including
the complete refurbishment of the ADR Plant site.
Manifestacin de Impacto Ambiental
The second phase of the La Colorada restart will involve the mining of additional material of the open
pits. This will result in the construction of new heap leach pads as well as new crushing system and
expanded waste rock disposal areas. In addition, the La Colorada open pit will be expanded. This
action will result in the encroachment of the mine on the town, and the relocation and resettlement of
several residences and public plaza.
These new facilities/activities will require approval by SEMARNAT through the use of the MIA. The
anticipated submittal date of this document is January 2012. Approval is anticipated in four to six
months; approval is need by October 2012 as the activities under the IP will be coming to an end.
Land Use Change
As with the environmental impact assessment, the land use change for the Project was also
separated into two phases. Land use change authorization for the relocated RoM heap leach pad
and new process ponds was granted by SEMARNAT on September 15, 2011.
Environmental Management Plans
Environmental management planning is being integrated into the overall project, primarily through
the IP and MIA processes, in accordance with Mexican NOMs and international standards and best
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practices, including, but not necessarily limited to Equator Principles, International Finance
Corporation (IFC) Performance Standards (PS), and World Bank Group Environmental, Health, and
Safety Guidelines (known as the EHS Guidelines). The EHS Guidelines are technical reference
documents with general and industry-specific examples of Good International Industry Practice
(GIIP), as defined in IFCs PS-3 on Pollution Prevention and Abatement. Reference to the EHS
Guidelines by IFC clients is required under PS-3. IFC uses the EHS Guidelines as a technical
source of information during project appraisal activities, as described in IFCs Environmental and
Social Review Procedure. In addition, the International Cyanide Management Code For The
Manufacture, Transport and Use of Cyanide In The Production of Gold (Cyanide Code) will be
voluntarily implemented at La Colorada to promote the responsible management of cyanide,
enhance the protection of human health, and reduce the potential for environmental impacts.
The Minera Pitalla environmental management system will be predicated on International
Standardization Organization (ISO) 14001 type systems, and include:
Surface and groundwater monitoring plan;

Fugitive dust control plan;
Cyanide management plan;
Waste rock management plan;
Accidental spill prevention plan;
Erosion control plan;

Wildlife management plan; and
Reclamation and closure plan.
17.4 Social and Community

17.4.1 Social Management Planning
Minera Pitalla is in the process of implementing a social management plan (SMP) to identify,
prevent, control and mitigate the possible impacts that might come with the La Colorada project and
could affect the social, economic and environmental dynamics of the projects area of influence.
The proposed SMP, prepared by Dinmica S de RL de CV, has been formulated according to the
environmental policies of Argonaut Gold Inc. (AGI), as well as the international guidelines and
standards regarding social impacts management.
In order to comply with the SMP objectives, Minera Pitalla has a Community Relations office located
in the town of La Colorada. This office is in charge of maintaining open dialogue and relations with
the locals while coordinating with the mine environmental and human resources departments. The
current SMP is fairly general is its approach, but does include descriptions of activities to be carried
out in the areas of:
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Community communication and dialogue;
Contribution program for financial assistance;
Local labor hiring program;
Community development program; and
Social and environmental programs.
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With the expansion of the La Colorada open pit during the next phase of mining at the site, a detailed
resettlement plan will be needed for those residence and businesses impacted. This plan does not
currently exist and will need to be in accordance with IFC Performance Standard 5 Land
Acquisition and Involuntary Resettlement (January 1, 2011), as well as Mexican regulations
governing forced relocation. Preliminary discussions have taken place with local and state
government officials regarding the relocation.
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December 30, 2011
La Colorada Project
Sonora, Mexico
Source: Argonaut Gold, Inc., 2011
Figure 17-1
Construction and Start-up Authorization for Industrial Facilities

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18 Capital and Operating Costs (Item 21)

PEA-level capital costs are estimated using combination of quotations received by Argonaut and
informed estimates by Minera Pitalla staff currently (2011) involved in site development. The capital
costs presented are to a PEA level of accuracy and are expected to be within 40%. All costs are in
4thQ 2011 U.S. dollars and based on a 12:1 US$ to Mexican Paso exchange rate.
Table 18.1.1 illustrates the LoM Capital cost estimates with the assumption that mine operations will
be contractor based.
18.1 Capital Cost Estimates

Table 18.1.1: LoM Capital Cost Summary ($000s) as of December 27, 2011
Item
Primary/Secondary Crushers
Heap Leach Pad & Ponds
ADR Plant
Power System
Leach Water System
Infrastructure
Sustaining Capital
Permitting
Pre-feas/Feas - 3rd party
Land Acquistion
Reclamation
Total Capital
LOM Cost (000s)

3,500
5,444
3,900
400
244
1,050
1,400
200
550
5,500
4,000
26,188
Table 18.1.2 details the initial capital required for 2012. Sunk costs during 2011 have not been
included in this analysis.
Table 18.1.2: Initial Capital Breakdown as of December 27, 2011
Item
Primary/Secondary Crushers
ADR Plant
Power System
Leach Water System
Infrastructure
Sustaining Capital
Permitting
Pre-feas/Feas - 3rd party
Land Acquisition
Total Capital
Initial Cost (000s)

3,500
2,444
3,900
400
244
1,050
200
200
550
2,000
14,488
From 2013 through end of mine life, Table 18.1.3 illustrates the estimated sustaining capital and
closure costs for the operation.
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Table 18.1.3: Sustaining and Closure Costs as of December 27, 2011

Item
Sustaining Capital
Land Acquisition
Reclamation
Total Capital
Sustaining Cost (000s)

3,00
1,200
3,500
4,000
11,700
18.1.1 Basis for Capital Cost Estimates

The basis for the capital cost estimate is founded on construction estimates and quotations already
received by Argonaut, initial scoping study estimates and discussions with process construction and
heap leach pad contractors. SRK is of the opinion that for a PEA level study, the capital costs are
reasonable but will be subject to change if production profile assumptions are modified in the future.
18.2 Operating Cost Estimates

PEA-level capital costs are estimated using combination of quotations received by Argonaut and
informed estimates by Minera Pitalla staff currently (2011) involved in site development. The
operating costs presented are to a PEA level of accuracy and are expected to be within 40%. All
costs are in 4thQ 2011 US dollars and based on a 12:1 US$ to Mexican Paso exchange rate. LoM
operating costs are shown in Table 18.2.1. Over the LoM, operating costs will be about US$10.13/t
of resource leached/crushed.
Table 18.2.1: LoM Operating Cost Summary as of December 27, 2011
Description
Mining (1)
Processing
G&A
Total
LoM Operating (US$000s)

$236,371
$77,288
$18,000
$331,659
Unit Cost
$1.54
$2.36
$0.55
$10.13
Unit
/t-mined
/t-crushed
/t-crushed
/t-crushed
(1) Includes re-handle of resources from stockpile
18.2.1 Basis for Operating Cost Estimates

The basis for the operating cost estimate is founded on construction estimates and quotations
already received by Argonaut, initial scoping study estimates and discussions with process
construction, mining and heap leach pad contractors. SRK is of the opinion that for a PEA level
study, the operating costs are reasonable but will be subject to change if production profile
assumptions are modified in the future.
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19 Economic Analysis (Item 22)

19.1 Principal Assumptions
Based on a production rate of 4 Mt of potentially minable resource being placed on heap leach pads,
the price assumptions to determine revenue are detailed in Table 19.1.1.
Table 19.1.1: Market Inputs as of December 27, 2011
Parameter
Gold Market Price
Silver Market Price
Gold Refining
Gold Royalty
Silver Royalty
US$/oz
$1,575.00
$21.00
$8.00
3.00%
3.00%
units
/oz
/oz
/oz
NSR on applicable oz
NSR on applicable oz.
19.2 Project Financials

The financial analysis results, shown in Table 19.2.1, indicate an NPV5% of US$278 million on a pretax basis. Payback will be the first year of production assuming that permits and land purchases are
in place by mid-2012 allowing for mine production to supplement RoM stockpile processing. The
following provides the basis of the SRK LoM plan and economics:
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Measured, Indicated and Inferred resources are included;
A mine operating life of 8 years with 9 years of production;
An overall average metallurgical recovery rate of 55.1% Au and 27.1% Ag over the LoM;
A net operating cost of US$613/Oz.Au on a gold equivalent basis;
Capital costs of US$26million, comprised of initial capital costs of US$14.4 million, and
sustaining capital over the LoM of US$11.7 million;
Mine closure cost, included in the above estimates is US$4 million;
The analysis does not include provision for salvage value; and
Operating costs are 47% of revenue.
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Table 19.2.1: Economic Results Pre-Tax as of December 27, 2011

Description
Production Summary
Waste Mined
Potentially Mineable Resource Mined
Oz-Au Refined
Estimate of Cash Flow
Gross Income
Refining
Gross Revenue
Royalty
Net Revenue
Operating Costs
Mining
Processing
G&A
Silver Credit
Total Operating
Operating Margin
Initial Capital
Income Tax
NPV 5%
Value
Units
121,219
32,753
438
kt
kt
koz
$722,668
($3,505)
$719,163
($10,323)
$708,840
000s
000s
000s
000s
000s
$/t-crushed
$7.22
$2.36
$0.55
($1.93)
$8.20
000s
000s
000s
$236,371
$77,288
$18,000
($63,166)
$268,493
$440,347
$14,488
$11,700
$0
$414,159
$278,274
Units
$/oz-Au
$539.51
$176.41
$41.08
($144.18)
$612.83
000s
000s
Table 19.2.2 illustrates the effect on NPV if a 31% tax is applied to the economic model.
Table 19.2.2: Economic Results After-Tax as of December 27, 2011
Description
Operating Margin
Initial Capital
Income Tax
NPV 5%
Value
$440,347
$14,488
$11,700
$93,919
$320,240
$200,899
19.3 Taxes, Royalties and Other Interests

The economic model has included $US11.a million for gold and silver royalty payments over the
LoM. Tax has been estimated at 31% as per Mexican norm.
19.4 Sensitivity Analysis

Sensitivity analysis for key economic parameters is shown in Table 19.4.1. The Project is nominally
most sensitive to metal prices (revenues). The Projects sensitivities to capital and operating costs
are quite similar.
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Table 19.4.1: Project Sensitivities as of December 27, 2011

Description
Revenues
Capital Costs
Operating Costs
-10%
273,000
281,000
306,000
-5%
276,000
279,000
292,000
Base
278,000
278,000
278,000
5%
281,000
277,000
264,000
10%
284,000
276,000
251,000
Table 19.4.2: Project Sensitivities After Tax as of December 27, 2011

Description
Revenues
Capital Costs
Operating Costs
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-10%
197,000
203,000
220,000
-5%
199,000
202,000
210,000
Base
201,000
201,000
201,000
5%
203,000
200,000
191,000
10%
205,000
199,000
182,000
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20 Adjacent Properties (Item 23)

There are no adjacent properties to the Project.
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21 Other Relevant Data and Information (Item 24)

There is no other relevant data or information.
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22 Interpretation and Conclusions (Item 25)

22.1 Environmental Conclusions
Minera Pitalla is currently constructing new liner and leach facilities (including process water ponds
and ADR plant site) for the existing RoM heap that were known to be the sources of groundwater
contamination. These activities were approved by SEMARNAT through the IP process, as these
facilities are all on previously disturbed areas, and were evaluated by the agency during the original
permitting of the project. These new facilities represent state-of-the-art construction to allow for
better control and monitoring of process solutions.
Environmental baseline data collection was initiated in 2011 in support of the MIA application for the
expansion of the La Colorada/Gran Central open pit, and construction of new heap leaching facilities
to receive the potentially mineable resource. The MIA is expected to be submitted to SEMARNAT in
early January 2012, with an anticipated approval during the third quarter of 2012.
22.2 Mining Conclusions

Mining will be carried out through the use of local contractors well versed in mine operation within the
Sonoran region. Pit optimization and preliminary mine designs indicate a moderately sized operation
is possible given gold price and operating cost assumptions. The sequencing of the operation will be
important to overcome high initial strip ratios for both pits along with limited heap leach pad space.
Through the purchase of additional land positions and relocation of a portion of the La Colorada
Township, the full potential of mineral extraction should be achievable. As the operation moves
towards production in late 2012, additional geological, geotechnical, water and mine sequencing
studies are recommended.
22.3 Financial Conclusions

The economic analysis indicates that the profitability of the potential operation will be driven by gold
price, metal recovery and operating cost. Given the high strip ratio and low grade nature of the
deposit, there is 47% of revenue consumed by operating cost. Seventy percent of the operating
costs are mine contractor related so contract negotiations will be vital for the future profitability of the
project. To improve the project economics, increasing the metallurgical recovery, reducing stripping
ratio and continued high gold prices will be of critical importance.
22.4 Process and Metallurgy Conclusions

Gold and silver recovery based on an ongoing program of 20 column tests conducted at the KCA
laboratory in Reno, Nevada running from 48 to 72 days resulted in recoveries of 55% for gold and
35% for silver at a 9.5 mm minus crush size. Potentially mineable resource will be sourced either
from existing RoM leach pad or by mining from one of four open pits considered in the study.
Potentially mineable resource will be processed crushed to 9.5 mm, belt-agglomerated with up to 2.5
kg/t cement as required, and conveyor stacked on a dedicated leach pad where it will be leached
using a diluted cyanide solution. The gold bearing solution will be pumped to an ADR plant for
further processing and production of dor bars. The plant will initially begin as an adsorption plant
only during start-up processing of the RoM-rehandle potentially mineable resource with carbon
BAS/SC
December 30, 2011

Page 129
stripping conducted off-site, and eventually expanded to the full plant prior to initiation of mining from
the open pits.
22.5 Significant Risks and Uncertainties

Risk Area
Resources
Database
Exploration data
Quality
Sufficiency/Adequacy
Assaying
Surveying
Geology
Geology and Resource Modeling
Geological modeling
Resource modeling approach
Geostatistical analysis
Resource estimate
Geotechnical
Slope Stability
Geotechnical data adequacy
Interpretation
Design
Waste Rock Dump
Geotechnical data adequacy
Interpretation
Design
Water Management
Data Adequacy
Interpretation
Ground water management
Surface water management
Water treatment
Major event management
Mining
Accuracy of relevant technical design parameters
Pit optimization
Conversion of resources to reserves
Proposed production schedule
Equipment schedule
Mining unit cost assumptions and reasonableness
Ramp up schedule
Grade control methodologies
Metallurgical Test Work/Processing Facilities
Metallurgical Test Work
Potentially mineable resource type definition
Recovery projections
Throughput
Process unit assumptions and reasonableness of rates
Offtake agreements
Environmental and Permitting
Status of statutory permits for current and future operations
Compliance of current operations with existing permits
Risks for future compliance of operations with permits
Identification of environmental and social risks
Mine reclamation and closure plans and costs
Infrastructure
BAS/SC
Risk Level
Low
Low
Low
Low
Low
Low
Moderate
Moderate
Low
Low
Low
Moderate
Moderate
Low
Low
Low
Low
Low
Low
Low
Moderate
Low
Low
Low
Low
Low
Low
Moderate
Low
Low
Moderate
Low
Low
Low
Low
Moderate
Low
Low
Moderate
Low
Low
Low to Moderate
Moderate
December 30, 2011

Risk Area
Power
Water
Access
Transportation
Surface facilities
Capital Costs
Capital cost programs
Sustaining capital
Operating Costs
Forecast costs used in resource determination
Currency split of domestic to foreign currency
Financial Model
Model verification
Revenue calculations
Management and Staffing
Implementation Plan & Schedule
Page 130
Risk Level
Low
Low
Low
Low
Low
Low
Low
Low
Low
Moderate
Low
Low
Low
22.5.1 Exploration
The exploration work is composed primarily of the drillhole database which supports the resource
estimation of this report. It consists of two main data sets. The older dataset was generated by
EESA during their work on the project in the late 1990s. The more recent dataset was generated by
Pediment and Argonaut since 2007.
orientations. The maximum drillhole depth is 479 m and the average is 117 m.
22.5.2 Mineral Resource Estimate

The mineral resource estimations are based on geologic models consisting of a single rock type, cut
by numerous fault/vein zones. All model blocks are 5 m x 5 m x 5 m in the x,y,z directions,
respectively. Each model block is assigned a unique specific gravity based on direct measurement
of the various rock types. All block grade estimates were made using 3 m down-hole composites.
An Inverse Distance Weighting to the second power estimation algorithm was used for all gold grade
and silver estimations. The results of the resource estimation provided a CIM classified Indicated
and Inferred Mineral Resource. The mineral resources have been classified as Indicated and
Inferred based primarily on sample support. All resources supported primarily by drilling at 25 m
centers are classified as indicated and all resources supported by wider spaced drilling were
classified as Inferred.
22.5.3 Mineral Resource Estimate

The main risks to the proposed mine schedule relate to adequacy of land position for extraction of
resources, placement of stockpiles and heap leach pads.
SRK is of the opinion that the production schedule is aggressive and close negotiations with potential
contractors will be required to determine the viability of the suggested mining rate.
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December 30, 2011

Page 131
22.5.4 Metallurgy and Processing

Preliminary indications are that higher metal recovery may be realized through finer crushing. This
should be studied further with additional metallurgical test work. As such, it is expected that
recoveries stated here are achievable at a minimum and the risk of realizing lower recoveries is
considered low.
Risk to plant throughputs using the plant designed here are also considered low, however, if finer
crushing is eventually deemed appropriate, it is possible that further plant upgrades will be needed
than those proposed here to maintain the design throughput.
BAS/SC
December 30, 2011

Page 132
23 Recommendations (Item 26)

23.1 Environmental
Visual inspection of the site suggested that the mine waste materials are relatively benign in
nature. However, inconclusive geochemical testing of the spent potentially mineable
resource and waste rock materials indicates the need for longer-term kinetic testing in order
to more precisely evaluate these materials, and develop adequate reclamation and closure
plans for the site. Minera Pitalla is expected to initiate this program during 2012.
The expansion of the La Colorada/Gran Central open pit to its full potential will require the
relocation of several residences, businesses and a community plaza. While Minera Pitalla
has developed and implemented a social management plan and program, a specific plan to
deal with a possible involuntary resettlement has not yet been prepared.
Water in the open pits suggests that lakes will be present post closure, especially if the pits
are expanded and deepened. While the current water in the existing lakes appears to be of
good quality, additional studies will be necessary to determine if the materials to be exposed
in the deeper portions of the pits will affect the long-term quality of the water.
23.2 Mining
SRK is of the opinion that the drilling has not been fully delineated to the north east of the El
Crestn deposit. There is a drillhole at depth which contains good mineralization suggesting
a continuation of grade. If this trend were to theoretically continue there are no deep holes
to prove or disprove additional grade. If exploration drilling were to be successful then the
stripping campaign and mining width restrictions on the north east wall would be alleviated.
Additional geotechnical studies should be completed to better establish the effect of

groundwater pore-pressure on pit-wall stability.
As part of detailed engineering, the sequencing of pit progression, heap leach phasing and
waste dump progression will be important to identify critical stages for additional land
purchases and/or rehandle of leach pads to provide room for potential resources.
The underground voids for El Crestn in particular require re-survey and interpretation to
ensure correct potentially mineable resource dilution and hazard identification associated
with the voids moving forward.
There is an aggressive schedule in place for 2012 with the commencement of in-situ mining
and reprocessing of old RoM stockpiles, it is vital permits and additional land purchases are
fast-tracked to allow for full production.
23.2.1 Mining Related Study Costs

Table 23.2.1.1 illustrates the estimated study price for 2012 estimated by SRK.
BAS/SC
December 30, 2011

Page 133
Table 23.2.1.1: Mining Cost Studies for 2012

Unit
Additional Potentially Mineable Resource Expansion (Pit expansion)
Geotechnical Program
Underground Voids
Mine sequencing and Production Rate
Total Mine Studies
US$
100,000
200,000
50,000
200,000
550,000
23.3 Metallurgy and Processing

Opportunities exist to optimize throughput and recovery of the potentially mineable resource which
will be studied through additional column tests and equipment reviews. Additional column test work
is being completed by KCA at the present time on core material from the Project. Further work is in
progress to define metal recoveries from the El Creston and Veta Madre mining areas as well as
additional agglomeration tests to better define cement addition requirements (if any).
The use of High Pressure Grinding Rolls (HPGR) is being looked at as an option for further finer
crushing by many projects at the present time and is an option that could be examined at La
Colorada with future metallurgical programs.
The recovery curves indicate relatively slow leaching and it is almost certain that several percent
more gold recovery would be realized with a 120 day leach cycle. All future column tests should be
run at this leach cycle as a minimum.
Any additional improvements in recovery may have a significant impact on the economics of the
project.
BAS/SC
December 30, 2011

Page 134
24 References (Item 27)

Ball, S.H.,1911, Geological Report on the property of the Mines Company of America, 22 p.
Diaz, Jorge, 2007, La Colorada Internal reports written by Interminera, S.A. de C.V. for Pediment
Gold Corp., 23 p.
Giroux, G and Charbonneau, D., 1992, Property and Resource Evaluation of the El Crestn Deposit,
La Colorada Project, Mexico, Unpublished report for Explorations Eldorado, S.A. de C.V.
Hermosillo, Mexico, 36 p.
Giroux, G., 1999, Audit of the Resources contained within the Gran Central and La Colorada Zones,
La Colorada Mine, Mexico, Unpublished report for Explorations Eldorado, S.A. de C.V.
Hermosillo, Mexico, 30 p.
Golder Associates, Reporte De Diseo De Ingeniera De ETAPAS 8, 9, 10 y 11 Del PatIo De
Lixiviacin Y Pileta NO. 2 De Contingencia. Appendix Figuras.pdf, p.15, Figure 14 Areas de
recubrimiento en patio de lixiviacion, pieltas de contingencia con volume
Hedenquist, J.W., Arribas, A. and Gonzales-Urien, E., 2000, Exploration for Epithermal Gold
Deposits. Reviews in Economic Geology, vol. 13, p. 245-277.
Herdrick, M. 2007, Mina La Colorada, Sonora, Mexico. Confidential reports to directors of Pediment
Exploration, 11p.
Lewis, P.D., 1995, Structural Evaluation of the La Colorada Project Area, Sonora, Mexico.
Unpublished Report by Lewis Geoscience Services Inc. for Exploraciones Eldorado, S.A. de
C.V., Hermosillo, Mexico, 25 p.
McMillan, R.H., Dawson, J.M. and Giroux, G.H., 2009, Geologic Report on the La Colorada Property
with a resource Estimate on La Colorada and El Crestn Mineralized Zones, Sonora Mexico,
prepared for Pediment Gold Corp, November 30, 2009, 141p.
Nordin, G., 1992, Geologic Report, La Colorada Property, Sonora, Mexico. Unpublished report for
Explorations Eldorado, S.A. de C.V. Hermosillo, Mexico, 76 p.
Simmons, S.F.; White, N.C. and John, D.A., 2005, Geologic Characteristics of Epithermal Precious
and Base Metal Deposits. Economic Geology 100th Anniversary Volume, p. 485-522.
Vazquez, Sierra & Garcia, S.C. 2011, Title Opinion Compania Minera Pitalla, S.A. de C.V. Mining
Concessions, October 12, 2011.
Zawada, Ross, D. Albinson, Tawn and Aneyta, Reyna, 2001, Geology of the El Crestn Gold
Deposit, Sonora State Mexico. Economic Geology Special Publication # 8, New Mines and
Discoveries in Mexico and Central America, p. 187-197.
BAS/SC
December 30, 2011

Page 135
25 Glossary
25.1 Mineral Resources
The mineral resources and mineral reserves have been classified according to the CIM Standards
on Mineral Resources and Reserves: Definitions and Guidelines (November 27, 2010).
Accordingly, the Resources have been classified as Measured, Indicated or Inferred, the Reserves
have been classified as Proven, and Probable based on the Measured and Indicated Resources as
defined below.
A Mineral Resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic
material in or on the Earths crust in such form and quantity and of such a grade or quality that it has
reasonable prospects for economic extraction.
The location, quantity, grade, geological
characteristics and continuity of a Mineral Resource are known, estimated or interpreted from
specific geological evidence and knowledge.
An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or
quality can be estimated on the basis of geological evidence and limited sampling and reasonably
assumed, but not verified, geological and grade continuity. The estimate is based on limited
information and sampling gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drillholes.
An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or
quality, densities, shape and physical characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and economic parameters, to support mine
planning and evaluation of the economic viability of the deposit. The estimate is based on detailed
and reliable exploration and testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drillholes that are spaced closely enough for
geological and grade continuity to be reasonably assumed.
A Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or
quality, densities, shape, physical characteristics are so well established that they can be estimated
with confidence sufficient to allow the appropriate application of technical and economic parameters,
to support production planning and evaluation of the economic viability of the deposit. The estimate
is based on detailed and reliable exploration, sampling and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings and drillholes that
are spaced closely enough to confirm both geological and grade continuity.
25.2 Mineral Reserves

A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource
demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate
information on mining, processing, metallurgical, economic and other relevant factors that
demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve
includes diluting materials and allowances for losses that may occur when the material is mined.
A Probable Mineral Reserve is the economically mineable part of an Indicated, and in some
circumstances a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility
BAS/SC
December 30, 2011

Page 136
Study. This Study must include adequate information on mining, processing, metallurgical,
economic, and other relevant factors that demonstrate, at the time of reporting, that economic
extraction can be justified.
A Proven Mineral Reserve is the economically mineable part of a Measured Mineral Resource
demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate
information on mining, processing, metallurgical, economic, and other relevant factors that
demonstrate, at the time of reporting, that economic extraction is justified.
25.3 Definition of Terms

The following general mining terms may be used in this report.
Table 26.3.1: Definition of Terms
Term
Assay
Capital Expenditure
Composite
Concentrate
Crushing
Cut-off Grade (CoG)
Dilution
Dip
Fault
Footwall
Gangue
Grade
Hangingwall
Haulage
Hydrocyclone
Igneous
Kriging
Level
Lithological
LoM Plans
LRP
Material Properties
Milling
Mineral/Mining Lease
Mining Assets
Ongoing Capital
Potentially Mineable
Resource Reserve
Pillar
Sedimentary
Shaft
BAS/SC
Definition
The chemical analysis of mineral samples to determine the metal content.
All other expenditures not classified as operating costs.
Combining more than one sample result to give an average result over a larger
distance.
A metal-rich product resulting from a mineral enrichment process such as gravity
concentration or flotation, in which most of the desired mineral has been separated
from the waste material in the potentially mineable resource.
Initial process of reducing potentially mineable resource particle size to render it
more amenable for further processing.
The grade of mineralized rock, which determines as to whether or not it is economic
to recover its gold content by further concentration.
Waste, which is unavoidably mined with potentially mineable resource.
Angle of inclination of a geological feature/rock from the horizontal.
The surface of a fracture along which movement has occurred.
The underlying side of an orebody or stope.
Non-valuable components of the ore.
The measure of concentration of gold within mineralized rock.
The overlying side of an orebody or slope.
A horizontal underground excavation which is used to transport mined potentially
mineable resource.
A process whereby material is graded according to size by exploiting centrifugal
forces of particulate materials.
Primary crystalline rock formed by the solidification of magma.
An interpolation method of assigning values from samples to blocks that minimizes
the estimation error.
Horizontal tunnel the primary purpose is the transportation of personnel and
materials.
Geological description pertaining to different rock types.
Life-of-Mine plans.
Long Range Plan.
Mine properties.
A general term used to describe the process in which the potentially mineable
resource is crushed and ground and subjected to physical or chemical treatment to
extract the valuable metals to a concentrate or finished product.
A lease area for which mineral rights are held.
The Material Properties and Significant Exploration Properties.
Capital estimates of a routine nature, which is necessary for sustaining operations.
See Mineral Reserve.
Rock left behind to help support the excavations in an underground mine.
Pertaining to rocks formed by the accumulation of sediments, formed by the erosion
of other rocks.
An opening cut downwards from the surface for transporting personnel, equipment,
December 30, 2011

Term
Sill
Smelting
Stope
Stratigraphy
Strike
Sulfide
Tailings
Thickening
Total Expenditure
Variogram
Page 137
Definition
supplies, ore and waste.
A thin, tabular, horizontal to sub-horizontal body of igneous rock formed by the
injection of magma into planar zones of weakness.
A high temperature pyrometallurgical operation conducted in a furnace, in which the
valuable metal is collected to a molten matte or dor phase and separated from the
gangue components that accumulate in a less dense molten slag phase.
Underground void created by mining.
The study of stratified rocks in terms of time and space.
Direction of line formed by the intersection of strata surfaces with the horizontal
plane, always perpendicular to the dip direction.
A sulfur bearing mineral.
Finely ground waste rock from which valuable minerals or metals have been
extracted.
The process of concentrating solid particles in suspension.
All expenditures including those of an operating and capital nature.
A statistical representation of the characteristics (usually grade).
25.4 Abbreviations
The following abbreviations may be used in this report.
Table 26.4.1: Abbreviations
Abbreviation
A
AA
A/m2
ANFO
Ag
Au
AuEq
C
CCD
CIL
CoG
cm
cm2
cm3
cfm
ConfC
Crec
CSS
CTW
dia.
EIS
EMP
FA
ft
ft2
ft3
g
gal
g/L
g-mol
gpm
g/t
BAS/SC
Unit or Term
ampere
atomic absorption
amperes per square meter
ammonium nitrate fuel oil
silver
gold
gold equivalent grade
degrees Centigrade
counter-current decantation
carbon-in-leach
cut-off grade
centimeter
square centimeter
cubic centimeter
cubic feet per minute
confidence code
core recovery
closed-side setting
calculated true width
degree (degrees)
diameter
Environmental Impact Statement
Environmental Management Plan
fire assay
foot (feet)
square foot (feet)
cubic foot (feet)
gram
gallon
gram per liter
gram-mole
gallons per minute
grams per tonne
December 30, 2011

Abbreviation
ha
HDPE
hp
HTW
ICP
ID2
ID3
IFC
ILS
kA
kg
km
km2
koz
kt
kt/d
kt/y
kV
kW
kWh
kWh/t
L
L/sec
L/sec/m
lb
LHD
LLDDP
LOI
LoM
m
m2
m3
masl
MARN
MDA
mg/L
mm
mm2
mm3
MME
Moz
Mt
MTW
MW
Ma
My
NGO
NI 43-101
OSC
oz
%
PLC
PLS
PMF
ppb
ppm
QA/QC
RC
RoM
BAS/SC
Page 138
Unit or Term
hectares
Height Density Polyethylene
horsepower
horizontal true width
induced couple plasma
inverse-distance squared
inverse-distance cubed
International Finance Corporation
Intermediate Leach Solution
kiloamperes
kilograms
kilometer
square kilometer
thousand troy ounce
thousand tonnes
thousand tonnes per day
thousand tonnes per year
kilovolt
kilowatt
kilowatt-hour
kilowatt-hour per metric tonne
liter
liters per second
liters per second per meter
pound
Long-Haul Dump truck
Linear Low Density Polyethylene Plastic
Loss On Ignition
Life-of-Mine
meter
square meter
cubic meter
meters above sea level
Ministry of the Environment and Natural Resources
Mine Development Associates
milligrams/liter
millimeter
square millimeter
cubic millimeter
Mine & Mill Engineering
million troy ounces
million tonnes
measured true width
million watts
million annum
million years
non-governmental organization
Canadian National Instrument 43-101
Ontario Securities Commission
troy ounce
percent
Programmable Logic Controller
Pregnant Leach Solution
probable maximum flood
parts per billion
parts per million
Quality Assurance/Quality Control
rotary circulation drilling
Run-of-Mine
December 30, 2011

Abbreviation
RQD
SEC
sec
SG
SPT
t
t/h
t/d
t/y
TSF
TSP
m
V
VFD
W
XRD
y
BAS/SC
Page 139
Unit or Term
Rock Quality Description
U.S. Securities & Exchange Commission
second
specific gravity
standard penetration testing
tonne (metric ton) (2,204.6 pounds)
tonnes per hour
tonnes per day
tonnes per year
tailings storage facility
total suspended particulates
micron or microns
volts
variable frequency drive
watt
x-ray diffraction
year
December 30, 2011

Appendices
Appendices
BAS/SC
December 30, 2011
Appendix A: Certificate of Author
SRK Denver
Suite 3000
7175 West Jefferson Avenue
Lakewood, CO 80235
T: 303.985.1333
F: 303.985.9947
denver@srk.com
www.srk.com
CERTIFICATE OF AUTHOR
I, Bret C. Swanson, BE (Mining), MMSA [#01418QP] do hereby certify that:

1. I am a Senior Mining Engineer of:
7175 W. Jefferson Ave, Suite 3000
Denver, CO, USA, 80235
2. I graduated with a degree in Bachelor of Engineering in Mining Engineering from the University of
Wollongong in 1997.
3. I am a current member of the Mining & Metallurgical Society of America.
4. I have worked as a Mining Engineer for a total of 14 years since my graduation from university.
5. I have read the definition of qualified person set out in National Instrument 43-101 (NI 43-101) and
certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101)
and past relevant work experience, I fulfill the requirements to be a qualified person for the purposes of
NI 43-101.
6. I am responsible for Sections 13, 15, 16, 18 and 19 of the report titled NI 43-101 Preliminary Economic
Assessment, La Colorada Project, Sonora, Mexico and dated December 30, 2011 (the Technical
Report) relating to the La Colorada Project.
7. I have not had prior involvement with the property that is the subject of the Technical Report.
8. As of the date of the certificate, to the best of my knowledge, information and belief, the Technical Report
contains all scientific and technical information that is required to be disclosed to make the technical
report not misleading
9. I am independent of the issuer applying all of the tests in Section 1.4 of National Instrument 43-101.
10. I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance
with that instrument and form.
11. I consent to the filing of the Technical Report with any stock exchange and other regulatory authority and
any publication by them for regulatory purposes, including electronic publication in the public company
files on their websites accessible by the public, of the Technical Report.
U.S. Offices:
Anchorage
Denver
Elko
Fort Collins
Reno
Tucson
QP_Cert_Swanson_Bret_2011
907.677.3520
303.985.1333
775.753.4151
970.407.8302
775.828.6800
520.544.3688
Mexico Office:
Canadian Offices:
Group Offices:
Guadalupe, Zacatecas
52.492.927.8982
Saskatoon
Sudbury
Toronto
Vancouver
Yellowknife
Africa
Asia
Australia
Europe
North America
South America
306.955.4778
705.682.3270
416.601.1445
604.681.4196
867.873.8670
SRK Consulting
Dated this 30th day of December, 2011.
Signed
________________________________
Bret C. Swanson, MMSA [#01418QP]
QP_Cert_Swanson_Bret_2011
Page 2
SRK Denver
Suite 3000
Lakewood, CO 80235
T: 303.985.1333
F: 303.985.9947
denver@srk.com
www.srk.com
I, Bart A. Stryhas Ph.D. CPG#11034 do hereby certify that:

1. I am a Principal Resource Geologist of:
7175 W. Jefferson Ave, Suite 3000
Denver, CO, USA, 80235
2. I graduated with a Doctorate degree in structural geology from Washington State University in 1988. In
addition, I have obtained a Master of Science degree in structural geology from the University of Idaho in
1985 and a Bachelor of Arts degree in geology from the University of Vermont in 1983.
3. I am a current member of the American Institute of Professional Geologists.
4. I have worked as a Geologist for a total of 22 years since my graduation in minerals exploration, mine
geology, project development and resource estimation. I have conducted resource estimations since
1988 and have been involved in technical reports since 2004.
NI 43-101.
6. I am responsible for Sections 4 through 10 and 12 of the report titled NI 43-101 Preliminary Economic
Assessment, La Colorada Project, Sonora, Mexico and dated December 30, 2011 (the Technical
Report) relating to the La Colorada Project. I have visited the Property on June 16, 2011, for one day.
7. I have not had prior involvement with the property that is the subject of the Technical Report.
8. As of the date of the certificate, to the best of my knowledge, information and belief, the Technical Report
contains all scientific and technical information that is required to be disclosed to make the technical
report not misleading.
9. I am independent of the issuer applying all of the tests in Section 1.4 of National Instrument 43-101.
10. I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance
with that instrument and form.
U.S. Offices:
Anchorage
Denver
Elko
Fort Collins
Reno
Tucson
QP_Cert_Stryhas_Bart_2011
907.677.3520
303.985.1333
775.753.4151
970.407.8302
775.828.6800
520.544.3688
Mexico Office:
Canadian Offices:
Group Offices:
52.492.927.8982
Saskatoon
Sudbury
Toronto
Vancouver
Yellowknife
Africa
Asia
Australia
Europe
North America
South America
306.955.4778
705.682.3270
416.601.1445
604.681.4196
867.873.8670
SRK Consulting
Page 2
any publication by them for regulatory purposes, including electronic publication in the public company
files on their websites accessible by the public, of the Technical Report.
Dated this 30th day of December, 2011.
Signed
________________________________
Dr. Bart A. Stryhas, CPG, PhD
QP_Cert_Stryhas_Bart_2011
SRK Denver
Suite 3000
Lakewood, CO 80235
T: 303.985.1333
F: 303.985.9947
denver@srk.com
www.srk.com
I, Mark Allan Willow, M.Sc., C.E.M., do hereby certify that:

1. I am Principal/Practice Leader of:
5250 Neil Road, Suite 300
Reno, NV, USA, 89502
2. I graduated with a Bachelor's degree in Fisheries and Wildlife Management from the University of
Missouri in 1987 and a Master's degree in Environmental Science and Engineering from the Colorado
School of Mines in 1995.
3. I am a Certified Environmental Manager (CEM) in the State of Nevada (#1832) in accordance with
Nevada Administrative Code NAC 459.970 through 459.9729. Before any person consults for a fee in
matters concerning: the management of hazardous waste; the investigation of a release or potential
release of a hazardous substance; the sampling of any media to determine the release of a hazardous
substance; the response to a release or cleanup of a hazardous substance; or the remediation soil or
water contaminated with a hazardous substance, they must be certified by the Nevada Division of
Environmental Protection, Bureau of Corrective Action.
4. I have worked as BiologisUEnvironmental Scientist for a total of 18 years since my graduation from
university. My relevant experience includes environmental due diligence/competent persons evaluations
of developmental phase and operational phase mines through the world, including small gold mining
projects in Panama, Senegal, Peru and Colombia; open pit and underground coal mines in Russia;
several large copper mines and processing facilities in Mexico; and a mine/coking operation in China. My
other international experience has included oversight of work scope implementation and senior review of
local consultants performing baseline biological/ecological characterization for a number of projects,
including Los Filos Project in Mexico, the Kazan Trona Project in Turkey, the Bellavista Gold Project in
Costa Rica, the Pueblo Viejo Project in the Dominican Republic, and the Glamis San Martin Project in
Honduras. My Project Manager experience includes several site characterization and mine closure
projects. Iwork closely with the U.S. Forest Service and U.S.Bureau of Land Management on several
permitting and mine closure projects to develop uniquely successful and cost effective closure
alternatives for the abandoned mining operations. Finally, I draw upon this diverse background for
knowledge and experience as a human health and ecological risk assessor with respect to potential
environmental impacts associated with operating and closing mining properties, and have experienced in
the development of Preliminary Remediation Goals and hazard/risk calculations for site remedial action
plans under CERCLA activities according to current U.S. EPA risk assessment guidance..
U.S. Offices:
Anchorage
Denver
Elko
Fort Collins
Reno
Tucson
QP_Cert_Willow_Mark_2011
907.677.3520
303.985.1333
775.753.4151
970.407.8302
775.828.6800
520.544.3688
Mexico Office:
Canadian Offices:
Group Offices:
52.492.927.8982
Saskatoon
Sudbury
Toronto
Vancouver
Yellowknife
Africa
Asia
Australia
Europe
North America
South America
306.955.4778
705.682.3270
416.601.1445
604.681.4196
867.873.8670
SRK Consulting
Page 2
NI 43-101.
6. 7. I am responsible for Section 17 of the report titled "NI 43-101 Preliminary Economic Assessment, La
Colorada Project, Sonora, Mexico" and dated December 30, 2011 (the "Technical Report") relating to the
La Colorada Project. I have visited the Property on November 14, 2011, for one day.
7. I have not had prior involvement with the La Colorada property that is the subject of the Technical
Report.
8. As of the date of the certificate, to the best of my knowledge, information and belief, the Section 17
contains all scientific and technical information that is required to be disclosed to make the Technical
Report not misleading.I have read NI 43-101 and Form 43-101F1, and the Technical Report has been
prepared in compliance with that instrument and form.

9. I am independent of the issuer applying all of the tests in section 1.5 of National Instrument 43-101.
10. I have read Nl43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance
with that instrument and form
any publication by them for regulatory purposes, including electronic publication in the public company files
on their websites accessible by the public, of the Technical Report.
Dated this 30th Day of December, 2011.

Signed
________________________________
Mark Allan Willow, CEM Nevada #1832
QP_Cert_Willow_Mark_2011

NI 43 101 2011 Technical Report On The La Colorada Project Hermosillo Mexico2

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NI 43 101 2011 Technical Report On The La Colorada Project Hermosillo Mexico2

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NI 43-101 Preliminary Economic Assessment

Report Prepared for

Argonaut Gold Inc.

SRK Consulting (U.S.), Inc.

SRK Consulting (U.S.), Inc.

Geology and Mineralization

La Colorada_NI 43-101 PEA_203900.020_14_SC

December 30, 2011

SRK Consulting (U.S.), Inc.

Mineral Resource Estimate

La Colorada_NI 43-101 PEA_203900.020_14_SC

December 30, 2011

SRK Consulting (U.S.), Inc.

Development and Mine Operations

Process and Metallurgy

La Colorada_NI 43-101 PEA_203900.020_14_SC

December 30, 2011

SRK Consulting (U.S.), Inc.

Environmental and Permitting

Measured, Indicated and Inferred resources are included;

A mine operating life of 8 years with 9 years of production;

A net operating cost of US$613/Oz.Au on a gold equivalent basis;

La Colorada_NI 43-101 PEA_203900.020_14_SC

December 30, 2011

SRK Consulting (U.S.), Inc.

Table 2: Economic Results Pre-Tax as of December 27, 2011

Conclusions and Recommendations Process and Metallurgy

La Colorada_NI 43-101 PEA_203900.020_14_SC

December 30, 2011

SRK Consulting (U.S.), Inc.

Conclusions and Recommendations - Environmental

La Colorada_NI 43-101 PEA_203900.020_14_SC

December 30, 2011

SRK Consulting (U.S.), Inc.

Conclusions and Recommendations - Mining

La Colorada_NI 43-101 PEA_203900.020_14_SC

December 30, 2011

SRK Consulting (U.S.), Inc.

1 Introduction (Item 2) .................................................................................................... 1

2 Property Description and Location (Item 4) ............................................................... 4

3 Accessibility, Climate, Local Resources, Infrastructure and Physiography (Item 5)15

4 History (Item 6) ........................................................................................................... 16

5 Geological Setting and Mineralization (Item 7) ........................................................ 18

6 Deposit Type (Item 8) ................................................................................................. 26

La Colorada_NI 43-101 PEA_203900.020_14_SC

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SRK Consulting (U.S.), Inc.

7 Exploration (Item 9) ................................................................................................... 29

8 Drilling (Item 10) ......................................................................................................... 30

9 Sample Preparation, Analysis and Security (Item 11)............................................. 35

10 Data Verification (Item 12) ......................................................................................... 43

11 Mineral Processing and Metallurgical Testing (Item 13)......................................... 45

12 Mineral Resource Estimate (Item 14)........................................................................ 52

La Colorada_NI 43-101 PEA_203900.020_14_SC

December 30, 2011

SRK Consulting (U.S.), Inc.

12.5 Compositing ...................................................................................................................................... 53

13 Mining Methods (Item 16) .......................................................................................... 63

14 Recovery Methods (Item 17) ..................................................................................... 88

La Colorada_NI 43-101 PEA_203900.020_14_SC

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SRK Consulting (U.S.), Inc.

14.3 Plant Design and Equipment Characteristics ................................................................................... 91