LOS FILOS - BERMEJAL

Total Los Filos gold production, which includes the open pit and underground operations, for the second quarter of 2009 was 58,500 ounces which was equal to the second quarter of 2008. In comparison to the second quarter of 2008, Los Filos experienced 2% higher grades and 5% higher tonnage due to improvements in mine sequencing and re-designed use of mining equipment. Total tonnes moved and solution flow rates to the process plant also increased from the second quarter of 2008 by 25% and 18%, respectively. Construction of the third stage of the heap leach pad and the dewatering trench was completed during the second quarter of 2009. Construction of the buttress continued to progress. The dewatering trench and buttress will provide stability to the future growth of the heap leach pad. The conveying system for the crushing and agglomeration plant is in progress and expected to be commissioned in early 2010. Exploration drilling at Bermejal South and nearby projects continued during the second quarter of 2009, with a total of 10,400 meters drilled.

Ground movement under the leach pad required that remedial measures be adopted. To restore stability, approximately 400,000 tonnes of material was relocated to other areas on the pad, irrigation was halted to specific areas, a buttress was constructed and the stacking sequence was modified. Construction of the third stage of the pad is being accelerated to provide additional leach pad space for future operations. All solution remains contained within the structures of the heap leach pad. As a result of these measures, at the end of the third quarter Los Filos had 21 hectares of ore under leach, down from 31 hectares at the end of the second quarter. These actions have reduced gold production during the quarter. Ore stacking continued at a rate of 1.8 million tonnes per month leading to a significant build-up in inventory. The stacking rate and average pregnant solution processing were 5% and 9% lower, respectively, than the previous quarter because of the reasons cited above. Gold production was 40,400 ounces, which was 11,500 ounces or 22% lower than the production in the prior quarter. Total tonnes mined increased with a 9% or 1 million tonne increase over the prior quarter. Cash costs for the open pit operation for the three months ended September 30, 2008 were $357 per ounce, an 18% or $78 per ounce decrease, primarily a result of increased in-circuit inventory levels due to the production interruptions from the pad movement.

At Los Filos mine, 2008 production will be adversely affected by a ground movement detected in mid-July on a portion of the heap leach pad. The movement area has stabilized, and no leakage of solutions from the liner system has been detected. Remediation efforts will interrupt the expected production ramp-up in the second half of 2008 due to unloading of ore from a portion of the pad. The open pit continued to ramp up in the period, with 51,900oz of gold produced in the quarter, which was 6,900oz, or 15%, higher than the production in the prior quarter. Tonnes mined were 9% higher and tonnes processed were 17% higher than the prior quarter, which resulted in an increased amount of ore being placed on the leach pad. Cash costs for the open pit operation for the six months ended were $340/oz and are more representative of the operating performance, rather than what was experienced over the last three months. Cash costs for the second quarter increased by $201/oz, or 86%, compared to the first quarter. The increase is a result of inventory movements ($134/oz), higher operating costs ($75/oz) and the stronger Mexican peso ($15/oz), partially offset by higher gold production ($23/oz). The increase in operating costs was attributable to employee cost increases of $1.3 million, increased fuel costs of $1.5 million due to increased haulage, increased reagent costs of $1 million, as the heap leach pad is expanded, and investment in the surrounding community of $1.2 million.