43-101 2008 Technical Report On The La Fortuna Project, Durango ...

Operating experience has indicated that much of the higher grade material presently being crushed (up to
70%) is already below the required final size range. Castle Gold management has indicated that it intends
to introduce a screening plant ahead of the crusher. This should ensure that only about 30% of the
material will actually go through the crusher; drastically reducing the crushing costs and allowing for a
greater proportion of ROM ore to be sent to screening and crushing thereby increasing the overall heap
leach recoveries. The scenarios do not account for any agglomeration of El Castillo ROM material.
Operating experience from the mine indicates that the material mined to date would not have benefited
from agglomerating.
16.2.1.2 Metal Prices
Recently gold prices have exceeded the US$1,000/ounce threshold. When Howe first began this project
(January 2008) the average 3 year gold price (London Daily Fixing) was US$578/oz. At the current time
(June 27, 2008) the average trailing three year gold price is US$652/oz. In addition the June 27, 2008
London Gold price Second Fixing was US$919.50 per oz. Howe has used a gold price of $712 in 2008,
$697 in 2009 and $625 per ounce for the remainder of the mine life. These prices are based on a National
Bank compilation of the forecasts of 35 major institutions in November 2007.
16.2.1.3 Mine Dilution
Howe has added 5% dilution at zero grade to the gold grades in the cash flow calculations.
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