ANNUAL INFORMATION FORM

Transcription

1 Columbus Gold Corp. Suite Howe Street Vancouver, BC V6C 2B3 ANNUAL INFORMATION FORM For the Year Ended September 30, 2011 Dated February 23, 2012

2 TABLE OF CONTENTS ITEM 1: CAUTIONARY NOTE ON FORWARD LOOKING INFORMATION... 4 ITEM 2: PRELIMINARY NOTES... 5 Effective Date of Information...5 Financial Statements and Management Discussion and Analysis...5 Currency and Exchange Rates...5 Imperial and Metric Conversions...5 Definitions...6 ITEM 3: INFORMATION INCORPORATED BY REFERENCE... 7 ITEM 4: CORPORATE STRUCTURE... 7 Intercorporate Relationships...8 ITEM 5: GENERAL DEVELOPMENT OF THE BUSINESS... 8 General...8 ITEM 6: DESCRIPTION OF THE BUSINESS General...11 Risk Factors...11 Paul Isnard Project, French Guiana...19 Other Properties...46 ITEM 7: DIVIDENDS ITEM 8: DESCRIPTION OF CAPITAL STRUCTURE Authorized and Issued Capital...48 ITEM 9: MARKET FOR SECURITIES Price Range and Trading Volume...49 ITEM 10: PRIOR SALES ITEM 11: ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER ITEM 12: DIRECTORS AND OFFICERS Name, Address, Occupation and Security Holding...50 Shareholdings of Directors and Senior Officers...51 Absence of Cease Trade Orders...53 Absence of Bankruptcies...53 Penalties or Sanctions...54 Conflicts of Interest...54 ITEM 13: LEGAL PROCEEDINGS AND REGULATORY ACTIONS ITEM 14: INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS P a g e Columbus Gold Corp. Annual Information Form

3 ITEM 15: TRANSFER AGENT AND REGISTRAR ITEM 16: MATERIAL CONTRACTS ITEM 17: INTEREST OF EXPERTS Names of Experts...56 Interests of Experts...56 ITEM 18: ADDITIONAL INFORMATION P a g e Columbus Gold Corp. Annual Information Form

4 ITEM 1: CAUTIONARY NOTE ON FORWARD LOOKING INFORMATION This Annual Information Form ( AIF ) contains forward-looking information within the meaning of applicable Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as plans, expects or does not expect, is expected, budget, scheduled, estimates, forecasts, intends, anticipates or does not anticipate, or believes, or variations of such words and phrases or statements that certain actions, events or results may, could, would, might or will be taken, occur or be achieved. Forward-looking information is based on reasonable assumptions that have been made by the Company as at the date of such information and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Columbus Gold to be materially different from those expressed or implied by such forward-looking information, including but not limited to: Columbus Gold s properties are not known to host any ore reserves nor known to contain any economic ore body. The mineral resources disclosed by Columbus Gold for the Paul Isnard Project are estimates only and the estimating of mineral resources is a subjective process, the accuracy of which is a function of the quantity and quality of available data, the assumptions made and judgment used in the engineering and geological interpretation, which may prove unreliable, and may be subject to revision; Columbus Gold may not be able to raise additional financing required in order to develop its properties; Columbus Gold has never earned any net income and it may never achieve profitability or pay dividends; Columbus Gold may not be able to continue on a going concern basis; the fluctuation of metal prices and currency rates and other macroeconomic events may have adverse consequences and may result in the Company not being able to raise the additional financing required to fund its planned activities, including the development of its properties; changes in government regulations, compliance with environmental requirements and the presence of unknown environmental hazards on the Company s mineral properties may result in significant unanticipated compliance and reclamation costs; the impact of general business and economic conditions, including exchange rate risks; and other risks detailed from time-to-time in the Company s quarterly filings, annual information forms, annual reports and annual filings with securities regulators and those which are discussed under the heading Risk Factors. Some of the important risks and uncertainties that could affect forward-looking statements are described in this AIF under Description of the Business Risk Factors. Should one or more of these risks and uncertainties materialize, or should underlying factors or assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. Material factors or assumptions involved in developing forward-looking statements include, without limitation, that:

5 the Company will continue to be in compliance with regulatory requirements; the Company will have sufficient working capital and be able to secure additional funding necessary for the continued exploration of the Company s property interests; the price of gold and other metals will not decline significantly nor for a lengthy period of time; the key personnel will continue their employment with the Company. Although the Company believes that the expectations conveyed by the forward-looking statements are reasonable based on the information available to it on the date such statements were made, no assurances can be given as to future results, approvals or achievements. The forward-looking statements contained in this AIF and the documents incorporated by reference herein are expressly qualified by this cautionary statement. The Company disclaims any duty to update any of the forward-looking statements after the date of this AIF to conform such statements to actual results or to changes in the Company s expectations except as otherwise required by applicable law ITEM 2: PRELIMINARY NOTES Effective Date of Information Throughout this AIF, references to Columbus Gold, the Company, its, and we, or related terms refer to Columbus Gold Corp. and includes, where the context requires, its subsidiaries. All information contained herein is as at September 30, 2011, unless otherwise stated. Financial Statements and Management Discussion and Analysis This AIF should be read in conjunction with the Company s annual consolidated Financial Statements for the year ending September 30, 2011 (the Financial Statements ), and the accompanying Management s Discussion and Analysis ( MD&A ) for that year. The Financial Statements and Management s Discussion and Analysis are available on the SEDAR website at under Columbus Gold s profile. Currency and Exchange Rates All dollar amounts referenced in this AIF are expressed in Canadian Dollars, unless otherwise indicated. Imperial and Metric Conversions For ease of reference, the following factors for converting metric measurements into imperial equivalents are: Imperial Measure Conversion to Metric Unit Metric Unit Conversion to Imperial Measure Acres = 1 Hectare Hectares = 1 Acre Feet = 1 Metre Metres = 1 Foot Miles = 1 Kilometre Kilometres = 1 Mile Ounces (troy) = 1 Gram Grams = 1 Ounce (troy) Pounds = 1 Kilogram Kilograms = 1 Pound Tons (short) = 1 Tonne Tonnes = 1 Ton 5 P a g e Columbus Gold Corp. Annual Information Form

6 Definitions In this AIF the following terms have the meanings set forth: Auplata BLM BQ Columbus Gold Columbus Luxembourg Columbus Nevada Columbus Silver Columbus USA Company Cordex Empire HQ ICP NI NSR QA/QC Paul Isnard Project Paul Isnard Option Paul Isnard Option Agreement Auplata S.A. Bureau of Land Management. a letter name specifying the dimensions of bits, core barrels, and drill rods in the B-size and Q-group wireline diamond drilling system having a core diameter of 36.5 mm and a hole diameter of 60 mm. Columbus Gold Ltd. Columbus Gold (Luxembourg) SARL, the Company s whollyowned Luxembourg subsidiary. Columbus Gold (Nevada) Corp., Columbus USA s whollyowned Nevada subsidiary. Columbus Silver Corporation. Columbus Gold (U.S.) Corporation, the Company s whollyowned Nevada subsidiary. Columbus Gold Ltd. Cordilleran Exploration Company, LLC. Empire Mining Corporation. a letter name specifying the dimensions of bits, core barrels, and drill rods in the H-size and Q-group wireline diamond drilling system having a core diameter of 63.5 mm and a hole diameter of 96 mm. Inductively Coupled Plasma Mass Spectroscopy, a type of analysis for samples. National Instrument Standards of Disclosure for Mineral Projects. Net smelter return royalty. Quality assurance/quality control. The Paul Isnard Project located in French Guiana, as more fully described in the Technical Report. The option held by the Company over the Paul Isnard Project pursuant to the terms and conditions of the Paul Isnard Option Agreement, as amended. The option agreement dated November 30, 2010 among the Company, Auplata, SOTRAPMAG, and Pelican. This agreement was subsequently amended on May 25, 2011, June 6, 2011, June 15, 2011, and December 5, P a g e Columbus Gold Corp. Annual Information Form

7 Pelican Share SOTRAPMAG Technical Report TSXV Pelican Venture SAS, a corporation formed under the laws of France. One common share in the capital of the Company. SOTRAPMAG SAS, a corporation formed under the laws of France, which holds the rights to the Paul Isnard Project. The NI compliant technical report on the Paul Isnard Project entitled Updated NI Technical Report, Paul Isnard Project, French Guiana dated effective February 1, 2012 and updated February 21, 2012, prepared by SRK Consulting (U.S.), Inc. The TSX Venture Exchange. ITEM 3: INFORMATION INCORPORATED BY REFERENCE The following documents, all of which are available under the Company s profile on the System for Electronic Document Analysis and Retrieval ( SEDAR ) at are incorporated by reference into this AIF: Audited financial statements of the Company for the fiscal year ended September 30, 2011; Management s Discussion and Analysis for the Company for the year ended September 30, 2011; and The Technical Report. ITEM 4: CORPORATE STRUCTURE The head office of Columbus Gold Corp. ( Columbus Gold or the Company ) is located at Suite 307, 475 Howe Street, Vancouver, British Columbia, Canada V6C 2B3. By the summer of 2012, the Company expects that its head office will have transitioned to 2 nd Floor, 1090 Hamilton Street, Vancouver, British Columbia, Canada, V6B 2R9. The Company s registered office is located at Suite 1500, 1055 West Georgia Street, Vancouver, British Columbia, Canada V6E 4N7. The Company s head office may be reached by telephone at , by facsimile at , and online at The Company was incorporated under the Business Corporations Act (Saskatchewan) on May 14, 2003 under the name Purple Vein Resources Ltd.. The Company was continued under the Company Act (British Columbia) on December 29, On November 24, 2004, the Company transitioned to the Business Corporations Act (British Columbia) and effective December 20, 2004 changed its name to Columbus Gold Corp.. On December 20, 2004, the Company completed a consolidation of its issued and outstanding common shares on the basis of two pre-consolidation common shares for each one postconsolidated common share, and changed its capital to an unlimited number of Shares and an unlimited number of class A preferred shares. The preferred shares, of which none were issued or outstanding, were cancelled subsequent to the approval of shareholders of the Company at the annual general meeting of shareholders held on March 13, P a g e Columbus Gold Corp. Annual Information Form

8 Intercorporate Relationships The Company has two subsidiaries: (i) Columbus Gold (U.S.) Corporation ( Columbus USA ), a wholly-owned subsidiary incorporated under the laws of Nevada in March 2005; and (ii) Columbus Gold (Nevada) Corp. ( Columbus Nevada ), an indirectly-held subsidiary that is wholly-owned by Columbus USA, and which is incorporated under the laws of Nevada in September Title to the Company s mineral properties located within the United States is held by Columbus USA, and Columbus Nevada performs certain of Columbus USA s administrative functions. ITEM 5: GENERAL DEVELOPMENT OF THE BUSINESS General The Company is an exploration stage mineral resources company with an interest in mineral properties located in the United States and French Guiana. Since 2005, the Company has engaged the services of Cordilleran Exploration Company LLC ( Cordex ) to generate, evaluate, and explore mineral properties on behalf of the Company, primarily in Nevada. Through its relationship with Cordex and also using its own project acquisitions, the Company s strategy has been to acquire prospective mineral properties and then to either develop them internally or to option, joint venture, or lease such properties to third parties. The Company and Cordex have continued their relationship on an annual basis, most recently via an amended and restated agreement dated January 1, Under the Cordex agreement, the Company provides US$44,000 per month to cover Cordex s overhead, and Cordex is able to retain a royalty on certain properties generated thereunder. See Interest of Management and Others in Material Transactions. During the past three financial years, Columbus Gold has primarily financed its operations by way of equity financings. On February 2, 2009, the Company completed a non-brokered private placement of 3,305,500 units at a price of $0.20 per such unit, with each unit consisting of one Share and one Share purchase warrant, with each such warrant entitling the holder thereof to purchase one Share at a price of $0.30 at any time prior to July 28, In April 2010, drilling was commenced on the Company s Summit project, located in Elko County, Nevada, USA ( Summit ), by the Company s joint venture partner Agnico-Eagle (USA) Limited ( Agnico ). On May 21, 2010, the Company completed a non-brokered private placement of 4,632,500 units at a price of $0.20 per unit, for aggregate gross proceeds of $926,500. Each unit issued in connection with the offering was comprised of one Share and one Share purchase warrant, with each such warrant 8 P a g e Columbus Gold Corp. Annual Information Form

9 entitling the holder thereof to purchase one additional Share at a price of $0.30 for the first twelve months increasing to $0.35 for the next six months thereafter, expiring on November 21, In connection with the financing the Company paid cash finders fees totaling $60, and issued an aggregate of 303,237 non-transferable finders warrants on substantially the same terms as the warrants forming a part of the units sold under the offering. On July 9, 2010, the Company completed a non-brokered private placement of 5,103,250 units at a price of $0.20 per such unit, for aggregate gross proceeds of $1,020,650. Each unit issued in connection with the offering was comprised of one Share and one Share purchase warrant, with each such warrant entitling the holder thereof to purchase one additional Share at a price of $0.30 for the first twelve months increasing to $0.35 for the next six months thereafter, expiring on January 9, In connection with the financing, the Company paid cash finders fees totalling $486, and issued an aggregate of 430,801 non-transferable finders warrants on substantially the same terms as the warrants forming a part of the units sold under the offering. On May 18, 2007, the Company incorporated Columbus Silver Corporation ( Columbus Silver ), which ultimately completed the initial public offering of its common shares and was listed for trading on the TSXV on September 23, In connection with its formation, Columbus Silver was transferred certain mineral properties from Columbus Gold in exchange for debt, represented by two convertible promissory notes issued to Columbus Gold, each of which bears simple interest of 5% per annum and could be converted into common shares of Columbus Silver at the Company s election (the Silver Notes ). As at September 30, 2011, the amounts of $845,208 and US$540,465 were owed as principal to the Company under the Silver Notes, and approximately $150,314 and US$110,314 had accrued as interest thereon. On February 14, 2012, the Company exercised the conversion feature of the Silver Notes, converting all of the principal amounts owing thereunder into a total of 13,858,898 common shares of Columbus Silver. As of the date of this AIF, there is no principal amount owing under these notes, but accrued interest thereon remains to be paid of $166, and $120, (U.S.), which is due on or before August 1, As at January 30, 2012, a total of approximately $283,975 is owed by Columbus Silver to Columbus Gold as accrued interest on the aforementioned convertible notes. As at the date of this AIF, and in part due to the conversion of the Silver Notes, Columbus Gold holds a total of 17,878,898 common shares of Columbus Silver, representing approximately 35.27% of Columbus Silver s issued and outstanding share capital. Columbus Silver has announced a merger with Santa Fe Gold Corporation ( Santa Fe ), under which Santa Fe has offered to conditionally purchase all of the outstanding common shares of Columbus Silver for $0.20 per such share. In the event that this merger is successful, Santa Fe would be required to pay Columbus Gold approximately $3,575,780 in consideration for its Columbus Silver shares. The Company entered into an option agreement dated November 30, 2010 (the Paul Isnard Option Agreement ) with Auplata SA ( Auplata ), SOTRAPMAG SAS ( SOTRAPMAG ) and Pelican Venture SAS ( Pelican ) which was amended on May 25, 2011, June 6, 2011 and June 15, 2011 primarily to address closing logistics. Pursuant to the terms of the Paul Isnard Option Agreement, the Company was granted an option to earn up to a 100% interest in and to the Paul Isnard Project (the Paul Isnard Option ), a gold project located in French Guiana. Pursuant to the terms of the Paul Isnard Option Agreement, the Company agreed to sell to Pelican a number of Shares equal to up to 15% of the issued and outstanding Shares of the Company, and to issue to Auplata a number of Shares equal to 34% of the Company s issued and outstanding Shares, with all such figures to be determined post-issuance. The Company s shareholders approved the Paul Isnard Option Agreement on May 25, 2011, and the Company subsequently closed the transaction on June 29, Upon closing, Columbus Gold issued a 9 P a g e Columbus Gold Corp. Annual Information Form

10 total of 13,357,176 Shares to Pelican for gross consideration of $2,871,792.84, and issued a total of 30,276,266 Shares to Auplata of which 20,184,177 are held in escrow until June 29, The Company issued a total of 190,473 Shares to a finder in connection with the Paul Isnard Option. See Paul Isnard Project, French Guiana. Upon the closing of the Paul Isnard Project option, the Company concentrated on earning its initial 51% interest in the Paul Isnard Project, shifting its focus from mineral projects in the United States. Prior to this time, the Company considered two mineral projects material to its operations, being its Golden Mile project located in Mineral County, Nevada, and its Utah Clipper project located in Lander County, Nevada. The Company completed several rounds of drilling on these properties, but results did not justify continued focus by the Company and accordingly Columbus Gold no longer considers either of these projects to be material. On November 29, 2011, the Company entered into an agreement with Agnico, under which Agnico agreed to purchase all of the Company s right, title and interest in and to the Summit property for US$8,500,000. This purchase and sale was completed by December 22, On December 2, 2011, the Company entered into an Option over Royalty Agreement (the Option over Royalty Agreement ) with Euro Ressources S.A. ( Euro ), pursuant to which Columbus Gold purchased an option to acquire the existing outstanding royalty on the Paul Isnard Project held by Euro. The aforementioned option is exercisable by Columbus Gold or Euro prior to July 30, 2015 after the Company meets certain conditions, including having earned a 100% interest in the Paul Isnard Project, by paying Euro $4.2 million in cash, issuing 12,865,600 Shares (subject to adjustment in certain circumstances) to Euro, and delivering an agreement in respect of a revised NSR royalty on the Paul Isnard Project providing for (i) a 1.8% NSR on the first 2 million ounces of gold produced, and (ii) a 0.9% NSR on the next 3 million ounces produced, with no royalty after 5 million ounces produced. The existing royalty held by Euro generally requires a payment on gold produced from the Paul Isnard Project in the amount of 10% of the gold price in excess of US$400 per ounce on the first 2 million ounces of production and 5% of the gold price in excess of US$400 per ounce on the next 3 million ounces produced. The Option over Royalty Agreement requires an annual maintenance payment of $50,000 to remain in good standing and will terminate on the earlier of (i) July 30, 2015, (ii) 120 days following the Company earning a 100% interest in the Paul Isnard Project, and (iii) 30 days following an anniversary of the agreement if Columbus Gold misses an annual maintenance payment. On December 5, 2011, the Company, Auplata, SOTRAPMAG, and Pelican amended the Paul Isnard Option Agreement a fourth time, providing Columbus Gold with the opportunity to complete its earn-in to the Paul Isnard Project by paying a total of US$1,500,000 to Auplata upon completing two milestones: approval of the TSXV and non-objection by applicable French authorities. The Company obtained the approval of the TSXV in late December 2011 and subsequently paid US$1,000,000 to Auplata in partial satisfaction of the first condition. Satisfaction of the second condition, non-objection of French authorities, is pending. Provided that applicable French authorities do not object to this transaction, Columbus Gold will have the requirement to pay US$500,000 to Auplata and, upon such payment, will earn a 100% interest in the Paul Isnard Project. The December 5, 2011 amendments to the Paul Isnard Option Agreement also changed the escrow provisions under which 20,184,177 Shares held by Auplata are escrowed; please see Escrowed Securities and Securities Subject to Contractual Restriction on Transfer. 10 P a g e Columbus Gold Corp. Annual Information Form

11 ITEM 6: DESCRIPTION OF THE BUSINESS General The Company s principal business activities are the acquisition, exploration and development of mineral properties, with gold as a principal focus. The Company is in the process of exploring and developing its mineral properties principally in French Guiana and Nevada, USA but has not yet determined whether the properties contain ore reserves that are economically recoverable. The Company maintains active generative (prospecting) and evaluation programs and, as a key element of its strategy, broadens exposure and minimizes risk through joint ventures on selected projects. Risk Factors Prior to making an investment decision investors should consider the investment risks set out below and those described elsewhere in this document, which are in addition to the usual risks associated with an investment in a business at an early stage of development. The directors of the Company consider the risks set out below to be the most significant to potential investors in the Company, but do not represent all of the risks associated with an investment in securities of the Company. If any of these risks materialize into actual events or circumstances or other possible additional risks and uncertainties of which the Directors are currently unaware or which they consider not to be material in relation to the Company s business, actually occur, the Company s assets, liabilities, financial condition, results of operations (including future results of operations), business and business prospects are likely to be materially and adversely affected. Exploration, Development and Production Risks An investment in the Company s Shares is speculative due to the nature of the Company s involvement in the evaluation, acquisition, exploration and, if warranted, development and production of minerals. Mineral exploration involves a high degree of risk and there is no assurance that expenditures made on future exploration by the Company will result in new discoveries in commercial quantities. While the Company has a limited number of specific identified exploration or development prospects, management will continue to evaluate prospects on an ongoing basis in a manner consistent with industry standards. The long-term commercial success of the Company depends on its ability to find, acquire and commercially develop reserves. No assurance can be given that the Company will be able to locate satisfactory properties for acquisition or participation. Moreover, if such acquisitions or participations are identified, the Company may determine that current markets, terms of acquisition and participation or pricing conditions make such acquisitions or participations uneconomic. The Company has no earnings record, no reserves and no producing resource properties. The Company s mineral projects are in the exploration stage. Resource exploration, development, and operations are highly speculative, characterized by a number of significant risks, which even a combination of careful evaluation, experience and knowledge will not eliminate. Few properties that are explored are ultimately developed into producing mines. Unusual or unexpected formations, formation pressures, fires, power outages, labour disruptions, flooding, explosions, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labour are other risks involved in the operation of mines and the conduct of exploration programs. Columbus Gold must rely upon consultants and contractors for exploration, development, construction and operating expertise. Substantial expenditures are required to establish mineral resources and mineral reserves through drilling, to develop 11 P a g e Columbus Gold Corp. Annual Information Form

12 metallurgical processes to extract the metal from mineral resources and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining. There is no assurance that surface rights agreements that may be necessary for future operations will be obtained when needed, on reasonable terms, or at all, which could adversely affect the business of the Company. No assurance can be given that minerals will be discovered in sufficient quantities at any of the Company s mineral projects to justify commercial operations or that funds required for additional exploration or development will be obtained on a timely basis. Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices which are highly cyclical; the proximity and capacity of milling facilities; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot accurately be predicted, but the combination of these factors may result in the Company not receiving an adequate return on invested capital. Uncertainty of Mineral Reserves and Mineral Resources The Company s mineral properties are in the exploration stage and have no known body of economic mineralization. The known mineralization at the Company s properties has not yet been determined to be economic, and may never be determined to be economic. Mineral reserves and resources estimates for the Company's properties are estimates of the size and grade of deposits based on limited sampling and on certain assumptions and parameters. Only an inferred mineral resource has been defined at the Paul Isnard Project. There is no certainty that further exploration and development will result in the definition of any further inferred or indicated mineral resources, or any measured resources, or probable or proven reserves, at the Paul Isnard Project or any other mineral property in which the Company has or will have an interest. No assurance can be given that the anticipated tonnages and grades will be achieved or that the indicated level of recovery of gold will be realized. The ore grade actually recovered may differ from the estimated grades of the mineral reserves and mineral resources. Prolonged declines in the market price of gold may render the Company s inferred resources containing relatively lower grades of gold mineralization uneconomic to exploit and could materially reduce the Company s inferred resources. Should such reductions occur, the Company could be required to take a material write-down of its investment in mining properties or delay or discontinue production or the development of new projects, resulting in increased net losses and reduced cash flow. Market price fluctuations of gold, as well as increased production costs or reduced recovery rates, may render inferred mineral resources containing relatively lower grades of mineralization uneconomical to recover and may ultimately result in a restatement of inferred mineral resources. Future Profits/Losses and Production Revenues/Expenses There can be no assurance that significant losses will not occur in the near future or that the Company will be profitable in the future. The Company s operating expenses and capital expenditures may increase in subsequent years as needed consultants, personnel and equipment associated with advancing exploration, development and commercial production, if any, of the Paul Isnard Project and any other properties Columbus Gold has or may acquire are added. The amounts and timing of expenditures will depend on the progress of ongoing exploration and development, the results of consultants analyses and recommendations, the rate at which operating losses are incurred, the execution of any joint venture agreements with strategic partners, and the Company s acquisition of additional properties and other 12 P a g e Columbus Gold Corp. Annual Information Form

13 factors, many of which are beyond the Company s control. The Company does not expect to receive revenues from operations in the foreseeable future, if ever. Columbus Gold expects to incur losses unless and until such time as the Paul Isnard Project and any other properties the Company may hold or subsequently acquire may enter into commercial production and generate sufficient revenues to fund its continuing operations. The development of the Paul Isnard Project and any other properties the Company may acquire will require the commitment of substantial resources to conduct the time-consuming exploration and development of properties. There can be no assurance that the Company will generate any revenues or achieve profitability. There can be no assurance that the underlying assumed levels of expenses will prove to be accurate Additional Funding Requirements From time to time, the Company may require additional financing in order to carry out its acquisition, exploration and development activities. Failure to obtain such financing on a timely basis could cause the Company to forfeit its interest in certain properties, miss certain acquisition opportunities, delay or indefinite postponement of further exploration and development of its projects with the possible loss of such properties, and reduce or terminate its operations. If the Company s cash flow from operations is not sufficient to satisfy its capital expenditure requirements, there can be no assurance that additional debt or equity financing will be available to meet these requirements or be available on favourable terms. Prices, Markets and Marketing of Natural Resources Gold is a commodity whose price is determined based on world demand, supply and other factors, all of which are beyond the control of Columbus Gold. World prices for gold have fluctuated widely in recent years. The marketability and price of natural resources which may be acquired or discovered by the Company will be affected by numerous factors beyond its control. Columbus Gold has limited direct experience in the marketing of gold. Government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of natural resources and environmental protection are all factors which may affect the marketability and price of natural resources. The exact effect of these factors cannot be accurately predicted, but any one or a combination of these factors could result in the Company not receiving an adequate return for shareholders. Title Matters Although title to the properties has been reviewed by the Company, formal title opinions have not been obtained by the Company for most of its mineral properties and, consequently, no assurances can be given that there are no title defects affecting such properties and that such title will not be challenged or impaired. The acquisition of title to resource properties is a very detailed and time-consuming process. Title to, and the area of, resource claims may be disputed. There may be valid challenges to the title of any of the mineral properties in which Columbus Gold holds an interest that, if successful, could impair development and/or operations thereof. A defect could result in the Company losing all or a portion of its right, title, estate and interest in and to the properties to which the title defect relates. Regarding the Paul Isnard Project, SOTRAPMAG only has the interests in the Paul Isnard Project described in the Technical Report. Additional interests in the area of the Paul Isnard Project may be required and the Company or SOTRAPMAG may be unable to acquire same. If the Company fails to meet payments or work commitments on these properties, the Company may lose its interests in the Paul Isnard Project and forfeit any funds expended to such time. 13 P a g e Columbus Gold Corp. Annual Information Form

14 Any of the mineral properties in which the Company holds an interest may be subject to prior unregistered liens, agreements or transfers or other undetected title defects. There is no guarantee that title to the properties will not be challenged or impugned. The Company is satisfied, however, that evidence of title to each of the properties is adequate and acceptable by prevailing industry standards. Foreign Operations The Company s mineral operations are currently conducted in French Guiana and the United States, and as such the Company s operations are exposed to various levels of political, economic and other risks and uncertainties. These risks and uncertainties may include, but are not limited to: extreme fluctuations in currency exchange rates; high rates of inflation; labour unrest; renegotiation or nullification of existing concessions, licenses, permits and contracts; illegal mining; corruption; changes in taxation policies; and changing political conditions, social unrest and governmental regulations that favour or require the awarding of contracts to local contractors or require foreign contractors to employ citizens of or purchase supplies from a particular jurisdiction. The Company s activities are subject to extensive laws and regulations governing worker health and safety, employment standards, waste disposal, protection of historic and archaeological sites, mine development, protection of endangered and protected species and other matters. A number of other approvals, licenses and permits are required for various aspects of mineral exploration and mine development. While the Company will use its best efforts to ensure title to its mineral properties continues into the future, these interests may be disputed, which could result in costly litigation or disruption of operations. Future changes in applicable laws and regulations or changes in their enforcement or regulatory interpretation could negatively impact current or planned exploration and development activities on the Company s mineral projects. Failure to comply strictly with applicable laws, regulations and local practices relating to mineral right applications and tenure, could result in loss, reduction or expropriation of entitlements. The occurrence of these various factors and uncertainties cannot be accurately predicted and could have an adverse effect on Columbus Gold s operations or future profitability. Political Risk The Company s primary property is located in French Guiana and is subject to changes in political conditions and regulations in that country. Columbus Gold s ultimate acquisition of the Paul Isnard Project will require that relevant French authorities not object to same. Although the Company does not expect an objection to arise, Columbus Gold has no control over this aspect of its acquisition strategy and such objection could create material difficulties in Columbus Gold s continuing to operate in French Guiana. 14 P a g e Columbus Gold Corp. Annual Information Form

15 Changes, if any, in mining or investment policies or shifts in political attitude in France and French Guiana could adversely affect the Company s operations or profitability. Operations may be affected in varying degrees by government regulations with respect to, but not limited to, restrictions on production, price controls, export controls, currency remittance, income taxes, expropriation of property, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety. Enforcement of Civil Liabilities Certain of Columbus Gold s directors and certain of the experts named herein reside outside of Canada and, similarly, a majority of the assets of the Company are located outside of Canada. It may not be possible for investors to effect service of process within Canada upon the directors and experts not residing in Canada. It may also not be possible to enforce against the Company and certain of its directors and experts named herein judgements obtained in Canadian courts predicated upon the civil liability provisions of applicable securities laws in Canada. Environmental Risks All phases of the natural resources business present environmental risks and hazards and are subject to environmental regulation pursuant to a variety of international conventions and state and municipal laws and regulations. Environmental legislation provides for, among other things, restrictions and prohibitions on spills, releases or emissions of various substances produced in association with operations. The legislation also requires that facility sites and mines be operated, maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities. Compliance with such legislation can require significant expenditures and a breach may result in the imposition of fines and penalties, some of which may be material. Environmental legislation is evolving in a manner expected to result in stricter standards and enforcement, larger fines and liability and potentially increased capital expenditures and operating costs. The discharge of tailings or other pollutants into the air, soil or water may give rise to liabilities to foreign governments and third parties and may require the Company to incur costs to remedy such discharge. No assurance can be given that environmental laws will not result in a curtailment of production or a material increase in the costs of production, development or exploration activities or otherwise adversely affect the Company s financial condition, results of operations or prospects. Companies engaged in the exploration and development of mineral properties generally experience increased costs, and delays as a result of the need to comply with applicable laws, regulations and permits. The Company believes it is in substantial compliance with all material laws and regulations which currently apply to its activities. Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in natural resource exploration and development activities may be required to compensate those suffering loss or damage by reason of its activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations and, in particular, environmental laws. Amendments to current laws, regulations and permits governing operations and activities of natural resources companies, or more stringent implementation thereof, could have a material adverse impact on Columbus Gold and cause increases in capital expenditures or production costs or a reduction in levels 15 P a g e Columbus Gold Corp. Annual Information Form

16 of production at producing properties or require abandonment or delays in developments of new properties. Dilution In order to finance future operations and development efforts, Columbus Gold may raise funds through the issue of Shares or securities convertible into Shares. The constating documents of the Company allow it to issue, among other things, an unlimited number of Shares for such consideration and on such terms and conditions as may be established by the directors of the Company, in many cases, without the approval of shareholders. The Company cannot predict the size of future issues of Shares or securities convertible into Shares or the effect, if any, that future issues and sales of Shares will have on the price of the Shares. Any transaction involving the issue of previously authorized but unissued Shares or securities convertible into Shares would result in dilution, possibly substantial, to present and prospective shareholders of the Company. Regulatory Requirements Mining operations, development and exploration activities are subject to extensive laws and regulations governing prospecting, development, production, exports, taxes, labour standards, occupational health, waste disposal, environmental protection and remediation, protection of endangered and protected species, mine safety, toxic substances and other matters. Changes in these regulations or in their application are beyond the control of the Company and could adversely affect its operations, business and results of operations. Government approvals and permits are currently, and may in the future be, required in connection with the mineral projects in which the Company has an interest. To the extent such approvals are required and not obtained, the Company may be restricted or prohibited from proceeding with planned exploration or development activities. Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may be liable for civil or criminal fines or penalties imposed for violations of applicable laws or regulations. Amendments to current laws, regulations and permitting requirements, or more stringent application of existing laws, could have a material adverse impact on the Company and cause increases in capital expenditures or production costs or reductions in levels of production at producing properties or require abandonment or delays in development of properties. The Company s material property is located in French Guiana and as such is subject to the jurisdiction of the laws of France and French Guiana. The Company believes the present attitude to foreign investment and to the mining industry is favourable but conditions may change. Operations may be affected in varying degrees by government regulation with respect to restrictions on production, price controls, export controls, foreign exchange controls, income taxes, expropriation of property, environmental legislation and mine safety. These uncertainties may make it more difficult for the Company to obtain required production financing for any Paul Isnard Project that go to production. Reliance on Operators and Key Employees The success of the Company will be largely dependent upon the performance of its management and key employees. The Company does not have any key man insurance policies and therefore there is a risk that 16 P a g e Columbus Gold Corp. Annual Information Form

17 the death or departure of any member of management or any key employee could have a material adverse effect on the Company. In assessing the risk of an investment in the Company s Shares, potential investors should realize that they are relying on the experience, judgment, discretion, integrity and good faith of the management of the Company. An investment in the Company s Common Shares is suitable only for those investors who are willing to risk a loss of their entire investment and who can afford to lose their entire investment. Permits and Licenses The operations of the Company will require licenses and permits from various governmental authorities. There can be no assurance that the Company will be able to obtain all necessary licenses and permits that may be required to carry out exploration and development of its projects. Availability of Equipment and Access Restrictions Natural resource exploration and development activities are dependent on the availability of drilling and related equipment in the particular areas where such activities will be conducted. Demand for such limited equipment or access restrictions may affect the availability of such equipment to the Company and may delay exploration and development activities. Conflict of Interest of Management Certain of Columbus Gold s directors and officers are also directors and officers of other natural resource companies. Consequently, there exists the possibility for such directors and officers to be in a position of conflict. Any decision made by any of such directors and officers relating to the Company will be made in accordance with their duties and obligations to deal fairly and in good faith with the Company and such other companies. Competition The Company actively competes for acquisitions, leases, licences, concessions, claims, skilled industry personnel and other related interests with a substantial number of other companies, many of which have significantly greater financial resources than the Company. The Company s ability to successfully bid on and acquire additional property rights to participate in opportunities and to identify and enter into commercial arrangements with other parties will be dependent upon developing and maintaining close working relationships with its future industry partners and joint operators and its ability to select and evaluate suitable properties and to consummate transactions in a highly competitive environment. Insurance The Company s involvement in the exploration for and development of natural resource properties may result in the Company becoming subject to liability for certain risks, and in particular unexpected or unusual geological operating conditions, including rock bursts, cave ins, fires, floods, earthquakes, pollution, blow-outs, property damage, personal injury or other hazards. Although the Company will obtain insurance in accordance with industry standards to address such risks, such insurance has limitations on liability that may not be sufficient to cover the full extent of such liabilities. In addition, such risks may not, in all circumstances be insurable, or, in certain circumstances, the Company may elect not to obtain insurance to deal with specific risks due to the high premiums associated with such 17 P a g e Columbus Gold Corp. Annual Information Form

18 insurance or other reasons. The payment of such uninsured liabilities would reduce the funds available to the Company. The occurrence of a significant event that the Company is not fully insured against, or the insolvency of the insurer or such event, could have a material adverse effect on the Company s financial position, results of operations or prospects. No assurance can be given that insurance to cover the risks to which the Company s activities will be subject will be available at all or at economically feasible premiums. Insurance against environmental risks (including potential for pollution or other hazards as a result of the disposal of waste products occurring from production) is not generally available to the Company or to other companies within the industry. The payment of such liabilities would reduce the funds available to the Company. Should the Company be unable to fund fully the cost of remedying an environmental problem, the Company might be required to suspend operations or enter into interim compliance measures pending completion of the required remedy. The Market Price of Shares May Be Subject to Wide Price Fluctuations The market price of Shares may be subject to wide fluctuations in response to many factors, including variations in the operating results of the Company, divergence in financial results from analysts expectations, changes in earnings estimates by stock market analysts, changes in the business prospects for the Company, general economic conditions, changes in mineral reserve or resource estimates, results of exploration, changes in results of mining operations, legislative changes, and other events and factors outside of the Company s control. In addition, stock markets have from time to time experienced extreme price and volume fluctuations, which, as well as general economic and political conditions, could adversely affect the market price for the Shares. The Company is unable to predict whether substantial amounts of Shares will be sold in the open market. Any sales of substantial amounts of Shares in the public market, or the perception that such sales might occur, could materially and adversely affect the market price of the Shares. Global Financial Conditions Global financial conditions over the last few years have been characterized by increased volatility and several financial institutions have either gone into bankruptcy or have had to be rescued by governmental authorities. These factors may affect the ability of the Company to obtain equity or debt financing in the future on terms favourable to it. Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. If such increased levels of volatility and market turmoil continue, the operations of the Company may suffer adverse impact and the price of our Shares may be adversely affected. Currency Risk Currency fluctuations may affect the costs the Company incurs at its operations. Gold is sold throughout the world based principally on the US dollar price, but a portion of the Company s operating expenses may be incurred in other currencies. Fluctuation in these and other currencies coupled with stable or declining metal prices may have an adverse effect on the Company s earnings, in the event it has any, halt or delay development of new projects, and reduce funds available for further mineral exploration. Credit risk 18 P a g e Columbus Gold Corp. Annual Information Form

19 Credit risk is the risk of an unexpected loss if a party to its financial instruments fails to meet its contractual obligations. The Company s financial assets exposed to credit risk will be primarily composed of cash and amounts receivable. While the Company will attempt to mitigate its exposure to credit risk, there can be no assurance that unexpected losses will not occur. Such unexpected losses could adversely affect the Company. Paul Isnard Project, French Guiana Unless otherwise stated, information of a technical or scientific nature related to the Paul Isnard Project contained in this AIF is summarized or extracted from the Technical Report available under the Company s profile on SEDAR at Project Description and Location Area, Location and Interest in Project The Paul Isnard Project and mining concessions are located in the northwestern portion of French Guiana, South America as illustrated in the figure below. The Montagne d Or area, which hosts the gold mineralization that is subject of the Technical Report, occurs within Concession C 02/46 in the southern part of the Paul Isnard Project. The project area 19 P a g e Columbus Gold Corp. Annual Information Form

20 extends from longitude W (UTM ) to W (UTM ), and latitude N (UTM ) to N (UTM ). Camp Citron, the base camp for the project, is located approximately 4 km northwest of Montagne d Or and has Universal Transverse Mercator (UTM) coordinates of 171,623 E, 524,072 N. The Project is composed of the following 8 mining concessions which cover an area of approximately 135km 2 (13,500 ha). # Mining Title Type Surface Km 2 Transfer to Sotrapmag Expiry Date C01/19 Concession Decree : 12/27/1995 (JO : 12/29/1995) 12/31/2018 C02/24 Concession Decree : 12/27/1995 (JO : 12/29/1995) 12/31/2018 C01/46 Concession Decree : 12/27/1995 (JO : 12/29/1995) 12/31/2018 C02/46 Concession Decree : 12/27/1995 (JO : 12/29/1995) 12/31/2018 C03/46 Concession Decree : 12/27/1995 (JO : 12/29/1995) 12/31/2018 C01/48 Concession Decree : 12/27/1995 (JO : 12/29/1995) 12/31/2018 C02/48 Concession Decree : 12/27/1995 (JO : 12/29/1995) 12/31/2018 C03/48 Concession Decree : 12/27/1995 (JO : 12/29/1995) 12/31/2018 Total P a g e Columbus Gold Corp. Annual Information Form

21 The concessions are shown in the figure, below. 21 P a g e Columbus Gold Corp. Annual Information Form

22 The Paul Isnard Project also includes a pending application for an exclusive exploitation permit ( PEX ), covering an area of 14.4 km2, contiguous with Concession C02/46 in the Montagne d Or area. The location of the pending PEX is shown on the figure above. Under the terms of the Paul Isnard Option Agreement, Columbus Gold has the right to acquire a 100% interest in SOTRAPMAG (or the Paul Isnard Project directly, at Columbus Gold s election) which holds the 8 mining concessions and pending PEX application comprising the Paul Isnard Project. The Paul Isnard Option Agreement required Columbus Gold, among other things, to issue shares to the Optioners a total of 30,276,266 shares in the capital of Columbus Gold, and also complete a private placement to Pelican Venture SAS of 10,092,089 shares in the capital of Columbus Gold. These share issuances were completed on June 29, The completion by Columbus Gold of the acquisition of the project is now subject only to one condition, being the payment of US$500,000 upon the expiration of the nonobjection period required by the appropriate department of the French government, including without limitation MEDDTL, which period is pending as at the date of this report. The Montagne d Or exploration area is located approximately halfway up the steep northern slope of the Dékou-Dékou Mountain with mineral concession C02/46 (215) shown in the figure above. The mineralization and proposed mining and processing facilities, with the exception of the man camp, are within mineral concession C02/46. The man camp for the current exploration and the proposed mining operation could be located at Citron Camp. Citron Camp is within mineral concessions C01/46 held by SOTRAPMAG and C01/32 held by Tanon S.A. (Tanon). The access road crosses two Tanon held mineral concessions. The road crosses Tanon held mineral concessions C01/32 between the mineralized zone and Citron Camp and mineral concession C01/33 north of Citron Camp (see figure above). Columbus Gold does not have surface or mineral rights on the Tanon held mineral concessions. Royalties and Other Encumbrances The Paul Isnard Project is subject to a royalty payable to Euro, former owner of SOTRAPMAG and the mining concessions, on the first 5 Moz gold production from the Paul Isnard Project. The royalty is payable as follows: Gold Production Royalty To 2Moz 10% of gold sales price less US$400/oz. 2 to 5Moz 5% of gold sales prices less US$400/oz. Columbus Gold has the right, pursuant to the Option Over Royalty Agreement, to acquire the aforementioned GSR and replace it with a Net Smelter Returns Royalty payable to Euro on the first 5 Moz gold production on the Project at a rate of 1.8% on the first 2 Moz, then 0.9% on the balance. In order to maintain this option, Columbus Gold is required to pay Euro an annual option fee of $50,000 on the anniversary date of the agreement. In order to exercise the option, Columbus Gold is required to pay Euro $4,200,000 in cash; issue 12,865,600 shares in the capital of Columbus Gold to Euro, subject to adjustment; and issue the aforementioned NSR royalty to Euro. The option will remain exercisable until the earlier of (i) July 30, 2015; (ii) 120 days following the date on which Columbus Gold has earned a 100% interest in the Project; and (iii) 30 days following an anniversary date of the Option Over Royalty Agreement if an applicable annual maintenance payment has not been duly paid to Euro. 22 P a g e Columbus Gold Corp. Annual Information Form

23 There is also a royalty payable to the Department of French Guiana, for distribution to the local communes (towns), of (US$289.64)/kg gold production for small and medium sized companies and (US$579.28)/kg for larger companies. The Euro-US dollar conversion is based on an exchange rate of US$1.29: Pursuant to an agreement dated November 19, 2009 between Golden Star Resources LTD ( Golden Star ) and Auplata, Auplata agreed to pay to Golden Star the sum of US$1,000,000 on the date when gold is first commercially produced on the project. Under an Agreement dated November 22, 2011, Columbus Gold agreed that it would be jointly and severally liable with Auplata for such payment, though the fourth amendment to the Option Agreement dated December 5, 2011 contains a provision under which Auplata agreed that it would pay the entirety of such payment to Golden Star in the event that its activities on the Project cause its activation. Environmental Liabilities and Permitting The Montagne d Or project area is an intermittently active exploration property centered in dense tropical rain forest. Exploration activities will require manual or mechanized line cutting for construction of access tracks, trenching, drill pads and camps. Environmental liabilities resulting from exploration activities are expected to be minimal, as natural vegetation regeneration and a high precipitation rate contributes to the rapid natural rehabilitation of project excavations and drill sites. Prior to its acquisition by Auplata (and the current agreement with Columbus) SOTRAPMAG had entered various agreements, none of which remain in effect, with local alluvial gold mining companies to carry out operations at Paul Isnard under terms of small mine permits designated Authorization d Exploitation (AEX). Holders of these permits are required by law to remediate worked areas, control downstream silting, and are prohibited from using mercury. These activities are monitored by government authorities and are not expected to create any liability to Columbus. The areas of environmental degradation of concern to Columbus Gold are mainly associated with illegal artisanal placer mining. Some of the environmental damage is visible from aerial reconnaissance, and includes clearing of the forest adjacent to streams, severe downstream silting, and potential mercury contamination. Auplata, and by extension Columbus, has reached agreement with French regulatory authorities to dedicate up to 350,000 (US$452,000) to reclamation of the illegal mining sites. A Nature Reserve, the Réserve Biologique Domaniale Lucifer Dékou-Dékou managed by the National Office of Forests (ONF) occurs north and south of Montagne d Or. Its Management Plan from the ONF is yet to be ratified. The boundaries of this reserve overlap four of the Paul Isnard mineral concessions. Since these concessions exist and there has been continued exploration and mining activity in the area, the ONF has agreed to create several zones within the reserve boundaries where mining is permitted. The Montagne d Or deposit itself is within a zone where mining is permitted, but quite close to the zone limit. Location of Mineralized Zones Gold mineralization at Montage d Or is most common within the felsic, or quartz porphyry, body. This unit could very likely represent a high-level intrusive body, an elongate pluton or a series of dikes. It has retained its relatively homogeneous lithology despite the cumulative effects of mineralization, alteration, shearing, and metamorphism. Narrow (1 to 3 m) intervals of quartz porphyry, sited within the mafic micro-porphyry and distal from the main mass, have been found to be preferentially mineralized. Gold mineralization within the quartz porphyry unit is strongly affiliated with chalcopyrite mineralization, and 23 P a g e Columbus Gold Corp. Annual Information Form

24 lesser; pyrite and pyrrhotite is present but does not appear to always be associated with gold. Semimassive sulfide veins and fractures that form >20% sulfide concentrations also occur within the felsic porphyry which have been strongly deformed. The Montagne d Or gold deposit, is interpreted from the relatively widely spaced and shallow fence drilling, as a steeply south-dipping quartz porphyry unit that may have intruded a mafic micro-porphyry, or dioritic section. Permits The Paul Isnard Project is comprised of 8 mining concessions covering approximately 135 km2. The mining concessions, combined with appropriate permits, allow large-scale mine operations and are valid until December 31, 2018 with potential renewal for a maximum of 25 years conditional upon a number of conditions including economic viability. The Project also includes a pending application for a PEX covering an additional 14.4 km2. The PEX, combined with appropriate permits, also provides for medium to large scale mine operations and is granted for 5 years with two potential and maximum renewals of 5 years each. Small-scale mining, including most alluvial operations, are carried out through exploitation authorizations ( AEX ) granted for areas no larger than 1 km2. There are no current AEX within the Paul Isnard Project area. Exploration activities are undertaken under auspices of exclusive exploration permits ( PER ) which are issued through a competitive bid process. The Paul Isnard Project does not currently include any PER. The Paul Isnard mining concessions, and the PEX pending issuance, require quarterly reporting to the State but carry no defined financial commitments for maintenance. Large scale mining operations, as would be contemplated at Paul Isnard, require different levels of permitting from the local authorities. Such authorizations are subject to an approved feasibility study, a full environmental impact study, and public inquiries. Government Approval of Operating Permits The proposed Scheme of Mining Orientation and Management of French Guiana {Project de Schéma Départmental d Orientation Minière de la Guyane ( SDOM )} was passed into law in December, 2011 and became effective on January 1st, The objective of the SDOM is to encourage and provide incentive, including security of land tenure and clear guidelines to development, to serious and environmentally responsible mining companies while inhibiting environmentally damaging illegal mining activities. To achieve its duel objectives (economic development and environmental protection) the SDOM assigns all lands in French Guiana to one of five classifications requiring varying levels of obligations for mining companies operating in the Department. The SDOM provides that the Department is covered by three zoning classifications setting out clear rules for mining therein. The three mineral land zone classes defined by the SDOM are: Area in which Mining Activity is Authorized. Mining activity, including open pit and underground mining, is authorized in these areas; 24 P a g e Columbus Gold Corp. Annual Information Form

25 Area in which Mining Activity is Banned Except for Underground Mining and Airborne Surveys. Underground mining is possible in these areas, but other mining activity is forbidden in these areas; and Area in which Mining Activity is Banned. All mining activity is forbidden in these areas. Most of the Paul Isnard concession area, including the Montagne d Or gold deposit, lies within the classification designated as Area in which Mining Activity is Authorized. Conditions to mining in these areas, which in actual fact would be applicable to large scale mining operations anywhere in the Department include: Demonstration of a viable mineral deposit; Completion of an Environmental Impact Study and Reclamation Plan; and Possible additional reclamation, or environmental investigations as may be required for the public interest, on or off site. Accessibility, Climate, Local Resources, Infrastructure and Physiography Access The property is accessible year around by air or seasonally by road. Fixed wing aircraft are available from either Cayenne or St. Laurent. Charter flights are currently operated by private services. Helicopter access is also available from Cayenne through several companies and costs approximately US$2,000/hr. The flight from Cayenne is approximately 55 minutes and from St. Laurent is about 20 minutes. There is a forest road from St. Laurent on the Moroni River approximately 120 km to the Paul Isnard project area. The first 65 km to Croisée d Apatou is maintained by the State and supports all season travel. SOTRAPMAG has an exclusive right to the final 55 km. This section is currently being renovated by Auplata to accommodate normal vehicle access for servicing the site. The existing heliport is adequate for initial site activities, but will need to be upgraded once the project advances and transportation requirements increase. Climate The climate is typically equatorial, with daytime temperatures between 29 C and 33 C, falling to 19 C to 23 C at night. There are two wet seasons; the main period is typically from April to end August, and the lesser one from mid-november to mid-march. The average annual rainfall is in excess of 2,000 mm with a minimum monthly rainfall of 50 mm. The humidity is constantly high, typically ranging between 78% and 92% (Suter, 1999). The operating season is year-round. Surface Rights and Infrastructure Surface rights on the mineral concessions are held by SOTRAPMAG and the PER applications are held by Auplata but are to be transferred to Columbus Gold once issued. There is currently minimal infrastructure for development of the Project. Near Citron, there is an exploration camp, 500 m grassed airstrip for small fixed wing aircraft and an unimproved heliport. 25 P a g e Columbus Gold Corp. Annual Information Form

26 Access to the mine site area is by an unimproved dirt road from Saint-Laurent-de Maroni. Due to its remote site location, significant infrastructure facilities will need to be constructed or upgraded for development of the Project. There is currently no power line near the Project site. A 138 kv power line will likely need to be constructed from Saint-Laurent-de Maroni to support operations. Diesel electric power generators will be sufficient to support exploration and pre-production activities. Potable water is available on site, sourced from a 40 m drilled well. Semi-skilled and unskilled labor is readily available in Cayenne, with most professional and technical personnel being trained in metropolitan France. Unskilled labor is also available in St. Laurent. Skilled labor will come from recruitment outside of the region. French labor laws apply to all disciplines, resulting in relatively high salaries and restrictive employment contracts compared to the neighboring countries of Suriname and Brazil (Suter, 1999). Based primarily on recently flown site topography, a potential tailings storage site has been identified at the head of a large drainage valley (Topaz Creek) located directly north of the western parts of the mineralization. The area is covered by thick tropical rain forest type vegetation. No geotechnical drilling or testing has been conducted in the proposed area to date. Two areas of potential waste disposal have been identified, each is located direct north of the east and west zone of mineralization, respectively. Heap leach processing has not been investigated and therefore no potential heap leach areas are identified. A potential processing plant site has been identified on the flat ground locate directly northeast of the western zone of mineralization. Topography, Elevation and Vegetation The elevation of the Project is 130 m amsl. Three prominent topographical features dominate the relief of the region. The E-W trending Massif Dékou-Dékou range is located to the south of the property. The SW-NE trending duricrust plateau of Montagne Lucifer is located to the northeast. The NW-SE drainage system of the Roche River separates these two areas of elevated relief eventually joining the Eau Claire River to the SE of Dékou-Dékou. The two high relief areas are notable for their steep flanks. There are numerous broad valleys, many of which have been exploited for their alluvial gold deposits. These are separated by areas of moderately rugged to more rounded hilly relief and often deeply incised valleys. To the east and north-east of the Massif Dékou-Dékou along the Montagne Patawa Range more rugged relief is again typical (Suter, 1999). Most of the region is covered by a thick canopy of primary and secondary forest. The larger valleys which have been extensively impacted by alluvial mining and are now covered by secondary forest or grassy-scrub with bamboo. 26 P a g e Columbus Gold Corp. Annual Information Form

27 History The Paul Isnard concession has been a regional center of alluvial and colluvial gold production since Minor hardrock excavations of gold vein systems during an uncertain era are also scattered throughout the concessions. Mechanized New Zealand type bucket dredging commenced in the early 1900 s and continued until dragline dredging began in Mining activity was delayed from 1950 through 1965 due to legal problems related to administrative delays. From 1965 to 1986, Compagnie Miniere de Paul Isnard (CMPI) held the mining permits and conducted placer mining operations. Total gold production from the Paul Isnard region is estimated at 2 M ounces. Alluvial mining has been mainly concentrated on the Roche-Lezard river system and its tributaries and the Elysee valley. The property was purchased by local company, Societe de Travaux Publics et de Auriferes en Guyane (SOTRAPMAG) in 1986, which continued placer mining through to In October 1994, Guyanor Resources S.A. acquired all the shares of SOTRAPMAG and the eight concession blocks, with 25-year terms, totaling approximately 136 km 2 were officially transferred the new SOTRAPMAG company in 1995 by Ministerial Decree. In November 1999, Guyanor was granted one Type A permit (since converted to an Exclusive Exploration Permit (PER)) for 283 km 2 of prospective ground. The PER has been reduced to 140 km 2, renewed by EURO through November 2007, and is currently in review for an extension into Early exploration work was first conducted by Bureau Minier Guyanais (BMG), a state mining group, at Montagne d Or from 1930 to 1958, and by the Bureau de Recherches Géologiques et Minières (BRGM) from 1964 to The BRGM chose to focus their activities on the Paul Isnard region due to the economic importance of the alluvial deposits that made the area one of the most important gold producing regions in French Guiana. The Montagne d Or bedrock mineralization was initially indicated by the BRGM regional geochemical sampling program in 1976, but was not recognized at the time. Reinterpretation of the data in 1984, suggested that elevated boron and potassium-barium values in the area may be important pathfinders to gold mineralization. Follow-up soil sampling and mapping in the area ensued over the next five years. In 1989, a 100 ppb Au anomalous zone was identified, and over the next few years a series of auger holes were drilled to a maximum depth of 6 m. Some grab and channel sampling followed, and a 1:4,000 detailed geologic map was constructed. Guyanor conducted exploration during 1994 and 1995, using regional-scale remote sensing (LandSat, geophysics), geological examinations and geochemical surveys. An airborne geophysical survey of magnetics and radiometrics was flown in 1994 by Aerodat. This was conducted along 200 m northsouth spacing over a 20 km x 40 km area, as part of Guyanor s semi-detailed airborne geophysical program over all the project properties in French Guiana and Surinam. Guyanor entered into a Joint Venture (JV) with ASARCO, and La Source as a silent partner, from June 1996 to April Essentially, ASARCO provided funding for exploration of the Montagne d Or zone. Firstly, 921 m of channel samples were collected in 1995 from 87 sites. A total of 56 diamond drillholes totaling 10,916 m were completed in In addition, from 1996 to 1998, the Montagne d Or investigations program included; geological mapping, rock sampling, petrographic studies; ground magnetic surveys, pulse electro-magnetic (EM) and induced polarization (IP) surveys. Downhole pulse EM surveys were conducted on some drillholes in The exploration program between 1999 and 2000 consisted mainly of regional mapping and grab sampling. This was aimed at improving geological interpretation and locating other gold occurrences (mainly at Elysée area on the NW part of the concessions and on the PER). 27 P a g e Columbus Gold Corp. Annual Information Form

28 Guyanor and Rio Tinto entered into a JV Agreement from January to September During this period, they retrieved and digitized all of the BRGM soil profile and grid geochemistry data over the entire Paul Isnard concession. Additional, soil sampling was conducted along ridges and spurs seeking extensions and enhancement of the Montagne d Or mineralization. Twelve DDH were carried out on the Elysée target, and 2 groups of 3 DDH each were drilled on combined soil geochem and ground Mag anomalies in the Paul-Isnard concessions not far from the Citron village. On the SE part of Montagne d Or, 3 DDH were drilled over a large IP anomaly. Due to weak results, not corresponding to the Rio Tinto objectives, Rio Tinto withdrew from the JV. Since 2001, the Montagne d Or project has been on care and maintenance status. The total drilling campaign to date includes 59 diamond drillholes at Montagne d Or, totaling 11,421 m. Golden Star Resources Ltd. Acquired a 100 percent interest in SOTRAPMAG and the Paul Isnard Project, subject to the royalty payable to Euro Resources S.A. described in Section 2.4, pursuant to a Settlement Agreement dated 18th November Auplata S.A. in turn acquired SOTRAPMAG and the Project, subject to the Euro royalty, in a Purchase and Sale Agreement dated November 19, Columbus acquired its right to acquire 100% of SOTRAPMAG and the Project through an Option Agreement, terms of which are outlined in Section 2.2.2, dated November 30, 2010 as amended thereafter. Apart from limited metallurgical testwork and a mineralo resource estimate carried out by SRK for Golden Star in 2007 to None of these groups had carried out drilling or substantive exploration activities on the Project. Since mid-2011 SOTRAPMAG has carried out extensive facilities upgrades at Citron Camp and rehabilitated road access to the Montagne d Or site. Columbus commenced diamond core drilling in late 2011 and has currently completed 14 holes for 4,882 meters with assays pending. Geological Setting Regional Geology The Paul Isnard concession occurs within the Guiana Shield, a 900,000 km2 segment of the Amazonian Craton of South America. The majority of the Guiana Shield formed during Proterozoic periods of intense magmatism, metamorphism and deformation that culminated in the Trans-Amazonian tectonothermal event of 2.1 to 1.9 Ga. The low-grade, volcanic-sedimentary greenstone sequences and affiliated granite intrusives that comprise the shield yield U-Pb age dates between 2.25 and 2.08 Ga. The major structural features include the Central Guiana Shear Zone (CGSZ) and the North Guiana Trough (NGT). The CGSZ is a large-scale ductile shear zone, extends from French Guiana westerly through central Suriname and north-central Guiana. The NGT is interpreted to be a sinistral strike-slip structure formed during the Trans-Amazonian Orogeny (Voicu et al, 2001). The greenstone belts of French Guiana are subdivided into two major groups illustrated in the figure below. The northern group is associated with the NGT and includes the Paramaca Formation an assemblage of volcanic, volcaniclastic and sedimentary units. This Formation occurs extensively across northern French Guiana, it strikes N110 E and hosts a number of gold deposits including; Paul Isnard, Camp Caiman, St. Elie, Kool Hoven and Gross Rosebel (cf: Royal Hill, in Suriname). 28 P a g e Columbus Gold Corp. Annual Information Form

29 The southern group is associated with the CGSZ and both extend from Surinam through French Guiana. It includes sedimentary rocks of the Lower Orapu Formation and volcanic-sedimentary units of the Arima Formation ( Ga), which unconformably overlie volcanic units of the Lower Proterozoic Paramaca Formation and the granite-gneiss complex of the Guianese Massif Central ( and Ga). This group hosts gold mineralization at Benzdorp in Suriname, Yaou and Dorlin in French Guiana and numerous other smaller workings. Most of the remainder of the country is composed of the Lower Proterozoic granite-gneiss metamorphic complex of the Guianese Massif Central, and a central belt of Paramaca volcanic, volcaniclastic, and sedimentary lithologies. The Project lies within the northern greenstone belt and is comprised of mafic metavolcanics of the Paramaca Formation located south of the contact of the Arima and Orapu Formations. The geology is dominated by a large gabbro and diorite complex interpreted by some to be a basal portion of the Paramaca Formation. The greenstone belt locally is limited to the south and west by regionallyextensive post-orogenic granites and to the east by inferred high-grade metamorphic rocks of migmatitic and granitic gneiss. To the north, a narrow band of Paramaca-Armina Formation is unconformably 29 P a g e Columbus Gold Corp. Annual Information Form

30 overlain by Upper Detrital Series (Ensemble Detrique Superieur-EDS) siliciclastic sediments comprised of the Bonidoro, Orapu and Rosebel Formations. The sediments are surrounded by gabbro and granite. The EDS sediments are interpreted as having been deposited in pull-apart basins associated with the NGT. The Paramaca and EDS are probable equivalent or correlatives of the Birimian and Tarkwaian sequences respectively of the West African Craton and may have been co-extensive prior to the separation of Gondwanaland in the Mesozoic. Property Geology At Montagne d Or, the gold mineralization is hosted within a 400 m thick sequence of intercalated felsic and mafic volcanics with subordinate volcaniclastics that are assigned to the Lower Proterozoic Paramaca Formation. The units strike east-west, dipping steeply south and are exposed on the northern slopes of Dékou-Dékou Mountain. The eastern portion contains a preponderance of mafic volcanics relative to felsic volcanics. The mineralized units have been strongly deformed, as evidenced by a penetrative S1 foliation that locally transposes S0 and in places is mylonitic. The S1 foliation is constant throughout the section, striking 080 to 100 with a 70 S to sub-vertical dip. The intensity of deformation varies significantly over the distance of a few meters. The shear displacement is interpreted as dip slip movement. The project area is cross cut by post deformation swarms of mafic dikes. Previous geological reports have interpreted the geology and mineralization at Montagne d Or to represent a bimodal sequence of submarine volcanic flows and pyroclastic rocks hosting syngenetic exhalative, volcanogenic massive sulfide-affiliated mineralization. Alternative interpretations have also been offered in favor of a deformed, metamorphosed, epigenetic, quartz porphyry-related hydrothermal system. The merits of each of these hypotheses will be discussed below in Section 6. The entire region has undergone Tertiary age lateritic weathering. The weathering surface is dissected to the south and north of the Montagne d Or project site, particularly on the steep northern face of Dékou- Dékou where the erosion has deeply incised the underlying saprolite exposing fresh bedrock. Exploration The BMG first conducted research at the Paul Isnard area from 1930 to The BRGM conducted a series of regional exploration surveys from 1964 to Their program progressed from regional geophysical and geochemical surveys to follow-up surveys of anomalous areas and outcrop mapping wherever possible. Anomalous gold was first discovered at Dékou-Dékou Mountain during the BRGM regional geochemical survey. Guyanor Ressources acquired the Paul Isnard property in 1994 and conducted extensive exploration activities including mapping, sampling, trenching, and geophysical surveys. This work included an Aerodat airborne radiometrics and magnetics survey over a 24 km x 40 km area. From 1996 through 1998, Guyanor joint ventured their exploration program at Montagne d Or with ASARCO and La Source. This work entailed geologic mapping and rock sampling, trench sampling, petrographic studies, ground geophysical surveys including ground magnetics, pulse EM, and Induced Polarization. Once a target zone was defined, a drilling program was developed that ultimately totaled 59 diamond core holes, for 11,321 m. Additionally, 921 m of detailed channel sampling was completed. Total project expenditures on the Paul Isnard Concession from were US$5,568,515 (Suter, 1999). The documentation files for the Paul Isnard property include numerous airborne and ground geophysical survey maps and compilations conducted both by the BRGM, Guyanor and ASARCO partners. Interpretive geophysical reports are not well documented. 30 P a g e Columbus Gold Corp. Annual Information Form

31 A ground magnetic survey was carried by ASARCO over the eastern and central portion of the deposit (Suter, 1999). The results of the survey indicated a positive relation between the BRGM soil anomalies and mineralization in drillholes with zones of high magnetic susceptibility. An IP-resistivity survey, performed by CSA Inc, Ireland, used a gradient array with 100m electrode spacing and 50m measurement intervals. Four gradient-array panels were surveyed with nominal electrode spacing of 1,950 m. Line spacing was typically at 100 m intervals and rarely 200 m. All geophysical stations were measured horizontally, due to the steep terrain, and surveyed by Guyanor personnel. A mise a la masse (MALM) downhole IP-resistivity survey was conducted around each drillhole over an 800 m x 800 m area at 50 m stations. The resistivity survey showed two prominent east-west trending zones, one to the south covering most of the amphibolites, and a second one in the centered grid of unknown cause. The IP survey identified two east-west bands of high chargeability; a northern zone corresponding to the SMS and disseminated sulfide zones, and a second one to the south that correlates with the contact of the Paramaca volcanics and amphibolites. A northeast-southwest zone of high chargeability was located in the southeastern corner of the survey grid. Overall, the MALM confirmed the general east-west trend of the felsic unit and mineralization. The exploration drilling program successfully outlined the Montagne d Or gold mineralization with several fences of wide-spaced (~ 200 m) drillholes. These have indicated a significant, intermediate grade gold deposit. Mineralization is largely contained within a 400 m-wide, east-west-striking, steeply south-dipping felsic schistose unit. Gold is predominantly associated with semi massive and disseminated sulfide zones containing pyrite, chalcopyrite, and other sulfides. Drilling was carried out over a 3,500 m strike length and mineralization was encountered along the entire strike length. The majority of continuous mineralization appears to occur in the central portion of the unit along a strike length of 2,200 m. A pulse-em ground loop survey was conducted that identified the two major conductive sulfide horizons encountered by drilling, along with ten additional anomalous zones. Subsequent drill testing of the additional anomalies proved negative, due to the presence of pyrrhotite, which is not associated with gold. At a fairly early stage of Guyanor s exploration, the bi-modal nature of the volcano-sedimentary units of Montagne d Or as well as abundant semi-massive sulfide mineralization was interpreted to indicate that the gold mineralization was related to a volcanogenic massive sulfide mineralization style. It was also apparent that subsequent deformation had affected the original gold distribution making an absolute model of mineralization even more difficult. The Guyanor exploration model that drove the 1996 to 1999 drilling program evolved over time as understanding of mineralization and geology improved. A focused re-examination of the textural, structural and mineralogical attributes of the deposit made by Goldfields Ltd. in 2001 (see Section 5.2.1) and Redwood (2002) provided an alternative explanation. Goldfields Ltd. proposed that the gold mineralization was actually formed as a sub-volcanic porphyryrelated gold-copper system. Exploration drilling to date has focused on the relatively shallow (~200 m) upper portions of a steeplydipping quartz porphyry or felsic unit. Drilling to search for additional massive sulfide lenses has had little success. The original model developed for the deposit as a stratabound volcanogenic sea floor exhalative or massive sulfide system is worthy of rethinking as an alternative means to expanding new areas to explore. The re-examination of the salient features of the system suggesting that it may represent a quartz porphyry-hosted epigenetic porphyry gold (copper) system appears to be credible. However, the applicability of either model remains to be demonstrated, as all drilling has been relatively 31 P a g e Columbus Gold Corp. Annual Information Form

32 shallow, and project-wide continuity or coalescence of mineralization and alteration features have yet to be fully documented by drilling. Either interpretation offers additional incentive and opportunity to both infill drill between widely-spaced drillholes, and to explore the deeper zones of the felsic unit for coalescing fracture system mineralization and/or for a possible plutonic source area. Interpretation The exploration drilling program conducted by Guyanor from 1994 to present was largely responsible for advancing the property from a raw exploration prospect to its current status. This program mapped, sampled and diamond core drilled the mineralized shear zone at Montagne d Or. These procedures were conducted in a careful and professional manner. Most of the drillholes were surveyed for down hole deviation. The core was logged, split and sampled properly. All samples were analyzed using appropriate assay procedures of the time. The drill logging and assay results were correctly compiled onto cross-sections. The exploration work described above resulted in the delineation of anomalous gold mineralization located within several tabular, south-dipping zones, ranging from a few meters up to 75 m in true thickness along 2,200 m of strike length. The drilling and assay results of the exploration work described above were subsequently incorporated into historical resource estimates (Costelloe, 1999, RSG Global 2004) as discussed in Section 4.3. Most of the technical data supporting the resource estimation discussed in Section 15 has also been provided. All of the relevant exploration work described above was conducted by employees, subcontractors or JV partners of Guyanor Resources. Mineralization The known gold deposits of the Guiana Shield are all located in close proximity to major structures, and occur within low to medium metamorphic- grade granitoid-greenstone belts. Most of the deposits appear to be epigenetic in origin, although some tend to be affiliated with specific stratigraphic units. These deposits occur within lithologic units that are rheologically more brittle than the adjacent country rocks. In contrast to most orogenic gold regions, the Guiana Shield has not endured high erosion rates, thus deposits formed at relatively shallow levels remain preserved. The age range of the Guiana greenstone belts are correlated with the Birimian System in West Africa, where major gold deposits are associated with shear zones within greenstone belts. Gold deposits within the Guiana Shield are mainly associated with mesothermal epigenetic style mineralization. This style is generally affiliated with regionally metamorphosed terrains that have undergone strong and protracted deformation. Correlative Archean and Proterozoic greenstone belts include the Abitibi belt of Canada, the deposits of the Yilgarn Block, Western Australia, the Birimian sequences of West Africa and the Lake Victoria region of Tanzania. Mineralization in these terrains typically consists of vein or stockwork fabrics developed within zones of brittle-ductile deformation. Brittle dilation zones are commonly found at deflections of ductile shear zones. These can form due rheological contrasts between rock types or by the increase in pore pressure related to the introduction of fluids. The fracture zones provide channel ways for hydrothermal flow and areas of relatively low pressure for view deposition. The gold mineralization at Montagne d Or has been interpreted to be the result of two very different processes. The earliest interpretation was that the gold was deposited in a syngenetic, exhalative, volcanogenic, massive sulfide-affiliated mineralization. A later hypothesis suggested that the gold was deposited in an epigenetic, quartz porphyry-related hydrothermal system, which was strongly deformed within a high strain shear zone. Each of these models are discussed below. 32 P a g e Columbus Gold Corp. Annual Information Form

33 The original interpretation of the Montagne d Or mineralization was that of a syngenetic, volcanogenic, massive sulfide exhalative environment deposited in a subaerial oceanic island arc setting (VMS). The hyperchlorite zones were interpreted as chloritic feeder pipes and sulfide mineralization as stringer zone sulfides. The VMS genetic model guided exploration on the Montagne d Or deposit throughout the drilling campaigns of the 1990 s. Franklin (1999a,b,c) provides extensive observations and correlations for this model. It was responsible for the majority of the interpretive descriptions used to characterize the lithologies encountered in the drill logs. The atypical alteration assemblages were the primary features casting doubt on the VMS model. A focused re-examination of the textural, structural and mineralogical attributes of the deposit made by Goldfields Ltd. in 2001 (see Section 5.2.1) and Redwood (2002) provided an alternative explanation. They proposed that the gold mineralization was actually formed as a sub-volcanic porphyry-related goldcopper system. Plots of normative corundum values on the gridded soil map of Montagne d Or shows elevated values within distinct zones oriented oblique to the strike of the gold mineralization. This cross cutting corundum zonation is also supported by contoured plots of gold, copper, and zinc grades in soil illustrated in the figure below. These features suggest that a cross-cutting fracture or feeder system may have controlled the original source fluids and the mineralized felsic unit has subsequently been deformed along the east-west shear zone. The main features that support a non-syngenetic origin for the deposit include: 33 P a g e Columbus Gold Corp. Annual Information Form