http://dl.dropbox.com/u/14600260/Oremex_Eng.pdf

After the successful research of Avino Silver & Gold Mines, here comes the sequel. It is yet again a silver junior but also a company with really interesting gold potential. It is at an earlier stage than Avino, with a lower market cap and a highly interesting, NI-43-complient deposit with completed P.E.A. (Preliminary Economic Assessment) for an open pit mine with 3.5 – 4.0 Moz Ag production per year.

Oremex Resources Inc. ORM.V 103.9 M (options; 4.5 M, warrants; 33.3 M, fully diluted 142 M) At 21 cents; 21 MCAD (not FD) 50.8 Moz Ag NI43-complient with P.E.A. 2 MUSD Silver, gold and base metals www.oremex.com

Oremex is a silver junior with a very good gold potential, active in Mexiko (Durango). It has several highly interesting projects concerning both silver and gold. The management consists of a group of merited people, experienced in both exploration and mining. Michael R. Smith, previously chief geologist for the gold giant Barrick at their Goldstrike mine, is president and CEO. The other persons also come from highly merited PM-companies, such as Placer Dome, Cominco and Gold Fields.

The company is yet relatively unknown, but I think this is about to change with the advances within their various fields which have been considerable as of late. Not in the least I also believe this is going to change considering the financial institution that recently chose to invest in Oremex. The market cap is still very low and herein lies the potential; being able to pick up a quality junior with highly potential areas before it has received more attention.

The developments lately indicate that Oremex – besides a NI43-complient silver deposit – has now also found an interesting gold mineralization with blue sky potential. This has every opportunity of becoming something of a game changer for Oremex, which previously was only seen as a silver junior with base metal credits. In the next section, under ”Deposits – mineralizations” , this will be described more closely, as well as why it looks so interesting.

Deposits - mineralizations

Oremex has several very interesting areas for both silver and gold at varying degrees of maturity, and it is especially within silver they have come a long way in a project with a NI43 which also includes a P.E.A. However, their gold areas are also extremely interesting, so let us review the projects one by one.

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Tejamen - silver

The flagship of ORM’s areas is Tejamen, and this is also the project that got me interested in Oremex to start with (before I had done some research on the gold areas). It has a NI43-complient deposit of 50.8 Moz Ag Inferred (22 million tons with 69 g/t Ag). There is also a completed P.E.A. for the deposit for an open pit mine with the following economical data:

-Year round production with electricity and water -10 000 tons per day -Open pit – heap leach -2:1 strip ratio

-3.5 – 4.0 Moz Ag per year -Cash cost of 4 USD/oz Ag -CapEx of 50 MUSD -Block model shows that the deposit is open to the south and at depth

The NPV (Net Present Value) for Tejamen at 18 USD/oz silver and 1100 USD/oz gold is 192 MUSD (at 7% discount rate) and this also assumes only 70% recovery of the silver. At the metal prices of today this of course becomes even better. Tejamen is close to existing infrastructure and is also easily accessible topographically.

Above: Mineralization at Tejamen.

Oremex has drilled 240 holes equivalent to 37 500 meters at Tejamen and say themselves that great potential for expansion remains as the mineralization is still open along trend and at depth. Tejamen consists of two mineralizations, where one of them – Los Mantos – contains 70% of the silver. A report from Snowden shows that the production at Los Mantos can be run with limited effect on surrounding villages.

Oremex has 100% owners’ right for the minerals at Tejamen. However, what remains is the surface rights which they need to be able to continue exploration here, as well as putting Los Mantos into production. As comparison I can mention that Oremex received surface rights at the very interesting San Lucas property last summer for the next 30 years. I know they work really hard on getting the surface rights at Tejamen. This is an answer in this matter and the information can also be seen in a press release from June. It shows how intensely they are working on the issue:

“We continue to do extensive work to get access back onto the Tejamen property. The Company has been actively pursuing the involvement of a variety of parties to facilitate the awarding of surface rights

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at Tejamen, including: the Village of Tejamen; the Municipality of Nuevo Ideal; The Tejamen Community Association; the Governor of the State of Durango; the Federal Senator for the State of Durango; the Ministry of Economia at both the Federal and State level, which incorporates the Mining Ministry; ProMexico, the Federal Government's trade and business development vehicle; the Reforma Agraria at both the Federal and the State level, which is responsible for legal decisions regarding land ownership; and the Office of the President.

We had been led to believe by various governmental agencies that a decision with respect to Tejamen would have been made by now. How much longer it will take is difficult to answer, we believe we are getting closer. A new Governor has recently been elected in the State of Durango and from our initial contact he appears to be pro mining and interested in moving projects forward. We hope he will be proactive in expediting the awarding of surface rights at Tejamen.”

And the new Governor of Durango seems to be a very positive development for getting surface rights at Tejamen. He is very interested in creating job opportunities in an area with high unemployment. Tejamen is exactly such a project that can create a lot of job opportunities if the decision is made to advance the project into a production facility. Mike Smith President & CEO recently had a meeting with the new Governor and the company felt that the meeting was positive. I am sure that we will here more from Oremex regarding the surface rights at Tejamen in the coming months.

It is also important to understand that Oremex does not stand and fall with Tejamen, but rather that San Lucas and Santa Catarina are looking more and more interesting. I would think that the market today gives almost no cred for Tejamen as the MCAP is only 21 MCAD. A large part of the potential lies in this. Let’s look at the other interesting properties that Oremex has.

Above: Exploration at Tejamen.

San Lucas – silver, gold and base metals

Oremex has three very interesting gold areas where San Lucas is one of them that was seen only as a silver-zinc-lead mineralization when the area was drilled during 2007. This was greatly changed when significant concentrations of gold were discovered in earlier unexplored areas at the end of last year. In a press release from January of this year it is shown that there is the potential for a gold deposit

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here, and in June the decision to continue to investigate the finds at San Lucas was taken. This was followed by a release in August where surface samples with as much as 1856 g/t Ag and 1.68 g/t Au could be shown.

Another milestone was reached in September when they received ”surface rights” for San Lucas from the inhabitants for the next 30 years. A drilling program for the area is being planned and my guess is that the recent developments at San Lucas combined with their Tejamen-project is what has got the ”Toronto-firm” interested in Oremex.

Drilling is expected to start at the end of Q4 – beginnings of Q1 and drilling sites have already been identified. Moreover, San Lucas lies on the same trend as Silver Standards San Agustin deposit which contains 2.65 Moz Au. 7000 meters have been drilled previously at San Lucas, spread over 47 holes. The following significant silver concentrations have been found:

•SL-34: 12m @ 71g/t Ag •SL-35: 12m @ 145g/t Ag •SL-46: 14m @ 158g/t Ag, 8m @ 290g/t Ag, Incl. 2m @ 1857g/t Ag •SL-49: 16m @ 81.7g/t Ag, Incl. 2m @ 615.6 g/t Ag

However the area that is now to be explored has not been drilled earlier, and it is the new gold find here that made Oremex to take the decision to proceed with a drilling program. The newly found area consists of three mineralized segments, so-called. ”silicified dacite dike’s” with a 330 meter long northern zone that has shown 1856 g/t silver and 1.06 g/t gold, a 800 meter long central zone with gold concentrations of up to 1.68 g/t, as well as a 180 meter long southern zone with gold concentrations up to 0.82 g/t. The length of the ”silicified dacite dike” trend has now increased to over 2 km after the latest finds from the 220 samples analyzed.

Santa Catarina – silver, gold and base metals

At Santa Catarina Oremex has been able to confirm early indications of a gold deposit through sampling. There has also been production here earlier, from the surface and to a depth of 5 meters. The average concentration through the deposit is 3.2 g/t Au (up to 20 g/t over 2 meters at certain sites) with 0.19% copper credits, and it is open along trend and at depth.

The third of November Oremex released news showing that the mineralization at Santa Catarina is far larger than they earlier believed and that 5 of the samples taken showed 10 g/t Au over 4.4 meters. The mineralization now covers 500 x 300 meters. The CEO comments the news:

"We are very encouraged by the strong results from our expanded sampling and mapping program at Santa Catarina," stated Michael Smith, President and CEO of Oremex. "The favourable grades and increased gold mineralization over an expanded area will lead us to conduct a geophysical survey of the property and a follow up drilling program over the next half year."

I believe that the drilling program here and at San Lucas has every chance of becoming a game changer for Oremex after studying the geology and the results of the explorations performed so far.

El Sol – silver, gold and base metals

El Sol consists of a 63 hektar area where surface samples showing 140 g/t Ag, 0.22 g/t Au as well as 5.4% Pb+Zn have been collected. Oremex have decided to investigate the area further. In October a press-release stating that they will continue to prepare for a drilling program by taking more surface samples and carrying out geo-physical measurements to know better where to drill was issued.

Further areas

Oremex also has a number of ”grass root” projects where no, or very little, exploration has taken place. I am not going to go into these any further, but for those who are interested there is more information available on their website. The focus will be on the areas described above.

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Why invest in Oremex?

What is it that, in my eyes, makes Oremex an interesting company to invest in? Well, it is mainly because of the following 5 reasons:

1 - Large NI43-complient deposit with completed P.E.A.

Oremex has a large NI-43-complient deposit in Tejamen where a P.E.A. is already in place.

2 - Sprott Asset Management

In September Sprott chose to invest in Oremex and in my eyes this is one of the best indicators that there is something very interesting here. Naturally Sprott has performed a thorough DD before choosing to invest and they obviously like what they see.

3 – Low Market Cap

The market cap at today’s stock price of 21 cent is only 21 MCAD (not FD).

4 - Silver

I see silver as the most interesting metal right now. The theories about silver manipulation are no longer just rumors, they are gaining a better and better foothold. If the large short-positions at Comex are forced to cover, silver can rise quickly. Silver has already risen quite strongly in recent months and the shorts will have to cover at some point before the losses escalates even further.

5 - Gold

Even though it was Tejamen that first got me interested in Oremex, I have come to see the gold at San Lucas and Santa Catarina as more and more important as I researched the company. These looks to be two really interesting areas and my guess are that some very good drill results will be seen from here in the coming drilling.

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Risks

I see three main risks in Oremex. The first one is that they do not have surface rights at Tejamen. This is however something they are working very hard on. And the progress lately is very positive regarding this matter.

The second risk i see is the country risk. That is to say that we all know that Mexiko is unstable with regards to drug cartels. However, Oremex has an advantage here as I see it, since they are not producing anything yet = there is nothing to steal from them (just like Avino has a large advantage in producing a concentrate = no thief in the world steals a concentrate).

The third, obvious risk is of course that Oremex is a small junior. At the same time this is where the tantalizing potential lies. In the right climate (in Benny Bernankes printing climate) these companies can do very well, especially if news around the companies is good. A MCAP of 21 MCAD is very low and for a company like Oremex with these deposits I would like to say that it is extremely low.

Conclusions

As I see it Oremex is a highly undervalued silver junior with very interesting areas. Naturally, Tejamen is the flagship with its’ 50 Moz Ag but San Lucas and Santa Catarina keep increasing in importance for the company, not least after the latest press release from November third.

I cannot stress enough how important it is that Sprott has chosen to invest in Oremex. It gives a whole new quality measure for the company and also gives economic back-up for Oremex while they develop the company. Sprott will have a share in financing the development from now on and that gives a big advantage compared to other juniors.

Please remember though that Oremex is not a company to place 50 % of your portfolio in, but it is well worth a small portion in a diversified PM-portfolio as I see it.

Disclaimer: scoris does not share your potential profits, and therefore does not share your potential losses. The information in this letter and the blog should be seen as a source of inspiration and a start to a future own DD. scoris does their best to make sure that all info made available here is correct, despite this inadvertent errors may sneak their way in. Always double-check figures and info yourself before basing any decisions on them.