Vilcoro Project, Peru

REGIONAL GOLD DEPOSITS

There are five important gold deposits within 14 to 24 km of the Vilcoro property. These are mainly high-sulfidation epithermal systems hosted in Callipuy volcanics or in an underlying quartzite unit. These deposits are: the Alto Chicama mine (drill indicated resource of ±6 million ounces of gold), the Tres Cruces deposit (drill-indicated reserves of 1.75 million ounces of gold), the Arena deposit (measured and indicated reserves of 2 million ounces of gold), the Virgen deposit (drill-indicated reserves of 340,000 ounces of gold), and the Santa Rosa mine (reserves unknown, production ≈30,000 ounces of gold per year).

VILCORO GOLD MINERALIZATION

The highlight of exploration work done in 2007-2008 was the identification of the “Main Trend”, which is an east-northeast-striking zone of anomalous gold in both rocks and soils. The main trend is 1,700 meters long, 150 to 300 meters wide and extends for a vertical span of 400 meters between elevations of 2800 to 3200 meters ASL. The Main Trend is thought to correspond to a steep-dipping shear zone cutting the volcaniclastic succession.

The median (50 percentile) assay of 394 rock channel samples taken from the Main Trend is 162 ppb gold. The mean assay for 291 soil samples taken from the Main Trend is 69 ppb gold. As is typical in epithermal deposits, samples from the Main Trend also exhibit an anomalous signature for antimony, arsenic, and mercury.

Within the Main Trend, there are zones where gold assays are significantly higher than the averages reported above. The most significant of these has been named Zona Manto, which is 140 meters long, 20 meters wide, and spans a vertical extent of 60 meters. Approximately 120 linear meters of underground development in three separate workings are present at Zona Manto. Eighty-three channel samples were collected from these underground workings and, disregarding one exceptionally high-grade assay of 25.0 opt gold, the average assay of all samples is 3.4 g/t gold. The median assay (50 percentile) is 1.5 g/t gold. Gold occurs in east-northeast and north-trending veins up to 0.9 meters wide. Gold also occurs in brecciated pyrolusite-rich mantos (beds) up to a meter wide that are cut by stockwork-style gypsum veinlets. Gold may also be present disseminated in the altered volcaniclastics.

CONCLUSIONS

1. The Vilcoro property is situated in a strategic area of Peru flanking an extensive claim group that protects Barrick’s Alto Chicama deposit.
   
2. A large area of anomalous gold mineralization (the "Main Trend") has been found on the Vilcoro property.
   
3. The anomalous gold is hosted in the Callipuy Formation, which is the premiere host for the largest gold mines in Peru, and some of the largest epithermal gold deposits in the world.
   
4. Within the Main Trend, there are zones of gold mineralization that have ore-tenor gold grades, such as Zona Manto.
   
5. Geophysical surveys have detected a distinct IP (induced polarization) anomaly about one hundred meters beneath Zona Manto. This is almost without doubt due to the transition between oxide-facies (weathered) material and sulphide-facies (fresh) material at that depth.
   
6. The combination of direct (sampling) and indirect (geophysical) evidence indicates that Zona Manto is a first-order drill target on the Vilcoro property. There are other zones within the Main Trend that also merit evaluation by drilling.