AGI Alamos Gold Inc New

EXCHANGE RATE INFORMATION

The following table sets forth, for each period indicated, the high and low exchange rates for United States dollars expressed in Canadian dollars; the average of such exchange rates for each day during such period; and the exchange rate at the end of such period, each based on the noon rate of exchange as reported by the Bank of Canada.

On January 30, 2017, the noon buying rate (as reported by the Bank of Canada) was US$1.00 = Cdn$1.3093.

ELIGIBILITY FOR INVESTMENT

In the opinion of Torys LLP, counsel to the Company, and Fasken Martineau DuMoulin LLP, counsel to the Underwriters, based on the provisions of the Income Tax Act (Canada) (collectively with the regulations thereunder, the “ Tax Act ”) in force as of the date hereof, provided the Offered Shares are listed on a “designated stock exchange” for purposes of the Tax Act (which currently includes the TSX and the NYSE) or the Company is a “public corporation” as defined in the Tax Act, the Offered Shares being offered pursuant to this short form prospectus, if issued on the date hereof, would be “qualified investments” under the Tax Act for a trust governed by a registered retirement savings plan (“ RRSP ”), registered retirement income fund (“ RRIF ”), deferred profit sharing plan, a registered education savings plan, registered disability savings plan or tax-free savings account (“ TFSA ”), all as defined in the Tax Act.

Notwithstanding the foregoing, a holder of a TFSA or an annuitant under an RRSP or RRIF, as the case may be, will be subject to a penalty tax if the Offered Shares held in the TFSA, RRSP or, RRIF are a “prohibited investment”, as defined in the Tax Act, for the TFSA, RRSP or, RRIF or TFSA, as the case may be. The Offered Shares generally will not be a “prohibited investment” for a TFSA, RRSP or RRIF if, for purposes of the Tax Act, the holder of the TFSA or the annuitant of the RRSP or RRIF, as the case may be, (i) deals at arm’s length with the Company for the purposes of the Tax Act and (ii) does not have a “significant interest” (as defined in the Tax Act for purposes of the prohibited investment rules) in the Company. In addition, the Offered Shares will not be a “prohibited investment” if the Offered Shares are “excluded property”, as defined in the Tax Act, for a TFSA, RRSP or RRIF. Prospective purchasers should consult their own tax advisors as to whether the Offered Shares will be a “prohibited investment” in their particular circumstances.

THE COMPANY

The Company is a mining company engaged in the mining and extraction of, and exploration for, precious metals, primarily gold. The Company owns and operates the Young-Davidson mine in Ontario, Canada and the Mulatos mine and El Chanate mine in the state of Sonora, Mexico. In 2016, the Young-Davidson mine produced 170,000 ounces of gold, the Mulatos mine produced 154,000 ounces of gold and the El Chanate mine produced 68,000 ounces of gold. The Company also owns the development-stage Ağı Dağı, Kirazlı and Çamyurt projects in the Biga district of northwestern Turkey (acquired 2010), the Esperanza gold project in Morelos State, Mexico (acquired 2013), the Quartz Mountain property in Oregon, USA (acquired 2013), and the Lynn Lake gold project in Lynn Lake, Manitoba (remaining interest acquired 2016).

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Recent Developments

On January 6, 2017, the Company announced its production for the fourth quarter of 2016 and its production and cost guidance for 2017. The Company produced 392,000 ounces of gold in 2016. The Company sold a record 107,504 ounces of gold in the fourth quarter of 2016 at an average realized price of $1,229 per ounce, $8 per ounce above the London Fix, for record revenues of approximately $132 million. All-in sustaining costs for 2016 have not been finalized but are expected to be approximately $1,000 per ounce. Gold production is expected to increase to a range of 400,000 to 430,000 ounces in 2017, a 6% increase from 2016 (based on the mid-point of guidance). All-in sustaining costs are expected to decrease to $940 per ounce of gold sold in 2017 reflecting further cost reductions at both Young-Davidson and Mulatos. Excluding higher cost production from El Chanate, all-in sustaining costs are expected to decrease to $890 per ounce.

On January 5, 2017, the Company reported that it had received the forestry permits required for the development of its Kirazli gold project from the Forestry General Directorate in Turkey. With the Environmental Impact Study and Forestry Permits for Kirazli approved by the federal government, Alamos is pursuing the GSM (Business Opening and Operation) permit which is granted by the Çanakkale Governorship.

On October 6, 2016, the Company reported it had received final approval of the Environmental Impact Assessment (“ EIA ”) for Phase I of its La Yaqui project. Construction activities for the development of Phase I commenced in December 2016, with production on track for the second half of 2017.

MINERAL PROJECTS

The Company considers its Young-Davidson mine and Mulatos mine material mineral projects for purposes of NI 43-101. Set forth below is certain mining and technical information in relation to those mines and certain of the Company’s other mines and projects.

Young-Davidson Mine

The Young-Davidson mine is located near the town of Matachewan, approximately 60 kilometres west of Kirkland Lake in Northern Ontario. The property consists of contiguous mineral leases and claims totaling 11,000 acres and is situated on the site of two past producing mines that produced almost one million ounces of gold between 1934 and 1957. The Young-Davidson mine consists of an underground mine, currently mining at a rate of between 6,500 and 7,500 tonnes per day, a conventional flotation and carbon-in-leach (CIL) mill and associated infrastructure. The mine has been in continuous operation since 2012.

Property Description and Location and Access

The Young-Davidson mine is located in northern Ontario, Canada, centrally located between Timmins, Kirkland Lake, North Bay and Sudbury, each of which have businesses that service the mining industry. The property is accessed by paved Highway 566, three kilometres west of the town of Matachewan.

The Company owns 100% of the mineral rights to all of the mineral resource related claims at the former Young-Davidson mine and the adjoining Matachewan Consolidated Mines Limited mine (the “ MCM Mine ”), which together comprise the modern day Young-Davidson mine. The Company also holds the mineral rights to 200 tenures from mining leases to exploration claims covering 4,734 hectares surrounding and including the Young-Davidson mine. The contiguous claim block that covers the Young-Davidson mine is hereinafter referred to as “Young-Davidson”. These tenures were acquired either through staking, application, or option agreements.

Collectively, Young-Davidson is subject to nine separate agreements with different obligations and royalties for each agreement. Based on the currently defined mineral reserves and resources, the only royalties to apply are:

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The Company controls sufficient surface rights to cover the sites required for all project buildings and fixed installations for the life of mine. The Company believes it has all of the necessary surface rights to dispose of waste rock and tailings on additional areas of the property. The Company’s land ownership and mineral tenures are registered with the Government of Ontario. All permits required to operate the mine are currently in place.

As Young-Davidson was the site of two former producing gold mines there is existing surface disturbance in the form of old workings, building foundations and tailings sites. Although there is no clean up order on these sites, infrastructure was designed to incorporate these sites where possible so that they are remediated as part of the mine closure plan.

Other than as described above, the Company is not aware of any rights, agreements or encumbrances to which Young-Davidson is subject, which would adversely affect the value of the property or the Company’s ownership.

The daily average mean temperature in nearby Kirkland Lake, Ontario is 1.7°C. The extreme maximum recorded temperature is 38.9°C and the extreme minimum temperature is -47°C. The average annual precipitation is 884 millimetres, comprising 590 millimetres as rainfall and 294 millimetres as snowfall. Given this climate, exploration and mining development activities can be carried out at all times of the year.

The surface rights possessed by the Company are sufficient for planned mining operations, availability of sources of power, water, mining personnel, potential tailings storage areas, and potential waste disposal. Electricity is provided from the provincial grid through a transmission line that was upgraded prior to commercial production.

The property is typical of northern Ontario with forest covered low rolling hills, small lakes and wetlands with numerous gravel roads providing access to all areas of the property. Average elevation on the property is 330 metres above sea level.

History

The initial discovery of gold in the project area was made by prospector Jake Davidson in 1916 on what became the former Young-Davidson mine. This sparked a staking rush that resulted in a second discovery by Samuel Otisse on what became the MCM Mine property. Surface prospecting, trenching and outcrop stripping continued intermittently for the next seventeen years on both properties. During this time a joint venture was established between Hollinger Corporation and Young-Davidson Mines Limited and underground mine production was initiated in 1934 and continued until 1957, over which time a total of 5.6 million tonnes were mined producing 585,690 ounces of gold (3.22 g/t recovered grade). Production from the MCM Mine property over the period 1934-1954 totaled 3.2 million tonnes, and 378,101 ounces of gold (3.67 g/t recovered grade). Following closure of the mines, the properties remained dormant until 1980 at which time Pamour Mines concluded option/joint venture agreements on both properties with the aim of establishing an open pit operation. Approximately 96,000 tonnes of ore were mined and trucked to the Pamour mill facility east of Timmins.

In 1995, Royal Oak Mines Inc. (“ Royal Oak ”), a successor company to Pamour Mines, initiated extensive diamond drilling to define an open pit resource, initiated shaft dewatering with a view to underground exploration, conducted shaft rehabilitation as well as engineering studies and environmental assessment studies with a view to re-opening the mines. Following the bankruptcy of Royal Oak, the property was dormant for several years before being acquired by a private company in 2000. This private company undertook limited exploration and, in 2002, vended the asset into Young-Davidson Mines Limited, the same company that had discovered the property. Young-Davidson Mines Limited re-initiated exploration with 9,312 metres of drilling in 58 diamond drill holes.

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In late 2005, Northgate Minerals Corporation (“ Northgate ”) amalgamated with Young-Davidson Mines Limited through a plan of arrangement, and proceeded with surface exploration, particularly diamond drilling, environmental and engineering studies and underground exploration and development.

In 2011, AuRico Gold Inc. (“ AuRico ”) acquired Northgate, which included Young-Davidson.

In 2015, AuRico and Alamos Gold Inc. (“Former Alamos”) combined to form the Company.

Geological Setting, Mineralization and Deposit Types

Young-Davidson is situated within the southwestern part of the Abitibi Greenstone Belt. The Abitibi Greenstone Belt consists of a complex and diverse array of volcanic, sedimentary, and plutonic rocks typically metamorphosed to greenschist facies grade, but locally attaining amphibolite facies grade. Volcanic rocks range in composition from rhyolitic to komatiitic and commonly occur as mafic to felsic volcanic cycles. Sedimentary rocks consist of both chemical and clastic varieties and occur as both intravolcanic sequences and as uncomformably overlying sequences. A wide spectrum of mafic to felsic, pre-tectonic, syn-tectonic and post-tectonic intrusive rocks are present. All lithologies are cut by late, generally northeast-trending proterozoic diabase dikes.

The Abitibi Greenstone Belt rocks have undergone a complex sequence of deformation events ranging from early folding and faulting through later upright folding, faulting and ductile shearing resulting in the development of large, dominantly east-west trending, crustal-scale structures that form a lozenge-like pattern. The regional Larder Lake-Cadillac Fault Zone (“ LLCFZ ”) cuts across the Young-Davidson project area. The LLCFZ has a sub-vertical dip and generally strikes east-west. The LLCFZ is characterized by chlorite-talc-carbonate schist and the deformation zone can be followed for over 120 miles from west of Kirkland Lake to Val d’Or, Québec.

There are three important groups of archean sedimentary rocks in the district. The oldest are Pontiac Group quartz greywacke and argillite, which occur as thick assemblages in Québec, while interbedded within the Larder Lake Group volcanic rocks are turbiditic siltstones and greywackes of the Porcupine Group. Uncomformably overlying is Timiskiming Group Conglomerate, turbidite and iron formation with minor interbedded alkalic volcaniclastic units.

Archean intrusive rocks are numerous in the district but are largely manifested as small stocks, dikes and plugs of augite syenite, syenite and feldspar porphyry occurring in close temporal and spatial association with the distribution of Timiskiming Group sediments. The main syenite mass, which hosts most of the gold mineralization on Young-Davidson, measures almost 3,000 feet east-west by 1,000 feet north-south.

Huronian proterozoic sedimentary rocks onlap and define the southern limit of the Abitibi in Ontario. In the project area these rocks are correlative to the Gowganda Formation tillite. Post-Archean dike rocks include Matachewan diabase and younger Nipissing diabase, which respectively bracket the Huronian unconformity in the project area.

Essentially all of the historical production at the former Young-Davidson mine and approximately 60% of the production from the MCM Mine was from syenite-hosted gold mineralization. Most of the current open pit and underground resources are also related to syenite-hosted gold. The syenite-hosted gold mineralization consists of a stockwork of quartz veinlets and narrow quartz veins, rarely greater than a few inches in thickness, situated within a broader halo of disseminated pyrite and potassic alteration. Visible gold is common in the narrower, glassy-textured quartz veinlets. In general, gold grades increase with quartz veinlet abundance, pyrite abundance, and alteration intensity. Mineralized areas are visually distinctive and are characterized by brick red to pink K-feldspar-rich syenite containing two to three percent disseminated pyrite and several orientations of quartz extension veinlets and veins. The quartz veins and veinlets commonly contain accessory carbonate, pyrite, and feldspar.

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Exploration

There has been no recent exploration undertaken at Young-Davidson with the exception of the drilling programs outlined in the next section.

Drilling

Since the discovery of gold in the project area until October 14, 2008 a total of 293,774 metres of surface and underground diamond drill holes were completed. With the exception of the holes pre-dating 1980 (324 holes, 20,236 metres), all of the drill logs have been preserved. All holes have been plotted on historic records and these hole traces and assays have now been entered into the database. All holes since 1988 have been surveyed for their collar co-ordinates and it is assumed that all pre-1988 underground hole collars were surveyed as per industry practice at the time of production. Since 1980 all holes have been down hole surveyed using a tropari instrument or acid test and since 2006 all drill holes have been surveyed using FLEXIT and/or a gyroscopic instrument in order to measure down hole deviation.

Underground drill holes were AQ core (27 millimetres diameter) as was the practice of the day, surface holes pre-dating AuRico were, with one exception, BQ core (36.5 millimetres diameter) and all holes by AuRico (and the one exception) have been NQ core (47.6 millimetres diameter) except where a reduction to BQ (36.5 millimetres diameter) has been required to complete the hole in problematic ground conditions. Core recovery and rock quality designations have not been noted in historic drill logs, however in all the holes by AuRico core recovery has been excellent and the rock quality designation (“ RQD ”) factor has been very high indicating very competent rock.

From 2009 to 2015, a total of 269 surface exploration drill holes were completed for a total of 136,076 metres. No surface exploration was undertaken in 2016.

From 2009 to 2015, a total of four underground exploration drill holes were completed for a total of 918 metres. No underground exploration was undertaken in 2016.

From 2009 to 2016, a total of 1,707 underground infill drill holes were completed for a total of 227,473 metres.

Sampling, Analysis and Data Verification

Drill core is transported directly from the drill rigs to the secure core logging facility. Core is logged with geological information being recorded, including rock type, degree of alteration, estimated percentage of sulfide minerals and vein intensity. Zones of interest are marked out and assigned a sample number and assay tags are stapled into the box as well as being inserted into the sample base. Most of the core has been split with a hydraulic splitter, with a small number of samples cut with a diamond bladed core saw. The majority of the samples are 1.5 metres in core length and most of the historic samples are in five foot lengths. Assay procedures were not well documented prior to 2003, but it is assumed that conventional crushing, pulverizing and classical fire assay techniques were used.

Prior to sample shipment, a number of measures have been implemented which were designed to maintain a high level of security at the core logging facility, at the mine property and while the samples are in transit.

Upon arrival at the ALS Global laboratory, samples were logged into the laboratory tracking system and weighed. Each core sample was entirely crushed to better than 70% -2 millimetre (minus 10 mesh). A 250 gram split of crushed material was taken and pulverized. Certified reference material (“ CRM ”) and blanks were inserted with samples prior to analysis. Fifty gram aliquots were weighed for fire assay. Fire assay fusion was by lead flux with a silver collector and atomic absorption finish. Each sample was also submitted for a 34 element analysis, aqua-regia acid digestion and ICP-AES. This process quantitatively dissolves base metals for the majority of geological materials. Major rock forming elements and more resistive metals are only partially dissolved. All sample batches were subjected to the laboratory’s internal quality control procedures.

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All mine samples, including blasthole, underground channel, and underground drill core are assayed at the on-site laboratory operated the Company. The Company has been advised by ALS Global that the laboratory is well- equipped, fully ventilated, and staffed by experienced personnel. Samples are prepared and analyzed as described above. The mine laboratory is externally audited on a periodic basis. A check assay program and participation in an international round robin was initiated in 2014.

No information has been compiled that describes the quality control (“ QC ”) and quality assurance (“ QA ”) procedures for the pre-2003 drilling, however it is unlikely that blanks and CRMs were used as this did not become standard industry practice until the early 2000’s. The main form of QA/QC would have been periodic re-assaying of anomalous samples with introduction of blanks in the early 1980s and 1990s.

The QA/QC for the 2006, 2007 and 2008 programs is documented in the technical documents filed on SEDAR at www.sedar.com. In essence this data amounted to four percent of the entire population of samples submitted for analysis, including blanks, standards, and duplicates. Additionally, about 15-20% of pulp replicates and 2.5% of reject duplicates were analyzed and incorporated into final assay grade to improve overall precision. The QA/QC data is monitored as the samples are being processed at the laboratories and where analytical problems are identified the laboratory is required to reanalyze the samples.

Based on this work it was concluded that the data is reliable and suitable for supporting mineral resource and mineral reserve estimation work.

The project data base has been subject to verification or audit by Scott Wilson Roscoe Postle Associates Inc. (2006), AMEC plc (2008) and Company geologists (2006, 2007 and 2008) who had no direct involvement with the project. Collar co-ordinates, down hole survey tests and assay intervals were verified against a variety of supporting documentation. Where errors have been identified these were corrected and procedures put in place to prevent re-occurrence and to expedite future data verification programs. In each case the third party audit has concluded that the database is valid and acceptable for supporting resource estimation work on the project.

Mineral Processing and Metallurgical Testing

The metallurgical testwork programs considered for feasibility study were completed in 2008 and early 2009 at SGS Lakefield. Results of these tests provided the data used for the design criteria.

The tests were conducted on samples from 32 holes selected across the mineralization from which five zone composites and a master composite were prepared. Flowsheet optimization was conducted on the master composite. Once the metallurgical parameters were optimized, the five zone composite and 32 individual samples were used for variability testing.

The grinding characteristics of the design mineralized material, an equal mixture of Upper Boundary Zone, Lower Boundary Zone and Pit Zone material as combined material for pilot plant feed gives an average Bond Work Index of 15.6 kilowatt hours per tonne (“ kWh/t ”) at 100 mesh (106 micrometer (“ µm ”)) of grind. The selected six zone samples work index ranged from 14.7 to 18.3 kWh/t. Most samples tested fell in the medium to hard range of hardness with respect to impact breakage and Bond rod mill/ball mill grindability work indices while there was one waste sample which fell in the very hard range of hardness. All samples have been classified as abrasive or very abrasive.

The gravity recoverable gold was determined to be about 25% of the gold contained in the composite sample tested when cleaning of the primary centrifugal concentrator product on a Mozley table was completed to a target 0.05% weight recovery of the initial feed material.

Mining Operations

Open pit mining commenced in November 2011 and ceased in June 2014, upon depletion of the in-situ mineral reserve. While the mining of the open pit has ceased, a sizeable stockpile of open pit ore was established

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that will be used to augment underground production until the underground mine can provide the entire mill feed. Over the life of the open pit, approximately 20.9 megatonnes of waste rock was generated by the open pit and placed in the waste dump to the north of the pit.

The Young-Davidson open pit mine and mill declared commercial production effective September 1, 2012. Commercial production was declared once the open pit mine achieved previously established commissioning thresholds. The commissioning thresholds included a 30-day period whereby the mill throughput averaged at least 5,100 tonnes per day (subsequent to the commissioning of the flotation) and the open pit averaged 29,750 tonnes per day of ore and waste mining.

In October 2013, the Company commissioned the mid-shaft loading pocket and shaft hoisting infrastructure, and began hoisting underground ore to surface via the Northgate shaft. Prior to October 2013, ore was being trucked to surface through the exploration ramp. On October 31, 2013, commercial production was declared at the Young-Davidson underground mine.

The underground deposit is located approximately 210 metres to 1,500 metres below surface. During 2013, AuRico completed the sinking of the Northgate shaft down to the mid-shaft loading pocket, which accesses the first eight years of mine production. The Company continues to work on developing vertical access in the underground mine below that of the mid-shaft loading pocket, to an eventual depth of 1,500 metres. In 2015 the existing MCM #3 shaft was extended to a depth of 1,500 metres to provide for the hoisting of personnel, materials, ore and waste. Commissioning of the MCM #3 shaft was completed in the first half of 2016. The mine is also accessed by a ramp, which is being extended to the bottom of the mine from the existing exploration ramp, currently at a depth of 985 metres below surface. The mine design has taken into consideration the existing MCM #3 and the Young-Davidson shafts and other existing openings for ventilation. Additional ventilation raises to surface have been established and the underground ventilation circuit continues to be upgraded as the mine deepens.

The underground mine has been designed for low operating costs through the use of large modern equipment, gravity movement of ore and waste through raises, shaft hoisting, minimal ore and waste re- handling, high productivity bulk mining methods and paste backfill. The mining method employed is a combination of transverse and longitudinal stoping, followed by paste backfill, on 30 metre sub-levels. The mine operates scooptrams to load, haul and transfer stope production to the ore pass system from where it is hoisted to the surface via two 18 tonne skips in the Northgate shaft.

At full production rates of 8,000 tonnes per day, the underground would have a mine life of approximately 15 years based on the current mineral reserve. Production from the underground mine is being complemented by stockpiled open pit ore until it can provide the entire mill feed (expected in 2019).

Lateral development of the underground mine will average approximately 12,000 metres per year including capital, operating and ore categories for the first 10 years of the underground mine operation. In the last five years of the underground mine life, the development requirements drop off sharply as the mine is close to being fully developed.

The average underground personnel requirements at current mining rates are estimated to be approximately 300 persons. The mine operates seven days a week with two 10.5 hour shifts per day working a five days on and four days off followed by four days on five days off schedule. Once at full capacity, the mine will be owner operated with only diamond drilling and raising being contracted.

Milling Operations

The metallurgical test programs supported the selection of single stage semi-autogenous grinding circuit with a gravity circuit followed by flotation. The flotation concentrate is further ground and leached in a

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conventional carbon-in-leach. The flotation tailings are also leached in a carbon-in-leach circuit. The gold is recovered from the carbon followed by electro-winning and pouring doré bars.

The combined leach tailings were used for the cyanide destruction testwork. The Young-Davidson carbon-in-leach tailings are treated with the SO2/Air cyanide destruction method.

In January 2014 a paste backfill plant was commissioned and is capable of supplying paste fill to the underground voids at a rate in excess of 8,000 tonnes per day.

Infrastructure, Permitting and Compliance Activities

Existing infrastructure at Young-Davidson includes the Northgate and MCM shafts and headframes, the access ramp portal, surface ventilation equipment, an 8,000 tonne per day conventional CIL mill, an 8,000 tonnes per day paste backfill plant, a tailings impoundment area, various office and workshop buildings, and two power lines connected to the provincial grid. Paved highway access exists to the mine site.

The Young-Davidson mine has all required permits for current operations and the mine is in compliance with all regulatory requirements. The Company has recorded an asset retirement obligation liability of $6.3 million which it expects to settle during the course of mining and on closure.

The Company entered into Impact Benefit Agreements with the Matachewan First Nation on July 2, 2009 and with the Temagami First Nation / Teme Augama Anishnabai on July 14, 2012, as the Young-Davidson mine is situated within the traditional territory of these two First Nations.

2017 Outlook

Gold production at Young-Davidson is expected to increase approximately 21% in 2017 to between 200,000 and 210,000 ounces. Underground mining rates are expected to increase from an average rate of approximately 6,000 tonnes per day in 2016, to a range of between 6,500 and 7,500 tonnes per day in 2017.

Underground mined grades are expected to be consistent with the mineral reserve grade of 2.69 grams of gold per tonne (“g/t Au”) in 2017, though can vary as much as 10% from quarter to quarter. Mill throughput is expected to range between 7,600 and 8,000 tonnes per day with stronger throughput in the second half of the year following the addition of a pebble crusher to the circuit. Milled grades are expected to range between 2.35 and 2.60 g/t Au. Mill recoveries are expected to range between 90 and 92%.

Total cash costs are expected to average $625 per ounce of gold sold in 2017. Mine-site all-in sustaining costs are expected to average $775 per ounce, more than a 10% decrease from 2016 levels reflecting higher underground mining rates, ongoing productivity improvements and lower sustaining capital spending.

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The Company remains focused on reducing capital spending at Young-Davidson. Capital is expected to total between $70 and $80 million in 2017, including $30 to $35 million of sustaining capital. This represents a $20 million decrease from approximately $95 million in 2016. Spending in 2017 will be focused on the ongoing development of the upper and lower mine, completion of the MCM waste pass, raise boring of the lower leg of the Northgate shaft and the addition of a pebble crusher. Approximately 60% of the 2017 capital budget is expected to be spent in the first half of the year.

Mulatos Mine

The Mulatos mine is located 220 kilometres east of Hermosillo in the state of Sonora in northwest Mexico. The Company owns 100% of the Mulatos mine and several other prospective exploration targets throughout the district. The mine includes both open pit and underground mines, a crushing and heap leaching facility, a high grade mill, gold processing facilities and related infrastructure. The mine was developed by Former Alamos and has been in continuous operation since 2005.

Project Description, Location and Access

The Mulatos Mine is located in the Sierra Madre Occidental mountain range in the east-central portion of the state of Sonora, Mexico. The Company controls several large mineral concessions, which are located mostly to the west, southwest and north-northeast of the Mulatos mine. A total of 28,773 hectares of mineral concessions, in 43 discrete concessions, are controlled by Alamos. The mineral concessions were awarded to the Company by the Mexican Department of Economy (the “ Direccion General de Minas ”). The property is approximately 220 kilometres by air east from the city of Hermosillo, and 300 kilometres south of the United States border. The Company maintains an administration office in Hermosillo, Mexico which supports the activities and operations of the Mulatos mine.

The Mulatos group of concessions cover the Mulatos deposit and satellite gold systems known as Cerro Pelon, La Yaqui, El Carricito, El Halcon, Las Carboneras, El Jaspe, Puebla, Los Bajios, and La Dura (the “ Mulatos Group of Concessions ”). The Mulatos deposit is itself divided into a number of mineralized zones known as Estrella, Mina Vieja, El Salto, Escondida, Gap, El Victor, El Victor North, San Carlos, Puerto del Aire, Puerto del Aire Extension, and East Estrella. Mineral rights for all concessions comprising the Mulatos Group of Concessions are controlled by Minas de Oro Nacional (“ MON ”), the Mexican subsidiary of the Company.

Surface rights in the exploitation area are held both privately and by the Mulatos, Ejido. In December 2016, the Company and the Ejido Mulatos entered into a new temporary occupation agreement (the “ 2016 Agreement ”). The 2016 Agreement, among other things, provided for the dismissal of several lawsuits related to both the Company’s operations and prior occupation agreements; as well, replaced all prior temporary occupation agreements governing the communal land underlying the Mulatos mine. The 2016 Agreement provides for both annual rent payments to Ejido Mulatos members (both individually and collectively); as well, additional success fee type payments, better aligning the interest of the Company and the local community.

Pursuant to a royalty agreement between MON and Minera San Augusto S.A. de C.V dated March 23, 2001 (the “ RTE Agreement ”), a 5% NSR royalty is payable beginning on the date of commencement of commercial production until such time as the first 2,000,000 ounces of gold have been mined, processed and sold (or deemed sold) from the Mulatos Group of Concessions (the “ Placer Kennecott Royalty ” or the “ Royal Gold Royalty ”). Royal Gold subsequently acquired the Placer Kennecott Royalty. As at September 30, 2016, the royalty had been paid or accrued on approximately 1.6 million ounces of applicable gold production.

The Mulatos group of concessions are accessible via a combination of a paved road (Highway 16) from the city of Hermosillo, Mexico and dirt roads direct to the Mulatos mine. The driving time from Hermosillo to the mine is approximately 6 hours. In 2010, Former Alamos built and permitted a new unpaved airstrip within the limits of the mine property.

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The town of Mulatos is in the municipality of Sahuaripa and is located approximately 0.5 kilometres northeast of the Estrella Pit. The population of the town of Mulatos is less than 100 people. The Company is currently engaged in a relocation program. Larger towns within 100 kilometre of the area of interest include Yecora with a population of 10,000, located southwest of Mulatos, and Sahuaripa with a population of 7,000 located northwest of Mulatos.

From July to September, the air is humid and hot, typically around 30 degrees Celsius during the day. In this period, over half of the average annual rainfall of 0.8 metre falls. The winter months (November to February) are cooler, generally between 15 and 20 degrees Celsius during the day, with occasional frost occurring at night.

History

Mulatos was known to contain gold dating back to the 1600s, with sporadic artisanal mining occurring over the years, especially in the area of Mina Vieja. Starting in the mid-1900s, several companies began to show interest in the claim areas, notably Minera Real de Angeles, Kennecott and Placer, with a substantial amount of exploration work conducted between 1993 and 1999. A preliminary feasibility study was completed on the property in 1998 by Kennecott and Placer who had entered into a joint venture agreement covering the deposit and a portion of the surrounding land.

In 2001, National Gold acquired a 100% interest in the property for cash and a sliding-scale royalty on the first two million ounces of gold production. In 2003, Alamos Minerals acquired an option on the property, and subsequently merged with National Gold to consolidate 100% ownership.

After completion of a feasibility study in 2004, an open pit operation with crushing and conveying to a heap leach pad at approximately 10,000 tpd was constructed. The operation achieved commenced production in April 2006. Since 2006 the Mulatos crushing facility has undergone numerous expansions and optimizations to both increase capacity to a nominal 17,500 tpd and provide for a consistent 100% passing -3/8” crush size.

In addition to the existing heap leach operations at the Mulatos mine, between 2009 and 2012, Former Alamos developed the Escondida high-grade zone and constructed a mill to process high-grade ore from Escondida. The high grade Escondida deposit was depleted in the second quarter of 2014. Alamos commenced underground development of the San Carlos high grade underground deposit in 2015 and undertook modifications to the mill to cater to the specific metallurgy of San Carlos.

Geological Setting, Mineralization and Deposit Types

The Mulatos mineral deposits are large epithermal, high-sulfidation, disseminated, gold deposits hosted within a mid-Tertiary dacitic dome complex. Gold mineralization is closely associated with silicic alteration within extensive areas of argillic and advanced argillic alteration. The Mulatos deposit proper is composed of the contiguous Estrella, El Salto, Mina Vieja, and Puerto del Aire resource areas. The Escondida deposit is the faulted extension of the Mina Vieja and El Salto sub-deposits and is believed to be continuous to the northeast with the Gap, El Victor and San Carlos mineralized areas. Although zones are often bounded by post-mineral faults, together they form a trend of 2.7 kilometres of gold mineralization starting at the north end of the Estrella pit to the San Carlos deposit.

Within the larger Mulatos Group of Concessions, and generally within 20 kilometres from the Mulatos deposit, geologically similar high sulfidation gold deposits, occurrences, or prospects are known. The principal ones, some of which are in the process of being evaluated and/or drill-tested, are: Cerro Pelon, La Yaqui, El Carricito, El Halcon, Las Carboneras, El Jaspe, Puebla, Los Bajios, and La Dura.

Gold deposits of the Mulatos district are considered to be high sulphidation-state epithermal systems. Epithermal precious metal systems may be classified as high, intermediate, and low sulphidation styles. They are characterized by the sulphidation state of the hypogene sulphide mineral assemblage, and show general relations

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in volcano-tectonic setting, precious and base metal content, igneous rock association, proximal hypogene alteration, and sulphide abundance. Ore in all occurrences is of the type formed under epizonal conditions, that is, generally within 2 kilometres of the paleo-surface. Past workers have referred to high sulphidation systems as acid-sulphate, enargite-gold, or alunite-kaolinite systems.

Most high-sulphidation systems are associated with coeval andesite to dacite volcanic arcs, and are hosted by extensive “pre-mineral” advanced argillic lithocaps. The principle ore host is vuggy residual silica, typically developed by intense acidic leaching of a pre-existing porphyritic dacite host rock. Proximal alteration comprises hypogene dickite, alunite (often crystalline), and/or pyrophyllite. Sulphides include enargite, pyrite, and luzonite. Quartz veining is extremely rare, but some deposits are overprinted by late barite and quartz veins. Laterally extensive sheets of intensely silicified rocks occur in many districts, and represent zones of lateral outflow of mixed hydrothermal and meteoritic water. Silica is transported in the acidic hydrothermal water, and on intersection with the paleowater table, undergoes neutralization and deposition of silica forming cryptocrystalline silica sheets. Most high-sulphidation deposits are large, low grade bulk-tonnage systems (“ Yanacocha ”), though vein-hosted high sulphidation deposits also occur (“ El Indio ”).

In contrast, low and intermediate sulphidation state systems are typically related to quartz and carbonate veins, near-neutral hydrothermal fluids, and lack proximal advanced argillic alteration and residual vuggy silica. Steam-heated alteration is present above some intermediate and low sulphidation state systems advanced argillic assemblages. However, they usually comprise low-temperature kaolinite, and fine grained alunite. Sulphides are of a low to intermediate sulphidation state. Gold occurs in oxide, mixed oxide/sulphide, and sulphide ore types, with pyrite as the primary sulphide mineral. The deposits are amenable to cyanidation in all ore types, but gold extraction decreases with decreasing levels of oxidation.

Precious metal mineralization at Mulatos is associated with intense silicic alteration (mostly vuggy silica), advanced argillic alteration, and the presence of hydrothermal breccias. The original protolith (dacite porphyry flow/tuff, coarse grained volcaniclastic rocks, breccias), as indicated by surface mapping and core drilling, may have contained in the order of 2-3 percent sulphide as pyrite with various amounts of enargite and tetrahedrite. The principal gold bearing host rock is interpreted as favoured for mineralization due to relatively high primary porosity and its intense fracturing.

Gold mineralization within the Mulatos deposit occurs primarily within areas of pervasive silicic alteration of the volcanic host rocks, and to a lesser extent, within advanced argillic alteration assemblages proximal to silicic alteration. The gold-bearing advanced argillic zones are dominated by pyrophyllite or dickite alteration. Silicic rocks host approximately 80 percent of the contained gold within the deposit. There are three main mineralization assemblages. From oldest to youngest they are: 1) quartz + pyrite + pyrophyllite + gold; 2) quartz + pyrite + kaolinite + gold + enargite; 3) kaolinite + barite + gold. Gold occurs in pyrite, as gold/silver telluride minerals, and possibly as a solid solution in some copper sulphide minerals. Supergene oxidation and perhaps remobilization and secondary enrichment of gold have been ongoing since the post-mineral volcanic cover was removed (in those specific deposits where it has been removed).

Exploration

Substantial drilling programs have been completed by the Company and its predecessors. Including drilling completed in conjunction with the 2004 feasibility study, the property has now been subject to over 778,970 metres of drilling in 4,671 holes. The majority of this drilling was completed in proximity to the Mulatos deposit, however, more recently drilling activities have focused on delineating other deposits in the district such as La Yaqui and Cerro Pelon and testing other regional exploration targets such as El Carricito.

In the second half of 2015 and all through 2016, the Company’s exploration focused mainly on the La Yaqui deposit with 46,809m drilled during 2016. Exploration focus has been on a large northwest trending silica ridge that sits to the northeast of previously known mineralization. Since the end of 2015, exploration has been

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defining new resources along this ridge and exploration there is still underway. Some drilling was also undertaken at Cerro Pelon and adjacent to the Escondida deposit (part of the main Mulatos open pit) in 2016. The main areas under exploration at Cerro Pelon are immediately north-northeast of the previously defined mineral reserve pit, further north under a massive silica cap and to the northwest of the mineral reserve pit over a newly outlined area of favourable alteration and structure.

During 2016, a full and detailed review and ranking of all prospects in the district was undertaken with 1, 2 and 5 year exploration plans outlined. In addition, mapping, sampling and Induced Polarisation geophysics were carried out on the Los Bajios project that sits approximately 3km to the northwest of Mulatos open pit.

Mulatos Main Zone

The Mulatos Main Zone is a continuous zone of mineralization that comprises the La Estrella, La Escondida, Mina Vieja, El Salto, Puerto del Aire, Gap, El Victor, El Victor North and San Carlos (open pit) deposits. This whole zone shows similar geological characteristics with comparable styles of mineralization. Dacitic and rhyodacitic rocks have undergone intense silica alteration (often vuggy) which is the key host for mineralization. These zones are often blind, being overlain by a relatively thick sequence of ignimbrite flows. Historically these flows have been referred to as post-mineral but recently acquired data shows portions of it to host vein-style mineralization. This has been seen at San Carlos and similar potential is currently being investigated in Gap, El Victor and Puerto del Aire. Sets of post-mineral faulting has caused some offset of the mineralization (to varying extents) throughout this entire zone.

Mineralization is usually stratiform with some local structural control, especially on high grades and zones of brecciation. This structural control that directly affects higher grades has been identified at La Estrella and Puerto del Aire Deposits and is also likely at Gap. Alamos conducted exploration systematically through this zone commencing in 2006 and by the end of 2014, 338,470 metres had been drilled.

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Limited exploration drilling was conducted on the main zone in 2016 with only 29 holes for 6,969m drilled adjacent to or beneath the whole zone.

Cerro Pelon

During 2008, Former Alamos announced the discovery of a new gold zone at Cerro Pelon. Cerro Pelon is located approximately 2.5 kilometres southwest of the leach pad area. It was a high-priority target for Former Alamos and continues to be a focus for the Company.

Gold at Cerro Pelon is associated with quartz-alunite alteration that is often vuggy in nature. Structural control and hydrothermal brecciation are also key factors associated with mineralization. The main structural trends are north-northwest and east-northeast. Intrusive rocks, hydrothermal brecciation and mineralization also follow these trends. Oxidation is very deep along and adjacent to the structures with oxidation and transition / mixed zones extending to 160 metres depth in places. As with all Mulatos exploration, every sample above a cut-off of 0.2g/t Au is sent for further analysis on cyanide-leachability and these results indicate excellent recoveries (usually greater than 80%) down to the base of the transition / mixed zone.

Drilling was undertaken at Cerro Pelon in 2008 and 2009 with a total of 18,653 metres completed in 142 holes. Geological modelling and 3D modelling was completed in September 2009, followed by a mineral resource estimate in November 2009. The results of the resource calculation were integrated into the global mineral resource & reserve numbers for 2009 and the majority of mineral resources at Cerro Pelon were classified as measured and indicated. Ongoing engineering work and economic evaluation initiated in 2009 resulted in an upgrade of a portion of the measured and indicated mineral resources to the reserve category.

In 2014, Alamos executed an agreement to acquire the surface rights to the Cerro Pelon deposit. Closing of the agreement occurred in 2015 and exploration programs recommenced. A comprehensive mapping and sampling program (742 rock chip samples and 1,850 metres x 1,425 metres covered by mapping and sampling) was undertaken which helped to refine the geological understanding. Full re-logging of the deposit was also undertaken. These programs were followed by exploration (and then infill) drilling with a total of 18,767 metres drilled in 98 holes. These programs have outlined a new zone of high-grade mineralisation about 100m to the north of current pit limits. Excellent drill results were obtained with several intercepts averaging well above the current mineral reserve grade. Some of the best intercepts recorded were 14.47g/t Au over 50.30 metres (15PEL012), 9.65g/t Au over 34.60 metres (15PEL020) and 2.46g/t Au over 94.20 metres and 2.21g/t Au over 22.60 metres (both from15PEL010).

Exploration in 2016 comprised further detailed mapping and sampling over a new zone to the northwest of the mineral reserve pit. A significant area of favourable silica and argillic alteration was outlined along with numerous north-south trending structures. Mineralization in the reserve pit (to the southeast) has a strong association with approximately north-south trending structures and silica alteration. Scout drilling commenced over this target in the fourth quarter and wide zones of vuggy silica and anomalous grades have been intersected in the sulphide zone. Multi-element geochemistry is being used to help vector towards higher temperature mineralization and grades are improving as drilling progresses. This program will be ongoing through 2017. In addition to drilling on the northwest zone, scout holes were also drilled beneath the massive silica cap to the north of the reserve pit. This is a large zone that will be systematically explored through 2017. Late in 2016 drilling also re-commenced immediately to the north and along strike from the high-grade shoot discovered in 2015. Mineralization in this area is strongly controlled by approximately north-south trending structures and drilling through 2017 is planned to further test these structures along strike. Totals of 19,064 metres in 90 holes were drilled at Cerro Pelon in 2016.

La Yaqui

The La Yaqui project is located approximately 9.5 kilometres southwest of the Mulatos Main Zone. After successful negotiation in 2007, Former Alamos gained exploration access to La Yaqui for the first time since

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1997. Exploration drilling commenced shortly after and continued into 2008 with 11,514 metres drilled in 84 holes.

The results of drilling were incorporated into Former Alamos’ measured and indicated mineral resource statement as of December 31, 2008. In 2009, Former Alamos completed engineering work and an economic evaluation and reported its first probable mineral reserve in December 31, 2009. Access once again became an issue until 2014, when Former Alamos executed an agreement to acquire the surface rights. On closing of this agreement Former Alamos commenced work towards permitting and construction on this project.

Exploration programs began immediately with a detailed mapping and sampling program undertaken in late 2014 and early 2015. A total of 556 rock chip samples were taken and an area of 1,950 metres x 2,210 metres was covered by mapping and sampling. Infill, geotechnical and metallurgical drilling was carried out concurrently with mapping and sampling while exploration drilling commenced afterwards. In 2015 a total of 17,517 metres were drilled on the project in 105 holes.

This drilling intersected ore-grade mineralization over a one kilometre strike length along the ridge-top to the northeast of in-pit reserves. Mineralization is associated with quartz-alunite altered dacitic rocks and usually sits below a barren massive silica cap. The drilling carried out in 2015 was widely spaced and purely exploratory in nature. Drill results received in 2015 include 1.36 g/t Au over 117.40 metres (15YAQ058), 1.34 g/t Au over 64.00 metres (15YAQ064) and 2.03 g/t Au over 32.00 metre (15YAQ068).

The main focus of exploration at Mulatos in 2016 was following up on the excellent results obtained in the 2015 scout drilling at La Yaqui Grande. Drilling in 2015 had outlined three potential zones of mineralization; Zone 1 – 3. Zone 1 sits at the southeast end of the northwest trending silica ridge with Zone 2 further to the northwest and Zone 3 located further northwest again. Gold mineralization in Zone 1 is associated with a north-south trending structural corridor and as a result is more linear in morphology. Zone 2 is more stratiform in nature and dips to the northeast at approximately 35-40 degrees (sub-parallel to topography). While the main control on mineralization in Zone 2 appears to be lithological, a higher grade section may be associated with structural intersections. The main focus of drilling in 2016 was to delineate and define both of these zones along with scout drilling of Zone 3. A total of 46,809 metres of drilling was carried out at La Yaqui in 2016 in 230 holes. Drill results received in 2016 include 4.37 g/t Au over 76.00 metres (16YAQ135), 3.79 g/t Au over 47.3 metres (16YAQ051), 2.20 g/t Au over 30.9 metres and 2.63 g/t Au over 35.6 metres (16YAQ027). 2.91 g/t Au over 43.3 metres (16YAQ033), 3.23 g/t Au over 65.5 metres (16YAQ096), 3.17 g/t Au over 76.80 metres (16YAQ129), 8.42 g/t Au over 19.80 metres (16YAQ117). 6.31 g/t Au over 32.60 metres (15YAQ228), 3.27 g/t Au over 63.00 metres (16YAQ196) and 6.35 g/t Au over 21.90 metres (16YAQ207).

An interim resource statement was calculated for La Yaqui Grande in September 2016. This included 27,201 metres of drilling from Zones 1 and 2 only.

2017 Exploration Outlook for Mulatos

Alamos plans to continue its aggressive exploration program in 2017 with 60,000 metres of drilling budgeted. The primary exploration drilling focus in 2017 will be on La Yaqui with infill and extension drill programs planned for all zones, scout drill programs planned to the northeast of Zone 1, on the silica rib that extends to the southeast of Zone 1 and on the Yaqui Norte to Halcon corridor. Another main drill focus will be Cerro Pelon with the aims of following up and delineating the northwest zone, the zone under the silica cap and the zone immediately to the north and along strike from the reserve mineralization. In 2017 scout drilling will also be conducted on other prospects in the district including Los Bajios and El Refugio. In addition to the drilling just described, mapping, sampling and geophysics will be conducted on the El Refugio, El Carricito and El Halcon prospects.

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Sampling, Analysis and Data Verification

The drilling methods utilized at Mulatos are RC using a center return bit, oriented diamond drilling using HQ and NQ diameter rods, and underground diamond drilling using NQ thin-wall core (for certain areas such as El Victor and Escondida).

Logging, sampling, and analysis procedures were historically established by previous operators and are still being used today apart from refinements and adjustments necessary to comply with current Quality Assurance/Quality Control (“ QA/QC ”) procedures and NI 43-101 requirements. Logging and sampling methodologies and procedures are documented, routinely updated, and maintained by the Company’s exploration department.

Geologists log drill core holes onsite at Mulatos. Core is logged on a hole by hole basis with data entered directly into AGI’s Corporate Data Management System. RC holes are logged from chip trays containing representative samples collected from each 1.5 metre sample interval. After completion of geological and geotechnical logging and collection of additional information such as specific gravity, geologists define and label the intervals to be sampled, ranging from 0.25 to 1.5 metres, depending on geological characteristics.

Drill core is cut and sampled onsite at Mulatos while RC samples are collected directly at the drill site. For RC drill holes, a sub-set of the sample cuttings is bagged, inventoried, prepared and shipped to Hermosillo for analysis. For core drill holes, half-core samples are prepared using a diamond core saw, with 1.0 m intervals as standard sample lengths in rock types presenting similar geological characteristics. Where geological or mineralization differences are noted, drill core can be selectively sampled to a minimum length of 0.25 metres. The samples are bagged, tagged, sealed and shipped in batches to the assaying laboratory. Metallurgical and geotechnical drill holes are logged at site in a similar manner to other core drill holes. Geologic logging and sample interval definition are completed by geologists; geotechnical logging including Rock Quality Designation (“ RQD ”), core recovery and specific gravity measurements are usually done by geological technicians. When applicable, underground channel sampling was supervised by a geologist, and consisted of 1.5 metre channels approximately 12 centimetres wide and 7.5 centimetres deep.

Laboratory sample preparation and analysis is in accordance with strict and industry recognized protocols and procedures. For RC samples, an approximate 5 kilogram sub-sample is sent to the lab. After drying, a 1 kg sub-set is crushed, riffle spilt, and pulverized to a 250g sample. A one assay-ton (30 grams) sample is then collected for precious metal analysis by fire assay with atomic absorption finish (“ FA-AA ”). For sample assaying above 5 g/t Au under FA-AA, a fire assay with gravimetric finish (“ FA-GR ”) is also performed. A smaller pulverized sub-sample (0.25 grams) is also taken for multi-element ICP analysis. Samples with gold assay results above 0.2 g/t are assayed by the hot-cyanide method (Au and Cu) to help assess the Au recovery potential; the results of these tests are also used for the recovery model. For core samples, the entire half of the core sample received at the lab is crushed; a 250 gram split is collected, pulverized and assayed using the methodology described above. Samples are now sent to ACME labs in Hermosillo, Mexico for sample preparation and fire assay analysis and to ACME’s Vancouver lab for multi-element analysis. Other labs, including ALS Chemex, Inspectorate and others, were used in the past with documentation available in individual drill logs. Check assay work was usually performed at Skyline Labs in Tucson, Arizona.

QA/QC procedures are performed systematically at Mulatos. Blind, standard and blank samples are systematically inserted on a regular sample batch interval, generally every 25-30 samples, and are routinely evaluated when results are received. Field Core Duplicates (1/4 core) are taken every 20 samples and Preparation Duplicate samples are selected at regular intervals, with the duplicate retrieved by the assaying laboratory personnel after the sample has been crushed, basically representing a separate split. Check assays of pulverized pulps are performed by a second lab and generally represent 5-10% of the entire sample database. Comparisons and reconciliation between original and check assays are done routinely during drilling, and systematically before any resource estimation exercise.

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Sample custody is ensured on-site by continuous inventorying and monitoring of the RC cuttings and drill core. Once samples are prepared, using the methodologies described above, they are inventoried, individually bagged, tagged and sealed in larger bags for transport to the assay lab. The laboratories used for analysis are certified and follow strict, industry recognized, QA/QC protocols. Audits of the assaying labs are performed occasionally.

For disclosure purposes, a 0.3 g/t Au cut-off grade is used for calculation of composite intervals, with only a single 1.5 m interval of sub-0.3 g/t Au material allowed within a composite interval; assay results are generally presented uncut.

Mineral Processing and Metallurgical Testing

The Mulatos deposit and surrounding deposits are amenable to cyanidation and heap leaching, as determined by lab scale testing conducted prior to project construction. The testwork indicated that mineralized material varies from pure oxide to pure sulphide, with gold recovery typically varying from 55% to 90% as material grades from sulphide to oxide. The average recovery was estimated to be between 72% and 74% for the Estrella Pit. Actual recoveries experienced early in project life were below this as run-of-mine un-crushed material, coarse crushed material and an area of low-recovery material were stacked on the leach pad at various times since mine commissioning. The Company has completed a number of operational initiatives that have improved leach pad percolation and resulted in higher gold recoveries, including conveying and stacking ore on the leach pad, implementing a drum agglomeration process and closing the crushing circuit to reduce the crusher discharge size to as close to 100% passing 3/8 of an inch as possible. As a result, recoveries have improved significantly.

Mining Operations

Mining operations at the Mulatos mine consists of the Mulatos open pit complex and the San Carlos underground. Mining in the open pit started in 2005. The open pit is a standard loader and truck operation running 24 hours per day, seven days per week. Mining is currently undertaken by a contractor and prior to 2014 mining was undertaken by MON personnel. It is anticipated that the contractor will remain for the life of the open pit. The current Mulatos open pit complex consists of the main Mulatos pit and the adjacent Victor and San Carlos pits. The Mulatos open pit complex (including stockpiled ore) has a remaining life of six years.

It is expected that an additional open pit will be started at La Yaqui in 2017. It is anticipated that a contractor will be used to operate La Yaqui. This open pit will have its own crushing and leaching facilities and loaded carbon will be transported to the main Mulatos ADR for further processing.

Development for the San Carlos underground was initiated in early 2014 and production stoping commenced in late 2014. Mining is at a nominal rate of between 350 and 450 tonnes per day of ore. Mining is carried out by longhole transverse mining and mined out stopes are filled with cemented rock fill. Mining is undertaken by a local contractor and engineering, geology and planning functions are carried out by MON staff. Access to the mine is via a ramp system and ore is hauled from the mine and placed on a pad adjacent to the ramp portal. Ore is loaded and hauled by the open pit contractor from the pad to the high grade mill located adjacent to the Mulatos heap leach crushing plant, a distance of approximately 5.4 kilometres.

Processing and Recovery Operations

The Mulatos processing facilities consist of a heap leach pad with an associated crushing plant, and a high grade mill.

Run of mine heap leach ore from the open pit is crushed in a four stage plant to 100% passing -3/8”. A run of mine stockpile is in front of the primary crusher and additional surge capacity is situated between the secondary and tertiary crushing plants, and after the quartenary crusher. Following quaternary crushing, the ore is

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transported via a 1.7 kilometre overland conveyor to the leach pad. At the leach pad, cement is added via two agglomerators and the ore is then transported via grasshopper portable conveyors to a stacker where it is stacked in 7 metre lifts.

Cyanide leach solution is applied to each lift for approximately 90 days, and the gold bearing solution then reports to one of two “pregnant” solution ponds via gravity. Inter-lift liners are installed on the leach pad every three lifts giving a height between inter-lift liners of 21 metres. Pregnant solution is pumped to the ADR where gold is recovered through the carbon absorption coumns, carbon stripping and electowinning to produce doré bars of gold and silver in the refinery.

In the process of mining the current oxide and mixed ores being sent the leach pad, Mulatos also mines significant quantities of sulphide material. This sulphide material is segreagated and placed in long term stockpiles. It is planned to process this material when the open pit mine is completed.

The high grade mill takes underground ore crushed from the primary and secondary crushing plants and recovers gold via a flotation concentrate which is sold on the international market.

The heap leach pads and processing facilities will continue to run for approximately three years after the main Mulatos pit is depleted, as long term stockpiles are processed.

Infrastructure, Permitting and Compliance Activities

Due to its distance from large population centers Mulatos maintains a camp including accommodation, kitchen, medical and recreational facilities. The camp facility is maintained by an outside contractor. Employees are bussed to the mine site from Hermosillo and work a nominal 14 day on 7 day off rotation.

There are currently two power plants in operation at the Mulatos mine. The first power plant is a generating plant consisting of four-1,100 kilowatt and two-2,000 kilowatt, 1,200 rpm diesel electrical generating sets which supply electrical power for all mine site usage. The second power plant was constructed for the closed crushing circuit and future expansion and consists of five-1,750 kilowatt generating sets and is expandable to host up to six generating sets. Total usage is approximately 70,000 kilowatt hours per day.

The Company is permitted to mine its reserves at the Mulatos pits and has obtained the required surface rights to carry on mining, processing and exploration activities at these areas. In 2014, Former Alamos completed negotiations to acquire additional land surface rights covering and surrounding the La Yaqui and Cerro Pelon satellite deposits. From time to time, the Company acquires additional permanent and temporary surface rights to explore additional targets within the Mulatos Group of Concessions.

The feasibility study completed in 2004 identified the potential for acid rock drainage. Measures to prevent acid rock drainage were incorporated into construction of the Mulatos mine. Standard mining and construction practices in Mexico and guidelines issued by the World Bank were followed in the development and construction of the Mulatos mine.

The Company complies with all environmental obligations set out in its mining plan, including eventual reclamation of mine and exploration roads, drill set-up, dumps and the heap leach pad. The Company has recorded an asset retirement obligation liability of $26.6 million which it expects to settle during the course of mining and on closure, as at December 31, 2015. The Mulatos mine undertakes ongoing reclamation of waste dumps and leach pads. In 2015, Mulatos reclaimed 4.6 hectares of leach pads.

The Company is in receipt of all permits to operate its existing mines and facilities.

The nearby town of Mulatos is largely protected from noise, dust, vibration and fly rock by the Mina Vieja outcrop. The Company proactively monitors noise, dust and vibration levels to ensure that they are within

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acceptable limits and the Company takes every precaution to minimize the impact of its mining operations on the local community. The Company also provides medical and educational assistance to the town of Mulatos as well as employment opportunities.

2017 Outlook

Mulatos is expected to produce 150,000 to 160,000 ounces of gold in 2017, a slight increase from 2016 production of 154,000 ounces. Mine-site all-in sustaining costs are expected to decrease to $890 per ounce of gold sold from 2016 guidance of $925 per ounce. Total cash costs are expected to average $815 per ounce of gold sold.

Open pit grades mined and stacked on the heap leach pad are expected to range between 0.79 and 0.88 grams of gold per tonne in 2017. The waste to ore ratio is expected to range between 0.7 and 0.9:1, down from approximately 1.2:1 in 2016. Milled grades are expected to average 8 grams of gold per tonne in 2017. The mill is expected to operate at a rate of approximately 400 tonnes per day. Based on existing stockpiles and the current mine plan, mill production is expected to continue into the fourth quarter of 2017; however, there is potential to extend the mine life at San Carlos with additional ore continuing to be mined outside of existing reserves. Total crusher throughput (excluding mill throughput) is expected to increase to an average 18,500 tonnes per day in 2017. The combined recovery ratio is expected to increase to an average of 73% in 2017, reflecting higher recoveries from the mill following the transition to concentrate production.

Low-cost production growth from the La Yaqui pit, starting in the second half of 2017, is expected to drive costs lower. This trend is expected to continue beyond 2017 as La Yaqui evolves into a larger operation and with the 5% net smelter royalty at the Mulatos mine expected to be eliminated within the next two years. Only 0.3 million ounces of production remain subject to the royalty, after which costs will decrease by $60 per ounce (assuming a gold price of $1,200 per ounce).

Capital spending at the Mulatos mine in 2017 is expected to total $33 million to $40 million, which includes $12 million for the development of Phase I of the La Yaqui project and $8 million to $10 million of sustaining capital. Exploration spending at the Mulatos mine in 2017 is expected to total $17 million. The majority of the exploration will be focused on the La Yaqui and Cerro Pelon deposits and scout drilling Los Bajios and El Refugio and other targets within the Mulatos district.

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The mineral resource update incorporates 27,201 metres of drilling completed across 132 holes through the first eight months of 2016. This included infill and extension drilling on the two zones of mineralization identified to date along the large northwest trending ridge at La Yaqui, known as La Yaqui Grande. Both zones at La Yaqui Grande remain open, with Zone 1 along strike to the north and Zone 2 open along strike and down dip. The mineral resources are in oxide mineralization with preliminary metallurgical test work indicating it is amenable to heap leaching.

The focus of the drill program since the mineral resource update has been to upgrade the inferred mineral resource in Zone 2 to indicated mineral resource status, to explore the area between Zones 1 and 2 and to scout drill Zone 3. La Yaqui Grande remains the Company’s highest priority exploration target with a further 5,749 metres drilled in September of 2016 and another 10,389 metres drilled during the fourth quarter of 2016 bringing the full year total for 2017 to 46,640 metres. For 2017, the Company has budgeted approximately $6 million for exploration. The focus will be on infill drilling within Zone 3, the gaps between all three zones and down dip (to the northeast) of Zones 2 and 3, as well as exploration drilling over the eastern part of Zone 1 and along the Yaqui Norte-Halcon corridor. With positive ongoing results, the project shows strong potential for further mineral reserve and resource growth.

Development of Phase I of the La Yaqui project remains on schedule for initial production in the second half of 2017. With contract mining and crushing to be employed, construction activities are focused on completion of an independent heap leach pad and carbon columns at an expected capital cost of approximately $12 million.

Other Mines and Projects

El Chanate (Mexico)

The El Chanate mine is expected to produce 50,000 to 60,000 ounces of gold in 2017, a decrease from 68,000 ounces produced in 2016, reflecting lower grades and throughput rates. Total crushed and run of mine ore is expected to decrease in 2017 to an average 16,500 tonnes per day. The processed grade (run of mine and crushed ore) is expected to average 0.53 grams of gold per tonne. The waste-to-ore ratio is expected to average

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3.4:1, consistent with 2016; however, it is expected to be sharply higher in the first half of 2017 as a pushback is completed.

Mine-site all-in sustaining costs are expected to average $1,200 per ounce of gold sold in 2017 with significant variability through the year. Total cash costs are expected to be in a similar range as the Company expects to expense all waste stripping costs in 2017. In light of the higher cost structure at El Chanate, the Company has hedged approximately 75% of its expected 2017 gold production through gold collar contracts which ensure a minimum gold price of $1,225 per ounce and participation up to a price of $1,450 per ounce.

The operation has approximately 18 months of mining remaining, after which the Company expects to residual leach the heap leach pad for approximately three years.

Kirazli, Aği Daği, and Çamyurt (Turkey)

The Company’s 2017 general and administrative budget for Turkey is $4 million which includes spending associated with completing the permitting process at Kirazli in addition to community and government relations and general administration. With the Environmental Impact Study and forestry permits for the Kirazli project approved by the federal government, the Company is pursuing the GSM (Business Opening and Operation) permit which is granted by the Canakkale Governorship.

Feasibility studies to update the economics for both the Kirazli and Aği Daği projects are nearing completion. A preliminary economic assessment is also being conducted on the higher grade Çamyurt project. A number of significant changes, including weakness in the Turkish lira and lower diesel prices since 2012, are expected to positively impact project economics. The Company will review its development budget for Kirazli following receipt of the GSM permit.

Lynn Lake (Manitoba, Canada)

The Company’s 2017 capital budget for Lynn Lake is $13 million, comprised of $9 million for development activities and $4 million for exploration. Development spending will be focused on baseline work in support of the project description, initiation of the permitting process and completion of a feasibility study, expected to be completed in the third quarter of 2017. Lynn Lake remains one of the Company’s top development priorities.