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Resource Geosciences de Mexico SA de CV

6 December 2010 Preliminary Economic Assessment, La India Gold


Project, Municipio of Sahuaripa, Sonora, Mexico
Prepared for Grayd Resource Corporation
by

Matthew D. Gray, Ph.D., C.P.G. #10688

Resource Geosciences de Mexico SA de CV

and
Gary H. Giroux, P. Eng., Giroux Consultants Ltd.
James H Gray, P. Eng., Moose Mountain Technical Services
Mark E. Smith, P.E.., RRD International Corp.
.
6 December 2010

Diamond core drilling at La Viruela, Main Zone, La India project, 2010 (photo by Cruz Paez).
Resource Geosciences de Mexico SA de CV
6 December 2010 Preliminary Economic Assessment, La India Gold Prospect, Municipio of Sahuaripa, Sonora,
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Table of Contents

Item Page

1 Title Page………………………………………………………………………….………….……. cover

2 Table of Contents, Table of Figures, List of Tables………………………………………..………… i

3 Executive Summary .................................................................................................................. 1


3.1 Introduction ...................................................................................................................... 1
3.2 Location, Mining Concessions, Surface Rights, Permits .................................................... 2
3.3 Exploration and Mining History.......................................................................................... 3
3.4 Geology and Mineralization............................................................................................... 4
3.5 Drilling and Sampling ........................................................................................................ 4
3.6 Metallurgical Testing ......................................................................................................... 5
3.7 Mineral Resource Estimation ............................................................................................ 6
3.8 Mining ............................................................................................................................ 12
3.9 Processing ..................................................................................................................... 17
3.10 Process Operating Costs ................................................................................................ 21
3.11 Gold Production .............................................................................................................. 22
3.12 Infrastructure and Construction ....................................................................................... 23
3.13 Environmental and Permitting ......................................................................................... 23
3.14 Economic Analysis ......................................................................................................... 24
3.14.1 Assumptions, Economic Criteria, and Inputs .......................................................... 24
3.14.2 Taxes ..................................................................................................................... 26
3.14.3 Income Tax and Single Rate Business Tax or Flat Tax ........................................... 26
3.14.4 Value Added Tax.................................................................................................... 26
3.14.5 Cash Flow .............................................................................................................. 27
3.14.6 Cash Flow Analysis and Economic Performance .................................................... 29
3.15 Conclusions .................................................................................................................... 30
3.16 Recommendations.......................................................................................................... 32

4 Introduction and Terms of Reference ...................................................................................... 35


4.1 Introduction .................................................................................................................... 35
4.2 Terms of Reference ........................................................................................................ 39
4.3 Purpose of Report .......................................................................................................... 39
4.4 Sources of Information.................................................................................................... 40
4.5 Field Examination and Data Review by the Qualified Person. .......................................... 40
4.6 Definitions and Translations ............................................................................................ 41

5 Reliance on Other Experts ...................................................................................................... 43

6 Property Description and Location........................................................................................... 44

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6 December 2010 Preliminary Economic Assessment, La India Gold Prospect, Municipio of Sahuaripa, Sonora,
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6.1 Area and Location .......................................................................................................... 44


6.2 Claims and Title .............................................................................................................. 46
6.3 Surface Rights ................................................................................................................ 53
6.3.1 Ejido Lands ................................................................................................................ 56
6.3.1.1 Matarachi Ejido .................................................................................................. 56
6.3.2 Private Lands ............................................................................................................. 56
6.3.2.1 Rancho Bronces y Bajios (aka La Cieneguita) .................................................... 56
6.3.2.2 Rancho La Amargosa......................................................................................... 57
6.3.2.3 Rancho El Duraznito .......................................................................................... 57
6.3.2.4 Rancho Ostimuri y Las Mesas ............................................................................ 57
6.4 Mineralization ................................................................................................................. 57
6.5 Environmental Liability .................................................................................................... 58
6.6 Permits ........................................................................................................................... 58
6.7 Water Rights and Water Supply ...................................................................................... 61
6.7.1 Surface Water Rights ................................................................................................. 61
6.7.2 Subsurface Water Rights ............................................................................................ 61
6.7.3 Project Water Rights................................................................................................... 62
6.7.3.1 Surface Water Rights ......................................................................................... 62
6.7.3.2 Subsurface Water Rights.................................................................................... 62

7 Access, Climate, Infrastructure, and Physiography .................................................................. 63

8 History .................................................................................................................................... 64

9 Geological Setting ................................................................................................................... 66


9.1 Regional Geology ........................................................................................................... 66
9.2 Local Geology ................................................................................................................ 68

10 Deposit Types ......................................................................................................................... 76

11 Mineralization.......................................................................................................................... 78
11.1 General .......................................................................................................................... 78
11.2 North Zone, comprising Cieneguita, Española, Cochis, La India areas ............................ 78
11.3 Main Zone, comprising La Viruela, La Cruz, and Cerro de Oro ........................................ 82
11.4 Tarachi ........................................................................................................................... 87
11.5 Construction of Oretype Domain/Resource Model ........................................................... 89

12 Exploration.............................................................................................................................. 91
12.1 Geologic Mapping and Geochemical/Mineralogical Sampling .......................................... 91
12.2 Airborne Electromagnetic and Magnetic Survey. ............................................................. 92
12.2.1 Procedure .............................................................................................................. 92
12.2.2 Results ................................................................................................................... 92
12.3 Induced Polarization Survey. .......................................................................................... 96
12.3.1 Procedure .............................................................................................................. 96
12.4 Ground Magnetic Survey – 2009..................................................................................... 98
12.5 Ground Magnetic Survey - 2010 .................................................................................... 98

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12.5.1 La India Grid .......................................................................................................... 99


12.5.2 Tarachi Grid ........................................................................................................... 99
12.5.3 Tubos..................................................................................................................... 99
12.6 Ground IP Survey – 2010 ............................................................................................... 99
12.6.1 La India Grid .......................................................................................................... 99
12.6.2 Tarachi ................................................................................................................. 100
12.6.3 Tubos Grid ........................................................................................................... 100
12.7 Photogrammetric Survey/Topographic Mapping ............................................................ 100

13 Drilling .................................................................................................................................. 101


13.1 2004 Diamond Drilling .................................................................................................. 101
13.2 2005 through January 2010 Reverse Circulation Drilling ............................................... 101
13.3 2007 and 2008 Diamond Core Drilling........................................................................... 106
13.4 2009 Diamond Core Drilling .......................................................................................... 106
13.5 2010 Tarachi Drilling ..................................................................................................... 106

14 Sampling Method and Approach ........................................................................................... 108


14.1 Sampling Method, Nature, and Spacing ........................................................................ 108
14.1.1 Surface Rock Chip Samples ................................................................................. 108
14.1.2 Diamond Drill Core Samples ................................................................................ 108
14.1.3 Reverse Circulation Drill Samples......................................................................... 109
14.2 Recovery Factors ......................................................................................................... 109
14.3 Sample Quality and Representativity ............................................................................ 110
14.4 Sample Interval Parameters.......................................................................................... 111

15 Sample Preparation, Analyses, and Security ......................................................................... 112


15.1 Personnel ..................................................................................................................... 112
15.2 Grayd Resource Sampling Program.............................................................................. 112
15.2.1 Sample Security/Chain of Custody ....................................................................... 112
15.2.2 Sample Preparation by ALS Chemex.................................................................... 112
15.2.3 Analytical Techniques used by ALS Chemex ........................................................ 112

16 Data Verification ................................................................................................................... 115


16.1 Prior Campaigns ........................................................................................................... 115
16.2 2010 Tarachi Exploration Drill Program ......................................................................... 115
16.3 Grayd Resources Exploration Campaign, 2004 to 22 January 2010, Resource Area. .... 115
16.3.1 General ................................................................................................................ 115
16.3.2 Mapping ............................................................................................................... 115
16.3.3 Assays ................................................................................................................. 116
16.3.3.1 Blanks.......................................................................................................... 117
16.3.3.2 Standards .................................................................................................... 121
16.3.3.3 Field Duplicates – Rig Splits......................................................................... 126
16.3.3.4 Sample Preparation Duplicates – Coarse Reject .......................................... 128
16.3.3.5 Lab Duplicates – Pulps ................................................................................ 129
16.3.3.6 Metallic (Screen) Fire Assays ....................................................................... 130
16.3.3.7 Check Assays .............................................................................................. 131
16.3.3.8 Reverse Circulation – Diamond Core Drillhole Twins .................................... 133

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6 December 2010 Preliminary Economic Assessment, La India Gold Prospect, Municipio of Sahuaripa, Sonora,
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16.3.3.9 Independent Verification of Database and Independent Sampling by Qualified


Person 148

17 Adjacent Properties............................................................................................................... 150

18 Metallurgical Testing ............................................................................................................. 152


18.1 General ........................................................................................................................ 152
18.2 Sample Composites Tested .......................................................................................... 152
18.3 Sample Preparation ...................................................................................................... 154
18.4 Rock Density Test Work ............................................................................................... 154
18.5 Bond Work Index Test Work ......................................................................................... 154
18.6 Head Analyses ............................................................................................................. 154
18.7 Bottle Roll Leach Test Work.......................................................................................... 155
18.8 Gravity Concentration Test Work .................................................................................. 155
18.9 Agglomeration and Percolation Test Work .................................................................... 155
18.10 Laboratory Column Leach Test Work........................................................................ 156
18.11 Metallurgical Test Results......................................................................................... 156
18.11.1 Rock Density Test Work ....................................................................................... 156
18.11.2 Bond Work Index Test Work ................................................................................. 156
18.11.3 Bottle Roll Leach Test Work ................................................................................. 157
18.11.4 Laboratory Column Leach Test Work.................................................................... 157

19 Mineral Resource Estimate ................................................................................................... 161


19.1 Introduction .................................................................................................................. 161
19.2 Assay Sample Weights and Core Recovery .................................................................. 161
19.3 Data Analysis ............................................................................................................... 164
19.3.1 Main Zone ............................................................................................................ 164
19.3.2 North Zone ........................................................................................................... 166
19.4 Fire Assay versus Screen Analysis ............................................................................... 167
19.5 Core versus RC Drill Results ........................................................................................ 168
19.6 Composites .................................................................................................................. 171
19.7 Variography .................................................................................................................. 171
19.7.1 Main Zone ............................................................................................................ 172
19.7.2 North Zone ........................................................................................................... 173
19.8 Bulk Density ................................................................................................................. 175
19.9 Block Models ................................................................................................................ 175
19.10 Grade Interpolation ................................................................................................... 176
19.10.1 North Zone ........................................................................................................... 176
19.10.2 Main Zone ............................................................................................................ 177
19.11 Classification ............................................................................................................ 180
19.11.1 Introduction .......................................................................................................... 180
19.11.2 Main Zone ............................................................................................................ 182
19.11.3 North Zone ........................................................................................................... 182

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19.12 Results ..................................................................................................................... 182


19.13 Model Verification ..................................................................................................... 190
19.14 Economic Pit Limit Analyses ..................................................................................... 191
19.15 Detailed Design - Pit Delineated resources ............................................................... 204

20 Other Relevant Data and Information .................................................................................... 205

21 Mining ................................................................................................................................... 206


21.1 Mining Operations ........................................................................................................ 206
21.1.1 Mining Areas and Phases ..................................................................................... 206
21.1.2 Detailed Pit Designs ............................................................................................. 209
21.1.3 Mine Layout ......................................................................................................... 211
21.1.4 Mine Production Schedule .................................................................................... 213
21.1.5 Mine Equipment Selection and Fleet Requirements .............................................. 217
21.1.6 Mine Personnel .................................................................................................... 220
21.2 Mining Costs................................................................................................................. 222
21.2.1 Mine Capital Estimates ......................................................................................... 222
21.2.2 Mine Operating Cost Estimates ............................................................................ 223
21.3 Mine Life....................................................................................................................... 224

22 Processing ............................................................................................................................ 227


22.1 Process Description and Design Criteria ....................................................................... 227
22.2 Process Description ...................................................................................................... 229
22.2.1 Primary Crushing ................................................................................................. 229
22.2.2 Primary Crushed Ore Stockpile ............................................................................ 229
22.2.3 Secondary Crushing and Screening ..................................................................... 229
22.2.4 Tertiary Crushing and Screening .......................................................................... 229
22.2.5 Heap Leach Pad .................................................................................................. 230
22.2.6 Solution Ponds ..................................................................................................... 230
22.2.7 Carbon Adsorption ............................................................................................... 230
22.2.8 Gold Recovery and Refining ................................................................................. 231
22.3 Process Services .......................................................................................................... 231
22.3.1 Electrical Power ................................................................................................... 231
22.3.2 Laboratory ............................................................................................................ 231
22.3.3 Process Design Criteria ........................................................................................ 231
22.4 Process Operating Costs .............................................................................................. 236
22.5 Gold Production ............................................................................................................ 241

23 Infrastructure and Overhead.................................................................................................. 243


23.1 Construction ................................................................................................................. 243
23.2 Access Road ................................................................................................................ 243
23.3 Camp ........................................................................................................................... 243
23.4 Office and Warehouse .................................................................................................. 243
23.5 Truckshop .................................................................................................................... 245
23.6 Plant Site ...................................................................................................................... 245
23.7 Crusher ........................................................................................................................ 245

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23.8 ADR Plant Site ............................................................................................................. 245


23.9 Laboratory .................................................................................................................... 245
23.10 Pad and Ponds ......................................................................................................... 245
23.11 Water Wells.............................................................................................................. 246
23.12 6 MW Power Plant.................................................................................................... 246
23.13 Fuel Handling Facility ............................................................................................... 246
23.14 Sewage and Waste .................................................................................................. 246
23.15 Security and Fencing ................................................................................................ 246
23.16 General and Administration Cost Estimates .............................................................. 246
23.16.1 Senior Management ............................................................................................. 247
23.16.2 Accounting, Legal and Human Resources ............................................................ 247
23.16.3 Environment and Community Relations ................................................................ 247
23.16.4 Worker Health and Safety and Security ................................................................ 247
23.16.5 Purchasing and Warehouse ................................................................................. 247
23.16.6 Camp and Logistics .............................................................................................. 247

24 Environmental and Permitting ............................................................................................... 250


24.1 Environmental Management plans ................................................................................ 250
24.2 Surface Water Management ......................................................................................... 250
24.3 Groundwater Management ........................................................................................... 250
24.4 Air Quality Management ............................................................................................... 251
24.5 Wildlife Management .................................................................................................... 251
24.6 Waste Handling ............................................................................................................ 251
24.6.1 Hazardous Wastes ............................................................................................... 251
24.6.2 Non-hazardous Wastes ........................................................................................ 251
24.6.3 Putrescible (Domestic) Waste Disposal ................................................................ 251
24.6.4 Boneyard Storage ................................................................................................ 251
24.6.5 On-site BioRemediation Cell ................................................................................. 252
24.6.6 Waste Water (Sewage) Disposal .......................................................................... 252
24.7 Reclamation ................................................................................................................. 252
24.7.1 Soil Handling ........................................................................................................ 253
24.7.2 Camp ................................................................................................................... 253
24.7.3 Central Operating Area......................................................................................... 253
24.7.4 Mine Pits .............................................................................................................. 253
24.7.5 Mine Waste Dumps .............................................................................................. 254
24.7.6 Roads .................................................................................................................. 254
24.8 Closure Activities – Heap Leach Facilities ..................................................................... 254
24.8.1 Engineering, Modeling & Monitoring Systems ....................................................... 254
24.8.2 Permanent Surface Water Diversion Works .......................................................... 254
24.8.3 Permanent Slope Stabilization .............................................................................. 255
24.8.4 Final Engineering & Monitoring Plans ................................................................... 255
24.8.5 Heap Rinsing & Neutralization .............................................................................. 255
24.8.6 Heap Slope Grooming & Slope Stabilization ......................................................... 255
24.8.7 Topsoil Placement and Revegetation of Heap & Surrounding Areas ..................... 256
24.8.8 Ponds & Pump Stations........................................................................................ 256
24.8.9 Physical & Mobile Equipment ............................................................................... 256
24.8.10 Roads, Diversion Works & Erosion Controls ......................................................... 256

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24.8.11 Fencing ................................................................................................................ 257


24.9 Post-Closure Activities .................................................................................................. 257
24.9.1 Physical Monitoring & Maintenance ...................................................................... 257
24.9.2 Geochemical Monitoring & Maintenance ............................................................... 257
24.9.3 Biological Monitoring & Maintenance .................................................................... 258
24.9.4 Surplus Water Management ................................................................................. 258
24.10 Closure Cost Estimates – Heap Leach Facilities ....................................................... 258

25 Economic Analysis ................................................................................................................ 260


25.1 Assumptions, Economic Criteria, and Inputs ................................................................. 260
25.1.1 Assumptions ........................................................................................................ 260
25.1.2 Production............................................................................................................ 260
25.1.3 Project Life ........................................................................................................... 260
25.1.4 Revenue .............................................................................................................. 261
25.1.5 Capital Costs........................................................................................................ 261
25.1.6 Operating Costs ................................................................................................... 262
25.2 Taxes ........................................................................................................................... 262
25.2.1 Income Tax and Single Rate Business Tax or Flat Tax ......................................... 262
25.2.2 Value Added Tax.................................................................................................. 263
25.3 Economic Performance................................................................................................. 263
25.3.1 Cash Flow ............................................................................................................ 263
25.3.2 Cash Flow Analysis and Economic Performance .................................................. 265
25.3.3 Sensitivity Analysis ............................................................................................... 265

26 Interpretations and Conclusions ............................................................................................ 268

27 Recommendations ................................................................................................................ 272


27.1 Work Plan and Budget .................................................................................................. 272
27.2 Opportunities ................................................................................................................ 273
27.2.1 Equipment Sizing ................................................................................................. 273
27.2.2 Pit Backfilling........................................................................................................ 273
27.2.3 Sulfide Mineralization ........................................................................................... 273
27.2.4 Increase Resource ............................................................................................... 274
27.2.5 Contract Mining .................................................................................................... 274
27.2.6 Vendor Financing ................................................................................................. 274
27.2.7 Improved Recovery .............................................................................................. 274
27.2.8 Reduced Power Costs .......................................................................................... 274
27.2.9 Run-of- Mine Leaching of Low Grade ................................................................... 275
27.2.10 New Resource Areas ........................................................................................... 275

28 References ........................................................................................................................... 276

29 Statement of Qualification ..................................................................................................... 281

List of Figures
Item Page

Figure 3.1. La India project NPV sensitivity chart. ........................................................................... 30


Figure 6.1. Location map. ............................................................................................................... 45

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Figure 6.2. Concession map ........................................................................................................... 52


Figure 6.3. Surface rights map, resource area, La India project...................................................... 54
Figure 6.4. Surface rights map, Tarachi area. ................................................................................. 55
Figure 9.1. Regional geologic map, summarized from Servicio Geologico Mexicano. ...................... 67
Figure 9.2. Geologic map encompassing the Cieneguita, La Viruela-La Cruz, and Cerro de Oro
areas. ..................................................................................................................................... 70
Figure 9.3. Volcanic stratigraphic column of the La India area as determined by T Longo. .............. 71
Figure 9.4. 40Ar/39Ar ages of the lower Cenozoic volcanic rocks from the La India area displayed as
a function of stratigraphic position. Two 40Ar/39Ar determinations returned middle Miocene
ages from post-mineral supergene alunite. The span of time for the Laramide porphyry event is
referenced in the upper right. .................................................................................................. 71
Figure 9.5. Drillhole fence diagram through Viruela - La Cruz zone. General orientation looking
northeast................................................................................................................................. 72
Figure 9.6. Geologic map of Tarachi claims. ................................................................................... 73
Figure 9.7. Volcanic stratigraphic column, Tarachi area, as determined by T. Longo. ...................... 74
Figure 9.8. Detailed geologic map of the Tarachi area as determined by T. Longo. ......................... 75
Figure 11.1. Section 706,300E, Cieneguita area, North Zone, showing relationships between
oretype domains 12, 14 and 18. .............................................................................................. 80
Figure 11.2. Section 3,179,175 Cieneguita area North Zone, showing relationships between oretype
domains 11, 12 and 18............................................................................................................ 81
Figure 11.3. Section 3,176,600 La Viruela area showing typical morphologies and spatial
relationships of Main Zone ore domains 1, 2, and 3. ................................................................ 84
Figure 11.4. Section 3,176,100 La Cruz area showing typical morphologies and spatial relationships
of Main Zone ore domains 5 and 6. ......................................................................................... 85
Figure 11.5. Section 3,176,500N Viruela West area showing morphology of Main Zone ore domain 7.
............................................................................................................................................... 86
Figure 11.6. Diagrammatic sketch of mineralization style at Tarachi (Longo, 2010). ........................ 88
11.7. Geologic map of Tarachi area shoing location and trneds of gold bearing quartz veins as
determined by T. Longo. Legend is same as that of Figure 9.8. .............................................. 89
Figure 12.1. Resistivity depth slice at 50m, red is most resistive, blue is least resistive.................... 94
Figure 12.2. Resistivity depth slice at 100m, red is most resistive, blue is least resistive.................. 94
Figure 12.3. Resistivity depth slice at 150m, red is most resistive, blue is least resistive.................. 95
Figure 12.4. Resistivity depth slice at 200m, red is most resistive, blue is least resistive.................. 95
Figure 12.5. Total field magnetic plot. Red denotes area of greatest magnetic response. ............... 96
Figure 12.6. Induced polarization ground geophysical survey lines (in red). Triple A and La India
claim boundaries shown in black. ............................................................................................ 97
Figure 12.7. 2009 Ground magnetic survey data, reduced-to-pole plot. ........................................... 98
Figure 13.1. Map showing all drillhole locations, resource development and exploration, La India
project................................................................................................................................... 103
Figure 13.2. North Zone: Location map of diamond and reverse circulation drillholes completed by
Grayd Resource, 2004 through 22 January 2010. ................................................................. 104
Figure 13.3. Main Zone: Location map of diamond and reverse circulation drillholes completed by
Grayd Resources, 2004 through 22 January 2010. ................................................................ 105
Figure 13.4. Drillhole location map, Tarachi area. ......................................................................... 107
Figure 16.1. Gold assays, certified blank samples......................................................................... 119
Figure 16.2. Gold assays, certified blanks and samples immediately preceding blanks, 2006 through
Jan 2010 drill programs......................................................................................................... 120
Figure 16.3. ALS Chemex assay results on chart showing certified mean and 2X standard deviation
range for standard A, OxF41. ................................................................................................ 122
Figure 16.4. ALS Chemex assay results on chart showing certified mean and 2X standard deviation
range for standard B, OxG38. ............................................................................................... 123
Figure 16.5. ALS Chemex assay results on chart showing certified mean and 2X standard deviation
range for standard C, OxE42................................................................................................. 123
Figure 16.6. ALS Chemex assay results on chart showing certified mean and 2X standard deviation
range for standard D, OxD43. ............................................................................................... 124

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Figure 16.7. ALS Chemex assay results on chart showing certified mean and 2X standard deviation
range for standard E, OxH52................................................................................................. 124
Figure 16.8. ALS Chemex assay results on chart showing certified mean and 2X standard deviation
range for standard F, OxC58. ................................................................................................ 125
Figure 16.9. ALS Chemex assay results on chart showing certified mean and 2X standard deviation
range for standard G, OxH55. ............................................................................................... 125
Figure 16.10. ALS Chemex assay results on chart showing certified mean and 2X standard deviation
range for standard H, OxC752 .............................................................................................. 126
Figure 16.11. Percentile plot absolute relative differences of field, preparation, and lab duplicates.127
Figure 16.12. Percent relative difference Au assay, rig splits......................................................... 128
Figure 16.13. Percent relative difference Au assay, coarse reject split. ......................................... 129
Figure 16.14. Percent relative difference Au assay, pulp re-assays. .............................................. 130
Figure 16.15. Plot comparing regular fire assay and screen fire assay analytical results................ 131
Figure 16.16. Plot comparing Acme and ALS Chemex fire assay analytical results. ...................... 132
Figure 16.17. Percent relative difference, ACME check assay vs. ALS Chemex assay. ................. 132
Figure 16.18. Comparison Au assays, twin pair DDH07-28 and RC06-52. .................................... 133
Figure 16.19. Comparison Au assays, twin pair DDH07-27 and RC06-54. .................................... 134
Figure 16.20. Comparison Au assays, twin pair DDH08-55 and RC06-73. .................................... 134
Figure 16.21. Comparison Au assays, twin pair DDH07-19 and RC07-142.................................... 135
Figure 16.22. Comparison Au assays, twin pair DDH07-13 and RC06-89. .................................... 135
Figure 16.23. Comparison Au assays, twin pair DDH07-23 and RC06-94. .................................... 136
Figure 16.24. Comparison Au assays, twin pair DDH07-22 and RC06-69. .................................... 136
Figure 16.25. Comparison Au assays, twin pair DDH07-12 and RC06-44. .................................... 137
Figure 16.26. Comparison Au assays, twin pair DDH07-14 and RC07-106.................................... 137
Figure 16.27. Comparison Au assays, twin pair DDH07-20 and RC07-155.................................... 138
Figure 16.28. Comparison Au assays, twin pair DDH08-42 and RC06-45. .................................... 138
Figure 16.29. Comparison Au assays, twin pair DDH07-15 and RC07-161.................................... 139
Figure 16.30. Comparison Au assays, twin pair DDH08-54 and RC07-145.................................... 139
Figure 16.31. Comparison Au assays, twin pair DDH07-16 and RC07-147.................................... 140
Figure 16.32. Comparison Au assays, twin pair DDH07-17 and RC07-148.................................... 140
Figure 16.33. Comparison Au assays, twin pair DDH07-30 and RC07-113.................................... 141
Figure 16.34. Comparison Au assays, twin pair DDH07-18 and RC07-117.................................... 141
Figure 16.35. Comparison Au assays, twin pair DDH08-50 and RC07-119.................................... 142
Figure 16.36. Comparison Au assays, twin pair DDH07-24 and RC07-131.................................... 142
Figure 16.37. Comparison Au assays, twin pair DDH07-35 and RC08-98. .................................... 143
Figure 16.38. Comparison Au assays, twin pair DDH07-37 and RC06-60. .................................... 143
Figure 16.39. Comparison Au assays, twin pair DDH07-39 and RC07-101.................................... 144
Figure 16.40. Comparison Au assays, twin pair DDH07-57 and RC07-190.................................... 144
Figure 16.41. Comparison Au assays, twin pair DDH08-65 and RC07-193.................................... 145
Figure 16.42. Comparison Au assays, twin pair DDH08-64 and RC07-102.................................... 145
Figure 16.43. Comparison Au assays, triplet DDH08-58, RC07-103, and RC08-377. .................... 146
Figure 16.44. Comparison Au assays, twin pair DDH08-62 and RC06-58. .................................... 146
Figure 16.45. Comparison Au assays, twin pair DDH08-61 and RC08-289.................................... 147
Figure 16.46. Comparison Au assays, twin pair DDH08-63 and RC08-395.................................... 147
Figure 17.1. Adjacent exploration properties map. ........................................................................ 151
Figure 19.1. Histograms of sample weights................................................................................... 162
Figure 19.2. Cumulative frequency plot for gold based on core recovery. ...................................... 163
Figure 19.3. Location map showing mineralized zones and drill hole collars. ................................. 164
Figure 19.4. Scatter plot of Fire Assay Gold (x axis) vs. Screen Analysis Au (y axis). Data has been
log transformed. .................................................................................................................... 168
Figure 19.5. Lognormal cumulative frequency plot for Au in core and RC Main A Zone. ............... 169
Figure 19.6. Lognormal cumulative frequency plot for Au in core and RC Main B Zone. ................ 170
Figure 19.7. Lognormal cumulative frequency plot for Au in core and RC North Zone. .................. 170
Figure 19.8. Lognormal cumulative frequency plot for Au composites in Domain 3. ....................... 172
Figure 19.9. Lerchs-Grossman cases 1-12, includes pad liner cost, slope=45. .............................. 196

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Figure 19.10. Lerchs-Grossman cases 1-12, excludes pad liner cost, slope=45. ........................... 197
Figure 19.11. Base case LG shells ($900/oz Au) for La India Project. ........................................... 199
Figure 19.12. Main model West-East cross section at 3,176,095 North, looking North................... 200
Figure 19.13. Main model West-East cross section at 3,176,495 North, looking North................... 201
Figure 19.14. North model West-East cross section at 3,178,690 North, looking North................... 202
Figure 19.15. North model West-East cross section at 3,179,115 North, looking North.................. 203
Figure 21.1. Base case open pit LG shells, areas for value ranking............................................... 207
Figure 21.2. North design pits used for scheduling, sequenced by value ranking........................... 208
Figure 21.3. Main design pits used for scheduling, sequenced by value ranking............................ 209
Figure 21.4. Pit design slope parameters. ..................................................................................... 210
Figure 21.5. Design pits used for scheduling with roads, dumps, leach pad, and infrastructure...... 212
Figure 21.6. Final surface, post mining and waste dump reclamation. ........................................... 216
Figure 22.1. Process flowsheet. .................................................................................................... 228
Figure 23.1. Construction schedule............................................................................................... 244
Figure 25.1. La India Project cash flow sensitivity chart................................................................. 267

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List of Tables

Table Page

Table 3.1. Expected gold recovery by oretype................................................................................... 6


Table 3.2. Measured and Indicated mineral resource estimate, all material types, all areas, La India
project....................................................................................................................................... 8
Table 3.3. Inferred mineral resource, all material types, all areas, La India project. ........................... 8
Table 3.4. Measured and Indicated mineral resource, oxide material only, all areas, La India project.9
Table 3.5. Inferred mineral resource estimate, oxide material only, all areas, La India project. .......... 9
Table 3.6. Base case economic parameters for pit design............................................................... 10
Table 3.7. Base case ($900/oz) Lerchs-Grossman, contained Measured, and Indicated resources. 11
Table 3.8. Base case ($900/oz) Lerchs-Grossman, contained Inferred resources. .......................... 11
Table 3.9. Detailed pit designs based on base Lerchs-Grossman, MII pit resources ........................ 12
Table 3.10. Design pit scheduling parameters................................................................................. 13
Table 3.11. Mine production schedule based on Measured, Indicated, and Inferred mineral
resources. ............................................................................................................................... 14
Table 3.12. Major mining equipment fleet requirements. ................................................................. 15
Table 3.13. Mine personnel requirements. ...................................................................................... 16
Table 3.14. Mine capital expenditures summary. ............................................................................ 16
Table 3.15. Unit mine operating cost summary. .............................................................................. 17
Table 3.16. Annual mine operating cost summary........................................................................... 17
Table 3.17. Process design criteria. ................................................................................................ 18
Table 3.18. Process operating costs by ore domain, 2010 USD. ..................................................... 22
Table 3.19. Mine production schedule. ........................................................................................... 22
Table 3.20. Projected cash flow, base case scenario. ..................................................................... 28
Table 3.21. Project Cash flows and IRR, Year pre-construction -2 through closure.......................... 29
Table 3.22. Project cash flows and IRR, Year PP through closure.................................................. 29
Table 3.23. La India cash flow sensitivity analysis. .......................................................................... 30
Table 3.24. Proposed 2011 budget, La India Project. ...................................................................... 33
Table 4.1. Contributors and responsible Qualified Persons for PEA report. ..................................... 37
Table 6.1. La India project mining concessions. .............................................................................. 51
Table 6.2. Permits required for mine construction and operation. .................................................... 60
Table 12.1. Exploration activities summary. .................................................................................... 91
Table 12.2. Exploration target areas. .............................................................................................. 93
Table 15.1. Element concentrations analyzed and analytical limits. ............................................... 114
Table 16.1. Summary statistics, all blank samples. ....................................................................... 118
Table 16.2. Summary statistics, blank samples preceded by mineralized samples. ....................... 118
Table 16.3. Summary results, assay results of certified standards................................................. 122
Table 16.4. Au assays of independent samples collected by M Gray............................................. 149
Table 18.1. Metallurgical sample composites. ............................................................................... 153
Table 18.2. Bond work index test results....................................................................................... 156
Table 18.3. Bottle roll leach test results......................................................................................... 157
Table 18.4. Column leach test results. .......................................................................................... 158
Table 18.5. Column leach test results by ore domain. ................................................................... 159
Table 18.6. Summary of gold recoveries by ore domain. ............................................................... 160
Table 19.1. Summary of gold in assays at Main Zone sorted by geologic domains. ....................... 165
Table 19.2. Summary of gold distribution at Main Zone Domain 1. ................................................ 165
Table 19.3. Capping strategy for Main Zone. ................................................................................ 166
Table 19.4. Summary of gold in capped assays in Main Zone. ...................................................... 166
Table 19.5. Summary of gold in assays at North Zone sorted by geologic domains. ...................... 167
Table 19.6. Capping strategy for North Zone. ............................................................................... 167
Table 19.7. Summary of capped gold in assays at North Zone sorted by geologic domains........... 167
Table 19.8. Summary of gold in 5m composites at Main Zone sorted by geologic domains. .......... 171
Table 19.9. Summary of gold in 5m composites at North Zone sorted by geologic domains. ......... 171

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Table 19.10. Summary of gold populations in Domain 3................................................................ 173


Table 19.11. Summary of semivariogram parameters for gold....................................................... 174
Table 19.12. Summary of rock densities. ...................................................................................... 175
Table 19.13. Summary of ordinary kriging search parameters – North Zone.................................. 177
Table 19.14. Summary of ordinary kriging search parameters – Main Zone................................... 179
Table 19.15. Measured and Indicated mineral resource estimate, all material types, all areas, La
India project. ......................................................................................................................... 183
Table 19.16. Inferred mineral resource, all material types all areas, La India project..................... 183
Table 19.17. Measured mineral resource, Main Zone.................................................................... 184
Table 19.18. Indicated mineral resource, Main Zone. .................................................................... 184
Table 19.19. Inferred mineral resource, Main Zone. ...................................................................... 184
Table 19.20. Measured plus Indicated resource, Main Zone. ........................................................ 185
Table 19.21. Indicated resource, North Zone. ............................................................................... 185
Table 19.22. Inferred resource, North Zone. ................................................................................. 185
Table 19.23. Measured and Indicated mineral resource, oxide material only, all areas, La India
project................................................................................................................................... 186
Table 19.24. Inferred mineral resource estimate, oxide material only, all areas, La India project.... 186
Table 19.25. Main Zone, Measured oxide mineral resource. ......................................................... 187
Table 19.26. Main Zone, Indicated oxide mineral resource............................................................ 187
Table 19.27. Main Zone, Inferred oxide mineral resource. ............................................................. 187
Table 19.28. Main Zone, Measured plus Indicated oxide mineral resource. ................................... 188
Table 19.29. North Zone Indicated oxide mineral resource............................................................ 188
Table 19.30. North Zone, Inferred oxide mineral resource. ............................................................ 188
Table 19.31. Comparison between Jan. 2008 (drilling through 2007), Jan 2009 (drilling through 2008)
and May 2010 (drilling through 22 January 2010) resource estimates. ................................... 189
Table 19.32. Summary of Resource at a 0.4 gpt Au cutoff sorted by Domains............................... 190
Table 19.33. Comparison of contained gold, 2010 resource model to 2009 resource model. ......... 191
Table 19.34.Base case economic parameters for pit design........................................................... 192
Table 19.35. Lerchs-Grossman cases 1 – 12; includes pad liner cost; slope = 45 .......................... 194
Table 19.36. Lerchs-Grossman cases 13 – 24; excludes pad liner cost; slope = 45....................... 195
Table 19.37. Base case ($900/oz) Lerchs-Grossman, contained Measured, and Indicated resources.
............................................................................................................................................. 197
Table 19.38. Base case ($900/oz) Lerchs-Grossman, contained Inferred resources. ..................... 198
Table 19.39. Detailed pit designs based on base Lerchs-Grossman, MII pit resources .................. 204
Table 21.1. Pit design parameters. ............................................................................................... 209
Table 21.2. Design pit scheduling parameters............................................................................... 211
Table 21.3. Mine production scheduling parameters. .................................................................... 213
Table 21.4. Mine production schedule based on Measured, Indicated, and Inferred mineral
resources. ............................................................................................................................. 214
Table 21.5. Waste material dumping elevations. ........................................................................... 218
Table 21.6. Major mining equipment fleet requirements. ............................................................... 220
Table 21.7. Mine personnel requirements. .................................................................................... 221
Table 21.8. Mine capital expenditures summary. .......................................................................... 222
Table 21.9. Unit mine operating cost summary. ............................................................................ 224
Table 21.10. Annual mine operating cost summary. ...................................................................... 224
Table 21.11. Mining cash flow summary. ...................................................................................... 225
Table 21.12. Mining cash flow parameters. ................................................................................... 226
Table 22.1. Process design criteria. .............................................................................................. 233
Table 22.2. Process operating costs by ore domain, 2010 USD. ................................................... 237
Table 22.3. Crushing and conveying operating cost estimates, 2010 USD. ................................... 238
Table 22.4. Leaching and plant operating cost estimates, 2010 USD. ........................................... 238
Table 22.5. Refining and laboratory operating cost estimates, 2010 USD...................................... 238
Table 22.6. Summary of manpower and costs, 2010 USD. ........................................................... 239
Table 22.7. Allocation of process manpower. ................................................................................ 240
Table 22.8. Reagent consumption and cost estimates. ................................................................. 241

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Table 22.9. Mine production schedule. ......................................................................................... 242


Table 23.1. General and Administration Cost Summary ................................................................ 249
Table 24.1. Closure costs, heap leach facilities. ............................................................................ 259
Table 25.1. La India Project projected cash flow ........................................................................... 264
Table 25.2. Project Cash flows and IRR, Year pre-construction -2 through closure........................ 265
Table 25.3. Project cash flows and IRR, Year PP through closure................................................ 265
Table 25.4. La India cash flow sensitivity. ..................................................................................... 267
Table 27.1. Proposed 2011 budget, La India Project. .................................................................... 273

List of Appendices

Appendix Page

Appendix A. Summary of significant drill intercepts, 2004 through 22 January 2010 reverse
circulation and diamond drilling. ............................................................................................ 285
Appendix B. Summary of significant drill intercepts, 2010 reverse circulation and diamond drilling,
Tarachi area, not part of resource estimate database.. .......................................................... 311
Appendix C. Summary of reverse circulation drilling where water was injected during drilling (“wet
drilling technique”): 2005, 2006, 2007, and 2008 reverse circulation drilling. .......................... 312
Appendix D. Summary of blank material certification assays. ........................................................ 316
Appendix E. RC and diamond core drillholes in resource estimate database, Main Zone: collar
location, orientation, and total depth summary table. ............................................................. 317
Appendix F. RC and diamond core drillholes in resource estimate database, North Zone: collar
location, orientation, and total depth summary table. ............................................................. 328
Appendix G. Semi-variograms, Main and North Zone oretype domains 1, 2, 3, 5, 6, 12, 17, & 18. . 335
Appendix H. Bulk density data information from Kappes Cassiday and Associates........................ 363
Appendix I. Period-end maps, pit, waste rock dump, and road status at end of production periods.367

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3 EXECUTIVE SUMMARY

3.1 Introduction

The La India project comprises multiple volcanic rock hosted, high sulfidation,
epithermal gold systems. Grayd Resource Corporation has been actively exploring
the project since 2004. Work completed to date includes geologic mapping,
geochemical rock chip sampling, airborne geophysical surveys, ground geophysical
surveys, photogrammetric topographic mapping, diamond drilling, reverse circulation
drilling, baseline environmental surveys, and metallurgical testing. In 2007 Grayd
commissioned Giroux Consultants Ltd and Resource Geosciences de Mexico SA de
CV to provide an independent mineral resource estimate and CSA NI43-101
compliant Technical Report for the La India project. An Inferred mineral resource
estimate was published in February 2008. After completion of an additional 12,130
meters of reverse circulation drilling and an additional 2,640 meters of diamond core
drilling, in August 2008 Grayd commissioned Giroux and RGM to create an updated
CSA NI 43-101 compliant resource estimate for the project, which was published in
February 2009. Since that time and up until 22 January 2010 Grayd has completed
an additional 11,976 meters of reverse circulation drilling in 134 drillholes and an
additional 2,444 meters of diamond core drilling in 37 drillholes. In January 2010
Grayd commissioned Resource Geosciences de Mexico SA de CV and Giroux
Consultants Ltd to prepare an updated independent mineral resource estimate and
CSA43-101 compliant Technical Report for the La India project, which was
published in June 2010.

In 2010 Grayd commenced drill testing of the Tarachi prospect, located 8 km


northwest of the Cieneguita zone. A total of 27 diamond core drillholes totaling
6,276 m and 8 reverse circulation drillholes totaling 1,926m were completed in three
periods between February 18 to October 24, 2010. Nearly all of the Tarachi
drillholes intersected significant mineralized widths containing greater than 0.20 gpt
Au, with local higher grade intervals. Highlights include as much as 244 m @ 0.85
g/t including 90 m @ 1.20 gpt Au (DDH-10-167). True widths and controls of
mineralized zones have yet to be determined. The Tarachi drillholes are not part of
the resource model database and resources have not yet been defined for this area.
Recently, drilling has been started again on the property utilizing one RC drill rig.
Many of the Tarachi holes were still mineralized at the end of the hole and the lateral
extents of mineralization is unknown. Surface mapping and sampling have outlined
a greater than five square area with gold potential. Therefore, is expected to be a
focus of future drill programs at the La India project.

In July 2010, Grayd Resources commissioned the authors of this report to produce a
Preliminary Economic Assessment of the La India project, based upon the
Measured, Indicated and Inferred resources defined for the Main and North Zones
and published in the June 2010 Technical Report. This report comprises the
Preliminary Economic Assessment of the La India project using mineral resource
and cost data current as of the date of publication of this report. This Technical

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Report updates the previously released CSA NI43-101 compliant Technical Reports
authored by Ebert (2004), Gray (2006), Gray and Giroux (2008), Gray and Giroux
(2009), and Gray and Giroux (2010). This report has been prepared to meet
Canadian Securities Administrators National Instrument 43-101 standards. The
report provides a summary of the geology of the project, an independent estimate of
a mineral resource, and the results preliminary engineering and cost studies related
to the economic viability of the project.

This Technical Report integrates the contributions of:

M.S. Patricia Aguayo


Gary Giroux, P. Eng., Giroux Consultants Ltd.
James H Gray, P.Eng., Moose Mountain Technical Services (MMTS)
Matthew D Gray, Ph.D., C.P.G., Resource Geosciences de Mexico (RGM)
Ritch Hall, P.Geol.
Fred Lightner, P.E.
Curtis McCullough, P.E.
Hans Smit, P. Geol.
Mark E Smith, P.E. RRD International Corp.

Matthew D. Gray Ph.D., C.P.G., James H. Gray, P. Eng., Mark E. Smith P.E., and
Gary Giroux, P.Eng. served as Qualified Persons as per definitions of CSA NI43-101
for the preparation of this Technical Report. This Technical Report updates the
previously released CSA NI43-101 compliant Technical Reports authored by Ebert
(2004), Gray (2006), Gray and Giroux (2008), and Gray and Giroux (2009).

3.2 Location, Mining Concessions, Surface Rights, Permits

The La India project comprises 27 mining concessions totaling 26,643.51 hectares


and is located in the municipality of Sahuaripa, State of Sonora, Mexico,
approximately 210 km E-SE of the city of Hermosillo. The center of the project area
is located at UTM Zone 12, 709,000E 3,174,000N, North American Datum 27, or
North Latitude 28o 40’ 41” West Longitude 108o 51’ 40”, North American Datum 27
Mexico. The mining concessions are currently controlled by Resource Grayd de
Mexico SA de CV (Grayd) by means of direct ownership and by 8 separate
agreements whereby Grayd can earn a 100% interest in certain concessions by
making cash and share payments totaling $3.228M USD and 835,000 shares over a
5 year period. Thus far $2.703M USD has been paid towards these concessions.
Should Grayd elect to acquire all currently optioned concessions, an additional
$0.525M USD in payments would be pending. Payment has been made in full for
the claims that host the majority of the Measured, Indicated, and Inferred resources
described in this report. Some concessions are subject to underlying NSRs, varying
between 1 and 3%. Part or all of these NSR’s can be purchased by Grayd which
would result in NSR’s between 0 and 1%. The legal standing of the mining
concessions has not been verified by the authors.

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Surface rights in the project area are owned by the Matarachi Ejido (agrarian
community) and private parties. All Measured, Indicated and Inferred project
resources lie within privately owned or possessed land. For all identified target
areas Grayd Resources has executed surface access lease agreements with the
property owners or possessors allowing Grayd access to conduct exploration work.
Existing agreements permit exploration activities only. Exploitation and production
activities will require execution of new lease or purchase agreements. Grayd is
currently negotiating to acquire the surface rights needed for project development.

The defined mineral resource for the project, and all lands required for infrastructure
as proposed in this Technical Report, are wholly contained within three privately held
properties: Rancho Bronces y Bajios (aka La Cieneguita), Rancho La Amargosa,
and Ranch El Duraznito. The legal standing of surface rights has not been verified
by the authors or RGM. As detailed in Item 6.1.2 of this Technical Report, a
preliminary review of title status for these properties indicates that they have not
been re-titled to reflect changes in legal ownership following the death of original
owners. Until corrected titles are issued for these properties, Grayd cannot execute
legally binding surface rights agreements that are required to obtain Federal
environmental permits for mine construction and operation. The current agreements
with the land possessors are sufficient to permit exploration activities that are
conducted under the auspices of environmental regulation NOM-120, as described
in Item 6 of this Technical Report.

3.3 Exploration and Mining History

The first gold discovery in the region, as recorded by Spanish colonials, was made in
1673 at Ostimuri. The gold deposit at Mulatos was discovered by the Spaniards in
1806, but it is likely that indigenous peoples exploited the native gold bearing
oxidized zone of the Mulatos deposit prior to the colonial epoch. Small scale mining
has been semi-continuous in the district during the last two centuries (Consejo de
Recursos Minerales, 1992). Much of the early mining and all of the small-scale
present mining (hand mining by local artisanal miners) targets oxidized fractures
containing fine-grained visible gold. Small underground mines and prospects are
present throughout the La Cruz and La Viruela areas. Local residents state that the
La Cruz - La Viruela property was intermittently mined at a small scale during the
early 1920’s and 30’s. Modern exploration work has been conducted at the La
Viruela-La Cruz property. In the late 1980’s New Golden Sceptre Minerals and
New Goliath Minerals completed approximately 2,000m of percussion drilling. In the
early 1990’s Noranda acquired the rights to La Cruz - La Viruela and completed
2,616m of reverse circulation drilling (Jenkins, 1994) In 1993 San Fernando Mining
Company Ltd. acquired the property and conducted further drilling, including 10
diamond drillholes totaling 2,268m at La Viruela and 11 diamond drillholes at La
Cruz totaling 1,292m (McDougall, 1995).

Grayd Resource Corporation has been actively exploring the project since 2004.
Work completed to date includes geologic mapping, geochemical rock chip

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sampling, airborne geophysical surveys, ground geophysical surveys,


photogrammetric topographic mapping, diamond drilling, reverse circulation drilling,
baseline environmental studies, and metallurgical testing

3.4 Geology and Mineralization

The La India project lies within the Sierra Madre Occidental (SMO) province, a
regionally extensive Eocene to Miocene volcanic field which extends southeast from
the United States-Mexico border to central Mexico. The La India project lies within
the western limits of the SMO in an area dominated by outcrops of andesite and
dacitic tuffs, overlain by rhyolites and rhyolitic tuffs, that have been affected by large
scale N-NW striking normal faults and intruded by granodiorite and diorite stocks.
Incised fluvial canyons have cut the uppermost strata and expose the Lower Series
volcanic strata.

The project area is predominantly underlain by a volcanic sequence comprised of


andesitic and felsic extrusive volcanic strata with interbedded epiclastic
volcaniclastic strata of similar composition. The mineral occurrences present in the
project area, and the deposit type being sought, are volcanic hosted, epithermal,
high sulfidation (HS) gold-silver deposits. Such deposits may be present as veins
and/or disseminated deposits. The La Viruela-La Cruz area comprises one of
several high sulfidation epithermal mineralization centers recognized in the region
(Staude, 2001).

3.5 Drilling and Sampling

In diamond drill campaigns carried out in 2004, 2007, 2008, 2009, and through 22
January 2010, Grayd Resource completed 7,557 meters of BQ, HQ, and PQ
diameter diamond core drilling in 102 drillholes at the La Viruela, La Cruz, Cerro de
Oro, Cieneguita, and Española areas. Seven diamond core holes within the
resource area were used exclusively for metallurgical testing, thus 95 diamond
drillholes totaling 7,208 meters constrain the resource estimate presented in this
report.

In 2005, 2006, 2007, 2008, 2009, and through 22 January 2010,, Grayd Resource
completed 45,334 meters of 5 ¼ inch diameter reverse circulation drilling in 542
drillholes. Of these, 32 were exploration holes or were drilled outside of the modeled
resource domains, thus 510 drillholes totaling 40,871 meters constrain the resource
estimate presented in the June 2010 Technical Report.

Subsequent to the publication of the June 2010 resource estimate, Grayd


commenced both diamond core and reverse circulation exploration drilling at the
previously undrilled Tarachi zone. A total of 27 diamond core drillholes totaling
6,276 m and 8 reverse circulation drillholes totaling 1,926m were completed in three
periods between February 18 to October 24, 2010. The Tarachi area is not included
in the resource model.

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Industry standard sampling methods were utilized to collect the reverse circulation
drillhole samples. Center return 5 ¼” diameter bits were used. Drilling was
conducted dry unless significant water production or hole plugging required the use
of wet drilling methods. While drilling in dry conditions compressed air was used to
force drill cuttings up the drill string for collection. Cuttings were forced into a
cyclone and Jones splitter as drilling progressed. When drilling in wet conditions,
water and compressed air were injected into the hole to force cuttings up the drill
string and a rotary splitter was employed. Samples were collected from initiation to
termination of the drill hole, at intervals of 1.524m (5 feet) m.

Throughout the drilling campaigns, Grayd implemented a quality assurance and


quality control program appropriate for an exploration program. Results verify that
the analytical results of the Grayd drilling programs are reliable and suitable for
resource estimation purposes. Key components of the QA/QC program were:
systematic insertion into the sample stream of blank samples and standards;
analyses of duplicate samples; confirmatory assays by a second laboratory;
independent confirmatory sampling, and use of multiple analytical techniques to
confirm validity of results. For drillholes used in the resource model database,
approximately 8.3% of all samples submitted for assay by Grayd were control
samples consisting of certified blanks, certified reference standards, field duplicates,
and sample preparation duplicates. Additionally, same-lab duplicate assays were
conducted on 3.9% of all pulps and check assays by an independent lab were
conducted on 1.6% of all pulps.

3.6 Metallurgical Testing

In 2006, 2007, and 2009 Grayd Resource commissioned Kappes, Cassiday &
Associates (KCA) to conduct preliminary metallurgical tests on reverse circulation
cuttings and drill core obtained from the Main and North Zones (Albert, 2007a,
Kappes, Cassiday & Associates, 2008; 2009; 2010a; 2010b). Samples selected for
testing represented the economically important mineralized domains. Reverse
circulation drill cuttings and drill core samples were subjected to bottle roll tests over
96 hours conducted on material milled to 80% passing 0.075mm mesh. Oxide
material yielded gold extractions of 85 to 96% with cyanide consumption of 0.31 to
1.78 kg/tonne, whereas sulfide material yielded gold extractions of 5 to 86% and
cyanide consumptions of 1.09 to 6.81 kg/tonne. Bottle roll tests for silver extraction
from oxide material yielded recoveries of 18 to 95%, but because of the low silver
content of the majority of the La India mineralized material, silver is not considered
to be of economic significance. KCA conducted flotation tests on two samples of
sulfide material, 36372 C and D. Material was ring and puck pulverized to 80%
minus 0.106mm and unoptimized flotation tests were completed using a Denver D-1
flotation machine. KCA determined that for these two samples, 94% of the
contained gold reports to the rougher flotation concentrate Albert, 2007b).

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Metallurgical test work completed on drill core from the 2007, 2008, and 2009 drill
campaigns included physical testing (rock densities and Bond Work Index testing),
head analysis, milled bottle roll leach test work, gravity concentration test work,
agglomeration and percolation test work, column leach test work, and environmental
test work. All preparation, assaying and metallurgical studies were performed
utilizing accepted industry standard procedures. Thirteen composites representing
oxide material from nine distinct ore domains were analyzed (Albert, 2007a; Kappes
Cassiday and Associates, 2008, 2009, 2010a, 2010b). Column leach tests for gold
extraction indicate that the oxide material at La India is amenable to standard
cyanide heap leach processing. Column leach tests of 12.5mm crushed material
yielded gold recoveries from 62 to 94%. Column leach tests of 25mm crushed
material yielded gold recoveries from 79 to 97%. Column leach tests for silver
extraction generally yielded low recoveries (2 to 26%) regardless of crush size.
Silver is not considered to be of economic significance and silver recoveries have
not been a focus of the continuing metallurgical studies. Multi-element analyses
indicated that the La India samples do not contain any elements detrimental to
cyanide leaching (Kappes, Cassiday and Associates, 2008). Expected gold
recoveries by ore type, in a conventional cyanide extraction and heap leach process,
are summarized in Table 3.1. Additional metallurgical testing is required to
accurately define appropriate processing methods and expected metal recoveries for
the La India mineralization.

Table 3.1. Expected gold recovery by oretype.

Ore Domain Ore Type Gold Recovery

Main 1 Dacite 89
Main 2 Silica Massive 73
Main 2A Silica Massive / Alunite 80
Main 3 Silica Vuggy / Alunite 71
Main 5 Silica Clay Structures 88
Main 6 Silica Body (C de O) 75

North 11 Dacite 89
North 12 Silica Massive 62
North 12A Silica Massive / Alunite 94
North 14 Silica Clay 88
North 17 Intrusive 88
North 18 Silica Breccia 92

3.7 Mineral Resource Estimation

The current CSA NI43-101 compliant resource estimate for the project was
presented by Gray and Giroux (2010) in the June 2010 project Technical Report.
This Preliminary Economic Assessment is based upon the June 2010 resource
estimate. Geologists in the employ of Grayd Resources collaborated with Resource

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Geosciences de Mexico and Giroux Consultants Ltd. to create resource models for
the drill tested mineralized areas. Two target areas have been the focus of
exploration and resource development drilling: the North Zone, which comprises the
La Cieneguita, Española, Cochis, and La India areas, and the Main Zone, which
comprises the La Viruela, La Cruz, and Cerro de Oro areas. The models are based
upon the geologically supported assumptions that gold distributions and related
hydrothermal alteration assemblages are controlled by lithologic and structural
features. Separate models were created for the geologically similar but spatially
distinct Main and North Zones. The Main Zone model is constrained by 314 reverse
circulation drillholes totaling 29,779 meters and 64 diamond drillholes totaling 4,947
meters. The North Zone model is constrained by 196 reverse circulation drillholes
totaling 11,092 meters and 31 diamond drillholes totaling 2,261 meters. Geologic
and assay data for the drillholes were input into MicroMine modeling software, which
project geologists then used to create and interpret three dimensional solids
representing geologic domains of internally consistent geologic and/or alteration
characteristics. Solids were created by wireframe modeling. The solids model was
based upon lithologies and alteration mineral assemblages mappable in outcrop and
in drill core and drill cuttings. The solids model was reviewed by Qualified Persons
Gray and Giroux and determined to be suitable for purposes of estimating a
Measured, Indicated, and Inferred mineral resource. Gray provided independent
on-site QA/QC reviews of the drilling and sampling procedures, crosschecked the
drillhole data against original assay certificates, conducted independent sampling,
verified via statistical analysis that the project drillhole database is reliable and
accurate and may be used for resource estimation purposes, and independently
reviewed and verified the resource geologic model. Giroux conducted further
statistical review of the data to verify the integrity of the database.

The 2004, 2006, 2007, 2008, 2009, and January 2010 exploration and drilling
campaigns have provided sufficient data to allow for estimation of CSA NI43-101
compliant Measured, Indicated, and Inferred resource estimates (Gray and Giroux,
2010). The La India project hosts a Measured and Indicated gold resource of
760,000 contained ounces contained in 26.77 M tonnes at a grade of 0.883 gpt,
calculated at a 0.40 gpt cutoff, as summarized in Table 3.2. The La India project
hosts an Inferred gold resource of 506,000 ounces contained in 19.73Mt @ 0.798
gpt Au, calculated at a 0.40 gpt cutoff grade, as summarized in Table 3.3.

Of the Measured and Indicated resource, 603,000 ounces (21.6M tonnes at a grade
of 0.867 gpt Au) are contained in oxidized material (Table 3.4). Of the Inferred
resource, 378,000 ounces (14.3 Mt @ 0.82 gpt Au at a 0.40gpt cutoff) are contained
in oxide material (Table 3.5). Column testing for oxide material indicates that the
material may be amenable to treatment by conventional cyanide heap leach gold
recovery methods.

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Table 3.2. Measured and Indicated mineral resource estimate, all material types, all areas, La
India project.
TOTAL ALL ZONES - MEASURED PLUS INDICATED RESOURCE
Au Cutoff Tonnes> Cutoff Grade > Cutoff
Au
(gpt) (tonnes) (gpt) Au (grams) Au Ounces
0.10 61,650,000 0.517 31,900,000 1,024,000
0.20 48,230,000 0.619 29,900,000 960,000
0.30 36,090,000 0.745 26,900,000 864,000
0.40 26,770,000 0.883 23,600,000 760,000
0.50 20,180,000 1.025 20,700,000 665,000
0.60 15,570,000 1.167 18,200,000 584,000
0.70 12,250,000 1.308 16,000,000 515,000
0.80 9,870,000 1.443 14,200,000 458,000
0.90 8,100,000 1.573 12,700,000 410,000
1.00 6,800,000 1.693 11,500,000 370,000

Table 3.3. Inferred mineral resource, all material types, all areas, La India project.
TOTAL ALL ZONES - INFERRED RESOURCE
Au Cutoff Tonnes> Cutoff Grade > Cutoff
Au
(gpt) (tonnes) (gpt) Au (grams) Au Ounces
0.10 117,170,000 0.303 35,500,000 1,143,000
0.20 62,130,000 0.443 27,500,000 886,000
0.30 34,150,000 0.606 20,700,000 665,000
0.40 19,730,000 0.798 15,700,000 506,000
0.50 13,540,000 0.961 13,000,000 418,000
0.60 9,910,000 1.113 11,000,000 355,000
0.70 7,540,000 1.259 9,500,000 305,000
0.80 5,900,000 1.402 8,300,000 266,000
0.90 4,800,000 1.530 7,300,000 236,000
1.00 4,040,000 1.641 6,600,000 213,000

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Table 3.4. Measured and Indicated mineral resource, oxide material only, all areas, La India
project.
TOTAL ALL ZONES OXIDES - MEASURED PLUS INDICATED
RESOURCE
Au Cutoff Tonnes> Cutoff Grade > Cutoff
Au
(gpt) (tonnes) (gpt) Au (grams) Au Ounces
0.10 44,870,000 0.542 24,300,000 781,000
0.20 35,980,000 0.638 23,000,000 738,000
0.30 28,230,000 0.745 21,000,000 677,000
0.40 21,630,000 0.867 18,800,000 603,000
0.50 16,580,000 0.995 16,500,000 530,000
0.60 12,770,000 1.129 14,400,000 463,000
0.70 10,040,000 1.259 12,600,000 407,000
0.80 8,100,000 1.383 11,200,000 360,000
0.90 6,620,000 1.502 9,900,000 320,000
1.00 5,510,000 1.614 8,900,000 286,000

Table 3.5. Inferred mineral resource estimate, oxide material only, all areas, La India project.
TOTAL ALL ZONES OXIDES - INFERRED RESOURCE
Au Cutoff Tonnes> Cutoff Grade > Cutoff
Au
(gpt) (tonnes) (gpt) Au (grams) Au Ounces
0.10 66,140,000 0.343 22,700,000 730,000
0.20 39,710,000 0.474 18,800,000 605,000
0.30 22,990,000 0.641 14,700,000 474,000
0.40 14,340,000 0.820 11,800,000 378,000
0.50 10,210,000 0.973 9,900,000 319,000
0.60 7,390,000 1.135 8,400,000 270,000
0.70 5,630,000 1.289 7,300,000 233,000
0.80 4,370,000 1.444 6,300,000 203,000
0.90 3,580,000 1.577 5,600,000 181,000
1.00 3,070,000 1.680 5,200,000 166,000

For purposes of a preliminary economic assessment of the La India project, Lerchs-


Grossmann (LG) evaluations of potential economic pit limits were made using
Measured, Indicated, and Inferred mineral resources. Table 3.6 summarizes the
base case economic and recovery parameters used in these evaluations. All prices
and costs are in second quarter 2010 U.S. dollars.

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Table 3.6. Base case economic parameters for pit design.

Base Case Economic Parameters


Metal price $900 / oz Au
NSR Royalty 2.0 %
Freight, insurance & refining costs $4.12 / oz Au
Ore mining cost $2.05 / t
Waste mining cost $2.05 / t
General & administration cost $1.50 / t ore
Ore processing costs, recoveries and specific gravities:
Process Cost Recovery Specific
Domain Rock Description $/t % Gravity
Main 1 Dacite 3.41 89 2.22
Main 2 Silica Massive 3.62 73 2.51
Main 2A Silica Massive / Alunite 3.64 80 2.33
Main 3 Silica Vuggy / Alunite 3.61 71 2.28
Main 5 Silica Clay Structures 4.18 88 1.97
Main 6 Silica Bodies (C de O) 3.40 75 2.39
Main 7 Intrusive 4.18 88 2.38
North 11 Dacite 3.41 89 2.22
North 12 Silica Massive 3.87 62 2.63
North 12A Silica Massive / Alunite 3.60 94 2.33
North 14 Silica Clay 4.18 88 1.97
North 17 Intrusive 4.18 88 2.38
North 18 Silica Breccia 5.24 92 2.18

In the LG study, only gold is used to generate revenues for oxidized material. All
sulfide mineralization is treated as waste rock. Overall slope angles of 40°, 45° and
50° are used for the LG evaluations. Net value is computed for each block for the
economic pit optimizations, which include variable ore costs and recoveries by
domain, and weighted average specific gravities. Potential ore is defined for
purposes of the LG analyses by internal dollar / tonne ($/t) cutoffs that include ore
mining ($2.05/t), general/administration ($1.50/t) and variable ore processing costs
by domain. A total of 72 runs (12 prices total x 3 slopes x 2 cases) were conducted
for each deposit model to test sensitivities to:

• gold prices ranging from $270 to $1260/oz (12 prices total), in 10%
increments from the base price of $900/oz,

• pit slope at 40°, 45°, and 50° (3 slopes total), and

• including a pad liner cost of $0.33/t ore (2 cases – with or without),

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The base case $900/oz Au LG shells contain 46.6 million tonnes grading 0.69 g Au/t
of Measured, Indicated and Inferred mineral resources. These figures do not include
any provisions for ore dilution or mining loss. Contained troy ounces of gold are
estimated at 1,029,000, of which about 899,000 ounces are considered potentially
recoverable. Tonnages are based on in-situ weighted average densities stored in
the block models, which range from 1.97-2.51 t/m 3 in the Main deposit and 1.97-2.63
t/m 3 in the North deposit. Average in-situ densities within the base case LG shells
are 2.23 and 2.33 t/m3 for the Main and North deposits, respectively. Tables 3.7 and
3.8 list the contained Measured plus Indicated, and Inferred mineral resources,
respectively, for the base case LG shells. All of the mineral resources presented in
Tables 19.35 and 19.36 are classified as Measured, Indicated and Inferred, and as
defined in Canadian NI 43-101, should not be considered mineral reserves until at
least a Pre-Feasibility study has been completed.

Table 3.7. Base case ($900/oz) Lerchs-Grossman, contained Measured, and Indicated
resources.
Base Case ($900/oz Au) Lerchs-Grossmann – Contained Measured & Indicated Mineral Resources
MnlRes* Contained Recov Au Recov
Deposit Ktonnes Au g/t Oz Au g/t Oz Au Net $/t
Main 16,272 0.71 373,500 0.56 291,800 7.99
North 13,814 0.66 295,300 0.58 258,900 8.83
Total 30,085 0.69 668,800 0.57 550,700 8.38
* Mineral resources above internal Net $/t cutoff without adjustments for dilution or
loss.

Table 3.8. Base case ($900/oz) Lerchs-Grossman, contained Inferred resources.


Base Case ($900/oz Au) Lerchs-Grossmann – Contained Inferred Mineral Resources
MnlRes* Contained Recov Au Recov
Deposit Ktonnes Au g/t Oz Au g/t Oz Au Net $/t
Main 7,646 0.63 154,400 0.50 123,400 6.22
North 8,858 0.72 205,700 0.65 186,500 9.43
Total 16,503 0.68 360,100 0.58 309,900 7.94
* Mineral resources above internal Net $/t cutoff without adjustments for dilution or loss.

About 65% of the mineral resource tonnages contained within the base case LG
shells are classified as Measured and Indicated, with the remainder being Inferred.
The Main deposit area contains about 51% of the project’s total mineral resources,
weighted by tonnage.

Based on the LG Base Case economic Pit20 ($900/oz Au) detailed pit designs have
been done to include detailed slope parameters and ramps. These are summarized
in Table 3.9 as pit delineated resources. At this PEA level of study these resources
include Measured, Indicated, and Inferred classes and are used in the production
schedule and economic analysis for evaluation purposes only. They are not deemed
reserves and MMTS does not present them as having economically assured
profitability at this stage of study.

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Table 3.9. Detailed pit designs based on base Lerchs-Grossman, MII pit resources
Detailed Pit Designs Based 0n Base Lerchs-Grossmann – MII Pit Resources
MnlRes* Contained Recov Au Recov
Deposit Ktonnes Au g/t Oz Au g/t Oz Au Net $/t
Main 25,478 0.64 522,500 0.50 411,600 8.44
North 23,956 0.63 487,100 0.56 432,100 9.91
Total 49,434 0.64 1,009,600 0.53 843,700 9.15

3.8 Mining

The mine planning and engineering work includes determining the economic pit limit,
detailed pit designs, calculating in pit resources, and production scheduling, based
on the resource model described above. Mining, capital and operating cost
estimates have then been estimated for the mine plan based on typical costs for this
type and size of operation.

The base case Lerchs-Grossmann (LG) analysis presented in Section 19 generates


a number of pit shells in the North and Main deposit areas. These pit shells have
been prioritized by net value for purposes of developing a mining sequence for a
preliminary mine production schedule. From the ranking of the smaller pit areas,
sets of five pits each in the Main and North deposit areas, ranked from highest to
lowest value, have been designed.

The grouped LG pits were converted to designed pits with ramps using double
benching and 45o inter-ramp slopes to get a truer estimate of waste rock and
stripping ratio. Figures 21.2 and 21.3 show the final design pits used for production
scheduling, for the North and Main areas respectively. The bench height used for
the pit designs in the current preliminary economic assessment (PEA) is based on
the block height in the 3D model, which is 6 meters. Figure 21.5 displays the layout
of the final design pits used for production scheduling, along with preliminary
locations for minesite infrastructure, and Table 3.10 shows the design pit phase
tonnages, grades, strip ratio, and values used for sequencing and scheduling.

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Table 3.10. Design pit scheduling parameters.


Incremental Design Pit Phases for Production Scheduling
AREA Leach Avg Rec Rec Oz Waste Total Value Net Value Avg. Insitu Insitu Oz
Pit Name [PIT#] (ktonnes) Au (g/t) (1000's) (ktonnes) S.R. (1000's) ($/t) Au (g/t) (1000's)
NP21 11+12 6,974 0.72 160.0 7,624 1.09 $ 96,313 $ 13.81 0.86 193.4
NP23 6+7+8 5,102 0.58 94.4 2,297 0.45 $ 54,800 $ 10.74 0.62 102.4
NP22 9+10 6,001 0.49 92.4 3,160 0.53 $ 48,673 $ 8.11 0.53 101.4
NP24 1+2 2,959 0.48 44.9 2,055 0.69 $ 22,488 $ 7.60 0.54 51.7
NP25 13 2,920 0.37 34.5 1,408 0.48 $ 15,195 $ 5.20 0.41 38.1
SubTotal 23,956 0.56 426.2 16,544 0.69 $ 237,470 $ 9.91 0.63 487.1
MP21 1+2 3,300 0.62 65.0 2,268 0.69 $ 38,672 $ 11.72 0.83 88.2
MP22 9+10 7,114 0.55 124.4 5,292 0.74 $ 70,017 $ 9.84 0.74 168.5
MP23 6+7+8 7,888 0.46 116.3 8,272 1.05 $ 59,086 $ 7.49 0.57 144.1
MP24 3+4+5 5,829 0.42 77.0 2,031 0.35 $ 34,862 $ 5.98 0.48 89.1
MP25 11+12 1,345 0.55 23.3 1,181 0.88 $ 12,453 $ 9.26 0.76 32.7
SubTotal 25,476 0.50 406.0 19,044 0.75 $ 215,091 $ 8.44 0.64 522.5
TOTAL 49,432 0.53 832.3 35,588 0.72 $ 452,560 $ 9.16 0.64 1,009.6

Notes: 1 - D0/ND0 domain material types are considered as waste.


2 - "Total Value" and "$/t" do not include mining costs.
3 - Leach and waste tonnes include 5% mining loss & 5% dilution.
4 - SG is based on values as stored in the resource model

A preliminary mine production schedule for the La India project is developed from
the Measured, Indicated, and Inferred mineral resources contained within each of
the design pit phases. The combined North and Main ore-grade mineral resources
used for scheduling are as indicated in Table 3.10.

A schedule optimization program has been used to simulate open pit mining for a
maximum leach processing rate of 6,000,000 tpy and a total mining capacity of
10,000,000 tpy. Only oxide mineral resources above the internal Net $/tonne cutoffs
(see Table 3.10) are considered as leach material for purposes of developing the
PEA mine production schedule. Benches are mined from the upper most benches
downward within each pit phase.

Mining is initiated in the North area deposits, and the Main area deposits are brought
into the schedule as determined by the program. Table 3.11 summarizes the
resulting mine production schedule for the PEA of the La India project. Feed to the
crushing plants and leach pads will total 49.4 million tonnes over the life of the mine,
which is projected at just under 9 years total. 832,000 ounces will be recovered in
total, at an average leach recovery of approximately 84%.

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Table 3.11. Mine production schedule based on Measured, Indicated, and Inferred mineral
resources.
Avg Rec
Leach Avg Insitu Contained Au (Rec Recovered Waste Total Ktonnes Strip
Year (Ktonnes) Au (g/t) Au (Koz) g/t) Au (Koz) Ktonnes Mined Ratio
1- Qtr1 1,050 0.78 26 0.63 21 1,707 2,757 1.63
1- Qtr2 1,050 0.81 27 0.66 22 1,376 2,426 1.31
1- Qtr3 1,300 0.83 35 0.67 28 1,433 2,733 1.10
1- Qtr4 1,300 0.84 35 0.73 30 895 2,195 0.69
2 5,100 0.70 114 0.64 104 3,348 8,448 0.66
3 5,800 0.61 114 0.58 106 2,559 8,359 0.44
4 5,894 0.58 110 0.49 92 3,152 9,046 0.53
5 5,600 0.73 132 0.55 99 4,417 10,017 0.79
6 5,510 0.44 78 0.38 66 6,773 12,283 1.23
7 5,924 0.72 137 0.58 108 4,504 10,428 0.76
8 5,750 0.51 95 0.46 84 3,112 8,862 0.54
9 5,153 0.56 92 0.46 75 2,312 7,465 0.45
Totals 49,431 0.63 996 0.53 832 35,588 85,019 0.72
Notes: 1- Pit resources are based on the net $/tonne cutoff value for full blocks
2- D0 / ND0 domain material types are always waste
3- Reserves have 5% loss and 5% dilution applied
4- Excludes North Pit 26 and Area 13 of Main Pit 25
* Includes Measured, Indicated and Inferred mineral resources, 5% mining dilution, and 5%
mining loss. Inferred mineral resources have a great amount of uncertainty as to their
existence and as to whether they can be mined legally or economically. It cannot be assumed
that all or any part of Inferred mineral resources will ever be upgraded to a higher category.

This preliminary economic assessment of the La India project is at a scoping


level in accuracy, is preliminary in nature and includes inferred mineral
resources in the estimation of the mine production schedule (Table 3.11).
Inferred mineral resources are considered too speculative geologically to have
the economic considerations applied to them that would enable them to be
categorized as mineral reserves under standards set forth in Canadian NI 43-
101. As such, there is no certainty that the mineral resource projections
presented in the mine production schedule will be realized. Mineral resources
that are not mineral reserves do not have demonstrated economic viability.

For purposes of equipment selection and cost estimation for this preliminary
assessment, open pit mining will be conducted from 6-m benches using small scale
equipment. Mobility is an important consideration in equipment selection where
three to four pits will be mined concurrently.

The mine will be scheduled for continuous operations using four rotating crews, each
working 12-hour shifts. Leach material will be hauled to crushing-screening-
agglomeration plants located near the proposed leach pad. The crushed and
agglomerated leach feed material will then be transported by conveyors and a
stacker onto the leach pad.

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Waste rock haulage will be directed to one of five sites, four in the North pit area and
one in the Main pit area. These dump sites were selected for their close proximity to
mining areas and natural confinement for regrading and water management
considerations. Some ongoing reclamation of the waste rock dumps will be
accomplished since the first north pit mined will accommodate much of the other
north pits’ waste through backfilling.

Equipment productivities are derived dynamically by the scheduling program using


pre-determined cycle times for all haul routes. Four 4.0-m 3 front-end loaders and
one 3.0-m 3 shovel will serve as the primary loading units, each working with 28-t off-
highway haul trucks, having an effective payload of 25 tonnes. The productivity of
this loader/shovel combination is estimated at 10,000,000 tonnes per year. Four to
five operating loaders will be required.

Table 3.12 summarizes the primary mine equipment requirements for the project.
Post mining reclamation will be done using the mining equipment at the end of
mining and final flushing of the leach pad. Accumulated funds from the reclamation
bond will fund this work. More detailed planning will require future studies in
conjunction with environmental studies.

Table 3.12. Major mining equipment fleet requirements.


Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9
Crawler Drills, 165-mm 3 3 3 3 3 3 3 3 3
Loaders, 4.0-cu-m 3 3 3 4 4 4 4 3 3
Shovels, 3.0-cu-m 1 1 1 1 1 1 1 1 1
Trucks, 25-tonne 16 16 16 17 17 17 17 16 16
Sec. Drills, 89-mm 1 1 1 1 1 1 1 1 1
Dozers, 306-kW 3 3 3 3 3 3 3 3 3
Dozers, 228-kW 2 2 2 2 2 2 2 2 2
Graders, 193-kW 3 3 3 3 3 3 3 3 3
Water Truck, 30,000-liter 3 3 3 3 3 3 3 3 3

A rotating, four-crew system will be used to staff mine operations and maintenance
craft labor positions. These crews will work 12-hour shifts. Table 3.13 summarizes
the total mine personnel requirements, including supervision and technical staff.
Mine manpower levels range from 120 in the final year of production mining (year 9)
to a peak of 223 that are projected for Years 4-7.

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Table 3.13. Mine personnel requirements.


Year1 - Year1 - Year1 - Year1 -
Description Qtr1 Qtr2 Qtr3 Qtr4 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9

Mine Operations:
Subtotal Mine
Operations 148 148 148 148 148 148 156 156 156 156 116 78

Mine Maintenance:
Subtotal Mine
Maintenance 43 43 43 43 43 43 43 43 43 43 33 27
Mine Supervision &
Technical:
Subtotal Mine
Supv/Tech 24 24 24 24 24 24 24 24 24 24 21 15

Total Mine
Personnel: 215 215 215 215 215 215 223 223 223 223 170 120

La India mining cost estimates are in second quarter 2010 U.S. dollars and
exclude taxes and duties. No inflationary escalation factors have been applied
to these cost projections. All cost estimates for this PEA should be
considered scoping level in accuracy (i.e., ±35%).

Mine equipment unit prices are from MMTS’s data base, derived from recent vendor
quotations for similarly sized equipment and industry cost guides. Sustaining capital
is also included in the estimates, accounting for fleet expansions where necessary
and replacements of aging units. Table 3.14 summarizes the mine capital
expenditures over the life of the La India project. Mine capital expenditures
throughout the mine life are projected at $40.7 million. This includes working capital
for mine operations.

Table 3.14. Mine capital expenditures summary.


Cost Description $USD x 1000
Initial equipment purchases (through Year 2) 26,100
Mine haul road construction and site preparation 7,200
Spares inventory 1,500
Sustaining / Working Capital 4,000
Sustaining equipment purchases 3,100
Spares recovery and equipment salvage -4,500
Closure earthworks and reclamation 3,200

Total Mine Capital 40,700

Mine operating costs were derived from numerous sources including nearby
operations, equipment handbooks, and typical industry estimates. La India mine

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operating cost estimates cover: pit operations (i.e., drilling, blasting, loading and
hauling); waste dump maintenance; construction of internal haul roads, sumps and
safety berms; maintenance of all mine roads and safety berms; operating and
maintenance labor; mine department supervision and technical services; and other
earthworks as may be required for day to day mining operations. Exploration costs
are not included in the operating cost estimates presented in this section. Over the
life of the project, mine operating costs for La India are projected at $174.2 million,
averaging $19.7 million per year. This equates to $2.05 per tonne of material mined
(leach feed and waste), or $3.52 per tonne of leach feed processed. Unit mining
costs are summarized in Table 3.15, and the annual mining costs are summarized in
Table 3.16.

Table 3.15. Unit mine operating cost summary.


Unit Mining Cost
Item
($/tonne matl):
Drilling $ 0.29
Blasting $ 0.24
Loading $ 0.20
Hauling $ 0.57
Roads & Dumps $ 0.38
General Mine $ 0.11
General Maintenance $ 0.05
Supervision & Technical $ 0.21

Total Mining, Pre-Tax ($/t matl): $ 2.05

Table 3.16. Annual mine operating cost summary.


Year1 - Year1 - Year1 - Year1 -
Description Qtr1 Qtr2 Qtr3 Qtr4 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Totals
Production
(ktonnes):
Ore 1,050 1,050 1,300 1,300 5,100 5,800 5,894 5,600 5,510 5,924 5,750 5,153 49,431
Waste 1,707 1,376 1,433 895 3,348 2,559 3,152 4,417 6,773 4,504 3,112 2,312 35,588
Total
Material 2,757 2,426 2,733 2,195 8,448 8,359 9,046 10,017 12,283 10,428 8,862 7,465 85,019
Operating
Costs
$USD x
1000 5,648 4,970 5,599 4,496 17,306 17,123 18,531 20,520 25,162 21,362 18,154 15,293 174,161

The operating life of the La India project is estimated at 8.85 years assuming an
average leach feed processing rate of 16,400 tpd. There is no preproduction
stripping period. However, road and site development work must be completed
before production can begin.

3.9 Processing

Flowsheet selection was based upon results of laboratory test work. The process
flowsheet includes a three-stage crushing plant followed by a heap leach operation.
Gold is extracted by an ADR carbon plant. The process flowsheet is based on an

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ore processing rate of 6.0 million dry tonnes per year (17,150 dry tonnes per day).
Design criteria are summarized in Table 3.17

Table 3.17. Process design criteria.


Unit Value
General
Design mtpd 17,150
Design mtph 950
Ore Characteristics
Specific Gravity (Average) mt/m3 2.4
Dry Crushed Ore Bulk Density
Primary Crusher Product mt/m3 1.6
Tertiary Crusher Product mt/m3 1.5
Run-of-Mine Moisture % 2.0
Abrasion Index (max) 0.78
Crushing
Days per Week 7
Days per Year 350
Shifts per Day 2
Shift Length hrs 12
Crusher Availability % 75
Hours per Day hrs 18
Primary Crusher
Type Gyratory
Size mm 1,065 x 1,651
Open Side Setting mm 140
Motor kw 375
Feed Size, 100 % Passing mm 900
Product Size, 80 % Passing mm 180
Apron Feeder
Size mm 7,070 x 1,500
Motor kw 15
Primary Crusher Discharge Conveyor
Type Belt
Width mm 1,372
Motor kw 50
Primary Crushed Ore Stockpile mt 160,000
Primary Crushed Ore Stockpile Reclaim Feeders
Number of Units 4
Type Vibrating
Motor kw 15
Secondary Crushing Plant Feed Conveyor
Type Belt
Width mm 1,372
Motor kw 50
Secondary Crusher Screen
Type Vibrating, Double Deck
Size mm 2,438 x 6,096

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Top Screen Deck Aperture mm 76


Bottom Screen Deck Aperture mm 25
Motor kw 40
Secondary Crusher
Type Standard Cone Crusher
Size mm MP 800
Motor kw 600
Closed Side Setting mm 32
Crusher Product, 80 % Minus mm 30
Secondary Crusher Discharge Conveyor
Type Belt
Width mm 1,372
Motor kw 50
Tertiary Crusher Screen
Type Vibrating, Double Deck
Size mm 2,428 x 6,096
Top Screen Deck Aperture mm 38
Bottom Screen Deck Aperture mm 25
Motor kw 40
Tertiary Crusher
Short-Head Cone
Type Crusher
Size mm MP 800
Motor kw 600
Closed Side Setting mm 16
Crusher Product, 80% minus mm 20
Tertiary Crusher Discharge Conveyor
Type Belt
Width mm 1,372
Motor kw 50
Tertiary Crusher Transfer Conveyor
Type Belt
Width mm 1,372
Motor kw 50
Final Crusher Product Conveyor
Type Belt
Width mm 1,372
Motor kw 50
Leach Pad Conveyors
Type Belt
Width mm 1,372
Quantity 9
Motor kw 50
Radial Stacker
Type Belt
Width mm 1,372
Motor kw 50
Leach Pad

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Ultimate Design mt 50,000,000


Ultimate Height m 100
Lift Height m 6
Volume Required m3 33,333,333
Total Area Required m2 600,000
Initial Area - Phase 1 m2 250,000
Phase 2 m2 175,000
Phase 3 m2 175,000
Pad Loading Sequence
Initial Area (375m x666m) m2 250,000
Lift 1 (359m x 650m) m2 233,350
Lift 2 (343m x 634m) m2 217,462
Lift 3 (327m x 618m) m2 202,086
Lift 4 (311m x 602m) m2 187,222
Lift 5 (295m x 586m) m2 172,870
Lift 6 (279m x 570m) m2 159,030
Leaching Cycle Lift 1
Load weeks 2
1st Leach weeks 11
Rest & Drain weeks 9
2nd Leach weeks 11
Rest & Drain weeks 10
3rd Leach weeks 11
Leach Panels
Area Square Meters (50m x 267m) m2 13,333
Panel (tonnes) mt 120,000
Design Flowrate (l/hr/sq. m) l/hr/m2 10
Design Flowrate Per Panel (l/hr) l/hr 133,333
Panels Actively Leached 11
Design Flowrate (l/hr) l/hr 1,466,663
Design Flowrate (gpm) gpm 6,458
Design Flowrate Per Panel (gpm) gpm 587
Design Flowrate Per Panel gpm 310
Solution to Ore Ratios
1st Leach 2.1
2nd Leach 2.1
3rd Leach 2.1
Barren Solution Pumps
Number of Units 2
Type Horizontal
Motor kw 150
Capacity l/m 23,000
Barren Solution Pond m3 9,470
gal 2,500,000
Pregnant Solution Pond m3 9,470
gal 2,500,000
Emergency Storm Water Pond m3 103,061
gal 28,000,000

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Pregnant Solution Pumps


Number of Units 2
Type Horizontal
Motor kw 100
Capacity l/m 23,000
Carbon Columns & Handling
Power kw 20
Capacity l/m 23,000
Quantity 5 Cascade Type
Acid Wash System
Power kw 5
Carbon Capacity mt 3
Carbon Strip Vessel
Power kw 4
Carbon Capacity mt 3
Heat Exchanger
Power kw 10
Type Skid Mounted
Electrowinning Cell
Power kw 45
Capacity m3 3.0
Regeneration Furnace
Power kw 225
Carbon Capacity mt 3
Mercury Retort Oven
Power kw 80
Induction Dore Furnace
Power kw 80

3.10 Process Operating Costs

Process operating costs were developed for all of the different ore types, or
Domains. The process costs did not include any mine or general and administrative
costs as these were covered elsewhere. The costs were estimated by specific
operating area and included; Crushing and Conveying, Leaching, Plant, Refinery,
and Laboratory. All process maintenance and manpower, including process
supervision is included.

The basis for the major consumables and Mexican National labor were taken from
current costs from similar heap leach operations in Mexico. For the process section
2 ex-patriot employees were included, and assumed to be from North America. The
process operations of Crushing and Conveying, Leaching, Plant and Laboratory
were based on a 24-hour operation and staffed by 3 separate work crews, working
on a 12-hour shift basis. The Refinery work schedule is only 1 12-hour shift per day.
All costs are presented in 2010 U.S. Dollars. An exchange rate of 12 Nuevo Pesos
(Pesos or “NP”) per dollar was assumed.

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Process Operating Costs by Domain are summarized in Table 3.18.

Table 3.18. Process operating costs by ore domain, 2010 USD.


Crush &
Domain Convey Leaching Plant Refinery Laboratory Total

Main 1 $1.30 $1.20 $0.29 $0.10 $0.10 $3.00


Main 2 $1.58 $1.10 $0.29 $0.10 $0.10 $3.17
Main 2A $1.58 $1.08 $0.29 $0.10 $0.10 $3.16
Main 3 $1.39 $1.31 $0.29 $0.10 $0.10 $3.20
Main 5 $1.04 $2.13 $0.29 $0.10 $0.10 $3.67
Main 6 $1.56 $0.88 $0.29 $0.10 $0.10 $2.94
North 11 $1.30 $1.20 $0.29 $0.10 $0.10 $3.00
North 12 $1.60 $1.30 $0.29 $0.10 $0.10 $3.40
North 12A $1.46 $1.21 $0.29 $0.10 $0.10 $3.16
North 14 $1.17 $2.13 $0.29 $0.10 $0.10 $3.80
North 17 $1.04 $2.13 $0.29 $0.10 $0.10 $3.67
North 18 $1.34 $2.68 $0.29 $0.10 $0.10 $4.52

3.11 Gold Production

Gold production for La India was calculated from the mine production schedule and
the overall recovery for each ore type as determined by the testwork completed by
Kappes Cassiday & Associates and is summarized in Table 3.19.
Table 3.19. Mine production schedule.
Units Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total

Ore to Pads kt 4,700 5,100 5,800 5,895 5,600 5,510 5,924 5,750 5,153 44,279
Gold Grade of Ore g/t 0.82 0.70 0.61 0.58 0.73 0.44 0.72 0.51 0.55 0.70
Contained Gold oz 123,606 114,468 113,760 109,774 132,239 78,409 136,714 94,828 91,849 995,649
Cum Contained Gold oz 123,606 238,074 351,835 461,609 593,849 672,258 808,972 903,800 995,649

Ultimate Recovery % 82% 86% 88% 87% 84% 84% 83% 84% 84% 84%
Recoverable Gold oz 100,749 103,389 106,143 91,195 98,271 65,627 108,496 83,180 75,087 832,138
Cum. Recoverable Gold oz 100,749 204,138 310,281 401,476 499,747 565,375 673,870 757,050 832,138

Gold Recovered oz 85,829 106,573 106,143 91,195 98,271 65,627 108,496 83,180 75,087 11,736 832,138
Cum Recovered Gold oz 85,829 192,402 298,545 389,740 488,011 553,639 662,134 745,314 820,402 832,138
Recoverable Inventory oz 14,920 11,736 11,736 11,736 11,736 11,736 11,736 11,736 11,736 0 0

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3.12 Infrastructure and Construction

From the start of construction, it will take approximately 12 months to build the
project. A construction schedule is presented in Figure 23.1.

3.13 Environmental and Permitting

Exploration and mining activities in Mexico are subject to control by the Secretaria
del Medio Ambiente y Recursos Naturales (Secretary of the Environment and
Natural Resources), known by its acronym SEMARNAT. The La India project is not
included within any specially protected, Federally designated ecological zones,
therefore basic exploration activities are regulated under Norma Oficial Mexicana
NOM-120-ECOL-1997. NOM120 allows for activities including mapping,
geochemical sampling, geophysical surveys, mechanized trenching, road building,
and drilling. Most exploration activities can be permitted utilizing NOM120. Mine
construction and operation activities generally require preparation of:

i. A Manifesto de Impacto Ambiental (Environmental Impact Statement), known


by its acronym as an MIA, and:
ii. A Cambio de Uso de Suelo (Land Used Change) permit, known by its
acronym as a CUS.

Properly prepared MIA and CUS applications and mine operating permits for a
project that does not affect Federally protected biospheres or ecological reserves
can usually be approved in 12 months.

Thus far exploration work at La India has been conducted under the auspices of
NOM120. Because the limits for surface disturbance permitted under NOM 120 are
being approached in the Main Zone, further exploration or development work in the
La Viruela-La Cruz area that creates additional surface disturbance will require a
Change of Land Use (Cambio de Uso de Suelo) permit. This permit cannot be
issued until such time that Grayd has a formally registered surface rights agreement
with the owner of legal record of the affected land. Grayd is currently negotiating to
acquire the surface rights needed for further project development at the Main Zone.
Exploration activities in the North Zone and Tarachi area may continue to be carried
out under the terms of NOM 120.

In October 2008 Grayd hired independent environmental permitting consultants to


design and implement baseline environmental studies of the La India project. Since
that time collection of data required for obtaining a Manifesto de Impacto Ambiental
(Environmental Impact Statement) and Cambio de Uso de Suelo (Land Use
Change) permit has been ongoing.

The project is not located in an area with a special Federal environmental protection
designation and no factors have been identified that would be expected to hinder

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authorization of Federal and State environmental permits required for construction


and operation of a mine as described in this report.

Permits that would be required for the construction and operation of a mine as
described in this Technical Report are summarized in Table 6.2. The Mulatos mine,
a large scale, open pit, cyanide heap leach gold mine, presently operates in the
Municipality and encountered no impediments to receipt of needed permits. Should
these permits be solicited for the La India project, no obstacles to obtaining them are
anticipated provided that Grayd obtains the necessary surface rights and design and
mitigation criteria meet all applicable standards.

3.14 Economic Analysis

3.14.1 Assumptions, Economic Criteria, and Inputs

The Preliminary Economic Assessment (PEA) is based on Measured, Indicated and


Inferred resources using the resource estimate prepared by G. Giroux, P.Eng., that
is detailed in a report titled, “May 2010 Measured, Indicated, and Inferred Mineral
Resource Estimate, La India Gold Project, Municipio of Sahuaripa, Sonora, Mexico”,
dated June 15, 2010. The PEA is preliminary in nature and includes Inferred mineral
resources that are considered too speculative, geologically, to have the economic
considerations applied to them that would enable them to be categorized as mineral
reserves. There is no certainty that all or any part of the mineral resource will be
converted into mineral reserves.

Economic pit optimization was run using a US $900/oz gold price. The following
assumptions were made in the evaluation:

- Mining by the owner


- 100% equity with no debt financing.
- Constant 3rd quarter 2010 US dollars with no escalation of operating costs,
capital costs or revenue.
- Exchange rate: US$1.00=Mx Peso 12.0
- Gold price of US$950/oz
- All in $US
- Mineral resources mined totaling 49.4 Mt at a grade of 0.63 g/t gold.
(includes dilution)
- Waste material of 35.6 Mt resulting in a waste to ore ratio of 0.72:1.
- Open pit ore production averaging 5.5 Mtpa or approximately 16,000 tpd.
- Three stages of crushing to -25 mm in closed circuit using conveyor pad
loading.
- Two years pre-construction capital costs including purchasing surface
rights and detailed engineering. Since these costs would be incurred
before the start of construction, and may in fact be incurred more than 2
years before the start of production, analyses of the NPV and IRR for the
project were made considering both the case of from Year -2 to closure

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and from Year PP to closure, as presented in Item 25.3 and Tables 3.21
and 3.22.
- Pre-production (construction) estimated at 9-12 months (Year PP). Note
that the project economic summary given below is based starting from
year PP or the start of construction.
- Mine life is nine years of production plus year 10 of residual production
and the rinsing of the heaps.
- Leach Plant gold recovery estimated by various material type, as indicated
by testwork - average 84%.
- Gold production schedule is based on leach time estimates from testwork.
Not all gold is produced in the year stacked. Recoverable gold inventory
is assumed to stabilize after year 2 and come out in year 10.
- Net Smelter Return includes dore’ transportation and refining, and a
0.50% NSR royalty from the North Zone. Costs for purchasing NSRs as
per various agreements are included in capital costs.
- Revenue and expenses are recognized at the time of production.
- Income from the salvage value at the end of the project’s life is from the
mining equipment only.
- Costs for land purchase and more detailed engineering of $7.9 million
prior to initializing construction. Since these costs would be incurred
before the start of construction, and may in fact be incurred more than 2
years before the start of production, analyses of the NPV and IRR for the
project were made considering both the case of from Year -2 to closure
and from Year PP to closure, as presented in Item 25.3 and Tables 3.21
and 3.22.
- Pre-production capital cost estimate is $72.7 million.
- Sustaining capital cost is estimated at $31.9 million.

Pre production capital includes:


Site earth works $ 6.0
Mine equipment 26.1
Process (crushing, pad and ponds) 22.2
Infrastructure (access, camp, power, shop) 10.1
Owner Indirects and insurance 1.8
Contingency 6.5
Total $72.7M

Sustaining Capital includes:


Site earth works $ 4.5
Mine equipment 8.1
Process (primarily pad and pond expansion) 15.0
Owner (royalty purchase) 1.5
Contingency 2.8
Total $31.9M

Operating Costs

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• Average operating costs over the LOM:

Mining $2.05/tonne material moved, or


$3.52/tonne processed
Processing $3.45/tonne processed
G&A $1.42/tonne processed

Total $8.39/tonne processed

Mining operating costs are presented in Item 21. Process costs are discussed in
Item 22. Each material type has an unique process cost dependent upon the
physical properties of the rock (i.e. crushing index) and the reagent consumption in
column tests. Details are given in Item 22. General and Administration costs were
developed based on information from operating mines and were then checked that
they are reasonable for the La India project.

3.14.2 Taxes

The principal corporate taxes levied in Mexico include:

1) the greater of the regular income tax (“ISR”), and the single rate business tax or
flat tax (“IETU”), and

2) a value-added tax (“VAT”).

3.14.3 Income Tax and Single Rate Business Tax or Flat Tax

Mexico’s corporate income tax is 30% through December 31, 2012. The rate will be
reduced to 29% in 2013 and 28% in 2014 and future years. An income tax rate of
28% has been used in the economic model.

Mexico also has a flat tax that applies to corporations. The flat tax is an alternative
tax that does not replace the corporate income tax and is calculated on a cash-flow
basis, generally when business receipts are collected and business expenditures,
including capital expenditures, are made. A flat tax rate of 17.5% has been used in
the economic model.

Corporations are required to calculate both their income tax liability and their flat tax
liability for each fiscal year, and pay whichever is higher.

3.14.4 Value Added Tax

Value-added tax is assessed on the sale of goods and services, leasing and imports.
The rate is 16% and is imposed on all activities conducted within Mexican territory,
11% in the US/Mexican border region and 0% for all exports, which includes the sale
of gold. Value-added tax paid on purchases is refundable as long as the expenses

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are business related and are deductible for income tax purposes. The economic
model assumes a value-added tax rate of 16%, and that all value-added tax paid will
be refunded.

3.14.5 Cash Flow

The projected cash flow for the La India project is summarized in Table 3.20.

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Table 3.20. Projected cash flow, base case scenario.

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3.14.6 Cash Flow Analysis and Economic Performance

Based on the time period from pre-construction year -2 through closure, on a stand-
alone basis the project returns the pre-tax cash flows presented in Table 3.21.

Table 3.21. Project Cash flows and IRR, Year pre-construction -2 through closure.
Price Gold Undiscounted Cash Flow NPV @ 5% Discount IRR Payback
Scenario (US$/oz) (millions US) (millions US) (%) Years
$850 $175 $105 31% N.A.

Base Case $950 $258 $161 43% N.A.


2 Week $1355 $595 $392 82% N.A.
Average (i)

Based on the time period from construction (year PP) through closure, on a stand-
alone basis the project returns the pre-tax cash flows presented in Table 3.22.

Table 3.22. Project cash flows and IRR, Year PP through closure.
Price Gold Undiscounted Cash Flow NPV @ 5% Discount IRR Payback
Scenario (US$/oz) (millions US) (millions US) (%) Years
$850 $184 $124 38% 3.4
Base Case $950 $267 $187 51% 2.6
2 Week $1355 $603 $441 103% 1.4
Average (i)
i. Source: www.kitco.com. 10 trading day average London PM Fix from Oct. 6, 2010-Oct 19, 2010.

The Total Cash Cost is $505/oz gold produced. The LOM capital cost is US$126/oz
gold produced, for a Total Production Cost of US$631/oz gold produced.

Key economic risks were examined by running cash flow sensitivities on:
- Recovered gold
- Capital Costs
- Operating Costs
- Gold Price

Sensitivity over the base case were calculated for a range of -20% to +20%
variations of the base case parameters listed above. Variance of gold recovery has
the same effect as variance of gold price, however gold recovery cannot increase
beyond 100% thus sensitivity to gold recovery was not studied beyond a 10%
increase. All were done with a 5% NPV. The project is most sensitive to gold price
and recovered gold (which have the same impact). This is followed by the operating
costs with the capital cost being the least sensitive to the economics of the project.
Sensitivities are summarized in Table 3.23 and shown in Figure 3.1.

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Table 3.23. La India cash flow sensitivity analysis.


La India Cash Flow Sensitivity Data
Cash Flow Before Tax @ NPV5
Years PP thru 10

-20% -10% Base +10% +20%


Gold Recovered $87 $132 $187 $246 N.A.
Capital Cost $202 $195 $187 $177 $168
Operating Cost $240 $216 $187 $155 $123
Gold Price $87 $132 $187 $246 $306

$300

$250

$200

Gold Recovered

$150 Capital Cost


Operating Cost
Gold Price
$100

$50

$0
-20% -10% Base 10% 20%

Figure 3.1. La India project NPV sensitivity chart.

3.15 Conclusions

The La India project hosts a CSA NI43-101 compliant Measured, Indicated and
Inferred resource comprising:

- a Measured and Indicated gold resource of 760,000 contained ounces


contained in 26.77 M tonnes at a grade of 0.883 gpt, calculated at a 0.40
gpt cutoff.
- an Inferred gold resource of 506,000 ounces contained in 19.73Mt @ 0.798
gpt Au, calculated at a 0.40 gpt cutoff grade.

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Of the Measured and Indicated resource, 603,000 ounces (21.6M tonnes at a


grade of 0.867 gpt Au) are contained in oxidized material. Of the Inferred resource,
378,000 ounces (14.3 Mt @ 0.82 gpt Au) at a 0.40gpt cutoff) are contained in oxide
material. Column leach tests of 12.5mm crushed material yielded gold recoveries
from 62 to 94%. Column leach tests of 25mm crushed material yielded gold
recoveries from 79 to 97%, an indication that the oxide material may be amenable to
treatment by conventional cyanide heap leach gold recovery methods.

For purposes of the Preliminary Economic Assessment of the La India project, the
subject of this report, engineering studies and operating and capital cost estimates
were made for a mine designed to exploit only the only oxide resources. Detailed pit
designs have been done to include detailed slope parameters and ramps. These are
summarized as pit delineated resources as follows:

- 49.9Mt @ 0.64 gpt Au


- 1.009M contained oz. gold
- 844,000 oz. recoverable gold.

At this PEA level of study these resources include Measured, Indicated, and Inferred
classes and are used in the production schedule and economic analysis for
evaluation purposes only. They are not deemed reserves and MMTS does not
present them as having economically assured profitability at this stage of study.

Based on the time period from construction (year PP) through closure, a $950
USD/oz. gold price, and the capital and operating costs detailed in this report, on a
stand-alone basis the project returns:

- $267M USD undiscounted pre-tax cash flow


- $187M USD NPV at a 5% discount rate
- 51% IRR
- Payback period of 2.6 years.
- Total cash cost is $505/oz gold produced
- LOM capital cost of US$126/oz gold produced
- Total production cost of US$631/oz gold produced.

The authors of this report believe that the Preliminary Economic Assessment of the
project indicates that the La India project has high potential to be developed into a
profitable mine, and the identified Measured, Indicated and Inferred mineral resource
is economically significant, however engineering and economic studies must be
completed to greater levels of detail before statements can be made about the
project’s potential economic viability. The authors believe that the results of this
PEA merit the continuance of the economic evaluation of the project to the
Feasibility level, with the objective of obtaining data required to assess the project’s
economic potential.

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3.16 Recommendations

Work to date has identified a gold resource likely to be of economic significance and
a Preliminary Economic Assessment indicates potential to develop a profitable and
economically significant mine. The positive conclusion to the PEA warrants that the
current resource area of the project be advanced to either a Pre-Feasibility or
Feasibility level of confidence.

Exploration to date in the Tarachi area has outlined a large mineralized system
whose limits are still unknown. Recommended work includes trying to define
resources in the area with current significant gold intersections and continued
exploration of the rest of the property to identify other potential resource areas. In
addition, the claim area should be expanded and exploration efforts continue onto
the expanded property.

Specific recommendations to improve the accuracy of the engineering estimates


going forward and to reduce project risk include:

- Complete an infill drilling program and update the resource block model, with
the goal of upgrading the Inferred mineralization to the Measured or Indicated
classifications.
- Complete a step-out drill program to increase the resource base to extend the
mine life or increase the production throughput.
- Acquire more detailed topographical information.
- Collect geotechnical data required for detailed pit slope, mine haul road,
waste dump and pad and pond designs. This work will entail drilling waste in
the highwall areas and under the pad and pond areas, rock strength testing,
geological mapping and modeling, and hydro-geological assessments.
- Create a hydrogeology model.
- Continue the ARD testwork and develop a waste rock management plan.
- Undertake trade-off study on contractor versus owner-mining.
- Confirm optimum mining equipment size.
- Purchase land required for further development and eventual exploitation of
the deposit should be purchased. Failure to do so will impede receipt of
environmental permits needed to conduct feasibility level studies.

The total cost of the program is estimated at $13.0M USD, as itemized in Table 3.24.

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Table 3.24. Proposed 2011 budget, La India Project.


Activity/Concept $M USD
Feasibility 5.0
Land Purchases 3.0
Claim Option Payments 0.6
Land taxes 0.2
Mexican Legal and Accounting 0.2
Tarachi Exploration 2.2
Main Area Exploration 1.0
New Claims Exploration 0.8
Property Generative 0.5
Total 13.0

Opportunities exist to improve the economic performance of the project and should
be investigated, including:

- Evaluation of mining and processing of sulfide material. Three column tests


of sulfide material were completed. These included two of Domain 17 and
one of Domain 5. All were done with -25mm (-1inch) material. The two
column tests on Domain 17 material had 40 and 60% recovery and the
Domain 5 test had 70% recovery. At a 0.3 g/t cut-off, there are approximately
250,000 ounces in Domains 3, 5, 7 and 17 in Measured, Indicated and
Inferred resource in the May 2010 calculation. Much of this material could
possibly be economically processed with the current development plan. The
sulfide material immediately underlies the oxide material, so waste to ore
ratios would be low if the sulfide was mined. Further columns tests to
confirm recoveries and reagent costs are recommended.

- Increase Resource. In the area west and south of the current Main zone pits,
there is a possibility for a moderate (50,000 to 100,000 ounce) increase in
oxide resources that report as ore in the pit optimization program. This
increase would be from a combination of new resource that recent work
shows may be present and current resource that would be “mineable” with the
addition of the new resource. Further drilling is required to test this
opportunity.

- Contract mining. The current assessment is based on the mining equipment


being owned and operated by the company. A capital cost reduction of $34M
could be achieved if mining was done entirely by a contractor. There would
also be a reduction in project risk for the company and may result in a
smoother start-up because the contractor could provide a management team
that has worked together previously. Presumably, contract mining will result
in higher costs per tonne operating costs than currently modelled. Indicative
quotes from contractors will be required to evaluate this opportunity.

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- Vendor financing. Vendor financing could provide reduced initial capital costs
and lower company risk. Indicative quotes from vendors will be required to
evaluate this opportunity.

- Improved recovery. There may be improved recoveries from that modeled


due to the very long secondary leach cycles available on a conventional
(multi-stack) heap.

- Reduced power costs. The current assessment is based on all electricity


being provided by electric generators. It may be possible to reduce electrical
costs by supplementing with alternatives, such as a wind turbine (e.g.,
Veladero, Argentina) or generators on down-slope conveyors and gravity
pipelines. It will take detailed work to estimate the cost and benefits of any
alternative energy source.

- Run-of-mine leaching of low grade material. It may be economic to leach run-


of-mine material of some rock domains at just below the current cut-off grade
to increase the resource. This will require large-scale tests to evaluate.

- New resource areas. Exploration for new resource zones continues at La


India. The discovery of a new resource area could significantly change the
project economics.

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4 INTRODUCTION AND TERMS OF REFERENCE

4.1 Introduction

The authors of this report, were asked by Grayd Resource Corporation to perform an
Preliminary Economic Assessment of the La India gold project in Sonora, Mexico.

Grayd Resource Corporation has been actively exploring the project since 2004.
Work completed to date includes geologic mapping, geochemical rock chip
sampling, airborne geophysical surveys, ground geophysical surveys,
photogrammetric topographic mapping, diamond drilling, reverse circulation drilling,
baseline environmental surveys, and metallurgical testing. In 2007 Grayd
commissioned Giroux Consultants Ltd and Resource Geosciences de Mexico SA de
CV to provide an independent mineral resource estimate and CSA NI43-101
compliant Technical Report for the La India project. An inferred mineral resource
estimate was published in February 2008. After completion of an additional 12,130
meters of reverse circulation drilling and an additional 2,640 meters of diamond core
drilling, in August 2008 Grayd commissioned Giroux and RGM to create an updated
CSA NI 43-101 compliant resource estimate for the project, which was published in
February 2009. Since that time and up until 22 January 2010 Grayd has completed
an additional 11,976 meters of reverse circulation drilling in 134 drillholes and an
additional 2,444 meters of diamond core drilling in 37 drillholes. In January 2010
Grayd commissioned Resource Geosciences de Mexico SA de CV and Giroux
Consultants Ltd to prepare an updated independent mineral resource estimate and
CSA43-101 compliant Technical Report for the La India project, which was
published in June 2010.

In July 2010, Grayd Resources commissioned the authors of this report to produce a
Preliminary Economic Assessment of the La India project, based upon the CSA
NI43-101 compliant resources as of June 2010 (Gray and Giroux, 2010).

This report comprises the Preliminary Economic Assessment of the La India project
using mineral resource and cost data current as of the date of publication of this
report. This Technical Report updates the previously released CSA NI43-101
compliant Technical Reports authored by Ebert (2004), Gray (2006), Gray and
Giroux (2008), Gray and Giroux (2009), and Gray and Giroux (2010). This report
has been prepared to meet Canadian Securities Administrators National Instrument
43-101 standards. The report provides a summary of the geology of the project, an
independent estimate of a mineral resource, and the results preliminary engineering
and cost studies related to the economic viability of the project.

This Technical Report bases the economic analysis on the CSA NI43-101 compliant
resource estimate prepared by Giroux (Gray and Giroux, 2010) and integrates the
contributions of:

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M.S. Patricia Aguayo


Matthew D Gray, PhD., C.P.G. – Resource Geosciences de Mexico SA de CV
Ritch Hall, P.G.
Fred Lightner, P.E.
Curtis McCullough, P.E.
James H Gray, P.Eng. – Moose Mountain Technical Services
Hans Smit, P. Geol.
Mark E Smith, P. E., RRD International Corp.

Matthew D. Gray Ph.D., C.P.G., James H. Gray, P. Eng., Mark E. Smith, P.E., and
Gary Giroux, P.Eng., served as Qualified Persons as per definitions of CSA NI43-
101 for the preparation of this Technical Report. Contributors to the report and the
Qualified Person responsible for each item is presented are Table 4.1.

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Table 4.1. Contributors and responsible Qualified Persons for PEA report.
Responsible
Items Contributor(s) QP
Summary, Conclusions, Recommendations All All
General Project Overview MG All
Claim Status and Agreements MG MG
Surface Rights MG MG
Critical Components MG All
Review of Current Resource GG GG
Ore Resource Exploration Potential MG MG
Information Required for
Feasibility JG MG/GG
Mining Bench Height Analysis JG JG
Mine Plan JG JG
Mine Access Roads JG JG
Mine Waste Storage JG JG
Water Management JG/HS/MG JG
Equipment - Mining JG JG
Equipment - Hauling JG JG
Equipment - Support JG JG
Mine Reclamation MG/PA/JG/MS MG/MS/JG
Capex JG JG
Opex JG JG
Information Required for
Feasibility JG JG
Processing Metallurgical Review FHL MS
Crush size FHL MS
Process flowsheet FHL MS
Lift Height Analysis FHL MS
Pad and Pond Location and
Design CM/FHL/MS MS
Pad construction CM/MS MS
Equipment - Crushing FHL MS
Equipment - Stacking FHL MS
Water Balance FHL/HS/MG MS
Water Source HS/MG MS
Gold Recovery Plant FHL MS
Gold Recovery by Year FHL MS
Pad and Pond Reclamation MS MS
Capex FHL/CM MS
Opex FHL MS

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Information Required for


Feasibility FHL MS
G&A Access Considerations CM JG
Camp CM JG
Shop and Other Ancillary
Buildings CM JG
Assay Facility CM/FHL JG
Power Generation CM JG
Fuel Supply and Storage CM JG
Transport and Refining Costs RH JG
Capex CM JG
Opex CM JG
Information Required for
Feasibility CM JG

Environmental Overview MG/PA MG


Environment and Social Permitting Requirements MG/PA MG
Social Considerations MG/PA MG
Acid Rock Drainage MG/PA/HS MG
Ongoing Monitoring MG/PA MG
Information Required for
Feasibility MG/PA MG
Schedule RH JG
Economic Analysis Total Capex RH JG
Opex RH JG
NSR RH JG
Reclamation Cost RH/CM/MS/JG JG
Cash Flow, IRR and NPV RH JG
Taxation RH JG
Risks and Opportunities All All

Contributors

Patricia Aguayo PA M.Sc.


Gary Giroux GG P.Eng., M.A.Sc.
Jim Gray JG P.Eng.
Matt Gray MG Ph.D., C.P.G.
Richard Hall RH P.G.
Fred Lightner FHL P.E.
Curtis McCullough CM P.E.
Hans Smit HS P.Geo.
Mark Smith MS P.E.

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This Technical Report and all publications, exhibits, documentation, conclusions,


and other work products obtained or developed by the authors for this Technical
Report are for sole and exclusive use of Grayd Resource Corporation. However all
reports, publications, exhibits, documentation, conclusions, and other work products
obtained or developed by the authors during completion of this Technical Report
shall be and remain the property of the authors. Unauthorized use or reuse by third
parties of reports, publications, exhibits, documentation, conclusions, and other work
products obtained or developed by the authors for the purposes of this Technical
Report is prohibited. This Technical Report was prepared specifically for the
purpose of complying with Canadian Securities Administrators National Instrument
43-101 and may be distributed to third parties and published without prior consent of
the authors if the Technical Report is presented in its entirety without omissions or
modifications, subject to the regulations of NI43-101.

4.2 Terms of Reference

Grayd Resource commissioned Resource Geosciences de Mexico (RGM), Moose


Mountain Technical Services (MMTS), Giroux Consultants Ltd., and RRD
International Corp. to review the La India gold project and to prepare a Preliminary
Economic Assessment following NI43-101 guidelines for submission as a Technical
Report. Grayd Resource trades on the TSX Venture exchange under the symbol
GYD.

Matthew Gray, Ph.D., C.P.G., senior partner of Resource Geosciences de Mexico,


an independent geosciences consulting firm contracted by Grayd Resource, visited
the project, reviewed the available geologic data, and took independent samples to
accomplish the requested task.

Jim Gray, P. Eng., senior partner of Moose Mountain Technical Services (MMTS),
an independent consulting firm contracted by Grayd Resource, visited the project,
reviewed the available geologic data, and conducted independent analyses to
accomplish the requested task.

Mark E Smith, P.E., of RRD International Corp., an independent consulting engineer


contracted by Grayd Resource, visited the project, reviewed the available geologic
data, and conducted independent analyses to accomplish the requested task.

Gary Giroux, P.Eng., of Giroux Consultants Ltd., an independent consulting


engineer contracted by Grayd Resource, reviewed the available geologic data, and
conducted independent analyses to accomplish the requested task.

4.3 Purpose of Report

The purpose of this report is to provide an independent assessment of the La India


gold project and in particular, to provide an Preliminary Economic Assessment of the

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project. This report was prepared following the guidelines of CSA National
Instrument 43-101.

4.4 Sources of Information

In the preparation of this report the authors have relied on their own observations
and independent assay data, supplemented by information obtained through review
of both published and unpublished documents and maps. In addition to the author’s
own observations and assay data, sources of information regarding location and
dimensions of mineralized showings, mines, veins, and the mineralized grades,
include:

Geologic, geophysical, and assay data collected and published by the Consejo
de Recursos Naturales (National Resource Council) and its successor, the
Servicio Geologico Mexicano (Mexican Geological Survey), a Mexican Federal
agency.

Topographic and physiographic data collected and published by the Instituto


Nacional de Estadistica Geografica e Informatica (INEGI), a Mexican Federal
Agency.

Geologic, geophysical, and geochemical data contained in private maps and


reports prepared by Grayd Resource and/or Newmont Mining.

Assay certificates provided by ALS Chemex Inc.

Metallurgical test data provided by Kappes, Cassiday, and Associates.

Data that was not generated by the authors has not been independently verified,
except as noted in Item 16 of this report. Where information from unverified sources
is relevant to interpretations and discussions of the economic potential of the project,
the source of information is explicitly mentioned. The authors do not accept
responsibility for the interpretations and representations made in this report where
they were the result of erroneous, false, or misrepresented data.

4.5 Field Examination and Data Review by the Qualified Person.

Matthew D. Gray, Ph.D., C.P.G., President of Resource Geosciences de Mexico SA


de CV, the Qualified Person as defined by CSA NI43-101, responsible for Items 4,
5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 19.13, 20, 24 and related components in
Items 3, 26, and 27 has conducted periodic field visits to the La India project since
2006, most recently visiting the project in the capacity as Qualified Person during the
period 27 April to 3 May 2010. The purpose of the site visits is to verify on-site
QA/QC procedures related to the resource definition drilling program and to review
the geologic modeling of the deposit. During the course of the 2007, 2008, 2009,
and 2010 drilling programs the author periodically spent time in RGM’s Hermosillo,

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Sonora office reviewing assay data and conducting QA/QC evaluations of the
reliability and integrity of the project drillhole database. Prior to the field visit and
data review conducted for the purposes of the author’s Technical Report released in
2006, M Gray had been directly involved in mineral exploration programs in the
region, including portions of the La India project, but had not conducted detailed
examinations of the La India project.

Jim Gray, P.Eng., the Qualified Person as defined by CSA NI43-101, responsible
for Items 19.14, 19.15, 21, 23, 25, and the related components of Items 3, 24, 26,
and 27 conducted site visits to the project on 1 and 2 May 2010.

Mark E. Smith, P.E., the Qualified Person as defined by CSA NI43-101,


responsible for Items 18 and 22 and related components in Items 3, 25, 26 and 27,
conducted site visits to the project on 7 and 8 April 2010.

Gary H. Giroux, P. Eng, MASc. the Qualified Person as defined by CSA NI43-101,
responsible for Items 19.1 through 19.12 and related components in Items 3, 26, and
27, did not visit the project. Giroux worked with a geologic model and drillhole
database provided by Grayd Resources and verified by M Gray.

4.6 Definitions and Translations

AIF - Annual Information Form


aka - also known as
ASL - Above sea level
C - degree Centigrade
C.P.G. - Certified Professional Geologist by American Institute of
Professional Geologists
CRM - Consejo de Recursos Minerales (Natural Resources
Council
CUS - Cambio de Uso de Suelo (Change of Land Use Permit)
DGM - Direccion General de Minas (Central Mining Department)
gpt - grams per tonne
gph - gallons per hour
gpm - gallones per minute
g/t - grams per tonne
Grayd - Grayd Resource Corporation
INEGI - Instituto Nacional de Estadistica Geografia y Informatica
IRR - Investment Rate of Return
KCA - Kappes, Cassiday and Associates
kg - kilogram
km - kilometer
kt - kilotonne (tonnes x 1000)
ktonne - kilotonne (tonnes x 1000)
kw - kilowatt

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LOM - life of mine


M - million
mm - millimeters
MMTS - Moose Mountain Technical Services
Mt - million metric tonnes
NAD - North American Datum
NOM120 - Norma Oficial Mexicana Ecological 1997-120 (Environmental
Regulation 120)
NPV - Net Present Value
NSR - Net Smelter Return
oz. - Troy Ounce
ppm - parts per million
RGM - Resource Geosciences de Mexico SA de CV
SGM - Servicio Geologico Mexicano (Mexican Geological Survey)
SEDAR - System for Electronic Data Analysis and Retrieval
SEMARNAT - Secretaria del Medio Ambiente y Recursos Naturales
(Secretary of the Environment and Natural Resources)
SMO - Sierra Madre Occidental
tpd - tonnes per day
tpd - tonnes per year
USD - United States Dollar
UTM - Universal Transverse Mercatur

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5 RELIANCE ON OTHER EXPERTS

The professional opinions expressed in this report are based in part on data and
information generated by and obtained from Grayd Resources Corporation, its
subcontractors, previous operators of the project, and public domain sources. The
authors of this report have excercised all reasonable care in reviewing the supplied
information and believe that the basic information provided is accurate. Data that
was not generated by the authors has not been independently verified, except as
noted in Item 16 of this report. Where information from unverified sources is
relevant to interpretations and discussions of the economic potential of the project,
the source of information is explicitly mentioned. Data was obtained from both
public domain and private sources as follows:

Metallurgical test data Kappes Cassiday and Associates, as


commissioned by Grayd Resources
Mining concession Information Lic. Mauricio Heiras
Assay data ALS Chemex Laboratories Inc.; Acme Analytical
Regional geologic maps Servicio Geologico de Mexico
Project geologic model Grayd Resources Inc.
Regional and local topographic data Instituto Nacional de Estadistica Geografia y
Informatica
Project topographic data Cooper Aerial de Mexico SA de CV
Drillhole location and orientation data Silver State Surveys; Ing. Julio C. Palomino
Geophysical data Newmont Mining; Gradient Geophysics;SJS
Geophysics

Appropriate scientific methods and best professional judgment were utilized in the
collection and interpretation of data discussed in this report. However, users of this
report are cautioned that the evaluation methods used herein are subject to inherent
uncertainties and assumptions, over which the authors have no control. These
uncertainties and assumptions are stated herein. Users of this report are hereby
advised to be aware of and understand these uncertainties and assumptions.

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6 PROPERTY DESCRIPTION AND LOCATION

6.1 Area and Location

The La India project comprises 26,643.51 hectares of mining concessions and is


located in the municipality of Sahuaripa, State of Sonora, Mexico, approximately 210
km E-SE of the city of Hermosillo, (Figure 6.1).

The center of the project area is located at UTM Zone 12, 709,000E 3,174,000N,
North American Datum 27, or North Latitude 28o 40’ 41” West Longitude 108o 51’
40”, North American Datum 27 Mexico.

All geographic references in this report utilize North American Datum 27 (NAD27)
unless otherwise stated.

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Figure 6.1. Location map.

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6.2 Claims and Title

Mining and exploration rights in Mexico are controlled by the Federal Government.
Prior to 2006, exploration and mining rights were assigned to third parties by the
granting of “exploration” and “exploitation” concessions, each with differing validity
periods and tax and assessment obligations. Mining law reform in December 2005
simplified the concession regime, and all new concessions are “mining concessions”
which are valid for a 50 year period and are renewable. Upon enactment of the
mining law reform, all previously issued “exploration” and “exploitation” concessions
automatically converted to “mining concessions” with the effective date of title the
same as that of the previously titled “exploration” or “exploitation” concession. The
mining concessions are administered by the Direccion General de Minas (DGM), a
subsecretariat of the cabinet level Secretaria de Economia. To maintain
concessions in good legal standing, concession holders are obligated to pay semi-
annual tax payments and to annually file documentation of exploration or
development work at the concession.

The La India project consists of 27 mining concessions covering in aggregate


26,643.51 hectares. Concessions controlled by Grayd are summarized in Table 6.1,
and the concessions are shown in Figure 6.2. The legal standing of these claims
and the ownership of surface rights have not been verified by the author or RGM.
Prior to entering into purchase option agreements for the concessions, Grayd
Resource requested a title opinion for the concessions from Grayd’s legal counsel in
Mexico, Lic. Mauricio Heiras. Heiras investigated the concession status and
reported that the claims were valid. Since the time that Grayd optioned the claims, a
registered mineral landman in the employ of Resource Geosciences de Mexico SA
de CV has filed all needed tax and assessment work reports for the concessions.

The claims are currently controlled by Resource Grayd de Mexico SA de CV (Grayd)


by means of direct ownership via staking and by eight separate agreements granting
Grayd the right to earn a 100% interest by making cash and share payments totaling
$3.228M USD and 835,000 shares over a 5 year period. Thus far $2.703M USD has
been paid towards the concessions. Should Grayd elect to acquire all currently
optioned concessions, an additional $0.525M USD in payments would be pending.
Payment has been made in full for the claims that host the majority of the Indicated
and Inferred resources described in this report. A summary of the claim purchase
agreements is as follows:

La India and La India 1 Concessions

Pursuant to a letter of intent dated November 10, 2003 and a definitive agreement
dated December 18, 2003, Grayd was granted an option to acquire a 100%
interest in two mining claims located totaling 476.6 hectares in Sonora State,
Mexico. Consideration for the acquisition consists of cash payments in the
aggregate of US $555,000 payable as follows:

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US $15,000 on signing (paid);


US $20,000 six months after signing (paid);
US $25,000 twelve months after signing (paid);
US $30,000 eighteen months after signing (paid);
US $40,000 twenty-four months after signing (paid);
US $45,000 thirty months after signing (paid);
US $100,000 thirty-six months after signing (paid);
US $60,000 forty-two months after signing (paid); and
US $220,000 forty-eight months after signing (paid).

A one-time bonus payment of US $0.50 per ounce of gold on reserves that are
proven and recoverable, as determined by a bankable feasibility study, will be
payable to the owners of the property within nine months from the
commencement of production. The owners will also retain a 1% net smelter
royalty (“NSR”) on the property, one-half of which may be purchased by the
Company for US $750,000.

A finder’s fee of 315,000 common shares was paid in connection with the
acquisition of the property.

Triple A Concession
Pursuant to an agreement dated January 21, 2004 and amended December 12,
2008, the Company was granted an option to acquire a 100% interest in a 6,592-
hectare mining claim located in Sonora State, Mexico. The property is subject to a
2% net smelter royalty. The Company is able to purchase 50% of the net smelter
royalty at any time with a payment of US$1,500,000. Consideration for the
acquisition consists of cash payments in the aggregate of US$816,000 payable as
follows:

US $3,000 on signing (paid);


US $15,000 three months after signing (paid);
US $15,000 six months after signing (paid);
US $20,000 twelve months after signing (paid);
US $15,000 eighteen months after signing (paid);
US $20,000 twenty-four months after signing (paid);
US $38,000 thirty months after signing (paid);
US $50,000 thirty-six months after signing (paid);
US $30,000 forty-two months after signing (paid);
US $60,000 forty-eight months after signing (paid);
US $50,000 fifty-four months after signing (paid);
US $50,000 sixty months after signing (paid);
US $50,000 sixty-six months after signing (paid);
US $50,000 seventy-two months after signing (paid);
US $50,000 seventy-eight months after signing (paid);
US $300,000 eighty-four months after signing.

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A finder’s fee in the aggregate of 300,000 common shares was paid in connection
with the acquisition of the property.

La Cruz Concession
Pursuant to a letter of intent dated September 2, 2004 and a definitive agreement
dated December 23, 2004, Grayd was granted an option to acquire a 100%
interest in a 65.2 hectare mining claim located in Sonora State, Mexico.
Consideration for the acquisition consists of cash payments in the aggregate of
US $150,000 payable as follows:

US $20,000 on signing (paid);


US $20,000 on the first anniversary date (paid);
US $40,000 on the second anniversary date (paid);
US $40,000 on the third anniversary date (paid); and
US $30,000 on the fourth anniversary date (paid).

The property is subject to an underlying 1% NSR that may be purchased for


US $250,000.

La Viruela claim group, comprising the contiguous La Viruela, Continuación SE La


Viruela, Soledad, Ampliación Soledad, Tayopita Concessions
Pursuant to a letter of intent dated October 18, 2004 and a definitive agreement
dated December 1, 2004, Grayd was granted an option to acquire a 100% interest
in a 162.8 hectare mining claim package located in Sonora State, Mexico.
Consideration for the acquisition consists of cash payments in the aggregate of
US $150,000 payable as follows:

US $30,000 on signing (paid);


US $25,000 on the first anniversary date (paid);
US $35,000 on the second anniversary date (paid);
US $45,000 on the third anniversary date (paid); and
US $15,000 on the fourth anniversary date (paid).

The property is subject to an underlying 3% NSR that may be purchased for


US $250,000.

San Fer claim group, comprising the contiguous San Fer 1, San Fer 2, San Fer 3,
San Fer 4 Fracc.1 , San Fer 4 Fracc. 2, and San Fer 4 Fracc. 3 Concessions,
Sonora State, México.
Pursuant to a letter of intent dated October 4, 2004 and a definitive agreement
dated December 3, 2004, Grayd was granted an option to acquire a 100% interest
in a 242.4 hectare mining claim group located in Sonora State, Mexico.
Consideration for the acquisition consists of cash payments in the aggregate of
US $57,000 and the issue of 220,000 common shares as follow:

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Pay US $12,000 and issue 60,000 common shares on signing (completed);

Pay US $20,000 (paid) and issue 75,000 common shares (issued) on or before
the first anniversary date; and

Pay US $25,000 (paid) and issue 85,000 common shares (issued) on or before
the second anniversary date.

Pilar claim group, comprising 18,794 hectares contained in the El Pilar, Sta. Cruz
Pilar Fracc. 1, and Sta. Cruz Pilar Fracc. 2 concessions.

In May 2006 Grayd acquired mineral rights to these concessions which adjoin the
previously acquired claim block on the west side. Terms of the concession
agreement include staged cash payments over 5 years totaling US$750,000
payable as follows:

US $15,000 on signing (paid);


US $15,000 six months after signing (paid);
US $27,000 twelve months after signing (paid);
US $30,000 eighteen months after signing (paid);
US $40,000 twenty-four months after signing (paid);
US $40,000 thirty months after signing (paid);
US $60,000 thirty-six months after signing (paid);
US $60,000 forty-two months after signing (paid);
US $150,000 forty-eight months after signing (paid);
US $88,000 fifty-four months after signing (paid); and
US $225,000 sixty months after signing.

The property is subject to a 2% NSR of which 1.5% can be bought back for US$3
million.

Tarachi Fraccion claim group comprising 117.25 hectares contained in the Tarachi
Fracc. 1, Tarachi Fracc. 2. and Tarachi Fracc. 3 concessions which are located
northwest of the previously acquired claim block.

The claims were ceded to Grayd for a cash payment of $25,000 USD. The
property is not subject to any NSR or further obligations.

Tarachi claim group comprising 1,258 hectares contained in the Tarachi, Tarachi-1,
Tarachi-2. And Tarachi-3 concessions which are located northwest of the previously
acquired claim block.

Pursuant to an agreement dated May 19, 2006 and amended December 12,
2008, the Company was granted an option to acquire a 100% interest in the
Tarachi exploration concessions. The property is subject to a 2% net smelter

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royalty, of which three-quarters, or a net smelter royalty of 1.5%, may be


purchased by the Company for US$1,000,000. Consideration for the acquisition
consists of cash payments in the aggregate of US$725,000 payable as follows:

US $25,000 on signing (paid);


US $30,000 six months after signing (paid);
US $40,000 twelve months after signing (paid);
US $40,000 eighteen months after signing (paid);
US $60,000 twenty-four months after signing (paid);
US $15,000 thirty months after signing (paid);
US $37,500 thirty-six months after signing (paid);
US $37,500 forty-two months after signing (paid);
US $170,000 forty-eight months after signing (paid); and
US $270,000 fifty-four months after signing (paid).

Pursuant to a letter agreement dated 8 July 2005, Grayd granted an option to a


Mexican subsidiary of Newmont Mining Corporation (“Newmont”) to earn an interest
in the La India Project. Newmont could earn a 51% interest by incurring US
$7,000,000 on the project over a four-year period. In July of 2006 Newmont
relinquished their option on the property after funding $1.8M USD in exploration
work at the project. Regional mapping, surface rock chip geochemical surveys,
airborne geophysical surveys, terrestrial geophysical surveys, and exploration
drilling funded by Newmont identified, and partly drill tested, outcropping gold
mineralized zones and concealed high sulfidation epithermal gold targets. Newmont
has no retained interest in the project.

On 5 September 2008 the La Rumorosa concession, which is adjacent to Grayd


Resource’s La India concession, became open for staking. A total of 195
applications for all or part of the area covered by the concession were submitted to
the Mexican Secretary of the Economy, Direccion General de Minas (DGM). Under
Mexican law, when applicants simultaneously apply for a concession released for
staking, a lottery is held to determine which applications are accepted. On 18
September 2008 the DGM conducted the lottery for the La Rumorosa concession
and an application submitted by Grayd Resources for the entire 375 Has of open
ground was selected as the winning application. Title was issued to Grayd’s
Mexican subsidiary on 17 February 2009.

On 2 February 2010 the Roka 2 concession, which is 3 km north of Grayd


Resource’s La India concession, became open for staking. A total of 7 applications
for all or part of the area covered by the concession were submitted to the Mexican
Secretary of the Economy, Direccion General de Minas (DGM). Under Mexican law,
when applicants simultaneously apply for a concession released for staking, a lottery
is held to determine which applications are accepted. On 10 February 2010 the
DGM conducted the lottery for the Roka 2 concession and an application submitted
by Grayd Resources was selected as a winning application. Title for 278.26 Has
was issued to Grayd’s Mexican subsidiary on 30 June 2010.

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Table 6.1. La India project mining concessions.


Map
Mining Concession Title Hectares Expiration Date
Reference
1 La India 217353 357.90 1-Jul-2052
2 La India 1 217354 118.70 1-Jul-2052
3 Triple A 218560 6,591.60 21-Nov-2052
4 Soledad 184078 18.50 14-Feb-2039
5 La Viruela 60132 8.00 6-Mar-2011
6 Continuacion S.E. La Viruela 64209 4.00 5-Feb-2011
7 Tayopita 181940 18.00 14-Dec-2037
8 Ampliacion Soledad 201919 114.30 10-Oct-2045
9 La Cruz 187195 65.20 12-Jun-2040
10 San Fer 1 214526 72.10 1-Oct-2051
11 San Fer 2 216162 25.00 11-Apr-2052
12 San Fer 3 220792 50.60 6-Oct-2053
13 San Fer 4 Fraction 1 221332 38.60 22-Jan-2054
14 San Fer 4 Fraction 2 221333 39.70 22-Jan-2054
15 San Fer 4 Fraction 3 221334 16.40 22-Jan-2054
16 El Pilar 226630 16,520.80 2-Feb-2056
17 Santa Cruz Pilar Fracc 1 226400 339.60 12-Jan-2056
18 Santa Cruz Pilar Fracc 2 226401 216.50 12-Jan-2056
19 Tarachi 226957 390.00 30-Mar-2056
20 Tarachi 1 226956 100.00 30-Mar-2056
21 Tarachi 2 226958 430.75 30-Mar-2056
22 Tarachi 3 226959 336.75 30-Mar-2056
23 Tarachi Fracc 1 227051 91.75 16-Apr-2056
24 Tarachi Fracc 2 227052 5.25 16-Apr-2056
25 Tarachi Fracc 3 227053 20.25 16-Apr-2056
26 La Rumorosa 233357 375.00 16-Feb-2059
27 Roka 2 236441 278.26 6-Jun-2060
Total 26,643.51

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Figure 6.2. Concession map

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6.3 Surface Rights

Surface rights in and adjacent to the Measured, Indicated, and Inferred resource
defined at the La India project area are owned by the Matarachi Ejido (agrarian
community) and private parties. All of the Measured, Indicated and Inferred project
resources lie within privately owned or possessed land (Figure 6.3). For all identified
target areas Grayd Resources has executed surface access lease agreements with
the property owners or possessors, allowing Grayd access to conduct exploration
work. Existing agreements permit exploration activities only. Exploitation and
production activities will require execution of new lease or purchase agreements.
Grayd is currently negotiating the purchase of surface rights required for
development of the La India gold deposit. The legal standing of the ownership of
surface rights has not been verified by the author or RGM.

Surface rights in exploration areas away from the currently defined resource and the
development area contemplated in this study are owned by the Matarachi Ejido, the
Tarachi Eijdo, and various private land owners. No work is currently being
undertaken on land owned by the Tarachi Eijdo. In the area of the Tarachi drilling,
surface access for exploration is covered by six separate agreements with private
landowners (Figure 6.4). Agreements are currently being negotiated for access to
ranches to the north of this to allow road construction and drilling.

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Figure 6.3. Surface rights map, resource area, La India project.

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Figure 6.4. Surface rights map, Tarachi area.

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6.3.1 Ejido Lands

Ejidos are communal agrarian and/or ranching societies formed as part of the
Mexican government’s post-revolutionary agrarian reform policies. Ejido land is
collectively owned by the Ejido members. The collectively owned land may be
leased but cannot be purchased by private parties or corporations. Constitutional
reforms enacted in the 1990’s permit the Ejidos to privatize the collectively owned
land such that it may be freely combined, rented, or sold. Over 50% of the surface
area of Mexico is assigned to Ejidos, and most major mines in Mexico are developed
on Ejido lands where land tenure is secured by the mining companies via special
lease arrangements defined by Federal Mining Law as Temporary Occupations, or
alternatively, via direct purchase of Ejido lands that have been privatized following
Federally prescribed procedures (PROCEDE). Ejido lands are not required for
development of the currently defined La India mineral resource, however some
satellite exploration targets are located in Matarachi Ejido lands.

6.3.1.1 Matarachi Ejido

No mineral resources have been defined within Ejido Matarachi lands, nor are Ejido
lands required for the siting of infrastructure as contemplated in this Technical
Report, however, the Puertos and Cebadilla exploration targets lie partly within Ejido
Matarachi lands. Grayd has conducted exploration on Matarachi Ejido lands under
the auspices of a written exploration contract with the community whereby
exploration access is granted and Grayd pays compensation of $5,000 USD per
year. Additional compensation fees for road and drill pad construction are
negotiated on a case-by-case basis, commensurate with the value of the land
affected.

6.3.2 Private Lands

6.3.2.1 Rancho Bronces y Bajios (aka La Cieneguita)

A review of Municipal public land registry records by consultants employed by Grayd


(Heiras, 2008; Gutierrez 2008a, 2008b) indicates that this 2,500 hectare privately
held property was registered in 1989 to Adela Arenas Torres Vda de Aguilar
(deceased), Pedro Aguilar Arenas, and Oviedo Aguilar Arena. Adela Arenas Torres
Vda de Aguilar (deceased) is the mother of Pedro and Oviedo. Oviedo Aguilar
Arenas has communicated to Grayd that the Arenas family has initiated a probate
process to cause the title to be re-issued in the name of Pedro Aguilar Arenas,
Oviedo Aguilar Arenas, and their sister Yolanda Aguilar Arenas. Grayd has
conducted exploration on the property under the auspices of a written exploration
contract with the Arenas family under which Grayd is allowed to conduct surface
exploration including road construction and drilling in consideration for an annual
payment of $18,000 USD.

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6.3.2.2 Rancho La Amargosa

A review of Municipal public land registry records did not find information for this 150
hectare property. The reputed owners are the Biebrich family. They have
communicated to Grayd that they have a valid notarized and executed sale-
purchase agreement (“escritura”) for the property, but they have not submitted it to
the Public Land Registry for inscription. A failure to inscribe the land transfer in the
land registry does not impair their ownership rights. The executed sale-purchase
contract has not been examined, but it is said to be in the name of the late Jose
Biebrich Torres, whose son, Jose Biebrich Melendez has inherited the property.
Grayd has conducted exploration on the property under the auspices of a written
exploration contract with Jose Biebrich Melendez under which Grayd is allowed to
conduct surface exploration including road construction and drilling in consideration
for an annual payment of $9,000 USD. This agreement also grants Grayd the right
to occupy the ranch house and ancillary buildings and to construct and use field
camps and storage buildings within the property.

6.3.2.3 Rancho El Duraznito

A review of Municipal public land registry records by consultants employed by Grayd


(Heiras, 2008; Gutierrez 2008a, 2008b) did not find information for this parcel. A
review of State catastral records indicated that this privately held property was
registered to Casmiro Monge Willem (deceased), however survey information for the
parcel was incomplete. The parcel is believed to be approximately 2,421 hectares in
size. The current possessor of the land is Casimiro Monge Carillo, the son of the
deceased registered owner. The widow of the deceased registered owner is still
alive, thus may have inherited the legal ownership rights to the property. Casimiro
Monge Carillo has presented documents indicating that Casimiro Monge Willem
ceded to Casimiro Monge Carillo the northern 1,000 hectares of the property,
comprising the area of interest to Grayd. Grayd has conducted exploration on the
property under the auspices of a written exploration contract with Casimiro Monge
Carillo under which Grayd is allowed to conduct surface exploration including road
construction and drilling in consideration for an annual payment of $28,000 USD.

6.3.2.4 Rancho Ostimuri y Las Mesas

Grayd had previously entered into an exploration access agreement for this 853
hectare parcel, however no mineral resources were defined within this parcel, nor is
this parcel required for the siting of infrastructure as contemplated in this Technical
Report and Grayd has allowed its access agreement to lapse.

6.4 Mineralization

Numerous abandoned small mines and exploration workings are present within the
property area. Nearly all are developed on or below zones of intense silicic
alteration, accompanied by varying amounts of iron-oxide staining. Controls on

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mineralization include both high angle structural zones or veins, and stratigraphic
contacts. The metals produced or sought were gold and silver. The mineralized
occurrences for which a resource estimate is presented are described in Item 11 of
this report. Other mineralized zones have been previously described in the July
2006 Technical Report published for the project (Gray, 2006).

6.5 Environmental Liability

An environmental audit was conducted by Hermosillo based consultants Bufete


Minero y Servicios del Noroeste SA de CV who reported that no significant
environmental liabilities are apparent. Small abandoned mines and waste piles are
present but are not generating acid drainage. There are no plant facilities present
within the project area, nor are tailings piles present.

6.6 Permits

Exploration and mining activities in Mexico are subject to control by the Secretaria
del Medio Ambiente y Recursos Naturales (Secretary of the Environment and
Natural Resources), known by its acronym SEMARNAT. The La India project is not
included within any specially protected, Federally designated ecological zones,
therefore basic exploration activities are regulated under Norma Oficial Mexicana
NOM-120-ECOL-1997. NOM120 allows for activities including mapping,
geochemical sampling, geophysical surveys, mechanized trenching, road building,
and drilling. If each particular activity does not exceed a defined threshold for
surface disturbance, which varies by activity, and if in aggregate these activities will
affect less than 25% of the project surface area, the project operator is required only
to inform SEMARNAT in writing of the proposed exploration activities. If after 5 days
SEMARNAT has not formally objected, work may proceed immediately. NOM120
defines the impact mitigation procedures that must be followed for each activity.

Most exploration activities can be permitted utilizing NOM120. Mine construction


and operation activities generally require preparation of:

iii. A Manifesto de Impacto Ambiental (Environmental Impact Statement), known


by its acronym as an MIA, and:
iv. A Cambio de Uso de Suelo (Land Used Change) permit, known by its
acronym as a CUS.

Properly prepared MIA and CUS applications and mine operating permits for a
project that does not affect Federally protected biospheres or ecological reserves
can usually be approved in 12 months.

Thus far exploration work at La India has been conducted under the auspices of
NOM120. Because the limits for surface disturbance permitted under NOM 120 are
being approached in the Main Zone, further exploration or development work in the
La Viruela-La Cruz area that creates additional surface disturbance will require a

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Change of Land Use (Cambio de Uso de Suelo) permit. This permit cannot be
issued until such time that Grayd has a formally registered surface rights agreement
with the owner of legal record of the affected land. Grayd is currently negotiating to
acquire the surface rights needed for further project development at the Main Zone.
Exploration activities in the North Zone and Tarachi area may continue to be carried
out under the terms of NOM 120.

In October 2008 Grayd hired independent environmental permitting consultants to


design and implement baseline environmental studies of the La India project. Since
that time collection of data required for obtaining a Manifesto de Impacto Ambiental
(Environmental Impact Statement) and Cambio de Uso de Suelo (Land Use
Change) permit has been ongoing. The project is not located in an area with a
special Federal environmental protection designation and no factors have been
identified that would be expected to hinder authorization of required Federal and
State environmental permits.

Permits that would be required for the construction and operation of a mine as
described in this Technical Report are summarized in Table 6.2. The Mulatos mine,
a large scale, open pit, cyanide heap leach gold mine, presently operates in the
Municipality and encountered no impediments to receipt of needed permits. Should
these permits be solicited for the La India project, no obstacles to obtaining them are
anticipated provided that Grayd obtains necessary surface rights and design and
mitigation criteria meet all applicable standards.

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Table 6.2. Permits required for mine construction and operation.


Permit Required for: Permitting Agency Estimated Time to
Obtain Permit
Environmental Impact Construction/Operation SEMARNAT 12 months
Statement (Manifiesto de
Impacto Ambiental -MIA)
Change of Land Use Construction/Operation SEMARNAT; CONAFOR 12 months
(Cambio de Uso de Suelo -
CUS)
Risk analysis Construction/Operation SEMARNAT 12 months
study(Estudio de Riesgos)

Construction and Land Construction SIUE; Municipality of 1 month, after approval


use license Sahuaripa of Federal environmental
permits
Explosive use, handling, Construction/Operation SEDENA; Governor's 1 month
and storage permits Authorization;
Municipality of Sahuaripa
Archaeological release Construction INAH 6 months
letter

Water use concession Construction/Operation CNA 3 months


title

Water discharge permit Construction/Operation CNA 2 to 5 months

Unique license Operation SEMARNAT 3 to 12 months

Accident prevention plan Operation SEMARNAT Not defined

Quarry or Aggregate Construction SIUE 1 month


Extraction Permit

Non-toxic Waste Diposal Construction Municipality of Sahuaripa 1 month


Permit

CNA - Comision Nacional de Agua (Federal Agency)


CONAFOR - Comision Nacional Forestal (Federal Agency)
INAH - Instituto Nacional de Antropologia y Historia (Federal Agency)
SEDENA - Secretaria de Defensa Nacional (Federal Agency)
SEMARNAT - Secretaria de Medio Ambiente y Recursos Naturales (Federal Agency)
SIUE - Secretaria de Infraestructura Urbana y Ecologia, Estado de Sonora (State Agency)

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6.7 Water Rights and Water Supply

Water rights in Mexico are established and governed by the “Law of National
Waters”, as interpreted by the 1994 “Regulation of the Law of National Water”,
which sets forth the manner in which water rights may be acquired and creates and
empowers the National Water Commission (CNA) to regulate water rights.
Applications for licenses or allotments may be filed with the CNA by both individual
persons and corporations in a manner similar to application for a mining concession.
A nominal fee is charged for filing the water concession application and when a
water right is granted and exercised, quarterly payments are due to the CNA.

6.7.1 Surface Water Rights

Surface water is free for domestic or animal use as long as flow is not significantly
diminished. The CNA regulates all other use of surface and underground water.
The CNA establishes “Basin Councils” to promote and regulate short, medium, and
long-term hydraulic development within basins determined by the CNA. The basin
councils in turn function through the participation of accredited organizations of
water users, license holders, or allotment holders within the basin. Surface water is
distributed in accord with established national, regional, and local priorities as
modified by available water and existing allotments. Pricing of surface water is
determined by several factors including: hydrologic region; water use; water quality
(potable or non-potable); and by whether or not a subsidized price has been
negotiated. Hydrologic regions are designated by the CNA and applied to
municipalities (counties) as a whole. They do not relate directly to either surface
drainage basins or to underground aquifers but are established on the basis of water
availability. The CNA annually publishes a water-rate table setting the cost to use
water within each of the hydrologic regions it designates. Each municipality within
each state is classified within one of the designated regions. The La India project
lies within a region where water for industrial use is priced at $5.3909 Pesos/m3.
Therefore, mining operations could expect to pay $0.45 USD/m 3 at current
conversion rates. If the water contains more than 2,500 milligrams per liter of
dissolved solids and the CNA considers the water unfit for standard use, it may
waive the pumping charge.

6.7.2 Subsurface Water Rights

The CNA determines the hydraulic balance within basins for the purpose of
assessing subsurface water availability. Basins may be classified as under-
subscribed, over-subscribed, or in balance. Subsurface water rights for under-
subscribed basins may be freely acquired by filing the corresponding application and
satisfying the requirements set forth by the CNA. Subsurface water rights for basins
that are either in balance or are over-subscribed are more difficult to acquire and
involve transfer of existing subsurface water rights. Pricing of subsurface water is
determined by the CNA in exactly the same manner as surface water.

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6.7.3 Project Water Rights

Grayd has estimated that mining and processing operations at La India will require a
total of 187 m3 of fresh water per hour (825 gallons per minute, 52 liters per second)
or 1.6 million m3 per year. Grayd and its hydrologic consultants have determined
that developing a subsurface water supply is the most expedient method of obtaining
water for mine operations.

6.7.3.1 Surface Water Rights

Surface water for the project area comes from the Rio Yaqui catchment basin. The
Plutarco Elias Calles dam that forms the Plutarco Elias Calles, or as it is more
popularly known, the El Novillo Reservoir, located 80 km northwest of La India,
captures the Rio Yaqui. The reservoir’s storage capacity is 3,026 million m 3 of
water. Surface water rights related to water captured by the El Novillo Reservoir are
mostly controlled by the downstream irrigation districts. Grayd does not intend to
use surface waters from the Rio Yaqui basin.

6.7.3.2 Subsurface Water Rights

The project lies within the Valle de Rio Yaqui hydrologic basins defined by the CNA.
According to Grayd’s hydrogeological consultants, underground water is believed to
be available in sufficient quantity and quality in the project area. The Valle de Rio
Yaqui basin is designated by the CNA as “freely concessionable” (“libre
alumbramiento”). This designation applies to basins where the CNA has determined
that the aquifer can support additional water extraction without exceeding the natural
aquifer recharge, and a water user may apply for and be granted a water
concession.

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7 ACCESS, CLIMATE, INFRASTRUCTURE, AND PHYSIOGRAPHY

The property is located approximately 210 kilometers east-southeast of the city of


Hermosillo, in the eastern portion of the State of Sonora, Mexico, in close proximity
to the neighboring State of Chihuahua (Figure 6.1). Access is by road from
Hermosillo and requires approximately 7 hours of travel time. The first 150
kilometers is via a paved road to the village of Arivechi located 15 kilometers
southeast of Sahuaripa. The remaining distance (approximately 60 kilometers) is on
a gravel and dirt road. The road beyond Arivechi provides access not only to the
property but also to Alamos Gold’s Mulatos deposit and thence into Chihuahua
State. The Federally owned and operated electric transmission grid extends as far
as Arivechi.

The property is located between the towns of Tarachi and Matarachi. These towns
offer little infrastructure beyond rural telephone service and small Federally
subsidized grocery stores. Most basic services are available in Sahuaripa. The
population of the district is estimated to be a few thousand with most of the
inhabitants involved in small mining operations, ranching, and/or subsistence
farming. Like most areas of the Sierra Madre, production and transport of marijuana
and opium poppy forms an important but unquantified part of the local economy.
These illicit activities have not adversely affected exploration at the project or mine
development and operation at the nearby Mulatos gold mine. An adequate supply of
labor for mining operations can be drawn from the region.

The nearest international airport is located at Hermosillo. Unpaved airstrips for light
aircraft exist at Matarachi, Tarachi, and the Mulatos mine.

The property is in the Sierra Madre Mountains of eastern Sonora. The topography
consists of long ridges separated by steep V- shaped valleys. Elevations range from
1200 meter ASL to over 2000 meter ASL. Areas of low relief in the western portion
of the project area are suitable locations for mill sites, leach pads, waste dumps, and
other mine related infrastructure.

The climate in the area is semi-arid with variable seasonal temperatures ranging
from 35oC in the summer and -2oC in the winter, with occasional frost at higher
elevations. The area experiences torrential rainfall occurring from July to September
and the driest months being March to May. Exploration activities may be conducted
year round, although summer rains may cause occasional closings of river and
arroyo crossings.

Vegetation in the area is varied. Vegetation at higher elevations consists of open


pine forests while oak and cedar forests predominate at lower elevations. Poor soils
and inconsistent precipitation limit the viability of farming in the area.

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8 HISTORY

The first gold discovery in the region, as recorded by Spanish colonials, was made in
1673 at Ostimuri. The gold deposit at Mulatos was discovered by the Spaniards in
1806, but it is likely that indigenous peoples exploited the native gold bearing
oxidized zone of the Mulatos deposit prior to the colonial epoch. Small scale mining
has been semi-continuous in the district during the last two centuries (Consejo de
Recursos Minerales, 1992). Much of the early mining and all of the small-scale
present mining (hand mining by local artisanal miners) targets oxidized fractures
containing fine-grained visible gold. The mineralization described for the mines
in this section is not necessarily indicative of the mineralization at the La
India, Sonora property. The Mulatos gold deposit is located 6.5 km from the
property and is reported to have produced over 400,000 oz gold prior to 1905.
(Southworth, 1905). Alamos Gold Inc, a TSX traded public company, now controls
the Mulatos deposit and operates a large scale open pit mine at Mulatos. At
commissioning of the mine, Alamos Gold reported a proven and probable mining
reserve of 36.4Mt grading 1.65 gpt Au, for a total mineable reserve of approximately
1.9M oz. Au, part of a Measured and Indicated resource of 62.2 Mt grading 1.51 gpt
Au, for a total contained gold resource of approximately 3M ounces (Alamos Gold
Quarterly Report. 3rd Quarter 2005). A remaining proven and probable mining
reserve of 61.6 Mt @ 1.21 gpt Au, containing 2.38M oz. gold was reported as of 31
December 2009 (Alamos Gold 2009 AIF, 2010). Alamos Gold states that these
mineral reserve estimates follow the required disclosure for reserves and resources
outlined in NI43-101. The author has not reviewed the data and the author cannot
comment on the accuracy of the resource estimates. The estimates were obtained
from sources believed to be reliable but cannot be verified.

Small underground mines and prospects are present throughout the La Cruz and La
Viruela areas. Local residents state that the La Cruz - La Viruela property was
intermittently mined at a small scale during the early 1920’s and 30’s. On the basis
of the size of the mine workings, the author estimates no more than 10,000 tonnes
of material was extracted from all of the historic workings in the La Viruela-La Cruz
area. Modern exploration work has been conducted at the La Viruela-La Cruz
property, contained within the La Viruela, Continuacion SE La Viruela, La Cruz,
Tayopita, Soledad, and Ampliacion Soledad claims. In the late 1980’s New Golden
Sceptre Minerals and New Goliath Minerals completed approximately 2,000m of
percussion drilling. In the early 1990’s Noranda acquired the rights to La Cruz - La
Viruela and completed 2,616m of reverse circulation drilling. Drill logs and assay
results generated by these drill programs are not available to the author or Grayd,
but Jenkins (1994) reported that at least 72 holes were drilled, with at least 32
drillholes located in the La Viruela area and at least 35 at La Cruz. The drillholes at
La Viruela ranged from 20 to 126m in depth, whereas the drillholes at La Cruz
ranged from 21 to 102m depth. Jenkins (1994) summarized drill results indicating
that intercepts of >0.3 gpt Au were common, with the most significant reported
intercepts at La Viruela being 52m @ 1.03 gpt and 38m @ 2.68 gpt Au, whereas at
La Cruz, the most significant drill intercepts were 20m @ 6.15 gpt Au and 24m @

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1.17 gpt Au. This data is historical in nature and has not been verified by the author.
In 1993 San Fernando Mining Company Ltd. acquired the property and conducted
further drilling, including 10 diamond drillholes totaling 2,268m at La Viruela and 11
diamond drillholes at La Cruz totaling 1,292m (McDougall, 1995). Drill logs and
assay results generated by the drill programs are not available to the author or
Grayd, but McDougall (1995) reported that the most significant intercepts generated
by San Fernando Mining Company Ltd. were 28m @ 1.96 gpt Au at La Viruela and
27.5m @ 2.24 gpt Au at La Cruz. This data is historical in nature and has not been
verified by the author.

Historical data is not included in the resource estimate database.

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9 GEOLOGICAL SETTING

9.1 Regional Geology

The La India project lies within the Sierra Madre Occidental (SMO) province, a
regionally extensive Eocene to Miocene volcanic field which extends southeast from
the United States-Mexico border to central Mexico. The total thickness of the
volcanic sequence is approximately 2km, and it rests upon Mesozoic clastic and
calcareous sedimentary rock. The volcanic field is comprised of two distinct volcanic
sequences, an older andesitic and dacitic series, and a younger, pyroclastic
dominated rhyolitic series. The traditional nomenclature refers to these as the Serie
Volcanica Inferior (Lower Series) and Serie Volcanica Superior (Upper Series). The
Lower Series is approximately 1km thick and is dominated by Paleocene and
Eocene andesitic lavas and pyroclastic deposits, with interbedded volcaniclastic
strata. Silicic volcanic units are present but are a minor component. The volcanic
strata of the Lower Series are cut by calc-alkaline intrusives. The Upper Series
unconformably overlies the Lower Series with erosional disconformity and comprises
a 1km thick sequence dominated by Oligocene and early-Miocene dacitic and
rhyolitic pyroclastic strata and volcaniclastic strata. Most significant metal
occurrences in the SMO are hosted by rocks of the Lower Series or the underlying
Mesozoic strata.

The La India project lies within the western limits of the SMO in an area dominated
by outcrops of andesitic to dacitic tuffs that were intruded by granodiorite and diorite
stocks, and overlain by rhyolitic tuffs, basaltic-andesite lavas, and a large pile of late
conglomerates. These rocks lie within a northwest-trending zone of Miocene
extension that disrupted the regional stratigraphy along N-NW striking normal faults
causing large-scale rotation of blocks with predominantly east-northeast inclinations.
(Figure 9.1). Incised fluvial canyons have cut the uppermost strata and expose the
Lower Series volcanic strata.

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Figure 9.1. Regional geologic map, summarized from Servicio Geologico Mexicano.

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9.2 Local Geology

The La India project area is underlain by the Lower Series volcanic sequence
comprised of Paleocene andesitic and dacitic volcanic rocks interbedded with
epiclastic rocks of similar composition (Figures 9.2 to 9.4). The andesitic volcanic
rocks are the oldest Cenozoic rocks at La India and include a lower sequence of
lavas, tuffs and epiclastic rocks. Atop the andesite is an upper sequence of biotite-
pyroxene trachyandesitic and dacitic flow-domes and tuffs. These rocks overlie the
lower andesites with erosional disconformity, and fine grained dacitic tuffs
interbedded with epiclastic rocks mark the contact. Two 40Ar/39Ar age determinations
on plagioclase returned Paleocene ages for the lower andesitic and upper dacitic
sequences (62.6 Ma and 55.8 Ma, respectively). Dacite and feldspar porphyries
intruded the andesitic and dacitic volcanic rocks at La India (Longo, 2006a, Longo et
al., 2010), and a granodiorite intruded andesitic volcanic rocks at the southern limit
of the project area (Moore, 2006). Two 40Ar/39Ar ages of plagioclase from the
porphyries yielded Eocene ages of 43.3 Ma and 36.9 Ma. Thick (100-500 m)
deposits of rhyolitic ignimbrite overlie the older andesite and dacite. These rocks are
named the Nopal Ignimbrite, and one 40Ar/39Ar age of biotite yielded an upper
Eocene age of 33.9 Ma. Upper series rocks include basaltic-andesite lavas and flow
breccias that overlie the Nopal ignimbrites with erosional disconformity. One
40
Ar/39Ar age from a whole rock sample of lava yielded an Oligocene age of 28.2 Ma.
These lavas are both overlain by and interbedded with alluvial conglomerates. Upper
series Oligocene rhyolitic ignimbrites have not been recognized within the
concession boundaries. The rocks at La India strike west-northwest and dip 25 to 30
degrees east-northeast in the southern portion of the project area (Moore, 2005),
and dip 15 to 25 degrees west and southwest in the northern portion of the project
area. The La India-La Viruela-La Cruz area comprises one of several high sulfidation
epithermal mineralization centers recognized in the Mulatos district (Staude, 2001).

Silica alteration is both strataform and discordant. Strataform layers of silica are
localized at the base of the dacitic tuffs within the epiclastic rocks (Figure 9.5).
Silicification coincident with zones of higher grade gold mineralization is controlled
by high angle faults and fractures. Geological mapping and surface rock chip
sampling has identified zones of gold-bearing silica, silica alunite, and argillic
alteration from numerous localities within the project area. The most extensive
surface outcrops of altered and gold-bearing rock are found at the La India, La
Viruela, La Cruz, Cerro de Oro, Espanola, Cieneguita, Espanola, and Cochis areas
and these have been the focus of drill testing and host the mineral resource
described in this report. Another significant zone of outcropping gold mineralization
has been identified at the Los Tubos area located 2 km east of the La Cruz area.
This area offers potential to host additional resources, but as of the effective date of
this report this target has only been partially drill tested and a resource has not been
calculated.

Volcanic stratigraphy in the Tarachi area is similar to La India (Figures 9.6 to 9.8).
The area is underlain by a thick package (>300 m) of dacitic and trachyandesitic

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porphyritic rocks and tuffs. These rocks are genetically related to flow-dome
complexes and interpreted as temporally related to the Eocene upper dacitic
sequence at La India. Basaltic-andesite dikes strike WNW and intruded the dacitic
sequence. Rhyolitic ignimbrites with a basal conglomerate overlie the dacites with
erosional disconformity. The conglomerates contain cobbles of mineralized dacite,
and the overlying ignimbrites are fresh and considered post-mineral. The rhyolitic
ignimbrites may be temporally associated to the upper Eocene Nopal Ignimbrite of
La India. Atop the rhyolite ignimbrites are thick (+100 m) piles of conglomerates
interbedded with basaltic-andesite lavas that are concentrated toward the
conglomerates base. Gold mineralization is entirely hosted within the underlying
dacitic sequence. A later episode of Miocene extension characterized by a series of
NW-trending normal faults shaped the region and reactivated old N-NE faults. The
volcanic rocks and conglomerates were torn apart and separated into rotated blocks
of strata that now strike predominantly northwest and dip 10-25 degrees northeast to
25 degrees southwest.

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Figure 9.2. Geologic map encompassing the Cieneguita, La Viruela-La Cruz, and Cerro de Oro
areas.

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Figure 9.3. Volcanic stratigraphic column of the La India area as determined by T Longo.

Figure 9.4. 40Ar/39Ar ages of the lower Cenozoic volcanic rocks from the La India area
displayed as a function of stratigraphic position. Two 40Ar/39Ar determinations returned
middle Miocene ages from post-mineral supergene alunite. The span of time for the Laramide
porphyry event is referenced in the upper right.

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Figure 9.5. Drillhole fence diagram through Viruela - La Cruz zone. General orientation
looking northeast.

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Figure 9.6. Geologic map of Tarachi claims.

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Figure 9.7. Volcanic stratigraphic column, Tarachi area, as determined by T. Longo.

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Figure 9.8. Detailed geologic map of the Tarachi area as determined by T. Longo.

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10 DEPOSIT TYPES

The mineral occurrences present in the Cieneguita, La India, and Main Zones of the
project area, and the deposit type being sought, are volcanic hosted, epithermal,
high sulfidation (HS) gold-silver deposits. Such deposits may be present as veins
and/or disseminated deposits. Some of the most intensely studied and described
HS deposits include Summitville, Colorado (Stoffregen, 1987; Gray and Coolbaugh,
1994), Goldfield, Nevada (Ransome, 1909, Ashley, 1974; Vikre, 1989), Lepanto,
Philippines (Hedenquist et al, 1998) and Julcani, Peru (Petersen et al. 1977; Deen et
al. 1994). Based upon these studies and others, excellent compilations of general
characteristics and genetic and empirical models have been presented by Hayba et
al. (1985), Heald et al. (1987), Berger and Henley (1988) and Arribas (1995).
General characteristics of HS deposits include: located within plutonic-volcanic arcs;
associated with intermediate calc-alkaline rocks, often in dome complexes; alteration
mineral assemblages indicative of high temperature acidic hydrothermal fluids,
including an advanced argillic assemblage characterized by one or more of
pyrophyllite, alunite, dickite, kaolinite, and diaspore; silicification and acid leaching of
principal hydrothermal fluid conduits (forming the clichéd “vuggy silica” alteration);
presence of minerals indicative of high sulfidation states, principally the sulfosalt
enargite or its low temperature polymorph luzonite; economically important
quantities of Au and/or Ag and/or Cu; and alteration zoning typified by a central zone
of silica alteration flanked by a zone of advanced argillic alteration, which in turn is
surrounded by illite dominated argillic alteration.

Genetic models proposed for HS systems call upon shallow emplacement of an


oxidized calc-alkaline magma. As the magma crystallizes, a metal- and volatile-rich
fluid phase exsolves, and at relatively low confining pressures will separate into a
low salinity vapor and a hypersaline liquid. The vapor phase ascends and when
absorbed into connate or meteoric waters, forms a high temperature, sulfate-rich,
acidic hydrothermal fluid. As this hydrothermal fluid ascends and cools, acidity
progressively increases, resulting in a vertical zonation where advanced argillic
assemblages overly illite-dominated argillic assemblages. Neutralization and cooling
of the fluid during lateral fluid flow repeats this zoning pattern, with proximal silicified
and leached zones flanked first by advanced argillic alteration, and then by more
distal illite dominated alteration. As the hydrothermal system evolves, younger, more
reduced hydrothermal fluids, probably generated by interactions between ascending
hypersaline magmatic fluid and meteoric water dominated convection cells, then
transport and deposit metals (Au-Ag-Cu) along the same conduits utilized
previously. Metals may be sourced directly from the magmatic fluids or leached
from country rocks.

Over of 380,000 ounces per year of Sierra Madre gold production currently comes
from this type of deposit. Some currently exploited examples are listed below. The
mineralization described for the mines in this section is not necessarily
indicative of the mineralization at the La India, Sonora property.

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El Sauzal, Chihuahua: Owned by Goldcorp. Mineable reserves as of 31 December


2005 were reported at 15.8 Mt @ 3.29 gpt Au containing 1.67M oz. gold. Proven and
probable mineable reserves reported as of 31 December 2009 were 5.8Mt @ 1.77
gpt Au totaling 0.57M ounces contained gold (Goldcorp Annual Report, 2009,
available on SEDAR, June 2010). In 2009 the mine produced 203,800 oz. gold from
an open pit, conventional milling and heap leach mine (Goldcorp Annual Report,
2009). These mineral reserve estimates were said to follow the required disclosure
for reserves and resources outlined in NI43-101. The author has not reviewed the
data and the author cannot comment on the accuracy of the resource estimates.
The estimates were obtained from sources believed to be reliable but cannot be
verified.

Mulatos, Sonora. Owned and operated by Alamos Gold Incorporated. Exploits a


high sulfidation mixed oxide and sulfide orebody by conventional open pit mining
and heap leach methods. The mineable reserve at the time of mine construction
was stated as 36.4Mt @ 1.64 gpt Au, for total contained ounces of 1.9 M oz. gold
(M3 Engineering, 2004). In 2009 the Mulatos mine produced 178,500 ounces of gold
and a remaining proven and probable mining reserve of 61.6 Mt @ 1.21 gpt Au,
containing 2.38M oz. gold was reported as of 31 December 2009 (Alamos Gold AIF,
2009).The mineable mineral reserve estimates are said to follow the required
disclosure for reserves and resources outlined in NI43-101. The author has not
reviewed the data and the author cannot comment on the accuracy of the resource
estimates. The estimates were obtained from sources believed to be reliable but
cannot be verified.

At the Tarachi prospect, surface outcrop mapping and drillhole data indicates that
the gold system there exposed is best classified as a low sufidation epithermal gold
deposit. Low sulfidation deposits may be present as veins and/or disseminated
deposits and hosted by intrusive, volcanic, and sedimentary rocks. Features
common to such deposits (Buchanan, 1981; Hayba et al., 1985; Heald et al., 1987;
Bonham, 1988; Berger and Henley, 1989; Albinson et al., 2001) include:

- Intermediate to felsic, calc-alkaline volcanic host rocks.


- Association with intrusive centers.
- Alteration mineral assemblages dominated by sericite, quartz, adularia, and
chlorite.
- Variable Au:Ag ratios.
- Ore mineralogy characterized by argentite, tetrahedrite, tennantite, native
silver, native gold, and base-metal sulfides.
- Vertical geochemical zoning, with well defined upper and lower elevation
limits to economic mineralization, over vertical ranges of 200 to 700m.
- Open space filling vein textures.
- Quartz and carbonate gangue minerals.
- Ore and gangue mineral textures indicative of low temperature environments.

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11 MINERALIZATION

11.1 General

Numerous epithermal gold occurrences are exposed in small abandoned mines or


exploration workings throughout the La India property. Host rocks include
hydrothermal breccias, andesite, dacite porphyry, and volcaniclastic strata. Both
high angle structural and low angle stratigraphic controls are observed. Mineralized
zones are characterized by alteration mineral assemblages which include alunite,
dickite, and/or pyrophyllite, accompanied by intense silica replacement of the host
rock, with variable intensities of pyritization and/or hematization. Pyrite occurs as
both disseminations and in microveinlets. In oxidized zones, relict hematite-limonite-
goethite after pyrite is present. In some occurrences, primary hypogene specularite
is associated with auriferous zones. The mineral occurrences for which resources
have been estimated, the North and Main Zones, are described herein. Other
mineral occurrences are described in the previously released project Technical
Report by Gray (2006).

11.2 North Zone, comprising Cieneguita, Española, Cochis, La India areas

This North Zone is underlain by andesitic and felsic fragmental volcanic strata.
Stratigraphically controlled zones of silica alteration and gold mineralization are
restricted to the felsic units and crop out extensively at the Cieneguita, Española,
and Cochis areas. The mineralized strata dip gently to the west, and the silicified
zones crop out as prominent ridge capping units and dip slopes. The silicified strata
are 30 to 60m thick, with downdip extent of 300m or more. The La Cieneguita zone
is semi-continuously exposed for over 1,300m of strike length, and erosional or fault
offset remnants of the silicified zone are exposed at the Española and Cochis areas
located to the east and southeast respectively. Oxidation is intense and complete
throughout the total thickness of the mineralized zone.

The inactive La India mine workings are developed in argillized porphyritic dacite
intrusive that underlies silicified felsic fragmental strata. The silicification appears to
be controlled by both stratigraphy and by high angle structures and may be part of
the silicified zone exposed to the north at the La Española and La Cieneguita areas.
In contrast to other mineralized zones in the region, where gold is generally
restricted to silicified zones, at the La India mine significant gold mineralization
occurs in argillized volcanic units. The La India area is also unusual in that thus far,
it is the only gold occurrence in the project area that is also associated with
disseminated copper mineralization, and recent drilling has demonstrated a Au-Cu-
Mo metal assemblage in mineralized porphyry. Gold and copper mineralization is
associated with quartz stockwork veinlets in the dacite with quartz-sericite-
tourmaline alteration. This style of mineralization and alteration is characteristic in
other Cu-Au porphyry-style deposits of the Sonora, Mexico. Coxcomb textured and
drusy quartz veins with molybdenite and pyrite that resemble D-veins in the dacite
porphyry are found at depths of 200 to 300 m below surface.

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North Zone oretype domains were defined by H Smit and F Bourke of Grayd
Resources on the basis of alteration mineral assemblages and the form or control of
gold occurrence (Smit, 2008). M Gray reviewed the domain definitions and agreed
that the oretype domains identified are appropriate for the deposit and valid for
resource estimation purposes. The domain descriptions presented by Smit (2008
and personal communication) are summarized as follows:

Domain 11: Variably silica and/or clay altered dacite/dacite tuff.


Stratigraphically overlies the silicified dacite of Domain 12 and is probably the
less altered equivalent.

Domain 12: Massive silica+alunite altered dacite tuff. Crosscutting field


relationships indicate that the massive silicification preceded the economically
important gold deposition events, and this unit is generally not significantly
mineralized unless it is crosscut by high angle structures and fracture zones.
Forms tabular continuous sheets that typically form dip slopes and blanket the
topographic surface.

Domain 14: Silica-clay altered andesite, forming a stratiform and stratabound


layer lying beneath the lower contact of the dacite unit of Domain 12 or
Domain 18. The zone is typically less than 10m thick and exhibits a rapid
gradational contact with increasing depth to unmineralized andesite.

Domain 17: Mineralized porphyry, comprising andesitic-dacitic feldspar


porphyry that hosts disseminated, stockwork, and irregular structurally
controlled gold mineralization with associated copper and molybdenum,
occurring in the vicinity of the La India mine workings. A lack of drillhole data
precluded inclusion of Domain 17 in the 2009 resource model, but
subsequent drilling has provided adequate data to allow its use in the 2010
resource model, the subject of this report.

Domain 18: Silicified and clay altered breccia, controlled by low angle
structural zone, continuous and correlated between drillholes only in the north
part of the Cieneguita area. Occurs at the base of Domain 12 and is
observed in drill core and underground workings as a zone of brecciated
massive silicified dacite and the underlying silica and clay altered andesite,
containing abundant hematite in fractures.

Figures 11.1 and 11.2 demonstrate the typical morphology of the most significant
North Zone ore domains and the spatial relationships between them. Drill results
are summarized in Appendix A of this report.

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Figure 11.1. Section 706,300E, Cieneguita area, North Zone, showing relationships between
oretype domains 12, 14 and 18.

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Figure 11.2. Section 3,179,175 Cieneguita area North Zone, showing relationships between
oretype domains 11, 12 and 18.

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11.3 Main Zone, comprising La Viruela, La Cruz, and Cerro de Oro

The Main Zone target area is comprised of the La Viruela, La Cruz, and Cerro de
Oro areas where gold concentrations are hosted by 6 distinct oretype domains.
Oretype domains were defined by H Smit and F Bourke of Grayd Resources on the
basis of alteration mineral assemblages and the form or control of gold occurrence
(Smit, 2008). M Gray reviewed the domain definitions and agreed that the oretype
domains identified are appropriate for the deposit and valid for resource estimation
purposes. The domain descriptions presented by Smit (2008 and personal
communication) are summarized as follows:

Domain 1: Dacite unit, variably altered to silica, clay and alunite mineral
assemblages, in the La Viruela and La Cruz areas. This domain is defined
both by lithology and alteration. Alteration is most intense in areas of high
angle structures and is in general most intense in the Viruela area. Where
quartz phenocrysts are preserved conclusive identification of the dacite is
possible, whereas in other cases the unit is defined on the basis of its
consistent stratigraphic position overlying the Domain 2 stratiform massive
silica unit.

Domain 2: Massive silica unit, developed primarily in dacitic tuff, but also may
be developed in contact zone with andesites and dacites in the La Viruela and
La Cruz areas. Forms intense stratiform zones of silica replaced rock, locally
with hydrothermal clays. Field relationships indicate that the massive
silicification predated the economically important gold deposition event.

Domain 3: Vuggy silica-silica alunite unit. Silica alunite altered rock, typically
developed in fine grained andesite tuffs, often with distinct vuggy silica
texture, found in the La Viruela area. Mapping and drillhole data demonstrate
that the distribution of this unit is controlled by high-angle northeast-striking
structures and by the lower contact of the Domain 2 massive silica unit. It
typically forms an irregular layer developed at the base of Domain 2 in the La
Viruela area and narrow high angle tabular bodies that follow northeast
structures. A silica-clay altered andesite zone is present at La Viruela,
occurring in gradational contact with the lower contact of Domain 3, reflecting
a decreasing alteration intensity in the andesite tuff. In the La Cruz area, it
occurs at the base of the Domain 2 massive silica unit. In the 2009 resource
model this material was modeled separately as Domain 4, but subsequent
drilling and analysis showed that the silica-clay altered zone is a gradational
zone at the boundary of the other domains, is volumetrically insignificant, and
cannot be accurately modeled as a distinct unit. Domain 4 is no longer used
in the resource model and the mineralized silica-clay altered zones at the
periphery of Domains 2 and 3 are included within the respective domains.

Domain 5: Silica clay altered andesite with Structurally controlled


mineralization, found in Cerro de Oro and La Cruz areas, comprised of silica-

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clay altered andesite with irregular quarts veinlets and stockworks that cannot
be specifically correlated between drillholes. Occurs stratigraphically lower
than Domain 2. Drillhole data indicates that this alteration style is at least in
part centered about an andesitic-dacitic porphyry body. It also occurs
peripheral to the silica bodies (Domain 6) in the La Cruz area. Where
unoxidized contains 3 to 5% disseminated pyrite.

Domain 6: Silicified bodies, apparently controlled by structural zones that can


be correlated between drillholes in the Cerro de Oro and La Cruz areas,
including the deep high grade La Cruz sulfide zone.

Domain 7: Mineralized porphyry, comprising andesitic-dacitic feldspar


porphyry that hosts disseminated, stockwork, and irregular structurally
controlled gold mineralization. A lack of drillhole data precluded inclusion of
Domain 7 in the 2009 resource model, but subsequent drilling has provided
adequate data to allow its use in the 2010 resource model, the subject of this
report.

Figures 11.3 to 11.5 demonstrate the typical morphology of the Main Zone ore
domains and the spatial relationships between them. Drill results are summarized in
Appendix A of this report.

Locally, auriferous hydrothermal breccias are developed along high angle faults and
they appear to post date all other alteration and mineralization events The silica-
alunite alteration zones at La Viruela and La Cruz are continuous for hundreds of
meters along strike, but have been offset by northwest striking high angle normal
faults (Longo, 2006a, 2006b, 2006c). Oxidation extends to depths of greater than
100m along structural zones and the majority of the drill tested mineralization is
oxide material. Highest grades and continuity of mineralization are found in the La
Viruela area, but mineralization of varying tenor and style is continuous between the
La Viruela, La Cruz, and Cerro de Oro areas.

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Figure 11.3. Section 3,176,600 La Viruela area showing typical morphologies and spatial
relationships of Main Zone ore domains 1, 2, and 3.

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Figure 11.4. Section 3,176,100 La Cruz area showing typical morphologies and spatial
relationships of Main Zone ore domains 5 and 6.

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Figure 11.5. Section 3,176,500N Viruela West area showing morphology of Main Zone ore
domain 7.

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11.4 Tarachi

The mineralization at Tarachi was only recently discovered and is as of yet only
partially understood. The hydrothermal alteration mineral assemblages observed at
Tarachi contrast with those of the Cieneguita, La India, and Main zones; the latter
are characterized by massive, pervasive silica-alunite alteration, which has thus far
not been observed at Tarachi. Stratigraphic controls to mineralization are dominant
in the Cieneguita, La India, and Main zones, but at Tarachi structural controls
appear to be more important than stratigraphic controls. A further difference is the
presence of sheeted quartz veins at Tarachi, which locally host high grade gold
concentrations and minor amounts of molybdenite. A schematic sketch of the
mineralization style at Tarachi is presented as Figure 11.6.

Gold mineralization in the Tarachi area is associated with sheeted and banded black
to gray quartz veins hosted in dacite. Gold is strongly associated with molybdenum
and to a lesser degree with Zn and Mn. Concentrations of sheeted and banded
quartz veins define central zones of gold mineralization that are progressively
enveloped by 1-5 m-wide zones of kaolinite-dickite alteration mineral assemblages
that grade outward to illite-smectite-magnetite-pyrite and distal chlorite-zeolite-
calcite-hematite-pyrite alteration assemblages. At least three stages of quartz
veining has been identified as follows: 1) early stage black quartz breccia and veins
with irregular vein walls with <0.1-0.5g/t Au, 10-80 ppm Mo, >100 ppm Zn, illite-
smectite alteration; (2) later banded and sheeted quartz veins with >0.5-5.0 g/t Au
(up to 22.9 g/t), >100 ppm Mo (up to 0.4% Mo), < 100 ppm Zn, kaolinite-smectite
±dickite alteration; and (3) latest barren tan banded quartz veins with planar vein
walls and brassy pyrite fracture coatings. Concentrations of quartz veining has been
identified in four zones known as Las Huejas, Llano, Llano Grande, and Rodado
(Figure 11.7). Veins strike predominately E-W to NE. In the Llano zone the quartz
veining is concentrated along the margins of a westerly trending, fine-grained
basaltic-andesite dike. The margins of the dike provided a permeable pathway for
the fluid flow (Figure 11.6). No one genetic model has been applied to the mineral
occurrences at Tarachi, however, both low-sulfidation epithermal Au-Ag vein and
Maricunga-style Au porphyry models have been proposed as possible analogies.
Further work is required before a deposit type is defined for Tarachi.

In 2010 Grayd commenced drill testing of the Tarachi prospect, located 8 km


northwest of the Cieneguita zone. A total of 27 diamond core drillholes totaling
6,276 m and 8 reverse circulation drillholes totaling 1,926m were completed in three
periods between February 18 to October 24, 2010. Nearly all of the Tarachi
drillholes intersected significant mineralized widths containing greater than 0.20 gpt
Au, with local higher grade intervals. Highlights include as much as 244 m @ 0.85
g/t including 90 m @ 1.20 gpt Au (DDH-10-167). True widths and controls of
mineralized zones have yet to be determined. Many of the Tarachi holes were still
mineralized at the end of the hole and the lateral extents of mineralization is
unknown. The Tarachi drillholes are not part of the resource model database and
resources have not yet been defined for this area.

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Surface sampling over a 5 km 2 area at Tarachi has returned numerous anomalous


surface samples in the range from 0.1 to 22.9 g/t Au. Results from rock samples
taken from intermittent outcrop along a 210 meter section of a 2010 drill road range
from 0.04 to 22.9 g/t Au.

Surface mapping and sampling have outlined a greater than five square area with
gold potential. Tarachi is expected to be a focus of future drill programs at the La
India project.

Figure 11.6. Diagrammatic sketch of mineralization style at Tarachi (Longo, 2010).

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11.7. Geologic map of Tarachi area shoing location and trneds of gold bearing quartz veins as
determined by T. Longo. Legend is same as that of Figure 9.8.

11.5 Construction of Oretype Domain/Resource Model

The oretype solids model was created in MicroMine by Grayd geologists H Smit and
F Bourke. After appropriate oretype domain definitions were determined for the
North and Main Zones, as described in Items 11.2 and 11.3 of this report, each
drillhole in the resource model database was coded to the oretype domains that it
intersected. A 3-D wire frame of oretype solids was created in MicroMine, and then
projected into 25m spaced north-looking cross sections. The oretype solids on
section were independently reviewed by M Gray, who suggested changes to insure
that the oretype solids faithfully reflected drillhole data and known geologic controls
to gold distribution. H Smit and F Bourke of Grayd reinterpreted the oretype domain
model on section and plan, and the 3-D wireframe solids were adjusted to respect
the revised sectional and plan view interpretations. The new 3-D oretype solids
were then projected onto 25m spaced north-looking sections and independently
checked by M Gray who verified that they faithfully respected all drillhole data,
respected the known geologic controls to mineralization, and were geologically
reasonable. A 10x10x6m (x,y,z) block model was cut from the oretype solids. The
block model, together with the complete drillhole database, was passed to Giroux
Consulting Ltd of Vancouver, British Columbia, who in turn conducted geostatistical
studies to determine appropriate grade interpolation parameters, which
subsequently were used by Giroux to estimate Au grades for each block, as
described in Item 19 of this report. Topographic surface control for the model was

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created by Cooper Aerial de Mexico. Air photography and photogrammetric


methods were used to create a topographic map of the resource area with 2m
contour interval.

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12 EXPLORATION

Grayd Resource commenced exploration of the property in January 2004.


Exploration activities to date have included both regional and detailed geologic
mapping of the concessions, rock chip geochemical sampling, airborne
electromagnetic and magnetic geophysical surveys, photogrammetric topographic
mapping to 2m contour interval, terrestrial induced polarization geophysical surveys,
diamond core drilling, and reverse circulation drilling. Exploration activities through
30 September 2008 are summarized in Table 12.1.

Table 12.1. Exploration activities summary.

Exploration Activity Units Amount


Reconnaissance Geologic Mapping hectares 20,000
Detailed Geologic Mapping hectares 4,200
Rock Chip Sampling samples 9329
Stream Sediment Sampling samples 58
Soil Sampling samples 1193
Airborne Geophysical Survey line-km 1,300
Photogrammetric Topography 2m CI hectares 4,420
Ground Geophysical Survey-Mag line-km 265
Ground Geophysical Survey-IP line-km 100
Diamond Core Drilling drillholes 102
meters 7,557
Reverse Circulation Drilling drillholes 542
meters 45,334

12.1 Geologic Mapping and Geochemical/Mineralogical Sampling

Mapping and rock chip sampling has been conducted for approximately one third of
the claim block, with activities focused on the La India concessions, the Tarachi
concessions, the La Viruela-La Cruz area, and the central portion of the Triple A
claim. Mapping at 1:20,000 scale identified zones of interest that were later mapped
at scales of 1:5,000. In 2004 mapping was conducted by consultant geologist
Shane Ebert Ph.D., P. Geo., and by RGM senior partner M. Castellanos. During
2005 and 2006 mapping programs were conducted by RGM staff geologists J.
Gonzalez, E. Paez, M. Tovar, and by Newmont Mining geologists T. Longo, S.
Moore, and J. Trujillo. Mapping completed during 2007 and 2008 was by RGM
geologists, Grayd geologist T. Longo, and consultant C Greig. Mapping in 2009 and
2010 was conducted by T Longo and RGM geologists. Rock chip sampling of altered
zones was conducted concurrent with the mapping and were analyzed by an
independent international laboratory, ALS Chemex. Details of the sampling program
are presented in Item 14 of this report. Representative samples of alteration zones
were analyzed by short wave infrared spectrographic analyses (PIMA Field
Spectrometer) to determine alteration mineral assemblages.

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12.2 Airborne Electromagnetic and Magnetic Survey.

12.2.1 Procedure

In 2005, a helicopter-supported, HoistEM airborne geophysical survey was


completed using proprietary systems developed by Grayd’s joint venture partner,
Newmont Mining. The survey collected 1,300 line km of data utilizing the HoistEM
system. The survey process was described by Foley (2006a) and a summary of this
work is presented in the 2006 Technical Report previously released for the La India
project (Gray, 2006).

The HoistEM system utilizes a simple coplanar geometry with the transmitter and
receiver loops suspended 30 m beneath the aircraft. The HoistEM receiver 2
is a
single-turn 10 m diameter coil with an effective area of 10,000 m including
preamplifier gain. The data acquisition system samples 112 channels of 101 µs
width commencing 54 µs after the end of the current turn-off ramp. In addition,
another 12 high-frequency early-time channels of 25.25 µs width are sampled.
During data processing these 124 channels are integrated into 21 working channels
between 65.70 µs and 12.676 ms. The transmitter current is nominally 2
300 amps
into a single-turn 22 m diameter loop with an output of 120,000 Am . Alternating
positive and negative transmitter pulses consist of an on-ramp of 800 µs, current on-
time of 4.2 ms and off-ramp of 40 µs. The base frequency of the system was set to
30 Hz due to the local power line frequency of 60 Hz. In addition of the EM,
magnetics data were recorded using an elegant standalone towed-bird cesium
magnetometer system. The magnetometer sensor was clamped on the 30 m
suspension cable 10 m above the EM system.

Lines were spaced 100 m apart on east-west lines with the vertices for the survey
block those of the concession package. The aircraft altitude was specified for a
nominal height of 80 m which placed the EM transmitter and receiver at 50 m above
ground and the magnetometer at 60 m above ground. A histogram of the laser
altimeter showed an actual average of 60 to 65 m above ground surface for the EM
receiver. Resistivity slices and sections were computed using Newmont’s in-house
developed algorithms.

12.2.2 Results

The survey identified three types of resistive zones:

Resistors that correlate to outcrops of post-mineral volcanic strata or country rock


intrusions. These features are not economically significant.

Resistors that correlate to known zones of hydrothermally silicified and/or


mineralized zones.

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Vertically and laterally continuous resistors identified at depth below post-mineral


volcanic cover rock. These resistors do not correlate with any exposures of resistive
post-mineral units or hydrothermally altered rock. These resistors are interpreted to
correlate with buried zones of silica alteration and are regarded as favorable
exploration targets.

A total of 17 target areas were defined by the airborne geophysics and mapping
programs, as listed in Table 12.2 and shown in Figures 12.1 through 12.5. Detailed
descriptions of each target may be found in the 2006 Technical Report previously
released for the La India project (Gray, 2006).

Table 12.2. Exploration target areas.

Target ID Number UTM East UTM North


La Cieneguita 1 706,300 3,179,170
La Espanola 2 706,880 3,178,700
La India W 3 706,608 3,177,384
La India 4 707,370 3,177,290
El Nopal 5 705,879 3,176,091
Viruela W 6 706,590 3,176,492
La Viruela 7 707,866 3,176,802
La Cruz 8 707,170 3,175,910
Grano de Oro 9 708,431 3,176,219
Puertos W 10 708,613 3,174,689
Puertos E 11 709,160 3,174,998
Matarachi 12 711,056 3,175,891
Duraznito N 13 708,267 3,173,469
Duraznito 14 709,051 3,172,503
Duraznito S 15 709,452 3,171,174
Cascabel 16 710,327 3,171,174
Cebadilla 17 711,420 3,170,973

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Figure 12.1. Resistivity depth slice at 50m, red is most resistive, blue is least resistive.

Figure 12.2. Resistivity depth slice at 100m, red is most resistive, blue is least resistive.

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Figure 12.3. Resistivity depth slice at 150m, red is most resistive, blue is least resistive.

Figure 12.4. Resistivity depth slice at 200m, red is most resistive, blue is least resistive.

Total field magnetic data is presented in Figure 12.5. The magnetic features
discerned correlate with regional lithologic and structural features and are useful
aids to the geologic mapping.

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Figure 12.5. Total field magnetic plot. Red denotes area of greatest magnetic response.

12.3 Induced Polarization Survey.

12.3.1 Procedure

In June 2005, features identified by the airborne Hoist EM survey were further
investigated by means of ground based, pole-dipole time domain induced
polarization surveys. Approximately 30 line-kilometers were completed (Figure
12.6). Detailed discussion of the survey results were presented in the 2006
Technical Report for the La India project (Gray, 2006). The objective of the survey
was to determine the most likely explanation of the previously identified resistors by
determining their three dimensional morphology. Survey parameters according to
Foley (2006b) were:

Method: Time domain induced polarization


Array: Pole- Dipole
Dipole Size: 50m
Transmitter: Iris VIP5000
Timing: 0.125Hz (2 secs bipolar)
Transmit Electrodes, Remote Tx: 2x2m aluminum lined pit
Transmit Electrodes, Pole Tx: Brass rods
Receiver: Iris Elrec Pro 10 channel
Receiver Timing: 500 – 1650 ms
Potential electrodes: Half cell copper sulfate infused electrodes

Data was plotted as conventional pole-dipole pseudo sections.

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Figure 12.6. Induced polarization ground geophysical survey lines (in red). Triple A and La
India claim boundaries shown in black.

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12.4 Ground Magnetic Survey – 2009

In June of 2009, Gradient Geophysics Inc. spent 9 days with one operator in the
Main Zone resource area of the property conducting a magnetometer survey. A
GEM system GSM–19W, overhauser “walking” magnetometer field roving unit and a
GEM system GSM–19, overhauser base station magnetometer were used. The
roving unit was set up to take time, magnetometer (nT) and real time GPS in WGS
84 coordinate system at every 2 seconds. This translates to approximately every 2
meters. The base Station was set up to take time and magnetometer readings every
30 seconds and data was corrected using base station readings on a daily basis.

A plan map of results is shown in Figure 12.7. Contrasting magnetic signatures


highlight a northwest trending fault that down-drops the rhyolites to the southwest
and an area with magnetite within an intrusive rock in the central part of the grid.

Figure 12.7. 2009 Ground magnetic survey data, reduced-to-pole plot.

12.5 Ground Magnetic Survey - 2010

In 2010, SJ Geophysics completed ground magnetic surveys on 3 grids, covering


parts of the resource area and the Tarachi and Tubos prospects. A total of 265 line-
km of were surveyed, including tie lines. For the Magnetic surveys measurements
were taken with Geometrics G856 Portable Proton Magnetometers. A stationary
base unit was used to record the diurnal variation in the total magnetic field at 6 to
10 second intervals. The mobile units, known as rovers, recorded the total magnetic
field every 12.5m along the grid line traverses. When base unit measurements were
unavailable or unreliable, sections of lines that had no base station measurements
were overlapped so that the proper corrections could be made. Calibration
measurements were taken by the rover units at the start and end of each day to
account for instrument drift.

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12.5.1 La India Grid

A ground magnetic survey was completed over the north part of the Main zone and
the North zone. It in part overlapped with the northern part of the 2009 survey in the
Main zone. Lines were east-west, spaced 50 m apart and readings were taken
every 12.5 m. The survey outlined the same magnetic-bearing intrusive bodies on
the west side of the main zone that the 2009 survey outlined. A large area of higher
response in the north part of the 2010 grid has not yet been explained.

12.5.2 Tarachi Grid

At Tarachi, lines were run north-south 100 m apart. Readings were taken every
12.5m. The survey showed higher magnetic response over areas underlain by
basalt. An area of higher magnetic response in the northwest corner of the grid has
not yet been explained.

12.5.3 Tubos

A small grid with 3 east-west lines was surveyed at the Tubos prospect. A magnetic
high in the east part of the grid has not been explained to date.

12.6 Ground IP Survey – 2010

A total of 69.5 line-km were surveyed by 3DIP in 2010 by SJ Geophysics. A


modified pole-dipole configuration was used with 12 to 16 potential dipoles at 50m to
100m separations. The potential array was connected using special 8-conductor
cables with 50m to 100m takeouts spliced to short (50 cm) stainless steel electrodes
hammered into the ground. Data were collected using a SJ-24 full waveform
receiver.

A GDD Tx II transmitter was used to inject current on a two seconds on, two
seconds off duty cycle. Current was injected at 50m to 100m intervals using three
long (75 cm) electrodes with the ground soaked with a salt solution to improve the
ground contact.

Two remote stations, consisting of four long electrodes, were employed during each
3DIP survey. Due to the size of the La India and Tarachi grids more than one
transmitter location was used and, as a result, multiple remote locations were
needed. To achieve better depth penetration and lower noise, when surveying on a
given half of the grid the remote on the opposite side was used. For example, on the
La India grid, the east remote was used when surveying the western half of the grid.

12.6.1 La India Grid

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An IP survey was conducted over the central part of the La India grid, where drilling
had indicated potential for a copper+/-gold+/-molybdenum porphyry. Line spacing
for the IP was 100m in the central part of the area surveyed and 200 m for the
outside lines. Results show moderate to high chargeability in areas with known
pyrite and copper +/- molybdenum mineralization. They do not indicate the
presence of a large porphyry-type deposit. Higher resistivity responses occur where
there is silica-alunite altered rock at or near surface.

12.6.2 Tarachi

At Tarachi, an IP survey was conducted over all the lines that were used in the
magnetic survey. A moderate to high chargeability was found over most of the north
and west parts of the gird. Drilling shows this area has ubiquitous pyrite in the rock.
Highest chargeability appears to be related to 3 to 5% brassy pyrite in fractures.
Low chargeability zones in the area of the higher chargeability are underlain by the
upper rhyolite. The lows are interpreted to be the result of not getting the current
through the very competent post-mineral rhyolite into the underlying rocks. This is
supported by the fact that RC-10-577 and 578, drilled to test under the rhyolite,
intersected altered and pyritic dacites though the IP showed lower chargeability in
the area.

The best gold intercepts to date are on the edges of the IP chargeability. However,
additional drilling in other areas is required to better correlate the geophysical
signature with gold potential.

Resistivity shows some weak patterns that have not been explained to date.

12.6.3 Tubos Grid

The small grid at Tubos has a moderate chargeability in the center and shows a
moderate resistor on the east side. There is not enough data to properly evaluate
the response, however the results indicate that additional geophysics may help to
sort out the geology and mineral potential of the area.

12.7 Photogrammetric Survey/Topographic Mapping

In 2007 Grayd commissioned Cooper Aerial de Mexico to create a 2m contour


interval topographic map by photogrammetric methods. A topographic surface with
2m contour interval was created for 4,424 hectares encompassing the resource
areas and adjacent lands.

High resolution airphotos of the project area were produced as part of the
photogrammetric process.

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13 DRILLING

Drilling campaigns have been conducted on the property by Grayd Resource every
year since 2004 and continue to the present day. Previous operators conducted
exploration drilling in the La Cruz and La Viruela areas, as discussed in Item 8 of this
report. Drillhole logs and assay data from the historical La Cruz and La Viruela
programs are not available to the author nor to Grayd Resource and do not form part
of the project database. For purposes of the resource estimate, data from 95
diamond drillholes and from 510 reverse circulation drillholes completed as of 22
January 2010 were included in the database. All drillholes completed by Grayd
Resources are shown in Figures 13.1, 13.2, 13.3, and 13.4.

13.1 2004 Diamond Drilling

In 2004, Grayd Resource completed 1,224 meters of BTW diameter (4.2 cm)
diamond drilling in 11 drillholes within the La India claim at the northern portion of
the claim block Three holes were completed at the La Cieneguita target (North
Zone), one at La Española (North Zone), and seven at the La India target (North
Zone). Drill targets were selected on the basis of rock chip geochemical anomalies
and silica-alunite alteration exposed in surface outcrops. All drill holes were inclined
at approximately –50 degrees and most were drilled due east in order to test
interpreted NE- and NW-striking structures and stratigraphic controls of gold
distribution. Ten of the eleven drillholes intersected gold mineralization, results of
which were presented in the July 2006 Technical Report (Gray, 2006). Drilling was
conducted by Canrock Drilling Services SA de CV. Core logging and sampling was
conducted by staff geologists of Resource Geosciences de Mexico SA de CV,
supervised by Hans Smit, P. Geo., Vice President, Exploration, Grayd Resource Inc.
Logging and sampling was carried out at the project exploration camp located at the
La Amargosa ranch. Core was split with a diamond disk saw, with one half sent for
assay and the other half preserved in the core library. Core recoveries in
mineralized zones averaged greater than 85 percent.

13.2 2005 through January 2010 Reverse Circulation Drilling

In 2005, 2006, 2007, 2008, 2009, and through 22 January 2010,, Grayd Resource
completed 45,334 meters of 5 ¼ inch diameter reverse circulation drilling in 542
drillholes (Figures 13.1 to 13.4). Drilling was conducted by Layne de Mexico SA de
CV, subsidiary of Layne Drilling Inc. All drillhole collars were surveyed using
differential correction GPS equipment. Silver State Surveys of Oro Valley, Arizona
was contracted to conduct downhole gyroscopic surveys of RC drillholes. Downhole
deviation of drillholes generally does not exceed a few degrees relative to the
planned azimuths and dips. The downhole survey data is included in the project
database and controls the projection of drillhole intercepts used in constructing the
resource model. Logging of drill cuttings and sampling was conducted by staff
geologists of Resource Geosciences de Mexico SA de CV, directed by Hans Smit,

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Vice President, Exploration, Grayd Resource Inc. Logging and sampling of reverse
circulation drill cuttings was carried out at the drill site. Samples generated were
split by cyclone and by rotary or Jones splitter. One quarter split of the sample was
sent for assay and the remainder was stored on site in a warehouse at the
exploration camp. Reverse circulation drilling was used both for general exploration
and for resource definition drilling. A total of 510 RC drillholes comprising 40,871
meters are located within the resource area and constrain the resource model
(Appendices E and F). Significant mineralized intercepts are presented in Appendix
A.

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Figure 13.1. Map showing all drillhole locations, resource development and exploration, La
India project.

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Figure 13.2. North Zone: Location map of diamond and reverse circulation drillholes
completed by Grayd Resource, 2004 through 22 January 2010.

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Figure 13.3. Main Zone: Location map of diamond and reverse circulation drillholes
completed by Grayd Resources, 2004 through 22 January 2010.

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13.3 2007 and 2008 Diamond Core Drilling

In 2007 and 2008 Grayd Resource completed 3,948 meters of HQ and PQ diameter
diamond core drilling in 54 drillholes (Appendices E and F, Figures 13.1 to 13.3).
Seven of the drillholes completed within the block model area were used exclusively
for metallurgical testing and do not form part of the resource model database.
Drilling was conducted by Layne de Mexico SA de CV, subsidiary of Layne Drilling
Inc., and Britton Brothers Drilling, a subsidiary of Boart Longyear. All drillhole collars
were surveyed using differential correction GPS equipment. During drilling, Layne
conducted downhole surveys using the Reflex downhole surveying instrument. Data
indicates that borehole deviation from the initial azimuth and inclination was minimal,
seldom exceeding a few degrees. Diamond core holes drilled by Britton Brothers
were not surveyed during drilling, but were later re-entered and gyroscopically
surveyed by Silver State Surveys of Oro Valley, Arizona. Core logging and sampling
was conducted by staff geologists of Resource Geosciences de Mexico SA de CV,
directed by Hans Smit, P. Geo., Vice President, Exploration, Grayd Resource Inc.
Logging and sampling was carried out at the project exploration camp located at the
La Amargosa ranch. Core was split with a diamond disk saw, with one half sent for
assay and the other half preserved in the core library. Geologic information from
the core holes was used to guide interpretation of lithological and alteration contacts,
assays of core samples constrain the resource estimate, and core samples were
used for specific gravity determinations.

13.4 2009 Diamond Core Drilling

In 2009 Grayd completed an additional 2,385 meters of diamond core drilling in 37


drillholes. Drilling was conducted by Energold Drilling using a man-portable
hydraulic drill rig and NTW tools. After completion, downhole orientations of diamond
core holes were gyroscopically surveyed by Silver State Surveys of Oro Valley,
Arizona. Logging and sampling procedures are the same as those described in Item
13.3 of this report.

13.5 2010 Tarachi Drilling

In 2010 Grayd commenced drill testing of the Tarachi prospect, located 8 km


northwest of the Cieneguita zone. A total of 27 diamond core drillholes totaling
6,276 m and 8 reverse circulation drillholes totaling 1,926m have been completed.
Locations are as shown in Figure 13.4 and listed in Appendix B. The Tarachi
drillholes are not part of the resource model database and resources have not yet
been defined for this area. The 2010 Tarachi drill program has yielded drill intercepts
of as much as 244 m @ 0.85 g/t including 90 m @ 1.20 gpt Au (DDH-10-167) and
nearly all drillholes intersected significant mineralized widths containing greater than
0.20 gpt Au. Many of the Tarachi holes were still mineralized at the end of the hole
and the lateral extents of mineralization are unknown. True widths and controls of
mineralized zones have yet to be determined but Tarachi is expected to be a focus

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of future drill programs at the La India project. Drillhole locations and a drillhole
intercept summary for the 2010 Tarachi drill program is presented in Appendix B.

Figure 13.4. Drillhole location map, Tarachi area.

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14 SAMPLING METHOD AND APPROACH

14.1 Sampling Method, Nature, and Spacing

14.1.1 Surface Rock Chip Samples

Concurrent with geologic mapping, project geologists collected surface rock chip
samples of outcropping zones of altered and mineralized rock. Geologists who have
participated in surface rock chip sampling programs include: Hans Smit, P. Geo.,
Vice President Exploration of Grayd Resources; geologists in the employ of
Resource Geosciences de Mexico SA de CV; consulting geologists under contract to
Grayd Resource; and geologists employed by Newmont Mining assigned to the
project. In excess of 9,000 rock chip samples have been collected and analyzed.
The objective of the sampling was to characterize the mineral deposit type(s) and to
define zones of gold enrichment within the extensive alteration zones. Samples were
collected from the entirety of the project claim block. Surface sample locations were
selected to be representative of the geologic feature being investigated. Continuous
channel sample was collected by chipping and collecting rock along a line
perpendicular to the orientation of the structure or feature being sampled. Samples
collected were channel samples, 1 to 2m in length. All samples were collected by
hand, using hardened steel chisels, picks, and geological hammers. Samples were
placed in 7.5 x 12” cloth drawstring sample bags. Sample weights varied from 1.5 to
2.5 kg. Sample spacing was variable, and was a function of exposure of mineralized
or altered rock. Sample numeration was in ascending order, using sample numbers
and sample tags provided by the analytical laboratory. Sample locations were
marked in the field with red spray paint, fluorescent plastic flagging, and aluminum
tags. Sample descriptions, location data, and multi-element assay data were
captured in digital format for importation into map generation and interpretation
software applications.

Surface sample data is not used for estimation of the mineral resources.

14.1.2 Diamond Drill Core Samples

Drill core was continuously sampled from inception to termination of the drillhole.
Sample intervals were typically 1m, and varied from this only when geologic contacts
were used to limit a sample interval or poor recoveries necessitated grouping of
sample intervals. Drill core diameter for 2004 drilling was B thin wall (BTW, 4.2cm).
Drill core diameter for 2007 drilling was HQ (6.35cm) and PQ (8.5cm). Drill core
diameter for the 2008 drilling was HQ, whereas 2009 and 2010 drilling was NTW.
Sample intervals were marked on the core by project geologists. One half split of the
core was collected for analysis and one half was retained in the core library. Core
was split with a diamond disk saw.

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14.1.3 Reverse Circulation Drill Samples

Industry standard sampling methods were utilized to collect the reverse circulation
drill hole samples. Center return 5 ¼” diameter bits were used. Drilling was
conducted dry unless significant water production or hole plugging required the use
of wet drilling methods. While drilling in dry conditions compressed air was used to
force drill cuttings up the drill string for collection. Cuttings were forced into a
cyclone and Jones splitter as drilling progressed. When drilling in wet conditions,
water and compressed air were injected into the hole to force cuttings up the drill
string and a rotary splitter was employed. Samples were collected from initiation to
termination of the drill hole, at intervals of 1.524m (5 feet). Quarter split sample
weights were approximately 5.9 kg. Of a total of 33,358 meters of reverse
circulation drilling used in the resource model, 3,078 meters (9.2 % of total) was
drilled using wet methods. Intervals drilled wet are as listed in Appendix C.

14.2 Recovery Factors

Surface rock chip samples were collected manually and recovery was 100%.
Surface rock chip samples are not used in the resource estimation

Average recovery for diamond drill core samples was 83% for BQ diameter core
and 85% for HQ diameter core. Faulted and fractured rock formations in the North
Zone created difficult drilling conditions and affected core recovery. Average core
recovery for drillholes in the Main Zone was 86% whereas average core recovery for
drillholes in the North Zone was 82%. Although no statistical bias of gold assays
was noted as a factor of core recovery, as discussed in Item 19 of this report, core
sample intervals with less than 31% recovery were judged to be insufficient to
accurately represent the interval samples thus 523 core sample assays were
removed from the resource model database.

Because of the variable nature of the rock types, fragmentation, and void spaces, it
was not possible to quantify recovery factors for the reverse circulation samples.
Silver State Surveys of Oro Valley, Arizona was contracted to collect caliper
measurements of borehole diameter on a select number of drillholes. Silver State
reported that re-entered 14 RC drillholes and collected caliper measurements.
Silver State advised Grayd that borehole walls are stable and smooth and that no
formations likely to cause downhole contamination were present. Borehole diameter
at collar seldom varied by more than 10% from the bit diameter of 5 ¼ inches (13.34
cm) and diameters generally decreased downhole as a factor of bit wear. Diameter
decrease of as much as 1 inch (2.54 cm) was observed. The average weight of
quarter split RC samples was 5.9 kg, which corresponds to approximately 50% of
the estimated mass of a quarter split of a 1m long, 0.127m (5”) diameter column
without voids and specific gravity of 2.5.

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Low recovered sample weights were noted in instances where RC drillholes


intersected structural zones with open fractures. In these areas a lack of return air
circulation caused a significant decrease in return of cuttings to surface. The
existence of open, through going fractures was conclusively indicated when air
return was lost during drilling and drillhole blowout was simultaneously seen at
nearby unplugged boreholes. Under these conditions, sample recovery at times
dropped to zero. Surface mapping and diamond core drilling provide conclusive
evidence that structural zones are typically sites of higher gold concentrations, thus
the zones of low RC sample recovery are often the zones of greatest economic
interest. There is no evidence that the low recovery samples are not representative
of the intervals being drilled, however in order to have a higher confidence level in
the database, drilled intervals that yielded sample recoveries of less than 2.5
standard deviations less than the mean, corresponding to a recovered sample
weight of 1.64, were eliminated from the resource estimate database, under the
assumption that too much sample was missing to consider these samples
representative. A total of 54 samples were eliminated from consideration for
resource modeling.

14.3 Sample Quality and Representativity

In the opinion of the author, samples collected are of high quality and representative
of the mineralized areas being evaluated.

Surface sample locations were selected to be representative of the geologic feature


being investigated. Continuous channel sample was collected by chipping and
collecting rock along a line perpendicular to the orientation of the structure or feature
being sampled. Industry standard methods and best professional judgment were
used in collection of the rock chip samples, however, by nature, manually collected
rock chip samples are of lesser quality than mechanically collected continuous
samples (i.e. cored or cut samples). The surface rock chip samples are of sufficient
quality and confidence to be used for preliminary assessments of the project’s
mineral potential, and serve to indicate areas of mineralization, however surface
samples are not used for purposes of resource estimation.

Diamond and reverse circulation drillholes were selected to target specific geological
or geophysical features, with orientations selected to intersect the interpreted
structural and/or stratigraphic controls of mineralization. Because many drillholes
targeted zones hosting both NW- and NE- striking structures, the majority of the
drillholes were drilled due E or due W in order to test both orientations. With the
exception of the 54 reverse circulation drill sample intervals and the 523 core
samples of low recovery, as discussed in Item 14.2 of this report, drill sample
recovery was adequate to provide representative results for the tested features.

The sample recovered for first 6 meters of most reverse circulation drillholes
consisted of blown out cuttings captured at the collar during setting of surface
casing, thus are not true RC samples. Where drillholes collared in or near the

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bedrock surface, these samples are considered relevant data and 1,207 samples of
this type are included in the database, but are tagged as casing samples to allow for
a separate treatment should it be deemed necessary. For the purposes of the
resource estimates presented in this report, these samples are treated identically to
the true RC samples.

Diamond core – reverse circulation twin pairs are available for 30 sets of RC and
DDH drillholes drilled at approximately the same location. Variations between the
mineralized intervals intersected by the RC and diamond drillholes are within the
expected normal range of variability and no bias of gold intercepts related to drilling
method is observed, as is discussed in Item 16 of this report. Statistical comparison
of the entire RC drillhole database to the complete DDH database also indicates no
bias between the sample sets, as more fully discussed in Item 19.

14.4 Sample Interval Parameters

Regular sample intervals of 1.52m were used for reverse circulation drillholes. With
few exceptions, a 1m sample interval was used for diamond core holes. When
geologic contacts between materials likely to be of strikingly different grade were
recognized in drill core, sample intervals were adjusted to avoid mixing different
mineralization types in a single sample.

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15 SAMPLE PREPARATION, ANALYSES, AND SECURITY

It is the author’s opinion that sample preparation, security, and analytical procedures
used were adequate to insure the integrity and reliability of the sample data base.

15.1 Personnel

Surface rock chip samples, drill core samples, and reverse circulation drill cutting
samples were collected by project geologists and technicians employed by
Resource Geosciences de Mexico SA de CV or by geologists employed by
Newmont Mining. Hans Smit, P. Geo., Vice President Exploration of Grayd
Resource supervised drilling programs and participated in surface sampling
programs conducted in 2004, but neither he nor other employees, officers, directors,
or associates of Grayd were directly involved in drillhole sample collection or
preparation.

15.2 Grayd Resource Sampling Program

15.2.1 Sample Security/Chain of Custody

Geologic descriptions of the sample, including nature of the sample, length of


sample, lithology, alteration, and mineralization, were captured in geologic field
books or in drill log forms. Samples were sealed in cloth bags with drawstring
closures. Sample identification tags were placed with each sample in the sample
bag, and a matching tag was retained in a sample book. Samples were stored on
site in a locked warehouse at the exploration camp. Upon leaving the project, the
samples were carried by RGM personnel to Hermosillo, Sonora, where they were
delivered directly to a receiving and preparation facility of ALS Chemex.

15.2.2 Sample Preparation by ALS Chemex

Analytical work was performed by ALS Chemex, an ISO 9001:2000 certified


international provider of analytical services to mining and exploration companies.
Sample preparation was conducted at the ALS Chemex facility in Hermosillo,
Sonora. Analyses were performed at their Vancouver, British Columbia, laboratory.

Each sample was dried and the entire sample was crushed to better than 70%
passing a 2 mm (Tyler 10 mesh) screen. Using a riffle splitter, a split of up to 250
grams was taken and pulverized to better than 85% passing a 75 micron (Tyler 200
mesh) screen.

15.2.3 Analytical Techniques used by ALS Chemex

Gold content was first analyzed utilizing standard fire assay fusion, followed by
Atomic Absorption Spectroscopy (AAS). For those samples that yielded assays
greater than 10,000 ppb Au (or 10 gpt Au), the sample was assayed again utilizing

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standard fire assay fusion, followed by gravimetric analysis. Metallic or screen fire
assays were conducted on select samples, as described in Item 16 of this report.
The two standard fire assay methods and their detection and upper limits are
described below.

Metal: Gold
Sample Decomposition: Fire Assay Fusion
Analytical Method: Atomic Absorption Spectroscopy (AAS)

A prepared sample is fused with a mixture of lead oxide, sodium carbonate, borax,
silica and other reagents as required, inquarted with 6 mg of gold-free silver and
then cupelled to yield a precious metal bead.

The bead is digested for ½ hour in dilute nitric acid. Hydrochloric acid is then added
and the solution is digested for an additional hour. The digested solution is cooled,
diluted to 7.5 ml with demineralized water, homogenized and then analyzed by
atomic absorption spectrometry. The detection limit is 5 ppb (.005 gpt) and the
upper limit is 10,000 ppb (10 gpt).

Metal: Gold
Sample Decomposition: Fire Assay Fusion
Analytical Method: Gravimetric

A prepared sample is fused with a mixture of lead oxide, sodium carbonate, borax,
silica and other reagents in order to produce a lead button. The lead button
containing the precious metals is cupelled to remove the lead. The remaining gold
and silver bead is parted in dilute nitric acid, annealed and weighed as gold. Silver,
if requested, is then determined by the difference in weights. Optionally, blanks with
known silver and gold content can be assayed at the same time to determine the
correction factor for silver loss in the fusion and cupellation. The detection limit is 50
ppb (.05 gpt) and the upper limit is 1,000 gpt.

All other elements listed below were analyzed utilizing Inductively Coupled Plasma -
Atomic Emission Spectroscopy (ICP - AES) methods. The method and the detection
and upper limits for each element are described in Table 15.1 below.

Sample Decomposition: Nitric Aqua Regia Digestion


Analytical Method: Inductively Coupled Plasma - Atomic Emission Spectroscopy
(ICP - AES)

A prepared sample (0.50 grams) is digested with aqua regia for at least one hour in
a hot water bath. After cooling, the resulting solution is diluted to 12.5 ml with
demineralized water, mixed and analyzed by inductively coupled plasma-atomic
emission spectrometry. The analytical results are corrected for inter-element
spectral interferences.

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Table 15.1. Element concentrations analyzed and analytical limits.

Detection Upper
Element Symbol Limit Limit

* Aluminum Al 0.01% 15 %
Antimony Sb 2 ppm 1%
Arsenic As 2 ppm 1%
* Barium Ba 10 ppm 1%
* Beryllium Be 0.5 ppm 0.01 %
Bismuth Bi 2 ppm 1%
Boron B 10 ppm 10,000
ppm
Cadmium Cd 0.5 ppm 0.05 %
* Calcium Ca 0.01% 15 %
* Chromium Cr 1 ppm 1%
Cobalt Co 1 ppm 1%
Copper Cu 1 ppm 1%
* Gallium Ga 10 ppm 1%
Iron Fe 0.01% 15 %
* Lanthanum La 10 ppm 1%
Lead Pb 2 ppm 1%
* Magnesium Mg 0.01% 15 %
Manganese Mn 5 ppm 1%
Mercury Hg 1 ppm 1%
Molybdenum Mo 1 ppm 1%
Nickel Ni 1 ppm 1%
Phosphorus P 10 ppm 1%
* Potassium K 0.01% 10 %
* Scandium Sc 1 ppm 1%
Silver Ag 0.2 ppm 0.01 %
* Sodium Na 0.01% 10 %
* Strontium Sr 1 ppm 1%
Sulfur S 0.01 % 10 %
* Thallium Tl 10 ppm 1%
* Titanium Ti 0.01% 10 %
* Tungsten W 10 ppm 1%
Uranium U 10 ppm 1%
Vanadium V 1 ppm 1%
Zinc Zn 2 ppm 1%

*Elements for which the digestion is possibly incomplete.

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16 DATA VERIFICATION

16.1 Prior Campaigns

No data is available from exploration programs conducted prior to Grayd’s


involvement with the project, except historical summaries as discussed in Item 8 of
this report. Historical data was not used for estimating the mineral resources
discussed in this report.

16.2 2010 Tarachi Exploration Drill Program

Throughout the 2010 Tarachi drilling program, Grayd implemented a quality


assurance and quality control program appropriate for an exploration program. Key
components of the QA/QC program were: systematic insertion into the sample
stream of blank samples and standards; analyses of duplicate samples; and
confirmatory assays by a second laboratory. Preliminary data indicates that the
Tarachi drillhole data is reliable, however it has not yet been subject to the same
level of analysis as the 2004 through 22 January 2010 drillhole data. The Tarachi
drillhole data is not part of the resource model database.

16.3 Grayd Resources Exploration Campaign, 2004 to 22 January 2010,


Resource Area.

16.3.1 General

Throughout the drilling campaigns, Grayd implemented a quality assurance and


quality control program appropriate for an exploration program. Results verify that
the analytical results of the Grayd drilling programs are reliable and suitable for
resource estimation purposes. Key components of the QA/QC program were:
systematic insertion into the sample stream of blank samples and standards;
analyses of duplicate samples; confirmatory assays by a second laboratory;
independent confirmatory sampling, and use of multiple analytical techniques to
confirm validity of results. Approximately 8% of all samples submitted for assay by
Grayd were control samples consisting of certified blanks, certified reference
standards, field duplicates, and sample preparation duplicates. Additionally, same-
lab duplicate assays were conducted on 3.7% of all pulps and check assays by an
independent lab were conducted on 1.8% of all pulps.

16.3.2 Mapping

The author’s reconnaissance mapping of the mineralized zones confirms the


mapping conducted by Grayd Resource and its previous joint venture partner,
Newmont Mining. The entirety of the mapped area was not field reviewed by the
author, but spot checks of the work indicate that the structural, lithological, and
alteration mapping is reliable.

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16.3.3 Assays

Throughout the drilling campaigns, Grayd implemented a quality assurance and


quality control program appropriate for an exploration and resource evaluation
program. Results verify that the analytical results of the Grayd drilling programs are
reliable. Key components of the QA/QC program were: systematic insertion into the
sample stream of blank samples and standards; analyses of duplicate samples,
confirmatory analyses by a second laboratory; and use of multiple analytical
techniques to confirm validity of results.

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16.3.3.1 Blanks

During the 2004 diamond drill program project geologists inserted blank samples
into the sample stream at an interval of one blank sample every 50 samples on
regular intervals. Blank material during the 2004 diamond drill program was
prepared from manually crushed post-mineral rhyolite that outcrops in the project
area. Numerous assays of the rhyolite prior to initiation of the drill program failed to
detect gold above the 0.005 ppm assay limit, however these blank samples are not
“certified” samples prepared by round robin laboratory testing of a bulk homogenized
sample. Detection of gold in these blank samples is not definitive proof of sample
preparation or analytical errors, as the possibility that the blank sample itself
contains some gold cannot be completely discounted. Nonetheless, these blank
samples are an indicator of potential sample preparation and/or analytical errors. A
total of 30 blanks were inserted into the diamond drill core sample stream and 29 of
the blanks were preceded by a core sample containing detectable gold. In 6 of
these 29 cases, the blank sample also returned a detectable gold assay. The blank
samples that were immediately preceded by the highest grade drill core samples
tended to yield the highest measured gold concentrations, with a maximum “blank”
assay of 0.025 ppm gold. If it is assumed that the blank samples truly are “blank”
and do not contain gold above the 0.005 ppm detection limit, then these data are
consistent with a slight and immaterial amount of contamination during sample
preparation. This possible error is not considered significant. Three diamond
drillholes from the 2004 campaign completed in the Cieneguita area were used for
estimation of mineral resources.

In 2006 a certified blank was prepared for project use. The blank sample was used
beginning with reverse circulation drillhole RC06-15 and diamond drillhole DDH07-
12. The blank sample was prepared from mechanically crushed and homogenized
unaltered andesite that outcrops in the project area. A bulk sample of the andesite
was collected and sent to Sonora Sample Preparation (Hermosillo, Sonora) for
crushing and homogenization. After the sample was homogenized multiple samples
(n= 55) were sent to two independent laboratories in Vancouver, BC: Acme and IPL.
Assay results indicate that this material contains less than 5 ppb gold, with a
maximum of 7 ppb Au, a minimum of <2 ppb Au, a mean of 2.4 ppb (calculated
setting <2 ppb assays to 2 ppb) and standard deviation of 0.9, thus this material is a
suitable blank for quality control purposes (Appendix D). During the 2006, 2007,
2008, 2009 and January 2010 diamond and reverse circulation drill programs,
project geologists inserted blank samples into the sample stream at an interval of
one blank sample approximately every 40 samples on irregular intervals. Blanks
were inserted into the sample stream such that they were preceded by zones
interpreted to be mineralized. These blank samples are a useful indicator of
potential sample preparation and/or analytical errors.

A total of 876 certified blanks, equivalent to approximately 2.4% of all drill samples
submitted by Grayd for assay, were inserted into the drill sample stream and 844 of
these blanks were preceded by a sample containing detectable gold. In 601 of

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these 844 cases, the blank sample also returned a detectable gold assay (Figures
16.1 and 16.2 and Tables 16.1 and 16.2). A total of 74 blank samples yielded in
excess of 0.020 gpt Au and 6 blanks assayed greater than 0.100 gpt Au. The blank
samples that were immediately preceded by drill cutting samples in excess of 4.0
ppm Au tended to yield the highest measured gold concentrations (Figure 16.2). The
maximum “blank” assay of 0.64 ppm gold was preceded by a sample assaying 4.99
ppm Au. The highest-grade sample that preceded a blank assayed 32.2 ppm Au and
the following blank assayed 0.078 ppm. When blank samples yielded anomalous
gold concentrations, the blanks and samples in sequence were re-assayed. If it is
assumed that the blank samples truly are “blank” and do not contain gold above the
0.005 ppm detection limit, then these data are consistent with a slight and immaterial
amount of contamination during sample preparation. This possible error is generally
less than 0.02 gpt, and is notable only for the highest grade samples and is not
considered significant for purposes of resource estimation.

Table 16.1. Summary statistics, all blank samples.

Au in ppm, statistical summary,


all blanks
Sample
Preceding
Blank Blank
Count 876 876
Mean 0.010 0.706
Median 0.005 0.199
Maximum 0.640 32.200
Std Dev 0.030 1.907

Table 16.2. Summary statistics, blank samples preceded by mineralized samples.

Au in ppm, statistical summary,


blank samples preceded by
mineralized sample
Sample
Blank Preceding Blank
Count 844 844
Mean 0.010 0.732
Median 0.005 0.218
Maximum 0.640 32.200
Std Dev 0.030 1.938

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Figure 16.1. Gold assays, certified blank samples.

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Figure 16.2. Gold assays, certified blanks and samples immediately preceding blanks, 2006
through Jan 2010 drill programs.

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16.3.3.2 Standards

During the 2004 diamond drilling program standards were inserted into the sample
stream approximately every 40 samples. Three different standards of different gold
grades were used. The standards were prepared and certified by CDN Resource
Laboratories Ltd. of Canada. The standards were in the form of pulps and were
inserted into the sample stream after the laboratory had completed its sample
preparation. Standards CDN-GS-1, CDN-GS-10, and CDN-GS-13 were used. A
comparison of standard assay results from ALS Chemex to the certified assay
means for the standards indicates that the assays obtained during the 2004 diamond
drilling program are reliable. The interested reader may find details of the 2004 drill
program presented in the July 2006 La India Technical Report (Gray, 2006) and
available on SEDAR.

During the 2006, 2007, 2008, and 2009 diamond core and reverse circulation drill
programs, standards were inserted into the sample stream approximately every 40
samples. Six different standards of different gold grades were used. A total of 892
standards, equivalent to approximately 2.4% of all drill samples submitted by Grayd
for assay, were certified reference standards. The standards were prepared and
certified by Rocklabs Ltd. of New Zealand. The standards were subjected to round
robin testing and verification by multiple commercial laboratories. The standards
were in the form of pulps and were inserted into the sample stream after the
laboratory had completed its sample preparation, thus the standards serve to test
the analytical accuracy of the lab, but do not address the issue of contamination
during sample preparation.

A comparison of standard assay results from ALS Chemex to the certified assay
means for the standards indicates that the assays obtained during the Grayd drilling
programs are reliable, although the Chemex assays may be slightly and immaterially
understating gold contents in the drill samples. The ALS Chemex assay data shows
a slight negative bias of less than 3 % for standards at grades greater than 0.6 gpt
Au, (Table 16.2 and Figures 16.3 to 16.10). The data suggests that the ALS
Chemex assays may slightly understate gold contents for concentrations at or near
the average deposit grade.

Control standard failure was defined by a reported gold content outside of a 2


standard deviation range of the reference standard certified gold content. A failure
of a control standard triggered an investigation into the cause. In cases where the
failure was not conclusively shown to be a result of a transcription or labeling error,
repeat analysis were performed for samples included in the same work order as the
failed control standard. Results from the repeat analyses were used in the resource
calculation.

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Table 16.3. Summary results, assay results of certified standards.

Certified Standard ALS Chemex Results


%
Difference,
ALS
Number Chemex
Standard of failures Au (ppm), Assay vs
Standard Code Au (ppm) Std Dev n * Mean Std Dev Certified
OxC58 F 0.201 0.007 219 18 0.219 0.163 8.9
OxC72 H 0.205 0.004 29 4 0.204 0.007 -0.6
OxD43 D 0.401 0.021 19 0 0.403 0.008 0.5
OxE42 C 0.610 0.028 231 3 0.606 0.022 -0.7
OxF41 A 0.815 0.024 26 1 0.794 0.022 -2.6
OxG38 B 1.031 0.036 90 3 1.023 0.035 -0.8
OxH55 G 1.282 0.038 127 12 1.237 0.193 -3.5
OxH52 E 1.291 0.025 132 40 1.277 0.049 -1.1
* Failure defined as assay outside range of 2 standard deviations from certified reference value)

Assay Results, Standard A: OxF41, 0.815 gt Au

0.90

0.85
Au (ppm)

0.80

0.75

0.70
637742

637820

637480

637539

637660

668540

668640

668680

668780

668880

668980

669040

669140

669240

669380

669480

670040

670180

670280

670380

670440

681040

681140

681240

681340

681440

Au assay, Standard A, ALS Chemex mean mean +2 std dev mean -2 std dev2

Figure 16.3. ALS Chemex assay results on chart showing certified mean and 2X standard
deviation range for standard A, OxF41.

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Assay Results, Standard B: OxG38, 1.031 gpt Au

1.20

1.10
Au (ppm)

1.00

0.90

0.80

12580
12740
12940
13140
13340
21540
21741
21940
22140
22340
637780
637580
668580
668840
669080
669280
669440
670150
670340
681180
681380
681580
681780
681940
715140
715340
684040
684241
684540
684763
684880
753183
753382
753540
753840
754040
754340
754540
754740
754940
756140
756340
756540
756740
756940
Au assay, Standard B, ALS Chemex mean mean +2 std dev mean -2 std dev2

Figure 16.4. ALS Chemex assay results on chart showing certified mean and 2X standard
deviation range for standard B, OxG38.

Assay Results, Standard C: OxE42, 0.610 gpt Au

0.70

0.65
Au (ppm)

0.60

0.55

0.50
357400
372180
372540
372900
388980
417820
418180
429040
429720
471180
472540
472900
512920
514280
514640
515000
515380
515740
516100
516460
516820
517220
517460
521280
590120
590480
590840
631140
631500
632360
633220
633500
641080
641440
642600
681740
684080
684340
684640
684840
715080
715380
753140
753440
753684
753980
754241
754480
754780
756080
756380
756680
756880
768180
768540
768900
769280
836120
836480
840347
840760
840960
841320
841680
842080
842440
842800
863720
864040
864400
864680
865040
865400
865760
866120
886100
887280

Au assay, Standard C, ALS Chemex mean mean +2 std dev mean -2 std dev2

Figure 16.5. ALS Chemex assay results on chart showing certified mean and 2X standard
deviation range for standard C, OxE42.

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Assay Results, Stnd D: OxD43, 0.401 gpt Au

0.50

Au (ppm) 0.45

0.40

0.35

0.30
12681

12780

12880

12980

13080

13180

13280

13380

13480

21580

21681

21780

21880

21980

22070

22180

22270

22380

22470
Axis Title

Au assay, Standard D, ALS Chemex mean mean +2 std dev mean -2 std dev2

Figure 16.6. ALS Chemex assay results on chart showing certified mean and 2X standard
deviation range for standard D, OxD43.

Assay Results, Standard E: OxH52, 1.291 gpt Au

1.50

1.40

1.30
Au (ppm)

1.20

1.10

1.00
111780
112070
112270
143040
143580
143820
313020
313260
313500
313740
313980
357220
357680
357920
358220
358500
372340
372700
388900
417860
418220
429080
429640
471100
471460
472820
515100
515300
515660
516020
516260
516500
516740
517100
81170
81370
81740
82140
82438
82680
82960
89270
89580
89870

Au assay, Standard E, ALS Chemex mean mean +2 std dev mean -2 std dev2

Figure 16.7. ALS Chemex assay results on chart showing certified mean and 2X standard
deviation range for standard E, OxH52.

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Assay Results, Standard F: OxC58, 0.201 gpt Au

0.30

0.25
Au (ppm)

0.20

0.15
112030
143080
143620
313060
313460
313860
357260
357560
357960
358340
372380
388820
417900
418500
429800
471500
512620
514320
514920
515460
516060
516540
517140
521200
590160
590760
631300
633140
634280
641600
768340
769060
836280
840538
842600
863640
864200
81240
81780
82270
82640
83000
89430
89940

Au assay, Standard F, ALS Chemex mean mean +2 std dev mean -2 std dev2

Figure 16.8. ALS Chemex assay results on chart showing certified mean and 2X standard
deviation range for standard F, OxC58.

Assay Results, Standard G, OxH55, 1.282 gpt Au

1.40

1.30
Au (ppm)

1.20

1.10
512880
514240
514600
514840
517300
521360
590320
590680
631100
631460
632200
633060
633420
641040
641400
641760
768140
768460
768740
769020
769360
836200
840100
840497
840680
840920
841280
841640
842000
842280
842640
843000
863800
864240
864560
864880
865240
865600
865960
866320
887120
887480

Au assay, Standard G, ALS Chemex mean mean +2 std dev mean -2 std dev2

Figure 16.9. ALS Chemex assay results on chart showing certified mean and 2X standard
deviation range for standard G, OxH55.

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_________________________________________________________________________________________________

Assay Results, Standard H: OxC72, 0.205 gpt Au

0.22

0.22

0.21
Au (ppm)

0.21

0.20

0.20

0.19

Au assay, Standard H, ALS Chemex mean mean +2 std dev mean -2 std dev2

Figure 16.10. ALS Chemex assay results on chart showing certified mean and 2X standard
deviation range for standard H, OxC752

16.3.3.3 Field Duplicates – Rig Splits

Field duplicates collected at the drill rig were inserted into the sample stream at a
ratio of one duplicate every 40 samples. A total of 702 field duplicates, equivalent to
approximately 1.9% of all drill samples submitted by Grayd for assay, were inserted
into the drill sample stream. Field duplicates consist of a ¼ rig split of the RC drilling
chips collected from the same ½ split that yields the sample sent to the lab. Field
duplicates were submitted blind to the laboratory, i.e. the lab could not distinguish
which samples were field duplicates. A consistent policy on duplicate numeration
was not followed. About 70 % of the duplicates were submitted as the sample
immediately following the original sample, and the remainder were submitted out of
sequence with the original sample. To eliminate statistical noise associated with
assays at or near the detection limit, for statistical evaluation of the data set, sample
pairs with mean gold contents of less than 3 times the detection limit of .005 ppm
were excluded. The rig split duplicates show no bias (~1%) compared to originals
and 90% of rig split duplicates have less than 35% absolute relative difference from
originals (Figure 16.11 and 16.12 and embedded table). Both relative and absolute
values of differences are highest at lower grade ranges. The precision
demonstrated by the rig split duplicates is within normal ranges observed for gold
deposits and the data indicates the sampling is reliable and adequate for resource
estimation purposes.

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_________________________________________________________________________________________________

Percentile Rank, Absolute Relative Difference, originals and duplicates


(for sample pairs with mean gold assay > 3x detection limit of 0.005 gpt)
100.0

90.0

80.0

70.0
Percent Absolute Relative Difference

60.0

50.0

40.0

30.0

20.0

10.0

0.0
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
Percentile Rank

rig duplicates prep duplicates lab duplicates

Figure 16.11. Percentile plot absolute relative differences of field, preparation, and lab
duplicates.

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_________________________________________________________________________________________________

Percent Relative Difference, Rig Duplicate to Original, Au assay


(for sample pairs with mean gold assay > 3x detection limit of 0.005 gpt)
100.0
90.0
80.0
70.0
60.0
Percent Relative Difference, Duplicate to Original Assay

50.0
40.0
30.0
20.0
10.0
0.0
-10.0
-20.0
-30.0
-40.0
-50.0
-60.0
-70.0
-80.0
-90.0
-100.0
0.000 0.200 0.400 0.600 0.800 1.000 1.200 1.400 1.600 1.800 2.000
Mean Assay, Au in ppm, Original-Duplicate Sample Pair

percent relative difference, dup to orig 10 point moving average

Figure 16.12. Percent relative difference Au assay, rig splits.

16.3.3.4 Sample Preparation Duplicates – Coarse Reject

A total of 695 sample preparation duplicates, equivalent to approximately 1.9% of all


drill samples submitted by Grayd for assay, were inserted into the sample stream.
Preparation duplicates were prepared from a split of course reject material at the
prep lab. The sample preparation duplicates show less than 2% bias compared to
originals and 90% of sample preparation duplicates have less than 17% absolute
relative difference from originals (Figure 16.11 and 16.13 and embedded table).
Both relative and absolute values of differences are highest at lower grade ranges.
The precision demonstrated by the coarse reject duplicates is within normal ranges
observed for gold deposits and the data indicates the sampling is reliable and
adequate for resource estimation purposes.

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Percent Relative Difference, Coarse Reject (Prep) Duplicate to Original, Au assay


(for sample pairs with mean gold assay > 3x detection limit of 0.005 gpt)
100.0
90.0
80.0
70.0
60.0
Percent Relative Difference, Duplicate to Original Assay

50.0
40.0
30.0
20.0
10.0
0.0
-10.0
-20.0
-30.0
-40.0
-50.0
-60.0
-70.0
-80.0
-90.0
-100.0
0.000 0.200 0.400 0.600 0.800 1.000 1.200 1.400 1.600 1.800 2.000
Mean Assay, Au in ppm, Original-Duplicate Sample Pair

percent relative difference, dup to orig 10 point moving average

Figure 16.13. Percent relative difference Au assay, coarse reject split.

16.3.3.5 Lab Duplicates – Pulps

A total of 1,414 lab duplicates, equivalent to approximately 3.9% of all drill sample
pulps, were re-assayed by ALS Chemex. Lab duplicates consist of a repeat
analyses of an already prepared and analyzed sample pulp. The pulp re-assays
show less than a 2% bias compared to the original assay and 90% of laboratory
pulp duplicates have less than 13% absolute relative difference from originals
(Figures 16.11 and 16.14 and embedded table). Both relative and absolute values
of differences are highest at lower grade ranges. The precision demonstrated by the
pulp re-assays is within normal ranges observed for gold deposits and the data
indicates the sampling is reliable and adequate for resource estimation purposes.

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_________________________________________________________________________________________________

Percent Relative Difference Duplicate to Original Assay of Pulp


(for sample pairs with mean gold assay > 3x detection limit of 0.005 gpt)
100.0
90.0
80.0
70.0
60.0
Percent Relative Difference, Duplicate to Original Assay

50.0
40.0
30.0
20.0
10.0
0.0
-10.0
-20.0
-30.0
-40.0
-50.0
-60.0
-70.0
-80.0
-90.0
-100.0
0.0000 0.2000 0.4000 0.6000 0.8000 1.0000 1.2000 1.4000 1.6000 1.8000 2.0000
Mean Assay, Au in ppm, Original-Duplicate Sample Pair

percent relative difference 10 point moving average

Figure 16.14. Percent relative difference Au assay, pulp re-assays.

16.3.3.6 Metallic (Screen) Fire Assays

ALS Chemex conducted metallic or screen fire assays on 176 samples selected
from mineralized intervals of varying grades. Metallic or screen fire assays test
specifically for the occurrence of gold in the coarse fraction of a sample and the
possibility of an inhomogeneous distribution of coarse particulate gold relative to the
sample size (a phenomena commonly referred to as “nugget effect”). Coarse reject
material from the sample submitted to ALS Chemex for the regular fire assay was
used. The material was screened into two size fractions, plus 100m mesh and less
than 100 mesh. Both fractions were weighed. Multiple analyses of the fine fraction
were performed and the entirety of the coarse fraction was fire assayed. Using the
gold content determined for each size fraction and their respective weights, a gold
content for the entire sample was calculated. This gold content was then compared
to the gold assay returned by standard fire assay of the same sample. A comparison
of results in shown in Figure 16.15. Results from the two methods are nearly
identical. The regression line between the two data sets has a slope of 1.036 and a
correlation coefficient of .972 and the overall mean and assay distribution for the two
data sets are similar, with a 5% difference in mean gold grade between the two
sample populations (table embedded in Figure 16.15). The data indicate that

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_________________________________________________________________________________________________

heterogeneous distribution of gold or “nugget effect” is not a concern for the drillhole
data set. Because no significant bias is present between the data sets, and the
overwhelming majority of assays are standard fire assay, in cases where both
standard fire assay and metallics assays are available, the standard fire assays
were used in the resource model database.

20
Metallics vs. Standard Fire Assay

15
Au ppm, metallics assay

10

0
0 5 10 15 20
Au ppm, fire assay

perfect correlation line

Figure 16.15. Plot comparing regular fire assay and screen fire assay analytical results.

16.3.3.7 Check Assays

Subsequent to receipt of assay results from ALS Chemex, pulps were selected and
sent to Acme Analytical Laboratories in Vancouver, British Columbia for analyses.
The objective of the testing was to verify the results provided by ALS Chemex. A
total 595 pulps, corresponding to 1.6% of the database, were assayed by Acme.
Results from the two labs are nearly identical. (Figure 16.16 and 16.17) and the
overall means for the two data sets are within 1%. (table embedded in Figure 16.16).
The data indicate that analytical results provided by ALS Chemex are reliable and
suitable for use in resource estimation.

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_________________________________________________________________________________________________

ALS Chemex vs ACME check assay


2.00

1.80

1.60

1.40
Au in ppm, ACME assay

1.20

1.00

0.80

0.60

0.40

0.20

0.00
0 1 2
Au in ppm, ALS Chemex assay

ALS Chemex vvs ACME check assay Perfect Correlation Line

Figure 16.16. Plot comparing Acme and ALS Chemex fire assay analytical results.

Percent Relative Difference, ACME to ALS Chemex, Au assay


(for all sample pairs, samples with gold assay < detection limit of 0.005 gpt set to 0.00025)
100.00
90.00
80.00
70.00
60.00
Percent Relative Difference, Duplicate to Original Assay

50.00
40.00
30.00
20.00
10.00
0.00
-10.00
-20.00
-30.00
-40.00
-50.00
-60.00
-70.00
-80.00
-90.00
-100.00
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
Mean Assay, Au in ppm, Original-Duplicate Sample Pair

percent relative difference, ACME to ALS 10 point moving average

Figure 16.17. Percent relative difference, ACME check assay vs. ALS Chemex assay.

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_________________________________________________________________________________________________

16.3.3.8 Reverse Circulation – Diamond Core Drillhole Twins

In order to analyze for bias caused by drilling methods, 30 reverse circulation –


diamond core drillhole twin sets were created and analyzed. Each set consists of
one RC and one diamond drillhole, drilled off of the same drill pad at the same
orientation. Separation between the two drillholes ranged from 1 to 8m. Results are
shown graphically in Figures 16.18 through 16.46. Most twins yield very similar
results and the variations observed between the paired drillhole sets lie within the
range expected for a gold deposit with structural controls on gold distribution.
Author M Gray conducted a graphical analysis of the results and no bias between
the drilling methods was observed. A statistical review of the RC and DDH datasets
by author G Giroux similarly found no bias between the RC and DDH datasets, as
discussed in Item 19 of this report.

12
RC DDH Twin, Cerro de Oro Area, separation 6m

10

6
gpt Au

0
0 10 20 30 40 50 60 70 80 90

-2
meters

DDH-07-28 RC-06-52

Figure 16.18. Comparison Au assays, twin pair DDH07-28 and RC06-52.

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_________________________________________________________________________________________________

7
RC DDH Twin, Cerro de Oro Area, separation 4m

4
gpt Au

0
0 10 20 30 40 50 60 70 80 90 100

-1
meters

DDH-07-27 RC-06-54

Figure 16.19. Comparison Au assays, twin pair DDH07-27 and RC06-54.

5
RC DDH Twin, Cerro de Oro Area, separation 6m

3
gpt Au

0
0 20 40 60 80 100 120 140 160

-1
meters

DDH-08-55 RC-06-73

Figure 16.20. Comparison Au assays, twin pair DDH08-55 and RC06-73.

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_________________________________________________________________________________________________

10.0
RC DDH Twin, Cerro de Oro Area, separation 1m
9.0

8.0

7.0

6.0
gpt Au

5.0

4.0

3.0

2.0

1.0

0.0
0 50 100 150 200 250
meters

DDH-07-19 RC-07-142

Figure 16.21. Comparison Au assays, twin pair DDH07-19 and RC07-142.

12
RC DDH Twin, La Cruz Area, separation 2m

10

6
gpt Au

0
0 10 20 30 40 50 60 70 80 90

-2
meters

DDH-07-13 RC-06-89

Figure 16.22. Comparison Au assays, twin pair DDH07-13 and RC06-89.

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_________________________________________________________________________________________________

2.5
RC DDH Twin, La Cruz Area, separation 2m

1.5
gpt Au

0.5

0
0 10 20 30 40 50 60 70 80
meters

DDH-07-23 RC-06-94

Figure 16.23. Comparison Au assays, twin pair DDH07-23 and RC06-94.

0.8
RC DDH Twin, La Cruz Area, separation 2m

0.7

0.6

0.5
gpt Au

0.4

0.3

0.2

0.1

0
0 10 20 30 40 50 60 70 80 90
meters

DDH-07-22 RC-06-69

Figure 16.24. Comparison Au assays, twin pair DDH07-22 and RC06-69.

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_________________________________________________________________________________________________

12
RC DDH Twin, La Cruz Area, separation 7m

10

6
gpt Au

0
0 20 40 60 80 100 120 140 160 180

-2
meters

DDH-07-12 RC-06-44

Figure 16.25. Comparison Au assays, twin pair DDH07-12 and RC06-44.

1.2
RC DDH Twin, La Cruz Area, separation 1m

1.0

0.8
gpt Au

0.6

0.4

0.2

0.0
0 20 40 60 80 100 120 140 160 180 200
meters

DDH-07-14 RC-07-106

Figure 16.26. Comparison Au assays, twin pair DDH07-14 and RC07-106.

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_________________________________________________________________________________________________

1.6
RC DDH Twin, La Cruz Area, separation 2m

1.4

1.2

1.0
gpt Au

0.8

0.6

0.4

0.2

0.0
0 20 40 60 80 100 120 140
meters

DDH-07-20 RC-07-155

Figure 16.27. Comparison Au assays, twin pair DDH07-20 and RC07-155.

3.5
RC DDH Twin, Viruela Area, separation 3m

2.5

2
gpt Au

1.5

0.5

0
0 20 40 60 80 100 120 140 160
meters

DDH-08-42 RC-06-45

Figure 16.28. Comparison Au assays, twin pair DDH08-42 and RC06-45.

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_________________________________________________________________________________________________

10.0
RC DDH Twin, Viruela Area, separation 3m
9.0

8.0

7.0

6.0
gpt Au

5.0

4.0

3.0

2.0

1.0

0.0
0 20 40 60 80 100 120
meters

DDH-07-15 RC-07-161

Figure 16.29. Comparison Au assays, twin pair DDH07-15 and RC07-161.

20.0
RC DDH Twin, Viruela Area, separation 7m
18.0

16.0

14.0

12.0
gpt Au

10.0

8.0

6.0

4.0

2.0

0.0
0 10 20 30 40 50 60 70 80
meters

DDH-08-54 RC-07-145

Figure 16.30. Comparison Au assays, twin pair DDH08-54 and RC07-145.

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_________________________________________________________________________________________________

8.0
RC DDH Twin, Viruela Area, separation 4m

7.0

6.0

5.0
gpt Au

4.0

3.0

2.0

1.0

0.0
0 20 40 60 80 100 120 140
meters

DDH-07-16 RC-07-147

Figure 16.31. Comparison Au assays, twin pair DDH07-16 and RC07-147.

10.0
RC DDH Twin, Viruela Area, separation 2m
9.0

8.0

7.0

6.0
gpt Au

5.0

4.0

3.0

2.0

1.0

0.0
0 10 20 30 40 50 60 70 80 90
meters

DDH-07-17 RC-07-148

Figure 16.32. Comparison Au assays, twin pair DDH07-17 and RC07-148.

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_________________________________________________________________________________________________

3.0
RC DDH Twin, Viruela Area, separation 4m

2.5

2.0
gpt Au

1.5

1.0

0.5

0.0
0 10 20 30 40 50 60
meters

DDH-07-30 RC-07-113

Figure 16.33. Comparison Au assays, twin pair DDH07-30 and RC07-113.

7.0
RC DDH Twin, Viruela Area, separation 3m

6.0

5.0

4.0
gpt Au

3.0

2.0

1.0

0.0
0 20 40 60 80 100 120
meters

DDH-07-18 RC-07-117

Figure 16.34. Comparison Au assays, twin pair DDH07-18 and RC07-117.

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_________________________________________________________________________________________________

20.0
RC DDH Twin, Viruela Area, separation 8m
18.0

16.0

14.0

12.0
gpt Au

10.0

8.0

6.0

4.0

2.0

0.0
0 10 20 30 40 50 60 70 80 90 100
meters

DDH-08-50 RC-07-119

Figure 16.35. Comparison Au assays, twin pair DDH08-50 and RC07-119.

1.0
RC DDH Twin, Viruela Area, separation 4m
0.9

0.8

0.7

0.6
gpt Au

0.5

0.4

0.3

0.2

0.1

0.0
0 20 40 60 80 100 120
meters

DDH-07-24 RC-07-131

Figure 16.36. Comparison Au assays, twin pair DDH07-24 and RC07-131.

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_________________________________________________________________________________________________

12.0
RC DDH Twin, Viruela Area, separation 8m

10.0

8.0
gpt Au

6.0

4.0

2.0

0.0
0 20 40 60 80 100 120 140 160
meters

DDH-07-35 RC-07-98

Figure 16.37. Comparison Au assays, twin pair DDH07-35 and RC08-98.

20
RC DDH Twin, Cieneguita Area, separation 2m
18

16

14

12

10
gpt Au

0
0 10 20 30 40 50 60

-2
meters

DDH-07-37 RC-06-60

Figure 16.38. Comparison Au assays, twin pair DDH07-37 and RC06-60.

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_________________________________________________________________________________________________

6
RC DDH Twin, Cieneguita Area, separation 5m

4
gpt Au

0
0 5 10 15 20 25 30 35 40
meters

DDH-07-39 RC-07-101

Figure 16.39. Comparison Au assays, twin pair DDH07-39 and RC07-101.

6.0
RC DDH Twin, Cieneguita Area, separation 7m

5.0

4.0
gpt Au

3.0

2.0

1.0

0.0
0 5 10 15 20 25 30 35 40 45
meters

DDH-07-57 RC-07-190

Figure 16.40. Comparison Au assays, twin pair DDH07-57 and RC07-190.

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_________________________________________________________________________________________________

18.0
RC DDH Twin, Cieneguita Area, separation 6m
16.0

14.0

12.0

10.0
gpt Au

8.0

6.0

4.0

2.0

0.0
0 10 20 30 40 50 60 70 80
meters

DDH-08-65 RC-07-193

Figure 16.41. Comparison Au assays, twin pair DDH08-65 and RC07-193.

4.5
RC DDH Twin, Cieneguita Area, separation 2m
4.0

3.5

3.0

2.5
gpt Au

2.0

1.5

1.0

0.5

0.0
0 10 20 30 40 50 60 70
meters

DDH-08-64 RC-07-102

Figure 16.42. Comparison Au assays, twin pair DDH08-64 and RC07-102.

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_________________________________________________________________________________________________

9
RC DDH Twin, Cieneguita Area, separation 10m RC103 -DDH58,
separation 15m RC377-DDH58, separation 25m RC103-RC377
8

5
gpt Au

0
0 10 20 30 40 50 60 70 80
meters

DDH-08-58 RC-07-103 RC-08-377

Figure 16.43. Comparison Au assays, triplet DDH08-58, RC07-103, and RC08-377.

8
RC DDH Twin, Española Area, separation 3m

4
gpt Au

0
0 5 10 15 20 25 30 35 40 45

-1
meters

DDH-08-62 RC-06-58

Figure 16.44. Comparison Au assays, twin pair DDH08-62 and RC06-58.

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_________________________________________________________________________________________________

6.0
RC DDH Twin, Española Area, separation 7m

5.0

4.0
gpt Au

3.0

2.0

1.0

0.0
0 10 20 30 40 50 60 70 80 90 100
meters

DDH-08-61 RC-08-289

Figure 16.45. Comparison Au assays, twin pair DDH08-61 and RC08-289.

12.0
RC DDH Twin, Española Area, separation 4m

10.0

8.0
gpt Au

6.0

4.0

2.0

0.0
0 10 20 30 40 50 60 70
meters

DDH-08-63 RC-08-395

Figure 16.46. Comparison Au assays, twin pair DDH08-63 and RC08-395.

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16.3.3.9 Independent Verification of Database and Independent Sampling by Qualified


Person

M. Gray cross checked the project database against original certified assay sheets
and verified that data was correctly transcribed. Gray verified the electronic
database used by Giroux for resource estimation. The database was provided to
Gray directly by Giroux, and it was compared to certified assay sheets provided to
Gray directly by ALS Chemex. No errors were discovered in the database and it
faithfully reflects the certified assay data. At various times during field visits to the
project the author collected rock chip samples from outcrop, RC cuttings from the
splitter at the drill rig, and drill cutting reject samples from the second split of reverse
circulation drill samples stored on site. The samples were delivered by the author to
ALS Chemex for assay. The resultant database is too small to allow for meaningful
statistical analyses, but the analytical results confirmed the gold mineralization
indicated by previous sampling at the project, as summarized in Table 16.4.

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_________________________________________________________________________________________________

Table 16.4. Au assays of independent samples collected by M Gray.


Drillhole or Au gpt
Surface Au gpt independent
Sample From To Sample ID original sample Comment
MAG-1 n/a n/a 682429 0.64 0.89 surface sample
MAG-2 n/a n/a 682159 3.11 5.60 surface sample
RC05-14 350 355 637566 8.64 7.97 La Cruz
RC05-14 590 595 637632 1.28 1.14 La Cruz
RC08-278 155 160 388825 41.60 36.90 Cieneguita
RC08-283 140 145 429519 22.00 21.20 Cieneguita
RC08-301 140 145 472525 0.81 0.95 Cerro de Oro
RC08-311 165 170 515244 1.77 1.56 La Viruela
RC08-313 240 245 515390 0.92 2.62 La Viruela
RC08-314 180 185 515454 0.71 1.42 La Viruela
RC08-316 140 145 515518 1.02 0.46 La Viruela
RC08-332 30 35 516450 0.17 0.17 Cerro de Oro
RC08-357 110 115 512556 3.09 3.66 Cieneguita
RC08-398 85 90 641011 0.79 0.75 La Cruz
RC08-417 65 70 641714 0.21 0.23 Cieneguita
RC09-497 45 50 497-45-50 0.23 0.24 La Viruela
RC09-498 185 190 498-185-190 1.01 1.08 La Viruela
RC09-499 55 60 499-55-60 0.17 0.17 La Viruela
RC09-501 90 95 501-90-95 0.06 0.07 La Viruela
RC09-505 110 115 505-110 0.36 0.17 La Viruela
RC09-505 120 125 505-120 0.32 0.30 La Viruela
RC09-505 130 135 505-120 0.30 0.29 La Viruela
RC09-505 235 240 505-235 0.53 0.94 La Viruela

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17 ADJACENT PROPERTIES

Numerous historic mine workings and prospects are present with the region that
hosts the La India project, but public domain or historic information is available only
for the Mulatos mine property of Alamos Gold Incorporated, which is immediately
adjacent to, and partly surrounded by, the claims comprising the La India gold
project. The Mulatos mine is located 5.8 km to southwest from the nearest portion of
the Grayd claim block (Figure 17.1). A remaining proven and probable mining
reserve of 61.6 Mt @ 1.21 gpt Au, containing 2.38M oz. gold was reported as of 31
December 2009 (Alamos Gold AIF, 2009). Alamos Gold also reports a proven and
probable minable reserve of 1.6Mt @ 1.58 gpt Au containing 79,600 ounces gold in
oxide ore at the La Yaqui deposit, located 5.7 km east from the nearest portion of
the Grayd claim block (Alamos Gold AIF, 2009). These mineable mineral reserve
estimates are said to follow the required disclosure for reserves and resources
outlined in NI43-101. The author has not reviewed the data and the author cannot
comment on the accuracy of the resource estimates. The estimates were obtained
from sources believed to be reliable but cannot be verified.

Alamos Gold has identified and partially drill tested two exploration targets near the
Grayd concessions. In a public release of information, dated 29 November 2004,
which by Canadian Securities Administrators regulations is available on SEDAR
(System for Electronic Data Analysis and Retrieval), Alamos Gold reported that
reverse circulation drilling at Cerro El Realito, located 1,400 meters east of the La
India target (Figure 17.1), yielded drill intercepts of as much as 24.4 m @ 5.98 gpt
Au. The alteration zone extends to the boundary of the claims controlled by Grayd
and is contiguous with the La India alteration zone. In the 2005 Annual Report
(available on SEDAR), Alamos Gold reported summary results of reverse circulation
drilling at the El Jaspe prospect. El Jaspe is surrounded on the west, north and east
sides by Grayd’s Triple A claim, and at its closest point is only 500m distant from the
Triple A claim boundary (Figure 17.1). Alamos reported that drill holes intersected a
blind zone of gold-silver-copper mineralization hosted by pyritized and silicified
volcanics. The downdip extent of the mineralized zone projects toward the Grayd
claims. Intercepts of 6.1m @ 2.25 gpt Au, 7.6m @ 1.46 gpt Au, and 13.7m @ 0.85
gpt Au were reported. The author has not reviewed the data and the author cannot
comment on the accuracy of these reported mineralized intercepts. The information
was obtained from sources believed to be reliable but cannot be verified. The
mineralization described for the adjacent properties is not necessarily
indicative of the mineralization at the La India, Sonora property.

Historic mining of silver ores is reported from the La Chipriona mine, located 1.5km
north of the La Cieneguita area, but production data is not available to the author.

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Figure 17.1. Adjacent exploration properties map.

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18 METALLURGICAL TESTING

18.1 General

Jenkins (1994) presented an unreferenced summary of results from twenty-four hour


agitated cyanide leach tests of 5 percussion drillhole samples from the La Cruz – La
Viruela area. The cited results were generated by Jacobs Assay in Tucson, Arizona
in 1987, and indicated 66 to 99% gold recoveries with cyanide consumption of 2.0 to
2.6 pounds per ton. Descriptions of the samples or testing procedure were not
included in the Jenkins (1994) report. This data is historical in nature and has not
been verified by the author and is not considered in this Preliminary Economic
Analysis.

Beginning in 2007 and continuing until the present, Kappes, Cassiday & Associates
(KCA) of Reno, Nevada has conducted the metallurgical studies for the La India
Project of Grayd Resources. Metallurgical test work has included physical testing
(rock densities and Bond Work Index testing), head analysis, milled bottle roll leach
test work, gravity concentration test work, agglomeration and percolation test work,
column leach test work and environmental test work. All sample preparation,
assaying and metallurgical studies were performed utilizing accepted industry
standard procedures. To date, a total of 22 column leach tests and 30 bottle roll
leach tests have been completed.

Results from metallurgical test work have been formally reported in reports prepared
and issued by KCA (Albert, 2007a, Kappes, Cassiday & Associates, 2008; 2009;
2010a; 2010b). Samples selected for testing represented the economically
important mineralized domains.

Metallurgical testing is ongoing and additional test results have been reported
informally by KCA by e-mail but have not yet been presented in a formal report. The
ongoing work is not included in this study; however, these data have been reviewed
to verify that there are no contradictory results.

18.2 Sample Composites Tested

In three periods of work, separate core interval samples were used to generate a
total of 13 metallurgical composites. These core composites were tested by both
bottle roll and column leach methods. Also, rejects from reverse circulation and core
drill holes used to generate another 17 composite samples used for bottle roll
testing. These samples are a good representation of the different potential ore zones
and varying lithologies known to exist at La India. The sample composites are
presented in Table 18.1.

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Table 18.1. Metallurgical sample composites.


KCA Sample Source Core Interval Head Assay
Sample No. Description DDH Size From To Au gms/tonne
36372 A LA06-01 5.50

36372 B LA06-02 3.17


36372 C LA06-03 5.45

36372 D LA06-04 2.16


36372 E LA06-05 4.34

36372 F LA06-06 9.22


36372 G LA06-07 0.81

36372 H LA06-08 4.82


Silica Structure – La Cruz & 07-33 HQ 54.3 60.8
38308 1.69
Cerro de Oro 07-36 HQ 0.0 35.0
07-33 HQ 13.0 39.0
38309 Silica Clay – La Cruz 0.48
07-34 HQ 7.0 31.0
07-25 HQ 1.0 5.9
38310 Dacite SC/SA – Viruela 1.24
07-32 PQ 0.0 19.3
07-25 HQ 5.9 34.5
38311 Silica Massive – Viruela 07-31 HQ 5.9 25.5 1.15
07-32 PQ 19.3 28.0
07-25 HQ 34.5 42.3
38312 Andesite SA/SV 2.45
07-32 PQ 52.0 78.0
38313 Silica Massive – Cieneguita 07-40 HQ 0.0 34.0 0.40
38314 Cieneguita – High Grade 07-40 HQ 34.0 40.9 9.00
08-48 HQ 26 34
08-50 HQ 34 72
41723 Viruela 08-51 HQ 37 55 1.35
08-52 HQ 53 60
08-53 HQ 24 35
41724 Viruela High Grade 08-50 HQ 53 70 12.88
08-59 HQ 25.0 66.0
41725 Cieneguita 08-60 HQ 4.2 19.1 1.11
08-64 HQ 22.0 42.0
08-61 HQ 11.0 41.0
41726 Espanola 1.03
08-63 HQ 13.0 44.0
09-82 HQ 51.0 60.0
09-83 HQ 50.0 59.0
43747 Domain 2 - LC 0.84
09-84 HQ 24.0 33.0
08-46 HQ 42.0 50.0
09-67 HQ 21.5 32
09-68 HQ 8.6 29
43748 Domain 2 - VR 09-69 HQ 0 17 0.59
09-70 HQ 0 12
09-71 HQ 10.65 18
43359 LI09-1 RC-09-447 60.0 125.0 0.54
43360 LI09-2 RC-09-476 5.0 85.0 0.92
43361 LI09-3 RC-09-476 95.0 175.0 1.04
43362 LI09-4 RC-09-476 185.0 280.0 1.11
43363 LI09-5 RC-09-477 10.0 105.0 1.26
43364 LI09-6 RC-09-477 115.0 160.0 0.40
43365 LI09-7 RC-09-495 110.0 150.0 0.85

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Whole core from 2007 drill holes (HQ and one PQ diameter) was used to generate 7
separate composites for testing. The composites were used for bottle roll leach
tests and each composite was used to create -12.5 and a -50mm samples for
column leach tests, excepting one composite of D18 that was only column tested at -
12.5 mm. (13 column and 7 bottle roll tests total). In addition, the 7 composites
were used for a suite of physical and environmental test work.

In 2009, 4 composites were created using half core from 2008 drilling (HQ diameter).
These were used for bottle roll leach tests and for column leach testing at -9.5 mm
and -25mm, excepting one composite of high grade material that was only tested at -
15.5 mm. (7 column and 4 bottle roll tests total). In addition, the 4 composites were
used for a suite of physical and environmental test work.

In 2010, two composites were created from half core from 2009 HQ diameter drill
holes. Each had a bottle roll test and a column leach test at -25mm.

Other bottle roll tests were performed over the last 4 years on composites created
from coarse assay rejects from RC and core drilling.

18.3 Sample Preparation

Upon receipt each core interval was inventoried, weighed and assigned a KCA
Sample Number. Sample preparation was completed to provide test material stage
variably crushed to 100% -50mm, -25mm, -12.5mm or -9.5mm The staged crushed
material was utilized in column leach testing.

18.4 Rock Density Test Work

Rock density tests were completed on randomly selected pieces of whole HQ and
PQ core. The pieces selected were approximately 5 to 8 centimeters in length and
were selected from each core interval received from the La India Project. The
procedure utilized by KCA for rock density determination is based upon ASTM Test
Method C914, “Standard Test Method for Rock Density and Volume of Solid
Refractories by Wax Immersion”.

18.5 Bond Work Index Test Work

Test work was completed on each separate composite by Phillips Enterprises, LLC
of Golden, Colorado (Phillips) for rod mill grindability tests, ball mill grindability tests
and abrasion tests.

18.6 Head Analyses

Head analyses were completed on the composite samples from the La India Project.
A weighted portion of the head material was crushed to nominal 1.70 millimeters.
Two (2) 500 gram portions were split out and pulverized individually to minus 0.106

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millimeters. Each pulverized portion was then assayed utilizing standard fire assay
methods for gold and silver.

A portion of one of the 500 gram pulverized portions for each separate composite
was assayed semi-quantitatively by means of an ICAP-OES for an additional series
of elements and for whole rock analyses. In addition to these semi-quantitative
analyses, the samples were assayed by quantitative methods for total carbon, total
sulfur (sulfur speciation) and mercury. A cyanide soluble copper shake test was also
conducted on a portion of the pulverized head material from each composite.

Head screen analyses with assays by size fraction were completed on portions of
head material utilized for each separate column leach test.

18.7 Bottle Roll Leach Test Work

A total of 30 bottle roll leach tests were conducted on both core composites and on
some selected rejects intervals from reverse circulation and core drilling. A weighted
portion of the head material from each core and reverse circulation interval
composites was crushed to nominal 1.70 millimeters and a 1,000 gram portion was
split out. The 1,000 gram portion was either pulverized or ball milled to minus 0.106
millimeters (80% minus 0.075 millimeters) and then utilized for a cyanide bottle roll
leach test.

18.8 Gravity Concentration Test Work

A higher grade sample, the Cieneguita - High Grade (D18) composite material, was
the only sample tested for gravity concentration processing. A 1,000 gram portion of
the minus 1.70 millimeter crushed material from the composite was milled utilizing a
stainless steel ball mill to achieve an expected P80 of 0.075 mm. The milled material
was then run through a Falcon SB40 Concentrator. Results indicated that 23% of the
contained gold and 26% of the contained silver could be concentrated into a portion
weighing 26% by weight of the feed material. Due to the lack of any real
concentration, gravity testing was discontinued.

18.9 Agglomeration and Percolation Test Work

Agglomeration tests were initially completed on selected samples stage crushed to


100% minus 12.5 millimeters and 100 % minus 9.5 millimeters. Each sample was
tested with the addition of 0, 2, 4 and 8 kilograms of cement per dry metric tonne of
ore.

The percolation tests were conducted in small columns at a range of cement levels
with no compressive load applied. The purpose of the percolation tests was to
examine the permeability of the material under various agglomeration cement levels
on staged crushed material. Percolation problems were not encountered.
Subsequent testing strongly indicated that these crush sizes were finer than actually

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required. Since the adopted crush size was determined to be 100 % minus 25
millimeters further testing of agglomeration was not done.

18.10 Laboratory Column Leach Test Work

A total of 22 separate column leach tests were completed utilizing material from
composites generated from the core material received from the La India Project.
Column leach tests were conducted on material stage crushed to 100% minus 50
millimeters, 100% minus 25 millimeters, 100% minus 12.5 millimeters and 100%
minus 9.5 millimeters. Screen analyses with assays by size fraction were completed
on each separate column leach test residue. After screening, each size fraction was
weighed and pulverized. The individual pulverized samples were submitted for gold
and silver analyses by standard fire assay methods. Column test recovery results
were based upon carbon assays vs. the calculated head (carbon assays + tail
assays).

18.11 Metallurgical Test Results

18.11.1 Rock Density Test Work

A total of 222 separate core interval samples were used for the rock density
measurements. Densities varied from a low of 1.33 grams per cubic centimeter to a
high of 3.17 grams per cubic centimeter depending upon varying lithology and
sample location. These density measurements plus an additional 31 measurements
from D17 core and surface rock samples were used in the geological and resource
estimation models.

18.11.2 Bond Work Index Test Work

A summary of the rod mill grindability tests, ball mill grindability tests and abrasion
tests as determined by Phillips for the different samples tested is presented in Table
18.2.

Table 18.2. Bond work index test results.


KCA Rod Mill Work Index Value Ball Mill Work Index Value
Sample No. Sample Description Kw-hr/tonne Kw-hr/tonne Abrasion Index

38308 Silica Structure – La Cruz & C de O 16.74 18.60 0.0705


38309 Silica Clay – La Cruz 7.24 6.62 0.0080
38310 Dacite SC/SA – Viruela 8.62 9.55 0.2291
38311 Silica Massive – Viruela 15.89 14.45 0.7408
38312 Andesite SA/SV 10.00 11.65 0.4005
38313 Silica Massive – Cieneguita 19.19 25.14 0.7779
41723 Viruela 11.99 14.64 0.3951
41724 Viruela High Grade - 12.33 -
41725 Cieneguita 16.56 20.32 0.5313
41726 Espanola 16.50 21.42 0.5056

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18.11.3 Bottle Roll Leach Test Work

The results of bottle roll leach tests are presented in Table 18.3.
Table 18.3. Bottle roll leach test results.
Head Calculated
Average, Head, Avg. Tails, Au Leach Consumption Addition
KCA Au Au Au Extracted, Time, NaCN, Ca(OH)2,
Sample No. Sample Description gms/tonne gms/tonne gms/tonne % days kg/tonne kg/tonne

36372 A LA06-01 5.50 5.01 0.40 0.92 4 0.31 1.50


36372 B LA06-02 3.17 2.88 0.12 0.96 4 0.52 1.50
36372 C LA06-03 5.45 5.35 5.08 0.05 4 1.09 2.00
36372 D LA06-04 2.16 2.08 1.94 0.07 4 3.00 1.50
36372 E LA06-05 4.34 4.21 0.36 0.92 4 0.41 2.00
36372 F LA06-06 9.22 9.17 0.64 0.93 4 0.95 3.00
36372 G LA06-07 0.81 0.78 0.05 0.94 4 0.94 5.00
36372 H LA06-08 4.82 4.40 0.21 0.95 4 0.22 1.00
38308 Silica Structure – La Cruz & C de O 1.69 1.74 0.36 79 4 0.27 1.00
38309 Silica Clay – La Cruz 0.48 0.44 <0.10 89 4 1.05 2.50
38310 Dacite SC/SA – Viruela 1.24 1.10 0.09 92 4 0.20 1.00
38311 Silica Massive – Viruela 1.15 0.93 0.14 85 4 0.22 1.00
38312 Andesite SA/SV 2.45 2.31 0.35 85 4 0.17 1.00
38313 Silica Massive – Cieneguita 0.40 0.41 <0.10 88 4 0.27 1.00
38314 Cieneguita – High Grade 9.00 8.30 0.82 90 4 1.07 3.00
41723 Viruela 1.35 1.57 0.13 92 4 1.15 1.00
41724 Viruela High Grade 12.88 12.42 0.43 97 4 0.89 1.00
41725 Cieneguita 1.11 0.89 0.06 94 4 0.33 1.00
41726 Espanola 1.03 1.02 0.05 95 4 0.51 1.00
43359 LI09-1 0.54 0.53 0.33 38 4 6.81 10.00
43360 LI09-2 0.92 0.93 0.11 88 4 1.00 3.00
43361 LI09-3 1.04 0.81 0.18 78 4 4.17 2.00
43362 LI09-4 1.11 0.93 0.15 83 4 3.95 3.00
43363 LI09-5 1.26 1.16 0.03 97 4 0.83 3.00
43364 LI09-6 0.40 0.36 0.05 86 4 1.69 3.00
43365 LI09-7 0.85 0.84 0.35 58 4 2.01 6.00
43747 Domain 2 - LC 0.81 0.93 0.06 93 4 1.78 1.50
43748 Domain 2 - VR 0.78 0.74 0.05 93 4 1.55 1.00

18.11.4 Laboratory Column Leach Test Work

The results of the laboratory column leach tests were used to establish recoveries
for the various ore types known to exist at La India. Table 18.4 presents the results
of the column leach tests conducted by KCA. Test numbers refer to KCA test
number.

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Table 18.4. Column leach test results.


Head Calculated
KCA Average, Head, Avg. Tails, Au Nominal Leach Consumption Addition
Sample Sample Au Au Au Extracted, Crush Size Time, NaCN, Ca(OH)2,
No. Description gms/tonne gms/tonne gms/tonne % P80, mm days kg/tonne kg/tonne

38308 A Silica Structure – La Cruz & 1.69 1.71 0.40 77 50 126 0.53 1.00
38308 B Cerro de Oro 1.69 1.77 0.33 81 12.5 140 0.88 2.00

38309 A 0.48 0.51 0.05 90 50 126 2.43 2.26


Silica Clay – La Cruz
38309 B 0.48 0.45 0.05 89 12.5 126 2.03 0.00

38310 A 1.24 0.97 0.09 91 50 126 0.86 2.00


Dacite SC/SA – Viruela
38310 B 1.24 1.12 0.11 90 12.5 126 1.29 0.00

38311 A 1.15 1.06 0.57 46 50 126 0.64 1.00


Silica Massive – Viruela
38311 B 1.15 0.98 0.28 71 12.5 126 0.78 1.00

38312 A 2.45 2.27 1.00 56 50 126 0.68 1.00


Andesite SA/SV
38312 B 2.45 2.35 0.81 66 12.5 126 1.03 3.00

38313 A 0.40 0.39 0.19 51 50 126 0.57 1.00


38313 B Silica Massive – Cieneguita 0.40 0.40 0.15 62 12.5 140 1.03 2.00

38314 A Cieneguita – High Grade 9.00 9.01 0.55 94 12.5 126 3.22 3.03

41723 A 1.35 1.65 0.33 80 25 91 0.81 2.01


Viruela
41723 B 1.35 1.55 0.33 79 9.5 104 0.77 0.00

41724 B Viruela High Grade 12.88 13.25 0.78 94 9.5 91 1.60 0.00

41725 A 1.11 1.08 0.04 96 25 91 0.82 2.01


Cieneguita
41725 B 1.11 1.09 0.06 95 9.5 104 0.92 0.00

41726 A 1.03 1.16 0.04 97 25 91 0.88 2.10


Espanola
41726 B 1.03 1.04 0.07 93 9.5 104 0.83 0.00

43747 Domain 2 - LC 0.84 1.3 0.23 82 25 60 0.56 2.00


43748 Domain 2 - VR 0.59 0.64 0.14 78 25 60 0.65 2.00

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Table 18.5 presents the column test results by Domain which were used to
determine gold recovery, major reagent consumption, and abrasion index.

Table 18.5. Column leach test results by ore domain.


Nominal Au Consumption Addition
KCA Crush Extracted, NaCN, Ca(OH)2, Abrasion
Domain Test No. Size, mm % kg/tonne kg/tonne Index

Main 1 38327 -50 91 0.86 2.00 0.2291


Main 2 38336 -12.5 71 0.78 1.00 0.7408
Main 2 43771 -25 78 0.76 2.00 0.7408
Main 2 Avg. 75 0.77 1.50 0.7408
Main 2A 43768 -25 82 0.67 2.01 0.7408
Main 3 38342 -12.5 66 1.03 3.00 0.4005
Main 3 41902 -25 80 0.81 2.01 0.3951
3 Avg. 73 0.92 2.50 0.3978
Main 5 38321 -50 90 2.43 2.26 0.0080
Main 6 38315 -50 77 0.53 1.00 0.7050
Main 7 38321 -50 90 2.43 2.26 0.0080
North 11 38327 -50 91 0.86 2.00 0.2291
North 12 38348 -12.5 62 1.03 2.00 0.7779
North 12A 41911 -25 96 0.82 2.01 0.5313
North 12A 41917 -25 97 0.88 2.10 0.5056
12A Avg 96 0.85 2.06 0.5185
North 14 38321 -50 90 2.43 2.26 0.0080
North 17 38321 -50 90 2.43 2.26 0.0080
North 18 38351 -12.5 94 3.22 3.03 0.7779

Test results on the same composites show similar recoveries between -12.5mm and
-50mm columns for Domains 1, 5 and 6. Recoveries were higher for Domains 2, 3
and 12 in the -12.5mm columns in comparison to the -50mm columns. Testing at -
9.5 mm and -25mm on the same composites showed similar recoveries for Domains
3 and 12A. The recoveries for Domain 2 and Domain 3 at -25mm were higher than
the recoveries for column tests at -12.5mm. (These are on different composites).
Therefore, a crush size of -25mm is considered the optimum crush size for the
project. A test of high-grade Domain 3 material had very high recoveries, indicating
that recovery of gold within high grade material should not be a problem.

Table 18.6 presents a summary of gold recoveries by Domain which were used for
gold production estimates later in this report. The recoveries determined by KCA
were reduced by 2 % with the exception of test 38348, on Domain 12 which was had
a head grade of 0.40 g/t Au, which is much lower than the core and RC twin of the
hole used to make the metallurgical composite, and the average grade of Domain
12. The abrasion indices were later used to help estimate differential crushing costs
for harder, more abrasive ores.

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Table 18.6. Summary of gold recoveries by ore domain.

Ore Domain Ore Type Gold Recovery

Main 1 Dacite 89
Main 2 Silica Massive 73
Main 2A Silica Massive / Alunite 80
Main 3 Silica Vuggy / Alunite 71
Main 5 Silica Clay Structures 88
Main 6 Silica Body (C de O) 75

North 11 Dacite 89
North 12 Silica Massive 62
North 12A Silica Massive / Alunite 94
North 14 Silica Clay 88
North 17 Intrusive 88
North 18 Silica Breccia 92

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19 MINERAL RESOURCE ESTIMATE

19.1 Introduction

In January 2010, Grayd Resource Corporation commissioned Giroux Consultants


Ltd. to complete an update of the La India Project Resource. This estimate was an
update on the estimate produced in 2009, (Gray and Giroux, 2009) based on an
additional 37 diamond drill holes and 134 reverse circulation holes (Gray and Giroux,
2010).

For the purposes of this report, Gary Giroux of Giroux Consultants Ltd. has reviewed
the mineral resource estimate contained in the 15 June 2010 Technical Report and
in particular has reviewed the methodology and classification, and confirms that the
work done in that previous report was reasonable and appropriate and that he is
satisified that the resource estimate discussed in Item 19 of this report is in
compliance with the requirements set out in CSA NI43-101.

19.2 Assay Sample Weights and Core Recovery

As part of the reverse circulation drill program, the weight for each sample was
recorded before processing. A study of 29,171 sample weights for each of the
deposits showed the weights ranged between a low of 0.28 kg to a high of 107.52 kg
with a mean weight of 23.67 kg (Figure 19.1). A threshold of 2.5 standard deviations
below the mean value, a weight of 1.64 kg was used as an acceptable cutoff.
Samples with weights below 1.64 kg (a total of 54) were removed from the data base
and 5 m composites were formed assuming the gaps were simply missing data. The
assumption was that, for these low sample weights, there was too much of a 5 ft.
sample run missing to consider these samples representative.

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Histogram of RC Sample Wts.

29171 N
5 23.67446 M
8.80907 S

3
Percent

0
0

20

40

60

80

100
SAMP_WT (kg)

Figure 19.1. Histograms of sample weights.

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A similar exercise was completed for drill core with low core recovery. A total of
6,814 drill core samples had core recovery measured. The results ranged from a
low of 0.15% to the maximum 100%. The mean value was 81.3 % with a standard
deviation of 25.2. Using a threshold of 2 S.D. below the mean as a cutoff samples
with core recovery less than 31% were not used for the resource estimate. A total of
523 core samples with low core recovery were not used in the estimate. The sample
statistics for these 523 samples varied from a low of 0.002 gpt Au to a high of 10.95
gpt Au with a mean of 0.42 gpt Au. With the low core recovery, however, these
samples were not considered representative of the sample interval and as a result
were left out of the resource estimate.

The overall data base was reduced by 1.6% as a result of removing RC samples
with low sample weights and core samples with low core recovery.

A further test was completed to determine if a bias existed in the core samples that
were removed. A lognormal cumulative frequency plot ( Figure 19.2) was produced
showing all gold assays from samples with core recovery ≥ 31% (in red) and all gold
assays from samples with core recovery < 31% (in green). There is virtually no
difference between the grade distributions between these two sample sets and as a
result no bias is indicated. The removal of the low recovery samples is conservative
99.9

99.5

99.0

1.0

0.5

0.1
95

90

80

70

60

50

40

30

20

10

5
1000 10
3

100 10
2

10 10
1

Distribution of gold grades from samples with


core recovery > 31% (samples used in
Au (g/t)

estimate)
1 1

0.1 10
-1

Distribution of gold grades from


samples with core recovery <31%
(Samples not used for estimate)
0.01 10
-2

0.001 10
-3
95

90

80

70

60

50

40

30

20

10

5
99.9

99.5

99.0

1.0

0.5

0.1

Percent

CORE RECOVERY - GOLD GRADES

Figure 19.2. Cumulative frequency plot for gold based on core recovery.

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19.3 Data Analysis

The data base for the La India Project consisted of drill hole data from two different
mineralized zones shown in Figure 19.3. The zones are the North Zone consisting
of Cieneguita, Española, El Cochi, and La India, and the Main Zone consisting of the
combined La Viruela, La Cruz and Cerro de Oro areas. These two zones while in
similar lithologies and alteration are treated independently due to their geographical
locations.

Figure 19.3. Location map showing mineralized zones and drill hole collars.

19.3.1 Main Zone

The Main Zone consists of the La Viruela, La Cruz, and Cerro de Oro areas. The
2010 data base for this zone consisted of 314 reverse circulation drill holes with a
total of 29,779 m and 64 diamond drill holes totaling 4,947 m. (see Appendix E for
a list of drill holes used in this study). Diamond drill holes DDH-07-25, 31, 32, 33, 34
and 36 were drilled within the resource area but were sent in their entirety to KCA for
metallurgical studies and were not used in the resource study.

A Main Zone geologic model was built by Grayd geologists that differentiated 6
separate mineralized domains, as described in Item11.3 of this report:

D1 = Dacite
D2 = Silica Massive – Silica Alunite
D3 = Silica Vuggy – Silica Alunite
D5 = Silica Clay with Structures
D6 = Silica Bodies
D7 = Porphyry
D0 = Lower waste unit

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Assays were back tagged based on their location relative to these 6 domains. Table
19.1 summarizes the assay statistics for each domain. Samples not assayed but
within the mineralized domains were assigned a value of 0.001 gpt Au.

Table 19.1. Summary of gold in assays at Main Zone sorted by geologic domains.

Domain D1 D2 D3 D5 D6 D7 D0
Au (gpt) Au (gpt) Au (gpt) Au (gpt) Au (gpt) Au (gpt) Au (gpt)
Number of Samples 3,007 3,592 1,909 4,841 1,187 171 10,054
Mean Grade 0.267 0.443 1.329 0.427 1.443 0.214 0.097
Standard Deviation 0.950 1.938 5.154 1.346 1.933 0.287 0.166
Minimum Value 0.001 0.002 0.001 0.001 0.001 0.002 0.002
Maximum Value 23.50 94.80 152.00 52.3 14.50 2.16 9.41
Coefficient of Variation 3.56 4.38 3.88 3.16 1.34 1.34 1.71

The assays for these units were evaluated using lognormal cumulative frequency
plots to determine if capping was required and if so at what levels.

As an example, a total of 3,007 assays within Domain 1 showed a skewed


distribution (Table 19.2). A lognormal cumulative frequency plot indicated 6
overlapping lognormal populations as described below. Population 1 was
considered erratic high grade and required capping. A cap of two standard
deviations above the mean of population 2 was selected. Three assays in domain 1
were capped at 15.0 g Au/t.

Table 19.2. Summary of gold distribution at Main Zone Domain 1.

Population Mean Au (gpt) Proportion of Number of


Total Data Assays
1 20.66 0.11 % 3
2 8.68 0.40 % 12
3 1.72 3.14 % 94
4 0.42 21.15 % 636
5 0.07 46.01 % 1,384
6 0.01 29.19 % 878

A similar exercise was conducted for gold in the remaining Main Zone domains. The
capping strategy is summarized in Table 19.3.

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Table 19.3. Capping strategy for Main Zone.

Domain Strategy
Capping Level Number of
Au (gpt) Assays Capped
1 2SDAMP2 15.0 3
2 2SDAMP2 14.0 5
3 2SDAMP3 20.0 6
5 2SDAMP2 11.0 7
6 2SDAMP1 13.0 2
7 2SDAMP1 3.4 0
0 2SDAMP2 1.5 11
Note: 2SDAMP2 means 2 Standard Deviations above the mean of population 2

Table 19.4 shows the effects of capping on each of the domains. The mean grade
in Domains 1 to 6 was slightly reduced and the coefficient of variation was reduced
to far more reasonable levels.

Table 19.4. Summary of gold in capped assays in Main Zone.

Domain D1 D2 D3 D5 D6 D7 D0
Au (gpt) Au (gpt) Au (gpt) Au (gpt) Au (gpt) Au (gpt) Au (gpt)
Number of Samples 3,007 3,592 1,909 4,841 1,187 171 10,054
Mean Grade 0.262 0.412 1.187 0.402 1.441 0.214 0.096
Standard Deviation 0.858 0.990 2.248 0.775 1.924 0.287 0.129
Minimum Value 0.001 0.002 0.001 0.001 0.001 0.002 0.001
Maximum Value 15.00 14.00 20.00 11.00 13.00 2.16 1.50
Coefficient of Variation 3.27 2.40 1.89 1.93 1.33 1.34 1.35

19.3.2 North Zone

The data base for the North zone consisted of 31 diamond drill holes totaling 2,261
m and a total of 196 reverse circulation holes totaling 11,092 m (see Appendix F for
listing of drill holes used). The North Zone is made up of the Cieneguita, El Cochi,
La India and Espanola Zones. Drill hole DDH-07-40 was drilled within the resource
area but was sent to KCA for metallurgical testing and was not used in the resource
estimate.

A geologic solid model was produced by Grayd geologists with some similar units to
the Main Zone outlined, as described in Item 11.2 of this report. Domains modeled
include:

D11 – Dacite
D12 - Silica Massive
D14 - Silica Clay
D17 - Porphyry
D18 - Silica Breccia
D0 - Lower Waste Unit

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The assays were tagged with domain codes with simple statistics for gold presented
as Table 19.5. Samples not assayed but within the mineralized domains were
assigned a value of 0.001 gpt Au.

Table 19.5. Summary of gold in assays at North Zone sorted by geologic domains.

Domain D11 D12 D14 D17 D18 D0


Au (gpt) Au (gpt) Au (gpt) Au (gpt) Au (gpt) Au (gpt)
Number of Samples 590 3,561 351 1,593 382 2,162
Mean Grade 0.179 0.371 0.478 0.280 2.684 0.083
Standard Deviation 0.355 0.800 0.809 0.531 9.448 0.317
Minimum Value 0.002 0.001 0.002 0.003 0.021 0.001
Maximum Value 3.52 16.30 6.79 6.76 128.50 10.65
Coefficient of Variation 1.98 2.15 1.69 1.90 3.52 3.79

The distribution of gold within each domain was examined using lognormal
cumulative frequency plots. A similar strategy was used in the North Zone domains
as was used in the Main Zone domains. The capping levels for each domain in the
North Zone are tabulated in Table 19.6.

Table 19.6. Capping strategy for North Zone.

Domain Strategy
Capping Level Number of
Au (gpt) Assays Capped
11 2SDAMP2 2.2 5
12 2SDAMP2 8.0 5
14 2SDAMP2 6.5 1
17 2SDAMP2 4.3 2
18 2SDAMP3 24.0 4
Note: 2SDAMP2 means 2 Standard Deviations above the mean of population 2

The effects of capping are presented in Table 19.7.

Table 19.7. Summary of capped gold in assays at North Zone sorted by geologic
domains.

Domain D11 D12 D14 D17 D18 D0


Au (gpt) Au (gpt) Au (gpt) Au (gpt) Au (gpt) Au (gpt)
Number of Samples 590 3,561 351 1,593 382 2,162
Mean Grade 0.176 0.365 0.478 0.277 2.113 0.075
Standard Deviation 0.333 0.714 0.802 0.505 3.847 0.167
Minimum Value 0.002 0.001 0.002 0.003 0.021 0.001
Maximum Value 2.20 8.00 6.50 4.30 24.00 1.50
Coefficient of Variation 1.89 1.96 1.68 1.82 1.82 2.24

19.4 Fire Assay versus Screen Analysis

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A check for coarse gold was made and described in the 2009 report (Gray and
Giroux, 2009) and is repeated here for completeness and summarized in Figure
19.4. No further checks were run in the 2009 drill program.

“As a check on the assay method and to determine if gold was lost during the
sampling and fire assay procedure, a total of 153 samples were assayed by screen
analysis. The mean grade for gold from fire assay was 3.55 gpt compared to 3.49
gpt from screen analysis. The correlation coefficient between the two data sets was
0.9846. As shown in the Figure 19.4 below there is no indication of bias between
the two sample sets with the best fit regression line mirroring the equal value line.
The sampling precision between the two methods was ± 6.6 %. As the vast majority
of samples were analyzed by fire assay techniques there is no reason to insert or
substitute the screen analysis results for these 153 samples.”

Figure 19.4. Scatter plot of Fire Assay Gold (x axis) vs. Screen Analysis Au (y axis).
Data has been log transformed.

19.5 Core versus RC Drill Results

Both diamond drill core and reverse circulation drilling methods have been utilized
on this project. A study comparing core assays to RC assays was completed in the

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2009 report (Gray and Giroux, 2009). This study is updated below with the 2009 drill
holes included. To determine if any bias exists between the two drilling methods the
gold grade distributions for each method were compared in several areas that
contained both sampling types.

Zone Main A - 706700 E to 707400 E and 3175850 N to 3176610 N


Zone Main B - 707020 E to 707350 E and 3175510 N to 3175660 N
Zone North - 706200 E to 706900 E and 3178400 N to 3179300 N

Using this graphical method to compare the two styles of drilling will show if a
sampling bias exists. Figures 19.5 to 19.7 show the three areas. In all three cases
the two sample types show roughly parallel grade distributions over all the grade
classes. The slight variations are well within reason and there appears to be no
sampling bias present. Both styles of drilling are used in this estimate.
99.9

99.5

99.0

1.0

0.5

0.1
95

90

80

70

60

50

40

30

20

10

5
2 2
10 10

10 1 10 1

Au in Core Holes

1 1
AU (g/t)

Au in RC Holes
-1 -1
10 10

-2 -2
10 10

-3 -3
10 10
95

90

80

70

60

50

40

30

20

10

1.0

0.5

0.1
99.9

99.5

99.0

Percent

MAIN A ZONE GOLD CORE VS RC

Figure 19.5. Lognormal cumulative frequency plot for Au in core and RC Main A Zone.

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99.9

99.5

99.0

1.0

0.5

0.1
95

90

80

70

60

50

40

30

20

10

5
2 2
10 10

1 1
10 10

Au in Core Holes

1 1
AU (g/t)

Au in RC Holes
-1 -1
10 10

-2 -2
10 10

-3 -3
10 10
99.9

99.5

99.0

95

90

80

70

60

50

40

30

20

10

1.0

0.5

0.1
Percent

MAIN B ZONE GOLD CORE VS RC

Figure 19.6. Lognormal cumulative frequency plot for Au in core and RC Main B Zone.
99.9

99.5

99.0

1.0

0.5

0.1
95

90

80

70

60

50

40

30

20

10

2 2
10 10

1 1
10 10

Au in Core Holes
1 1
AU (g/t)

10
-1
Au in RC Holes 10
-1

-2 -2
10 10

-3 -3
10 10
99.9

99.5

99.0

95

90

80

70

60

50

40

30

20

10

1.0

0.5

0.1

Percent

NORTH ZONE GOLD CORE VS RC

Figure 19.7. Lognormal cumulative frequency plot for Au in core and RC North Zone.

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19.6 Composites

Drill holes were passed through the various domain solids and assigned a code to
sections contained in each solid. Uniform down hole 5 m composites were produced
that honored the boundaries of each solid. Small intervals at the boundaries of
solids less than 2.5 m were combined with adjoining intervals to produce a uniform
support of 5 ± 2.5 m. The statistics for gold in 5 m composites for all zones are
presented in Tables 19.8 and 19.9. Assays from core holes with core recovery less
than 31% and assays from reverse circulation holes with sample weights less than
1.64 kg were not used to form composites and in some cases where these assays
were in strings composites were not formed at all.

Table 19.8. Summary of gold in 5m composites at Main Zone sorted by geologic domains.

Domain D1 D2 D3 D5 D6 D7 D0
Au (gpt) Au (gpt) Au (gpt) Au (gpt) Au (gpt) Au (gpt) Au (gpt)
Number of Samples 832 998 513 1,426 337 53 2,936
Mean Grade 0.261 0.418 1.165 0.397 1.429 0.213 0.096
Standard Deviation 0.686 0.685 1.645 0.633 1.672 0.212 0.101
Minimum Value 0.002 0.006 0.011 0.003 0.006 0.010 0.002
Maximum Value 12.62 8.06 14.52 8.99 9.18 1.12 0.96
Coefficient of Variation 2.63 1.64 1.41 1.59 1.17 1.00 1.06

Table 19.9. Summary of gold in 5m composites at North Zone sorted by geologic domains.

Domain D11 D12 D14 D17 D18 D0


Au (gpt) Au (gpt) Au (gpt) Au (gpt) Au (gpt) Au (gpt)
Number of Samples 180 1,068 145 107 115 651
Mean Grade 0.179 0.362 0.426 0.495 2.066 0.073
Standard Deviation 0.283 0.544 0.535 0.679 2.251 0.127
Minimum Value 0.002 0.002 0.014 0.014 0.047 0.002
Maximum Value 1.77 5.34 3.85 3.85 10.25 1.22
Coefficient of Variation 1.58 1.50 1.25 1.37 1.09 1.72

19.7 Variography

Each of the domains in each mineral zone was modeled independently when
sufficient data was present. The strategy in each case was to first produce pairwise
relative semivariograms in the four principal horizontal directions namely azimuths
090, 0, 045 and 135 and then in the vertical direction. Based on the horizontal
results the interior angles between the two longest horizontal ranges were modeled
to determine the longest horizontal range and direction. The vertical plane
perpendicular to this was then modeled until the maximum direction of continuity in
the vertical plane was identified.

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19.7.1 Main Zone

For Domain 1 (Dacite) gold showed the best horizontal continuity of 120 m along
azimuth 80o dip 0o. The vertical plane perpendicular to this showed the longest
continuity of 120 m along azimuth 170o dip -45o. The orthogonal third direction was
azimuth 350o dip -45o and showed a range of 30 m. A similar procedure was used
to model gold in Domains 2 (Silica Massive), Domain 3 (Silica Vuggy), Domain 5
(Silica Clay with Structures) and Domain 6 (Silica Bodies). There was insufficient
data to develop a model for Domain 7. The model for Domain 17, the intrusive in the
North zone, was used. The parameters are shown in Table 19.11 and the graphs are
shown in Appendix G.

When the Grayd geologist reviewed the semivariogram results, Domain 3 was
identified as problematic. Within a background mineralization higher grade
structures exist but are too few to model effectively. As a result an indicator
approach was tried. The Domain 3 composites were plotted on a lognormal
cumulative frequency plot (Figure 19.8).

Figure 19.8. Lognormal cumulative frequency plot for Au composites in Domain 3.

A series of 6 overlapping lognormal populations were identified as summarized in


Table 19.10. These populations are tabulated below. Populations 1 to 3
representing a combined 7.2% of the composites in Domain 3 have average grades

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exceeding 4 gpt and might represent the high grade structures. The remaining
populations 4 to 6 represent the background style of mineralization.

Table 19.10. Summary of gold populations in Domain 3.

Population Mean Au (gpt) Percentage of Number of


Total Data Composites
1 13.25 0.76 % 4
2 6.72 2.47 % 13
3 4.06 3.96 % 20
4 1.71 25.26 % 130
5 0.46 53.77 % 275
6 0.12 13.79 % 71

A threshold to separate populations 1-3 from 4-6 would be at 2 standard deviations


above the mean of population 4, a value of 3.6 gpt Au. Using an indicator approach
the composites are converted to 0’s and 1’s based on the following:

IND = 1 for composites ≥ 3.6 gpt Au


IND = 0 for composites < 3.6 gpt Au

Semivariograms were then produced for the indicators (0’s and 1’s) and modeled
with nested spherical models showing a anisotropy with the direction of maximum
continuity along azimuth 030o.

The background populations (values below 3.6 gpt Au) in Domain 3 were then
modeled independently. The longest continuity in the horizontal plane was along
azimuth 100o.

19.7.2 North Zone

Domain 12 was modeled using pairwise relative semivariograms and the maximum
continuity for gold of 120 m was determined to be along azimuth 130 dip 0. The
second longest direction was 100 m along azimuth 220 dipping -35. There were too
few sample pairs within Domains 11 and 14 to establish a model so the model for
Domain 12 was applied. For Domain 18, the contact zone, a single anisotropic
model was fit to the dip and strike of the zone as determined from surface mapping.
The parameters are shown in Table 19.11 and the graphs are shown in Appendix G.

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Table 19.11. Summary of semivariogram parameters for gold.

Zone Domain Azimuth Dip Co C1 C2 Short Long


Range (m) Range (m)
MAIN ZONE 1 080 0 0.20 0.30 0.20 34 120
350 -45 0.20 0.30 0.20 20 30
170 -45 0.20 0.30 0.20 60 120
2 52 0 0.20 0.22 0.29 10 140
322 -70 0.20 0.22 0.29 12 44
142 -20 0.20 0.22 0.29 10 90
3 Background 100 0 0.10 0.38 0.22 30 200
10 0 0.10 0.38 0.22 10 30
0 -90 0.10 0.38 0.22 20 80
3 HG Indicator 30 0 1.80 0.10 0.10 32 80
300 0 1.80 0.10 0.10 30 40
0 -90 1.80 0.10 0.10 20 30
5 50 0 0.10 0.38 0.16 10 80
320 -60 0.10 0.38 0.16 25 90
140 -30 0.10 0.38 0.16 40 60
6 45 0 0.10 0.40 0.40 10 120
315 0 0.10 0.40 0.40 15 64
0 -90 0.10 0.40 0.40 10 50
NORTH ZONE 12 130 0 0.20 0.25 0.24 20 120
40 -65 0.20 0.25 0.24 10 60
220 -25 0.20 0.25 0.24 50 100
17 45 0 0.10 0.20 0.40 28 160
315 0 0.10 0.20 0.40 20 60
0 -90 0.10 0.20 0.40 30 100
18 335 0 0.20 0.53 70
245 -25 0.20 0.53 50
65 -65 0.20 0.53 20
Note: For Domain 7 in the Main Zone the model for Domain 17 was used. In the North Zone for
Domain 11 and Domain 14 the model for Domain 12 was used. There were too few samples
in unit 18 to model in detail so the semivariogram was calculated along the field observed
strike 335 and dipping -25 to the west.

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19.8 Bulk Density

Specific gravity determinations were made by Kappes Cassiday & Associates in


Reno, Nevada. Their procedure using wax immersion is documented in
Appendix H. The results are summarized in Table 19.12.

Table 19.12. Summary of rock densities.

Domain Number of Minimum Maximum Average


Measurements Sg Sg Sg
1 - Dacite 22 1.94 2.57 2.22
2 – Silica Massive Main Zone 33 2.27 2.69 2.51
2A – Silica Massive (Alunite) Main Zone From D12A 2.33
3 – Andesite – Silica Vuggy 59 1.88 3.17 2.28
5 & 14– Silica Clay 25 1.33 2.42 1.97
6 – Silica Structure 22 2.24 2.57 2.39
12 – Silica Massive North Zone 16 2.56 2.85 2.63
12A – Silica Massive (Alunite) North Zone 36 1.85 2.57 2.33
7 &17 – Porphyry 31 2.15 2.63 2.38

No specific gravity determinations were taken in Domain 18, the silica breccia / silica
clay unit within the North Zone. Since the unit is a mixture of silica (brecciated) and
clay alteration, a combined specific gravity was used. From Domain 12 (silica
massive) SG = 2.63 and silica clay from Domain 14 SG = 1.97, an average of 2.30
was determined. Since there are areas with brecciation and likely some open space
close to surface the SG for Domain 18 was reduced (5%) to 2.18. Unit D0 the lower
waste unit was assumed to have an SG of 2.22 similar to dacite.

Within the block model specific gravity was applied by domain with blocks containing
more than one domain having a weighted average.

19.9 Block Models

Two block models with blocks 10 m x 10 m by 6 m high were superimposed upon


the two geologic models for Main and North Zones. The model origins are as
follows:

MAIN ZONE
Lower Left Corner 706125 E Column Size 10 m 138 cols.
(no Rotation) 3175295 N Row Size 10 m 151 rows
Top of Model 1905 Elev. Level Size 6 m 93 levels

NORTH ZONE
Lower Left Corner 705595 E Column Size 10 m 211 cols.
(no Rotation) 3177215 N Row Size 10 m 243 rows
Top of Model 1907 Elev. Level Size 6 m 85 levels

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For each model the proportion of each block below the topographic surface was
recorded as well as the proportion of each domain present.

19.10 Grade Interpolation

19.10.1 North Zone

Gold grades were interpolated into blocks containing some percentage of Domains
11, 12, 14, 17 and 18 by ordinary kriging. All domains used hard boundaries so only
composites from a particular domain were used to estimate that domain. The kriging
exercise was completed in a series of passes with an expanding search ellipse tied
to the ranges of the domains semivariogram. For Pass 1 a minimum of 4
composites were required within a search ellipse with dimensions equal to ¼ the
semivariogram range. For blocks not estimated in Pass 1 a second pass using a
search ellipse with dimensions equal to ½ the semivariogram range in each direction
was used. A third pass using the full range and a fourth pass using twice the range
completed the kriging exercise. In all cases a maximum of 3 composites were
allowed from a single hole. In all cases if more than 12 composites were found in
any given pass the closest 12 were used. The lower waste unit Domain 0 was not
estimated. For blocks with some percentage of D0 present the average of the
Domain 0 composites was used, a value of 0.073 gpt Au.

The final grade for the block was a weighted average of all domains present. The
kriging search parameters and number of blocks estimated during each pass are
tabulated in Table 19.13.

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Table 19.13. Summary of ordinary kriging search parameters – North Zone.


Domain Pass Number Az/Dip Dist. Az/Dip Dist. Az/Dip Dist.
Estimated (m) (m) (m)
11 1 18 130/0 30.0 40/-65 15.0 220/-25 25.0
All Blocks 2 1,894 130/0 60.0 40/-65 30.0 220/-25 50.0
Estimated 3 15,075 130/0 120.0 40/-65 60.0 220/-25 100.0
4 16,713 130/0 240.0 40/-65 120.0 220/-25 200.0
12 1 4,294 130/0 30.0 40/-65 15.0 220/-25 25.0
All Blocks 2 12,993 130/0 60.0 40/-65 30.0 220/-25 50.0
Estimated 3 15,891 130/0 120.0 40/-65 60.0 220/-25 100.0
4 22,934 130/0 240.0 40/-65 120.0 220/-25 200.0
14 1 163 130/0 30.0 40/-65 15.0 220/-25 25.0
All Blocks 2 1,663 130/0 60.0 40/-65 30.0 220/-25 50.0
Estimated 3 3,915 130/0 120.0 40/-65 60.0 220/-25 100.0
4 1,137 130/0 240.0 40/-65 120.0 220/-25 200.0
17 1 1,417 45/0 40.0 135/0 15.0 0/-90 25.0
19% of Blocks 2 6,790 45/0 80.0 135/0 30.0 0/-90 50.0
Estimated 3 26,393 45/0 160.0 135/0 60.0 0/-90 100.0
18 1 6 335/0 17.5 245/-25 12.5 65/-65 5.0
All Blocks 2 361 335/0 35.0 245/-25 25.0 65/-65 10.0
Estimated 3 2,230 335/0 70.0 245/-25 50.0 65/-65 20.0
4 817 335/0 140.0 245/-25 100.0 65/-65 40.0

Note: Due to the fact numerous blocks contain multiple domains a fifth pass was sometimes made to
fill in grades of domains not previously estimated.

19.10.2 Main Zone

Gold grades have been interpolated into blocks containing some percentage of
Domains 1, 2, 5, 6 and 7 using ordinary kriging. Domain 3 was estimated using a
combination of ordinary kriging and indicator kriging.

Each domain was estimated independently using hard boundaries between the
domains with the exception of Domain 7. Because of the few composites within
Domain 7 and the close proximity to Domain 3, Domain 7 was estimated using a soft
boundary between Domain 7 and Domain 3 composites.

An estimation for gold was attempted into every block that had some proportion of a
domain present. The estimation procedure was completed in a series of passes with
an expanding search ellipse. The dimensions for the search ellipse were tied into
the appropriate semivariogram for each domain. A first pass in each domain used a
search ellipse with dimensions equal to ¼ of the semivariogram range. A minimum
of 4 composites were necessary to estimate the block. Only composites from the
domain being estimated were used. For blocks not estimated in pass 1 a second
pass using search ellipse dimensions equal to ½ the semivariogram were used.
Again a minimum of 4 composites were required to estimate the block. A third and
in some cases a fourth pass was completed using the full range and twice the
semivariogram range respectively. In all cases if more than 12 composites were

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found in any given search the closest 12 were used. A maximum of 3 composites
were allowed from any single drill hole.

For Domain 3 a different approach was used due to the higher grade structures
present in this domain. First a “low grade” gold value was estimate for each block
containing some percentage of Domain 3 from composites less than 3.6 gpt Au
using the approach described above. Next an indicator value between 0 and 1 was
estimated for each block by kriging the 0 or 1 indicators. This value represents the
relative proportion of “high grade” present in the block. Next a value for the “high
grade” was estimated by ordinary kriging the composites in Domain 3 that were ≥
3.6 gpt Au. For blocks with a kriged indicator value greater than 0.0 but not
estimated, the average grade of the high grade composites, 6.03 gpt Au was
inserted. Finally the weighted average gold was determine for all Domain 3 blocks
estimated as follows:

D3 Au = (IND * HG_AU) + ((1.0 – IND) * LG_AU)

The kriging search parameters are summarized in Table 19.14.

For blocks containing some percentage of the D0 waste unit the average grade of
the D0 composites, a value of 0.096 gpt Au, was inserted. The final grade for the
total block was a weighted average of all domains present.

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Table 19.14. Summary of ordinary kriging search parameters – Main Zone.

Domain Pass Number Az/Dip Dist. Az/Dip Dist. Az/Dip Dist.


Estimated (m) (m) (m)
D1 1 2,562 80/0 30.0 350/-45 7.5 170/-45 30.0
99% of Solid 2 5,710 80/0 60.0 350/-45 15.0 170/-45 60.0
Estimated 3 11,915 80/0 120.0 350/-45 30.0 170/-45 120.0
4 12,301 80/0 240.0 350/-45 60.0 170/-45 240
D2 1 4,469 52/0 32.5 322/-70 10.0 142/-20 22.5
98% of Solid 2 7,385 52/0 65.0 322/-70 20.0 142/-20 45.0
Estimated 3 6,173 52/0 130.0 322/-70 40.0 142/-20 90.0
4 7,986 52/0 260.0 322/-70 80.0 142/-20 180.0
D3 Low Grade 1 1,288 100/0 50.0 10/0 7.5 0/-90 20.0
88.6% of Solid 2 3,475 100/0 100.0 10/0 15.0 0/-90 40.0
Estimated 3 2,508 100/0 200.0 10/0 30.0 0/-90 80.0
4 2,598 100/0 400.0 10/0 60.0 0/-90 160.0
D3 Indicator 1 241 30/0 20.0 300/0 10.0 0/-90 7.5
2 2,566 30/0 40.0 300/0 20.0 0/-90 15.0
3 3,577 30/0 80.0 300/0 40.0 0/-90 30.0
4 3,485 30/0 160.0 300/0 80.0 0/-90 60.0
D5 1 2,806 50/0 20.0 320/-60 22.5 140/-30 15.0
99.8% of Solid 2 12,737 50/0 40.0 320/-60 45.0 140/-30 30.0
Estimated 3 12,634 50/0 80.0 320/-60 90.0 140/-30 60.0
4 2.350 50/0 160.0 320/-60 180.0 140/-30 120.0
D6 1 991 45/0 20.0 315/0 16.0 0/-90 12.5
100% of Solid 2 2,179 45/0 40.0 315/0 32.0 0/-90 25.0
Estimated 3 1,168 45/0 80.0 315/0 64.0 0/-90 50.0
4 331 45/0 160.0 315/0 128.0 0/-90 100.0
D7 1 141 45/0 40.0 315/0 15.0 0/-90 25.0
100% of Solid 2 1,059 45/0 80.0 315/0 30.0 0/-90 50.0
Estimated 3 3,025 45/0 160.0 315/0 60.0 0/-90 100.0
4 520 45/0 320.0 315/0 120.0 0/-90 200.0

Note: Due to the fact numerous blocks contain multiple domains a fifth pass was sometimes made to
fill in grades of domains not previously estimated.

Tonnages were determined for each block based on the block volume (10 x 10 x 6
m) times the weighted average specific gravity for the block times the proportion of
the block below surface topography.

Each block in the Main and North Zone was also compared to the oxidation surface
established from drill logs. The proportion of the block above the oxide surface was
used to produce a tonnage of oxide present.

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19.11 Classification

19.11.1 Introduction

Based on the study herein reported, delineated mineralization of the La India Project
is classified as a resource according to the following definition from National
Instrument 43-101 and CIM (2005):

“In this Instrument, the terms "mineral resource", "inferred mineral


resource", "indicated mineral resource" and "measured mineral resource" have
the meanings ascribed to those terms by the Canadian Institute of Mining,
Metallurgy and Petroleum, as the CIM Definition Standards on Mineral
Resources and Mineral Reserves adopted by CIM Council, as those definitions
may be amended.”
The terms Measured, Indicated and Inferred are defined by CIM (2005) as follows:

“A Mineral Resource is a concentration or occurrence of diamonds,


natural solid inorganic material, or natural solid fossilized organic material
including base and precious metals, coal and industrial minerals in or on
the Earth’s crust in such form and quantity and of such a grade or quality
that it has reasonable prospects for economic extraction. The location,
quantity, grade, geological characteristics and continuity of a Mineral
Resource are known, estimated or interpreted from specific geological
evidence and knowledge.”
“The term Mineral Resource covers mineralization and natural material
of intrinsic economic interest which has been identified and estimated
through exploration and sampling and within which Mineral Reserves may
subsequently be defined by the consideration and application of technical,
economic, legal, environmental, socio-economic and governmental
factors. The phrase ‘reasonable prospects for economic extraction’
implies a judgment by the Qualified Person in respect of the technical and
economic factors likely to influence the prospect of economic extraction. A
Mineral Resource is an inventory of mineralization that under realistically
assumed and justifiable technical and economic conditions might become
economically extractable. These assumptions must be presented explicitly
in both public and technical reports.”
Inferred Mineral Resource
“An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for
which quantity and grade or quality can be estimated on the basis of
geological evidence and limited sampling and reasonably assumed, but
not verified, geological and grade continuity. The estimate is based on
limited information and sampling gathered through appropriate techniques
from locations such as outcrops, trenches, workings and drill holes.”

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“Due to the uncertainty that may be attached to Inferred Mineral


Resources, it cannot be assumed that all or any part of an Inferred Mineral
Resource will be upgraded to an Indicated or Measured Mineral Resource
as a result of continued exploration. Confidence in the estimate is
insufficient to allow the meaningful application of technical and economic
parameters or to enable an evaluation of economic viability worthy of
public disclosure. Inferred Mineral Resources must be excluded from
estimates forming the basis of feasibility or other economic studies.”
Indicated Mineral Resource
“An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for
which quantity, grade or quality, densities, shape and physical
characteristics, can be estimated with a level of confidence sufficient to
allow the appropriate application of technical and economic parameters, to
support mine planning and evaluation of the economic viability of the
deposit. The estimate is based on detailed and reliable exploration and
testing information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are spaced
closely enough for geological and grade continuity to be reasonably
assumed.”
“Mineralization may be classified as an Indicated Mineral Resource by
the Qualified Person when the nature, quality, quantity and distribution of
data are such as to allow confident interpretation of the geological
framework and to reasonably assume the continuity of mineralization. The
Qualified Person must recognize the importance of the Indicated Mineral
Resource category to the advancement of the feasibility of the project. An
Indicated Mineral Resource estimate is of sufficient quality to support a
Preliminary Feasibility Study which can serve as the basis for major
development decisions.”
Measured Mineral Resource
“A ‘Measured Mineral Resource’ is that part of a Mineral Resource for
which quantity, grade or quality, densities, shape, and physical
characteristics are so well established that they can be estimated with
confidence sufficient to allow the appropriate application of technical and
economic parameters, to support production planning and evaluation of
the economic viability of the deposit. The estimate is based on detailed
and reliable exploration, sampling and testing information gathered
through appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes that are spaced closely enough to confirm
both geological and grade continuity.”
“Mineralization or other natural material of economic interest may be
classified as a Measured Mineral Resource by the Qualified Person when
the nature, quality, quantity and distribution of data are such that the
tonnage and grade of the mineralization can be estimated to within close

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limits and that variation from the estimate would not significantly affect
potential economic viability. This category requires a high level of
confidence in, and understanding of, the geology and controls of the
mineral deposit.”

19.11.2 Main Zone

For blocks within the Main Zone completely contained within Domains 1, 2, 3, 5 or 6
the classification was Measured if estimated in Pass 1 using ¼ of the semivariogram
range or Indicated in estimated in Pass 2 using up to ½ the semivariogram range
and Inferred if estimated in Pass 3 or 4. All blocks estimated completely within
Domain 7 were classed Inferred due to the relative lack of data and the inability to
establish a semivariogram model. For blocks containing two or more domains the
classification was similar to above based on the domain estimated in the highest
pass. For example if a block contained Domains 1, 2 and 3 and Domain 1 and
Domain 3 were estimated in pass 3 while Domain 2 was estimated in pass 2 the
block was classified Inferred. After this classification procedure was completed
blocks were examined visually and isolated pockets of Measured were downgraded
to Indicated.

19.11.3 North Zone

Blocks contained completely within Domains 11,12,14,17 or 18 and estimated within


Pass 1 or 2 were classed Indicated while those estimated in Pass 3 or 4 were
classed Inferred. Blocks containing two or more of the domains were classified
based on majority rules. If the majority of the block was within Domain 12 then the
classification based on Domain 12 estimation was used. A final check of classified
blocks was made visually and isolated indicated blocks were downgraded to
Inferred.

19.12 Results

The geologic continuity of the various zones within the La India deposit has been
established through diamond drilling, RC drilling and surface mapping. Grade
continuity can be quantified by semivariogram analysis.

The results have been tabulated for the portion of blocks within the mineralized
domains. This assumes one could mine to the domain boundaries. Since the D0
unit of waste is a tabular slice at the bottom of the model it may be possible, with
good grade control to limit the amount of dilution including this unit would cause.

The La India project hosts a Measured and Indicated gold resource, currently
estimated at 760,000 contained ounces contained in 26.77 M tonnes at a grade of
0.883 gpt, calculated at a 0.40 gpt cutoff, as summarized in Table 19.15. The La
India project hosts an Inferred gold resource of 506,000 ounces contained in

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19.73Mt @ 0.798 gpt Au, calculated at a 0.40 gpt cutoff grade, as summarized in
Table 19.16.

Tables 19.17 to 19.22 summarize the resource estimates for the North and Main
Zones separately. A possible economic open pit cut-off of 0.40 gpt Au has been
highlighted although at this time no economic studies have been completed and as a
result the true economic cutoff is unknown.

Table 19.15. Measured and Indicated mineral resource estimate, all material types, all areas,
La India project.
TOTAL ALL ZONES - MEASURED PLUS INDICATED RESOURCE
Au Cutoff Tonnes> Cutoff Grade > Cutoff
Au
(gpt) (tonnes) (gpt) Au (grams) Au Ounces
0.10 61,650,000 0.517 31,900,000 1,024,000
0.20 48,230,000 0.619 29,900,000 960,000
0.30 36,090,000 0.745 26,900,000 864,000
0.40 26,770,000 0.883 23,600,000 760,000
0.50 20,180,000 1.025 20,700,000 665,000
0.60 15,570,000 1.167 18,200,000 584,000
0.70 12,250,000 1.308 16,000,000 515,000
0.80 9,870,000 1.443 14,200,000 458,000
0.90 8,100,000 1.573 12,700,000 410,000
1.00 6,800,000 1.693 11,500,000 370,000

Table 19.16. Inferred mineral resource, all material types all areas, La India project.
TOTAL ALL ZONES - INFERRED RESOURCE
Au Cutoff Tonnes> Cutoff Grade > Cutoff
Au
(gpt) (tonnes) (gpt) Au (grams) Au Ounces
0.10 117,170,000 0.303 35,500,000 1,143,000
0.20 62,130,000 0.443 27,500,000 886,000
0.30 34,150,000 0.606 20,700,000 665,000
0.40 19,730,000 0.798 15,700,000 506,000
0.50 13,540,000 0.961 13,000,000 418,000
0.60 9,910,000 1.113 11,000,000 355,000
0.70 7,540,000 1.259 9,500,000 305,000
0.80 5,900,000 1.402 8,300,000 266,000
0.90 4,800,000 1.530 7,300,000 236,000
1.00 4,040,000 1.641 6,600,000 213,000

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Table 19.17. Measured mineral resource, Main Zone.

MAIN ZONE - MEASURED RESOURCE


Au Cutoff Tonnes> Cutoff Grade > Cutoff
(gpt) (tonnes) Au (gpt) Au (grams) Au Ounces
0.10 7,400,000 0.650 4,800,000 155,000
0.20 5,900,000 0.777 4,600,000 147,000
0.30 4,690,000 0.913 4,300,000 138,000
0.40 3,730,000 1.058 3,900,000 127,000
0.50 2,890,000 1.235 3,600,000 115,000
0.60 2,310,000 1.408 3,300,000 105,000
0.70 1,870,000 1.588 3,000,000 95,000
0.80 1,560,000 1.754 2,700,000 88,000
0.90 1,350,000 1.900 2,600,000 82,000
1.00 1,190,000 2.025 2,400,000 77,000

Table 19.18. Indicated mineral resource, Main Zone.

MAIN ZONE - INDICATED RESOURCE


Au Cutoff Tonnes> Cutoff Grade > Cutoff
(gpt) (tonnes) Au (gpt) Au (grams) Au Ounces
0.10 26,690,000 0.538 14,400,000 462,000
0.20 21,660,000 0.628 13,600,000 437,000
0.30 16,380,000 0.751 12,300,000 395,000
0.40 12,110,000 0.893 10,800,000 348,000
0.50 9,090,000 1.041 9,500,000 304,000
0.60 6,960,000 1.192 8,300,000 267,000
0.70 5,540,000 1.332 7,400,000 237,000
0.80 4,520,000 1.465 6,600,000 213,000
0.90 3,810,000 1.578 6,000,000 193,000
1.00 3,280,000 1.680 5,500,000 177,000

Table 19.19. Inferred mineral resource, Main Zone.

MAIN ZONE - INFERRED RESOURCE


Au Cutoff Tonnes> Cutoff Grade > Cutoff
(gpt) (tonnes) Au (gpt) Au (grams) Au Ounces
0.10 39,940,000 0.389 15,500,000 500,000
0.20 29,410,000 0.475 14,000,000 449,000
0.30 18,600,000 0.608 11,300,000 364,000
0.40 11,780,000 0.762 9,000,000 289,000
0.50 8,170,000 0.903 7,400,000 237,000
0.60 5,990,000 1.033 6,200,000 199,000
0.70 4,590,000 1.151 5,300,000 170,000
0.80 3,500,000 1.276 4,500,000 144,000
0.90 2,750,000 1.393 3,800,000 123,000
1.00 2,220,000 1.501 3,300,000 107,000

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Table 19.20. Measured plus Indicated resource, Main Zone.

MAIN ZONE - MEASURED PLUS INDICATED RESOURCE


Au Cutoff Tonnes> Cutoff Grade > Cutoff
(gpt) (tonnes) Au (gpt) Au (grams) Au Ounces
0.10 34,080,000 0.562 19,200,000 616,000
0.20 27,550,000 0.660 18,200,000 585,000
0.30 21,070,000 0.787 16,600,000 533,000
0.40 15,840,000 0.932 14,800,000 475,000
0.50 11,980,000 1.088 13,000,000 419,000
0.60 9,270,000 1.246 11,600,000 371,000
0.70 7,410,000 1.397 10,400,000 333,000
0.80 6,080,000 1.539 9,400,000 301,000
0.90 5,160,000 1.662 8,600,000 276,000
1.00 4,470,000 1.772 7,900,000 255,000

Table 19.21. Indicated resource, North Zone.

NORTH ZONE - INDICATED RESOURCE


Au Cutoff Tonnes> Cutoff Grade > Cutoff
(gpt) (tonnes) Au (gpt) Au (grams) Au Ounces
0.10 27,570,000 0.461 12,700,000 409,000
0.20 20,680,000 0.565 11,700,000 376,000
0.30 15,020,000 0.685 10,300,000 331,000
0.40 10,930,000 0.812 8,900,000 285,000
0.50 8,200,000 0.934 7,700,000 246,000
0.60 6,300,000 1.050 6,600,000 213,000
0.70 4,840,000 1.171 5,700,000 182,000
0.80 3,790,000 1.289 4,900,000 157,000
0.90 2,940,000 1.418 4,200,000 134,000
1.00 2,330,000 1.541 3,600,000 115,000

Table 19.22. Inferred resource, North Zone.

NORTH ZONE - INFERRED RESOURCE


Au Cutoff Tonnes> Cutoff Grade > Cutoff
(gpt) (tonnes) Au (gpt) Au (grams) Au Ounces
0.10 77,230,000 0.259 20,000,000 643,000
0.20 32,720,000 0.415 13,600,000 437,000
0.30 15,550,000 0.603 9,400,000 301,000
0.40 7,950,000 0.852 6,800,000 218,000
0.50 5,370,000 1.050 5,600,000 181,000
0.60 3,920,000 1.236 4,800,000 156,000
0.70 2,950,000 1.428 4,200,000 135,000
0.80 2,400,000 1.585 3,800,000 122,000
0.90 2,050,000 1.713 3,500,000 113,000
1.00 1,820,000 1.811 3,300,000 106,000

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For both zones the proportion of each block above the oxidation surface was
recorded and this material is classified as oxidized. Of the Measured and Indicated
resource, 603,000 ounces (21.6M tonnes at a grade of 0.867 gpt Au) are contained
in oxidized material (Table 19.23). Of the Inferred resource, 378,000 ounces (14.3
Mt @ 0.82 gpt Au at a 0.40gpt cutoff) are contained in oxide material (Table 19.24).

Tables 19.25 to 19.30 summarize the oxide resource estimates for the North and
Main Zones separately.

Table 19.23. Measured and Indicated mineral resource, oxide material only, all areas, La India
project.
TOTAL ALL ZONES OXIDES - MEASURED PLUS INDICATED
RESOURCE
Au Cutoff Tonnes> Cutoff Grade > Cutoff
Au
(gpt) (tonnes) (gpt) Au (grams) Au Ounces
0.10 44,870,000 0.542 24,300,000 781,000
0.20 35,980,000 0.638 23,000,000 738,000
0.30 28,230,000 0.745 21,000,000 677,000
0.40 21,630,000 0.867 18,800,000 603,000
0.50 16,580,000 0.995 16,500,000 530,000
0.60 12,770,000 1.129 14,400,000 463,000
0.70 10,040,000 1.259 12,600,000 407,000
0.80 8,100,000 1.383 11,200,000 360,000
0.90 6,620,000 1.502 9,900,000 320,000
1.00 5,510,000 1.614 8,900,000 286,000

Table 19.24. Inferred mineral resource estimate, oxide material only, all areas, La India
project.
TOTAL ALL ZONES OXIDES - INFERRED RESOURCE
Au Cutoff Tonnes> Cutoff Grade > Cutoff
Au
(gpt) (tonnes) (gpt) Au (grams) Au Ounces
0.10 66,140,000 0.343 22,700,000 730,000
0.20 39,710,000 0.474 18,800,000 605,000
0.30 22,990,000 0.641 14,700,000 474,000
0.40 14,340,000 0.820 11,800,000 378,000
0.50 10,210,000 0.973 9,900,000 319,000
0.60 7,390,000 1.135 8,400,000 270,000
0.70 5,630,000 1.289 7,300,000 233,000
0.80 4,370,000 1.444 6,300,000 203,000
0.90 3,580,000 1.577 5,600,000 181,000
1.00 3,070,000 1.680 5,200,000 166,000

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Table 19.25. Main Zone, Measured oxide mineral resource.

MAIN ZONE OXIDES - MEASURED RESOURCE


Au Cutoff Tonnes > Cutoff Grade > Cutoff
(gpt) (tonnes) Au (gpt) Au (grams) Au Ounces
0.10 6,030,000 0.606 3,700,000 117,000
0.20 4,810,000 0.721 3,500,000 111,000
0.30 3,880,000 0.835 3,200,000 104,000
0.40 3,090,000 0.960 3,000,000 95,000
0.50 2,370,000 1.115 2,600,000 85,000
0.60 1,850,000 1.274 2,400,000 76,000
0.70 1,470,000 1.435 2,100,000 68,000
0.80 1,210,000 1.583 1,900,000 62,000
0.90 1,030,000 1.714 1,800,000 57,000
1.00 890,000 1.839 1,600,000 53,000

Table 19.26. Main Zone, Indicated oxide mineral resource.

MAIN ZONE OXIDES - INDICATED RESOURCE


Au Cutoff Tonnes> Cutoff Grade > Cutoff
(gpt) (tonnes) Au (gpt) Au (grams) Au Ounces
0.10 18,570,000 0.546 10,100,000 326,000
0.20 15,100,000 0.638 9,600,000 310,000
0.30 11,950,000 0.740 8,800,000 284,000
0.40 9,110,000 0.862 7,900,000 252,000
0.50 6,930,000 0.993 6,900,000 221,000
0.60 5,240,000 1.137 6,000,000 192,000
0.70 4,140,000 1.267 5,200,000 169,000
0.80 3,370,000 1.386 4,700,000 150,000
0.90 2,820,000 1.490 4,200,000 135,000
1.00 2,400,000 1.585 3,800,000 122,000

Table 19.27. Main Zone, Inferred oxide mineral resource.

MAIN ZONE OXIDES - INFERRED RESOURCE


Au Cutoff Tonnes> Cutoff Grade > Cutoff
(gpt) (tonnes) Au (gpt) Au (grams) Au Ounces
0.10 26,150,000 0.390 10,200,000 328,000
0.20 19,910,000 0.465 9,300,000 298,000
0.30 12,590,000 0.593 7,500,000 240,000
0.40 7,960,000 0.737 5,900,000 189,000
0.50 5,530,000 0.866 4,800,000 154,000
0.60 3,870,000 1.004 3,900,000 125,000
0.70 2,840,000 1.135 3,200,000 104,000
0.80 2,070,000 1.277 2,600,000 85,000
0.90 1,600,000 1.404 2,200,000 72,000
1.00 1,310,000 1.506 2,000,000 63,000

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Table 19.28. Main Zone, Measured plus Indicated oxide mineral resource.

MAIN ZONE OXIDES – MEASURED PLUS INDICATED RESOURCE


Au Cutoff Tonnes> Cutoff Grade > Cutoff
(gpt) (tonnes) Au (gpt) Au (grams) Au Ounces
0.10 24,600,000 0.561 13,800,000 444,000
0.20 19,910,000 0.658 13,100,000 421,000
0.30 15,830,000 0.763 12,100,000 388,000
0.40 12,200,000 0.887 10,800,000 348,000
0.50 9,300,000 1.024 9,500,000 306,000
0.60 7,100,000 1.173 8,300,000 268,000
0.70 5,620,000 1.311 7,400,000 237,000
0.80 4,590,000 1.438 6,600,000 212,000
0.90 3,860,000 1.550 6,000,000 192,000
1.00 3,290,000 1.653 5,400,000 175,000

Table 19.29. North Zone Indicated oxide mineral resource.


NORTH ZONE OXIDES - INDICATED RESOURCE
Grade > Cutoff
Au Cutoff Tonnes> Cutoff Au
(gpt) (tonnes) (gpt) Au (grams) Au Ounces
0.10 20,270,000 0.518 10,500,000 338,000
0.20 16,070,000 0.614 9,900,000 317,000
0.30 12,400,000 0.723 9,000,000 288,000
0.40 9,430,000 0.841 7,900,000 255,000
0.50 7,280,000 0.957 7,000,000 224,000
0.60 5,670,000 1.073 6,100,000 196,000
0.70 4,420,000 1.194 5,300,000 170,000
0.80 3,510,000 1.310 4,600,000 148,000
0.90 2,760,000 1.435 4,000,000 127,000
1.00 2,220,000 1.555 3,500,000 111,000

Table 19.30. North Zone, Inferred oxide mineral resource.


NORTH ZONE OXIDES - INFERRED RESOURCE
Grade > Cutoff
Au Cutoff Tonnes> Cutoff Au
(gpt) (tonnes) (gpt) Au (grams) Au Ounces
0.10 39,990,000 0.313 12,500,000 402,000
0.20 19,800,000 0.483 9,600,000 307,000
0.30 10,400,000 0.699 7,300,000 234,000
0.40 6,380,000 0.924 5,900,000 190,000
0.50 4,680,000 1.099 5,100,000 165,000
0.60 3,520,000 1.278 4,500,000 145,000
0.70 2,790,000 1.446 4,000,000 130,000
0.80 2,300,000 1.595 3,700,000 118,000
0.90 1,980,000 1.716 3,400,000 109,000
1.00 1,760,000 1.810 3,200,000 102,000

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For comparison the 2010 results are compared to those estimated from 2007 drilling
and reported in Gray and Giroux, Feb. 2008 and the 2008 drilling reported in Gray
and Giroux March 2009, for total (oxide plus sulfide) resource as summarized in
Table 19.31.

Table 19.31. Comparison between Jan. 2008 (drilling through 2007), Jan 2009 (drilling through
2008) and May 2010 (drilling through 22 January 2010) resource estimates.

Grade > Cutoff


Year Zone Classification Cutoff Tonnes> Cutoff Au
Au (gpt) (tonnes) (gpt) Au Ounces
2007 Main Inferred 0.40 28,520,000 0.80 735,000
North Inferred 0.40 8,270,000 0.76 202,000
Combined Inferred 0.40 36,790,000 0.79 936,000
Main Inferred 0.50 19,730,000 0.96 609,000
North Inferred 0.50 6,400,000 0.85 175,000
Combined Inferred 0.50 26,130,000 0.93 783,000

2008- Main Indicated 0.40 16,310,000 0.91 477,000


2009 North Indicated 0.40 7,440,000 0.74 177,000
Combined Indicated 0.40 23,750,000 0.86 654,000
Main Inferred 0.40 8,280,000 0.84 223,000
North Inferred 0.40 5,210,000 0.91 153,000
Combined Inferred 0.40 13,490,000 0.87 375,000
Main Indicated 0.50 11,930,000 1.08 414,000
North Indicated 0.50 5,230,000 0.86 145,000
Combined Indicated 0.50 17,160,000 1.01 559,000
Main Inferred 0.50 6,000,000 0.99 190,000
North Inferred 0.50 3,410,000 1.17 153,000
Combined Inferred 0.50 9,410,000 1.05 318,000

2010 Main M+I 0.40 15,840,000 0.93 475,000


North Indicated 0.40 10,930,000 0.81 285,000
Combined M+I 0.40 26,770,000 0.88 760,000
Main Inferred 0.40 11,780,000 0.76 289,000
North Inferred 0.40 7,950,000 0.85 218,000
Combined Inferred 0.40 19,730,000 0.80 506,000
Main M+I 0.50 11,980,000 1.09 419,000
North Indicated 0.50 8,200,000 0.93 246,000
Combined M+I 0.50 20,180,000 1.03 665,000
Main Inferred 0.50 8,170,000 0.90 237,000
North Inferred 0.50 5,370,000 1.05 181,000
Combined Inferred 0.50 13,540,000 0.96 418,000

The results can also be subdivided by Domains as shown in Table 19.32.

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Table 19.32. Summary of Resource at a 0.4 gpt Au cutoff sorted by Domains.

Zone Domain Class Tonnes> Cutoff Grade > Cutoff Percent of


Total Tonnes
for Zone and
Resource
(tonnes) Au (gpt) Au Ounces Classification
Main D1 M+I 1,110,000 0.757 27,000 7.2%
D2 M+I 3,920,000 0.755 95,000 25.3%
D3 M+I 3,040,000 1.290 126,000 19.6%
D5 M+I 4,821,000 0.665 103,100 31.1%
D6 M+I 2,618,000 1.465 123,300 16.9%
D1 INFERRED 60,000 0.705 1,000 0.5%
D2 INFERRED 4,000,000 0.616 79,000 35.1%
D3 INFERRED 2,400,000 0.966 75,000 21.1%
D5 INFERRED 2,810,000 0.742 67,000 24.6%
D6 INFERRED 930,000 1.530 46,000 8.2%
D7 INFERRED 1,200,000 0.512 20,000 10.5%
North D11 INDICATED 310,000 0.675 7,000 2.9%
D12 INDICATED 6,980,000 0.764 171,000 65.7%
D14 INDICATED 520,000 1.016 17,000 4.9%
D17 INDICATED 2,330,000 0.699 52,000 21.9%
D18 INDICATED 480,000 2.292 35,000 4.5%
D11 INFERRED 556,696 0.511 9,000 7.2%
D12 INFERRED 2,950,000 0.589 56,000 38.1%
D14 INFERRED 930,000 0.834 25,000 12.0%
D17 INFERRED 1,730,000 0.544 30,000 22.3%
D18 INFERRED 1,580,000 1.911 97,000 20.4%

19.13 Model Verification

To verify the block model cross sections on 25 m spacing and level plans on 10 m
levels were produced showing the geologic domains, the drill holes with assays and
the estimated blocks. These cross sections and level plans were reviewed by
several Grayd geologists and both authors. This process, completed in April of
2010, resulted in several changes to the geologic three dimensional model. A
similar review of the current model has established confidence in both the modeling
parameters and the grades estimated.

After the updated resource estimate was completed, M Gray examined the changes
between the 2009 and 2010 resource models and verified that they were reasonable
based on the new drillhole information and changes to the ore domain models.
Compared to the 2009 resource model and estimate, the 2010 model and estimate
has added resources, as measured by contained ounces gold, at both the Main and
North Zones, as summarized in Table 19.33. Infill drilling in the Main Zone raised
much of the Indicated material to Measured classification, resulting in a decrease of

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Indicated resource that is nearly exactly offset by an increase in Measured resource.


A more restrictive domain model for Domain 3 resulted in a slight net decrease of
2,000 contained ounces gold in the combined Measured plus Indicated categories.
The Inferred gold resource at the Main Zone increased by 66,000 ounces.

The increase in contained gold was more pronounced in the North Zone. Infill
drilling of the Cieneguita area and development of resources on its extension onto
the newly acquired Rumorosa claim resulted in an increase of Indicated resources
by 108,000 ounces and Inferred resources by 65,000 ounces.

Table 19.33. Comparison of contained gold, 2010 resource model to 2009 resource model.
Main Zone contained ounces Au North Zone contained ounces Au
Year MZ Meas MZ Ind MZ Inf NZ Meas NZ Ind NZ Inf

2009 0 477,000 223,000 0 177,000 153,000

2010 127,000 348,000 289,000 0 285,000 218,000


Absolute change,
2010 to 2009 127,000 -129,000 66,000 0 108,000 65,000
Percent change,
2010 to 2009 n.a -27% 30% 0% 61% 42%

19.14 Economic Pit Limit Analyses

For purposes of a preliminary economic assessment of the La India project, Lerchs-


Grossmann (LG) evaluations of potential economic pit limits were conducted using
the deposit models and mineral resources described earlier in this section. Table
19.34 summarizes the base case economic and recovery parameters used in these
evaluations. This includes specific unit costs, recoveries, and SGs for the different
domains as included in the resource models. All prices and costs are in second
quarter 2010 U.S. dollars.

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Table 19.34.Base case economic parameters for pit design.

Base Case Economic Parameters


Metal price $900 / oz Au
NSR Royalty 2.0 %
Freight, insurance & refining costs $4.12 / oz Au
Ore mining cost $2.05 / t
Waste mining cost $2.05 / t
General & administration cost $1.50 / t ore
Ore processing costs, recoveries and specific gravities:
Process Cost Recovery Specific
Domain Rock Description $/t % Gravity
Main 1 Dacite 3.41 89 2.22
Main 2 Silica Massive 3.62 73 2.51
Main 2A Silica Massive / Alunite 3.64 80 2.33
Main 3 Silica Vuggy / Alunite 3.61 71 2.28
Main 5 Silica Clay Structures 4.18 88 1.97
Main 6 Silica Bodies (C de O) 3.40 75 2.39
Main 7 Intrusive 4.18 88 2.38
North 11 Dacite 3.41 89 2.22
North 12 Silica Massive 3.87 62 2.63
North 12A Silica Massive / Alunite 3.60 94 2.33
North 14 Silica Clay 4.18 88 1.97
North 17 Intrusive 4.18 88 2.38
North 18 Silica Breccia 5.24 92 2.18

In the LG study, only gold is used to generate revenues for oxidized material. All
sulfide mineralization is treated as waste rock. Overall slope angles of 40°, 45° and
50° are used for the LG evaluations. Mineral resources classified as Measured,
Indicated and Inferred are allowed to be considered as potential ore in the LG
analyses.

Net value is computed for each block for the economic pit optimizations, which
include variable ore costs and recoveries by domain, and weighted average specific
gravities. Potential ore is defined for purposes of the LG analyses by internal dollar
/ tonne ($/t) cutoffs that include ore mining ($2.05/t), general/administration ($1.50/t)
and variable ore processing costs by domain. A total of 72 runs (12 prices total x 3
slopes x 2 cases equals 72 cases) are included for each deposit model to test
sensitivities to:

• gold prices ranging from $270 to $1260/oz (12 prices total), in 10%
increments from the base price of $900/oz,

• pit slope at 40°, 45°, and 50° (3 slopes total), and

• including a pad liner cost of $0.33/t ore (2 cases – with or without),

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The results of the LG pit limit analyses for the 45° pit slopes are presented in Tables
19.35 and 19.36, including and excluding pad liner costs, respectively. All of the
mineral resources presented in Tables 19.35 and 19.36 are classified as Measured,
Indicated and Inferred, and as defined in Canadian NI 43-101, should not be
considered mineral reserves until at least a Pre-Feasibility study has been
completed. Tonnages are based on in-situ weighted average densities stored in the
block models, which range from 1.97-2.51 t/m3 in the Main deposit and 1.97-2.63
t/m 3 in the North deposit. Average in-situ densities within the base case LG shells
are 2.23 and 2.33 t/m3 for the Main and North deposits, respectively. The base
case, at $900/oz Au, is highlighted in bold typeface in the Tables.

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Table 19.35. Lerchs-Grossman cases 1 – 12; includes pad liner cost; slope = 45
Contained Measured, Indicated and Inferred Mineral Resources
Main Ore Wste Total Strip Au Avg ContainAu Au Rec Rec Au Net $
Price Case# (ktonnes) (ktonnes) (ktonnes) Ratio g/t (kOunces) g/t (kOunces) (k$)
$ 270 1 1,199 916 2,115 0.76 1.57 61 1.23 47 $ 1,526.8
$ 360 2 4,505 4,668 9,173 1.04 1.27 183 0.96 140 $ 5,894.3
$ 450 3 7,495 7,225 14,720 0.96 1.10 266 0.85 205 $ 18,191.9
$ 540 4 11,180 10,219 21,399 0.91 0.98 351 0.76 272 $ 35,612.3
$ 630 5 14,563 10,998 25,561 0.76 0.87 408 0.68 317 $ 58,234.1
$ 720 6 17,617 11,683 29,300 0.66 0.80 453 0.62 353 $ 84,357.1
$ 810 7 20,285 12,393 32,678 0.61 0.75 488 0.59 382 $ 113,020.9
$ 900 8 22,812 12,980 35,792 0.57 0.70 517 0.55 406 $ 144,336.7
$ 990 9 26,496 15,775 42,271 0.60 0.66 560 0.52 442 $ 177,134.5
$ 1,080 10 29,598 17,888 47,486 0.60 0.62 593 0.49 469 $ 213,324.0
$ 1,170 11 31,544 18,586 50,130 0.59 0.60 610 0.48 484 $ 251,353.6
$ 1,260 12 33,734 19,241 52,975 0.57 0.58 629 0.46 499 $ 290,869.6
North
$ 270 1 2,605 4,436 7,041 1.70 1.58 132 1.39 117 $ 1,213.4
$ 360 2 5,734 7,011 12,745 1.22 1.28 236 1.13 208 $ 11,915.2
$ 450 3 9,217 8,741 17,958 0.95 1.06 315 0.94 279 $ 29,343.8
$ 540 4 12,042 9,375 21,417 0.78 0.94 365 0.84 325 $ 52,406.9
$ 630 5 14,737 9,860 24,597 0.67 0.86 406 0.76 361 $ 79,090.6
$ 720 6 17,866 11,453 29,319 0.64 0.78 450 0.70 400 $ 108,215.0
$ 810 7 19,896 11,847 31,743 0.60 0.74 473 0.66 421 $ 140,370.8
$ 900 8 21,648 12,261 33,909 0.57 0.71 492 0.63 437 $ 174,209.2
$ 990 9 23,507 12,706 36,213 0.54 0.67 509 0.60 453 $ 209,265.9
$ 1,080 10 25,037 12,968 38,005 0.52 0.65 522 0.58 464 $ 245,794.4
$ 1,170 11 26,803 13,481 40,284 0.50 0.62 537 0.55 477 $ 283,080.5
$ 1,260 12 28,249 13,731 41,980 0.49 0.60 548 0.54 486 $ 321,558.6
Total
$ 270 1 3,804 5,352 9,156 1.41 1.58 193 1.34 164 $ 2,740.1
$ 360 2 10,239 11,679 21,918 1.14 1.27 419 1.06 347 $ 17,809.5
$ 450 3 16,712 15,966 32,678 0.96 1.08 581 0.90 485 $ 47,535.7
$ 540 4 23,222 19,594 42,816 0.84 0.96 717 0.80 596 $ 88,019.2
$ 630 5 29,300 20,858 50,158 0.71 0.86 814 0.72 678 $ 137,324.7
$ 720 6 35,483 23,136 58,619 0.65 0.79 903 0.66 754 $ 192,572.1
$ 810 7 40,181 24,240 64,421 0.60 0.74 961 0.62 803 $ 253,391.7
$ 900 8 44,460 25,241 69,701 0.57 0.71 1,008 0.59 843 $ 318,545.9
$ 990 9 50,003 28,481 78,484 0.57 0.67 1,069 0.56 894 $ 386,400.4
$ 1,080 10 54,635 30,856 85,491 0.56 0.63 1,115 0.53 933 $ 459,118.4
$ 1,170 11 58,347 32,067 90,414 0.55 0.61 1,147 0.51 960 $ 534,434.1
$ 1,260 12 61,983 32,972 94,955 0.53 0.59 1,176 0.49 985 $ 612,428.3
* Measured, Indicated and Inferred mineral resources without adjustments for dilution or loss.
Inferred mineral resources have a great amount of uncertainty as to their existence and as to whether
they can be mined legally or economically. It cannot be assumed that all or any part of Inferred
mineral resources will ever be upgraded to a higher category.

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Table 19.36. Lerchs-Grossman cases 13 – 24; excludes pad liner cost; slope = 45
Contained Measured, Indicated and Inferred Mineral Resources
Main Ore Wste Total Strip Au Avg ContainAu Au Rec Rec Au Net $
Price Case# (ktonnes) (ktonnes) (ktonnes) Ratio g/t (kOunces) g/t (kOunces) (k$)
$ 270 13 1,366 1,025 2,391 0.75 1.53 67 1.19 52 $ 1,802.1
$ 360 14 4,925 4,701 9,626 0.95 1.22 194 0.93 148 $ 7,038.3
$ 450 15 8,535 8,020 16,555 0.94 1.07 293 0.82 226 $ 20,096.2
$ 540 16 12,249 10,336 22,585 0.84 0.94 370 0.73 286 $ 38,450.2
$ 630 17 15,661 10,972 26,633 0.70 0.84 424 0.66 330 $ 62,196.0
$ 720 18 18,381 11,500 29,881 0.63 0.78 462 0.61 361 $ 89,327.6
$ 810 19 21,223 12,459 33,682 0.59 0.73 498 0.57 391 $ 118,757.3
$ 900 20 23,917 13,055 36,972 0.55 0.69 528 0.54 415 $ 150,862.1
$ 990 21 27,448 15,636 43,084 0.57 0.64 568 0.51 449 $ 184,834.2
$ 1,080 22 30,608 17,848 48,456 0.58 0.61 601 0.48 476 $ 221,964.9
$ 1,170 23 32,665 18,509 51,174 0.57 0.59 619 0.47 491 $ 260,705.4
$ 1,260 24 34,720 18,942 53,662 0.55 0.57 635 0.45 504 $ 300,948.3
North
$ 270 13 3,026 4,688 7,714 1.55 1.53 149 1.34 131 $ 1,679.7
$ 360 14 6,157 7,188 13,345 1.17 1.25 247 1.10 217 $ 13,252.3
$ 450 15 9,883 8,722 18,605 0.88 1.03 327 0.91 290 $ 31,829.4
$ 540 16 12,772 9,280 22,052 0.73 0.92 376 0.81 334 $ 55,790.5
$ 630 17 15,873 10,569 26,442 0.67 0.83 423 0.74 376 $ 82,827.0
$ 720 18 18,636 11,361 29,997 0.61 0.77 458 0.68 408 $ 113,313.2
$ 810 19 20,686 11,809 32,495 0.57 0.72 481 0.64 428 $ 146,060.0
$ 900 20 22,672 12,284 34,956 0.54 0.69 501 0.61 445 $ 180,330.9
$ 990 21 24,318 12,699 37,017 0.52 0.66 516 0.59 459 $ 216,018.7
$ 1,080 22 25,912 12,936 38,848 0.50 0.64 529 0.56 470 $ 253,082.3
$ 1,170 23 27,686 13,463 41,149 0.49 0.61 543 0.54 482 $ 290,896.8
$ 1,260 24 29,265 13,854 43,119 0.47 0.59 555 0.52 492 $ 329,773.2
Total
$ 270 13 4,392 5,713 10,105 1.30 1.53 216 1.30 183 $ 3,481.8
$ 360 14 11,082 11,889 22,971 1.07 1.24 440 1.02 365 $ 20,290.7
$ 450 15 18,418 16,742 35,160 0.91 1.05 620 0.87 516 $ 51,925.6
$ 540 16 25,021 19,616 44,637 0.78 0.93 746 0.77 620 $ 94,240.8
$ 630 17 31,534 21,541 53,075 0.68 0.84 847 0.70 706 $ 145,023.0
$ 720 18 37,017 22,861 59,878 0.62 0.77 920 0.65 768 $ 202,640.8
$ 810 19 41,909 24,268 66,177 0.58 0.73 979 0.61 819 $ 264,817.3
$ 900 20 46,589 25,339 71,928 0.54 0.69 1,029 0.57 861 $ 331,193.0
$ 990 21 51,766 28,335 80,101 0.55 0.65 1,084 0.55 907 $ 400,852.9
$ 1,080 22 56,520 30,784 87,304 0.54 0.62 1,130 0.52 946 $ 475,047.2
$ 1,170 23 60,351 31,972 92,323 0.53 0.60 1,162 0.50 973 $ 551,602.2
$ 1,260 24 63,985 32,796 96,781 0.51 0.58 1,190 0.48 996 $ 630,721.5
* Measured, Indicated and Inferred mineral resources without adjustments for dilution or loss.
Inferred mineral resources have a great amount of uncertainty as to their existence and as to whether
they can be mined legally or economically. It cannot be assumed that all or any part of Inferred
mineral resources will ever be upgraded to a higher category.

The “Net$” column is the net value of the pit, with all costs deducted. This item is
used to determine the “ultimate” pit for the life-of-mine scheduling analysis. Figures
19.9 and 19.10 graphically represent the pit parameters. From these graphs, it’s

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notable that the ultimate pit size does not vary significantly if the pad liner cost is
included or excluded. It is also noted that for pit shells smaller than the base case
price, pit mineable resource is more sensitive than shells larger than the base case.
Therefore cases below the base case gain ounces more significantly where a large
mineable resource has a large effect on the return on capital. The cases larger than
the base case have a lesser gain in size and therefore will not contribute as much
return on capital for the equivalent increased risk. Case# 20, the base case at $900
gold price, excluding pad liner costs, and at a 45o pit slope, has been chosen as the
final pit to give a more robust economic pit resource limit for scheduling. Cost and
price sensitivity can then be done in the cash flow for the selected ultimate pit size.

Main
700
Summary of L-G Pit Cases 1-12
$350,000.00 60,000 600

$300,000.00 A
50,000 500
U u

(
S 1
$250,000.00
40,000 0
$ O 400
0
$200,000.00 u
Net $ (k$) 0
(

1 30,000 n 300 INSITU Au (kOunces)


'
0 $150,000.00 Ore (kTONNES) c Rec Au (kOunces)
s
0 Wste (kTONNES) e

)
20,000 200
0 $100,000.00 s
Total (kTONNES)
s
10,000 100
)

$50,000.00

$0.00 - -
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12

L-G Pit Run # L-G Pit Run #

North
600
Summary of L-G Pit Cases 1-12
$350,000.00 45,000
500
40,000
$300,000.00 A
U 35,000 u
(

1 400
S $250,000.00
30,000 0
$ O
0
$200,000.00 u 300
25,000 0
Net $ (k$) INSITU Au (kOunces)
(

1 n
'
0 $150,000.00 20,000 Ore (kTONNES) c Rec Au (kOunces)
s 200
0 Wste (kTONNES) e
)

15,000
0 $100,000.00 s
Total (kTONNES)
s 10,000
100
)

$50,000.00
5,000

$0.00 - -
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12

L-G Pit Run # L-G Pit Run #

Figure 19.9. Lerchs-Grossman cases 1-12, includes pad liner cost, slope=45.

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Main
700
Summary of L-G Pit Cases 13-24
$350,000.00 60,000 600

$300,000.00 A
50,000 500
U u

(
S 1
$250,000.00
40,000 0
$ O 400
0
$200,000.00 u
Net $ (k$) 0
n INSITU Au (kOunces)
(

1 30,000 ' 300


0 $150,000.00 Ore (kTONNES) c Rec Au (kOunces)
s
0 Wste (kTONNES) e

)
20,000 200
0 $100,000.00 s
Total (kTONNES)
s
10,000 100
)

$50,000.00

$0.00 - -
13 14 15 16 17 18 19 20 21 22 23 24 13 14 15 16 17 18 19 20 21 22 23 24

L-G Pit Run # L-G Pit Run #

North
600
Summary of L-G Pit Cases 13-24
$350,000.00 50,000
500
45,000
$300,000.00 A
U 40,000 u

(
1 400
S $250,000.00 35,000 0
$ O
30,000 0
$200,000.00 u 300
Net $ (k$) 0
n INSITU Au (kOunces)
(

1 25,000 '
0 $150,000.00 Ore (kTONNES) c Rec Au (kOunces)
20,000 s 200
0 Wste (kTONNES) e

)
0 $100,000.00 15,000 s
Total (kTONNES)
s 10,000 100
)

$50,000.00
5,000

$0.00 - -
13 14 15 16 17 18 19 20 21 22 23 24 13 14 15 16 17 18 19 20 21 22 23 24

L-G Pit Run # L-G Pit Run #

Figure 19.10. Lerchs-Grossman cases 1-12, excludes pad liner cost, slope=45.

The base case $900/oz Au LG shells contain 46.6 million tonnes grading 0.69 g Au/t
of Measured, Indicated and Inferred mineral resources. These figures do not include
any provisions for ore dilution or mining loss. Contained troy ounces of gold are
estimated at 1,029,000, of which about 899,000 ounces are considered potentially
recoverable. Tables 19.37 and 19.38 below list the contained Measured plus
Indicated, and Inferred mineral resources, respectively, for the base case LG shells.

Table 19.37. Base case ($900/oz) Lerchs-Grossman, contained Measured, and Indicated
resources.
Base Case ($900/oz Au) Lerchs-Grossmann – Contained Measured & Indicated Mineral Resources
MnlRes* Contained Recov Au Recov
Deposit Ktonnes Au g/t Oz Au g/t Oz Au Net $/t
Main 16,272 0.71 373,500 0.56 291,800 7.99
North 13,814 0.66 295,300 0.58 258,900 8.83
Total 30,085 0.69 668,800 0.57 550,700 8.38
* Mineral resources above internal Net $/t cutoff without adjustments for dilution or
loss.

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Table 19.38. Base case ($900/oz) Lerchs-Grossman, contained Inferred resources.


Base Case ($900/oz Au) Lerchs-Grossmann – Contained Inferred Mineral Resources
MnlRes* Contained Recov Au Recov
Deposit Ktonnes Au g/t Oz Au g/t Oz Au Net $/t
Main 7,646 0.63 154,400 0.50 123,400 6.22
North 8,858 0.72 205,700 0.65 186,500 9.43
Total 16,503 0.68 360,100 0.58 309,900 7.94
* Mineral resources above internal Net $/t cutoff without adjustments for dilution or loss.

About 65% of the mineral resource tonnages contained within the base case LG
shells are classified as Measured and Indicated, with the remainder being Inferred.
The Main deposit area contains about 51% of the project’s total mineral resources,
weighted by tonnage.

Figure 19.11 illustrates the base case LG shells within the Main and North deposit
areas. Potential haul roads, dumps, and surface facilities are located in Figure
19.11 for reference. Note that while Floating Cone pits are not guaranteed to be
optimal, LG pit shells are deemed to be optimized pits. However, these pits are not
minable as is, requiring roads and a designed pit wall configuration. Detailed pit
designs have been generated from the optimized pit shells and are broken out as
individual pits, to be mined in a prescribed sequence. This is the basis of the life-of-
mine scheduling described in Item 21.

Figures 19.12 through 19.15 are west-east cross sections looking north through the
Main and North area models displaying topography, selected LG pit shells ($450 Au
through $1080 Au, at $90 increments), color-coded 3-D model (weighted average)
gold block grades, and the oxide / sulfide surface (in bold orange). The base case
LG pit at a $900 Au price is in bold red.

This study of the La India project is at a scoping level in accuracy, is preliminary in


nature and includes Inferred mineral resources in the estimation of the mine
production schedule (Item 21). Inferred mineral resources are considered too
speculative geologically to have the economic considerations applied to them that
would enable them to be categorized as mineral reserves under standards set forth
in Canadian NI 43-101. As such, there is no certainty that the mineral resource
projections presented in the above tables and the mine production schedule (Table
21.4) will be realized. Mineral resources that are not mineral reserves do not have
demonstrated economic viability.

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Figure 19.11. Base case LG shells ($900/oz Au) for La India Project.

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Figure 19.12. Main model West-East cross section at 3,176,095 North, looking North.

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Figure 19.13. Main model West-East cross section at 3,176,495 North, looking North.

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Figure 19.14. North model West-East cross section at 3,178,690 North, looking North.

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Figure 19.15. North model West-East cross section at 3,179,115 North, looking North.

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19.15 Detailed Design - Pit Delineated resources

Based on the LG Base Case economic Pit20 ($900/oz Au) detailed pit designs have
been done to include detailed slope parameters and ramps. These are described in
Item 21 but summarized in Table 19.39 as pit delineated resources. At this PEA
level of study these resources include Measured, Indicated, and Inferred classes
and are used in the production schedule and economic analysis for evaluation
purposes only. They are not deemed reserves and MMTS does not present them as
having economically assured profitability at this stage of study.

Table 19.39. Detailed pit designs based on base Lerchs-Grossman, MII pit resources
Detailed Pit Designs Based 0n Base Lerchs-Grossmann – MII Pit Resources
MnlRes* Contained Recov Au Recov
Deposit Ktonnes Au g/t Oz Au g/t Oz Au Net $/t
Main 25,478 0.64 522,500 0.50 411,600 8.44
North 23,956 0.63 487,100 0.56 432,100 9.91
Total 49,434 0.64 1,009,600 0.53 843,700 9.15

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20 OTHER RELEVANT DATA AND INFORMATION

To the best of the author’s knowledge, all relevant data has been presented in this
report.

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21 MINING

21.1 Mining Operations

The mine planning and engineering work includes determining the economic pit limit,
detailed pit designs, calculating in pit resources, and production scheduling, based
on the resource model described in the preceding section. The resource model and
the mining engineering work have been done using MineSight® software. Mining,
capital and operating cost estimates have then been estimated for the mine plan
based on typical costs for this type and size of operation. These components of the
study are described in the following sections.

21.1.1 Mining Areas and Phases

The base case Lerchs-Grossmann (LG) analysis presented in Section 19 generates


a number of pit shells in the North and Main deposit areas. These pit shells have
been prioritized by net value for purposes of developing a mining sequence for a
preliminary mine production schedule. Figure 21.1 illustrates the LG shells and the
pit areas used to rank by net value.

Some of these pit shells are small distinct cones but are in close proximity to each
other and will be mined more efficiently when combined together. From the ranking
of the smaller pit areas, in the Main deposit a set of five pits, ranked from highest to
lowest value, has been designed: MP21, MP22, MP23, MP24, and MP25. Similarly
the North deposit pit sequence is defined by five additional sets of pits, ranked from
highest to lowest value: NP21, NP23, NP22, NP24, and NP25. Note that the lower
value LG pit shells are excluded from the production scheduling as being either too
small or too marginal in value.

The grouped LG pits were converted to designed pits using double benching and
45o inter-ramp slopes to get a truer estimate of waste rock and stripping ratio. Pit
ramps have a maximum slope of 10%, and a bank face angle of 70 o is assumed.
Figures 21.2 and 21.3 display the final design pits used for production scheduling,
for the North and Main areas respectively.

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Figure 21.1. Base case open pit LG shells, areas for value ranking.

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Figure 21.2. North design pits used for scheduling, sequenced by value ranking.

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Figure 21.3. Main design pits used for scheduling, sequenced by value ranking.

21.1.2 Detailed Pit Designs

The detailed designs for the pit areas indicated above are based on the pit design
parameters as listed below in Table 21.1 and shown in Figure 21.4.
Table 21.1. Pit design parameters.
o o
Inter-Ramp Slope (maximum ) 45
o o
Bank Face Angle ( ) 70
Bench Stacking (@ 6m / bench) 2 (Double-Benches)
Berm Width (every 2nd bench) 7.6m
Road Grade (maximum) 10%
Road Width – Double Lane 13.8m
Road width – Single Lane 9.2m

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Bench Height

Bench Height
Berm Width
Bank Face Angle

Inter-ramp Slope Angle Berm Width

Figure 21.4. Pit design slope parameters.

The bench height used for the pit designs in the current preliminary economic
assessment (PEA) is based on the block height in the 3D model, which is 6 meters.
The pits are to be mined using double benching, i.e., 2-6m benches per stack, with a
7.6m berm width every other 6m bench (or one double bench stack), as shown in
Figure 21.4. An overall 45 degree inter-ramp slope is achieved using the 7.6 m
berm width along with a 70o bank face angle.

Roads are 10 percent maximum, with external roads at a double-lane width, and
most inter-pit ramps using a single lane width (due to their short spans.) Pit access
and haulage roads are designed for 28-t off-highway haulage trucks (CAT 730
articulated). Access roads to the working areas will be single lane at 9.2 m wide, but
active haulage roads are double lane at 13.8 m wide – sufficient for two way traffic,
berms and ditches. The smaller truck size requires a narrower road and is expected
to be more efficient for accessing the small pit bottoms of the numerous pit areas.
Table 21.2 displays the design pit phase tonnages, grades, strip ratio, and values
used for sequencing and scheduling.

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Table 21.2. Design pit scheduling parameters.


Incremental Design Pit Phases for Production Scheduling
AREA Ore Avg Rec Rec Oz Waste Total Value Net Value Avg. Insitu Insitu Oz
Pit Name [PIT#] (ktonnes) Au (g/t) (1000's) (ktonnes) S.R. (1000's) ($/t) Au (g/t) (1000's)
NP21 11+12 6,974 0.72 160.0 7,624 1.09 $ 96,313 $ 13.81 0.86 193.4
NP23 6+7+8 5,102 0.58 94.4 2,297 0.45 $ 54,800 $ 10.74 0.62 102.4
NP22 9+10 6,001 0.49 92.4 3,160 0.53 $ 48,673 $ 8.11 0.53 101.4
NP24 1+2 2,959 0.48 44.9 2,055 0.69 $ 22,488 $ 7.60 0.54 51.7
NP25 13 2,920 0.37 34.5 1,408 0.48 $ 15,195 $ 5.20 0.41 38.1
SubTotal 23,956 0.56 426.2 16,544 0.69 $ 237,470 $ 9.91 0.63 487.1
MP21 1+2 3,300 0.62 65.0 2,268 0.69 $ 38,672 $ 11.72 0.83 88.2
MP22 9+10 7,114 0.55 124.4 5,292 0.74 $ 70,017 $ 9.84 0.74 168.5
MP23 6+7+8 7,888 0.46 116.3 8,272 1.05 $ 59,086 $ 7.49 0.57 144.1
MP24 3+4+5 5,829 0.42 77.0 2,031 0.35 $ 34,862 $ 5.98 0.48 89.1
MP25 11+12 1,345 0.55 23.3 1,181 0.88 $ 12,453 $ 9.26 0.76 32.7
SubTotal 25,476 0.50 406.0 19,044 0.75 $ 215,091 $ 8.44 0.64 522.5
TOTAL 49,432 0.53 832.3 35,588 0.72 $ 452,560 $ 9.16 0.64 1,009.6

Notes: 1 - D0/ND0 is considered as waste.


2 - "Total Value" and "$/t" do not include mining costs.
3 - Ore and waste tonnes include 5% mining loss & 5% dilution.
4 - SG is based on values as stored in the resource model

Note pit MP25 is mined last since it requires moving the haul road.
The pit designs developed for this scoping-level mining study contain mineral
resources that are adjusted to include 5% mining dilution at average grades of 0.14
g Au/t in the North area and 0.15 g Au/t in the Main area. Ore losses of 5% are also
assumed.

21.1.3 Mine Layout

Figure 21.5 displays the layout of the final design pits used for production
scheduling, along with preliminary locations for minesite infrastructure. These
include the mine access road, haulage roads, carbon adsorption plant, truck shop
location, leach pad, and prospective waste rock disposal sites.

One leach pad is to be employed west and south of the North pits with the crusher at
approximately the 1560 elevation. This minimizes ore haulage distances since the
average haulage distance to the crusher is about the same for the North and Main
pits. The carbon plant and the truck shop site are centrally located between the two
deposits and near the crusher.

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Figure 21.5. Design pits used for scheduling with roads, dumps, leach pad, and infrastructure.

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21.1.4 Mine Production Schedule

A preliminary mine production schedule for the La India project is developed from
the Measured, Indicated, and Inferred mineral resources contained within each of
the design pit phases. The combined North and Main ore-grade mineral resources
used for scheduling are as indicated in Table 21.2 above.

The MineSight® schedule optimization program (MSSP) has been to simulate open
pit mining for a maximum ore processing rate of 6,000,000 tpy. Table 21.3
summarizes the parameters used to generate the mine production schedule and,
subsequently, to estimate mine equipment and manpower requirements.
Table 21.3. Mine production scheduling parameters.
Combined annual ore and waste production rate 10 million tonnes
Annual maximum crushing rate 6 million tonnes
Mine operating hours per shift 12
Mine operating shifts per day 2
Mine operating days per week 7
Scheduled mine operating days per year 365
Number of mine crews 4

An allowance of 5 days per annum was made for weather delays and/or shutdowns
for holidays. Otherwise, pit operations are scheduled around the clock. Ore feed for
the first two years of operations is limited to 4.7 million tonnes and 5.1 million tones,
respectively, to account for a gradual ramp-up of the crushing plants and sinking rate
(benches mined per year) restrictions. Mine sinking rates were typically limited to a
maximum of twelve to fifteen 6-m benches per year to allow adequate time for
drilling, sampling, blasting, assaying, grade control staking and loading operations.
This is equivalent to just over one bench mined every month.

Only oxide mineral resources above the internal Net $/tonne cutoffs (see Table 21.1)
are considered as leach material for purposes of developing the PEA mine
production schedule. The scheduling program sequences the necessary material by
bench and by phase, for each time period.

The mining phases in each deposit area are initially input in the highest to lowest
economic order. The scheduling program reorders the mining based on numerous
criteria, including maximizing value period-by-period, pre-stripping, and sink rate.
Benches are mined from the upper most benches downward within each pit phase.
Concurrent phase mining is allowed for advanced stripping purposes and to maintain
acceptable sink rates. Mining is initiated in the North area deposits, and the Main
area deposits are brought into the schedule as determined by the program. The
North and Main areas must be developed simultaneously to have sufficient ore
exposure for consistent ore processing/leaching and to manage sinking rates within
each of the pits.

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Table 21.4 summarizes the resulting mine production schedule for the PEA of the La
India project.

No preproduction is necessary since there is no waste capping the deposits, i.e., ore
occurs on the surface, or near surface, in sufficient quantities to meet production
requirements immediately upon commencement of mining. Feed to the crushing
plants and leach pads will total 49.4 million tonnes over the life of the mine, which is
projected at just under 9 years total. 832,000 ounces will be recovered in total, at an
average leach recovery of approximately 84%.

Table 21.4. Mine production schedule based on Measured, Indicated, and Inferred mineral
resources.
ORE Avg Insitu Contained Avg Rec Au Recovered Waste Total Ktonnes Strip
Year (Ktonnes) Au (g/t) Au (Koz) (Rec g/t) Au (Koz) Ktonnes Mined Ratio
1 - Qtr1 1,050 0.78 26 0.63 21 1,707 2,757 1.63
1 - Qtr2 1,050 0.81 27 0.66 22 1,376 2,426 1.31
1 - Qtr3 1,300 0.83 35 0.67 28 1,433 2,733 1.10
1 - Qtr4 1,300 0.84 35 0.73 30 895 2,195 0.69
2 5,100 0.70 114 0.64 104 3,348 8,448 0.66
3 5,800 0.61 114 0.58 106 2,559 8,359 0.44
4 5,894 0.58 110 0.49 92 3,152 9,046 0.53
5 5,600 0.73 132 0.55 99 4,417 10,017 0.79
6 5,510 0.44 78 0.38 66 6,773 12,283 1.23
7 5,924 0.72 137 0.58 108 4,504 10,428 0.76
8 5,750 0.51 95 0.46 84 3,112 8,862 0.54
9 5,153 0.56 92 0.46 75 2,312 7,465 0.45
Totals 49,431 0.63 996 0.53 832 35,588 85,019 0.72
Notes: 1 - Pit resources are based on the net $/tonne cutoff value for full blocks
2 - D0 / ND0 is always waste
3 - Reserves have 5% loss and 5% dilution applied
4 - Excludes North Pit 26 and Area 13 of Main Pit 25
* Includes Measured, Indicated and Inferred mineral resources, 5% mining dilution, and 5% mining loss. Inferred mineral resources
have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. It cannot be
assumed that all or any part of Inferred mineral resources will ever be upgraded to a higher category.

Ore production varies from year-to-year in that the scheduling program tries to
balance a target of 100,000 ounces recovered gold per annum against sink rate
limits and the total material mining capacity.

Peak material handling rates during Years 5-7 average just under 30,000 tpd of total
material. External mine haul road construction and other site preparation work
precedes production mining on a pit by pit requirement basis.

Figure 21.6 displays the final surface after mining and waste dump reclamation.
Appendix I contains mining progress maps (i.e., Year-End Plan Maps) at several
stages of mining, displaying pit and waste dump progress.

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This preliminary economic assessment of the La India project is at a scoping


level in accuracy, is preliminary in nature and includes inferred mineral
resources in the estimation of the mine production schedule (Table 21.4).
Inferred mineral resources are considered too speculative geologically to have
the economic considerations applied to them that would enable them to be
categorized as mineral reserves under standards set forth in Canadian NI 43-
101. As such, there is no certainty that this preliminary economic assessment
and the mineral resource projections presented in the mine production
schedule will be realized. Mineral resources that are not mineral reserves do
not have demonstrated economic viability.

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Figure 21.6. Final surface, post mining and waste dump reclamation.

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21.1.5 Mine Equipment Selection and Fleet Requirements

For purposes of equipment selection and cost estimation for this preliminary
assessment, open pit mining will be conducted from 6-m benches using small scale
equipment, including:

- 165-mm-diameter down-hole-hammer blasthole drills,

- 4.0-m3 front-end loaders,

- 3.0-m3 hydraulic shovel,

- 28-t off-highway haulage trucks,

- 306- and 228-kW crawler dozers,

- 193-kW motor graders and 30,000-liter water trucks.

All major mining equipment will be diesel powered. Mobility is an important


consideration in equipment selection where three to four pits will be mined
concurrently. A 60-t equipment transporter (tractor plus low-boy trailer) will be
needed to move drills and dozers between pit areas.

The mine equipment and manpower requirements are derived from the operating
parameters presented in Table 21.2 and the production schedule listed in Table
21.3. Essentially, the mine will be scheduled for continuous operations using four
rotating crews, each working 12-hour shifts, four days on and four days off,
averaging 41.5 hours per week. No preproduction stripping operations are required,
excluding mine road construction and general site preparation.

Ore will be hauled to crushing-screening-agglomeration plants located near the


proposed leach pad. The crushed and agglomerated ore will then be transported by
conveyors and a stacker onto the leach pad.

Waste rock haulage will be directed to one of five sites:

1. MD1 - Main dump located west-southwest of the Main deposit area for
phases MP21 through MP25,

2. ND1 - North dump situated between north phases NP21 and NP23 for NP21,

3. ND2 - North dump located east of phase NP23 for NP21,

4. ND3 - dump located west of phase NP24 for NP24, and

5. Backfill to pit NP21 for phases NP22, NP23, and NP25.

Dumping elevations for each waste material site are summarized in Table 21.5.

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Table 21.5. Waste material dumping elevations.


Waste Dump Dumping / Crest Elevation
(meters above sea level)
MD1 – Main Dump 1715
ND1 – North Dump #1 1736
ND2 – North Dump #2 1754
ND3 – North Dump #4 1730
NP21 – North Pit #21 Backfill 1760

These dump sites were selected for their close proximity to mining areas and natural
confinement for regrading and water management considerations. Storm run-off will
not require re-routing using additional drainage ditches since the natural drainage
will can handle the flow. Pits and waste rock dumps are situated on higher ground
away from major drainages such that neither flooding of pits or dumps nor acid rock
drainage is anticipated.

Some ongoing reclamation of the waste rock dumps will be accomplished since the
first north pit mined (NP21) will accommodate much of the other north pits’ waste
through backfilling. More detailed work will be required on this in future planning.

Equipment productivities are derived dynamically by the scheduling program using


pre-determined cycle times for all haul routes. A loose density of 1.71 t/m 3, equating
to an average 34% swell, is used in waste dump sizing and unit productivity
calculations for loading and hauling equipment.

Blasthole drill productivities are estimated at nearly 750 tonnes per hour using a
blasthole pattern of 5 m by 5 m, with 0.8 m of subgrade drilling, and a powder factor
of 0.33 kg per tonne of rock. Effective drill penetration rates of 27 m per hour are
assumed. A fleet of three drills is estimated to cover the required production plus
down time and scheduling losses, with 2.4 drills operating on average. A crawler-
type percussion drill will also be needed for secondary breakage, road construction
and short-term backup to the primary blasthole drills.

Four 4.0-m3 front-end loaders and one 3.0-m 3 shovel will serve as the primary
loading units, each working with 28-t off-highway haul trucks, having an effective
payload of 25 tonnes. The productivity of this loader/shovel combination is
estimated at 10,000,000 tonnes per year. Four to five operating loaders will be
required. One of the 4.0-m 3 front-end loaders can also provide for ROM ore
stockpile rehandling, bench toe cleanup work, berm maintenance and other
miscellaneous loading requirements.

Ore haulage profiles range from 1.8 to 4.2 km one-way for the North pit hauls, and
waste profiles vary between 0.4 and 3.5 km one-way, including pit NP21 backfill.
Ore haulage profiles range from 1.7 to 4.9 km one-way for the Main pit hauls, and
waste profiles vary between 0.6 and 2.3 km one-way. Truck fleet requirements, with
utilizations of approximately 71%, reach a maximum of seventeen units during Years

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4-7. A fleet of sixteen trucks is estimated for the first three years of production and
the last two years.

Auxiliary equipment for roads and dump maintenance, heap leach and other support
operations will include:

• three 306-kW crawler dozers,

• two 228-kW crawler dozers,

• three 193-kW motor graders, and

• three 30,000-liter (35-t) off-highway water trucks.

Table 21.6 summarizes the major mine equipment requirements for the project.
Post mining reclamation will be done using the mining equipment at the end of
mining and final flushing of the leach pad. Accumulated funds from the reclamation
bond will fund this work. More detailed planning will require future studies in
conjunction with environmental studies.

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Table 21.6. Major mining equipment fleet requirements.


Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9
Primary:
Crawler Drills, 165-mm 3 3 3 3 3 3 3 3 3
Loaders, 4.0-cu-m 3 3 3 4 4 4 4 3 3
Shovels, 3.0-cu-m 1 1 1 1 1 1 1 1 1
Trucks, 25-tonne 16 16 16 17 17 17 17 16 16
Sec. Drills, 89-mm 1 1 1 1 1 1 1 1 1
Dozers, 306-kW 3 3 3 3 3 3 3 3 3
Dozers, 228-kW 2 2 2 2 2 2 2 2 2
Graders, 193-kW 3 3 3 3 3 3 3 3 3
Water Truck, 30,000-liter 3 3 3 3 3 3 3 3 3
Ancillary:
ANFO Truck, 8-t 2 2 2 2 2 2 2 2 2
Blasthole Dewatering Truck 1 1 1 1 1 1 1 1 1
Powder Truck, 1-t 2 2 2 2 2 2 2 2 2
Powder Magazine, 5-t 2 2 2 2 2 2 2 2 2
AN Storage Bin, 40-t 1 1 1 1 1 1 1 1 1
Integrated Tool Carrier, 105-kW 2 2 2 2 2 2 2 2 2
Crawler Excavator, 1.5-cu-m 1 1 1 1 1 1 1 1 1
Backhoe/Loader, 1.1-cu-m 1 1 1 1 1 1 1 1 1
All-Terrain Crane, 40-t 1 1 1 1 1 1 1 1 1
Equipment Transporter, 60-t 1 1 1 1 1 1 1 1 1
Fuel/Lube Truck 2 2 2 2 2 2 2 2 2
Mechanic Field Service Truck 4 4 4 4 4 4 4 4 4
Off-Road Tire Handling Truck 2 2 2 2 2 2 2 2 2
Shop Forklift 1 1 1 1 1 1 1 1 1
Light Plant 5 5 5 5 5 5 5 5 5
Pickup Truck, 0.5-t, 4-WD 8 8 8 8 8 8 8 8 8
Crew Van 2 2 2 2 2 2 2 2 2
Ambulance 1 1 1 1 1 1 1 1 1
Mobile Radios 41 41 41 41 41 41 41 41 41

21.1.6 Mine Personnel

A rotating, four-crew system will be used to staff mine operations and maintenance
craft labor positions. These crews will work 12-hour shifts. Table 21.7 summarizes
the mine personnel requirements, including supervision and technical staff. Mine
manpower levels range from 120 in the final year of production mining (year 9) to a
peak of 223 that are projected for Years 4-7.

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Table 21.7. Mine personnel requirements.

Year1 - Year1 - Year1 - Year1 -


Description Qtr1 Qtr2 Qtr3 Qtr4 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9
Mine Operations:
Driller, blasthole 12 12 12 12 12 12 12 12 12 12 12 8
Driller, secondary/pioneer 4 4 4 4 4 4 4 4 4 4 3 2
Blaster 2 2 2 2 2 2 2 2 2 2 2 2
Blasting Helper 4 4 4 4 4 4 4 4 4 4 3 2
Shovel/Loader Operator 16 16 16 16 16 16 20 20 20 20 12 8
Truck Driver 64 64 64 64 64 64 68 68 68 68 48 32
Track Dozer Operator 16 16 16 16 16 16 16 16 16 16 12 8
Grader Operator 8 8 8 8 8 8 8 8 8 8 8 6
Water Truck Driver 8 8 8 8 8 8 8 8 8 8 6 4
Laborer/Trainee 8 8 8 8 8 8 8 8 8 8 6 4
VSA Operator 4 4 4 4 4 4 4 4 4 4 3 2
VSA Laborer/Trainee 2 2 2 2 2 2 2 2 2 2 1 0
Subtotal Mine
Operations 148 148 148 148 148 148 156 156 156 156 116 78
Mine Maintenance:
Heavy Eqpmt Mechanic 12 12 12 12 12 12 12 12 12 12 9 9
Welder/Mechanic 4 4 4 4 4 4 4 4 4 4 3 3
Electrician/Instrument 2 2 2 2 2 2 2 2 2 2 1 1
Lubeman/PM Mechanic 4 4 4 4 4 4 4 4 4 4 3 2
Tireman 4 4 4 4 4 4 4 4 4 4 3 2
Machinist 2 2 2 2 2 2 2 2 2 2 1 1
Carpenter/Utilityman 4 4 4 4 4 4 4 4 4 4 4 2
Laborer/Trainee 8 8 8 8 8 8 8 8 8 8 6 4
VSA Mechanic 2 2 2 2 2 2 2 2 2 2 2 2
VSA Laborer 1 1 1 1 1 1 1 1 1 1 1 1
Subtotal Mine
Maintenance 43 43 43 43 43 43 43 43 43 43 33 27
Mine Supervision &
Technical:
Mine Superintendent 1 1 1 1 1 1 1 1 1 1 1 1
Drill & Blast Foreman 1 1 1 1 1 1 1 1 1 1 1 1
Mine Shift Foreman 4 4 4 4 4 4 4 4 4 4 3 2
Maint General Foreman 1 1 1 1 1 1 1 1 1 1 1 1
Maint Shift Foreman 4 4 4 4 4 4 4 4 4 4 3 2
Chief Engineer 1 1 1 1 1 1 1 1 1 1 1 1
Mine Planning Engineer 1 1 1 1 1 1 1 1 1 1 1 0
Ore Control Engineer 1 1 1 1 1 1 1 1 1 1 1 1
Sr Mine Geologist 1 1 1 1 1 1 1 1 1 1 1 1
Mine Geologist 1 1 1 1 1 1 1 1 1 1 1 0
Surveyor 1 1 1 1 1 1 1 1 1 1 1 1
Rodman 1 1 1 1 1 1 1 1 1 1 1 1
Eng Tech/Ore Control 4 4 4 4 4 4 4 4 4 4 3 2
Secretary/Clerk 2 2 2 2 2 2 2 2 2 2 2 1
Subtotal Mine
Supv/Tech 24 24 24 24 24 24 24 24 24 24 21 15

Total Mine Personnel: 215 215 215 215 215 215 223 223 223 223 170 120

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21.2 Mining Costs

La India mining cost estimates are in second quarter 2010 U.S. dollars and exclude
taxes and duties. No inflationary escalation factors have been applied to these cost
projections. All cost estimates for this PEA should be considered scoping level in
accuracy (i.e., ±35%).

21.2.1 Mine Capital Estimates

Mine equipment unit prices are from MMTS’s data base, derived from recent vendor
quotations for similarly sized equipment and industry cost guides. Sustaining capital
is also included in the estimates, accounting for fleet expansions where necessary
and replacements of aging units. Costs are estimated for ancillary equipment, which
includes: explosives storage and handling, small excavating and transport
equipment, an all-terrain crane, a fuel/lube truck, mechanic field trucks, tire handling
equipment, forklifts, light plants and assorted light vehicles. Allowances are made
for shop equipment, pit water handling systems, radio communications, office
equipment and software, initial mine haul road construction, spare parts and
supplies inventories, contingency and salvage value at the end of mining.

Table 21.8 summarizes the mine capital expenditures over the life of the La India
project.
Table 21.8. Mine capital expenditures summary.
Cost Description U.S. $ x 1000
Initial equipment purchases (through Year 2) 26,100
Mine haul road construction and site preparation 7,200
Spares inventory 1,500
Sustaining / Working Capital 4,000
Sustaining equipment purchases 3,100
Spares recovery and equipment salvage (4,500)
Closure earthworks and reclamation 3,200
Total Mine Capital 40,700

Mine capital expenditures throughout the mine life are projected at $40.7 million.
This includes working capital for mine operations.

The above capital costs exclude the truck shop, wash pad, tire shop, fuel and
lubricant storage and pumping systems, mine offices and power distribution
systems. These are included in the mine facilities capital estimates presented later
in this report.

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21.2.2 Mine Operating Cost Estimates

Costs were derived from numerous sources including nearby operations, equipment
handbooks, and typical industry estimates.

La India mine operating cost estimates cover: pit operations (i.e., drilling, blasting,
loading and hauling); waste dump maintenance; construction of internal haul roads,
sumps and safety berms; maintenance of all mine roads and safety berms; operating
and maintenance labor; mine department supervision and technical services; and
other earthworks as may be required for day to day mining operations. Exploration
costs are not included in the operating cost estimates presented in this section. The
mine production schedule presented in Table 21.4 and equipment unit productivity
estimates were used to calculate operating shifts and manpower requirements,
which in turn are used to derive mine operating costs.

Unit operating costs for major equipment incorporate manufacturer estimates of fuel
and lubricant consumption. Up-to-date industry cost estimation guides and industry
contacts, are used to estimate hourly operating costs, which are subsequently
adjusted for local labor rates and supply costs. The mining cost estimates were
based on energy prices of $0.59/liter for diesel fuel, and $0.55/kg for ANFO and
$0.75/kg for emulsion costs (at a 75%:25% ratio, respectively). Mining operations
will not consume electricity as all equipment will be diesel powered.

Mine operating and maintenance labor rates range between $1.45 and 3.80 per
hour, which are commensurate with similar Mexican operations. Fringe benefits,
which include overtime pay adjustments, were estimated at 100% of the base labor
costs.

Over the life of the project, mine operating costs for La India are projected at $174.2
million, averaging $19.7 million per year. This equates to $2.05 per tonne of
material mined (ore and waste), or $3.52 per tonne of ore processed. Unit mining
costs are summarized in Table 21.9, and the annual mining costs are summarized in
Table 21.10.

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Table 21.9. Unit mine operating cost summary.

Item Unit Mining Cost


($/tonne matl):
Drilling $ 0.29
Blasting $ 0.24
Loading $ 0.20
Hauling $ 0.57
Roads & Dumps $ 0.38
General Mine $ 0.11
General Maintenance $ 0.05
Supervision & Technical $ 0.21

Total Mining, Pre-Tax ($/t matl): $ 2.05

Table 21.10. Annual mine operating cost summary.


Description Year1 - Qtr1 Year1 - Qtr2 Year1 - Qtr3 Year1 - Qtr4 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Totals

Production (ktonnes):
Ore 1,050 1,050 1,300 1,300 5,100 5,800 5,894 5,600 5,510 5,924 5,750 5,153 49,431
Waste 1,707 1,376 1,433 895 3,348 2,559 3,152 4,417 6,773 4,504 3,112 2,312 35,588
Total Material 2,757 2,426 2,733 2,195 8,448 8,359 9,046 10,017 12,283 10,428 8,862 7,465 85,019

Mine Operating Costs 5,647,700 4,969,600 5,598,500 4,496,400 17,305,600 17,123,300 18,530,600 20,519,700 25,161,600 21,361,600 18,153,700 15,292,600 174,161,100

21.3 Mine Life

The operating life of the La India project is estimated at 8.85 years assuming an
average ore processing rate of 16,400 tpd. There is no preproduction stripping
period. However, road and site development work must be completed before
production can begin. The mining cash flow is summarized in Table 21.11, with the
value and cost parameters used summarized in Table 21.12.

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Table 21.11. Mining cash flow summary.


Description Pre-Mining Year1 - Qtr1 Year1 - Qtr2 Year1 - Qtr3 Year1 - Qtr4 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Totals
ORE Ktonnes Mined 1,050 1,050 1,300 1,300 5,100 5,800 5,894 5,600 5,510 5,924 5,750 5,153 49,431
D11 31 253 373 344 331 558 771 2,661
D12 760 533 546 506 765 33 11 3,154
D12A 3 13 123 157 2,794 5,118 1,838 37 934 612 11,629
D14 1 5 6 290 682 531 72 1,587
D17 230 2,730 2,959
D18 257 250 252 287 921 0 0 1 1,968
D1 1,056 582 905 138 33 2,714
D2 1,221 1,952 0 503 37 831 4,544
D2A 2,478 874 3,352
D3 152 1,556 92 1,102 22 568 3,492
D5 12 4 477 1,682 2,962 3,721 8,859
D6 1,083 1,397 33 2,514
D7 -
AU (Insitu g/t) 0.78 0.81 0.83 0.84 0.70 0.61 0.58 0.73 0.44 0.72 0.51 0.56 0.63
AU (Rec g/t) 0.63 0.66 0.67 0.73 0.64 0.58 0.49 0.55 0.38 0.58 0.46 0.46 0.53
Recovered Au KOz 21 22 28 30 105 107 93 100 67 110 85 76 844
Waste Ktonnes 1,707 1,376 1,433 895 3,348 2,559 3,152 4,417 6,773 4,504 3,112 2,312 35,588
Total Ktonnes Mined 2,757 2,426 2,733 2,195 8,448 8,359 9,046 10,017 12,283 10,428 8,862 7,465 85,019
Strip Ratio 1.63 1.31 1.10 0.69 0.66 0.44 0.53 0.79 1.23 0.76 0.54 0.45 0.72
Mine Operating Costs
Description Pre-Mining Year1 - Qtr1 Year1 - Qtr2 Year1 - Qtr3 Year1 - Qtr4 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Totals
Gross Revenue (1000's) $ 18,900 $ 19,800 $ 25,200 $ 27,000 $ 94,500 $ 96,300 $ 83,700 $ 90,000 $ 60,300 $ 99,000 $ 76,500 $ 68,400 $ 759,600
Refining Cost (1000's) $ (87) $ (91) $ (115) $ (124) $ (433) $ (441) $ (383) $ (412) $ (276) $ (453) $ (350) $ (313) $ (3,477)
Royalty (1000's) $ (94) $ (99) $ (125) $ (134) $ (470) $ (479) $ (417) $ (448) $ (300) $ (493) $ (381) $ (340) $ (3,781)
Processing Cost (1000's)
D11 $ (105) $ (864) $ (1,272) $ (1,173) $ (1,127) $ - $ - $ - $ (1,903) $ (2,628) $ - $ - $ (9,073)
D12 $ (2,941) $ (2,064) $ (2,113) $ (1,958) $ (2,961) $ - $ - $ - $ (126) $ (44) $ - $ - $ (12,207)
D12A $ (9) $ (46) $ (443) $ (566) $ (10,058) $ (18,426) $ (6,617) $ (132) $ (3,363) $ (2,203) $ - $ - $ (41,864)
D14 $ - $ (2) $ (23) $ (24) $ (1,211) $ (2,849) $ (2,221) $ (301) $ - $ - $ - $ - $ (6,632)
D17 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ (960) $ (11,410) $ - $ (12,370)
D18 $ (1,347) $ (1,313) $ (1,325) $ (1,506) $ (4,834) $ (1) $ (0) $ - $ - $ (4) $ - $ - $ (10,330)
ND0 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
D1 $ - $ - $ - $ - $ - $ - $ (3,601) $ (1,984) $ (3,088) $ (471) $ - $ (112) $ (9,256)
D2 $ - $ - $ - $ - $ - $ - $ (4,421) $ (7,066) $ (1) $ (1,821) $ (133) $ (3,008) $ (16,450)
D2A $ - $ - $ - $ - $ - $ - $ - $ - $ (9,019) $ (3,182) $ - $ - $ (12,201)
D3 $ - $ - $ - $ - $ - $ - $ (551) $ (5,618) $ (331) $ (3,980) $ (79) $ (2,049) $ (12,607)
D5 $ - $ - $ - $ - $ - $ - $ (51) $ (16) $ (1,994) $ (7,030) $ (12,382) $ (15,556) $ (37,029)
D6 $ - $ - $ - $ - $ - $ - $ (3,683) $ (4,751) $ (113) $ - $ - $ - $ (8,547)
D7 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
D0 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Ore Mining Cost (1000's) $ (2,153) $ (2,153) $ (2,665) $ (2,665) $ (10,455) $ (11,890) $ (12,083) $ (11,480) $ (11,296) $ (12,144) $ (11,788) $ (10,564) $ (101,334)
G & A (1000's) $ (1,575) $ (1,575) $ (1,950) $ (1,950) $ (7,650) $ (8,700) $ (8,841) $ (8,400) $ (8,265) $ (8,886) $ (8,625) $ (7,730) $ (74,147)
Waste Mining Cost (1000's) $ (3,499) $ (2,821) $ (2,938) $ (1,835) $ (6,863) $ (5,246) $ (6,462) $ (9,055) $ (13,885) $ (9,233) $ (6,380) $ (4,740) $ (72,956)
Net Revenue (1000's) $ 7,090 $ 8,774 $ 12,230 $ 15,064 $ 48,437 $ 48,268 $ 34,371 $ 40,337 $ 6,341 $ 45,468 $ 24,973 $ 23,988 $ 315,341
Net $/ore tonne $ 6.75 $ 8.36 $ 9.41 $ 11.59 $ 9.50 $ 8.32 $ 5.83 $ 7.20 $ 1.15 $ 7.68 $ 4.34 $ 4.66 $ 6.38
Mine Capital
TOTAL MINE CAPITAL, Pre-Tax 28,769 1,806 - - - 1,439 2,264 1,681 1,056 2,290 2,124 1,854 (2,562) 40,720

Net Mining Cash Flow (1000's US $) $ (28,769) $ 5,284 $ 8,774 $ 12,230 $ 15,064 $ 46,999 $ 46,005 $ 32,690 $ 39,281 $ 4,051 $ 43,344 $ 23,119 $ 26,550 $ 274,621

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Table 21.12. Mining cash flow parameters.


Item Value
Gold Unit Price ($/oz) $ 900.00
Gold Refining Cost ($/oz) $ (4.12)
Royalty ($/oz) 0.5% NSR $ (4.48)
Ore Unit Processing Cost ($/t)
D11 $ (3.41)
D12 $ (3.87)
D12A $ (3.60)
D14 $ (4.18)
D17 $ (4.18)
D18 $ (5.25)
D1 $ (3.41)
D2 $ (3.62)
D2A $ (3.64)
D3 $ (3.61)
D5 $ (4.18)
D6 $ (3.40)
D7 $ (4.18)
Ore Unit Mining Cost ($/t) $ (2.05)
G&A $ (1.50)
Waste Unit Mining Cost ($/t) $ (2.05)

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22 PROCESSING

22.1 Process Description and Design Criteria

Flowsheet selection was based upon results of laboratory test work. The process
flowsheet includes a three-stage crushing plant followed by a heap leach operation.
Gold is extracted by an ADR carbon plant. The process flowsheet is based on an
ore processing rate of 6.0 million dry tonnes per year (17,150 dry tonnes per day). A
simplified process flowsheet is presented in Figure 22.1.

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Figure 22.1. Process flowsheet.

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22.2 Process Description

22.2.1 Primary Crushing

Run-of-mine (ROM) ore is trucked from the mine and dumped directly into the
Primary Gyratory Crusher. An apron feeder reclaims the primary crushed ore from
the gyratory discharge pocket and feeds the Primary Crusher Discharge Conveyor
(Conveyor # 1) The Primary Crusher Discharge Conveyor feeds the Primary
Crushed Ore Stockpile.

22.2.2 Primary Crushed Ore Stockpile

The Primary Crushed Ore Stockpile has a live capacity of 120,000 tonnes. However
by dozer pushing the total stockpile can be increased to contain up to 500,000
tonnes. Crushed ore is reclaimed from the pile by 4 vibrating feeders which load the
primary crushed ore onto the Secondary Crushing Plant Feed Conveyor (Conveyor
# 2), which is equipped with a metal detector and magnet.

22.2.3 Secondary Crushing and Screening

Ore from the Secondary Crushing Plant Feed Conveyor is transported to the
Secondary Crusher Vibrating Screen. Screen undersize material by-passes the
Secondary Standard Cone Crusher directly to the Secondary Crusher Discharge
Conveyor (Conveyor # 3). Screen oversize material feeds the MP 800 standard-
head cone crusher. The Secondary Cone Crusher discharges on the Secondary
Crusher Discharge Conveyor.

22.2.4 Tertiary Crushing and Screening

The Secondary Crusher Discharge Conveyor transfers material to the Tertiary


Crusher Vibrating Screen. Screen undersize material is dropped directly on the Final
Crusher Product Conveyor. Screen oversize material feeds the MP 800 Short-head
Cone Crusher. Product discharged from the Tertiary Short-head Cone Crusher is
collected by the Tertiary Crusher Discharge Conveyor (Conveyor # 4) and
transported to the Tertiary Crusher Transfer Conveyor (Conveyor # 5). The Tertiary
Crusher Transfer Conveyor, in a scissors arrangement, is conveyed back to the
Secondary Crusher Discharge Conveyor to close the circuit. The tertiary crusher
could be by-passed if the Tertiary Crusher Vibrating Screen is opened. The need for
tertiary crushing is considered marginal and needs to be confirmed by additional
testing, however for this study tertiary crushing is included.

Lime addition for pH control is added to the Final Crusher Product Conveyor
(Conveyor # 6) which feeds a series of grasshopper-type portable conveyors and a
self-propelled radial stacker for heap construction.

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22.2.5 Heap Leach Pad

The leach pad design is based on a total capacity of 50 million dry tonnes. The final
pad will be approximately 667 m x 900 m built in three separate phases. Phase 1 will
be approximately 250,000 square meters (667m x 375m). Phase 2 and 3 built in
Year 3 and Year 6 respectively will each be 175,000 square meters (667m x 263m).
Ultimate height will be approximately 100 meters (measured vertically at the
maximum depth). The leach pad liner system consists of an 80 mil low density
polyethylene (LDPE) geomembrane overlying geosynthetic clay liner (GCL) on
prepared subgrade. Compacted clay may be used in some areas in place of GCL. It
is anticipated that the ore will be stacked in lifts that are 6 meters high. Once a
reasonable area of the pad is stacked with ore, piping and drip emitters will be
placed on the ore for distribution of cyanide leach solution. Solution draining from the
leach pad will be collected in a solution collection ditch with the ability to route the
solution either the barren or pregnant collection ponds. A ditch diversion system
diverts the natural runoff from uphill catchment areas around the phased heap leach
pad.

22.2.6 Solution Ponds

Solution ponds consist of a Barren Solution Pond, a Pregnant Solution Pond and an
emergency Storm Water Pond. The Barren and Pregnant Solution Ponds are each
sized at 2.5 million gallons. The Storm Water Pond will be designed to store rain
water to minimize fresh water consumption and also to contain the volume of
solution that will be produced from a 100-year /24-hour storm event. The Storm
Water Pond is ultimately sized at 28 million gallons. The Storm Water Pond could be
built in three phases as the leach pad is expanded. The initial phase would contain
12 million gallons. When Phase 2 and Phase 3 of the leach pad are built the pond
would be expanded by 8 million gallons for each separate pad expansion. The
Barren and Pregnant Ponds are double lined and equipped with leak collection and
recovery systems. The single lined emergency Storm Water Pond is available in
case of an extreme storm event. If this occurs, the excess solution will be routed to
the Storm Water Pond and later used to supply make-up water.

22.2.7 Carbon Adsorption

The pregnant solution will be pumped to the carbon adsorption circuit. The solution
will be pumped across a stationary trash screen for trash removal. The carbon
adsorption circuit consists of a series of five cascading carbon columns. The solution
flows counter current to the flow of carbon and the solution overflow from the final
column will discharge onto a carbon safety screen to catch any entrained carbon.
The barren solution that will discharge from the final carbon column drains to the
barren solution pond. Cyanide solution, liquid caustic and antiscalent are added to
the barren as needed. Barren solution is then pumped back to the leach pad. The
loaded carbon from the first carbon column is advanced to the
desorption/regeneration circuits. At this point of the process, the carbon in each

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column will be advanced one column and either regenerated or fresh carbon will be
placed in the fifth carbon column. Recessed impeller pumps will be used to move
carbon between the columns and to the loaded carbon screen.

22.2.8 Gold Recovery and Refining

The loaded carbon will be advanced to the loaded carbon screen for dewatering and
then the loaded carbon is transferred into an acid wash tank. The acid wash
removes any scale that accumulates on the surface of the activated carbon. At the
conclusion of the acid wash cycle, a dilute caustic solution will be used to wash the
carbon and to neutralize the acid solution. The wash solution will be discharged to
the barren ponds for use in the heap leaching circuit. Then, the washed carbon
transfer pump will move the carbon from the acid wash tank to the carbon strip
vessel.

The caustic soda strip solution is pumped through in-line heaters and a heat
exchanger before entering the bottom of the strip vessel. The pregnant solution that
flows out of the top of the strip vessel will flow to an electrowinning cell. At the
conclusion of the strip cycle, the stripped carbon will be pumped to the stripped
carbon dewatering screen. The dewatered carbon will discharge into the carbon
reactivation kiln feed hopper. The processed carbon will be thermally regenerated in
the carbon reactivation kiln to maintain its activity. Regenerated carbon is
discharged into a carbon quench tank.

Gold will be plated onto knitted-mesh steel wool cathodes in the electrowinning cell.
Cathodes go a wash station where the gold-bearing sludge and any remaining steel
wool will be removed. The gold-bearing sludge and steel wool will be retorted to
remove any mercury. The retort residue will be mixed with fluxes and then smelted
in an induction furnace to produce gold doré and slag. The doré will be transported
to a refiner for further purification. Slag is processed to remove prills for re-melting in
the furnace.

22.3 Process Services

22.3.1 Electrical Power

All power for the project will be supplied by diesel generators. Estimated power
required for the process plant is 3.9 megawatts.

22.3.2 Laboratory

An assay and metallurgical laboratory facility is equipped to perform sample


preparation and assays, by atomic absorption, fire assay, and CN soluble analyses.
A metallurgical test work area for process optimization is also included.

22.3.3 Process Design Criteria

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The design particle crush size is minus 25 millimeters however, ore types found to
leach adequately at coarser sizes could bypass the tertiary crushing circuit. Based
on experience gained during actual operations, the crush size for each ore type may
be modified as conditions permit. The process design criteria are presented in Table
22.1.

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Table 22.1. Process design criteria.


Unit Value
General
Design mtpd 17,150
Design mtph 950
Ore Characteristics
Specific Gravity (Average) mt/m3 2.4
Dry Crushed Ore Bulk Density
Primary Crusher Product mt/m3 1.6
Tertiary Crusher Product mt/m3 1.5
Run-of-Mine Moisture % 2.0
Abrasion Index (max) 0.78
Crushing
Days per Week 7
Days per Year 350
Shifts per Day 2
Shift Length hrs 12
Crusher Availability % 75
Hours per Day hrs 18
Primary Crusher
Type Gyratory
Size mm 1,065 x 1,651
Open Side Setting mm 140
Motor kw 375
Feed Size, 100 % Passing mm 900
Product Size, 80 % Passing mm 180
Apron Feeder
Size mm 7,070 x 1,500
Motor kw 15
Primary Crusher Discharge Conveyor
Type Belt
Width mm 1,372
Motor kw 50
Primary Crushed Ore Stockpile mt 160,000
Primary Crushed Ore Stockpile Reclaim Feeders
Number of Units 4
Type Vibrating
Motor kw 15
Secondary Crushing Plant Feed Conveyor
Type Belt
Width mm 1,372
Motor kw 50
Secondary Crusher Screen
Type Vibrating, Double Deck
Size mm 2,438 x 6,096
Top Screen Deck Aperture mm 76
Bottom Screen Deck Aperture mm 25
Motor kw 40

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Secondary Crusher
Type Standard Cone Crusher
Size mm MP 800
Motor kw 600
Closed Side Setting mm 32
Crusher Product, 80 % Minus mm 30
Secondary Crusher Discharge Conveyor
Type Belt
Width mm 1,372
Motor kw 50
Tertiary Crusher Screen
Type Vibrating, Double Deck
Size mm 2,428 x 6,096
Top Screen Deck Aperture mm 38
Bottom Screen Deck Aperture mm 25
Motor kw 40
Tertiary Crusher
Short-Head Cone
Type Crusher
Size mm MP 800
Motor kw 600
Closed Side Setting mm 16
Crusher Product, 80% minus mm 20
Tertiary Crusher Discharge Conveyor
Type Belt
Width mm 1,372
Motor kw 50
Tertiary Crusher Transfer Conveyor
Type Belt
Width mm 1,372
Motor kw 50
Final Crusher Product Conveyor
Type Belt
Width mm 1,372
Motor kw 50
Leach Pad Conveyors
Type Belt
Width mm 1,372
Quantity 9
Motor kw 50
Radial Stacker
Type Belt
Width mm 1,372
Motor kw 50
Leach Pad
Ultimate Design mt 50,000,000
Ultimate Height m 100
Lift Height m 6

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Volume Required m3 33,333,333


Total Area Required m2 600,000
Initial Area - Phase 1 m2 250,000
Phase 2 m2 175,000
Phase 3 m2 175,000
Pad Loading Sequence
Initial Area (375m x666m) m2 250,000
Lift 1 (359m x 650m) m2 233,350
Lift 2 (343m x 634m) m2 217,462
Lift 3 (327m x 618m) m2 202,086
Lift 4 (311m x 602m) m2 187,222
Lift 5 (295m x 586m) m2 172,870
Lift 6 (279m x 570m) m2 159,030
Leaching Cycle Lift 1
Load weeks 2
1st Leach weeks 11
Rest & Drain weeks 9
2nd Leach weeks 11
Rest & Drain weeks 10
3rd Leach weeks 11
Leach Panels
Area Square Meters (50m x 267m) m2 13,333
Panel (tonnes) mt 120,000
Design Flowrate (l/hr/sq. m) l/hr/m2 10
Design Flowrate Per Panel (l/hr) l/hr 133,333
Panels Actively Leached 11
Design Flowrate (l/hr) l/hr 1,466,663
Design Flowrate (gpm) gpm 6,458
Design Flowrate Per Panel (gpm) gpm 587
Design Flowrate Per Panel gpm 310
Solution to Ore Ratios
1st Leach 2.1
2nd Leach 2.1
3rd Leach 2.1
Barren Solution Pumps
Number of Units 2
Type Horizontal
Motor kw 150
Capacity l/m 23,000
Barren Solution Pond m3 9,470
gal 2,500,000
Pregnant Solution Pond m3 9,470
gal 2,500,000
Emergency Storm Water Pond (Ultimate) m3 106,061
gal 28,000,000
Pregnant Solution Pumps
Number of Units 2
Type Horizontal

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Motor kw 100
Capacity l/m 23,000
Carbon Columns & Handling
Power kw 20
Capacity l/m 23,000
Quantity 5 Cascade Type
Acid Wash System
Power kw 5
Carbon Capacity mt 3
Carbon Strip Vessel
Power kw 4
Carbon Capacity mt 3
Heat Exchanger
Power kw 10
Type Skid Mounted
Electrowinning Cell
Power kw 45
Capacity m3 3.0
Regeneration Furnace
Power kw 225
Carbon Capacity mt 3
Mercury Retort Oven
Power kw 80
Induction Dore Furnace
Power kw 80

22.4 Process Operating Costs

Process operating costs were developed for all of the different ore types, or
Domains. The process costs did not include any mine or general and administrative
costs as these were covered elsewhere. The costs were estimated by specific
operating area and included; Crushing and Conveying, Leaching, Plant, Refinery,
and Laboratory. All process maintenance and manpower, including process
supervision is included.

The basis for the major consumables and Mexican National labor were taken from
current costs from similar heap leach operations in Mexico. For the process section
2 ex-patriot employees were included, and assumed to be from North America. The
process operations of Crushing and Conveying, Leaching, Plant and Laboratory
were based on a 24-hour operation and staffed by 3 separate work crews, working
on a 12-hour shift basis. The Refinery work schedule is only 1 12-hour shift per day.
All costs are presented in 2010 U.S. Dollars. An exchange rate of 12 Nuevo Pesos
(Pesos or “NP”) per dollar was assumed.

Process Operating Costs by Domain are summarized in Table 22.2.

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Table 22.2. Process operating costs by ore domain, 2010 USD.


Crush &
Domain Convey Leaching Plant Refinery Laboratory Total

Main 1 $1.30 $1.20 $0.29 $0.10 $0.10 $3.00


Main 2 $1.58 $1.10 $0.29 $0.10 $0.10 $3.17
Main 2A $1.58 $1.08 $0.29 $0.10 $0.10 $3.16
Main 3 $1.39 $1.31 $0.29 $0.10 $0.10 $3.20
Main 5 $1.04 $2.13 $0.29 $0.10 $0.10 $3.67
Main 6 $1.56 $0.88 $0.29 $0.10 $0.10 $2.94
North 11 $1.30 $1.20 $0.29 $0.10 $0.10 $3.00
North 12 $1.60 $1.30 $0.29 $0.10 $0.10 $3.40
North 12A $1.46 $1.21 $0.29 $0.10 $0.10 $3.16
North 14 $1.17 $2.13 $0.29 $0.10 $0.10 $3.80
North 17 $1.04 $2.13 $0.29 $0.10 $0.10 $3.67
North 18 $1.34 $2.68 $0.29 $0.10 $0.10 $4.52

Tables 22.3 through 22.8 provide the details of the process operating costs.

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Table 22.3. Crushing and conveying operating cost estimates, 2010 USD.
North 12 North 18
Main 1 Main 2A SM Main 2 Silica Main 3 Silica Main 5 Silica Main 6 Silica Silica North 12A North 14 Silica
Ore types crushed to – 25 mm Dacite /Alunite Massive Vuggy Structures Bodies Massive SM / Alunite Silica Clay Breccia
North 11 North 17
Dacite Intrusive

Abrasion Index 0.23 0.74 0.74 0.40 0.01 0.71 0.78 0.52 0.01 0.78

Operating and Maintenance Manpower $893,400 $893,400 $893,400 $893,400 $893,400 $893,400 $893,400 $893,400 $893,400 $893,400
Primary Wear Parts $323,718 $487,179 $487,179 $378,205 $150,000 $477,564 $500,000 $416,667 $250,000 $300,000
Secondary Wear Parts $776,923 $1,169,231 $1,169,231 $907,692 $400,000 $1,146,154 $1,200,000 $1,000,000 $600,000 $800,000
Tertiary Wear Parts $776,923 $1,169,231 $1,169,231 $907,692 $400,000 $1,146,154 $1,200,000 $1,000,000 $600,000 $800,000
Other Wear Parts $258,974 $389,744 $389,744 $302,564 $150,000 $382,051 $400,000 $333,333 $200,000 $300,000
Screens $258,974 $389,744 $389,744 $302,564 $150,000 $382,051 $400,000 $333,333 $200,000 $300,000
Conveyor Belting $647,436 $974,359 $974,359 $756,410 $375,000 $955,128 $1,000,000 $833,333 $500,000 $750,000
Conveyor Parts $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000
Power $2,516,573 $2,516,573 $2,516,573 $2,516,573 $2,516,573 $2,516,573 $2,516,573 $2,516,573 $2,516,573 $2,516,573
Micellaneous (supplies & services) $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000

$7,152,922 $8,689,460 $8,689,460 $7,665,101 $5,734,973 $8,599,075 $8,809,973 $8,026,639 $6,459,973 $7,359,973
$1.30 $1.58 $1.58 $1.39 $1.04 $1.56 $1.60 $1.46 $1.17 $1.34

Table 22.4. Leaching and plant operating cost estimates, 2010 USD.
North 12 North 18
Main 1 Main 2A SM Main 2 Silica Main 3 Silica Main 5 Silica Main 6 Silica Silica North 12A North 14 Silica
Dacite /Alunite Massive Vuggy Structures Bodies Massive SM / Alunite Silica Clay Breccia
North 11 North 17
Dacite Intrusive

Leaching

Operating and Maintenance Manpower $/Year $445,860 $445,860 $445,860 $445,860 $445,860 $445,860 $445,860 $445,860 $445,860 $445,860
Piping and Solution Distribution $/Year $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $500,000 $500,000
Power $/Year $487,042 $487,042 $487,042 $487,042 $487,042 $487,042 $487,042 $487,042 $487,042 $487,042
Water $/Year $736,969 $736,969 $736,969 $736,969 $736,969 $736,969 $736,969 $736,969 $736,969 $736,969
Miscellaneous Supplies $/Year $143,290 $143,290 $143,290 $143,290 $143,290 $143,290 $143,290 $143,290 $143,290 $143,290
Sub-total $/Year $2,313,161 $2,313,161 $2,313,161 $2,313,161 $2,313,161 $2,313,161 $2,313,161 $2,313,161 $2,313,161 $2,313,161
$/tonne $0.42 $0.42 $0.42 $0.42 $0.42 $0.42 $0.42 $0.42 $0.42 $0.42
Reagents $/tonne $0.78 $0.68 $0.66 $0.89 $1.71 $0.46 $0.88 $0.79 $1.71 $2.26
$/tonne $1.20 $1.10 $1.08 $1.31 $2.13 $0.88 $1.30 $1.21 $2.13 $2.68

Plant

Operating and Maintenance Manpower $/Year $442,260 $442,260 $442,260 $442,260 $442,260 $442,260 $442,260 $442,260 $442,260 $442,260
Power $/Year $391,299 $391,299 $391,299 $391,299 $391,299 $391,299 $391,299 $391,299 $391,299 $391,299
Miscellaneous Supplies $/Year $83,356 $83,356 $83,356 $83,356 $83,356 $83,356 $83,356 $83,356 $83,356 $83,356
Sub-total $/Year $916,915 $916,915 $916,915 $916,915 $916,915 $916,915 $916,915 $916,915 $916,915 $916,915
$/tonne $0.17 $0.17 $0.17 $0.17 $0.17 $0.17 $0.17 $0.17 $0.17 $0.17
Reagents $/tonne $0.13 $0.13 $0.13 $0.13 $0.13 $0.13 $0.13 $0.13 $0.13 $0.13
$/tonne $0.29 $0.29 $0.29 $0.29 $0.29 $0.29 $0.29 $0.29 $0.29 $0.29

Table 22.5. Refining and laboratory operating cost estimates, 2010 USD.
Main 2 Main 3 Main 5 Main 6 North 12 North 12A North 18
Main 1 Main 2A Silica Silica Silica Silica Silica SM / North 14 Silica
Dacite SM /Alunite Massive Vuggy Structures Bodies Massive Alunite Silica Clay Breccia
North 11 North 17
Dacite Intrusive

Refining

Operating and Maintenance Manpower $/Year $285,060 $285,060 $285,060 $285,060 $285,060 $285,060 $285,060 $285,060 $285,060 $285,060
Power $/Year $97,825 $97,825 $97,825 $97,825 $97,825 $97,825 $97,825 $97,825 $97,825 $97,825
Miscellaneous Supplies $/Year $38,288 $38,288 $38,288 $38,288 $38,288 $38,288 $38,288 $38,288 $38,288 $38,288
Sub-total $/Year $421,173 $421,173 $421,173 $421,173 $421,173 $421,173 $421,173 $421,173 $421,173 $421,173
$/tonne $0.08 $0.08 $0.08 $0.08 $0.08 $0.08 $0.08 $0.08 $0.08 $0.08
Reagents $/tonne $0.03 $0.03 $0.03 $0.03 $0.03 $0.03 $0.03 $0.03 $0.03 $0.03
$/tonne $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10

Laboratory

Operating and Maintenance Manpower $/Year $475,620 $475,620 $475,620 $475,620 $475,620 $475,620 $475,620 $475,620 $475,620 $475,620
Miscellaneous Supplies $/Year $47,562 $47,562 $47,562 $47,562 $47,562 $47,562 $47,562 $47,562 $47,562 $47,562
Sub-total $/Year $523,182 $523,182 $523,182 $523,182 $523,182 $523,182 $523,182 $523,182 $523,182 $523,182
$/tonne $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10
Reagents $/tonne $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.01 $0.01
$/tonne $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10

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Table 22.6. Summary of manpower and costs, 2010 USD.


Pesos US $
No. Pesos / Day Cost / Month Benefits Cost / Year Cost / Month Cost / Year
Supervision
Process Manager 1 $12,000 $144,000
Metalurgical Engineer 1 $9,000 $108,000
Crushing Foreman 1 $8,000 $96,000
Master Mechanic 1 $9,000 $108,000
Secretary / Clerk 2 $400 $24,000 $24,000 $576,000 $48,000
Shift Foremen 3 $1,000 $90,000 $90,000 $2,160,000 $180,000
Chief Chemist 1 $1,200 $36,000 $36,000 $864,000 $72,000
Maintenance Supervisor 3 $1,000 $90,000 $90,000 $2,160,000 $180,000
Crushing & Conveying
Front End Loader Operator 3 $400 $36,000 $36,000 $864,000 $72,000
Crusher Operator 9 $200 $54,000 $54,000 $1,296,000 $108,000
Crusher Helper 9 $150 $40,500 $40,500 $972,000 $81,000
Crusher Laborer 9 $140 $37,800 $37,800 $907,200 $75,600
Stacking Operator 3 $200 $18,000 $18,000 $432,000 $36,000
Stacking Helper 9 $140 $37,800 $37,800 $907,200 $75,600
Leaching
Leach Pad Operator 3 $200 $18,000 $18,000 $432,000 $36,000
Leach Plant Helper 9 $150 $40,500 $40,500 $972,000 $81,000
Leach Plant Laborer 9 $140 $37,800 $37,800 $907,200 $75,600
Plant
Plant Operator 9 $200 $54,000 $54,000 $1,296,000 $108,000
Plant Helper 9 $150 $40,500 $40,500 $972,000 $81,000
Refinery
Operator 4 $200 $24,000 $24,000 $576,000 $48,000
Refinery Helper 2 $150 $9,000 $9,000 $216,000 $18,000
Laboratory
Assayers 6 $650 $117,000 $117,000 $2,808,000 $234,000
Sample Preparation 12 $150 $54,000 $54,000 $1,296,000 $108,000
Maintenance
Electrician 5 $400 $60,000 $60,000 $1,440,000 $120,000
Mechanic 6 $400 $72,000 $72,000 $1,728,000 $144,000
Helper 6 $150 $27,000 $27,000 $648,000 $54,000
Laborer 6 $140 $25,200 $25,200 $604,800 $50,400

141 $25,034,400 $2,542,200

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Table 22.7. Allocation of process manpower.


No. Cost / Year
Supervision
Process Manager 1 $144,000
Metalurgical Engineer 1 $108,000
Crushing Foreman 1 $96,000
Master Mechanic 1 $108,000
Secretary / Clerk 2 $48,000
Shift Foremen 3 $180,000
$684,000
Maintenance
Maintenance Supervisor 1 $180,000
Electrician 5 $120,000
Mechanic 6 $144,000
Helper 6 $54,000
Laborer 6 $50,400
$548,400
Crushing & Conveying
Front End Loader Operator 3 $72,000
Crusher Operator 9 $108,000
Crusher Helper 9 $81,000
Crusher Laborer 9 $75,600
Stacking Operator 3 $36,000
Stacking Helper 9 $75,600
Supervision Manpower Allocation 25% $171,000
Maintenance Manpower Allocation 50% $274,200
$893,400
Leaching
Leach Pad Operator 3 $36,000
Leach Plant Helper 9 $81,000
Leach Plant Laborer 9 $75,600
Supervision Manpower Allocation 25% $171,000
Maintenance Manpower Allocation 15% $82,260
$445,860
Plant
Plant Operator 9 $108,000
Plant Helper 9 $81,000
Supervision Manpower Allocation 25% $171,000
Maintenance Manpower Allocation 15% $82,260
$442,260
Refinery
Operator 4 $48,000
Refinery Helper 2 $18,000
Supervision Manpower Allocation 20% $136,800
Maintenance Manpower Allocation 15% $82,260
$285,060
Laboratory
Chief Chemist 1 $72,000
Assayers 6 $234,000
Sample Preparation 12 $108,000
Supervision Manpower Allocation 5% $34,200
Maintenance Manpower Allocation 5% $27,420
$475,620

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Table 22.8. Reagent consumption and cost estimates.


Main 2 Main 3 Main 5 Main 6 North 12 North 18
Main 1 Main 2A SM Silica Silica Silica Silica Silica North 12A North 14 Silica
Dacite /Alunite Massive Vuggy Structures Bodies Massive SM / Alunite Silica Clay Breccia
North 11 North 17
Dacite Intrusive

Major Reagent Consumption by Ore Type (g/tonne)


Reagent ($/kg)
Lime $0.14 2,000 2,000 1,500 2,500 2,260 1,000 2,000 2,060 2,260 3,030
NaCN $1.69 287 223 257 307 810 177 343 283 810 1,073
NaOH $0.50 25 25 25 25 25 25 25 25 25 25
Carbon $2.31 50 50 50 50 50 50 50 50 50 50
Antiscalant $2.75 5 5 5 5 5 5 5 5 5 5
Refinery $0.75 50 50 50 50 50 50 50 50 50 50
Laboratory $0.90 25 25 25 25 25 25 25 25 25 25

Main 2 Main 3 Main 5 Main 6 North 12 North 18


Main 1 Main 2A SM Silica Silica Silica Silica Silica North 12A North 14 Silica
Dacite /Alunite Massive Vuggy Structures Bodies Massive SM / Alunite Silica Clay Breccia
North 11 North 17
Dacite Intrusive

Major Reagent Cost Per Tonne of Ore by Ore Type


Reagent ($/kg)
Lime $0.14 $0.286 $0.286 $0.215 $0.358 $0.323 $0.143 $0.286 $0.295 $0.323 $0.434
NaCN $1.69 $0.484 $0.377 $0.434 $0.518 $1.369 $0.299 $0.580 $0.479 $1.369 $1.814
NaOH $0.50 $0.013 $0.013 $0.013 $0.013 $0.013 $0.013 $0.013 $0.013 $0.013 $0.013
Carbon $2.31 $0.116 $0.116 $0.116 $0.116 $0.116 $0.116 $0.116 $0.116 $0.116 $0.116
Antiscalant $2.75 $0.014 $0.014 $0.014 $0.014 $0.014 $0.014 $0.014 $0.014 $0.014 $0.014
Refinery $0.75 $0.025 $0.025 $0.025 $0.025 $0.025 $0.025 $0.025 $0.025 $0.025 $0.025
Laboratory $0.90 $0.005 $0.005 $0.005 $0.005 $0.005 $0.005 $0.005 $0.005 $0.005 $0.005

Leaching
Lime $0.286 $0.286 $0.215 $0.358 $0.323 $0.143 $0.286 $0.295 $0.323 $0.434
NaCN $0.484 $0.377 $0.434 $0.518 $1.369 $0.299 $0.580 $0.479 $1.369 $1.814
Antiscalant $0.014 $0.014 $0.014 $0.014 $0.014 $0.014 $0.014 $0.014 $0.014 $0.014
$0.784 $0.677 $0.662 $0.890 $1.706 $0.455 $0.880 $0.787 $1.706 $2.261
Plant
NaOH $0.013 $0.013 $0.013 $0.013 $0.013 $0.013 $0.013 $0.013 $0.013 $0.013
Carbon $0.116 $0.116 $0.116 $0.116 $0.116 $0.116 $0.116 $0.116 $0.116 $0.116
$0.128 $0.128 $0.128 $0.128 $0.128 $0.128 $0.128 $0.128 $0.128 $0.128

22.5 Gold Production

Gold production for La India was calculated from the mine production schedule and
the overall recovery for each ore type as determined by the testwork completed by
Kappes Cassiday & Associates.

Overall recoveries are summarized below:

Main 1 Dacite 89%


Main 2 Silica Massive 73%
Main 2A Silica Massive / Alunite 80%
Main 3 Silica Vuggy / Alunite 71%
Main 5 Silica Clay Structures 88%
Main 6 Silica Body (C de O) 75%
North 11 Dacite 89%
North 12 Silica Massive 62%
North 12A Silica Massive / Alunite 94%
North 14 Silica Clay 88%
North 17 Intrusive 88%
North 18 Silica Breccia 92%

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From the size of the initial leach pad and the pad loading schedule the leach cycle
was determined. The recovery profile by quarter was taken from the leach recovery
versus tonnes of solution applied to ores that was developed by Kappes Cassiday.

Quarter: 1 2 3 4 5 Total
Main 1 Dacite 70% 0% 14% 4% 1% 89%
Main 2 Silica Massive 50% 0% 12% 8% 3% 73%
Main 2A Silica Massive / Alunite 54% 0% 13% 8% 5% 80%
Main 3 Silica Vuggy / Alunite 50% 0% 12% 5% 4% 71%
Main 5 Silica Clay Structures 70% 0% 14% 3% 1% 88%
Main 6 Silica Body (C de O) 56% 0% 13% 4% 2% 75%
North 11 Dacite 70% 0% 14% 4% 1% 89%
North 12 Silica Massive 45% 0% 11% 4% 2% 62%
North 12A Silica Massive / Alunite 72% 0% 16% 4% 2% 94%
North 14 Silica Clay 70% 0% 14% 3% 1% 88%
North 17 Intrusive 70% 0% 14% 3% 1% 88%
North 18 Silica Breccia 70% 0% 14% 5% 3% 92%

The mine schedule for Year 1 was given on a quarterly basis. Although the mine
schedule for Year 2 was given on an annual basis for the basis of the production
calculations, Year 2 was divided into 4 equal quarters. The recovery profiles were
then applied to the quarterly mine-production to calculate the production and the
remaining recoverable inventory in the heaps. It was assumed that inventory
remained constant after 2 years and recoveries were then at equilibrium. All
inventories were recovered in Year 10 after mine production ended. Mine
production is summarized in Table 22.9.
Table 22.9. Mine production schedule.
Units Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total

Ore to Pads kt 4,700 5,100 5,800 5,895 5,600 5,510 5,924 5,750 5,153 44,279
Gold Grade of Ore g/t 0.82 0.70 0.61 0.58 0.73 0.44 0.72 0.51 0.55 0.70
Contained Gold oz 123,606 114,468 113,760 109,774 132,239 78,409 136,714 94,828 91,849 995,649
Cum Contained Gold oz 123,606 238,074 351,835 461,609 593,849 672,258 808,972 903,800 995,649

Ultimate Recovery % 82% 86% 88% 87% 84% 84% 83% 84% 84% 84%
Recoverable Gold oz 100,749 103,389 106,143 91,195 98,271 65,627 108,496 83,180 75,087 832,138
Cum. Recoverable Gold oz 100,749 204,138 310,281 401,476 499,747 565,375 673,870 757,050 832,138

Gold Recovered oz 85,829 106,573 106,143 91,195 98,271 65,627 108,496 83,180 75,087 11,736 832,138
Cum Recovered Gold oz 85,829 192,402 298,545 389,740 488,011 553,639 662,134 745,314 820,402 832,138
Recoverable Inventory oz 14,920 11,736 11,736 11,736 11,736 11,736 11,736 11,736 11,736 0 0

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23 INFRASTRUCTURE AND OVERHEAD

23.1 Construction

From the start of construction, it will take approximately 12 months to build the
project. A construction schedule is presented in Figure 23.1. Costs for construction
are outlined in Item 21.

23.2 Access Road

To connect the minesite with the road used by the Mulatos Mine for access and
transport of all materials will require 4 km of new road construction. As the existing
access roads to the site are not suitable for large trucks, this new access road will
need to be one of the first construction items completed.

There is potential to decrease the total access distance to the minesite by


approximately 12 km by reconstructing an abandoned road that trends west from the
site to the town of Iglesia. This would require approximately 10 km of new road. It
would also require access agreements with various landowners that have not been
approached at this time.

23.3 Camp

The man-camp will be one of the first items to construct because of the need to
house the construction workers for the project. An initial tent-type temporary camp
will be replaced by the permanent man- camp built of more sturdy materials. There
will be an estimated 438 employees, with 2/3 if these in camp at any one time. With
additional room for contractors and visitors, this results in a need for accommodation
for 350 people at any one time. Senior management will have their own rooms.
Other employees will be housed with 2 to 4 people sharing a room. Camp will
include a kitchen and dining hall, recreation room, first aid room and dry rooms for
both men and women.

The camp will be placed in a location sufficiently removed from the operations to
provide a quiet location well removed from blasting and crushing activities. The
camp has been tentatively located in an area north of the mine workings. However,
the location should be reviewed.

23.4 Office and Warehouse

Initially, office space will be provided by portable trailers. These will be replaced by
a permanent office and warehouse structure located close to, or adjoining, the
truckshop. Room will be required for management, security and visiting contractors
and consultants.

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Figure 23.1. Construction schedule.

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The office and warehouse will be located in the central operating area where the
current exploration camp is situated.

23.5 Truckshop

A truckshop including an open aired but covered area for large equipment and a
smaller enclosed area will be constructed at the same time as the other
infrastructure before the mine is opened. It will be located in the central operating
area.

23.6 Plant Site

The process flowsheet and details of the plant site are given in Section xxx. The
plant site will consist of a crushing plant and related stockpiles, the heap leach pad
and ponds, the gold recovery plant and a laboratory.

23.7 Crusher

The crushing plant will be one of the critical path items of the project and will require
early procurement of the crushing equipment. Geotechnical investigations will be
required in the proposed location to ensure that the underlying substrate is stable.
However, as the overburden is thin in this location, stability is not likely to be an
issue.

23.8 ADR Plant Site

The ADR plant equipment will be constructed off-site and brought in as a


modularized unit. It will require early procurement.

23.9 Laboratory

A laboratory will be constructed adjacent to, or as part of, the gold recovery plant.
The laboratory will be bought as a modularized unit constructed off-site and then
transported to site. It will need to be operational before mining commences so that
ore/waste determinations can be made.

23.10 Pad and Ponds

The heap leach pad and ponds are the items which require the most extensive
construction. There is currently no geotechnical information under the pad location.
It is situated in a gently-sloped valley with rock close to the surface. Stability is not
expected to be an issue, but geotechnical investigations and more detailed
engineering are a high-priority for further analysis. Further investigation of the area
is also required to develop a better cost estimate for pad construction.

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In this study, a geosynthetic clay liner (GCL) is modeled under the main pad liner as
there is no known area of suitable clay identified close by. Additional exploration for
a clay source is warranted.

23.11 Water Wells

Current information indicates that it will not be possible to acquire rights to surface
water. It is possible to acquire rights to sub-surface water. It is estimated that 187
m3 per hour (825 gpm) of water will be required for process make-up water, dust
suppression, camp and miscellaneous uses. Work to ensure this volume of water
can be extracted by wells is a high priority. Development of the actual wells and
related infrastructure will be undertaken early in the construction period.

23.12 6 MW Power Plant

This power plant facility will consist of 3 each 2000 KW diesel power generation
units. This facility is needed to generate the power for the entire project. The power
plant will be started along with the man-camp, offices, and laboratory in order to
provide all power requirements. It will be located in the central operating area.
There will be temporary generators utilized until this facility is in production.

23.13 Fuel Handling Facility

A secure fuel storage and dispensing facility will be built in the central operating
area. All fuel for operating equipment, vehicles and power generation will be stored
in the facility. For protection, all storage will have a secondary containment system.
A lubricant and waste oil storage site will be included in the facility.

23.14 Sewage and Waste

Sewage systems will be constructed for the camp and for the office complex. An
incinerator, dump area for inert waste and boneyard will be built to handle camp and
operational waste. A secure area will be constructed to store hazardous waste until
it is transported off-site for disposal at appropriate facilities.

23.15 Security and Fencing

While there are few people living in the area around the site, a security fence will be
placed around the camp and the central operating area. Fencing to keep out
animals, especially cattle, will be constructed around the entire operational site.

23.16 General and Administration Cost Estimates

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Costs not directly related to mining of material or the crushing and leaching of ore
and the recovery and sales of gold have been grouped under General and
Administration (G&A). This includes the cost for housing workers in a camp and
costs related to worker health and safety. A summary of G&A costs are given in
Table 23.1.

23.16.1 Senior Management

Senior management will consist of the General Manager and the Mine, Processing
and General and Administration managers who will report directly to the General
Manager. All management costs for mining and processing are included in the
mining and processing costs. The costs for the General Manager and General and
Administration manager and related support are in General and Administration
costs.

23.16.2 Accounting, Legal and Human Resources

An estimated 17 people will be employed in accounting, payroll and human


resources functions. Legal services will be by contract with outside providers.

23.16.3 Environment and Community Relations

This department will be responsible for the execution of the environmental


management plans, as well as monitoring and revision to plans as required.
Community and local government relations will also be the responsibility of this
group estimated to be 7 people.

23.16.4 Worker Health and Safety and Security

People responsible to develop and conduct worker health and safety programs will
include emergency responders/safety trainers, nurses and a doctor. A small team
of security people will be required at all times. During gold pours and dore transport,
additional security will be required. An estimated 21 people will be employed in the
Worker Health and Safety and Security department.

To reduce the risk during dore shipment, the cost of flying the dore out by helicopter
has been included in this study.

23.16.5 Purchasing and Warehouse

Approximately 15 people will be required for purchasing and warehouse operation.


Costs of procuring and shipping equipment and supplies after the completion of
construction are included in the G&A costs.

23.16.6 Camp and Logistics

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In this study, it has been assumed that the camp will be built by the company, but
will be operated by a contractor. Nine people will be employed to mange this
contract, organize transport to and from the site for equipment, material and workers
and to supervise maintenance of the access road. The access road maintenance
will be by contractors.

All costs for camp, logistics and freight have been included in G&A.

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Table 23.1. General and Administration Cost Summary


G&A Cost Summary
Total by
Category,
Area and Item Cost USD Number Units Total USD USD
Senior Management
Personnel 234,000
Office and Supplies 5,000 1 12 60,000
Vehicles 1,500 2 12 36,000
Technical Consultants 200,000 1 1 200,000
Travel, training for senior staff 100,000 1 1 100,000 630,000

Accounting and Human Resources


Personnel 334,000
Office and Supplies 5,000 1 12 60,000 394,000

Environment and Community Relations


Personnel 166,000
Office and Supplies 5,000 1 12 60,000
Vehicles 1,500 2 12 36,000
Samping Costs 10,000 1 12 120,000
Equipment 25,000 1 1 25,000
Community Support 200,000 1 1 200,000
Independent Consulting 100,000 1 1 100,000 707,000

Worker Health and Safety and Security


Personnel 340,000
Office and Supplies 5,000 1 12 60,000
Vehicles 1,500 5 12 90,000
Equipment 40,000 1 1 40,000
Safety Supplies 200 438 1 87,600
Training Costs 200 438 1 87,600 705,200

Purchasing and Warehouse


Personnel 278,000
Office and Supplies 5,000 1 12 60,000
Warehouse Operation 10,000 1 12 120,000 458,000

Camp and Logistics


Personnel 200,000
Office and Supplies 5,000 1 12 60,000
Vehicles 1,500 3 12 54,000
Room and Board (Contractor) 20 292 365 2,131,600
Camp, lab, office and truck shop power 750,000 1 1 750,000
Transport of Workers (Contractor) 20 438 12 105,120
General Freight 50,000 1 12 600,000
Communication 10,000 1 12 120,000
Access Road Maintenance (Contractor) 40,000 1 12 480,000 4,500,720

Insurance 200,000 200,000

Total per year 7,594,920

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24 ENVIRONMENTAL AND PERMITTING

24.1 Environmental Management plans


A description of the environment around the project site and a summary of
environmental assessments completed to date is presented in Item 6. A key
objective is to design and build the project in such a way that it does not cause
significant adverse effects during construction, operation, closure and post-closure.
To aid this objective, a number of Environmental Management Plans will be
developed. An outline of some of the key plans is given in this section. These plans
will need to be developed further before construction begins. They will also need to
be reviewed and revised during the life of the project.

Costs for environmental monitoring, management plans and environmental


protection measures are included in this study.

24.2 Surface Water Management

As detailed in Item 6, systematic sampling of surface waters draining the project


area has been ongoing since late 2008. This program will be continued through the
life of the mine, reclamation period and for post-closure until it has been determined
that reclamation has been successful in preventing long-term effects on surface
waters.

Water diversion structures will be constructed to keep surface water from flowing
into the pad, mine pits, waste dumps and other operational areas. Surface drainage
from disturbed areas which have no potential to produce chemical or metal
contamination will be directed into small ponds to allow sediments to settle out
before discharging to the environment.

Testing of 32 samples indicates that some of the rock types at La India are
potentially acid generating. While much of the waste rock is oxidized material with
low sulfide and metal content, there is no carbonate or other minerals in the rock to
neutralize the acid potential. Therefore, rock with even low amounts of sulfide can
be potentially acid generating. A more detailed investigation of Acid Rock Drainage
(ARD) and metal leaching potential is underway and a Mine Waste Handling Plan
will be developed before mining commences. The initial testing indicates that most
of waste rock where mining will start in the North Zone is not potentially acid
generating.

The final wall of the mine will commonly be in material that contains 3 to 5% pyrite.
As with the waste rock, further characterization of the rock that will comprise the final
walls is underway in order to develop predictions on the long-effects on surface
water chemistry from drainage of the completed mine pits.

24.3 Groundwater Management

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Groundwater effects could potentially come from the pad and ponds (if the liners
leak) and from the waste rock piles. Therefore, monitoring wells will be constructed
below the heap leach pad and waste rock dumps . A systematic sampling program
will be developed to ensure any effects the operation has on groundwater are
detected and appropriate changes to the operation can be made to negate these
effects.

24.4 Air Quality Management

The primary potential effect on air quality will be because of dust. Costs for
watering the road have been included in this study. An air quality monitoring
program will be initiated to ensure worker health and the environment are not
adversely affected by air quality.

24.5 Wildlife Management

All operational areas will be fenced to keep animals out. A no hunting policy will be
enforced amongst workers. Waterfowl are not common in the area. However, if
required, a system to keep birds from landing in the operational ponds will be
devised.

24.6 Waste Handling

24.6.1 Hazardous Wastes

Special wastes such as waste oil, glycol coolant, solvent fluids, used oil filters, used
batteries, and contaminated fuel, will be handled, stored, transported, and disposed
of in accordance with appropriate Hazardous Waste Regulations

24.6.2 Non-hazardous Wastes

A site for temporary storage of recyclable materials will be established at the


laydown Area. Such items as scrap metal, tires, glass, recyclable plastics and drink
containers will be separated, containerized as appropriate, and temporarily stored in
the lay down area until sufficient volumes are available for shipment to a recycling
point. Non-recyclable and non-hazardous waste will be buried in an on-site landfill.

24.6.3 Putrescible (Domestic) Waste Disposal

Putrescible organic food wastes generated from the camp accommodation facilities
will be burned in an on-site incinerator. Ash produced by the incinerator will be
buried in the landfill site along with other inert non-recyclable materials.

24.6.4 Boneyard Storage

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A location on the mine site will be designated as an outdoor storage or ‘boneyard’


area for placement of items that are not yet ready for disposal, but which may still be
of use for spare parts. These items are likely to include equipment parts, vehicles,
and pieces of equipment, and metal components. As much of this material as
possible, will be utilized during the mine life. Materials remaining in the boneyard at
the end of mine life will either be shipped off site for salvage value, or disposed of in
the landfill if they meet the criteria for disposal at that location.

24.6.5 On-site BioRemediation Cell

“Land farming” is a commonly used method of soil remediation for hydrocarbon


contaminated soil that relies on natural breakdown of hydrocarbons by microbial
action. This is done by spreading a shallow layer of contaminated soil onto a lined
"bermed" area referred to as a biocell. In the event of a minor hydrocarbon spill on
site, the contaminated materials will be treated using a biocell as authorized in the
Hazardous Waste Regulation.

24.6.6 Waste Water (Sewage) Disposal

The wastewater disposal systems for the camp and office areas will be engineered,
constructed, and maintained under the direction of a qualified professional.

24.7 Reclamation

Reclamation will be undertaken during mining activities where possible, but the
majority of work will occur after the completion of mining and final gold recovery.
The reclamation land use objective will be to return the land to a grazing area for
cattle and wildlife habitat. Closure objectives include securing the site to assure
physical safety of people, protecting wildlife, protecting surface and groundwater
quality and quantity, minimizing erosion and controlling fugitive dust. To accomplish
these objectives, the following key elements will be included in the reclamation plan:
1. Chemical stabilization, accomplished through rinsing and neutralizing the
heap and stabilizing waste dumps and mine pits
2. Physical stabilization, accomplished through slope grooming, and the
application of topsoil and revegetation;
3. Control of surface waters; and
4. Monitoring effluent chemistry from the pad and water draining the mine waste
and pit areas.

Closure will be accomplished in three stages:


1. Concurrent: measures implemented during the operating life of the project;
2. Final: measures implemented after cessation of operations; and,
3. Post-closure: provides for short-term maintenance and long-term monitoring
of the closed facilities.

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An outline of the key components of the reclamation plan is given in this section.
Further detailing of these components will be required before construction
commences. During operation, the reclamation plan will be revised further.

24.7.1 Soil Handling

All topsoil harvested during construction will be stockpiled for future use. However,
the site is expected to be deficient of organic matter and other soils to support
revegetation. Therefore, during operations topsoil will be created. This will be done
by combining compostable materials with suitable native soils and natural topsoil.
The produced topsoil will be stockpiled for future use; this process must start early
since green wastes require time to compost before they are suitable to use as soil
amendments.
Possible sources for organic matter include:
- Chipped wood, bark and brush from site clearing activities (from the entire
site including the mine and waste dumps), beginning with the initial site
clearing and including subsequent phases of expansion of the heap, waste
dumps and open pits;
- Composted organic fractions from solid wastes (especially food wastes) from
the camp and canteen; and,
- Composted sewage sludge from the on-site disposal systems (ideally
composted with the solid waste organic fraction).

Capital costs include the purchase of a wood chipper, tractor and rototiller.

24.7.2 Camp
All camp buildings will be removed upon completion of the operation
and the area graded and seeded.

24.7.3 Central Operating Area


Prior to reclamation, all hazardous material will be
removed from site. All equipment and building in the central operating area,
including the office and warehouse, truckshop, ADR plant, generators and fuel
handling facility will be dismantled and removed, and the area graded and seeded.

24.7.4 Mine Pits

Water diversion structures around the mine pits will be upgraded if required to
ensure long-term operation. In most places, the final walls will result in an open cut
more than a pit. Material around the top of pits will be stabilized, and fenced off if
required but there is no plan not re-contour pit walls.

Some concurrent reclamation of mine pits is built into the mine plan with the partial
backfilling of one north pit occurring as mining progresses.

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24.7.5 Mine Waste Dumps

Mine waste dumps and roads will be reclaimed both concurrently and post mining.
Mine roads and waste dumps will be re-sloped, re-contoured, have topsoil added,
and be re-seeded. The concurrent reclamation that can be completed during
production will allow the usage of mine equipment within the operating cost
framework to minimize closure costs.

An estimate of $3,200,000 has been made for the post-mining closure costs which is
included in the Mining Sustaining capital. Re-grading is allocated at a cost of
$0.85(US) per cubic meter of material. Growth media and preparation is costed at
$4,000(US) per hectare, and re-seeding is estimated to cost $2,000 per hectare.
The waste dumps encompass a total area of approximately 2.1 cubic meters for re-
grading and approximately 55 hectares for growth media and re-seeding.

Short and longer term monitoring of slope stabilities will be provided until deemed
stable.

24.7.6 Roads

During reclamation, steep slopes on roads will be stabilized and any culverts
removed. Drainage bars will be constructed to keep water from flowing down the
road bed. Except for the access road, surfaces will be scarified and seeded.

24.8 Closure Activities – Heap Leach Facilities

The following activities will be completed during the operating life of the project,
beginning in year 3 of operations and continuing until the cessation of operations:

24.8.1 Engineering, Modeling & Monitoring Systems

In the first five years of operation detailed closure and monitoring plans will be
developed considering the as-built facilities and the projected as-stacked heap.
These plans will be of sufficient detail to allow the start of concurrent closure
activities as well as planning for final closure.

Laboratory and field data will be collected to support geochemical and heap
neutralization modeling and to allow accurate prediction of both the neutralization
process and effluent chemistry following closure. Laboratory testing will include
leach columns and kinetic testing to simulate long-term geochemistry. Field testing
will include testing either pilot heaps or cells created inside the commercial heap to
verify the laboratory data. By year 7 geochemical modeling will be completed to
allow predictive modeling of effluent quality from the closed heap.

24.8.2 Permanent Surface Water Diversion Works

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As the leach pad expands the lower portions of the surface water diversion systems
will be in their final locations, and then they will be upgraded to meet permanent
standards for erosion and storm size. This will also apply to the outlet structures
and any associated erosion works. These upgrades will begin in about year 5.

24.8.3 Permanent Slope Stabilization

Once Phase 2 of the leach pad is constructed portions of the Phase 1 heap slopes
will be in their permanent configuration and leaching will have ceased. At this time,
estimated to start in year 6, final grooming, capping and revegetation of these
slopes, along with associated surface water and erosion controls, will be
implemented.

24.8.4 Final Engineering & Monitoring Plans

The plans developed during concurrent closure will require final revisions to
accommodate both lessons learned and the final configuration of the heap and
roads. This will also include final as-built surveys of the facilities.

24.8.5 Heap Rinsing & Neutralization

This process consists primarily of recirculating cleaner water through the heap, and
treating the effluent to reduce contained metals and neutralize the pH. Initially the
recirculated solutions will be process solutions, diluted by normal rainfall, with pH
buffered to normal leaching levels to allow complete extraction of gold, silver and
other metals. Once the concentrations of soluble metals are sufficiently low, the pH
will be reduced to below 8.0 and rinsing will continue until the target cyanide levels
are achieved. Individual areas of the heap, simulating approximately the normal
leach areas, will be rinsed and neutralized so that the capacity of the drainage
system and plant are properly utilized. Once the target levels for the controlled
constituents (pH, metals and CN) are reached, the heap will be allowed to sit idle
through at least one wet season and the effluent chemistry monitored to ensure the
targets are maintained. If any of the constituents exceed the targets, then rinsing
will be repeated. If the geochemical modeling suggests any potential to produce
acidic drainage, then the post-rinse pH will be left elevated to off-set this potential.

Industry history has shown that, with very few exceptions, the rinsing stage of a gold
heap produces more value in gold than the neutralization stage costs to complete.
In fact, most large gold heaps continue operating profitably in the “rinse” mode for
years beyond the end of mining. And this has been the case even with sustained
low metal prices. Since this gold production is not recognized in the economic
forecast for the project, the value is properly credited against closure costs. Thus,
the closure cost estimate includes zero net cost for the rinsing/neutralization stage.

24.8.6 Heap Slope Grooming & Slope Stabilization

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In most cases the heap slopes will remain in the as-stacked configuration, with only
clean up of benches and minor regarding to promote proper drainage. In some
cases where slope stability has been an issue during operations, some flattening of
the slopes may be required as part of final closure. The required final slopes will be
determined based on testing and analysis. In general, the slopes of the heap will be
angle-of-repose lifts followed by nominally flat benches to create a stable over-all
slope. Some areas may be graded to combine several benches to allow creation of
permanent access roads or other features. The lower portions of the entire
perimeter of the heap will be graded to spread the ripios so that all exposed liner is
covered.

24.8.7 Topsoil Placement and Revegetation of Heap & Surrounding Areas

The crest of the heap and the benches, as well as any disturbed ground in the
vicinity (except roads and diversions to remain) will be covered with topsoil,
supplemental nutrients as needed, and seed. For high-erosion prone areas some
rapid growing, annual species of exotics may be used but the revegetation plan will
emphasize the use of locally harvested native species. Experience has shown that
locally harvested seeds have the highest survival rates and are the best suited to
local soil and climate factors. Over the heap non-food species will be preferred to
avoid accumulation of any metals in the food chain. The cost estimate includes
harvesting and purchasing seed and purchasing fertilizer annually for the first three
years; afterwards the maturing vegetation will generate sufficient seed and organic
mass to support robust growth.

24.8.8 Ponds & Pump Stations

The solution and emergency ponds and pump stations will remain in place and in
service for the first few years to allow management of heap effluents. The ponds
may remain in service permanently to provide seasonal water to livestock and
wildlife. This is a matter for further consideration.

24.8.9 Physical & Mobile Equipment

Except for the light mobile equipment (truck, backhoe, bulldozer) to remain on-site
during the post-closure care and monitoring period, all equipment will be sold for
scrap. Most of this equipment will be in serviceable condition and thus will probably
be sold at a profit (i.e., sales proceeds exceed decommissioning costs).

24.8.10 Roads, Diversion Works & Erosion Controls

Roads and diversion works that are to remain in service post-closure will be
upgraded to meet the closure design. Generally this will mean that the surfacing
will be more robust and that the dimensions of drainage facilities will be enlarged to

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meet a larger design storm. Culverts will be replaced with surface crossings since
culverts are only serviceable for 10-20 years (and are targets for theft).

24.8.11 Fencing

All fencing around the pad and pond areas will be removed as the land is intended to
return to grazing and wildlife habitat. Further, maintaining fencing would not likely to
be successful in the long-term.

24.9 Post-Closure Activities

24.9.1 Physical Monitoring & Maintenance

After the completion of final closure, the site will require regular maintenance for the
first approximately 3 years post-closure or until there is no further signs of changing
conditions. During this period, the site will be inspected every calendar quarter (3
months) and maintenance activities will be planned immediately following each wet
season and following any unseasonal major storm events. The purpose of this is to
ensure the drainage and erosion control measures are working as planned, and to
allow the recently revegetated areas to mature and properly take hold.
Maintenance work will consist of light manual labor (ditch tending, rubble removal,
and so forth), and light equipment (backhoe and bulldozer) work to regrade or groom
any areas showing signs of distress or erosion.

Once the site stops showing signs of seasonal distress and the functionality of the
facilities has been field proofed, and when the geochemical performance matches
predictive modeling, periodic inspection and maintenance activities can be reduced
in frequency; initially to annually and eventually to only after unusually high rainfall
periods.

24.9.2 Geochemical Monitoring & Maintenance

The quality of the water draining from the heap will require monitoring and
comparison to the predicted chemistry. If the measured water quality significantly
varies from that predicted, in an unfavorable manner, then the geochemical model
will be revised and new forecasts prepared. In the extreme case additional rinsing
and neutralization of the heap may be required. More likely it will only be required to
extend the short-term maintenance period.

The ponds will remain in service indefinitely. Water collected in the ponds will be
tested with each inspection cycle and if the water quality does not meet discharge
standards then that water will be recirculated to the heap and/or evaporated. The
ponds will likely accumulate sediments and precipitates as water accumulates and
evaporates. These sediments will require periodic removal and can be buried within
the heap. This will probably continue for at least one year post-closure and may be

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needed for up to five years, depending upon the effectiveness of the erosion control
measures and re-vegetation efforts.

24.9.3 Biological Monitoring & Maintenance

Maintaining a healthy, robust biological system will improve both the physical and
geochemical performance of the closed heap. Thus, the periodic inspections will
pay special attention to the biological environment, the health of the vegetated areas
as well as the health of the down-stream riparian habitats and surrounding
vegetative areas. Reseeding and replacement of some topsoil will be planned
annually for the first approximately 3 years. Biological monitoring will continue as
long as physical monitoring does, and at least until all habitat and vegetative areas
have been stable for multiple years and through extreme wet and dry seasons.

24.9.4 Surplus Water Management

Heap drainage will be tested and when clean discharged to the downstream
drainages. In the short-term some periods when the water cannot be discharged
will be provided for, and in these cases solution will be pumped on top of the heap
as irrigation water for the revegetated areas. Costs for this program will principally
be pump maintenance and provision of electrical power (i.e., diesel fuel) from the
generating station.

If the geochemistry of the heap effluent supports closing the ponds, then they will be
decommissioned and closed at such time. The liners will be perforated and the
ponds backfilled with permeable waste rock or rinsed ripios. Heap effluent will
continue to flow into the backfilled ponds, which will now act as infiltration basins.
Alternatively, if the geochemistry is stable and water quality acceptable, one or more
of the ponds will be left in place as water storage facilities to support agricultural
activities.

24.10 Closure Cost Estimates – Heap Leach Facilities

Except for the items listed below, the costs for concurrent closure are included in the
normal operating and sustaining capital cost estimates. All cost estimates assume
economies of scale achieved by the company and do not include contractor
overhead, profit, or contingency. Nor are other indirect costs included. All activities
requiring mobile equipment assume that the operational fleet will be available and
thus the closure activities are not burdened with the fleet capital expense (or that
any equipment to be purchased at closure will be funded by proceeds of selling used
equipment for no net cost). Closure costs are as summarized in Table 24.1.

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Table 24.1. Closure costs, heap leach facilities.

Concurrent Closure:
Engineering Design (year 5) $ 120,000
Monitoring Plans (physical, geochemical, biological; yr 5) $ 35,000
Geochemical modeling (and supporting test work; yr 5) $ 180,000
Topsoil generation (years 3 to 10)
Mobile equipment $ 20,000
$20,000/year x 8 years $ 160,000
TOTAL CONCURRENT CLOSURE: $ 515,000

Final Closure:
Engineering Design, Survey, Monitoring Plans (yr 9) $ 100,000
Heap Rinsing & Neutralization -- 0 --
Slope Grooming, Stabilization, Topsoil & Revegetation
Seed & fertilizer, 3 yrs x $10,000/yr (yrs 10-12) $ 30,000
50 hectares x $15,000/ha (yrs 10-12) $ 750,000
Ponds & Pump Stations -- 0 --
Physical & Mobile Equipment -- 0 --
Roads, Diversion Works & Erosion Control
5 km x $30,000/km $ 150,000
TOTAL FINAL CLOSURE: $1,030,000

Post-Closure Monitoring & Care:


Physical, geochemical & biological monitoring & maintenance
Annually, first 3 years post-closure: $50,000/yr x 3 yrs $ 150,000
Annually, years 4 to 10 post-closure: 20,000/yr x 7 yrs $ 140,000
Surplus Water Management
Annually, first 3 years post-closure: $50,000/yr x 3 yrs $ 150,000
TOTAL POST-CLOSURE: $ 440,000

TOTAL CONCURRENT, FINAL & POST-CLOSURE: $1,985,000

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25 ECONOMIC ANALYSIS

The Preliminary Economic Assessment (PEA) is based on Measured, Indicated and


Inferred resources using the resource estimate prepared by G. Giroux, P.Eng., that
is detailed in a report titled, “May 2010 Measured, Indicated, and Inferred Mineral
Resource Estimate, La India Gold Project, Municipio of Sahuaripa, Sonora, Mexico”,
dated June 15, 2010. The PEA is preliminary in nature and includes Inferred Mineral
Resources that are considered too speculative, geologically, to have the economic
considerations applied to them that would enable them to be categorized as Mineral
Reserves. There is no certainty that all or any part of the mineral resource will be
converted into mineral reserves.

25.1 Assumptions, Economic Criteria, and Inputs

Economic pit optimization has been run using a US $900/oz gold price. Only oxide
material was considered in the assessment. Details of the pit optimization and mine
production schedule are given in Item 21. Gold recoveries are based on column
tests as detailed in Item 18. Different recoveries are used for different material
types.

Capital and operating costs are derived from a number of sources including actual
costs for similar cost items, quotes and best estimates by experienced people.

Both pre-tax and after-tax Cash Flow Projections are generated from the Life of Mine
(LOM) production schedule and capital and operating cost estimates.

25.1.1 Assumptions

- Mining by the owner


- 100% equity with no debt financing.
- Constant 3rd quarter 2010 US dollars with no escalation of operating costs,
capital costs or revenue.
- Exchange rate: US$1.00=Mx Peso 12.0
- Gold price of US$950/oz
- All in $US

25.1.2 Production

- Mineral resources mined totaling 49.4 Mt at a grade of 0.63 g/t gold.


(includes dilution)
- Waste material of 35.6 Mt resulting in a waste to ore ratio of 0.72:1.
- Open pit ore production averaging 5.5 Mtpa or approximately 16,000 tpd.
- Three stages of crushing to -25 mm in closed circuit using conveyor pad
loading.

25.1.3 Project Life

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- Two years pre-construction capital costs including purchasing surface rights


and detailed engineering. Since these costs would be incurred before the
start of construction, and may in fact be incurred more than 2 years before the
start of production, analyses of the NPV and IRR for the project were made
considering both the case of from Year -2 to closure and from Year PP to
closure, as presented in Item 25.3 and Tables 25.1, 25.2, and 25.3.
- Pre-production (construction) estimated at 9-12 months (Year PP). Note that
the project economic summary given below is based starting from year PP or
the start of construction.
- Mine life is nine years of production plus year 10 of residual production and
the rinsing of the heaps.

25.1.4 Revenue

- Leach Plant gold recovery estimated by various material type, as indicated by


testwork - average 84%.
- Gold production schedule is based on leach time estimates from testwork.
Not all gold is produced in the year stacked. Recoverable gold inventory is
assumed to stabilize after year 2 and come out in year 10.
- Net Smelter Return includes dore’ transportation and refining, and a 0.50%
NSR royalty from the North Zone. Costs for purchasing NSRs as per various
agreements are included in capital costs.
- Revenue and expenses are recognized at the time of production.
- Income from the salvage value at the end of the project’s life is from the
mining equipment only.

25.1.5 Capital Costs

- Costs for land purchase and more detailed engineering of $7.9 million prior to
initializing construction. Since these costs would be incurred before the start
of construction, and may in fact be incurred more than 2 years before the start
of production, analyses of the NPV and IRR for the project were made
considering both the case of from Year -2 to closure and from Year PP to
closure, as presented in Item 25.3 and Tables 25.1, 25.2, and 25.3.
- Pre-production capital cost estimate is $72.7 million.
- Sustaining capital cost is estimated at $31.9 million.

Pre production capital includes:

Site earth works $ 6.0


Mine equipment 26.1
Process (crushing, pad and ponds) 22.2
Infrastructure (access, camp, power, shop) 10.1
Owner Indirects and insurance 1.8
Contingency 6.5

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Total $72.7M

Sustaining Capital includes:


Site earth works $ 4.5
Mine equipment 8.1
Process (primarily pad and pond expansion) 15.0
Owner (royalty purchase) 1.5
Contingency 2.8
Total $31.9M

25.1.6 Operating Costs

Average operating costs over the LOM:

Mining $2.05/tonne material moved, or


$3.52/tonne processed
Processing $3.45/tonne processed
G&A $1.42/tonne processed

Total $8.39/tonne processed

Mining operating costs are presented in Item 21. Process costs are discussed in
Item 22. Each material type has an unique process cost dependent upon the
physical properties of the rock (i.e. crushing index) and the reagent consumption in
column tests. Details are given in section Item 22. General and Administration
costs were developed based on information from operating mines and were then
checked that they are reasonable for the La India project.

25.2 Taxes

The principal corporate taxes levied in Mexico include:

1) the greater of the regular income tax (“ISR”), and the single rate business tax or
flat tax (“IETU”), and

2) a value-added tax (“VAT”).

25.2.1 Income Tax and Single Rate Business Tax or Flat Tax

Mexico’s corporate income tax is 30% through December 31, 2012. The rate will be
reduced to 29% in 2013 and 28% in 2014 and future years. An income tax rate of
28% has been used in the economic model.

Mexico also has a flat tax that applies to corporations. The flat tax is an alternative
tax that does not replace the corporate income tax and is calculated on a cash-flow
basis, generally when business receipts are collected and business expenditures,

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including capital expenditures, are made. A flat tax rate of 17.5% has been used in
the economic model.

Corporations are required to calculate both their income tax liability and their flat tax
liability for each fiscal year, and pay whichever is higher.

25.2.2 Value Added Tax

Value-added tax is assessed on the sale of goods and services, leasing and imports.
The rate is 16% and is imposed on all activities conducted within Mexican territory,
11% in the US/Mexican border region and 0% for all exports, which includes the sale
of gold. Value-added tax paid on purchases is refundable as long as the expenses
are business related and are deductible for income tax purposes. The economic
model assumes a value-added tax rate of 16%, and that all value-added tax paid will
be refunded.

25.3 Economic Performance

25.3.1 Cash Flow

The projected cash flow for the La India project is summarized in Table 25.1.

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Table 25.1. La India Project projected cash flow

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25.3.2 Cash Flow Analysis and Economic Performance

Based on the time period from pre-construction year -2 through closure, on a stand-
alone basis the project returns the pre-tax cash flows presented in Table 25.2.

Table 25.2. Project Cash flows and IRR, Year pre-construction -2 through closure.
Price Gold Undiscounted Cash Flow NPV @ 5% Discount IRR Payback
Scenario (US$/oz) (millions US) (millions US) (%) Years
$850 $175 $105 31% N.A.

Base Case $950 $258 $161 43% N.A.


2 Week $1355 $595 $392 82% N.A.
Average (i)

Based on the time period from construction (year PP) through closure, on a stand-
alone basis the project returns the pre-tax cash flows presented in Table 25.3.

Table 25.3. Project cash flows and IRR, Year PP through closure.
Price Gold Undiscounted Cash Flow NPV @ 5% Discount IRR Payback
Scenario (US$/oz) (millions US) (millions US) (%) Years
$850 $184 $124 38% 3.4
Base Case $950 $267 $187 51% 2.6
2 Week $1355 $603 $441 103% 1.4
Average (i)
ii. Source: www.kitco.com. 10 trading day average London PM Fix from Oct. 6, 2010-Oct 19, 2010.

The Total Cash Cost is $505/oz gold produced. The LOM capital cost is US$126/oz
gold produced, for a Total Production Cost of US$631/oz gold produced.

25.3.3 Sensitivity Analysis

Key economic risks were examined by running cash flow sensitivities on:

- Recovered gold
- Capital Costs
- Operating Costs
- Gold Price

Sensitivity over the base case were calculated for a range of -20% to +20%
variations of the base case parameters of capital cost, operating cost, and gold
price. Variance of gold recovery has the same effect as variance of gold price,
however gold recovery cannot increase beyond 100% thus sensitivity to gold

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recovery was not studied beyond a 10% increase. All analyses were done with a
5% NPV. The sensitivities are shown on Table 25.4 and Figure 25.1.

The project is most sensitive to gold price and recovered gold (which have the same
impact). This is followed by the operating costs with the capital cost being the least
sensitive to the economics of the project.

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Table 25.4. La India cash flow sensitivity.

La India Cash Flow Sensitivity Data


Cash Flow Before Tax @ NPV5
Years PP thru 10

-20% -10% Base +10% +20%


Gold Recovered $87 $132 $187 $246 N.A.
Capital Cost $202 $195 $187 $177 $168
Operating Cost $240 $216 $187 $155 $123
Gold Price $87 $132 $187 $246 $306

$300

$250

$200

Gold Recovered

$150 Capital Cost


Operating Cost
Gold Price
$100

$50

$0
-20% -10% Base 10% 20%

Figure 25.1. La India Project cash flow sensitivity chart.

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26 INTERPRETATIONS AND CONCLUSIONS

The La India project comprises 27 mining concessions totaling 26,643.51 hectares


located in the municipality of Sahuaripa, State of Sonora, Mexico, approximately 210
km E-SE of the city of Hermosillo. The mining concessions are currently controlled
by Resource Grayd de Mexico SA de CV (Grayd) by direct ownership via staking
and by means of 8 separate agreements whereby Grayd can earn a 100% interest in
the concessions by making cash and share payments totaling $3.228M USD and
835,000 shares over a 5 year period. Thus far $2.703M USD has been paid towards
the concessions. Should Grayd elect to acquire all currently optioned concessions,
an additional $0.525M USD in payments would be pending. Some concessions are
subject to underlying NSRs, varying between 1 and 3%. Part or all of these NSR’s
can be purchased by Grayd which would result in NSR’s between 0 and 1%.

The La India project comprises multiple high sulfidation, epithermal gold systems
hosted by a volcanic sequence comprised of andesitic and felsic extrusive volcanic
strata with interbedded epiclastic volcaniclastic strata of similar composition. The La
Viruela-La Cruz area comprises one of several high sulfidation epithermal
mineralization centers recognized in the region (Staude, 2001).

Grayd Resource Corporation has been actively exploring the project since 2004.
Work completed to date includes: geologic mapping; geochemical rock chip
sampling; airborne geophysical surveys; ground geophysical surveys;
photogrammetric topographic mapping; 7,208 meters of diamond drilling in 95
resource model drillholes; drilling of 7 diamond core holes for metallurgical sampling;
40,871 meters of reverse circulation drilling in 510 resource model drillholes;
completion of 30 bottle roll metallurgical tests; and completion of 22 column leach
tests of 13 composite samples representing the most significant ore domains.

At the Tarachi exploration prospect, Grayd has completed a total of 27 diamond core
drillholes totaling 6,276 m and 8 reverse circulation drillholes totaling 1,926m.
Surface sampling and drill results from the Tarachi area have outlined a mineral
system in excess of five square kilometers in area. Nearly all of the 35 Tarachi
drillholes to date intersected significant mineralized widths containing greater than
0.20 gpt Au, with local higher grade intervals. Many of the Tarachi holes were
mineralized at the end of the hole and the lateral extents of mineralization are
unknown. The Tarachi prospect has potential to host a large gold resource. The
Tarachi drillholes are not part of the resource model database and resources have
not yet been defined for the Tarachi area.

Throughout the drilling campaigns, Grayd implemented a quality assurance and


quality control program appropriate for an exploration program. An independent
QA/QC review of the project by RGM and M Gray verified that the analytical results
of the Grayd drilling programs are reliable and that the resource model is technically
sound.

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The drilling campaigns successfully met their objective of providing sufficient data to
allow for estimation of a CSA NI43-101 compliant Measured, Indicated and Inferred
resource estimate for the Main and North Zones. Resources have not yet been
defined for the Tarachi area. The La India project hosts:

- a Measured and Indicated gold resource of 760,000 contained ounces


contained in 26.77 M tonnes at a grade of 0.883 gpt, calculated at a 0.40
gpt cutoff.

- an Inferred gold resource of 506,000 ounces contained in 19.73Mt @ 0.798


gpt Au, calculated at a 0.40 gpt cutoff grade.

Of the Measured and Indicated resource, 603,000 ounces (21.6M tonnes at a grade
of 0.867 gpt Au) are contained in oxidized material. Of the Inferred resource,
378,000 ounces (14.3 Mt @ 0.82 gpt Au) at a 0.40gpt cutoff) are contained in oxide
material. Column leach tests of 12.5mm crushed material yielded gold recoveries
from 62 to 94%. Column leach tests of 25mm crushed material yielded gold
recoveries from 79 to 97%, an indication that the oxide material may be amenable to
treatment by conventional cyanide heap leach gold recovery methods.

For purposes of the Preliminary Economic Assessment of the La India project, the
subject of this report, engineering studies and operating and capital cost estimates
were made for a mine designed to exploit only the only oxide resources.

Lerchs-Grossmann (LG) evaluations of potential economic pit limits were made


using Measured, Indicated, and Inferred oxide mineral resources. The base case
$900/oz Au LG shells contain 46.6 million tonnes grading 0.69 g Au/t of Measured,
Indicated and Inferred mineral resources. These figures do not include any
provisions for ore dilution or mining loss. Contained troy ounces of gold are
estimated at 1,029,000, of which about 899,000 ounces are considered potentially
recoverable. All of the mineral resources are classified as Measured, Indicated and
Inferred, and as defined in Canadian NI 43-101, should not be considered mineral
reserves until at least a Pre-Feasibility study has been completed.

About 65% of the mineral resource tonnages contained within the base case LG
shells are classified as Measured and Indicated, with the remainder being Inferred.
The Main deposit area contains about 51% of the project’s total mineral resources,
weighted by tonnage.

Based on the LG Base Case economic Pit20 ($900/oz Au) detailed pit designs have
been done to include detailed slope parameters and ramps. These are summarized
as pit delineated resources as follows:

- 49.9Mt @ 0.64 gpt Au


- 1.009M contained oz. gold
- 844,000 oz. recoverable gold.

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At this PEA level of study these resources include Measured, Indicated, and Inferred
classes and are used in the production schedule and economic analysis for
evaluation purposes only. They are not deemed reserves and MMTS does not
present them as having economically assured profitability at this stage of study.

Based on the time period from construction (year PP) through closure, a $950
USD/oz. gold price, and the capital and operating costs detailed in this report, on a
stand-alone basis the project returns:

- $267M USD undiscounted pre-tax cash flow.


- $187M USD NPV at a 5% discount rate.
- 51% IRR payback period of 2.6 years.
- Total cash cost of $505/oz gold produced.
- LOM capital cost of US$126/oz gold produced.
- Total production cost of US$631/oz gold produced.

The optimized economic pit limits based on the oxide zone of the La India resource
model produce a significant mineable resource. These results are based on scoping
level design and include Measured, Indicated, and Inferred resource classes so the
design level of detail does not signify economic viability at this time, but it does
indicate the project has significant economic potential. The positive economic
interpretation is based on the following points:

- The scoping study economic pit optimizations (LG), pit designs, and mine
planning are based on the inclusion of all Measured, Indicated, and Inferred
mineralized rock. To realize, or exceed, the results of this study at the next
stage of the project will require the Inferred material to be upgraded to
Measured or Indicated resource class.

- The mine plan is based on conventional truck shovel mining, feeding a heap
leach process, and is similar to other surface operations in the area. This
operating plan has a low technical risk for viable operations and regulatory
approval in this region.

- Capacity still exists within the planned heap leach dump, and for mine waste
dumping. A larger operation can be considered if regional exploration
indicated an increase in resources.

- A smaller sized equipment fleet has been considered for this scoping study
on the basis that it allows for flexibility in planning and also for getting into the
“tighter” mining areas of the numerous smaller sized pits. However, the
economic, and other, impacts should be studied for considering larger sized
loader and truck fleets in conjunction with more detailed mine planning.

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- Pit slope designs are based on average overall slopes. The impact of flatter
slope is demonstrated to be not significant to the overall results. However for
more detailed levels of study geotechnical investigations will be needed to
improve the accuracy of the estimate of the pit slopes for the numerous pit
areas.

- Additional environmental analysis should be performed on the impact of


mining and waste rock deposition on the numerous drainages in the mine
disturbance area. Waste rock chemistry study would refine the need for
segregated placement of any potential acid-generating waste rock.

The authors of this report deem the La India open pit gold mining project to be viable
at the Preliminary Economic Assessment level of study and should be advanced to a
Pre-Feasibility or Feasibility Study level.

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27 RECOMMENDATIONS

Work to date has identified a gold resource likely to be of economic significance and
a Preliminary Economic Assessment indicates potential to develop a profitable and
economically significant mine. The positive conclusion to the PEA warrants that the
current resource area of the project be advanced to either a Pre-Feasibility or
Feasibility level of confidence.

Exploration to date in the Tarachi area has outlined a large mineralized system
whose limits are still unknown. Recommended work includes trying to define
resources in the area with current significant gold intersections and continued
exploration of the rest of the property to identify other potential resource areas. In
addition, the claim area should be expanded and exploration efforts continue onto
the expanded property.

27.1 Work Plan and Budget

Specific recommendations to improve the accuracy of the engineering estimates


going forward and to reduce project risk include:

- Complete an infill drilling program and update the resource block model, with
the goal of upgrading the Inferred mineralization to the Measured or Indicated
classifications.
- Complete a step-out drill program to increase the resource base to extend the
mine life or increase the production throughput.
- Acquire more detailed topographical information.
- Collect geotechnical data required for detailed pit slope, mine haul road,
waste dump and pad and pond designs. This work will entail drilling waste in
the highwall areas and under the pad and pond areas, rock strength testing,
geological mapping and modeling, and hydro-geological assessments.
- Create a hydrogeology model.
- Continue the ARD testwork and develop a waste rock management plan.
- Undertake trade-off study on contractor versus owner-mining.
- Confirm optimum mining equipment size.
- Purchase land required for further development and eventual exploitation of
the deposit should be purchased. Failure to do so will impede receipt of
environmental permits needed to conduct feasibility level studies.

The total cost of the program is estimated at $13.0M USD, as itemized in Table 27.1.

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Table 27.1. Proposed 2011 budget, La India Project.


Activity/Concept $M USD
Feasibility 5.0
Land Purchases 3.0
Claim Option Payments 0.6
Land taxes 0.2
Mexican Legal and Accounting 0.2
Tarachi Exploration 2.2
Main Area Exploration 1.0
New Claims Exploration 0.8
Property Generative 0.5
Total 13.0

27.2 Opportunities

During the Preliminary Economic Analysis of the La India Project, various


opportunities for enhancing the overall economics of the project were identified.
Further work is required to determine whether these opportunities are possible and
what their economic impact would be.

27.2.1 Equipment Sizing

A trade-off study on the equipment sizing to obtain the optimal fleet size may result
in cost reductions.

27.2.2 Pit Backfilling

Backfilling of the mined out pits should be evaluated as a means to reduce operating
costs.

27.2.3 Sulfide Mineralization

The current analysis is based on processing only oxide material. The resource
includes a significant amount of gold in sulfide material. Initial testing of sulfide
Domain 6 material in 2005 showed very low recoveries in cyanide bottle rolls but
indicated that the gold could be recovered in a sulfide concentrate. At this point
there is not enough of this material to consider the construction of a mill.

However, further bottle rolls of sulfide Domain 3, 5, 7 and 17 material showed higher
recoveries and subsequently three column tests of sulfide material were completed.
These included two of Domain 17 and one of Domain 5. All were done with -25mm
(-1inch) material. The two column tests on Domain 17 material had 40 and 60%
recovery and the Domain 5 test had 70% recovery. As expected, lime and cyanide
consumptions were higher than for the oxide material, but were not unreasonable.

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At a 0.3 g/t cut-off, there are approximately 250,000 ounces in Domains 3, 5, 7 and
17 in Measured, Indicated and Inferred resource in the May 2010 calculation.
(Domains 7 and 17 are the same material, with 7 in the Main zone and 17 in the
north zone). Much of this material could possibly be economically processed with the
current development plan. The sulfide material immediately underlies the oxide
material, so waste to ore ratios would be low if the sulfide was mined. Further
columns tests to confirm recoveries and reagent costs are recommended.

27.2.4 Increase Resource

In the area west and south of the current Main zone pits, there is a possibility for a
moderate (50,000 to 100,000 ounce) increase in oxide resources that report as ore
in the pit optimization program. This increase would be from a combination of new
resource that recent work shows may be present and current resource that would be
“mineable” with the addition of the new resource. Further drilling is required to test
this opportunity.

27.2.5 Contract Mining

The current assessment is based on the mining equipment being owned and
operated by the company. A capital cost reduction of $34M could be achieved if
mining was done entirely by a contractor. ($26M initial and $8M sustaining). There
would also be a reduction in project risk for the company and may result in a
smoother start-up because the contractor could provide a management team that
has worked together previously. Presumably, contract mining will result in higher
costs per tonne operating costs than currently modelled. Indicative quotes from
contractors will be required to evaluate this opportunity.

27.2.6 Vendor Financing

Vendor financing could provide reduced initial capital costs and lower company risk.
Indicative quotes from vendors will be required to evaluate this opportunity.

27.2.7 Improved Recovery

There may be improved recoveries from that modeled due to the very long
secondary leach cycles available on a conventional (multi-stack) heap. A couple
percentage points is a reasonable estimate for what this increased recovery may be,
however it is very hard to estimate beforehand.

27.2.8 Reduced Power Costs

The current assessment is based on all electricity being provided by electric


generators. It may be possible to reduce electrical costs by supplementing with
alternatives, such as a wind turbine (e.g., Veladero, Argentina) or generators on

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down-slope conveyors and gravity pipelines. It will take detailed work to estimate
the cost and benefits of any alternative energy source.

27.2.9 Run-of- Mine Leaching of Low Grade

It may be economic to leach run-of-mine material of some rock Domains at just


below the current cut-off grade to increase the resource. This will require large-
scale tests to evaluate.

27.2.10 New Resource Areas

Exploration for new resource zones continues at La India. The discovery of a new
resource area could significantly change the project economics.

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28 REFERENCES

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System for Electronic Document Analysis and Retrieval (SEDAR),
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Alamos Gold Incorporated, 2010, Annual Information Form 2009, published on


System for Electronic Document Analysis and Retrieval (SEDAR),
http://www.sedar.com

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Project, Mulatos District, Sonora, report prepared for Grayd Resource Corporation
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Administrators regulations is available on SEDAR (System for Electronic Data
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Foley, A., 2006a, La India Hoist EM acquisition report, private report dated April
2006, prepared for Newmont Mining Corporation and Grayd Resource Corporation,
6 pages.

Foley, A., 2006b, La India Pole-Dipole acquisition report, private report dated April
2006, prepared for Newmont Mining Corporation and Grayd Resource Corporation,
31 pages.

Glamis Gold Corporation, 2006, First Quarter Report, published on System for
Electronic Document Analysis and Retrieval (SEDAR), http://www.sedar.com.

Goldcorp, 2006, El Sauzal 2005 reserve statement published on Goldcorp website,


http://goldcorp.com.

Goldcorp, 2008, Goldcorp 2007 Annual Report, published on Goldcorp website,


http://goldcorp.com and published on System for Electronic Document Analysis and
Retrieval (SEDAR), http://www.sedar.com.

Goldcorp, 2010, Goldcorp 2009 Annual Report, published on Goldcorp website,


http://goldcorp.com and published on System for Electronic Document Analysis and
Retrieval (SEDAR), http://www.sedar.com.

Gray, Matthew D., 2006, Summary report of the La India gold project, CSA NI43-101
compliant Technical Report, prepared for Grayd Resource Corporation, 14 July
2006, 155p., published on System for Electronic Document Analysis and Retrieval
(SEDAR), http://www.sedar.com.

6 December 2010 Page 277 of 374


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6 December 2010 Preliminary Economic Assessment, La India Gold Prospect, Municipio of Sahuaripa, Sonora,
_________________________________________________________________________________________________

Gray, M.D, and Giroux, G., 2008, February 2008 inferred mineral resource, La India
gold project, Municipio of Sahuaripa, Sonora, Mexico, CSA43-101 compliant
Technical Report, Grayd Resource Corporation, 22 February 2008, 158p., published
on System for Electronic Document Analysis and Retrieval (SEDAR),
http://www.sedar.com.

Gray, M.D, and Giroux, G., 2009, February 2009 inferred mineral resource, La India
gold project, Municipio of Sahuaripa, Sonora, Mexico, CSA43-101 compliant
Technical Report, Grayd Resource Corporation, 26 March 2009, 200p., published on
System for Electronic Document Analysis and Retrieval (SEDAR),
http://www.sedar.com.

Gray, M.D, and Giroux, G., 2010, May 2010 measured, indicated and inferred
mineral resource, La India gold project, Municipio of Sahuaripa, Sonora, Mexico,
CSA43-101 compliant Technical Report, Grayd Resource Corporation, 15 June
2010, 237p., published on System for Electronic Document Analysis and Retrieval
(SEDAR), http://www.sedar.com.

Gray, J.E., and Coolbaugh, M.F., 1994: Geology and geochemistry of Summitville,
Colorado: An epithermal acid-sulfate deposit in a volcanic dome. Economic
Geology v. 89 p. 1906-1923.

Hayba, D.O., Bethke, P.M., Heald, P., and Foley, N.K., 1985: Geologic, mineralogic,
and geochemical characteristics of volcanic-hosted epithermal precious metal
deposits. Reviews in Economic Geology v. 2 p. 129-167.

Hedenquist, J.W., Arribas, A. Jr., Reynolds, T.J., 1998: Evolution of an intrusion-


centered hydrothermal system: Far Southeast Lepanto porphyry and epithermal Cu-
Au deposits, Philippines. Economic Geology v. 93 p. 373-404.

Heald, P., Foley, N.K., and Hayba, D.O., 1987: Comparative anatomy of volcanic-
hosted epithermal deposits: acid-sulfate and adularia-sericite types. Economic
Geology v. 82 p. 1-26.

Jenkins, D.M., 1994, Geological report on La Viruela Project, Sonora State, Mexico,
private report dated 13 April 1994 prepared for San Fernando Mining Company, 40
pages.

Kappes, Cassiday & Associates, 2008, La India project, report of metallurgical


testwork, September 2008, KCA Project Code: 285 C/7900, private report prepared
by Kappes Cassiday and Associates for Grayd Resources, 276p., September 2008.

Kappes, Cassiday & Associates, 2009, La India project, report of metallurgical


testwork, October 2009, KCA Project Code: 285 C/7900, private report prepared by
Kappes Cassiday and Associates for Grayd Resources, 194p., October 2009.

6 December 2010 Page 278 of 374


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6 December 2010 Preliminary Economic Assessment, La India Gold Prospect, Municipio of Sahuaripa, Sonora,
_________________________________________________________________________________________________

Kappes, Cassiday & Associates, 2010a, Bottle roll leach test work - La India project,
report of metallurgical testwork, March 2010, KCA Project Code: 285 C/7900, private
report prepared by Kappes Cassiday and Associates for Grayd Resources, 4p.,
March 2010.

Kappes, Cassiday & Associates, 2010b, La India project, report of metallurgical


testwork, May 2010, KCA Project Code: 285 C/7900, private report prepared by
Kappes Cassiday and Associates for Grayd Resources, 57p., May 2010.

Longo, T., 2006a, La India field review report, 27 February 2006, private report
prepared for Newmont Mining Corporation and Grayd Resource Corporation, 43
pages.

Longo, T., 2006b, La India February 2006 monthly report, 28 February 2006, private
report prepared for Newmont Mining Corporation and Grayd Resource Corporation,
6 pages.

Longo, T., 2006c, La India progress report, 28 March 2006, private report prepared
for Newmont Mining Corporation and Grayd Resource Corporation, 9 pages.

Longo, A. A., Paez-Beltran, E., Smit H., Bourke, F. M., and Prefontaine, M., 2010,
Geology of the La India Gold Deposit, Mulatos District, Sonora, Mexico, in Great
Basin Evolution and Metallogeny, Geological Society of Nevada Symposium
Proceedings, Reno/Sparks, Nevada, May 14-22, 2010, in press.

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Sonora, Mexico, CSA NI43-101 compliant Technical Report prepared for Alamos
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Mexico, private report dated 31 March 1995 prepared for San Fernando Mining
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February 2006, private report dated 18 March 2006, prepared for Newmont Mining
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_________________________________________________________________________________________________

Ransome, F.L., 1909: The association of alunite with gold in the Goldfield district.
Economic Geology v.2 p. 667-692.

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report prepared for Grayd Resources Inc, November 2008, 4 pages.

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published by Secretaria de Fomento Colonizacion, Industria y Comercio, Gobierno
de Mexico, 260 pages.

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and advanced argillic alteration in the Mulatos District, Sonora, Mexico: in New
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Number 8 of the Society of Economic Geologists, p. 199 - 216.

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mineralization at Summitville, Colorado. Economic Geology v.82 p. 1575-1591.

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Goldfield, Nevada. Economic Geology v. 84 p. 2115-2138.

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_________________________________________________________________________________________________

29 STATEMENT OF QUALIFICATION

I, Matthew Dean Gray, of Calle Real No. 68, Hermosillo, Sonora, Mexico, do hereby certify:

1. That I am Senior Partner and geologist at Resource Geosciences de Mexico SA de CV,


(RGM) an independent consulting geosciences firm, whose address is Calle 14 de Abril No.
68, Colonia San Benito, Hermosillo, Sonora, CP 83190, MEXICO.
2. That: (a) I am a Certified Professional Geologist (#10688) with the American Institute of
Professional Geologists; (b) my qualifications include experience applicable to the subject
matter of this report including but not limited to resource modeling and economic
assessments of the Mexican Hat gold deposit, Arizona; the El Suazal gold deposit,
Chihuahua, Mexico; the Cerro de San Pedro gold-silver deposit, San Luis Potosi, Mexico;
and permitting, land acquisition, community agreements, water rights aquistions, and water
supply development for the Piedras Verdes copper mine, Sonora, Mexico; and (c) I am a
“Qualified Person” for the purposes of CSA National Instrument 43-101.
3. That I am a graduate of the Colorado School of Mines (Ph.D., Geology with Minor in Mineral
Economics, 1994; B.Sc., Geological Engineering, 1985) and the University of Arizona (M.Sc.,
Geosciences, 1988) and that I have practiced my profession continuously since 1988.
4. That Resource Geosciences de Mexico (“RGM”) is an independent provider of technical
services to exploration and mining companies, including Grayd Resource Corporation
(“Grayd”). Annual revenues to RGM from Grayd are approximately 11% of RGM total
revenues.
5. That I have no material interest, direct or indirect, in the property discussed in the Technical
Report titled “6 December 2010 Preliminary Economic Assessment, La India Gold Project,
Municipio of Sahuaripa, Sonora” and dated 6 December 2010 (the “Technical Report”), in
adjacent properties, or in the securities of Grayd, and that I am responsible for Items 4, 5, 6,
7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 19.13, 20, co-preparation of 23, 24 and related
components in Items 3, 26, and 27 of the Technical Report.
6. That I am independent of Grayd applying all the tests of Section 1.4 of CSA National
Instrument 43-101.
7. As of the date of this certificate, to the best of my knowledge, information and belief, the
Technical Report contains all scientific and technical information that is required to be
disclosed to make the Technical Report not misleading.
8. That the Technical Report is based on multiple site visits in 2006, 2007, 2008, 2009, and
2010, most recently visiting the project during the period 27 April to 3 May 2010, and on a
review of published and unpublished information and that I have had no prior involvement
with the property that is the subject of the Technical Report prior to authoring a Technical
Report for the project in 2006, as cited in this report.
9. That I have read National Instrument 43-101 and Form 43-101, and that the Technical Report
has been prepared in compliance with the Instrument and Form, and that I am responsible for
the compilation of the Technical Report.
10. I consent to the filing of the Technical Report with any stock exchange and other regulatory
authority and any publication by them for regulatory purposes, including electronic publication
in the public company files on their websites accessible by the public.

Signed:______________________________________ Date:______________________
Matthew D. Gray, Ph.D., C.P.G. #10688

6 December 2010 Page 281 of 374


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6 December 2010 Preliminary Economic Assessment, La India Gold Prospect, Municipio of Sahuaripa, Sonora,
_________________________________________________________________________________________________

I, G.H. Giroux, of 982 Broadview Drive, North Vancouver, British Columbia, do


hereby certify that:

1) I am a consulting geological engineer with an office at #1215 - 675 West Hastings


Street, Vancouver, British Columbia.

2) I am a graduate of the University of British Columbia in 1970 with a B.A. Sc. and in
1984 with a M.A. Sc., both in Geological Engineering.

3) I am a member in good standing of the Association of Professional Engineers and


Geoscientists of the Province of British Columbia.

4) I have practiced my profession continuously since 1970. I have had over 30 years
experience calculating mineral resources. I have previously completed resource
estimations on a wide variety of precious metal deposits both in B.C. and around the
world, including La Colorada, La Jojoba and Lluvia de Oro in the State of Sonora
Mexico , Livengood in Alaska and Kisladag in Turkey

5) I have read the definition of “qualified person” set out in National Instrument 43-101
and certify that by reason of education, experience, independence and affiliation with
a professional association, I meet the requirements of an Independent Qualified
Person as defined in National Instrument 43-101.

6) This report titled “6 December 2010 Preliminary Economic Assessment, La India


Gold Project, Municipio of Sahuaripa, Sonora, Mexico” dated December 6, 2010,
is based on a study of the data and literature available on the La India Property. I am
responsible for Sections 19.1 to 19.12 on the resource estimations completed in
Vancouver during 2010. I have not visited the property.

7) I have previously completed a resource estimation on this property in 2008 (Gray &
Giroux, Feb. 22, 2008), in 2009 (Gray & Giroux, March 26, 2009) and in 2010 ( Gray
& Giroux, June 15, 2010). All of these reports are available on SEDAR. The
resource estimate completed in 2010 is the basis for the PEA in this report.

8) As of the date of this certificate, to the best of my knowledge, information and belief,
the technical report contains all scientific and technical information that is required to
be disclosed to make the technical report not misleading.

9) I am independent of the issuer applying all of the tests in section 1.4 of National
Instrument 43-101.

10) I have read National Instrument 43-101 and the technical report has been prepared
in compliance with National Instrument 43-101.

Dated this 6th day of December, 2010

“signed and sealed”

G. H. Giroux, P.Eng., MASc.

6 December 2010 Page 282 of 374


Resource Geosciences de Mexico SA de CV
6 December 2010 Preliminary Economic Assessment, La India Gold Prospect, Municipio of Sahuaripa, Sonora,
_________________________________________________________________________________________________

I, James H Gray. P.Eng., do hereby certify that:

1. I am a Principal of Moose Mountain Member Corp., 1584 Evergreen Hill SW Calgary,


Alberta Canada T2Y 3A9.
2. I graduated with a Bachelor of Applied Science in Mining Engineering from the
University of British Columbia in 1975.
3. I am registered by The Association of Professional and Geoscientists of the Province
of British Columbia, registration number 11,919, and the Association of Professional
Engineers, Geologists and Geophysicists of Alberta (M47177).
4. I have worked as a Professional Engineer for over 30 years since my graduation
from university.
5. I have read the definition of "qualified person" set out in National Instrument 43-101
("NI 43-101") and certify that by reason of my education, affiliation with a
professional association (as defined in NI 43-101) and past relevant work
experience, I am a "qualified person" for the purposes of NI 43-101.
6. I am responsible for sections 19.14, 19.15, 21 and the mining components of section
24, 25, 26 & 27 the technical report titled “6 December 2010 Preliminary Economic
Assessment, La India Gold Project, Municipio of Sahuaripa, Sonora, Mexico”
December 6, 2010.
7. I have visited the La India Property on May 1st & 2nd 2010.
8. I have not had prior involvement with the property that is the subject of the Technical
Report.
9. As of the date of this certificate, to the best of my knowledge, information and belief,
the technical report contains all scientific and technical information that is required to
be disclosed to make the technical report not misleading.
10. I am independent of the issuer applying all of the tests in section 1.4 of National
Instrument 43-101.
11. I have read National Instrument 43-101 and Form 43-101F1, and the Technical
Report has been prepared in compliance with that instrument and form.
12. I consent to the filing of the Technical Report with any stock exchange and other
regulatory authority and any publication by them for regulatory purposes, including
electronic publication in the public company files on their websites accessible by the
public.

Dated December 6, 2010

“signed” James H. Gray (sealed)


________________________
Signature of Qualified Person

James H Gray P.Eng.


Print Name of Qualified Person

6 December 2010 Page 283 of 374


Resource Geosciences de Mexico SA de CV
6 December 2010 Preliminary Economic Assessment, La India Gold Prospect, Municipio of Sahuaripa, Sonora,
_________________________________________________________________________________________________

I, Mark E. Smith, P.E., of Incline Village, Nevada, USA, hereby certify that:

1. I am a US citizen and professional engineer with offices at 759 Eagle Drive, Incline
Village, Nevada, USA. I have practiced my profession continuously since 1979 and I
have over 30 years of experience in mining and mineral processing working
worldwide.
2. I am a registered civil and geotechnical engineer in the State of California
(#CE35469 and #G2082), a registered professional engineer (civil) and water rights
surveyor in the Nevada (#6546 and #701), a registered professional engineer (civil
and structural) in the Idaho and Utah, and a registered professional engineer (civil) in
Texas and South Dakota. I am a Registered Member of the Society for Mining,
Metallurgy & Exploration (#3005800) and a member of the Instituto de Ingeríos de
Minas del Peru.
3. I am a member of the Advisory Board for the College of Engineering, University of
Nevada, Reno, Nevada. I am the qualifying officer for contractor’s licenses for
general building and general engineering construction (A and B) in the State of
California (#648517) for XVEI (formerly known as Vector Engineering).
4. I graduated from the University of Nevada, Reno (M.Sc. Civil Engineering with
honors) in 1986, and the University of California, Davis (B.Sc. Civil Engineering) in
1979. I also studied geological engineering, groundwater hydrology and rock
mechanics at the University of Utah, Salt Lake City (1979-1980).
5. I have read the definition of "qualified person" set out in National Instrument 43-101
("NI 43-101") and certify that by reason of my education, affiliation with a
professional association (as defined in NI 43-101) and past relevant work
experience, I am a "qualified person" for the purposes of NI 43-101.
6. The Technical Report to which this certificate applies is titled “6 December 2010
Preliminary Economic Assessment, La India Gold Project, Municipio of Sahuaripa,
Sonora, Mexico” and dated 6 December 2010 and I am responsible for Items 18, 22
and Item 23 and the related components of Items 3, 26, and 27.
7. I have visited the La India Property on April 7 and 8, 2010.
8. I have not had prior involvement with the property that is the subject of the Technical
Report.
9. As of the date of this certificate, to the best of my knowledge, information and belief,
the technical report contains all scientific and technical information that is required to
be disclosed to make the technical report not misleading.
10. I am independent of the issuer applying all of the tests in section 1.4 of National
Instrument 43-101.
11. I have read National Instrument 43-101 and Form 43-101F1, and the Technical
Report has been prepared in compliance with that instrument and form.
12. I consent to the filing of the Technical Report with any stock exchange and other
regulatory authority and any publication by them for regulatory purposes, including
electronic publication in the public company files on their websites accessible by the
public.

Dated December 6, 2010

“signed”
________________________
Signature of Qualified Person
Mark E. Smith, P.E.

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_________________________________________________________________________________________________

Appendix A. Summary of significant drill intercepts, 2004 through 22 January 2010 reverse
circulation and diamond drilling.

Drillhole From(m) To(m) Au gpt


DDH-04-01 10.0 36.3 0.330
DDH-04-01 40.0 51.5 0.463
DDH-04-01 63.0 69.0 0.771
DDH-04-01 102.5 103.3 0.349
DDH-04-02 8.7 58.5 0.933
DDH-04-02 65.1 85.2 0.408
DDH-04-02 91.0 104.8 0.225
DDH-04-03 9.4 48.0 0.433
DDH-04-03 49.4 78.6 0.452
DDH-04-04 9.1 51.0 0.960
DDH-04-04 60.0 62.0 0.300
DDH-04-04 80.5 97.5 0.285
DDH-04-05 10.5 16.0 0.300
DDH-04-05 38.5 40.0 0.354
DDH-04-05 72.5 92.5 0.224
DDH-04-05 95.5 97.0 0.303
DDH-04-05 113.0 122.0 0.191
DDH-04-06 6.0 7.5 0.427
DDH-04-06 159.5 160.3 0.322
DDH-04-06 194.5 195.5 0.306
DDH-04-06 221.5 223.5 0.359
DDH-04-07 8.0 36.0 0.854
DDH-04-07 41.0 46.0 0.471
DDH-04-08 0.0 14.6 0.294
DDH-04-08 25.4 32.1 1.114
DDH-04-09 0.0 27.9 0.902
DDH-04-10 9.1 26.3 0.768
DDH-04-10 37.4 49.8 0.278
DDH-04-10 62.8 63.8 0.293
DDH-04-11 5.5 6.5 0.447
DDH-07-12 10.0 30.0 0.229
DDH-07-12 34.0 46.0 0.436
DDH-07-12 69.0 146.0 2.585
DDH-07-13 13.0 72.0 1.149
DDH-07-13 79.0 81.0 0.632
DDH-07-14 7.0 53.3 0.525
DDH-07-15 38.0 41.0 0.396
DDH-07-15 64.0 66.0 3.618
DDH-07-16 3.0 29.0 0.477

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_________________________________________________________________________________________________

DDH-07-16 40.0 74.0 1.089


DDH-07-16 91.0 97.0 0.614
DDH-07-17 0.0 42.0 0.671
DDH-07-17 51.0 80.2 4.223
DDH-07-18 2.0 9.0 0.312
DDH-07-18 23.0 25.0 0.359
DDH-07-18 69.0 98.0 1.487
DDH-07-18 100.0 101.0 0.629
DDH-07-19 0.0 26.0 0.633
DDH-07-19 50.0 89.0 1.489
DDH-07-20 23.0 25.0 0.505
DDH-07-20 45.0 58.0 0.187
DDH-07-20 75.0 76.0 1.405
DDH-07-20 97.0 98.0 0.295
DDH-07-21 12.0 19.0 1.355
DDH-07-21 43.0 68.0 0.556
DDH-07-22 17.0 18.0 0.425
DDH-07-22 61.0 68.0 0.320
DDH-07-23 1.7 29.0 0.523
DDH-07-24 23.0 31.0 0.186
DDH-07-24 89.0 90.0 0.302
DDH-07-26 0.0 43.0 0.771
DDH-07-26 44.0 62.0 0.397
DDH-07-27 0.0 36.0 1.458
DDH-07-27 75.0 76.0 0.321
DDH-07-28 5.0 24.0 0.514
DDH-07-29 11.0 28.0 0.417
DDH-07-29 73.0 74.0 0.336
DDH-07-30 1.0 24.0 0.748
DDH-07-30 39.0 40.0 0.504
DDH-07-35 1.0 54.0 1.068
DDH-07-35 82.0 83.0 0.343
DDH-07-35 114.0 115.0 0.498
DDH-07-37 2.3 43.0 1.851
DDH-07-38 4.0 8.0 4.285
DDH-07-38 24.7 43.0 0.135
DDH-07-38 48.0 50.0 2.148
DDH-07-39 0.0 32.0 0.662
DDH-08-41 6.1 17.0 0.517
DDH-08-41 38.0 72.0 0.485
DDH-08-42 4.6 65.0 0.657
DDH-08-42 69.0 71.0 0.577
DDH-08-43 11.0 52.0 0.701

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_________________________________________________________________________________________________

DDH-08-43 52.6 71.0 0.224


DDH-08-43 88.0 89.0 0.298
DDH-08-44 40.0 52.0 0.416
DDH-08-44 77.0 81.0 0.299
DDH-08-45 41.0 42.0 0.822
DDH-08-45 64.0 67.0 0.811
DDH-08-46 30.0 53.0 0.802
DDH-08-46 77.0 79.0 0.344
DDH-08-47 11.0 49.0 0.399
DDH-08-48 2.1 15.0 0.723
DDH-08-48 29.0 43.0 0.600
DDH-08-49 3.0 22.0 0.409
DDH-08-49 56.0 67.0 1.250
DDH-08-49 89.0 93.0 1.042
DDH-08-50 3.0 7.0 0.277
DDH-08-50 28.0 83.0 5.736
DDH-08-51 3.0 10.0 0.352
DDH-08-51 42.0 57.0 1.324
DDH-08-52 14.0 26.0 0.352
DDH-08-52 38.0 40.0 5.185
DDH-08-52 56.0 71.0 1.013
DDH-08-53 16.0 45.0 0.893
DDH-08-54 6.0 24.0 0.237
DDH-08-54 29.0 43.0 2.318
DDH-08-55 0.0 79.0 1.164
DDH-08-55 89.0 102.8 1.185
DDH-08-56 6.0 7.0 0.292
DDH-08-57 3.0 21.5 0.176
DDH-08-58 18.0 41.0 0.299
DDH-08-59 25.0 70.0 1.079
DDH-08-59 78.0 82.0 0.487
DDH-08-60 2.0 18.0 0.549
DDH-08-61 0.0 41.0 0.459
DDH-08-61 50.0 59.0 0.394
DDH-08-62 19.0 25.6 0.609
DDH-08-63 2.0 38.0 1.333
DDH-08-63 39.0 52.0 0.296
DDH-08-64 0.0 2.0 0.433
DDH-08-64 22.0 45.0 0.769
DDH-08-65 31.0 37.4 0.558
DDH-09-66 2.0 24.0 0.409
DDH-09-66 34.0 52.0 0.259
DDH-09-66 67.0 79.3 1.105

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_________________________________________________________________________________________________

DDH-09-67 0.0 22.0 1.832


DDH-09-67 24.0 38.2 0.748
DDH-09-67 56.0 71.0 1.941
DDH-09-68 0.4 29.0 0.424
DDH-09-68 37.0 57.0 1.477
DDH-09-69 0.0 50.0 0.782
DDH-09-70 0.0 33.0 0.529
DDH-09-70 55.0 66.4 0.539
DDH-09-71 1.0 17.0 0.677
DDH-09-71 36.0 73.4 2.228
DDH-09-72 0.0 18.0 0.164
DDH-09-72 22.0 41.8 0.451
DDH-09-72 52.0 61.0 1.459
DDH-09-73 4.0 12.2 0.702
DDH-09-73 35.0 53.5 0.786
DDH-09-74 0.0 1.0 0.328
DDH-09-75 1.5 37.0 0.417
DDH-09-75 46.0 51.0 0.283
DDH-09-76 1.0 49.0 0.609
DDH-09-77 1.0 30.5 0.720
DDH-09-78 2.0 38.1 0.618
DDH-09-79 0.6 57.9 0.533
DDH-09-80 3.0 5.0 0.519
DDH-09-80 31.2 35.0 0.311
DDH-09-80 52.8 62.0 0.347
DDH-09-81 7.0 22.3 0.327
DDH-09-81 32.0 52.0 0.141
DDH-09-81 60.3 61.0 0.309
DDH-09-82 51.0 71.0 0.847
DDH-09-83 46.0 59.0 0.452
DDH-09-83 76.9 80.8 0.440
DDH-09-84 24.0 33.0 0.443
DDH-09-85 18.0 35.0 0.476
DDH-09-85 40.0 48.0 0.434
DDH-09-86 2.0 3.0 0.335
DDH-09-86 36.0 47.0 1.314
DDH-09-87 0.0 1.0 1.115
DDH-09-87 19.0 49.7 0.740
DDH-09-88 0.0 14.0 0.287
DDH-09-88 35.0 51.9 0.376
DDH-09-89 22.0 33.0 0.578
DDH-09-90 0.0 1.0 0.422
DDH-09-90 38.0 61.0 0.346

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DDH-09-91 1.0 15.0 0.459


DDH-09-91 36.3 60.0 0.917
DDH-09-92 11.0 12.1 1.518
DDH-09-92 40.0 44.0 1.534
DDH-09-93 0.4 60.8 1.467
DDH-09-94 2.5 26.0 0.548
DDH-09-94 34.0 53.0 0.484
DDH-09-95 53.4 53.8 1.940
DDH-09-96 28.0 66.0 1.530
DDH-09-97 42.0 48.0 6.046
DDH-09-98 5.9 7.0 0.316
DDH-09-98 30.5 51.9 0.755
DDH-09-99 0.0 19.0 0.284
DDH-09-99 27.0 47.0 2.220
DDH-09-
100 24.0 35.0 0.720
DDH-09-
101 58.0 59.0 0.480
DDH-09-
102 48.0 53.7 0.482
RC-05-13 126.5 128.0 0.316
RC-05-14 24.4 33.5 0.531
RC-05-14 62.5 65.5 0.329
RC-05-14 97.5 187.5 2.492
RC-05-14 227.1 243.8 0.626
RC-06-15 25.9 53.3 0.888
RC-06-15 108.2 125.0 0.170
RC-06-16 6.1 13.7 1.219
RC-06-16 38.1 65.5 0.299
RC-06-16 80.8 86.9 0.285
RC-06-16 155.5 158.5 0.355
RC-06-16 173.7 175.3 0.662
RC-06-17 0.0 13.7 0.611
RC-06-17 25.9 91.4 0.535
RC-06-17 96.0 108.2 0.234
RC-06-17 114.3 166.1 1.637
RC-06-19 0.0 39.6 0.371
RC-06-20 0.0 48.8 0.465
RC-06-20 57.9 76.2 0.290
RC-06-21 1.5 21.3 0.279
RC-06-21 30.5 32.0 0.438
RC-06-23 1.5 21.3 0.325
RC-06-23 36.6 44.2 0.585
RC-06-24 1.5 22.9 0.309

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RC-06-25 0.0 56.4 2.641


RC-06-25 99.1 111.3 0.424
RC-06-26 0.0 9.1 1.169
RC-06-26 25.9 32.0 0.388
RC-06-26 93.0 96.0 0.291
RC-06-29 0.0 35.1 0.643
RC-06-29 54.9 71.6 0.394
RC-06-29 86.9 96.0 0.401
RC-06-30 32.0 35.1 0.364
RC-06-30 64.0 83.8 0.356
RC-06-31 15.2 41.2 0.429
RC-06-31 59.4 73.2 1.959
RC-06-32 6.1 10.7 0.276
RC-06-32 27.4 29.0 0.412
RC-06-32 47.2 54.9 0.845
RC-06-32 71.6 85.3 0.644
RC-06-32 96.0 103.6 0.708
RC-06-33 1.5 19.8 0.741
RC-06-33 33.5 73.2 0.679
RC-06-33 89.9 93.0 0.433
RC-06-34 6.1 38.1 0.937
RC-06-34 59.4 71.6 0.274
RC-06-35 9.1 33.5 8.329
RC-06-35 56.4 62.5 6.634
RC-06-35 93.0 108.2 0.223
RC-06-36 4.6 29.0 1.950
RC-06-36 51.8 65.5 0.718
RC-06-36 77.7 79.3 0.645
RC-06-37 27.4 41.2 0.345
RC-06-37 57.9 93.0 0.408
RC-06-37 97.5 108.2 0.403
RC-06-37 132.6 134.1 0.320
RC-06-38 6.1 35.1 0.322
RC-06-38 36.6 71.6 0.420
RC-06-38 74.7 153.9 2.555
RC-06-38 175.3 182.9 0.375
RC-06-39 1.5 18.3 0.344
RC-06-39 38.1 61.0 0.293
RC-06-40 0.0 38.1 3.647
RC-06-40 53.3 94.5 0.865
RC-06-41 0.0 33.5 0.717
RC-06-41 51.8 64.0 0.975
RC-06-42 0.0 7.6 1.264

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RC-06-42 27.4 36.6 0.746


RC-06-42 62.5 74.7 0.657
RC-06-43 0.0 48.8 0.619
RC-06-43 56.4 64.0 0.779
RC-06-44 1.5 15.2 0.318
RC-06-44 39.6 42.7 0.953
RC-06-44 70.1 157.0 2.610
RC-06-45 7.6 51.8 0.675
RC-06-45 56.4 73.2 0.549
RC-06-45 131.1 134.1 0.379
RC-06-46 1.5 13.7 0.428
RC-06-46 29.0 62.5 1.170
RC-06-47 30.5 73.2 2.672
RC-06-47 76.2 100.6 3.031
RC-06-48 48.8 96.0 0.768
RC-06-48 134.1 157.0 0.336
RC-06-49 3.1 12.2 0.657
RC-06-49 27.4 29.0 0.325
RC-06-49 64.0 65.5 1.105
RC-06-50 1.5 39.6 1.563
RC-06-51 0.0 12.2 0.268
RC-06-51 85.3 86.9 0.423
RC-06-52 4.6 38.1 2.429
RC-06-53 0.0 48.8 1.432
RC-06-54 1.5 41.2 1.440
RC-06-55 0.0 24.4 0.341
RC-06-55 29.0 32.0 0.489
RC-06-56 0.0 22.9 0.413
RC-06-56 35.1 36.6 0.601
RC-06-56 56.4 64.0 0.403
RC-06-57 12.2 15.2 0.438
RC-06-57 38.1 39.6 0.294
RC-06-58 1.5 27.4 0.986
RC-06-59 0.0 32.0 1.264
RC-06-60 0.0 42.7 1.123
RC-06-61 0.0 4.6 0.919
RC-06-61 25.9 70.1 1.194
RC-06-62 54.9 56.4 0.747
RC-06-63 0.0 21.3 0.558
RC-06-63 51.8 53.3 0.340
RC-06-64 0.0 50.3 0.897
RC-06-64 57.9 123.4 1.578
RC-06-64 126.5 140.2 0.469

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RC-06-65 1.5 61.0 0.481


RC-06-65 62.5 70.1 0.434
RC-06-65 96.0 114.3 0.381
RC-06-66 1.5 18.3 0.222
RC-06-66 24.4 25.9 0.735
RC-06-67 15.2 27.4 1.014
RC-06-67 42.7 47.2 0.705
RC-06-67 80.8 99.1 0.300
RC-06-67 109.7 111.3 0.324
RC-06-68 1.5 18.3 0.272
RC-06-68 27.4 35.1 1.555
RC-06-68 59.4 61.0 0.916
RC-06-69 16.8 22.9 0.411
RC-06-70 25.9 32.0 0.343
RC-06-70 53.3 56.4 1.127
RC-06-71 0.0 29.0 1.634
RC-06-71 30.5 53.3 0.842
RC-06-72 0.0 48.8 1.042
RC-06-73 0.0 85.3 1.352
RC-06-73 103.6 109.7 0.952
RC-06-74 0.0 19.8 0.278
RC-06-74 27.4 51.8 0.314
RC-06-74 61.0 62.5 0.298
RC-06-74 77.7 79.3 0.310
RC-06-75 4.6 36.6 0.863
RC-06-76 0.0 38.1 0.637
RC-06-77 6.1 30.5 0.278
RC-06-77 33.5 42.7 0.558
RC-06-78 0.0 30.5 0.644
RC-06-78 45.7 47.2 0.482
RC-06-78 80.8 105.2 1.272
RC-06-79 0.0 15.2 0.244
RC-06-79 22.9 24.4 0.567
RC-06-80 131.1 132.6 0.302
RC-06-82 0.0 1.5 0.533
RC-06-84 4.6 6.1 0.386
RC-06-84 24.4 35.1 0.717
RC-06-84 59.4 61.0 0.636
RC-06-85 38.1 41.2 2.611
RC-06-86 1.5 3.1 0.405
RC-06-86 27.4 36.6 0.269
RC-06-86 54.9 59.4 2.245
RC-06-87 0.0 18.3 0.842

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RC-06-87 30.5 32.0 0.312


RC-06-89 13.7 80.8 1.585
RC-06-90 6.1 30.5 0.819
RC-06-90 41.2 51.8 0.278
RC-06-90 76.2 91.4 0.362
RC-06-91 32.0 73.2 0.666
RC-06-92 3.1 25.9 0.965
RC-06-92 39.6 41.2 0.370
RC-06-93 38.1 39.6 0.520
RC-06-94 0.0 29.0 0.489
RC-06-95 21.3 27.4 0.631
RC-06-96 0.0 3.1 0.379
RC-06-96 42.7 48.8 1.127
RC-06-97 3.1 6.1 0.317
RC-07-100 0.0 22.9 0.479
RC-07-100 24.4 38.1 0.488
RC-07-100 47.2 50.3 0.426
RC-07-101 0.0 35.1 0.718
RC-07-102 0.0 6.1 0.359
RC-07-102 22.9 45.7 0.867
RC-07-103 21.3 41.2 1.644
RC-07-104 1.5 24.4 0.615
RC-07-105 6.1 30.5 1.325
RC-07-105 41.2 53.3 0.233
RC-07-106 3.1 53.3 0.532
RC-07-106 111.3 121.9 0.612
RC-07-106 149.4 173.7 0.439
RC-07-107 4.6 13.7 0.452
RC-07-107 32.0 76.2 0.336
RC-07-107 80.8 120.4 2.432
RC-07-108 16.8 35.1 0.543
RC-07-109 10.7 27.4 0.480
RC-07-109 36.6 42.7 0.594
RC-07-110 0.0 6.1 0.486
RC-07-110 35.1 42.7 0.479
RC-07-111 12.2 41.2 0.354
RC-07-111 56.4 76.2 0.305
RC-07-111 80.8 88.4 0.270
RC-07-112 1.5 48.8 0.860
RC-07-113 0.0 22.9 0.641
RC-07-113 42.7 47.2 0.912
RC-07-114 6.1 24.4 0.231
RC-07-114 42.7 48.8 0.595

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RC-07-114 64.0 79.3 0.212


RC-07-115 9.1 18.3 0.385
RC-07-116 39.6 41.2 0.460
RC-07-116 64.0 80.8 0.117
RC-07-117 9.1 10.7 0.494
RC-07-117 39.6 44.2 0.563
RC-07-117 77.7 97.5 1.154
RC-07-118 0.0 1.5 0.311
RC-07-118 22.9 44.2 0.290
RC-07-118 47.2 53.3 2.774
RC-07-119 33.5 64.0 4.342
RC-07-120 0.0 25.9 0.630
RC-07-120 33.5 53.3 0.295
RC-07-120 61.0 74.7 1.695
RC-07-121 4.6 16.8 0.715
RC-07-122 0.0 13.7 0.299
RC-07-122 29.0 41.2 4.653
RC-07-123 0.0 45.7 1.002
RC-07-123 48.8 51.8 0.493
RC-07-124 0.0 53.3 0.667
RC-07-125 0.0 45.7 1.591
RC-07-125 48.8 56.4 0.351
RC-07-126 0.0 38.1 0.506
RC-07-127 0.0 27.4 0.311
RC-07-127 29.0 51.8 0.268
RC-07-127 59.4 114.3 1.948
RC-07-128 0.0 4.6 0.289
RC-07-128 24.4 39.6 0.447
RC-07-128 59.4 61.0 0.290
RC-07-129 0.0 25.9 0.893
RC-07-129 35.1 41.2 0.376
RC-07-129 57.9 83.8 0.288
RC-07-130 7.6 35.1 0.830
RC-07-130 44.2 47.2 0.517
RC-07-131 12.2 16.8 0.553
RC-07-132 64.0 86.9 0.252
RC-07-132 93.0 99.1 0.395
RC-07-133 32.0 50.3 0.398
RC-07-134 0.0 54.9 0.695
RC-07-135 12.2 35.1 0.290
RC-07-135 36.6 50.3 0.519
RC-07-136 45.7 57.9 0.172
RC-07-136 67.1 68.6 0.321

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RC-07-137 0.0 21.3 0.358


RC-07-138 0.0 18.3 0.242
RC-07-138 24.4 29.0 1.641
RC-07-139 0.0 1.5 0.428
RC-07-139 29.0 30.5 1.350
RC-07-140 4.6 7.6 0.440
RC-07-140 33.5 47.2 2.382
RC-07-141 1.5 3.1 0.474
RC-07-141 25.9 45.7 0.879
RC-07-141 54.9 80.8 0.774
RC-07-142 0.0 33.5 0.674
RC-07-142 51.8 83.8 3.146
RC-07-143 0.0 39.6 2.175
RC-07-143 44.2 59.4 4.035
RC-07-144 1.5 10.7 0.288
RC-07-144 45.7 64.0 1.313
RC-07-145 4.6 24.4 0.748
RC-07-145 27.4 54.9 1.645
RC-07-146 18.3 36.6 0.680
RC-07-147 0.0 25.9 0.920
RC-07-147 38.1 47.2 0.490
RC-07-147 68.6 106.7 1.077
RC-07-148 0.0 47.2 0.802
RC-07-149 12.2 29.0 0.282
RC-07-149 50.3 56.4 0.542
RC-07-150 6.1 7.6 0.561
RC-07-150 39.6 41.2 1.625
RC-07-151 9.1 68.6 0.457
RC-07-152 15.2 16.8 0.424
RC-07-152 35.1 47.2 1.518
RC-07-153 12.2 24.4 0.904
RC-07-153 41.2 59.4 0.330
RC-07-154 27.4 29.0 0.403
RC-07-155 56.4 57.9 0.492
RC-07-155 74.7 76.2 0.520
RC-07-155 106.7 108.2 0.323
RC-07-156 44.2 51.8 0.548
RC-07-156 65.5 67.1 0.305
RC-07-157 25.9 27.4 0.396
RC-07-157 47.2 48.8 0.569
RC-07-158 29.0 59.4 1.259
RC-07-158 77.7 82.3 0.343
RC-07-159 24.4 27.4 3.923

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RC-07-159 45.7 47.2 4.350


RC-07-159 64.0 80.8 0.542
RC-07-160 19.8 41.2 1.579
RC-07-160 50.3 57.9 0.301
RC-07-160 68.6 73.2 0.863
RC-07-161 1.5 4.6 1.175
RC-07-161 38.1 50.3 0.701
RC-07-161 62.5 76.2 12.187
RC-07-161 89.9 97.5 0.287
RC-07-162 13.7 57.9 0.607
RC-07-162 129.5 141.7 0.380
RC-07-163 12.2 24.4 0.211
RC-07-163 36.6 38.1 0.325
RC-07-166 0.0 30.5 0.499
RC-07-166 50.3 53.3 0.328
RC-07-168 0.0 50.3 0.425
RC-07-168 80.8 144.8 1.158
RC-07-170 6.1 27.4 0.284
RC-07-170 32.0 61.0 0.384
RC-07-170 67.1 77.7 0.302
RC-07-171 33.5 59.4 0.321
RC-07-172 7.6 9.1 0.352
RC-07-172 30.5 48.8 0.482
RC-07-173 18.3 51.8 0.701
RC-07-174 13.7 15.2 0.297
RC-07-174 33.5 39.6 0.856
RC-07-175 4.6 22.9 0.370
RC-07-175 36.6 56.4 0.852
RC-07-175 62.5 68.6 0.656
RC-07-176 15.2 16.8 1.390
RC-07-177 15.2 21.3 0.371
RC-07-177 50.3 51.8 0.327
RC-07-178 3.1 18.3 0.617
RC-07-178 32.0 33.5 0.360
RC-07-179 0.0 13.7 0.230
RC-07-180 16.8 27.4 2.420
RC-07-181 4.6 12.2 0.691
RC-07-181 42.7 51.8 0.445
RC-07-181 73.2 74.7 0.498
RC-07-185 22.9 24.4 1.655
RC-07-186 88.4 128.0 0.398
RC-07-187 0.0 16.8 0.546
RC-07-188 0.0 21.3 0.477

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RC-07-188 33.5 35.1 0.425


RC-07-189 0.0 18.3 0.376
RC-07-190 16.8 35.1 0.949
RC-07-191 0.0 1.5 0.321
RC-07-192 39.6 50.3 17.256
RC-07-193 29.0 59.4 1.557
RC-07-194 54.9 56.4 0.681
RC-07-195 10.7 32.0 0.480
RC-07-196 3.1 9.1 0.285
RC-07-196 41.2 45.7 0.752
RC-07-197 35.1 36.6 0.611
RC-07-198 1.5 7.6 0.519
RC-07-198 24.4 33.5 0.386
RC-07-199 6.1 15.2 0.266
RC-07-199 27.4 30.5 0.864
RC-07-200 0.0 30.5 0.649
RC-07-201 1.5 24.4 0.327
RC-07-201 29.0 30.5 6.790
RC-07-202 1.5 3.1 0.615
RC-07-202 18.3 24.4 2.041
RC-07-203 3.1 4.6 1.330
RC-07-203 27.4 41.2 0.529
RC-07-203 51.8 67.1 1.351
RC-07-204 0.0 18.3 0.598
RC-07-205 12.2 13.7 0.474
RC-07-207 0.0 1.5 0.295
RC-07-208 0.0 29.0 0.445
RC-07-209 32.0 33.5 0.293
RC-07-209 68.6 132.6 0.522
RC-07-209 140.2 141.7 0.376
RC-07-209 160.0 169.2 0.786
RC-07-210 76.2 77.7 0.430
RC-07-210 196.6 202.7 0.409
RC-07-210 251.5 253.0 0.346
RC-07-211 6.1 27.4 0.772
RC-07-211 44.2 48.8 0.401
RC-07-211 71.6 76.2 0.683
RC-07-212 3.1 29.0 0.320
RC-07-212 33.5 62.5 0.457
RC-07-212 79.3 85.3 0.453
RC-07-213 9.1 32.0 0.254
RC-07-213 35.1 53.3 0.418
RC-07-214 0.0 44.2 1.124

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RC-07-215 0.0 13.7 0.593


RC-07-215 22.9 25.9 0.418
RC-07-215 47.2 51.8 1.556
RC-07-216 0.0 12.2 1.313
RC-07-216 35.1 45.7 6.302
RC-07-217 0.0 1.5 0.296
RC-07-217 53.3 59.4 0.930
RC-07-218 48.8 53.3 2.298
RC-07-219 22.9 38.1 0.290
RC-07-220 0.0 21.3 0.241
RC-07-220 27.4 42.7 1.040
RC-07-221 19.8 32.0 2.304
RC-07-221 64.0 82.3 0.296
RC-07-223 9.1 10.7 0.290
RC-07-223 45.7 47.2 0.415
RC-07-224 7.6 24.4 0.796
RC-07-225 7.6 18.3 0.551
RC-07-225 39.6 42.7 0.914
RC-07-225 61.0 70.1 1.017
RC-07-226 1.5 42.7 0.431
RC-07-226 138.7 140.2 0.314
RC-07-226 158.5 160.0 0.346
RC-07-227 42.7 47.2 0.552
RC-07-227 103.6 105.2 0.308
RC-07-228 0.0 4.6 0.460
RC-07-229 6.1 7.6 0.300
RC-07-229 54.9 56.4 1.430
RC-07-229 91.4 109.7 0.369
RC-07-230 3.1 18.3 0.169
RC-07-230 24.4 50.3 1.349
RC-07-231 10.7 29.0 0.424
RC-07-232 3.1 4.6 0.341
RC-07-232 19.8 38.1 0.404
RC-07-233 19.8 22.9 1.278
RC-07-233 62.5 93.0 0.483
RC-07-233 103.6 105.2 0.331
RC-07-234 51.8 68.6 3.161
RC-07-234 106.7 128.0 0.216
RC-07-235 1.5 22.9 0.242
RC-07-235 64.0 65.5 0.346
RC-07-236 9.1 33.5 0.382
RC-07-236 39.6 53.3 0.280
RC-07-236 76.2 94.5 0.282

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RC-07-237 0.0 18.3 0.187


RC-07-237 19.8 54.9 0.598
RC-07-238 3.1 4.6 1.495
RC-07-238 25.9 27.4 1.675
RC-07-238 166.1 173.7 0.343
RC-07-239 13.7 15.2 0.369
RC-07-239 35.1 57.9 0.240
RC-07-239 59.4 70.1 0.216
RC-07-240 12.2 15.2 0.386
RC-07-240 35.1 36.6 0.315
RC-07-241 0.0 6.1 0.664
RC-07-242 13.7 16.8 0.796
RC-07-243 0.0 35.1 0.510
RC-07-243 94.5 106.7 0.291
RC-07-244 21.3 22.9 0.858
RC-07-244 56.4 80.8 1.616
RC-07-245 1.5 3.1 0.330
RC-07-245 38.1 50.3 1.888
RC-07-245 67.1 68.6 9.410
RC-07-246 13.7 15.2 0.422
RC-07-247 0.0 1.5 1.925
RC-07-247 39.6 57.9 1.293
RC-07-249 6.1 7.6 0.527
RC-07-250 45.7 54.9 22.832
RC-07-252 16.8 35.1 0.620
RC-07-253 6.1 21.3 2.308
RC-07-254 0.0 13.7 0.465
RC-07-254 29.0 39.6 0.415
RC-07-255 3.1 7.6 0.936
RC-07-255 27.4 33.5 0.874
RC-07-256 1.5 32.0 0.554
RC-07-256 39.6 47.2 0.490
RC-07-257 4.6 36.6 0.407
RC-07-257 44.2 61.0 0.662
RC-07-258 3.1 51.8 0.528
RC-07-258 61.0 65.5 0.714
RC-07-259 36.6 80.8 0.857
RC-07-260 18.3 19.8 0.311
RC-07-263 0.0 10.7 0.407
RC-07-263 137.2 138.7 0.822
RC-07-264 3.1 22.9 0.341
RC-07-264 30.5 33.5 0.333
RC-07-265 18.3 35.1 0.248

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RC-07-265 94.5 96.0 0.337


RC-07-266 76.2 79.3 0.371
RC-07-267 6.1 16.8 0.535
RC-07-267 33.5 48.8 0.657
RC-07-268 22.9 35.1 1.082
RC-07-268 53.3 71.6 2.433
RC-07-268 82.3 83.8 0.333
RC-07-269 39.6 56.4 4.917
RC-07-269 125.0 126.5 0.328
RC-07-270 35.1 42.7 0.957
RC-07-271 0.0 1.5 0.337
RC-07-271 44.2 62.5 0.761
RC-07-271 88.4 89.9 0.377
RC-07-272 0.0 38.1 1.377
RC-07-272 44.2 71.6 3.241
RC-07-273 0.0 35.1 0.614
RC-07-273 39.6 47.2 0.256
RC-07-273 61.0 65.5 2.097
RC-07-274 0.0 38.1 0.654
RC-07-98 1.5 42.7 1.575
RC-07-99 0.0 33.5 0.732
RC-07-99 41.2 74.7 1.525
RC-08-276 9.1 24.4 0.295
RC-08-277 22.9 42.7 0.744
RC-08-278 18.3 21.3 0.799
RC-08-278 42.7 68.6 5.759
RC-08-279 15.2 33.5 2.402
RC-08-280 0.0 13.7 0.315
RC-08-280 24.4 39.6 0.348
RC-08-281 9.1 19.8 0.353
RC-08-281 36.6 48.8 2.716
RC-08-282 36.6 39.6 2.564
RC-08-282 56.4 57.9 0.623
RC-08-283 41.2 53.3 4.201
RC-08-284 0.0 12.2 1.108
RC-08-285 1.5 30.5 1.702
RC-08-286 1.5 7.6 1.224
RC-08-288 6.1 12.2 0.654
RC-08-289 0.0 36.6 1.184
RC-08-289 51.8 65.5 0.391
RC-08-290 27.4 36.6 0.648
RC-08-291 1.5 27.4 0.711
RC-08-292 0.0 12.2 1.204

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RC-08-292 39.6 44.2 0.415


RC-08-294 35.1 44.2 1.386
RC-08-295 30.5 42.7 0.623
RC-08-297 19.8 21.3 0.337
RC-08-297 53.3 68.6 0.252
RC-08-297 93.0 94.5 0.372
RC-08-298 36.6 39.6 0.512
RC-08-299 0.0 18.3 0.322
RC-08-299 54.9 64.0 0.228
RC-08-300 18.3 19.8 0.470
RC-08-300 74.7 82.3 0.691
RC-08-300 111.3 114.3 0.826
RC-08-300 132.6 134.1 0.368
RC-08-300 224.0 225.6 0.906
RC-08-301 9.1 16.8 0.522
RC-08-301 39.6 48.8 1.329
RC-08-302 3.1 25.9 0.559
RC-08-302 36.6 50.3 0.266
RC-08-303 9.1 35.1 0.335
RC-08-303 36.6 53.3 0.250
RC-08-306 45.7 70.1 0.524
RC-08-306 82.3 83.8 1.420
RC-08-307 1.5 3.1 0.329
RC-08-307 24.4 36.6 0.227
RC-08-307 53.3 71.6 0.312
RC-08-308 3.1 39.6 0.841
RC-08-308 54.9 79.3 0.914
RC-08-308 91.4 103.6 2.364
RC-08-309 0.0 51.8 0.549
RC-08-309 53.3 117.4 0.833
RC-08-310 1.5 30.5 0.583
RC-08-310 54.9 85.3 1.443
RC-08-310 96.0 99.1 0.946
RC-08-311 0.0 79.3 1.176
RC-08-311 91.4 93.0 0.297
RC-08-312 4.6 25.9 0.987
RC-08-312 59.4 61.0 0.587
RC-08-313 21.3 38.1 0.162
RC-08-313 68.6 96.0 0.702
RC-08-314 0.0 1.5 0.296
RC-08-314 36.6 64.0 1.088
RC-08-315 6.1 9.1 2.766
RC-08-316 3.1 4.6 0.290

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RC-08-316 30.5 50.3 1.100


RC-08-317 7.6 12.2 0.893
RC-08-317 27.4 48.8 0.258
RC-08-317 51.8 59.4 0.267
RC-08-317 71.6 82.3 0.408
RC-08-318 25.9 59.4 0.576
RC-08-318 65.5 70.1 0.342
RC-08-319 0.0 15.2 0.623
RC-08-320 1.5 9.1 0.314
RC-08-321 16.8 18.3 0.449
RC-08-322 3.1 18.3 1.089
RC-08-322 93.0 108.2 0.185
RC-08-322 114.3 117.4 0.607
RC-08-323 9.1 35.1 0.446
RC-08-323 41.2 50.3 0.274
RC-08-323 61.0 68.6 0.271
RC-08-324 1.5 22.9 0.434
RC-08-324 39.6 41.2 0.360
RC-08-325 1.5 12.2 0.277
RC-08-325 25.9 32.0 0.386
RC-08-326 16.8 36.6 0.422
RC-08-327 4.6 7.6 1.688
RC-08-327 33.5 38.1 0.602
RC-08-328 0.0 1.5 0.314
RC-08-328 35.1 51.8 0.226
RC-08-329 0.0 22.9 0.434
RC-08-329 32.0 39.6 0.525
RC-08-329 71.6 77.7 0.765
RC-08-330 12.2 21.3 0.314
RC-08-331 6.1 9.1 0.594
RC-08-331 36.6 54.9 0.286
RC-08-332 4.6 15.2 0.877
RC-08-332 27.4 33.5 0.251
RC-08-333 1.5 27.4 0.264
RC-08-333 33.5 36.6 0.305
RC-08-334 21.3 38.1 0.502
RC-08-335 18.3 44.2 0.278
RC-08-336 7.6 29.0 0.345
RC-08-336 35.1 54.9 2.530
RC-08-337 0.0 1.5 0.317
RC-08-337 39.6 76.2 0.514
RC-08-338 1.5 3.1 0.333
RC-08-339 1.5 16.8 0.744

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RC-08-339 41.2 42.7 0.316


RC-08-340 4.6 7.6 0.317
RC-08-340 47.2 50.3 0.363
RC-08-341 0.0 18.3 0.384
RC-08-342 38.1 39.6 0.326
RC-08-342 128.0 144.8 1.184
RC-08-343 74.7 108.2 1.198
RC-08-344 7.6 9.1 0.344
RC-08-344 45.7 47.2 0.311
RC-08-345 4.6 13.7 0.557
RC-08-346 1.5 18.3 1.989
RC-08-347 3.1 51.8 0.624
RC-08-348 12.2 27.4 0.181
RC-08-349 24.4 25.9 0.799
RC-08-349 47.2 53.3 0.451
RC-08-350 4.6 10.7 0.964
RC-08-350 27.4 41.2 0.379
RC-08-351 6.1 19.8 0.154
RC-08-352 19.8 30.5 0.906
RC-08-353 9.1 22.9 0.205
RC-08-353 33.5 56.4 0.266
RC-08-354 0.0 41.2 0.575
RC-08-355 0.0 22.9 0.720
RC-08-356 6.1 30.5 0.419
RC-08-357 0.0 19.8 0.362
RC-08-357 30.5 38.1 1.005
RC-08-358 27.4 30.5 1.035
RC-08-360 39.6 41.2 3.050
RC-08-361 9.1 19.8 0.202
RC-08-361 38.1 39.6 1.945
RC-08-362 44.2 47.2 1.385
RC-08-363 0.0 1.5 0.682
RC-08-364 22.9 56.4 0.356
RC-08-365 16.8 18.3 2.410
RC-08-365 36.6 44.2 0.651
RC-08-365 61.0 65.5 2.205
RC-08-367 10.7 24.4 0.439
RC-08-368 10.7 19.8 0.363
RC-08-368 36.6 38.1 0.773
RC-08-369 3.1 9.1 0.508
RC-08-369 27.4 41.2 1.921
RC-08-370 1.5 25.9 0.457
RC-08-371 0.0 12.2 1.069

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RC-08-371 32.0 65.5 0.573


RC-08-371 73.2 77.7 0.656
RC-08-372 0.0 9.1 0.378
RC-08-372 21.3 30.5 0.277
RC-08-373 3.1 9.1 0.313
RC-08-373 33.5 65.5 0.869
RC-08-374 0.0 21.3 0.239
RC-08-375 3.1 15.2 0.363
RC-08-375 25.9 41.2 0.846
RC-08-376 1.5 3.1 0.435
RC-08-376 27.4 50.3 2.101
RC-08-377 1.5 12.2 2.060
RC-08-377 25.9 41.2 0.488
RC-08-377 50.3 56.4 0.918
RC-08-378 13.7 18.3 0.732
RC-08-380 9.1 19.8 0.284
RC-08-380 30.5 32.0 0.322
RC-08-382 1.5 3.1 0.324
RC-08-382 21.3 22.9 0.393
RC-08-383 0.0 4.6 0.315
RC-08-383 22.9 25.9 0.418
RC-08-384 6.1 15.2 1.212
RC-08-385 1.5 29.0 0.563
RC-08-386 3.1 24.4 0.416
RC-08-387 1.5 7.6 0.982
RC-08-388 3.1 4.6 0.293
RC-08-388 21.3 38.1 0.521
RC-08-390 0.0 25.9 0.680
RC-08-391 3.1 35.1 0.708
RC-08-391 42.7 59.4 0.392
RC-08-392 0.0 15.2 0.377
RC-08-393 0.0 15.2 0.548
RC-08-394 3.1 61.0 1.184
RC-08-395 0.0 39.6 0.923
RC-08-396 1.5 42.7 0.497
RC-08-396 45.7 70.1 0.366
RC-08-397 3.1 44.2 0.544
RC-08-397 56.4 67.1 0.252
RC-08-398 10.7 44.2 0.581
RC-08-399 38.1 54.9 0.170
RC-08-399 61.0 74.7 0.274
RC-08-400 0.0 47.2 0.358
RC-08-401 22.9 24.4 0.388

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RC-08-401 86.9 100.6 0.580


RC-08-401 115.8 120.4 0.276
RC-08-402 13.7 41.2 0.516
RC-08-402 50.3 57.9 0.530
RC-08-403 6.1 18.3 0.686
RC-08-404 4.6 33.5 0.834
RC-08-404 35.1 41.2 0.544
RC-08-405 3.1 15.2 0.614
RC-08-406 1.5 10.7 0.292
RC-08-407 1.5 18.3 0.378
RC-08-407 33.5 35.1 0.546
RC-08-408 0.0 1.5 0.400
RC-08-409 10.7 12.2 0.340
RC-08-411 1.5 3.1 0.304
RC-08-412 10.7 65.5 0.641
RC-08-412 67.1 68.6 5.820
RC-08-414 4.6 9.1 0.580
RC-08-414 30.5 61.0 0.671
RC-08-414 74.7 94.5 0.234
RC-08-415 4.6 9.1 0.530
RC-08-415 39.6 56.4 0.940
RC-08-416 15.2 18.3 0.896
RC-08-417 0.0 13.7 0.572
RC-08-418 0.0 27.4 0.380
RC-09-420 27.4 67.1 0.471
RC-09-421 6.1 25.9 0.407
RC-09-421 33.5 35.1 0.302
RC-09-422 12.2 33.5 0.360
RC-09-422 36.6 47.2 0.311
RC-09-422 73.2 82.3 0.353
RC-09-424 21.3 22.9 0.531
RC-09-424 76.2 93.0 0.256
RC-09-424 97.5 105.2 0.389
RC-09-425 1.5 3.1 0.321
RC-09-425 27.4 30.5 0.452
RC-09-425 62.5 64.0 0.297
RC-09-425 85.3 86.9 0.574
RC-09-426 32.0 33.5 0.455
RC-09-426 105.2 106.7 0.294
RC-09-426 144.8 146.3 0.619
RC-09-426 169.2 170.7 0.305
RC-09-427 32.0 48.8 0.200
RC-09-427 79.3 126.5 0.652

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RC-09-430 25.9 29.0 1.321


RC-09-430 59.4 76.2 0.262
RC-09-431 21.3 57.9 1.623
RC-09-432 0.0 38.1 0.726
RC-09-432 44.2 99.1 6.540
RC-09-433 51.8 65.5 0.402
RC-09-435 50.3 51.8 0.339
RC-09-436 0.0 4.6 0.554
RC-09-436 19.8 21.3 0.299
RC-09-436 39.6 45.7 1.879
RC-09-437 0.0 9.1 0.524
RC-09-437 35.1 36.6 0.485
RC-09-438 1.5 19.8 0.238
RC-09-438 47.2 56.4 0.182
RC-09-439 24.4 41.2 0.485
RC-09-439 56.4 80.8 0.960
RC-09-440 7.6 12.2 0.600
RC-09-441 16.8 19.8 0.520
RC-09-441 71.6 73.2 0.640
RC-09-441 94.5 118.9 0.448
RC-09-442 7.6 22.9 0.187
RC-09-443 1.5 27.4 0.704
RC-09-444 1.5 42.7 0.525
RC-09-445 0.0 16.8 0.635
RC-09-445 30.5 33.5 0.450
RC-09-445 80.8 93.0 0.694
RC-09-446 32.0 35.1 0.465
RC-09-446 61.0 77.7 0.170
RC-09-446 93.0 94.5 0.385
RC-09-447 6.1 38.1 0.382
RC-09-447 45.7 64.0 0.173
RC-09-447 128.0 141.7 0.204
RC-09-448 50.3 51.8 0.347
RC-09-448 91.4 99.1 0.600
RC-09-449 35.1 54.9 0.287
RC-09-449 86.9 88.4 0.314
RC-09-450 0.0 41.2 0.510
RC-09-450 53.3 71.6 0.565
RC-09-451 36.6 38.1 0.297
RC-09-452 27.4 33.5 0.361
RC-09-452 50.3 51.8 0.346
RC-09-453 48.8 50.3 0.349
RC-09-454 1.5 6.1 0.619

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RC-09-455 33.5 35.1 0.370


RC-09-456 54.9 56.4 0.440
RC-09-457 13.7 33.5 0.402
RC-09-458 15.2 27.4 0.284
RC-09-458 36.6 61.0 0.370
RC-09-458 71.6 73.2 0.330
RC-09-459 25.9 54.9 0.402
RC-09-460 30.5 39.6 3.958
RC-09-460 62.5 74.7 0.954
RC-09-460 91.4 93.0 0.669
RC-09-460 114.3 128.0 0.337
RC-09-461 67.1 68.6 0.420
RC-09-461 89.9 93.0 1.743
RC-09-462 0.0 59.4 0.670
RC-09-463 0.0 16.8 0.464
RC-09-463 27.4 33.5 0.367
RC-09-463 53.3 73.2 2.435
RC-09-464 4.6 9.1 0.447
RC-09-464 32.0 47.2 1.919
RC-09-464 62.5 64.0 0.445
RC-09-466 47.2 50.3 0.608
RC-09-468 79.3 82.3 0.336
RC-09-468 100.6 103.6 0.898
RC-09-471 141.7 146.3 0.499
RC-09-476 0.0 86.9 1.047
RC-09-476 89.9 105.2 0.248
RC-09-476 128.0 138.7 0.804
RC-09-477 0.0 48.8 0.935
RC-09-477 62.5 86.9 0.370
RC-09-478 0.0 32.0 0.836
RC-09-478 36.6 38.1 0.304
RC-09-479 0.0 36.6 1.123
RC-09-479 47.2 53.3 0.579
RC-09-479 108.2 117.4 0.237
RC-09-480 1.5 41.2 0.879
RC-09-480 48.8 71.6 0.385
RC-09-481 13.7 32.0 0.458
RC-09-481 35.1 62.5 0.486
RC-09-481 64.0 65.5 2.000
RC-09-483 12.2 16.8 0.387
RC-09-483 32.0 54.9 0.312
RC-09-485 76.2 82.3 0.417
RC-09-486 21.3 25.9 0.357

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RC-09-487 22.9 24.4 0.370


RC-09-487 39.6 57.9 0.731
RC-09-488 39.6 44.2 2.025
RC-09-490 39.6 41.2 1.215
RC-09-492 7.6 53.3 0.505
RC-09-492 54.9 59.4 0.468
RC-09-493 4.6 65.5 0.725
RC-09-494 3.1 18.3 0.513
RC-09-494 39.6 70.1 0.379
RC-09-495 0.0 53.3 0.650
RC-09-496 42.7 44.2 0.566
RC-09-497 0.0 13.7 0.617
RC-09-497 25.9 35.1 0.366
RC-09-498 0.0 29.0 1.051
RC-09-498 44.2 62.5 1.333
RC-09-499 1.5 16.8 0.257
RC-09-499 38.1 48.8 2.128
RC-09-500 0.0 48.8 0.804
RC-09-501 4.6 32.0 0.376
RC-09-501 38.1 54.9 0.273
RC-09-501 65.5 77.7 0.351
RC-09-502 0.0 9.1 0.223
RC-09-502 30.5 32.0 1.190
RC-09-503 4.6 21.3 0.425
RC-09-503 30.5 45.7 2.819
RC-09-504 41.2 48.8 0.266
RC-09-505 33.5 64.0 0.371
RC-09-505 65.5 76.2 0.571
RC-09-507 4.6 24.4 0.222
RC-09-507 30.5 53.3 0.814
RC-09-508 1.5 62.5 2.018
RC-09-509 0.0 6.1 0.341
RC-09-510 19.8 38.1 0.276
RC-09-510 42.7 45.7 0.957
RC-09-511 16.8 54.9 0.398
RC-09-513 4.6 12.2 0.529
RC-09-513 27.4 32.0 1.454
RC-09-514 6.1 7.6 0.495
RC-09-514 30.5 50.3 0.770
RC-09-515 18.3 27.4 0.702
RC-09-515 39.6 44.2 0.457
RC-09-516 19.8 36.6 1.260
RC-09-516 50.3 57.9 0.431

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RC-09-517 25.9 27.4 0.465


RC-09-518 16.8 21.3 0.385
RC-09-519 0.0 4.6 0.953
RC-09-519 19.8 33.5 1.077
RC-09-520 6.1 44.2 1.797
RC-09-521 6.1 25.9 1.184
RC-09-522 1.5 18.3 0.417
RC-09-523 7.6 59.4 1.610
RC-09-524 1.5 21.3 0.402
RC-09-524 27.4 51.8 0.351
RC-09-525 19.8 38.1 0.367
RC-09-525 47.2 68.6 0.456
RC-09-526 0.0 15.2 0.300
RC-09-526 35.1 42.7 1.256
RC-09-527 0.0 4.6 0.883
RC-09-528 0.0 30.5 0.661
RC-09-529 3.1 30.5 0.552
RC-09-530 3.1 4.6 0.721
RC-09-531 4.6 6.1 0.305
RC-09-532 0.0 19.8 0.461
RC-09-533 0.0 22.9 0.749
RC-09-533 61.0 77.7 0.210
RC-09-533 94.5 97.5 0.324
RC-09-534 18.3 29.0 0.307
RC-09-534 61.0 79.3 0.281
RC-09-534 80.8 82.3 0.346
RC-09-534 114.3 115.8 0.360
RC-09-535 0.0 9.1 0.870
RC-09-535 42.7 51.8 0.404
RC-09-535 74.7 80.8 0.421
RC-09-535 114.3 117.4 0.386
RC-09-536 89.9 99.1 0.580
RC-09-537 18.3 39.6 0.263
RC-09-537 47.2 50.3 0.625
RC-09-538 0.0 54.9 1.508
RC-09-538 68.6 70.1 0.457
RC-09-539 12.2 24.4 1.330
RC-09-540 0.0 35.1 1.069
RC-09-541 1.5 35.1 1.994
RC-09-542 4.6 18.3 0.661
RC-09-542 71.6 80.8 0.256
RC-09-543 7.6 24.4 0.280
RC-09-543 45.7 54.9 1.158

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RC-09-544 7.6 30.5 0.942


RC-09-545 6.1 19.8 0.303
RC-09-545 38.1 77.7 0.635
RC-09-545 83.8 94.5 0.363
RC-09-546 18.3 19.8 0.597
RC-09-546 41.2 47.2 0.366
RC-09-546 65.5 68.6 0.413
RC-10-548 30.5 32.0 0.294
RC-10-550 24.4 39.6 0.155
RC-10-550 54.9 74.7 0.330
RC-10-550 97.5 100.6 0.516
RC-10-550 125.0 126.5 0.767
RC-10-551 3.1 15.2 0.481
RC-10-552 76.2 82.3 0.431
RC-10-552 112.8 114.3 2.060
RC-10-552 161.5 170.7 0.259
RC-10-553 0.0 32.0 0.645

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Appendix B. Summary of significant drill intercepts, 2010 reverse circulation and diamond
drilling, Tarachi area, not part of resource estimate database..
Length To Width Au
Zone Hole East North Azimuth Dip From (m)
(m) (m) (m) gpt
RC-10-
88.4 24.4 0.35
Tarachi 583 700200 3185073 135 -50 254.5 64.0
RC-10-
13.7 236.2 222.5 0.50
Tarachi 582 699985 3184981 110 -60 269.8
including 160.0 230.1 70.1 0.95
RC-10-
7.6 112.8 105.2 0.18
Tarachi 581 700412 3185114 130 -60 160.0
RC-10-
77.7 208.8 131.1 0.19
Tarachi 580 699824 3185364 150 -60 306.3
RC-10-
13.7 99.1 85.3 0.31
Tarachi 579 700129 3185166 315 -60 233.2
RC-10-
42.7 228.6 185.9 0.29
Tarachi 578 700183 3185264 135 -60 243.8
RC-10-
132.6 245.4 112.8 0.39
Tarachi 577 700340 3185615 225 -50 245.4
RC-10-
99.1 134.1 35.1 0.24
Tarachi 576 700342 3185616 45 -60 213.4

DDH-10-
Tarachi 169 700534 3185643 350 -60 226
DDH-10-
Tarachi 168 700535 3185643 170 -60 194
DDH-10-
6 250 244.0 0.85
Tarachi 167 700179 3184990 225 -60 250.0
108 198 90.0 1.21
DDH-10- No significant
Tarachi 166 699573 3185783 135 -60 324.8 intersection
DDH-10- No significant
Tarachi 165 700264 3185730 315 -60 327.9 intersection
DDH-10-
161.0 166.0 5.0 0.70
Tarachi 164 700271 3185725 135 -60 207.4
DDH-10- No significant
Tarachi 163 700346 3184824 315 -60 253.2 intersection
DDH-10-
9.0 46.0 37.0 0.38
Tarachi 162 700122 3185039 315 -60 349.2
DDH-10-
373.6 136.0 247.0 111.0 0.43
Tarachi 161 699984 3184960 290 -60
including 144.0 158.0 14.0 1.07
DDH-10-
Tarachi 24.0 142.0 118.0 0.38
160 700069 3184879 315 -60 205.9
including 41.0 75.0 34.0 0.62
DDH-10-
Tarachi 9.0 141.0 132.0 0.50
159 700174 3184927 315 -60 199.8
including 68.0 105.0 37.0 0.86
DDH-10-
Tarachi 410.7 11.0 253.0 212.0 0.31
158 699984 3184960 110 -60
including 152.0 184.0 32.0 0.69
DDH-10-
Tarachi 0.0 180.0 180.0 0.28
157 700129 3185152 135 -60 179.95
including 101.0 123.0 22.0 0.74
DDH-10-
Tarachi 157.1 15.3 157.1 141.9 0.23
153 700247 3185095 270 -60
including 23.8 55.8 32.0 0.43

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DDH-10-
Tarachi 146.0 154.0 8.0 0.67
152 700364 3185283 270 -60 189.1
DDH-10-
Tarachi 3.0 16.0 16.0 0.41
151 700364 3185283 110 -60 138.8
DDH-10-
Tarachi 55.0 117.0 62.0 0.40
150 700029 3184940 10 -60 164.7
DDH-10-
Tarachi 0.0 191.0 191.0 0.85
149 700029 3184940 110 -60 221.2
including 98.0 186.0 88.0 1.54
including 146.0 180.0 34.0 2.23
DDH-10-
Tarachi 8.0 212.0 204.0 0.47
148 700259 3185096 60 -60 212.0
including 22.0 96.0 74.0 0.95
DDH-10-
Tarachi 7.0 110.0 103.0 0.18
147 700256 3184844 10 -60 151.0
DDH-10-
93.0 93.0 0.27
Tarachi 129 700281 3184882 270 -85 93 0.0
including 0.0 9.0 9.0 1.22
DDH-10-
100.6 100.6 0.27
Tarachi 128 700281 3184882 90 -75 100.65 0.0
including 0.0 36.0 36.0 0.51
DDH-10-
109.0 109.0 0.28
Tarachi 127 700281 3184882 145 -85 164.7 0.0
including 0.0 19.0 19.0 0.58
including 87.0 109.0 22.0 0.57
DDH-10-
94.0 94.0 0.43
Tarachi 126 700281 3184882 144 -71 303.3 0.0
DDH-10-
159.0 159.0 0.22
Tarachi 125 700128 3185028 135 -70 300.4 0.0
DDH-10-
302.0 296.0 0.21
Tarachi 124 700403 3185129 290 -70 301.95 6.0
DDH-10-
165.5 163.3 0.33
Tarachi 123 700281 3184882 273 -69 276.4 2.2
including 2.2 58.0 55.8 0.71

Appendix C. Summary of reverse circulation drilling where water was injected during drilling
(“wet drilling technique”): 2005, 2006, 2007, and 2008 reverse circulation drilling.

Intervals Drilled Wet (Water


Injected)
Drillhole From (m) To (m) Length (m)
RC-05-
173.74 252.98 79.24
14
RC-05-
205.74 59.44
15 265.18
RC-06-
129.54 195.07 65.53
16
RC-06-
76.20 166.12 89.92
17
RC-06-
128.02 198.12 70.10
18
RC-06- 192.02 216.41 24.39

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19
RC-06-
86.87 181.36 94.49
22
RC-06-
35.05 36.58 1.52
28
RC-06-
53.34 114.30 60.96
28
RC-06-
35.05 36.58 1.52
29
RC-06-
18.29 21.34 3.05
36
RC-06-
48.77 108.20 59.44
36
RC-06-
59.44 135.64 76.20
37
RC-06-
128.02 163.07 35.05
44
RC-06-
89.92 141.73 51.82
45
RC-06-
92.96 150.88 57.91
47
RC-06-
77.72 141.73 64.01
62
RC-06-
77.72 89.92 12.19
74
RC-06-
50.29 135.64 85.34
73
RC-06-
32.00 71.63 39.62
94
RC-07-
41.15 50.29 9.14
100
RC-07-
108.20 173.74 65.53
106
RC-07-
35.05 44.20 9.14
108
RC-07-
42.67 56.39 13.72
113
RC-07-
89.92 114.30 24.38
127
RC-07-
45.72 50.29 4.57
156
RC-07-
64.01 68.58 4.57
168
RC-07-
109.73 144.78 35.05
168

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RC-07-
134.11 230.12 96.01
169
RC-07-
50.29 53.34 3.05
170
RC-07-
41.15 44.20 3.05
190
RC-07-
67.06 83.82 16.76
193
RC-07-
18.29 51.82 33.53
194
RC-07-
47.24 68.58 21.34
198
RC-07-
83.82 149.35 65.53
209
RC-07-
144.78 150.88 6.10
212
RC-07-
160.02 164.59 4.57
226
RC-07-
38.10 121.92 83.82
236
RC-07-
121.92 141.73 19.81
236
RC-07-
21.34 254.51 233.17
239
RC-07-
135.64 140.21 4.57
243
RC-07-
21.34 38.10 16.76
252
RC-07-
41.15 53.34 12.19
254
RC-08-
10.67 22.86 12.19
277
RC-08-
53.34 73.15 19.81
290
RC-08-
92.96 144.78 51.82
342
RC-08-
13.72 19.81 6.10
363
RC-08-
0.00 56.39 56.39
378
RC-08-
22.86 53.34 30.48
380
RC-08-
0.00 35.05 35.05
382
RC-08- 0.00 35.05 35.05

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383
RC-08-
0.00 35.05 35.05
385
RC-08-
0.00 68.58 68.58
386
RC-08-
0.00 28.96 28.96
387
RC-08-
0.00 44.20 44.20
388
RC-08-
0.00 59.44 59.44
389
RC-08-
0.00 28.96 28.96
390
RC-08-
0.00 64.01 64.01
391
RC-08-
0.00 38.10 38.10
392
RC-08-
0.00 44.20 44.20
393
RC-08-
0.00 65.53 65.53
394
RC-08-
0.00 59.44 59.44
395
RC-08-
0.00 59.44 59.44
400
RC-08-
0.00 141.73 141.73
401
RC-08-
0.00 65.53 65.53
402
RC-08-
6.10 59.44 53.34
404
RC-08-
15.24 105.16 89.92
408
RC-08-
7.62 74.68 67.06
412
Total 3,078.48

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Appendix D. Summary of blank material certification assays.


Blank Material Assay Results
Lab Sample Identification Au in ppb
Acme L1-01 4
Acme L1-02 3
Acme L1-03 3
Acme L1-04 2
Acme L1-05 2
Acme L1-06 3
Acme L1-06 repeat 2
Acme L1-07 4
Acme L1-08 2
Acme L1-09 3
Acme L1-10 <2
Acme L1-11 3
Acme L1-12 3
Acme L1-13 4
Acme L1-14 3
Acme L1-15 3
Acme L1-16 3
Acme LA INDIA-001 <2
Acme LA INDIA-002 <2
Acme LA INDIA-003 <2
Acme LA INDIA-004 <2
Acme LA INDIA-005 <2
Acme LA INDIA-006 <2
Acme LA INDIA-007 <2
Acme LA INDIA-008 <2
Acme LA INDIA-009 <2
Acme LA INDIA-010 <2
IPL L1-01 2
IPL L1-02 4
IPL L1-03 2
IPL L1-04 2
IPL L1-05 2
IPL L1-06 <2
IPL L1-07 <2
IPL L1-08 7
IPL L1-09 3
IPL L1-10 2
IPL L1-11 <2
IPL L1-12 <2
IPL L1-13 2
IPL L1-14 2
IPL L1-15 3
IPL L1-16 <2
IPL L1-01 repeat 2
IPL LA INDAI-001 2
IPL LA INDAI-002 2
IPL LA INDAI-003 <2
IPL LA INDAI-004 <2
IPL LA INDAI-005 <2
IPL LA INDAI-006 2
IPL LA INDAI-007 2
IPL LA INDAI-008 2
IPL LA INDAI-009 <2
IPL LA INDAI-010 <2
IPL LA INDAI-001 repeat <2

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Appendix E. RC and diamond core drillholes in resource estimate database, Main Zone: collar
location, orientation, and total depth summary table.

Drillhole Easting Northing Elev Depth Area Type Zone


DDH-07-
12 707,230 3,176,168 1,778 161.0 La Cruz DDH Main Zone
DDH-07-
13 707,269 3,176,223 1,804 84.7 La Cruz DDH Main Zone
DDH-07-
14 707,074 3,176,204 1,750 53.9 La Cruz DDH Main Zone
DDH-07-
15 707,333 3,176,326 1,819 74.9 Viruela DDH Main Zone
DDH-07-
16 706,984 3,176,563 1,864 122.1 Viruela DDH Main Zone
DDH-07-
17 706,874 3,176,606 1,855 80.2 Viruela DDH Main Zone
DDH-07-
18 707,021 3,176,455 1,839 101.7 Viruela DDH Main Zone
DDH-07-
19 706,825 3,176,516 1,830 102.0 Viruela Root DDH Main Zone
DDH-07-
20 707,305 3,176,356 1,829 98.8 La Cruz DDH Main Zone
DDH-07-
21 707,083 3,176,280 1,768 77.6 La Cruz DDH Main Zone
DDH-07-
22 707,217 3,175,955 1,758 71.6 La Cruz S DDH Main Zone
DDH-07-
23 707,331 3,176,004 1,730 62.1 La Cruz DDH Main Zone
DDH-07-
24 706,558 3,176,352 1,762 103.6 Viruela DDH Main Zone
DDH-07-
26 706,928 3,175,870 1,699 71.4 Cerro de Oro N DDH Main Zone
DDH-07-
27 707,041 3,175,643 1,707 80.6 Cerro de Oro DDH Main Zone
DDH-07-
28 707,221 3,175,532 1,690 92.2 Cerro de Oro DDH Main Zone
DDH-07-
29 707,121 3,176,425 1,837 99.2 Viruela DDH Main Zone
DDH-07-
30 706,855 3,176,423 1,783 56.2 Viruela DDH Main Zone
DDH-07-
35 706,863 3,176,315 1,739 120.2 Viruela DDH Main Zone
DDH-08-
41 707,050 3,176,020 1,697 81.4 Viruela-LaCruz DDH Main Zone
DDH-08-
42 707,232 3,176,166 1,778 84.4 Viruela-LaCruz DDH Main Zone
DDH-08-
43 707,269 3,176,222 1,803 90.5 Viruela-LaCruz DDH Main Zone
DDH-08-
44 707,230 3,176,430 1,807 121.0 Viruela-LaCruz DDH Main Zone
DDH-08-
45 707,194 3,176,528 1,834 90.5 Viruela DDH Main Zone
DDH-08-
46 707,331 3,176,460 1,844 80.0 Viruela DDH Main Zone

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DDH-08-
47 706,990 3,176,563 1,864 62.0 Viruela DDH Main Zone
DDH-08-
48 706,896 3,176,553 1,839 78.8 Viruela DDH Main Zone
DDH-08-
49 706,896 3,176,549 1,838 103.5 Viruela DDH Main Zone
DDH-08-
50 706,954 3,176,411 1,807 88.0 Viruela DDH Main Zone
DDH-08-
51 706,904 3,176,460 1,815 80.2 Viruela DDH Main Zone
DDH-08-
52 706,792 3,176,526 1,822 84.4 Viruela DDH Main Zone
DDH-08-
53 706,734 3,176,453 1,802 54.0 Viruela DDH Main Zone
DDH-08-
54 706,799 3,176,464 1,804 65.5 Viruela DDH Main Zone
DDH-08-
55 707,312 3,175,573 1,663 102.8 Cerro de Oro DDH Main Zone
DDH-08-
56 706,652 3,176,442 1,769 51.7 Viruela DDH Main Zone
DDH-09-
66 706,887 3,176,572 1,845 79.3 Viruela DDH Main Zone
DDH-09-
67 706,850 3,176,565 1,841 71.7 Viruela DDH Main Zone
DDH-09-
68 706,894 3,176,552 1,838 80.8 Viruela DDH Main Zone
DDH-09-
69 706,967 3,176,617 1,846 51.9 Viruela DDH Main Zone
DDH-09-
70 706,969 3,176,615 1,846 80.5 Viruela DDH Main Zone
DDH-09-
71 706,891 3,176,518 1,824 90.4 Viruela DDH Main Zone
DDH-09-
72 706,806 3,176,550 1,827 68.6 Viruela DDH Main Zone
DDH-09-
73 706,846 3,176,470 1,809 79.3 Viruela DDH Main Zone
DDH-09-
74 706,827 3,176,441 1,795 56.4 Viruela DDH Main Zone
DDH-09-
75 706,882 3,176,653 1,822 67.1 Viruela DDH Main Zone
DDH-09-
76 706,879 3,176,653 1,822 50.3 Viruela DDH Main Zone
DDH-09-
77 706,818 3,176,658 1,809 30.5 Viruela DDH Main Zone
DDH-09-
78 706,821 3,176,658 1,809 38.1 Viruela DDH Main Zone
DDH-09-
79 706,946 3,176,573 1,860 57.9 Viruela DDH Main Zone
DDH-09-
80 707,021 3,176,455 1,839 82.4 Viruela DDH Main Zone
DDH-09-
81 707,042 3,176,481 1,850 85.4 Viruela DDH Main Zone
DDH-09-
82 707,229 3,176,429 1,807 77.8 La Cruz DDH Main Zone

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DDH-09-
83 707,348 3,176,377 1,821 80.8 La Cruz DDH Main Zone
DDH-09-
84 707,274 3,176,478 1,823 80.8 La Cruz DDH Main Zone
DDH-09-
85 707,004 3,176,485 1,844 61.0 Viruela DDH Main Zone
DDH-09-
86 706,849 3,176,472 1,809 61.0 Viruela DDH Main Zone
DDH-09-
87 706,809 3,176,476 1,812 59.5 Viruela DDH Main Zone
DDH-09-
88 706,778 3,176,581 1,808 51.9 Viruela DDH Main Zone
DDH-09-
89 706,733 3,176,449 1,801 61.0 Viruela DDH Main Zone
DDH-09-
90 706,914 3,176,413 1,795 61.0 Viruela DDH Main Zone
DDH-09-
91 706,972 3,176,415 1,811 70.0 Viruela DDH Main Zone
DDH-09-
92 707,363 3,176,405 1,825 51.9 La Cruz DDH Main Zone
DDH-09-
93 707,342 3,175,552 1,652 66.9 Cerro de Oro DDH Main Zone
DDH-09-
94 706,893 3,176,552 1,838 61.0 Viruela DDH Main Zone
RC-05-14 707,270 3,176,189 1,788 254.5 La Cruz RC Main Zone
RC-06-15 706,564 3,176,351 1,762 266.7 Viruela Root RC Main Zone
RC-06-16 707,258 3,175,983 1,737 196.6 La Cruz RC Main Zone
RC-06-17 707,211 3,176,124 1,776 170.7 La Cruz RC Main Zone
RC-06-19 706,978 3,175,875 1,694 217.9 Cerro de Oro N RC Main Zone
RC-06-20 706,972 3,175,874 1,694 153.9 Cerro de Oro N RC Main Zone
RC-06-21 706,974 3,175,874 1,694 35.1 Cerro de Oro N RC Main Zone
RC-06-24 707,189 3,175,542 1,700 108.2 Cerro de Oro RC Main Zone
RC-06-25 707,040 3,175,646 1,707 120.4 Cerro de Oro RC Main Zone
RC-06-26 707,085 3,175,645 1,722 138.7 Cerro de Oro RC Main Zone
RC-06-29 707,270 3,176,192 1,788 138.7 La Cruz RC Main Zone
RC-06-30 707,338 3,176,280 1,807 99.1 La Cruz RC Main Zone
RC-06-31 707,339 3,176,279 1,807 86.9 La Cruz RC Main Zone
RC-06-32 707,336 3,176,325 1,819 121.9 La Cruz RC Main Zone
RC-06-33 707,342 3,176,276 1,806 121.9 La Cruz RC Main Zone
RC-06-34 707,306 3,176,224 1,789 71.6 La Cruz RC Main Zone
RC-06-35 707,306 3,176,226 1,790 111.3 La Cruz RC Main Zone
RC-06-36 707,302 3,176,224 1,789 108.2 La Cruz RC Main Zone
RC-06-37 707,222 3,176,173 1,778 135.6 La Cruz RC Main Zone
RC-06-38 707,160 3,176,235 1,770 189.0 La Cruz RC Main Zone
RC-06-39 707,323 3,176,184 1,763 152.4 La Cruz RC Main Zone

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RC-06-40 706,851 3,176,568 1,841 108.2 Viruela RC Main Zone


RC-06-41 706,853 3,176,568 1,841 89.9 Viruela RC Main Zone
RC-06-42 706,848 3,176,568 1,841 89.9 Viruela RC Main Zone
RC-06-43 706,875 3,176,608 1,856 65.5 Viruela RC Main Zone
RC-06-44 707,224 3,176,172 1,778 163.1 La Cruz RC Main Zone
RC-06-45 707,227 3,176,171 1,778 141.7 La Cruz RC Main Zone
RC-06-46 707,271 3,176,188 1,788 62.5 La Cruz RC Main Zone
RC-06-47 707,274 3,176,192 1,788 150.9 La Cruz RC Main Zone
RC-06-48 707,125 3,176,274 1,763 160.0 La Cruz RC Main Zone
RC-06-49 707,358 3,175,669 1,658 89.9 Cerro de Oro RC Main Zone
RC-06-50 707,354 3,175,665 1,658 93.0 Cerro de Oro RC Main Zone
RC-06-51 707,378 3,175,963 1,712 86.9 La Cruz S RC Main Zone
RC-06-52 707,226 3,175,536 1,690 77.7 Cerro de Oro RC Main Zone
RC-06-53 707,037 3,175,645 1,707 83.8 Cerro de Oro RC Main Zone
RC-06-54 707,038 3,175,645 1,707 89.9 Cerro de Oro RC Main Zone
RC-06-63 706,873 3,176,311 1,739 83.8 Viruela RC Main Zone
RC-06-64 707,115 3,176,222 1,750 141.7 La Cruz RC Main Zone
RC-06-65 707,073 3,176,202 1,751 147.8 La Cruz RC Main Zone
RC-06-66 706,822 3,176,398 1,776 89.9 Viruela RC Main Zone
RC-06-67 706,738 3,176,452 1,802 141.7 Viruela RC Main Zone
RC-06-68 706,803 3,176,619 1,826 89.9 Viruela RC Main Zone
RC-06-69 707,218 3,175,956 1,758 77.7 La Cruz RC Main Zone
RC-06-70 707,163 3,175,892 1,774 102.1 La Cruz RC Main Zone
RC-06-71 707,042 3,175,640 1,707 105.2 Cerro de Oro RC Main Zone
RC-06-72 707,039 3,175,640 1,708 111.3 Cerro de Oro RC Main Zone
RC-06-73 707,314 3,175,570 1,663 135.6 Cerro de Oro RC Main Zone
RC-06-74 706,927 3,175,870 1,699 89.9 Cerro de Oro N RC Main Zone
RC-06-75 707,224 3,175,535 1,690 71.6 Cerro de Oro S RC Main Zone
RC-06-76 707,313 3,175,572 1,663 120.4 Cerro de Oro S RC Main Zone
RC-06-77 707,278 3,176,109 1,764 77.7 La Cruz RC Main Zone
RC-06-78 707,116 3,176,221 1,750 120.4 La Cruz RC Main Zone
RC-06-79 707,180 3,175,524 1,700 61.0 Cerro de Oro RC Main Zone
RC-06-83 707,223 3,175,534 1,690 19.8 Cerro de Oro RC Main Zone
RC-06-84 707,162 3,175,464 1,680 61.0 Cerro de Oro RC Main Zone
RC-06-85 707,161 3,175,464 1,680 50.3 Cerro de Oro RC Main Zone
RC-06-86 707,158 3,175,464 1,680 93.0 Cerro de Oro RC Main Zone
RC-06-87 707,136 3,175,597 1,709 35.1 Cerro de Oro RC Main Zone
RC-06-88 707,116 3,175,704 1,715 53.3 Cerro de Oro RC Main Zone

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RC-06-89 707,271 3,176,222 1,804 83.8 La Cruz RC Main Zone


RC-06-90 707,069 3,176,208 1,751 91.4 La Cruz RC Main Zone
RC-06-91 706,955 3,176,415 1,808 83.8 Viruela RC Main Zone
RC-06-92 706,862 3,176,420 1,784 71.6 Viruela RC Main Zone
RC-06-93 707,151 3,176,319 1,790 59.4 Viruela RC Main Zone
RC-06-94 707,333 3,176,002 1,730 71.6 La Cruz S RC Main Zone
RC-06-95 707,403 3,175,817 1,683 59.4 La Cruz S RC Main Zone
RC-06-96 707,310 3,175,569 1,663 59.4 Cerro de Oro S RC Main Zone
RC-06-97 707,340 3,175,722 1,670 53.3 Cerro de Oro S RC Main Zone
RC-07-106 707,074 3,176,204 1,750 173.7 La Cruz RC Main Zone
RC-07-107 707,143 3,176,199 1,757 138.7 La Cruz RC Main Zone
RC-07-108 707,241 3,176,247 1,805 44.2 La Cruz RC Main Zone
RC-07-109 707,076 3,175,616 1,716 61.0 Cerro de Oro RC Main Zone
RC-07-110 707,091 3,175,640 1,721 61.0 Cerro de Oro RC Main Zone
RC-07-111 707,247 3,176,245 1,804 99.1 La Cruz RC Main Zone
RC-07-112 706,871 3,176,399 1,786 61.0 Viruela RC Main Zone
RC-07-113 706,859 3,176,422 1,783 56.4 Viruela RC Main Zone
RC-07-114 706,821 3,176,395 1,774 105.2 Viruela RC Main Zone
RC-07-115 706,812 3,176,402 1,776 118.9 Viruela RC Main Zone
RC-07-116 707,020 3,176,453 1,839 83.8 Viruela RC Main Zone
RC-07-117 707,018 3,176,453 1,838 114.3 Viruela RC Main Zone
RC-07-118 706,949 3,176,521 1,843 79.3 Viruela RC Main Zone
RC-07-119 706,953 3,176,418 1,807 77.7 Viruela RC Main Zone
RC-07-120 706,819 3,176,513 1,829 108.2 Viruela RC Main Zone
RC-07-121 706,763 3,176,471 1,806 41.2 Viruela RC Main Zone
RC-07-122 706,873 3,176,506 1,815 47.2 Viruela RC Main Zone
RC-07-123 706,891 3,176,551 1,838 59.4 Viruela RC Main Zone
RC-07-124 706,912 3,176,601 1,859 53.3 Viruela RC Main Zone
RC-07-125 706,954 3,176,580 1,863 71.6 Viruela RC Main Zone
RC-07-126 707,214 3,176,100 1,773 65.5 La Cruz RC Main Zone
RC-07-127 707,142 3,176,135 1,741 114.3 La Cruz RC Main Zone
RC-07-128 707,281 3,175,935 1,718 61.0 La Cruz RC Main Zone
RC-07-129 706,875 3,176,311 1,738 89.9 Viruela RC Main Zone
RC-07-130 706,777 3,176,343 1,737 96.0 Viruela RC Main Zone
RC-07-131 706,555 3,176,354 1,762 105.2 Viruela RC Main Zone
RC-07-132 706,519 3,176,417 1,778 114.3 Viruela RC Main Zone
RC-07-133 706,455 3,176,474 1,754 77.7 Viruela RC Main Zone
RC-07-134 706,877 3,176,608 1,855 59.4 Viruela RC Main Zone

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RC-07-135 707,024 3,176,454 1,839 61.0 Viruela RC Main Zone


RC-07-136 707,048 3,176,555 1,868 77.7 Viruela RC Main Zone
RC-07-137 706,943 3,176,476 1,828 61.0 Viruela RC Main Zone
RC-07-138 706,906 3,176,515 1,826 53.3 Viruela RC Main Zone
RC-07-139 706,876 3,176,505 1,815 47.2 Viruela RC Main Zone
RC-07-140 706,903 3,176,460 1,815 53.3 Viruela RC Main Zone
RC-07-141 706,950 3,176,413 1,807 80.8 Viruela RC Main Zone
RC-07-142 706,825 3,176,514 1,829 91.4 Viruela RC Main Zone
RC-07-143 706,786 3,176,541 1,818 61.0 Viruela RC Main Zone
RC-07-144 706,902 3,176,460 1,815 71.6 Viruela RC Main Zone
RC-07-145 706,805 3,176,463 1,804 68.6 Viruela RC Main Zone
RC-07-146 706,690 3,176,487 1,799 47.2 Viruela RC Main Zone
RC-07-147 706,987 3,176,561 1,864 121.9 Viruela RC Main Zone
RC-07-148 706,876 3,176,605 1,855 56.4 Viruela RC Main Zone
RC-07-149 707,117 3,176,425 1,837 71.6 Viruela RC Main Zone
RC-07-150 707,100 3,176,371 1,808 80.8 Viruela RC Main Zone
RC-07-151 707,083 3,176,282 1,768 77.7 Viruela RC Main Zone
RC-07-152 707,327 3,176,462 1,843 91.4 Viruela RC Main Zone
RC-07-153 707,328 3,176,457 1,843 86.9 Viruela RC Main Zone
RC-07-154 707,303 3,176,358 1,829 74.7 Viruela RC Main Zone
RC-07-155 707,303 3,176,357 1,829 132.6 La Cruz RC Main Zone
RC-07-156 707,258 3,176,292 1,828 68.6 La Cruz RC Main Zone
RC-07-157 707,258 3,176,292 1,828 83.8 La Cruz RC Main Zone
RC-07-158 707,350 3,176,376 1,820 147.8 La Cruz RC Main Zone
RC-07-159 707,352 3,176,378 1,820 157.0 La Cruz RC Main Zone
RC-07-160 707,353 3,176,374 1,818 83.8 La Cruz RC Main Zone
RC-07-161 707,336 3,176,325 1,819 114.3 La Cruz RC Main Zone
RC-07-162 707,251 3,176,153 1,779 141.7 La Cruz RC Main Zone
RC-07-163 707,416 3,176,344 1,773 77.7 La Cruz RC Main Zone
RC-07-164 707,463 3,176,399 1,756 105.2 La Cruz RC Main Zone
RC-07-165 707,547 3,176,199 1,718 67.1 La Cruz RC Main Zone
RC-07-166 707,016 3,175,656 1,691 102.1 Cerro de Oro RC Main Zone
RC-07-167 707,050 3,175,688 1,690 41.2 Cerro de Oro RC Main Zone
RC-07-168 707,088 3,176,122 1,727 144.8 La Cruz RC Main Zone
RC-07-169 707,464 3,176,344 1,749 230.1 La Cruz RC Main Zone
RC-07-170 707,049 3,176,022 1,697 80.8 La Cruz RC Main Zone
RC-07-171 706,942 3,176,326 1,732 65.5 Viruela RC Main Zone
RC-07-172 706,944 3,176,327 1,732 61.0 Viruela RC Main Zone

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RC-07-173 706,949 3,176,327 1,732 71.6 Viruela RC Main Zone


RC-07-174 706,994 3,176,318 1,736 61.0 Viruela RC Main Zone
RC-07-175 707,008 3,176,283 1,738 89.9 Viruela RC Main Zone
RC-07-176 706,994 3,176,318 1,736 83.8 Viruela RC Main Zone
RC-07-177 706,722 3,176,374 1,745 89.9 Viruela RC Main Zone
RC-07-178 706,615 3,176,471 1,772 41.2 Viruela RC Main Zone
RC-07-179 706,614 3,176,471 1,772 29.0 Viruela RC Main Zone
RC-07-180 706,683 3,176,431 1,772 59.4 Viruela RC Main Zone
RC-07-181 706,682 3,176,431 1,772 108.2 Viruela RC Main Zone
RC-07-182 706,609 3,176,263 1,752 117.4 Viruela RC Main Zone
RC-07-183 706,653 3,176,236 1,738 163.1 Viruela RC Main Zone
RC-07-184 706,656 3,176,238 1,738 89.9 Viruela RC Main Zone
RC-07-185 706,503 3,176,345 1,753 89.9 Viruela RC Main Zone
RC-07-186 706,504 3,176,345 1,753 135.6 Viruela RC Main Zone
RC-07-187 706,786 3,176,689 1,775 59.4 Viruela RC Main Zone
RC-07-188 706,825 3,176,719 1,770 59.4 Viruela RC Main Zone
RC-07-207 706,712 3,176,586 1,759 59.4 Viruela RC Main Zone
RC-07-208 706,914 3,176,268 1,714 47.2 Viruela RC Main Zone
RC-07-209 707,028 3,176,183 1,726 169.2 Viruela RC Main Zone
RC-07-210 707,104 3,176,508 1,870 263.7 Viruela RC Main Zone
RC-07-211 707,029 3,176,519 1,859 150.9 Viruela RC Main Zone
RC-07-212 706,985 3,176,559 1,864 150.9 Viruela RC Main Zone
RC-07-213 706,949 3,176,521 1,843 132.6 Viruela RC Main Zone
RC-07-214 706,807 3,176,623 1,826 71.6 Viruela RC Main Zone
RC-07-215 706,801 3,176,620 1,826 71.6 Viruela RC Main Zone
RC-07-216 706,796 3,176,585 1,818 77.7 Viruela RC Main Zone
RC-07-217 706,936 3,176,476 1,828 74.7 Viruela RC Main Zone
RC-07-218 706,731 3,176,452 1,802 71.6 Viruela RC Main Zone
RC-07-219 706,792 3,176,399 1,779 50.3 Viruela RC Main Zone
RC-07-220 707,044 3,176,557 1,869 274.3 Viruela RC Main Zone
RC-07-221 706,854 3,176,369 1,768 86.9 Viruela RC Main Zone
RC-07-222 706,800 3,176,406 1,779 61.0 Viruela RC Main Zone
RC-07-223 706,798 3,176,463 1,804 61.0 Viruela RC Main Zone
RC-07-224 706,754 3,176,502 1,803 59.4 Viruela RC Main Zone
RC-07-225 706,953 3,176,413 1,807 80.8 Viruela Root RC Main Zone
RC-07-226 706,956 3,176,577 1,863 175.3 Viruela RC Main Zone
RC-07-227 707,076 3,176,592 1,856 120.4 Viruela RC Main Zone
RC-07-228 706,727 3,176,542 1,783 47.2 Viruela RC Main Zone

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RC-07-229 707,347 3,176,380 1,821 120.4 La Cruz RC Main Zone


RC-07-230 707,354 3,176,511 1,845 77.7 La Cruz RC Main Zone
RC-07-231 707,353 3,176,513 1,845 89.9 La Cruz RC Main Zone
RC-07-232 707,349 3,176,516 1,845 91.4 La Cruz RC Main Zone
RC-07-233 707,221 3,176,343 1,807 120.4 La Cruz RC Main Zone
RC-07-234 707,231 3,176,427 1,807 163.1 La Cruz RC Main Zone
RC-07-235 707,300 3,176,220 1,789 65.5 La Cruz RC Main Zone
RC-07-236 706,984 3,176,086 1,695 141.7 La Cruz S RC Main Zone
RC-07-237 707,025 3,176,186 1,726 59.4 La Cruz S RC Main Zone
RC-07-238 707,103 3,176,373 1,808 196.6 Viruela RC Main Zone
RC-07-239 707,088 3,176,283 1,768 163.1 La Cruz RC Main Zone
RC-07-240 707,317 3,176,052 1,739 41.2 La Cruz RC Main Zone
RC-07-241 707,334 3,176,128 1,744 44.2 La Cruz S RC Main Zone
RC-07-242 707,244 3,176,060 1,753 41.2 La Cruz S RC Main Zone
RC-07-243 707,144 3,176,130 1,741 140.2 La Cruz RC Main Zone
RC-07-244 707,199 3,176,530 1,834 182.9 Viruela RC Main Zone
RC-07-245 706,962 3,176,449 1,818 91.4 Viruela RC Main Zone
RC-07-246 706,840 3,176,012 1,642 73.2 La Cruz RC Main Zone
RC-07-247 706,405 3,176,499 1,738 59.4 Viruela Root RC Main Zone
RC-07-248 706,335 3,176,725 1,664 86.9 Viruela RC Main Zone
RC-07-257 707,104 3,176,631 1,834 65.5 Viruela RC Main Zone
RC-07-258 707,102 3,176,631 1,833 83.8 Viruela RC Main Zone
RC-07-259 707,110 3,176,631 1,834 80.8 Viruela RC Main Zone
RC-07-260 707,196 3,176,821 1,692 59.4 Viruela RC Main Zone
RC-07-261 707,195 3,176,821 1,692 65.5 Viruela RC Main Zone
RC-07-262 707,199 3,176,822 1,692 65.5 Viruela RC Main Zone
RC-07-263 706,968 3,176,714 1,769 163.1 Viruela RC Main Zone
RC-07-264 706,968 3,176,714 1,769 68.6 Viruela RC Main Zone
RC-07-265 707,272 3,176,542 1,834 105.2 Viruela RC Main Zone
RC-07-266 707,192 3,176,528 1,834 138.7 Viruela RC Main Zone
RC-07-267 707,047 3,176,426 1,824 82.3 Viruela RC Main Zone
RC-07-268 707,274 3,176,479 1,824 141.7 La Cruz RC Main Zone
RC-07-269 707,234 3,176,432 1,810 199.6 Viruela RC Main Zone
RC-07-270 707,029 3,176,356 1,790 61.0 Viruela RC Main Zone
RC-07-271 707,195 3,176,385 1,805 108.2 Viruela RC Main Zone
RC-07-272 706,963 3,175,610 1,679 77.7 Cerro de Oro RC Main Zone
RC-07-273 706,963 3,175,612 1,679 86.9 Cerro de Oro RC Main Zone
RC-07-274 706,984 3,175,631 1,685 50.3 Cerro de Oro RC Main Zone

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RC-07-275 706,965 3,176,714 1,770 12.2 Viruela RC Main Zone


RC-07-98 706,869 3,176,310 1,738 150.9 Viruela RC Main Zone
RC-07-99 706,873 3,176,306 1,738 99.1 Viruela RC Main Zone
RC-08-297 707,184 3,176,492 1,837 117.4 Viruela RC Main Zone
RC-08-298 707,179 3,176,415 1,820 120.4 Viruela RC Main Zone
RC-08-299 707,150 3,176,318 1,791 114.3 Viruela RC Main Zone
RC-08-300 707,178 3,176,318 1,798 236.2 Viruela RC Main Zone
RC-08-301 706,967 3,175,617 1,679 105.2 Cerro de Oro RC Main Zone
RC-08-302 707,057 3,176,011 1,697 59.4 Cerro de Oro N RC Main Zone
RC-08-303 707,046 3,175,961 1,708 77.7 Cerro de Oro N RC Main Zone
RC-08-306 707,128 3,176,574 1,861 102.1 Viruela RC Main Zone
RC-08-307 707,073 3,176,592 1,856 96.0 Viruela RC Main Zone
RC-08-308 707,042 3,176,554 1,868 114.3 Viruela RC Main Zone
RC-08-309 706,910 3,176,600 1,859 120.4 Viruela RC Main Zone
RC-08-310 706,825 3,176,518 1,832 99.1 Viruela RC Main Zone
RC-08-311 706,913 3,176,601 1,859 96.0 Viruela RC Main Zone
RC-08-312 707,033 3,176,515 1,859 86.9 Viruela RC Main Zone
RC-08-313 707,013 3,176,454 1,838 109.7 Viruela RC Main Zone
RC-08-314 706,952 3,176,411 1,805 89.9 Viruela RC Main Zone
RC-08-315 706,956 3,176,410 1,804 10.7 Viruela RC Main Zone
RC-08-316 706,959 3,176,409 1,807 68.6 Viruela RC Main Zone
RC-08-317 706,852 3,176,370 1,768 108.2 Viruela RC Main Zone
RC-08-318 706,857 3,176,371 1,768 96.0 Viruela RC Main Zone
RC-08-319 706,747 3,176,521 1,797 59.4 Viruela RC Main Zone
RC-08-320 706,671 3,176,382 1,746 89.9 Viruela RC Main Zone
RC-08-321 706,729 3,176,535 1,782 56.4 Viruela RC Main Zone
RC-08-322 706,755 3,176,310 1,709 129.5 Viruela RC Main Zone
RC-08-323 706,777 3,176,348 1,738 71.6 Viruela RC Main Zone
RC-08-324 706,775 3,176,343 1,737 71.6 Viruela RC Main Zone
RC-08-325 707,125 3,175,416 1,653 89.9 Cerro de Oro RC Main Zone
RC-08-326 707,125 3,175,472 1,667 71.6 Cerro de Oro RC Main Zone
RC-08-327 707,094 3,175,497 1,674 74.7 Cerro de Oro RC Main Zone
RC-08-328 707,157 3,175,462 1,680 89.9 Cerro de Oro RC Main Zone
RC-08-329 707,086 3,175,488 1,673 96.0 Cerro de Oro RC Main Zone
RC-08-330 707,064 3,175,560 1,690 68.6 Cerro de Oro RC Main Zone
RC-08-331 707,077 3,175,541 1,689 96.0 Cerro de Oro RC Main Zone
RC-08-332 707,028 3,175,562 1,686 77.7 Cerro de Oro N RC Main Zone
RC-08-333 707,118 3,175,771 1,714 71.6 Cerro de Oro N RC Main Zone

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RC-08-334 707,049 3,175,959 1,708 59.4 Cerro de Oro N RC Main Zone


RC-08-335 707,048 3,175,960 1,708 59.4 Cerro de Oro N RC Main Zone
RC-08-336 707,050 3,176,017 1,703 54.9 Cerro de Oro N RC Main Zone
RC-08-337 706,975 3,176,304 1,726 86.9 Viruela RC Main Zone
RC-08-338 706,946 3,176,245 1,706 59.4 Viruela-LaCruz RC Main Zone
RC-08-339 706,961 3,176,208 1,698 47.2 Viruela-LaCruz RC Main Zone
RC-08-340 707,001 3,176,155 1,711 50.3 Viruela-LaCruz RC Main Zone
RC-08-341 706,888 3,176,209 1,686 68.6 Viruela-LaCruz RC Main Zone
RC-08-342 706,507 3,176,060 1,655 144.8 Viruela-LaCruz RC Main Zone
RC-08-343 706,323 3,176,323 1,679 120.4 Viruela-LaCruz RC Main Zone
RC-08-396 706,982 3,176,084 1,694 96.0 Viruela-LaCruz RC Main Zone
RC-08-397 707,011 3,176,027 1,687 71.6 Viruela-LaCruz RC Main Zone
RC-08-398 707,080 3,176,047 1,707 77.7 Viruela-LaCruz RC Main Zone
RC-08-399 707,013 3,175,923 1,692 74.7 Viruela-LaCruz RC Main Zone
RC-08-400 707,137 3,176,109 1,739 59.4 Viruela-LaCruz RC Main Zone
RC-08-401 706,417 3,176,154 1,652 141.7 Viruela West RC Main Zone
RC-09-420 706,334 3,176,404 1,685 86.9 Viruela West RC Main Zone
RC-09-421 706,327 3,176,526 1,686 65.5 Viruela West RC Main Zone
RC-09-422 706,329 3,176,521 1,686 89.9 Viruela West RC Main Zone
RC-09-423 706,195 3,176,336 1,669 65.5 Viruela West RC Main Zone
RC-09-424 706,650 3,176,067 1,648 138.7 Viruela West RC Main Zone
RC-09-425 706,675 3,176,013 1,640 126.5 Viruela West RC Main Zone
RC-09-426 706,311 3,176,224 1,662 214.9 Viruela West RC Main Zone
RC-09-427 706,427 3,176,163 1,657 138.7 Viruela West RC Main Zone
RC-09-428 706,067 3,176,139 1,646 214.9 Viruela West RC Main Zone
RC-09-429 706,237 3,176,033 1,652 291.1 Viruela West RC Main Zone
RC-09-430 706,335 3,176,410 1,685 121.9 Viruela West RC Main Zone
RC-09-431 707,063 3,176,493 1,858 91.4 Viruela RC Main Zone
RC-09-432 706,881 3,176,606 1,856 117.4 Viruela RC Main Zone
RC-09-433 706,748 3,175,671 1,574 118.9 Cerro de Oro RC Main Zone
RC-09-439 706,967 3,176,447 1,818 91.4 Viruela RC Main Zone
RC-09-449 707,078 3,176,592 1,856 91.4 Viruela RC Main Zone
RC-09-450 706,910 3,176,603 1,859 73.2 Viruela RC Main Zone
RC-09-458 707,274 3,176,544 1,834 91.4 La Cruz RC Main Zone
RC-09-459 707,271 3,176,483 1,823 178.3 La Cruz RC Main Zone
RC-09-460 707,276 3,176,477 1,823 135.6 Viruela RC Main Zone
RC-09-461 707,221 3,176,337 1,809 96.0 Viruela RC Main Zone
RC-09-462 706,872 3,176,607 1,855 89.9 Viruela RC Main Zone

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RC-09-463 706,828 3,176,516 1,830 83.8 Viruela RC Main Zone


RC-09-485 707,197 3,176,532 1,834 99.1 La Cruz RC Main Zone
RC-09-486 707,291 3,176,518 1,835 59.4 La Cruz RC Main Zone
RC-09-487 707,271 3,176,392 1,813 80.8 La Cruz RC Main Zone
RC-09-488 707,239 3,176,362 1,813 62.5 La Cruz RC Main Zone
RC-09-489 707,197 3,176,385 1,804 50.3 La Cruz RC Main Zone
RC-09-490 707,187 3,176,355 1,796 56.4 La Cruz RC Main Zone
RC-09-491 707,181 3,176,356 1,795 38.1 La Cruz RC Main Zone
RC-09-492 707,213 3,176,228 1,786 59.4 La Cruz RC Main Zone
RC-09-493 707,254 3,176,154 1,779 71.6 La Cruz RC Main Zone
RC-09-494 707,194 3,176,042 1,761 71.6 La Cruz RC Main Zone
RC-09-495 707,305 3,176,151 1,759 53.3 La Cruz RC Main Zone
RC-09-496 707,262 3,175,831 1,708 44.2 Viruela RC Main Zone
RC-09-497 706,938 3,176,526 1,843 45.7 Viruela RC Main Zone
RC-09-498 706,841 3,176,531 1,830 71.6 Viruela RC Main Zone
RC-09-499 706,938 3,176,478 1,828 57.9 Viruela RC Main Zone
RC-09-500 706,929 3,176,592 1,862 53.3 Viruela RC Main Zone
RC-09-501 706,957 3,176,581 1,863 77.7 Viruela RC Main Zone
RC-09-502 706,880 3,176,503 1,815 53.3 Viruela RC Main Zone
RC-09-503 706,738 3,176,454 1,802 65.5 Viruela RC Main Zone
RC-09-504 707,097 3,176,476 1,861 96.0 Viruela RC Main Zone
RC-09-505 707,134 3,176,539 1,860 93.0 Viruela RC Main Zone
RC-09-506 707,148 3,176,439 1,839 59.4 Viruela RC Main Zone
RC-09-507 706,988 3,176,497 1,844 68.6 Viruela RC Main Zone
RC-09-508 707,086 3,176,042 1,707 71.6 Viruela RC Main Zone
RC-09-509 706,908 3,176,003 1,654 61.0 Viruela RC Main Zone
RC-09-510 706,974 3,176,133 1,699 61.0 Viruela RC Main Zone

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Appendix F. RC and diamond core drillholes in resource estimate database, North Zone:
collar location, orientation, and total depth summary table.
Drillhole Easting Northing Elev Depth Area Type Zone

DDH-04-01 707,358 3,177,300 1,723 106.7 La India DDH North Zone

DDH-04-02 707,417 3,177,304 1,723 130.8 La India DDH North Zone

DDH-04-03 707,335 3,177,271 1,707 85.7 La India DDH North Zone

DDH-04-04 707,323 3,177,249 1,694 125.0 La India DDH North Zone

DDH-04-05 707,338 3,177,335 1,740 133.5 La India DDH North Zone

DDH-04-06 707,128 3,177,521 1,762 246.6 La India DDH North Zone

DDH-04-07 706,250 3,179,202 1,747 51.5 Cieneguita DDH North Zone

DDH-04-08 706,223 3,179,176 1,725 62.8 Cieneguita DDH North Zone

DDH-04-09 706,256 3,179,125 1,744 27.9 Cieneguita DDH North Zone

DDH-04-10 706,832 3,178,683 1,751 80.8 Espanola DDH North Zone

DDH-04-11 707,476 3,177,552 1,839 173.4 La India DDH North Zone

DDH-07-37 706,255 3,179,122 1,745 50.1 Cieneguita DDH North Zone

DDH-07-38 706,337 3,178,905 1,732 60.1 Cieneguita DDH North Zone

DDH-07-39 706,483 3,178,466 1,688 34.8 Cieneguita DDH North Zone

DDH-08-57 706,303 3,178,997 1,739 21.5 Cieneguita DDH North Zone

DDH-08-58 706,388 3,178,511 1,669 53.6 Cieneguita DDH North Zone

DDH-08-59 706,388 3,178,510 1,669 86.5 Cieneguita DDH North Zone

DDH-08-60 706,257 3,178,741 1,667 19.1 Cieneguita DDH North Zone

DDH-08-61 706,709 3,178,761 1,740 62.4 Espanola DDH North Zone

DDH-08-62 706,742 3,178,989 1,781 34.2 Espanola DDH North Zone

DDH-08-63 706,857 3,178,730 1,774 57.1 Espanola DDH North Zone

DDH-08-64 706,465 3,178,630 1,708 49.9 Cieneguita DDH North Zone

DDH-08-65 706,244 3,178,901 1,708 37.4 Cieneguita DDH North Zone

DDH-09-95 706,295 3,178,954 1,729 62.5 Cieneguita DDH North Zone

DDH-09-96 706,250 3,178,902 1,708 73.6 Cieneguita DDH North Zone

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DDH-09-97 706,231 3,178,999 1,727 54.9 Cieneguita DDH North Zone

DDH-09-98 706,230 3,179,084 1,734 51.9 Cieneguita DDH North Zone

DDH-09-99 706,186 3,179,334 1,755 53.4 Cieneguita DDH North Zone


DDH-09-
100 706,151 3,179,355 1,738 41.2 Cieneguita DDH North Zone
DDH-09-
101 706,084 3,178,354 1,616 70.2 Cieneguita DDH North Zone
DDH-09-
102 706,071 3,178,203 1,587 62.5 Cieneguita DDH North Zone
RC-06-55 706,920 3,178,793 1,793 59.4 Espanola RC North Zone
RC-06-56 706,921 3,178,792 1,793 74.7 Espanola RC North Zone
RC-06-57 706,896 3,178,873 1,792 44.2 Espanola RC North Zone
RC-06-58 706,739 3,178,990 1,781 42.7 Espanola RC North Zone
RC-06-59 706,258 3,179,123 1,745 45.7 Cieneguita RC North Zone
RC-06-60 706,257 3,179,123 1,745 50.3 Cieneguita RC North Zone
RC-06-61 706,483 3,178,545 1,703 102.1 Cieneguita RC North Zone
RC-07-100 706,483 3,178,465 1,687 50.3 Cieneguita RC North Zone
RC-07-101 706,487 3,178,463 1,687 35.1 Cieneguita RC North Zone
RC-07-102 706,464 3,178,632 1,708 59.4 Cieneguita RC North Zone
RC-07-103 706,383 3,178,519 1,669 41.2 Cieneguita RC North Zone
RC-07-104 706,366 3,178,738 1,713 41.2 Cieneguita RC North Zone
RC-07-105 706,335 3,178,908 1,732 61.0 Cieneguita RC North Zone
RC-07-189 706,272 3,179,220 1,746 35.1 Cieneguita RC North Zone
RC-07-190 706,306 3,179,003 1,740 44.2 Cieneguita RC North Zone
RC-07-191 706,268 3,179,047 1,741 25.9 Cieneguita RC North Zone
RC-07-192 706,257 3,179,000 1,729 53.3 Cieneguita RC North Zone
RC-07-193 706,247 3,178,903 1,708 71.6 Cieneguita RC North Zone
RC-07-194 706,300 3,178,949 1,729 65.5 Cieneguita RC North Zone
RC-07-195 706,243 3,178,859 1,700 32.0 Cieneguita RC North Zone
RC-07-196 706,254 3,178,650 1,645 47.2 Cieneguita RC North Zone
RC-07-197 706,248 3,178,494 1,636 47.2 Cieneguita RC North Zone
RC-07-198 706,301 3,178,544 1,650 68.6 Cieneguita RC North Zone
RC-07-199 706,303 3,178,594 1,659 41.2 Cieneguita RC North Zone
RC-07-200 706,299 3,178,697 1,672 35.1 Cieneguita RC North Zone
RC-07-201 706,335 3,178,649 1,679 41.2 Cieneguita RC North Zone
RC-07-202 706,301 3,178,479 1,633 30.5 Cieneguita RC North Zone
RC-07-203 706,408 3,178,451 1,669 68.6 Cieneguita RC North Zone
RC-07-204 706,400 3,178,598 1,681 47.2 Cieneguita RC North Zone
RC-07-205 706,556 3,178,401 1,653 25.9 Cieneguita RC North Zone

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RC-07-206 707,450 3,177,505 1,849 86.9 La India RC North Zone


RC-07-249 706,268 3,178,848 1,700 13.7 Cieneguita RC North Zone
RC-07-250 706,247 3,178,959 1,716 56.4 Cieneguita RC North Zone
RC-07-251 706,306 3,179,052 1,749 7.6 Cieneguita RC North Zone
RC-07-252 706,275 3,179,073 1,747 38.1 Cieneguita RC North Zone
RC-07-253 706,357 3,178,948 1,737 50.3 Cieneguita RC North Zone
RC-07-254 706,252 3,178,821 1,688 53.3 Cieneguita RC North Zone
RC-07-255 706,249 3,178,699 1,654 47.2 Cieneguita RC North Zone
RC-07-256 706,258 3,178,742 1,668 47.2 Cieneguita RC North Zone
RC-08-276 706,337 3,178,989 1,742 39.6 Cieneguita RC North Zone
RC-08-277 706,338 3,178,948 1,739 65.5 Cieneguita RC North Zone
RC-08-278 706,301 3,178,906 1,724 71.6 Cieneguita RC North Zone
RC-08-279 706,282 3,179,086 1,747 41.2 Cieneguita RC North Zone
RC-08-280 706,229 3,179,085 1,734 50.3 Cieneguita RC North Zone
RC-08-281 706,245 3,179,047 1,737 56.4 Cieneguita RC North Zone
RC-08-282 706,267 3,179,029 1,737 71.6 Cieneguita RC North Zone
RC-08-283 706,239 3,178,947 1,712 68.6 Cieneguita RC North Zone
RC-08-284 706,679 3,178,863 1,745 30.5 Espanola RC North Zone
RC-08-285 706,689 3,178,915 1,763 41.2 Espanola RC North Zone
RC-08-286 706,703 3,178,944 1,768 41.2 Espanola RC North Zone
RC-08-287 706,742 3,178,812 1,746 44.2 Espanola RC North Zone
RC-08-288 706,793 3,178,787 1,755 71.6 Espanola RC North Zone
RC-08-289 706,703 3,178,763 1,740 91.4 Espanola RC North Zone
RC-08-290 706,744 3,178,694 1,732 73.2 Espanola RC North Zone
RC-08-291 706,737 3,178,694 1,731 39.6 Espanola RC North Zone
RC-08-292 706,791 3,178,553 1,713 44.2 Espanola RC North Zone
RC-08-293 706,234 3,178,999 1,727 7.6 Cieneguita RC North Zone
RC-08-294 706,235 3,178,999 1,727 44.2 Cieneguita RC North Zone
RC-08-295 706,327 3,178,095 1,646 53.3 Cieneguita_S RC North Zone
RC-08-296 706,362 3,178,181 1,662 47.2 Cieneguita_S RC North Zone
RC-08-344 706,563 3,177,880 1,665 53.3 El Cochi RC North Zone
RC-08-345 706,652 3,177,914 1,658 35.1 El Cochi RC North Zone
RC-08-346 706,656 3,177,940 1,662 38.1 El Cochi RC North Zone
RC-08-347 706,793 3,178,047 1,709 53.3 El Cochi RC North Zone
RC-08-348 706,752 3,177,796 1,702 59.4 El Cochi RC North Zone
RC-08-349 706,768 3,177,837 1,707 53.3 El Cochi RC North Zone
RC-08-350 706,719 3,178,045 1,679 44.2 El Cochi RC North Zone
RC-08-351 706,897 3,177,981 1,746 50.3 El Cochi RC North Zone

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RC-08-352 706,838 3,177,911 1,734 59.4 El Cochi RC North Zone


RC-08-353 706,857 3,177,967 1,742 61.0 El Cochi RC North Zone
RC-08-354 706,220 3,179,175 1,724 53.3 Cieneguita RC North Zone
RC-08-355 706,256 3,179,204 1,747 41.2 Cieneguita RC North Zone
RC-08-356 706,298 3,179,082 1,755 47.2 Cieneguita RC North Zone
RC-08-357 706,256 3,179,116 1,745 38.1 Cieneguita RC North Zone
RC-08-358 706,299 3,179,053 1,749 44.2 Cieneguita RC North Zone
RC-08-359 706,227 3,179,084 1,734 22.9 Cieneguita RC North Zone
RC-08-360 706,238 3,179,043 1,737 41.2 Cieneguita RC North Zone
RC-08-361 706,245 3,179,045 1,737 59.4 Cieneguita RC North Zone
RC-08-362 706,253 3,178,997 1,726 47.2 Cieneguita RC North Zone
RC-08-363 706,227 3,178,950 1,713 19.8 Cieneguita RC North Zone
RC-08-364 706,202 3,178,899 1,702 56.4 Cieneguita RC North Zone
RC-08-365 706,305 3,178,904 1,724 71.6 Cieneguita RC North Zone
RC-08-366 706,294 3,178,957 1,730 18.3 Cieneguita RC North Zone
RC-08-367 706,292 3,178,852 1,706 47.2 Cieneguita RC North Zone
RC-08-368 706,242 3,178,819 1,687 53.3 Cieneguita RC North Zone
RC-08-369 706,274 3,178,812 1,691 59.4 Cieneguita RC North Zone
RC-08-370 706,484 3,178,462 1,687 25.9 Cieneguita RC North Zone
RC-08-371 706,465 3,178,498 1,693 83.8 Cieneguita RC North Zone
RC-08-372 706,459 3,178,496 1,691 30.5 Cieneguita RC North Zone
RC-08-373 706,462 3,178,545 1,699 65.5 Cieneguita RC North Zone
RC-08-374 706,469 3,178,600 1,704 24.4 Cieneguita RC North Zone
RC-08-375 706,448 3,178,644 1,707 80.8 Cieneguita RC North Zone
RC-08-376 706,467 3,178,600 1,704 59.4 Cieneguita RC North Zone
RC-08-377 706,393 3,178,496 1,669 71.6 Cieneguita RC North Zone
RC-08-378 706,387 3,178,544 1,671 56.4 Cieneguita RC North Zone
RC-08-379 706,212 3,178,733 1,646 22.9 Cieneguita RC North Zone
RC-08-380 706,256 3,178,601 1,642 53.3 Cieneguita RC North Zone
RC-08-381 706,305 3,178,634 1,666 4.6 Cieneguita RC North Zone
RC-08-382 706,341 3,178,604 1,672 35.1 Cieneguita RC North Zone
RC-08-383 706,335 3,178,653 1,679 35.1 Cieneguita RC North Zone
RC-08-384 706,754 3,178,338 1,671 29.0 Espanola RC North Zone
RC-08-385 706,795 3,178,433 1,681 35.1 Espanola RC North Zone
RC-08-386 706,770 3,178,492 1,690 77.7 Espanola RC North Zone
RC-08-387 706,903 3,178,439 1,685 29.0 Espanola RC North Zone
RC-08-388 706,894 3,178,402 1,686 44.2 Espanola RC North Zone
RC-08-389 706,910 3,178,358 1,685 59.4 Espanola RC North Zone

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RC-08-390 706,710 3,178,668 1,727 29.0 Espanola RC North Zone


RC-08-391 706,696 3,178,724 1,735 64.0 Espanola RC North Zone
RC-08-392 706,821 3,178,653 1,736 38.1 Espanola RC North Zone
RC-08-393 706,674 3,178,859 1,744 44.2 Espanola RC North Zone
RC-08-394 706,698 3,178,946 1,768 65.5 Espanola RC North Zone
RC-08-395 706,859 3,178,733 1,774 59.4 Espanola RC North Zone
RC-08-402 706,839 3,178,798 1,776 65.5 Espanola RC North Zone
RC-08-403 706,816 3,178,854 1,780 18.3 Espanola RC North Zone
RC-08-404 706,817 3,178,851 1,780 59.4 Espanola RC North Zone
RC-08-405 706,971 3,178,928 1,784 47.2 Espanola RC North Zone
RC-08-406 706,909 3,178,905 1,793 47.2 Espanola RC North Zone
RC-08-407 706,852 3,178,538 1,705 35.1 Espanola RC North Zone
RC-08-408 706,597 3,178,928 1,717 35.1 Espanola RC North Zone
RC-08-409 706,646 3,178,718 1,713 38.1 Espanola RC North Zone
RC-08-410 706,293 3,178,959 1,728 16.8 Cieneguita RC North Zone
RC-08-411 706,255 3,179,117 1,745 10.7 Cieneguita RC North Zone
RC-08-412 706,252 3,179,120 1,744 74.7 Cieneguita RC North Zone
RC-08-413 706,233 3,179,083 1,734 19.8 Cieneguita RC North Zone
RC-08-414 706,457 3,178,499 1,692 105.2 Cieneguita RC North Zone
RC-08-415 706,462 3,178,547 1,700 65.5 Cieneguita RC North Zone
RC-08-416 706,350 3,178,521 1,653 38.1 Cieneguita RC North Zone
RC-08-417 706,331 3,178,711 1,688 59.4 Cieneguita RC North Zone
RC-08-418 706,307 3,178,743 1,685 44.2 Cieneguita RC North Zone
RC-08-419 706,495 3,178,386 1,655 12.2 Cieneguita RC North Zone
RC-09-434 705,888 3,178,216 1,533 35.1 Cieneguita RC North Zone
RC-09-435 705,880 3,178,407 1,537 80.8 Cieneguita RC North Zone
RC-09-436 706,157 3,179,143 1,699 61.0 Cieneguita RC North Zone
RC-09-437 706,063 3,179,326 1,688 47.2 Cieneguita RC North Zone
RC-09-438 706,047 3,179,069 1,656 61.0 Cieneguita RC North Zone
RC-09-440 706,100 3,179,020 1,673 30.5 Cieneguita RC North Zone
RC-09-441 706,008 3,178,853 1,617 132.6 Cieneguita RC North Zone
RC-09-442 705,944 3,179,347 1,638 83.8 Cieneguita RC North Zone
RC-09-443 705,970 3,179,255 1,627 38.1 Cieneguita RC North Zone
RC-09-444 705,929 3,179,178 1,619 71.6 Cieneguita RC North Zone
RC-09-445 705,933 3,179,112 1,617 111.3 Cieneguita RC North Zone
RC-09-446 705,900 3,178,928 1,579 117.4 Cieneguita RC North Zone
RC-09-447 705,728 3,179,274 1,573 149.4 Cieneguita RC North Zone
RC-09-448 706,019 3,178,572 1,561 102.1 Cieneguita RC North Zone

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RC-09-464 706,046 3,179,234 1,670 68.6 Cieneguita RC North Zone


RC-09-476 707,418 3,177,303 1,723 138.7 La India RC North Zone
RC-09-477 707,315 3,177,250 1,694 93.0 La India RC North Zone
RC-09-478 707,313 3,177,250 1,693 65.5 La India RC North Zone
RC-09-479 707,445 3,177,245 1,703 120.4 La India RC North Zone
RC-09-480 707,399 3,177,273 1,709 71.6 La India RC North Zone
RC-09-481 707,445 3,177,337 1,739 68.6 La India RC North Zone
RC-09-482 707,161 3,177,313 1,721 86.9 La India RC North Zone
RC-09-483 706,941 3,179,216 1,723 83.8 Espanola RC North Zone
RC-09-484 706,772 3,179,185 1,729 68.6 Espanola RC North Zone
RC-09-512 706,210 3,178,822 1,683 56.4 Cieneguita RC North Zone
RC-09-513 706,246 3,178,858 1,700 32.0 Cieneguita RC North Zone
RC-09-514 706,190 3,178,938 1,701 59.4 Cieneguita RC North Zone
RC-09-515 706,198 3,179,050 1,717 59.4 Cieneguita RC North Zone
RC-09-516 706,191 3,179,011 1,714 68.6 Cieneguita RC North Zone
RC-09-517 706,172 3,178,695 1,637 50.3 Cieneguita RC North Zone
RC-09-518 706,178 3,178,786 1,657 50.3 Cieneguita RC North Zone
RC-09-519 706,214 3,179,149 1,720 56.4 Cieneguita RC North Zone
RC-09-520 706,164 3,179,288 1,719 53.3 Cieneguita RC North Zone
RC-09-521 706,103 3,179,305 1,699 35.1 Cieneguita RC North Zone
RC-09-522 706,061 3,179,278 1,682 38.1 Cieneguita RC North Zone
RC-09-523 706,165 3,179,188 1,701 61.0 Cieneguita RC North Zone
RC-09-524 706,109 3,179,157 1,682 61.0 Cieneguita RC North Zone
RC-09-525 706,117 3,178,861 1,645 71.6 Cieneguita RC North Zone
RC-09-526 706,020 3,179,159 1,650 56.4 Cieneguita RC North Zone
RC-09-527 705,963 3,179,056 1,622 38.1 Cieneguita RC North Zone
RC-09-528 705,909 3,179,254 1,606 50.3 Cieneguita RC North Zone
RC-09-529 705,913 3,179,354 1,631 41.2 Cieneguita RC North Zone
RC-09-530 705,964 3,179,416 1,643 29.0 Cieneguita RC North Zone
RC-09-531 705,985 3,179,380 1,651 35.1 Cieneguita RC North Zone
RC-09-532 705,987 3,179,318 1,647 32.0 Cieneguita RC North Zone
RC-09-533 705,857 3,179,150 1,590 105.2 Cieneguita RC North Zone
RC-09-534 705,850 3,179,030 1,579 123.4 Cieneguita RC North Zone
RC-09-535 705,800 3,178,942 1,566 126.5 Cieneguita RC North Zone
RC-09-536 706,059 3,179,396 1,681 105.2 Cieneguita RC North Zone
RC-09-537 706,115 3,179,255 1,692 77.7 Cieneguita RC North Zone
RC-09-538 706,150 3,179,224 1,697 77.7 Cieneguita RC North Zone
RC-09-539 706,116 3,179,387 1,705 83.8 Cieneguita RC North Zone

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RC-09-540 706,221 3,179,208 1,725 50.3 Cieneguita RC North Zone


RC-09-541 706,176 3,179,251 1,711 44.2 Cieneguita RC North Zone
RC-09-542 706,219 3,179,272 1,728 80.8 Cieneguita RC North Zone
RC-09-543 706,156 3,179,084 1,701 65.5 Cieneguita RC North Zone
RC-09-544 707,278 3,177,251 1,686 83.8 La India RC North Zone
RC-09-545 707,332 3,177,298 1,719 96.0 La India RC North Zone
RC-09-546 707,175 3,177,313 1,723 89.9 La India RC North Zone
RC-10-547 705,570 3,179,486 1,592 32.0 Cieneguita RC North Zone
RC-10-548 705,701 3,179,345 1,584 32.0 Cieneguita RC North Zone
RC-10-549 705,744 3,179,138 1,564 32.0 Cieneguita RC North Zone
RC-10-550 707,550 3,177,315 1,729 150.9 La India RC North Zone
RC-10-551 707,619 3,177,236 1,681 108.2 La India RC North Zone
RC-10-552 707,550 3,177,315 1,729 172.2 La India RC North Zone
RC-10-553 707,619 3,177,236 1,681 105.2 La India RC North Zone

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Appendix G. Semi-variograms, Main and North Zone oretype domains 1, 2, 3, 5, 6, 12, 17, & 18.

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Appendix H. Bulk density data information from Kappes Cassiday and Associates.
.
Rock Density Test Work

Rock density tests were completed on randomly selected pieces of whole HQ and
PQ core. The pieces selected were approximately 5 to 8 centimeters in length and
were selected from each core interval received from the La India Project.

The procedure utilized by KCA for rock density determination is based upon the
ASTM Method C914, Standard Test Method for Rock Density and Volume of Solid
Refractories by Wax Immersion.

A summary of the average rock density for each composite sample is presented in
Table 3-1.

Table 3-1.
Summary of Composite Rock Densities

KCA Sample Average Density,


Nos. Composite Description g/cm3
38301 A-V A Silica Structure - La Cruz and Cerro de Oro 2.39
38302 A-Y B Silica Clay - La Cruz 1.97
38303 A-V C Dacite - SC/SA - Viruela 2.22
38304 A-GG D Silica Massive - Viruela 2.51
38305 A-DD E Andesite - SA/SV 2.19
38306 A-P F Silica Massive - Cieneguita 2.63

3.1 Rock Density Test Procedure


Rock densities were determined utilizing the wax immersion test method. The
equipment required for the test method and the general procedure are outlined as
follows:

For each refractory to be characterized several representative specimens should be


chosen. These specimens may be whole shapes or broken pieces and should
exhibit sufficient structural integrity to permit handling. Loose particles and soil
should be removed from the specimens prior to testing.

An apparatus used for melting wax is required. A container heated by hot water,
preferably thermostatically controlled, is satisfactory. The water should be heated to
only slightly above the melting point of the wax to avoid flashing of the wax vapors.
Vapors given off by molten wax ignite spontaneously at above 400°F (205°C) and
should not be allowed to come in contact with the heating element or open flame.
The container should be large enough to permit the dipping of the specimen into the
melted wax so that a uniform surface coating of wax is achieved.

Fully refined paraffin wax that has a known constant density, K, that does not
change after repeated melting and cooling cycles is required. The paraffin waxes

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generally used are commercially available and have density values in the range of
0.87 to 0.91 g/cm 3. These waxes melt at approximately 135°F (57°C).
A balance capable of determining the weights of the specimens to a minimum of four
significant figures is required. Thus, specimens weighing from 100 to 999 g should
be weighed to a minimum of one decimal place. Those from 10 to 99 g should be
weighed to two decimal places and so on.

The individual test specimen was dried to a constant weight by heating to 105 -
110°C to remove entrapped moisture which would affect the rock density
determination. Any loose material or soil was removed from the test specimen.

An initial weight, W, of the test specimen in grams was measured to four significant
figures and the weight recorded.

The test specimen was then coated with wax by dipping the specimen into the
container of melted wax. Care was taken not to entrap air bubbles under the wax. If
found, these bubbles were pressed out so that the wax conformed exactly to the
surface of the specimen. Holes in the wax coating were closed by additional dipping
in the melted wax so that the surface was completely sealed.

A wax coated weight, P, of the test specimen in grams to four significant figures was
taken and the weight recorded.

The balance was then counterbalanced with a device to suspend the specimen in
place while immersed in water, Figure 3-1.

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Resource Geosciences de Mexico SA de CV
6 December 2010 Preliminary Economic Assessment, La India Gold Prospect, Municipio of Sahuaripa, Sonora,
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Figure 3-1
Counterbalance Device Utilized for Water Immersion Weight

Rock

Water

Balance

The weight of the wax-coated specimen suspended in water, S, in grams to four


significant figures was determined and the weight recorded.

The total volume, V1, of the wax coated test specimen (specimen including the wax
coating) was calculated in cubic centimeters as follows;

V1 = P – S

This assumes that 1 cubic centimeter (cm 3) of water weighs 1.0 gram. This is true to
within 3 parts per thousand (ppt) for distilled water at room temperature.

The volume of the wax coating on the test specimen, V2, was calculated in cubic
centimeters as follows;

V2 = (P – W)/K

Where K = density of the wax, g/cm3.

The volume of the test specimen, V, was then calculated by subtracting the volume
of the wax coating from the total volume as calculated in step 11 above.

V = V1 – V2

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Resource Geosciences de Mexico SA de CV
6 December 2010 Preliminary Economic Assessment, La India Gold Prospect, Municipio of Sahuaripa, Sonora,
_________________________________________________________________________________________________

The rock density, D, of the test specimen in grams per cubic centimeters (g/cm 3)
was calculated as the quotient of the initial weight divided by the volume of the test
specimen, excluding the volume of wax.

D = W/V

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Resource Geosciences de Mexico SA de CV
6 December 2010 Preliminary Economic Assessment, La India Gold Prospect, Municipio of Sahuaripa, Sonora,
_________________________________________________________________________________________________

Appendix I. Period-end maps, pit, waste rock dump, and road status at end of production
periods.

The surface contour maps displayed in this appendix depict the production schedule
developed for the current PEA, displaying the pit, waste dump, and road
configurations at various stages of mining. The end of the first five years of mining,
and the final period (year 9) before reclamation, are provided.

The truck shop area, leach pad and other processing facilities, and surface features
such as drainages, are also shown for reference.

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6 December 2010 Preliminary Economic Assessment, La India Gold Prospect, Municipio of Sahuaripa, Sonora,
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End of Production Year 1

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6 December 2010 Preliminary Economic Assessment, La India Gold Prospect, Municipio of Sahuaripa, Sonora,
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End of Production Year 2

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6 December 2010 Preliminary Economic Assessment, La India Gold Prospect, Municipio of Sahuaripa, Sonora,
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End of Year 3

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End of Year 4

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6 December 2010 Preliminary Economic Assessment, La India Gold Prospect, Municipio of Sahuaripa, Sonora,
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End of Year 5

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6 December 2010 Preliminary Economic Assessment, La India Gold Prospect, Municipio of Sahuaripa, Sonora,
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End of Year 9

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