SAN GREGORIO MINE GEOLOGY AND DEPOSITS

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Santa Teresa

Summary: The Santa Teresa area contains the western-most economic gold lodes along the San Gregorio Shear Zone including; Santa Teresa (the main lode), Santa Teresa East (STE), Santa Teresa North (STN) and Polvorin. To date the Santa Teresa deposits have collectively produced more than 100K oz Au. Currently a cut-back is underway at the main Santa Teresa pit and exploration and resource definition drilling continues to identify additional resources in the footwall of this structurally complex area.

Geology: Gold mineralization at Santa Teresa lies 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 like at San Gregorio is associated with silica-sericite-carbonate alteration and forms quartz-carbonate-pyrite lodes and silica-pyrite stock-work veining. The presence of multiple deposits at Santa Teresa is attributed to the structural complexity of the area since both STN and Polvorin are controlled by oblique, footwall structures to the main shear.

Resource: An updated 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 main lode. The result of the resource update was 1.26Mt at 1.05g/t for 40Koz Au.

Exploration & Development plans: Several drilling programs have been completed in the area and in F2008 the Polvorin deposit was discovered in the footwall of Santa Teresa East that produced 59Kt at 2.04g/t for 3,900oz Au. The current cut-back at Santa Teresa pit 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 drill definition and structural control. It is anticipated that some of this mineralization may be converted to resource which could drive an additional cut-back into the footwall of Santa Teresa in F2010; drilling is underway to achieve this goal.