Agbaou Permit 37

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This is Agbaou Exploitation Permit no. 37 which covers an area of 334km2 and was granted to Etruscan Resources Cote d’Ivoire SARL (“ERCI”) by Decree no. 2012-766 on August 1, 2012. It is valid for 10 years and can be renewed based on the remaining life of mine. At that time the permit was still registered to Etruscan, however Endeavour Mining Corporation acquired Etruscan in mid 2010. After that the Ivorian Government granted a transfer of the permit under Arrêté no. 028/MMPE/DGMG/DDM from Etruscan to the newly formed Agbaou Gold Operations SA, which is owned by Endeavour. Current ownership of Agbaou is: 85% Endeavour, 10% government Côte d’Ivoire, 5% SODEMI, with SODEMI having the right to acquire another 10% interest. SODEMI is the national mining agency. All revenue from production is subject to a net smelter return held by the Ivorian Government and the amount is tied to the price of gold. The mine consists of multiple deposits mined by conventional open pit using selective mining exploitation method. Construction commenced in August, 2012, with commercial production commencing January 27, 2014. The mining is conducted by contractor BCM International Ltd. (“BCM”).

The Agbaou area was known to have alluvial gold for some time but bedrock mineralization was not noted until the late 1980's, after a joint venture between BHP Mineral and SODEMI conducted extensive exploration during the period of 1988 to 1994. That joint venture did not move on with the project and the property was help by Goldivoire S.A.R.L. during the period of 1996 to 2000, and their exploration work further defined the results from the previous holders. The Ivorian government then withrew the permit from Goldivoire on November 27, 2003 because they did not satisfy required obligations to hold the permit. After that the Ministry of Mines and Energy granted the permit to ERCI. ERCI then contined exploration drilling, 179 holes after acquiring the permit, and infill program between 2010 to 2011 for another 85 holes, and in 2013 to 2014 another 320 holes. This further defined the mineral resources at Agbaou.

Alluvial gold has been known for some time in the Agbaou area. Gold mineralization in bedrock was first reported during the late 1980’s followed by extensive exploration conducted between 1988 and 1994, while the ground was held by a joint-venture between BHP Minerals and SODEMI. Between 1996 and 2000 the property was held by Goldivoire S.A.R.L. which undertook exploration that confirmed and further defined BHP’s previous results. The government of Côte d’Ivoire withdrew the Agbaou permit on November 27, 2003, after Goldivoire failed to meet required expenditures. The Ministry of Mines and Energy for Côte d’Ivoire subsequently granted the Agbaou exploration permit to ERCI.

After obtaining the project in 2003, ERCI drilled an additional 179 drillholes and conducted various studies. The combination of this information with the historic information formed the basis for a Feasibility Study in 2009. Following this, ERCI continued with an infill and exploration drilling program from 2010 to 2011 by drilling an additional 85 holes (7,063m), which required the re-estimation of the mineral resources. Subsequent to the formation of AGO, during 2013 and 2014, two drill campaigns have been completed which included drilling an additional 310 holes (28,331m) and further defined additional mineral resources at Agbaou.

Locally the Agbaou permit area is underlain by rocks of the Archean-Proterozoic Man Shield which forms the southern half of the larger West African Craton. The shear-zone hosted gold mineralization of the Agbaou deposit occurs within a sheared volcano-sedimentary succession that was subjected to lower green-schist facies metamorphism, forming the Birimian age Oumé-Fetekro Greenstone Belt, surrounded by granodioritic intrusions. Gold occurs in a mesothermal auriferous sulphide (pyrite + pyrrhotite) assemblage associated with quartz veins. The quartz veins are characterized by a wide range of quartz-vein types that include, brecciation, boudinage, sericitic and carbonate alteration. However, the mineralized quartz veins have a very distinctive texture that has been described as “mottled”. These veins are easily identifiable in the drill intersections and pit mapping.

The Agbaou processing plant uses the conventional gravity/carbon in leach (“CIL”) gold recovery process. The comminution circuit of the process plant is comprised of a primary jaw crusher, followed by SAG and ball mills. A dedicated gravity circuit consisting of a concentrator, intensive cyanidation package and an electrowinning cell recovers free gold from a portion of the milled product. The rest of the milled product is processed in the CIL circuit where gold contained in the ore is leached and adsorbed onto activated carbon. The CIL tails slurry undergoes cyanide destruction prior to disposal in the tailings dam. Loaded carbon is acid washed and rinsed prior to elution. The electrolyte leaving the Anglo American Research Laboratory elution circuit undergoes electrowinning where gold sludge is produced. The sludge is dewatered using a pot filter and dried in a drying oven ahead of smelting. Fluxes are added to the dried gold sludge and the mixture placed in the smelting furnace. After smelting the furnace crucible contents are poured into cascading moulds. The gold bars are cleaned, sampled, labelled and prepared for shipping.