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MINERAL RESOURCE AND RESERVE ESTIMATES Pincock, Allen & Holt ("PAH"), of Denver, Colorado, reviewed the methods and procedures utilized by the Company at the Brisas Project to gather geological, geotechnical, and assaying information and found them reasonable and meeting generally accepted industry standards for a bankable feasibility level of study. PAH believes that the Brisas Project has conducted exploration and development sampling and analysis programs using standard practices, providing generally reasonable results and believes that the resulting data can effectively be used in the estimation of resources and reserves. PAH calculated the mineral resource and reserve estimates contained herein, most recently in March 2008. The mineral reserves have been calculated in accordance with National Instrument 43-101, as required by Canadian Securities regulatory authorities. We believe that the calculation of such mineral reserves is substantially the same as those under the U.S. Securities and Exchange Commission Industry Guide 7, except for references to "Inferred Mineral Resources." We advise U.S. investors that while the terms "measured," "indicated" and "inferred" resource are recognized by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that the mineralization not already categorized as mineral reserves will ever be converted into reserves. Further, an "inferred resource" has a great amount of uncertainty as to its existence and its economic and legal feasibility. Under Canadian disclosure rules, estimates of inferred mineral resources may not form the basis of feasibility or prefeasibility studies, except in rare cases. U.S. investors are cautioned not to assume that part or all of an inferred resource exists, is economically or legally mineable or that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Also, disclosure of contained ounces is permitted under Canadian regulations however, the SEC generally requires mineral resource information to be reported as in-place tonnage and grade.
Mineral Resource Estimate Based on work completed by PAH for the Brisas bankable feasibility study, using an off-site smelter process for treating copper concentrates, the Brisas Project is estimated to contain a measured and indicated mineral resource of 11.8 million ounces of gold and approximately 1.6 billion pounds of copper (based on 0.4 gram per tonne gold equivalent cut-off). The March 2008 estimated measured and indicated mineral resource utilizing an off-site smelter process is summarized in the following table: | (kt=1,000 tonnes) | | Measured | | Indicated | | Measured and Indicated | | Au Eg | | | Au | Cu | | | Au | Cu | | | Au | Cu | | Cut-off Grade | | kt | (gpt) | (%) | | kt | (gpt) | (%) | | kt | (gpt) | (%) | | 0.40 | | 256,483 | 0.710 | 0.119 | | 300,367 | 0.620 | 0.134 | | 556,850 | 0.661 | 0.127 | | | | (In Millions) | | Measured | | Indicated | | Measured and Indicated | | Au Eg | | | Au | Cu | | | Au | Cu | | | Au | Cu | | Cut-off Grade | | | oz. | lb. | | | oz. | lb. | | | oz. | lb. | | 0.40 | | - | 5.853 | 674 | | - | 5.986 | 888 | | - | 11.839 | 1,562 |
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The inferred mineral resource, based on an off-site smelter process (0.4 gram per tonne gold equivalent cut-off), is estimated at 121 million tonnes containing 0.59 grams gold per tonne and 0.12 percent copper, or 2.28 million ounces of gold and 316 million pounds of copper. The mineral resource estimate has been calculated in accordance with the SME Reporting Guide and CIMM Standards as adopted by CSA National Instrument 43 - 101, which we believe is substantially the same as SEC Industry Guide 7, except for references to "Inferred Mineral Resources." The mineral resource and gold equivalent (AuEq) cut-off is based on $400 per gold ounce and $1.15 per pound copper. Mineral Reserve Estimate Based on the NI 43-101 Technical Report completed by PAH during March 2008, using an off-site smelter process for treating copper concentrates, the Brisas Project is estimated to contain a proven and probable mineral reserve of approximately 10.2 million ounces of gold and 1.4 billion pounds of copper. The March 2008 estimated proven and probable mineral reserve utilizing traditional flotation and off-site smelter processes is summarized in the following table: | | Reserve tonnes | Au Grade | Cu Grade | Au Ounces | Cu Pounds | Strip | | Class | (millions) | (gpt) | (%) | (thousands) | (millions) | Ratio | | Proven | 237.7 | 0.71 | 0.12 | 5,429 | 643 | | | Probable | 245.0 | 0.61 | 0.14 | 4,800 | 746 | | | Total | 482.7 | 0.66 | 0.13 | 10,229 | 1,389 | 2.24 |
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The mineral reserve (within a pit design) has been estimated in accordance with the SME Reporting Guide and CIMM Standards as adopted by CSA National Instrument 43 - 101, which we believe is substantially the same as SEC Industry Guide 7. The mineral reserve was estimated using metal prices of U.S. $470 per ounce gold and U.S. $1.35 per pound copper with an internal revenue cut-off of $3.54 per tonne. The qualified persons involved in the property evaluation and resource and reserve estimates were Susan Poos, P.E., of Marston & Marston, Inc., Richard Addison, P.E., Barton Stone, Professional Geologist, and Rick Lambert, P.E. of PAH.
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