EXPLORATION - URUGUAY

SAN GREGORIO AND ARENAL DEEPS DISTRICT

OMI's operating gold mine; The San Gregorio Mine is located in Northern Uruguay in the historic Minas de Corrales mining district 450 kilometers north of Montevideo by paved road.  The Minas de Corrales district forms the western flank of the Isla Cristalina Belt; a Proterozoic granite-greenstone belt approximately 110km long by 40km wide.  The metamorphic grade of the greenstones rocks actually grade from greenschist into granulite facies however the belt is dominated by amphibolites facies rocks. The known deposits are spatially associated with the San Gregorio Shear Zone (SGSZ) and are often referred to as lode gold deposits due to their formation with quartz-carbonate boudens along shear structures in deformed rocks. The principal alteration assemblage associated with this style of mineralization is silica- carbonate-sericite-pyrite-chlorite-epidote.  Gold mineralization is related to quartz-carbonate-pyrite lodes and silica-sulfide stock-work veining.  The Isla Cristalina Belt contains a number of important structural features that are prospective for gold mineralization but to date all of the historic production has come from the Minas de Corrales district.

FIGURE: Aerial Photograph of San Gregorio Mine Site (April 2009) with Minas de Corrales town site in top right corner. Pits from west to east are; Santa tTeresa, Ombu, San Gregorio, San Gregorio East Extension, Veta Sur and Arenal

ISLA CRISTALINA BELT

Geology: The Isla Cristalina Belt refers to an erosional window through Paleozoic sediments into the underlying Proterozoic basement rocks approximately 110km long by 40km wide.  The belt is generically referred to as a granite-greenstone belt, but the metamorphic grades actual range from greenschist to granulite.  However, most of the host rocks around the known gold deposits are of amphibolite facies.  Anomalous gold mineralization is present along the entire 110 kilometer strike length of the belt and is spatially associated with the Rivera Shear which appears to be a long lived crustal scale fault.  The San Gregorio Shear Zone may be a limb of the Rivera Shear as it is inferred to have pre-existed the main mineralizaing event and was   

The principal alteration assemblage associated with the mineralization is comprised of silica-sericite-carbonate-pyrite.

Exploration Targets: The San Gregorio Mine site is located in the Minas de Corrales Historic mining district are located in the western third of the Isla Cristalina Belt.  The current brown fields targets listed in order of importance are; Arenal Deeps, San Gregorio, Zapucay South (Knob Hill), Picaflor, Peru and Nueva Australia.  The Regional or Green fields targets are locate in the eastern two thirds of the district and are Curtume, Vaca Muerta and Vichadero.

Figure: Isla Cristalina Belt

MINAS DE CORRALES DISTRICT

Summary: The San Gregorio Mine complex is located within the historic Minas de Corrales mining district which forms the western third of the Isla Cristalina Belt.  The Minas de Corrales district hosts two principle mining centers; San Gregorio and Zapucay both of which were discovered and mined by the English around the turn of the century and much later by Crystallex International Corporation from 1997 until 2004.  Each of the two mining centers host multiple deposits and collectively are often referred to as the Near Mine deposits or prospects.  Additionally the near mine targets are those that are located within about 30km hauling distance to the San Gregorio plant.

More recently discovered deposits include Arenal, Santa Teresa, Ombu, Veta A, Veta Sur, Sobresalientes, Castrillon and Argentinita.  The Arenal deposit has been the primary source of ore feed at the San Gregorio plant facility for Uruguay Mineral Exploration Inc and its subsidiaries (2004-2009) but several of the other deposits including cut-backs at San Gregorio (East Extension) and Santa Teresa (East) have also been important sources of ore.  Approximately 950,000 ounces have been produced from the Minas de Corrales District since the San Gregorio plant was commissioned in 1997.

Figure: Minas de Corrales District (includes San Gregorio and Zapucay Mines)

ARENAL & ARENAL DEEPS

Summary: the Arenal deposit is the eastern most gold lode along the San Gregorio Shear Zone (SGSZ).  Arenal was mined as an open pit to about 0mRL (sea level) from 2004 until 2009.   Arenal Deeps is the down plunge extension of Arenal and has recently been the focus of a significant resource drilling program and feasibility study.  Arenal Deeps is now referred to as a separate deposit and it is anticipated that it will be mined as an underground operation.  Both Arenal and Arenal deeps are located 2 kilometers east of the San Gregorio Plant where Arenal ore was processed. 

Geology: gold mineralization at Arenal is deposited along a moderately south dipping, east-west striking shear zone hosted in Proterozoic granite, monzonite and diorite rocks that have been metamorphosed to amphibolite facies.  Gold mineralization is associated to silica-sericite-carbonate alteration with quartz-carbonate-pyrite loads and silica-pyrite stock-work veining.  The shear zone is up to 100 meters wide and is well constrained by hanging wall and footwall structures. Ar-Ar age dating of sercite from the Arenal pit estimated a date of 618Ma +/- 5Ma.

Resource: In April 2009 OMI published the results of an independent resource estimate of the Arenal Deeps deposit by Golder and Associates.  The resource estimate was calculated using all drill results received through December 2008 (27,117m of diamond drilling in 109 holes and 38,645m of RC drilling in 393 holes).  The estimation process used ordinary kriging for a high grade domain and inverse distance weighting for a low grade domain.  The results of this estimate are presented in the table below;

Mineral Resource Estimate*+

*Tonnage totals were rounded to +/- 1000 tonnes

Resource Drilling 2009: More than 22,500 meters of diamond and RC drilling was completed between April and December of 2009 as an infill and extension program to improve and augment the resource reported above.  A table with significant intercepts from this program is presented below.

Table of Intercepts for Arenal Deeps from recent program (Apr-Dec, 2009) - Click to View

Note: Drill hole intercepts are composites of drill widths using a 1 g/t Au cutoff, no grade capping, and may include up to 2 meters of internal waste (samples <1g/t).

Figure: Representative Drill section looking NW through Arenal Deeps highlighting deposit geometry and structural control

Resource Update: Mine Development Associates (MDA) was commissioned in May 2009 to complete the final Resource Estimate for Arenal Deeps.  Geological modeling was ongoing during the drill program in conjunction with OMI`s geological team.  MDA received the final drill hole database in January 2010 and the final Resource Estimate is anticipated to be completed by March 2010.  

Planned Exploration & Development: Exploration is planned to continue drill testing the shear zone to the east of the Arenal open pit.  The Arenal Deeps lode clearly plunges southeast to depth however the shear continues striking to the east and is considered still open and prospective for additional mineralization; additional gold lodes could be found along strike to the east along the SGSZ.  The comprehensive feasibility study on the Arenal Deeps underground project continues to advance on schedule and is anticipated to be completed in Q1F2010.

SAN GREGORIO (INCLUDING RIELES & EAST EXTENSION)

Summary: the San Gregorio deposit is the central lode along the San Gregorio Shear Zone (SGSZ) and was the focus of historic mining activities in the Minas Corrales District.  Recent mining activities by OMI (F2009) include a cut back of the east pit (East Extension).  An additional cut back is planned for the west pit during F2010.  On the exploration front OMI has completed several exploration drilling programs on and around the SGSZ that defined additional resources at the Rieles zone which is the down dip component of the main shear between the two pits and also a deep drilling program that confirmed down-dip continuity of mineralization along the main controlling fault.  One hole in particular (SGDD003) from the down-dip program intersected mineralization (3.65m @ 3.92g/t from 656.75m) about 300m down-dip of the nearest hole.  OMI believes there is significant potential to define additional underground reserves at the historic San Gregorio deposit.

Geology: Gold mineralization at San Gregorio is deposited along and adjacent to a moderate to steeply south dipping, east-west striking shear fault.  The host rocks are Proterozoic age granite, monzonite and diorite rocks that have been metamorphosed to amphibolite facies.  Gold mineralization is associated to silica-sericite-carbonate alteration with quartz-carbonate-pyrite loads and silica-pyrite stock-work veining.  The shear zone at San Gregorio differs from Arenal in that the shear appears to be controlled by a single central fault.  The altered rocks outboard of the central fault form a shear zone that is up to 100 meters wide as in Arenal but the edges of the shear zone and not as clearly defined as at Arenal.  The footwall to the main fault at San Gregorio is notoriously altered and deformed with abundant brecciated rocks, disseminated mineralization and relatively common quartz-carbonate veins that host abundant coarse grained galena along with pyrite and gold.

Resource: A resource estimate was completed by Golders and Associates in August, 2007 to include the drilling at the Rieles zone and delineated 0.72Mt @ 1.24g/t for 29,578oz Au of measured resource and 8.07Mt @ 1.04g/t for 270Koz Au of indicated resource using a 0.5g/t Au cut-off.  Some of that resource was mined at the East Extension cut-back and the updated statement will reflect that depletion.  Please refer to resources and reserves section for current R&R statement.

Planned Exploration & Development (H2 F2009): Drilling is currently underway at San Gregorio and is a focus for this current period.  The goals of this current program are to convert part of a defined low grade resource (8MT @ 1.04g/t) into underground reserves by re-interpreting the geological model and re-estimating with better control the high grade load(s) and also to test for additional underground resources down-dip along the strike length of the main structure which is over 1km in length. 

SANTA TERESA, SANTA TERESA NORTH AND POLVORIN

Summary:The Santa Teresa deposit is considered to be the western most lode along the San Gregorio Shear Zone but in fact forms a group of deposits that include Santa Teresa (the main load), Santa Teresa East (STE), Santa Teresa North (STN) and Polvorin. A cut-back was completed at STE during F2008 & F2009 and an additional cut-back is underway at Santa Teresa.      

Geology: Gold mineralization at Santa Teresa is deposited along and adjacent to a moderate to steeply south dipping, east-west striking shear fault.  The host rocks are Proterozoic age intercalated granite, monzonite and diorite rocks that have been metamorphosed to amphibolite facies.  Gold mineralization is associated to silica-sericite-carbonate alteration with quartz-carbonate-pyrite loads and silica-pyrite stock-work veining. The presence of multiple deposits at Santa Teresa is attributed to the structural complexity of the area.  Both STN and Polvorin are considered to be oblique, footwall structures to the main shear. 

Resource: A resource estimate was completed by Golders and Associates in June 2009 to include additional drilling completed along the down-dip and up-dip edges of the deposit and in the footwall zone of the Santa Teresa.   The results of that estimate were 1.26Mt at 1.05g/t for 4Koz Au. Please refer to resources and reserves section for current R&R statement.

Planned Exploration & Development: Several drilling programs have been completed at and around the Santa Teresa deposit. Most recently the Polvorin deposit was discovered, defined and mined in F2008 producing roughly 59Kt at 2.04g/t for 3,900oz Au.  The current cut-back at Santa Teresa is revealing the presence of additional, important mineralized structures in the footwall that could not be modelled in the recent update due to lack of structural control.  It is anticipated that some of this mineralization may be defined as resource and potentially drive an additional cut-back into the footwall of Santa Teresa.  Drilling is planned for H2F2009 to achieve this goal.

VETA SUR & VETA A

Summary
The Veta Sur and Veta A deposits are related only in that they are both mineralized shear structures with similar size and geometry.  Both deposits are hosted in the hanging wall of the main San Gregorio Shear Zone (SGSZ) and both have been an important source of mill feed from F2007 to date.  To date more than 600Kt have been mined from the two "Vetas" structures for over 50K oz Au.

Geology: Both Veta Sur and Veta A deposits are hosted in the hanging wall of the SGSZ which typically hosts diortite to quartz monzonite rocks.  Both of the Veta structures are in fact smaller scale shears that are believed to be very closely associated to the Au mineralizing event. 

Resource: Mine Development Associates (MDA) completed resource estimates for Veta A and Veta Sur in July, 2007.  The estimated measured and indicated resources for Veta A were 0.51Mt @ 2.07g/t for 33.7Koz au and for Veta sur 0.65Mt @ 1.58g/t for 33Koz Au.

Planned Exploration & Development: Mining at Veta A was completed in Sept, 2008 and continues intermittently at Veta Sur.  Minor additional resource definition drilling is planned for Veta Sur where required.