Supergene alteration phenomena have affected the upper part of the Perama Hill epithermal mineralization hosted in the felsic sandstone (oxide sector). The very low acid buffering capacity of the porous sandstone combined with the disseminated character of pyrite and sulfosalts, resulted in extensive weathering. Goethite and hematite predominate in the upper part of the mineralized sandstone revealing pervasive oxidation and leaching of heavy metals. A transitional zone to the refractory sulfide mineralization is detected close to the underlying andesitic breccia. Free Au grains are identified in the upper, oxide sector of the deposit, with the highest Au grades being observed at the upper and lower part of the sandstone, the latter located close to the transition zone with the underlying andesitic breccia. Acid rock drainage identified in both surface and ground water samples in the vicinity of the Perama Hill epithermal deposit indicates active oxidation of the sulfide sector of the deposit.