El Pilar

The El Pilar mineral property comprises 7,169 hectares in seventeen concessions located about fifteen km south of the international border with United States of America in the state of Sonora, Mexico.

Measured and indicated mineral resources were estimated at 276.3 million tonnes averaging 0.31% total copper (TCu) calculated at a cut off of 0.20% TCu. The copper mineralization remains open at its southern limit.

Following a positive Feasibility Study the Board of Directors approved the development of the copper oxide project in April 2009.

The basis of the Feasibility Study is the use of a mining contractor in the open pit and owner operated primary crushing, conveying and stacking of ore onto a heap leach pad, followed by solvent extraction and electro-winning (SX-EW) to produce cathode copper.

A co-generation acid/power plant is included in cost estimates. It is estimated that the 600 t per day acid plant will generate 8 MW of power, of which 1.8 MW will be required to run the acid plant.

The mine-life waste to ore stripping ratio is currently estimated at 1.61:1. The project is expected to produce 956 million pounds of copper cathode over the 14 year life of mine.

The maximum mine and crushing/conveying ore capacity was designed at 17 Mt per year. At this capacity, the average copper cathode production would be 68.3 million pounds per year over 14 years.

The operating cash cost for the project is calculated at $1.20 per pound of copper.

The El Pilar copper project is a greenfield project with no existing mining infrastructure or equipment at the property. The Santa Cruz River flows year round 2 km south of the project. The railway of Ferrocarril Mexicano follows this river basin, as do local roads.

Power is available at Nogales approximately 28 km to the northwest of the project.

The socio-economic influence area of the El Pilar project was considered to be a 20 km radius, in which a total of 16 communities were canvassed, consisting of 3,314 inhabitants; the closest one to the project is Miguel Hidalgo (San Lazaro) with a population of 520 people.