LEFA Corridor Gold Project - Guinea

Project description and location

The LEFA Corridor Gold Project is located approximately 700 km northeast of Conakry, the capital of the Republic of Guinea. The principal concession, governed by the Convention de Base, covers an area of approximately 1,600 square kilometers and is known as the Dinguiraye Concession. LEFA also has a further six contiguous properties over which Crew has rights derived from six prospecting permits not governed by the Convention de Base, bringing the total project area to approximately 2,552 square kilometers.

Ownership and History

On October 17, 2005 Crew announced an offer to purchase 100% of the shares of Guinor (references to Guinor include its subsidiaries) at a price of CAD l.50 per common share, in an all-cash transaction valued at approximately US$ 330 million.

On the date of initial acquisition by Crew, Guinor had an 85% interest in its subsidiary, Société Minière de Dinguiraye (“SMD”). SMD is the Guinor subsidiary which owns the LEFA mineral property and related net assets. Crew completed the purchase of the remaining 15% of SMD from the Government of Guinea (“GOG”) on June 30, 2006, through a cash payment of US$ 15 million and the issue of 979,614 common shares, having an aggregate fair market value of US$ 15 million. The common shares were placed into escrow pending agreed upon amendments to the Convention de Base being ratified by the GOG. The Corporation has extended the deadline for the GOG to ratify the amended Convention de Base until September 30, 2009, after which time, if the ratification has not occurred, the shares may be cancelled and returned to treasury.

In the Guinor purchase, Crew acquired a sufficient number of Guinor common shares to permit it to carry out a compulsory acquisition of the remainder of the outstanding Guinor common shares not deposited to the Offer. The process of acquiring the Guinor shares was completed in March 2006, with Crew securing 100%.

In November 2004 Guinor signed an agreement with the GOG that paved the way for a substantial expansion of LEFA. The agreement was signed on behalf of the government jointly by the Minister of Mines, the Minister of Economy & Finance and the Governor of the Central Bank. The agreement confirms that the GOG and Guinor will adhere to the terms of the existing Convention de Base, which defines the fiscal regime for any investment by Guinor. It also confirms the right of Guinor to import and transport heavy fuel for power for mining purposes free of any taxes or government charges.

Geology

Regional Setting

The LEFA Gold Project lies within the Siguiri Basin, part of the Birimian volcano-sedimentary series that dominates the basement geology of the West African Shield. The Birimian Series, including the Siguiri Basin, is under-plated by a cratonized block of Archaean-aged high-grade metamorphic and intrusive rocks termed the “Man Shield”. A collisional environment resulted in the development of dominantly greenschist facies metamorphism and regional northeast to northwest trending deformation zones, considered to be fundamental to the development of gold mineralization in the Siguiri Basin.

Project Setting

The Siguiri Basin can be subdivided into two distinct formations: the upper Matagania Formation and the lower Siguiri Formation. The Matagania Formation is dominated by inter-bedded claystones and siltstones, better represented throughout southern portions of the Dinguiraye Concession. The Siguiri Formation comprises intercalated siltstones and arkosic sandstones or greywackes and occasional conglomerates, which are more prevalent in northern portions of the Dinguiraye Concession. Within the LEFA Corridor the basement stratigraphy is essentially sub-horizontal and significant fault offsets are rare. Primary mineral assemblages reflect low- grade regional metamorphism and are characterised by broad monoclinal folding.

The entire stratigraphy has been intruded by massive dolerite dykes and sills during the Jurassic period, associated with the break-up of the Gondwanan continental landmass. Being more resistant to erosion and lateritization, these intrusions form prominent hills and bluffs within the northern half of the concession.

At the regional scale, gold occurrences are more numerous in the coarser grained arkosic unit (Siguiri Formation). The lithological sequence in the LEFA Corridor area is dominated by sediments and is composed mainly of arkosic siltstones with subordinate horizons of true arkoses.

Mineralization is preferentially developed in the more permeable, altered, coarser-grained sediments, within and adjacent to east-northeast oriented structures and north to north-northwest trending fracture zones. Mineralization is localised by a combination of lithological and structural controls. The dip and strike of mineralized zones, and to a lesser extent the style of mineralization, varies considerably between deposits. Gold mineralization is dominantly associated with stockwork and sheeted quartz-carbonate-sulphide veining, stockworks of albite-carbonate-sulphide veinlets, or as sulphidic haematitic breccia. Pyrite is the dominant sulphide species. Gold is largely developed within fractures in pyrite grains, rarely larger than 50 microns, and is non-refractory.

Extensive weathering and lateritization of the mineralization and surrounding host rocks have resulted in the development of economic laterite and saprolite gold deposits. Both transported and residual laterite, up to 15 meters thick, host economic gold mineralization, which typically averages 1g/t to 2g/t gold over extensive lateral areas. Saprolite mineralization tends to be higher grade (1.5g/t to 5g/t gold), but is generally developed over more restricted zones between two meters and 30 meters wide.

Resources

In June 2008 Crew announced updated resources at LEFA, effective 31 March 2008. Total resources increased by 0.47 million oz (7%) from 5.95 million oz announced in March 2007 to 6.42 million oz (this takes account of depletion to 31 March 2008 surfaces). The measured and indicated resource total increased by 0.28 million oz to 5.1 million oz. Inferred resources increased by 0.2 million oz to 1.3 million oz.

Resources have been updated for mining depletion since April 2008 to date and the drilling results between April 2008 and February 2009 and will be independently verified during August 2009.  This will be used to redo the life of mine plan recognising the continuing extension and deepening of the pits and an increasing proportion of harder ore.

Ore processing

The CIP processing plant consists of the following major unit processes. Following crushing, the ore is fed into the grinding circuit comprising SAG and ball mills where it is ground to 80% pass 150 µm. The density is then increased to around 48% by the addition of flocculants and is then pumped to the leach circuit where sodium cyanide is added as a lixiviant to dissolve the gold. The ore is leached for approximately 24 hours before passing to the adsorption circuit. Activated carbon is added to the circuit to absorb the dissolved gold. The loaded carbon is recovered and washed with a hot solution of sodium hydroxide and sodium cyanide. This is done in the carbon strip columns. Gold is recovered from this concentrated solution by electrolysis, which causes it to be deposited onto steel wool cathodes. The dried precipitate from the cathodes is then smelted to produce doré bullion. Tailings are pumped to a specially constructed tailing storage facility.

Crew extended commissioning of the CIP plant at LEFA while it undertook a rectification and upgrade program focusing on the operation of the re-built former Kilean plant. The major elements of the rectification and upgrade program comprise replacement of the leach and adsorption tank agitators, gearboxes and motors, refurbishment of the SAG and Ball mills, total refurbishment of the Fayalala and Lero crushing station agitators, installation of additional pump capacity and conversion of the power station to operate on heavy fuel oil (“HFO”) in place of more expensive diesel.

Much of 2007 was spent attempting to rectify these deficiencies and altering areas where improvements could be made. In 2008 detailed inspection by both internal experts and external consultants indicated that the state of the plant required extended rectification and debottlenecking.

In addition the repairs needed to the Ball Mill 01 motor were more extensive than initially thought and the motor was sent off site for rewinding. From July 2009 the de-bottlenecking projects will continue, but the majority of maintenance work is anticipated to be routine. There will, however, remain some minor risk of partial shutdowns until end of 2010, when all of the insurance spares are on site.

Power plant

The power plant electrical generation system has been fully commissioned and has started running 100% on HFO. The change to HFO power generation is expected to reduce cash operating costs by an estimated $15-20/oz and the HFO storage capacity of 3.5 million liters will provide an additional buffer against possible disruption to supply in the wet season. The bulk diesel storage will then only be required for the open pit mining fleet.

Outlook

While remaining aspects of the rectification and expansion project are being completed, Crew has provided revised production guidance for 2009 of between 220,000 to 240,000 oz.

When the plant is completely operational, it is expected to achieve annual production of 320,000 to 360,000 oz per year with an estimated cash cost of US$ 400-450/oz before royalties (royalty payments are 5.4% of gold revenue) based upon the current reserve grade of 1.6 g/t.

Operations

Ore mined in the quarter ended June 30, 2009 was 1,108,028 tonnes at an average grade of 1.6 g/t, down from the 1,243,400 tonnes mined in Q1 2009 (quarter ended June 30, 2008 - 830,085 tonnes at grade of 2.4 g/t).

Mining activities in the quarter continued to be hampered by equipment availability and work continued on the refurbishment of the open pit mining equipment to original equipment manufacturer standards following the takeover of mining operations from the contractor in September 2008.

Total ore mined for the six months ended June 30, 2009 was 2,351,428 tonnes at an average grade of 1.5 g/t (six months ended June 30, 2008 – 2,002,277 tonnes at an average grade of 1.9 g/t).

Ore milled during the quarter ended June 30, 2009 was 984,566 tonnes at an average grade of 1.4 g/t (quarter ended June 30, 2008 - 880,772 tonnes at an average grade of 2.1 g/t). Year-to-date throughput for the six months ended June 30, 2009 totalled 1,983,035 tonnes at a head grade of 1.5 g/t (six months ended June 30, 2008 – 1,589,584 tonnes at a head grade of 2.1 g/t).

Gold produced in the quarter ended June 30, 2009 was 40,743 oz (quarter ended June 30, 2008 - 53,531 oz) and for the six months ended June 30, 2009 was 85,349 oz (six months ended June 30, 2008 – 98,574).