NI 43-101 Technical Report for the San Gregorio Project, Minas De Corrales, Rivera, Uruguay

NI 43-101 Technical Report for the San Gregorio Project, Minas de Corrales, Rivera, Uruguay.

Prepared for: Orosur Mining Inc.

Prepared by: Randall Corbett, P.Eng. B Eng (Mining) General Manager San Gregorio Project – OMI Inc.

William Lindqvist, MAusIMM, SEG and AIME PhD Applied Geology Non- Executive Director – OMI Inc.

John Barber, PE Principal Mining Engineer AMEC E&C Services Inc.

Effective Date: 22nd October, 2010

CONTENTS

1 SUMMARY ...... 1-1 1.1 Location and Access ...... 1-1 1.2 Climate and Physiography ...... 1-1 1.3 Local Resources...... 1-1 1.4 Mineral Tenure, Surface Rights, and Royalties...... 1-2 1.5 Permits ...... 1-2 1.6 Environmental ...... 1-2 1.7 Geology and Mineralization...... 1-3 1.8 Exploration ...... 1-3 1.9 Drilling ...... 1-3 1.10 Sample Preparation and Analysis ...... 1-3 1.11 Data Verification...... 1-4 1.12 Metallurgical Testwork...... 1-4 1.13 Mineral Resources ...... 1-5 1.14 Mineral Reserves ...... 1-5 1.15 Mining Operations ...... 1-9 1.15.1 Open Pit Mining Operations...... 1-9 1.15.2 Planned Underground Operation ...... 1-9 1.15.3 Sequencing ...... 1-10 1.16 Process ...... 1-11 1.17 Tailings...... 1-11 1.18 Capital and Operating Costs ...... 1-12 1.19 Markets...... 1-13 1.20 Financial Analysis...... 1-13 2 INTRODUCTION...... 2-1 2.1 Qualified Persons...... 2-1 2.2 Effective Dates ...... 2-1 2.3 Previous Technical Reports ...... 2-2 3 RELIANCE ON OTHER EXPERTS...... 3-1 4 PROPERTY DESCRIPTION AND LOCATION ...... 4-1 4.1 Location and property boundaries...... 4-1 4.2 Property and Title in Uruguay...... 4-1 4.2.1 Mineral Title...... 4-1 4.2.2 Royalties ...... 4-2 4.2.3 Surface Rights...... 4-2

4.2.4 Water Rights ...... 4-2 4.2.5 Environment...... 4-3 4.3 Area of the property...... 4-3 4.4 Mineral Tenure ...... 4-3 4.4.1 Tenure History...... 4-3 4.4.2 Mineral Title...... 4-4 4.5 Surface Rights...... 4-10 4.6 Royalties...... 4-16 4.7 Sectorial Permits ...... 4-17 4.8 Environmental Permits ...... 4-18 4.9 Environmental liabilities...... 4-20 4.9.1 Baseline Studies ...... 4-21 4.9.2 Remediation and Closure...... 4-24 5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY...... 5-1 5.1 Accessibility...... 5-1 5.2 Climate ...... 5-1 5.3 Local Resources and Infrastructure ...... 5-2 5.4 Physiography, Flora and Fauna ...... 5-3 6 HISTORY...... 6-1 7 GEOLOGICAL SETTING ...... 7-1 7.1 Project Geology...... 7-4 7.2 Deposits ...... 7-4 7.2.1 Santa Teresa...... 7-4 7.2.2 Veta A and Veta Sur ...... 7-4 7.2.3 San Gregorio...... 7-5 7.2.4 Ombú ...... 7-6 7.2.5 Arenal...... 7-7 7.2.6 Castrillon ...... 7-8 7.2.7 Sobresaliente ...... 7-10 7.2.8 Zapucay, Knob Hill, and Argentinita...... 7-11 7.2.9 Crucera ...... 7-13 7.2.10 Picaflor ...... 7-14 7.3 Prospects and Targets ...... 7-15 7.3.1 Nueva Australia...... 7-16 7.3.2 Peru...... 7-17 7.3.3 Areicua and Laureles ...... 7-17

7.3.4 Vaca Muerta...... 7-17 8 DEPOSIT TYPES...... 8-1 8.1 Comment on Section 8...... 8-1 9 MINERALIZATION ...... 9-1 9.1 San Gregorio...... 9-1 9.2 Santa Teresa...... 9-2 9.3 Arenal...... 9-3 9.4 Veta A and Veta Sur...... 9-4 9.5 Ombú...... 9-5 9.6 Castrillón ...... 9-6 9.7 Sobresaliente ...... 9-7 9.8 Zapucay, Knob Hill and Argentinita ...... 9-8 9.9 Crucera...... 9-9 9.10 Picaflor ...... 9-10 10 EXPLORATION ...... 10-1 10.1 Grids and Surveys...... 10-1 10.2 Geological Mapping...... 10-1 10.2.1 Geophysical Surveys ...... 10-6 10.2.1.1 Airborne Surveys ...... 10-6 10.2.1.2 Ground Surveys ...... 10-6 10.2.2 Trenching ...... 10-7 10.3 Drilling ...... 10-9 10.4 Bulk Density ...... 10-9 10.5 Geotechnical and Hydrology ...... 10-9 10.6 Exploration Potential ...... 10-9 11 DRILLING ...... 11-1 11.1 Legacy Drill Programs ...... 11-5 11.2 Orosur Drill Programs...... 11-5 11.3 Geological Logging...... 11-7 11.4 Collar Surveys...... 11-7 11.5 Down-hole Surveys ...... 11-7 11.6 Drill Recovery...... 11-8 11.7 Blast Hole Drilling...... 11-8 12 SAMPLING METHOD AND APPROACH ...... 12-1 12.1 Geochemical Sampling ...... 12-1 12.2 RAB Sampling...... 12-1 12.3 Sampling ...... 12-1

III

12.4 Core Sampling...... 12-2 12.5 Blast Hole Sampling...... 12-2 12.6 Quality Assurance and Quality Control ...... 12-2 12.7 Density (Specific Gravity) Determinations...... 12-2 13 SAMPLE PREPARATION, ANALYSES, AND SECURITY...... 13-1 13.1 Analytical Laboratories...... 13-1 13.2 Sample Preparation and Analysis ...... 13-2 13.3 Quality Assurance/Quality Control Programs...... 13-2 13.4 Databases ...... 13-3 13.5 Sample Security ...... 13-3 13.6 Sample Storage...... 13-3 14 DATA VERIFICATION ...... 14-1 14.1 Jones (2005) ...... 14-1 14.2 MBS Environmental, 2006...... 14-2 14.3 Golder 2007...... 14-2 14.4 Golder, 2009...... 14-2 14.5 Smee, 2010...... 14-3 14.6 MDA, 2010 ...... 14-3 15 ADJACENT PROPERTIES...... 15-1 16 MINERAL PROCESSING AND METALLURGICAL TESTING...... 16-1 16.1 Metallurgical Testwork...... 16-1 16.1.1 Arenal Deeps ...... 16-3 16.1.2 San Gregorio, Santa Teresa and Zapucay ...... 16-5 16.1.3 Argentinita...... 16-5 16.1.4 Sobresaliente ...... 16-6 16.1.5 Crucera ...... 16-6 16.2 Historic Plant Throughput and Gold Recovery Data ...... 16-6 16.3 Projected Metallurgical Performance and Proposed Mill Schedule...... 16-10 16.4 Process Facilities ...... 16-11 17 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES ...... 17-1 17.1 Mineral Resource Estimation – Arenal Deeps...... 17-4 17.1.1 Database...... 17-4 17.1.2 Domains...... 17-4 17.1.3 Geological Model ...... 17-4 17.1.4 Examination of Extreme Values ...... 17-5 17.1.5 Composites ...... 17-5 17.1.6 Variography...... 17-5

17.1.7 Model Setup...... 17-5 17.1.8 Estimation Methodology...... 17-5 17.1.9 Bulk Density Assignment ...... 17-5 17.1.10 Model Validation...... 17-5 17.1.11 Resource Classification...... 17-6 17.1.12 Assessment of “Reasonable Prospects for Economic Extraction” ...... 17-7 17.1.13 Mineral Resource Statement (MDA)...... 17-7 17.1.14 AMEC Resource Estimate Review in Support of Mineral Reserve Declaration on Arenal Deeps...... 17-9 17.1.15 Upside Potential ...... 17-13 17.2 Open Pit Mineral Resource Estimation ...... 17-13 17.2.1 Database...... 17-13 17.2.2 Domains...... 17-13 17.2.3 Geological Model ...... 17-13 17.2.4 Examination of Extreme Values ...... 17-14 17.2.5 Composites ...... 17-14 17.2.6 Variography...... 17-14 17.2.7 Estimation Methodology...... 17-15 17.2.8 Model Validation...... 17-15 17.2.9 Assessment of “Reasonable Prospects for Economic Extraction” ...... 17-15 17.2.10 Mineral Resource Statement ...... 17-16 17.2.11 OROSUR Mineral Estimate Review ...... 17-16 17.3 Mineral Resource Estimation – Stockpiles ...... 17-17 17.4 Mineral Reserves – Arenal Deeps...... 17-18 17.4.1 Cut-off Grades...... 17-19 17.4.2 Dilution ...... 17-22 17.4.3 Mineral Reserves ...... 17-22 17.4.4 Effect of Changes in Gold Price on Cut-off Grades ...... 17-23 17.5 Mineral Reserves – Open Pit Deposits ...... 17-25 17.5.1 Dilution ...... 17-25 17.5.2 Pit optimizations...... 17-25 17.5.3 Geomechanical ...... 17-26 17.5.4 Optimization Parameters...... 17-27 17.5.5 Effect of Changes in Gold Price...... 17-28 17.5.6 Pit designs...... 17-28 17.5.7 Mineral reserves...... 17-29 17.5.8 Open Pits comments...... 17-29

18 ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORT ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES...... 18-1 18.1 Current and Proposed Mining Operations...... 18-1 18.1.1 Introduction ...... 18-1 18.1.2 Open Pit Mining Method and Equipment ...... 18-1 18.1.3 Open Pit Grade Control and Reconciliation ...... 18-1 18.1.4 Open Pit Sequencing ...... 18-2 18.1.5 Underground Mining Operation – Arenal Deeps ...... 18-3 18.1.6 Transverse Stoping...... 18-3 18.1.6.1 Inclined Room and Pillar ...... 18-3 18.1.6.2 Development – Arenal Deeps ...... 18-6 18.1.6.3 Ventilation – Arenal Deeps ...... 18-7 18.1.7 Mine Production Schedules ...... 18-8 18.2 Tailings Storage Operations...... 18-9 18.3 Infrastructure and Services ...... 18-11 18.3.1 Introduction ...... 18-11 18.3.2 Transport...... 18-11 18.3.3 Power...... 18-11 18.3.3.1 Power – Arenal Deeps...... 18-12 18.3.4 Buildings...... 18-12 18.3.5 Fresh and Potable Water System ...... 18-12 18.3.6 Fire Protection...... 18-13 18.3.7 Sewerage and Waste Disposal ...... 18-13 18.3.8 Security ...... 18-13 18.3.9 Site Drainage ...... 18-13 18.3.10 Mine Water ...... 18-13 18.3.10.1 Dewatering – Arenal Deeps ...... 18-14 18.3.11 Communications...... 18-14 18.3.12 Fuel Storage...... 18-15 18.3.13 Roads ...... 18-15 18.4 Hydrogeology – Arenal Deeps ...... 18-15 18.5 Rock Mechanics – Arenal Deeps ...... 18-15 18.5.1 Intact Rock Testing Summary ...... 18-16 18.5.2 Joints...... 18-16 18.5.3 Rock Mass Characterization Summary...... 18-17 18.5.4 Insitu Stress Regime ...... 18-17 18.5.5 Stope Design...... 18-17

18.5.6 Stress Modelling...... 18-18 18.5.7 Ground Support Design ...... 18-19 18.6 Taxes...... 18-21 18.6.1 Corporate Income Tax (IRAE):...... 18-21 18.6.2 Capital Tax (IP): ...... 18-21 18.6.3 Value Added Tax (IVA): ...... 18-21 18.6.4 Social security Contributions:...... 18-21 18.6.5 Mining royalty: ...... 18-22 18.7 Marketing...... 18-22 18.8 Capital Costs...... 18-22 18.9 Operating Costs ...... 18-24 18.10 Financial Analysis...... 18-25 18.10.1 Basis of Financial Analysis...... 18-25 18.10.2 Sensitivities...... 18-28 19 OTHER RELEVANT DATA AND INFORMATION ...... 19-1 20 INTERPRETATION AND CONCLUSIONS...... 20-1 20.1 Mineral Resource ...... 20-1 20.2 Infrastructure ...... 20-1 20.3 Geology...... 20-1 20.4 Sampling and Grade Control...... 20-1 20.5 Surface Mining ...... 20-1 20.6 Milling ...... 20-2 20.7 Computer Modeling...... 20-2 20.8 Following completion of the Arenal Deeps underground study, the AMEC QPs concluded:...... 20-2 21 RECOMMENDATIONS...... 21-1 21.1 Tenure and Permitting...... 21-1 21.2 Engineering and Geology...... 21-1 21.3 Mill...... 21-1 21.4 Reclamation ...... 21-1 22 REFERENCES ...... 22-1 23 DATE AND SIGNATURE PAGE...... 23-1

VII

TABLES Table 1-1 Mineral Resources at Orosur’s San Gregorio Project ...... 1-7 Table 1-2 Mineral Reserves at Orosur’s San Gregorio Project ...... 1-8 Table 1-3 Life of Mine Capital Costs...... 1-12 Table 1-4 Life of Mine Operating Costs...... 1-12 Table 4-1 Licenses and Durations...... 4-2 Table 4-2 Mineral Tenure Summary ...... 4-4 Table 4-3 Surface Rights...... 4-10 Table 4-4 Agreements with landowners and easements...... 4-15 Table 4-5 Royalties...... 4-16 Table 4-6 Environmental Permits Summary ...... 4-19 Table 4-7 DINAMIGE Guarantees...... 4-24 Table 4-8 Detail of activities and Closure Plan costs...... 4-26 Table 6-1 Orosur Production Figures 2002–2009 (years ending 31 May)...... 6-2 Table 7-1 Vaca Muerta Drill Results...... 7-18 Table 10-1 Trenches...... 10-7 Table 11-1 Drilling Data...... 11-2 Table 11-2 Orosur Owned Exploration Drilling Rigs (until August 2010)...... 11-5 Table 16-1 Metallurgical Testwork Results...... 16-2 Table 16-2 Leach tests conditions...... 16-3 Table 16-3 Historical Data ...... 16-7 Table 17-1 Mineral Resources at Orosur’s San Gregorio Project ...... 17-2 Table 17-2 Mineral Reserves at Orosur’s San Gregorio Project ...... 17-3 Table 17-3 Arenal Deeps Resource Classification Criteria...... 17-7 Table 17-4 Measured Mineral Resources, Reported at Various Cut-off Grades (MDA base case at 1.5 g/t Au highlighted) ...... 17-8 Table 17-5 Indicated Mineral Resources, Reported at Various Cut-off Grades (MDA base case at 1.5 g/t Au highlighted) ...... 17-8 Table 17-6 Inferred Mineral Resources, Reported at Various Cut-off Grades (MDA base case at 1.5 g/t Au highlighted) ...... 17-9 Table 17-7 Measured Mineral Resources, Reported at Various Cut-off Grades, Effective Date 15 March 2010 (base case is highlighted) ...... Error! Bookmark not defined. Table 17-8 Indicated Mineral Resources, Reported at Various Cut-off Grades, Effective Date 15 March 2010 (base case is highlighted) ...... Error! Bookmark not defined. Table 17-9 Inferred Mineral Resources, Reported at Various Cut-off Grades, Effective Date 15 March 2010 (base case is highlighted) ...... Error! Bookmark not defined. Table 17-10 Database dates of closure...... 17-13 Table 17-11 Domains, Top Cuts, Composite length...... 17-14 Table 17-12 Block size, Density and Cut off...... 17-16 Table 17-13 Effective Topography Date...... 17-16 Table 17-14 Mineral Resources for Argentinita deposit as end of May, 2010 ...... 17-17 Table 17-15 Mineral Resource - Stockpile...... 17-18 Table 17-16 Mining Cut-off Grade Determination (US$850/oz gold price) ...... 17-20 Table 17-17 Marginal Cut-off Grade Determination (US$850/oz gold price)...... 17-21 Table 17-18 Probable Mineral Reserves, J. Barber, P.E., Effective Date 1 June 2010 17-23 Table 17-19 Mining Cut-off Grade Determination (US$1,000/oz gold price) ...... 17-24 Table 17-20 Geological Block Model Parameters ...... 17-25 Table 17-21 Geological Block Model Parameters ...... 17-26 Table 17-22 Global Stability Analysis ...... 17-26 Table 17-23 Zapucay, Argentinita Stability Analysis...... 17-27

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Table 17-24 Optimization Parameters...... 17-28 Table 17-25 Optimization Parameters...... 17-28 Table 17-26 Pit Design Parameters...... 17-29 Table 17-27 Pit Design Parameters...... 17-29 Table 18-1 Life of Mine Plan...... 18-8 Table 18-2 Primary Ground Support Standard ...... 18-20 Table 18-3 Contribution Rates...... 18-22 Table 18-4 Life of Mine Capital Costs...... 18-22 Table 18-5 Life-of-Mine Capital Cost Summary – Arenal Deeps...... 18-24 Table 18-6 Life of Mine Operating Costs...... 18-24 Table 18-7 Life of Mine Operating Costs- Open pit and Underground Operations...... 18-24 Table 18-8 San Gregorio Project Cash Flow...... 18-27 Table 18-9 Sensitivitiy, NPV at 7% and 10%, (000’s US$)...... 18-28

FIGURES

Figure 1-1 Sensitivity, NPV at 7%...... 1-14 Figure 1-2 Sensitivity, NPV at 10 %...... 1-14 Figure 4-1 Mineral Tenures - Uruguay...... 4-5 Figure 4-2 Isla Cristalina District...... 4-6 Figure 4-3 Land Property Near Mine ...... 4-7 Figure 4-4 Land Property Near Mine (Air Photo) ...... 4-8 Figure 4-5 Land Property Near Mine (Geology) ...... 4-9 Figure 4-6 Surface Rights Ownership (Plan View) ...... 4-12 Figure 4-7 Surface Rights Ownership (Plan View) ...... 4-13 Figure 4-8 Surface Rights Ownership (Air Photo) ...... 4-14 Figure 7-1 Regional Geology Plan...... 7-2 Figure 7-2 Geology Plan, Isla Christina Greenstone Belt ...... 7-3 Figure 7-3 Schematic Lithology Diagram...... 7-3 Figure 7-4 Deposit Location Plan, San Gregorio Area ...... 7-6 Figure 7-5 Geology Plan, Arenal Open Pit ...... 7-7 Figure 7-6 Deposit Location Plan, Sobresaliente and Castrillon Area...... 7-9 Figure 7-7 Castrillon (Plan View)...... 7-10 Figure 7-8 Sobresaliente (Plan View)...... 7-11 Figure 7-9 Deposit Location Plan, Zapucay, Knob Hill, and Argentinita Area ...... 7-12 Figure 7-10 Zapucay and Argentinita (Plan View) ...... 7-13 Figure 7-11 Crucera (Plan View) ...... 7-14 Figure 7-12 Deposit Location Plan, Picaflor Area...... 7-15 Figure 7-13 Location Plan, Prospects and Targets ...... 7-16 Figure 7-14 Peru (Plan View) ...... 7-17 Figure 7-15 Vaca Muerta (Plan View)...... 7-19 Figure 9-1 San Gregorio – Cross Section (Looking East) ...... 9-2 Figure 9-2 Santa Teresa – Cross Section (Looking East) ...... 9-3 Figure 9-3 Arenal – Cross Section (Looking East) ...... 9-4 Figure 9-4 Veta Sur – Cross Section (Looking South West) ...... 9-5 Figure 9-5 Ombu – Cross Section (Looking East) ...... 9-6 Figure 9-6 Castrillon – Cross Section (Looking North) ...... 9-7 Figure 9-7 Sobresaliente – Cross Section (Looking North) ...... 9-8 Figure 9-8 Zapucay – Cross Section (Looking East) ...... 9-9 Figure 9-9 Argentinita – Cross Section (Looking North West)...... 9-9 Figure 9-10 Crucera – Cross Section (Looking East) ...... 9-10 Figure 9-11 Picaflor – Cross Section (Looking North West) ...... 9-11 Figure 10-1 Geochemical Map – Isla Cristalina (Central)...... 10-2 Figure 10-2 Geochemical Map – Isla Cristalina (East) ...... 10-3 Figure 10-3 Geochemical Map – IslaCristalina (West) ...... 10-4 Figure 10-4 Geochemical Map – Crucera...... 10-5 Figure 10-5 Isla Cristalina- Rivera. Dighem airborne geophysical survey...... 10-6 Figure 10-6 San Gregorio – Trench location (Plan View) ...... 10-8 Figure 10-7 Crucera – Trench Location (Plan View) ...... 10-9 Figure 11-1 San Gregorio – Drill Hole Collars (Plan View)...... 11-3 Figure 11-2 Zapucay – Argentinita. Drill Hole Collars (Plan View) ...... 11-4 Figure 11-3 Crucera – Drill Hole Collars (Plan View) ...... 11-5 Figure 16-1 Deeps Leach Tests – Gold Recovery...... 16-4 Figure 16-2 Arenal Deeps Leach Tests – Silver Recovery...... 16-4

Figure 16-3 Gold Recovery and Throughput ...... 16-7 Figure 16-4 Tonnes Per Year and Availability ...... 16-8 Figure 16-5 Projected Feed blends (% tonnes – left axis) and predicted throughput (right axis) ...... 16-10 Figure 16-6 Projected Feed blend (% ozt – left axis)) and expected recovery (right axis) 16- 11 Figure 16-7 Process Flow Diagram ...... 16-13 Figure 17-1 Resource Classification, Example Cross-Section, 530 650E...... 17-11 Figure 17-2 MDA Resource Model with AMEC Recommended Resource Re-Classification, Example Cross-Section, 530 650E...... 17-12 Figure 18-1 Mine 3D View, looking North...... 18-4 Figure 18-2 Mine 3D View, Looking West ...... 18-5 Figure 18-3 Tailings Dam Layout...... 18-10 Figure 18-4 Sensitivity, NPV at 7 %...... 18-28 Figure 18-5 Sensitivity, NPV at 10 %...... 18-29

1 SUMMARY

A National Instrument 43-101 Standards of Disclosure for Mineral Projects Technical Report (The Report) was prepared on the San Gregorio Project, Uruguay (the Project), on behalf of Orosur Mining Inc. (OMI). The Report supports disclosure of the results of the Feasibility Study for Arenal Deeps, Uruguay”.

1.1 Location and Access

The San Gregorio Project is situated in the Department of Rivera, approximately 450 km north of Uruguay’s capital city, Montevideo, and approximately 100 km south of the international border with Brazil. The San Gregorio project currently contains a mining complex comprising 13 open pits and supporting infrastructure.

From Montevideo, the Project can be reached by traveling 426 km to the north along route 5 (the main country route and a paved road) to route 29 (secondary route and paved), then turning east on route 29 and traveling 21 km, then turning south on a gravel road and traveling 3.6 km to the process plant.

Commercial air flights operate from Montevideo to Rivera, some 100 km from the Project.

The key Project deposits, San Gregorio, Santa Teresa, Arenal and Veins, the tailings storage facility (TSF), and waste dumps are situated within 2 km of the Project treatment plant (the Plant). In addition there are a number of more distant deposits, including Zapucay-Argentinita, currently in production and located 30 km to the southeast of the Plant, Sobresaliente and Castrillon situated 6 km north, and Picaflor, sited 3 km to the northeast.

OMI is also considering the feasibility of trucking mineralization from Crucera deposit, which is about 410 km from San Gregorio, for treatment through the San Gregorio plant.

1.2 Climate and Physiography

The Project area comprises gently rolling grasslands divided by broad river valleys. The regional climatic profile is temperate with no pronounced wet season. Project operation is generally possible all year round. Some intermittent interruptions may occur during large storms, when low-lying road portions may be flooded for short durations.

1.3 Local Resources

The principal towns in the region are Tacuarembó, Rivera, and the town of Minas de Corrales. Minas de Corrales has a population of about 3.300, and can provide basic services, such as schools, a hospital, shops, some engineering workshops, a service station, and repair shops. Tacuarembó and Rivera have commercial airstrips, and can provide more advanced services to the project.

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1.4 Mineral Tenure, Surface Rights, and Royalties

The San Gregorio project comprises 19 tenements, 5 of which are under application, covering an approximate area of 2,061 ha. Tenements are held in the names of wholly-owned subsidiaries of Orosur. As per Uruguayan requirements for grant of tenure, the concessions comprising the Project have been surveyed on the ground by a licensed surveyor.

Orosur has purchased most of the land affected by current mining operations. This has allowed unrestricted access for exploration and drilling activities.

The government of Uruguay levies a production royalty, based on the value of ore at the mine mouth, that consists of a 3% royalty paid to the underlying landowner and a 2% royalty paid to the government during the first 5 years, and 8% (5% to landowner and 3% to the Government) after the fifth year.

For ease of calculation the Uruguayan ministry responsible for mining estimates a fixed rate to apply for every tonne of ore treated. It has been the practice of the ministry to review this fixed rate for head grade, recovery and gold price twice per year; in 2009, a royalty of 5% to 8% was applied to an average of $33.5 per ton treated. Of this royalty, 37.5 % was paid to the State and 62.5 % to the landowners.

1.5 Permits

Exploitation permits are held over all disclosed sources of Mineral Reserves for the San Gregorio Project.

Sectorial permits (explosives, sanitation, building, storage of fuel, municipal, etc) were granted when the operation began in 1997 and are still valid without expiration date.

1.6 Environmental

All of the mineral deposits under exploitation have the environmental authorization given by the Uruguayan Ministry of Housing, Land Planning and Environment. Deposits that are yet undeveloped, have different degrees of advancement in the process of obtaining environmental permits, depending on the status of the studies on the deposit.

The significant environmental aspects for the San Gregorio Gold Project have been determined through environmental impact studies. Approvals have been granted in the form of Environmental Permits.

The Uruguayan National Environmental Directorate (DINAMA) regulates the environmental management of the San Gregorio Gold Project.

From 2008, DINAMA has performed an annual site inspection. Inspection reports are archived by Orosur. No relevant observations have been made to date.

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The Arenal open pit was permitted in 2004, and operated from October 2004 until April 2009. Two environmental impact assessments (EIAs) were prepared in support of the open pit operation in 2004 and 2007.

1.7 Geology and Mineralization

The deposits discovered by Orosur to date in the San Gregorio project area are considered to be typical of mesothermal vein-style, or orogenic-style gold deposits.

The San Gregorio mine area hosts gold mineralization developed in quartz– carbonate–sulfide lodes and silica–sulfide stockwork veining hosted along and adjacent to the San Gregorio fault system, a shear structure of the Isla Cristalina granite–greenstone belt.

The Crucera project is a shear-hosted deposit that trends 290-315 degrees and dips 70 degrees to the NNE within granodiorites-tonalites, containing a quartz- pyrite vein that irregularly outcrops along 700 m. Gold mineralization is related to the main vein (transparent/milky quartz) with the presence of iron oxides (hematitization processes and locally derived from the alteration of sulphides), and sheared-altered host rock (fine-grained chlorite mafic schist with disseminated pyrite).

1.8 Exploration

Exploration activities on the project have included regional and detailed geological mapping, rock, grab, and soil sampling, trenching, RC and core drilling, airborne geophysical surveys, ground magnetic and IP geophysical surveys, mineralization characterization studies, and metallurgical testing of samples. Density measurements on the different lithologies have also been carried out.

1.9 Drilling

Drilling completed to 15 March 2010 on the Project comprised 720 drill holes (90.822 m), in 124 RAB drill holes (1.249 m), 442 RC drill holes (46.619 m) and 146 core holes (42.534 m). The dimension of the drilling grid is 25 m by 25 m in the core of the open pit area and 50 m by 50 m in the perimeter area.

Experienced geologists logged all drill cuttings and core. Mine-area drill hole collars, including all drilling at Arenal Deeps, are surveyed by the Orosur mine surveyors using Total Station instruments.

Down-hole surveying was undertaken on most of the deep drill holes using Reflex EZShotTM and AQshotTM. Core recoveries are recorded. Oriented core is produced from most of the deep drill holes using Reflex ACTTMTM.

1.10 Sample Preparation and Analysis

All sampling in the field is carried out by Orosur staff under the supervision of the site geologists, who are also Orosur employees. Since 2008, core sampling

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approximately averages 1 m intervals by not sampling less than 0.5 m and not more than 2 m as defined by geological features and especially mineralization. Half-core is sent for assay following cutting of the core lengthways using a diamond saw perpendicular to the main mineralizing fabric.

American Assays Ltd. (AAL) set up the original San Gregorio project mine site laboratory. It is not known if the facility was accredited. Sample preparation and analyses are currently conducted at the former AAL on-site laboratory that is now owned by Orosur and operated by Orosur laboratory personnel. The laboratory is not accredited.

Check assays on pulps are routinely performed at the independent external laboratories of Alfred Knight in Lima, Peru and ACME in Santiago, Chile. These laboratories are certified to international standards.

Samples are dried, crushed and pulverized to a particle size of P95 150#. Gold analyses are undertaken by conventional fire assay methods using a 30 g charge. All tasks are subject to internal laboratory protocols and controls.

Orosur routinely submits duplicate, blanks and standard reference samples to the laboratory with the drill samples. The quality control samples are closely monitored and any batch containing a failed QA/QC sample is re-assayed.

Sample security relied upon the fact that the samples were always attended or locked at the core shack or laboratory. Chain of custody procedures consisted of filling out sample submittal forms that were sent to the laboratory with sample shipments to make certain that all samples were received by the laboratory.

1.11 Data Verification

A number of data verification programs and audits have been performed over the project history, primarily in support of compilation of technical reports on the project. No issues that could affect mineral resource or mineral reserve estimation were noted.

1.12 Metallurgical Testwork

For deposits other than Arenal Deeps, metallurgical testing has been limited and representativity is low. For that reason, results are for orientation purposes. Notwithstanding this, there is significant industrial operational experience with most of the ores that are material in the LOM plan.

In the case of Arenal Deeps, the sample selection for both the on-site and off-site metallurgical testwork was based on discussions between Orosur on-site geological and metallurgical plant staff. The samples were selected based on gold and silver grades and lithology and represent the Arenal Deeps orebody spatially.

Gold recovery results for the majority of the deposits indicate no significant differences compared to the average achieved at the treatment plant during the period 2007-2010 (93 %). One special case is that of Sobresaliente, which

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presents recoveries averaging 80 %, and for that reason, provisions have been made in the Life of Mine (LOM) plan to account for this lower metallurgical recovery.

Ores from Arenal Deeps and San Gregorio are expected to present a harder behavior compared to surface ores, based on grinding tests performed in SGS- Lakefield Santiago and previous experience with Arenal and San Gregorio open pits.

Other deposits like Santa Teresa, Zapucay, Argentinita have limited hardness information, but experience indicate that they present hardness indexes lower than those for Arenal and San Gregorio, therefore allowing a faster mill throughput.

Grinding tests performed on Sobresaliente ore indicate moderate hardness.

Limited metallurgical testwork has been performed for the Crucera deposit, which indicates gold recoveries above 91 % and lower hardness index (BWi 16 kWh/t) compared to the ore from the other pits.

1.13 Mineral Resources

As defined by NI 43-101, OMI is a producing issuer and has prepared this technical report using its own non-independent qualified persons. Notwithstanding this, extensive use has been made of independent consultants who were engaged to estimate NI 43-101 compliant Mineral Resources of material importance to OMI.

Mine Development Associates (MDA) has estimated Mineral Resources for Ombú, Argentinita, Sobresaliente, Veta A, Crucera, and Arenal Deeps.

Golder Associates SA (Golder) has estimated Mineral Resources for San Gregorio and Castrillon.

Mineral Resource estimates for Santa Teresa, Veta Sur, Zapucay, Zapucay-Knob Hill, Picaflor and Stockpiles have been prepared by Orosur internal staff.

Mineral Resources for the San Gregorio Project are presented in Table 1-1Error! Reference source not found. as at 1 June 2010. Mineral Resources are reported in accordance with the 2005 CIM Definition Standards for Mineral Resources and Mineral Reserves. OMI cautions that Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

1.14 Mineral Reserves

All Mineral Reserves for the Minas de Corrales Project open pits were estimated in accordance with NI 43-101 requirements by Orosur employees by applying modifying factors to the MDA, Golder and Orosur mineral resource estimates.

AMEC accepted the block models prepared by MDA as suitable for estimation of Mineral Reserves for the Arenal Deeps deposit.

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The classifications used for Mineral Reserves are those outlined by the 2005 CIM Definition Standards for Mineral Resources and Mineral Reserves.

Mineral Reserves for the Minas de Corrales Project are presented in Table 1-2Error! Reference source not found..

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Table 1-1 Mineral Resources at Orosur’s San Gregorio Project

Measured Resources Indicated Resources Total Measured and Indicated Inferred Resources

QP Notes cut off Tonnes Grade Contained Tonnes Grade Contained Tonnes Grade Contained Tonnes Grade Contained Deposit (g/t Au) (000’s) (g/t Au) Ounces (000’s) (g/t Au) Ounces (000’s) (g/t Au) Ounces (000’s) (g/t Au) Ounces Underground Resources Arenal Deeps MDA 1,5 846 3,52 96.000 1.297 3,68 153.000 2.143 3,61 249.000 63 3,77 8.000 Total 846 3,52 96.000 1.297 3,67 153.000 2.143 3,61 249.000 63 3,95 8.000 Open Pit Resources San Gregorio Golder 0,5 511 1,08 18.000 8.009 1,02 263.000 8.520 1,02 281.000 3 0,95 100 Santa Teresa OMI 0,5 433 1,01 14.000 1.122 0,85 31.000 1.555 0,90 45.000 236 0,83 6.000 Ombú MDA 0,5 454 1,24 18.000 454 1,24 18.000 29 0,93 1.000 Veta A MDA * 0,5 428 2,00 27.000 428 2,00 27.000 38 1,40 2.000 Veta Sur OMI 0,5 44 2,60 4.000 145 2,67 12.000 189 2,66 16.000 47 2,27 3.000 Zapucay OMI 0,5 46 1,41 2.000 170 1,20 7.000 216 1,25 9.000 3 0,96 100 Zapucay - Knob Hill OMI 0,5 192 1,59 10.000 359 1,52 17.000 550 1,54 27.000 Argentinita MDA 0,5 1.701 1,52 83.000 1.701 1,52 83.000 502 1,04 17.000 Castrillón Golder 0,5 46 1,09 2.000 17 1,24 700 63 1,13 2.700 142 1,04 5.000 Sobresaliente MDA 0,7 431 1,16 16.000 431 1,16 16.000 61 0,92 2.000 Picaflor OMI 56 3,14 6.000 56 3,14 6.000 50 2,31 3.800 Crucera MDA 2,0 150 3,67 18.000 Stockpiles - High 61,553006 1,55300 Stockpiles - Medium 444 1,02 15.000 444 1,02 15.000 Stockpiles - Low 1.060 0,64 22.000 1.060 0,64 22.000 Total 1.271 1,22 50.000 14.401 1,12 518.000 15.672 1,13 568.000 1.261 1,43 58.000

Note: Mineral resources are not mineral reserves and do not have demonstrated economic viability * Veta A Resource includes 336kt @ 1.94gpt under the operating Tailings Storage Facility

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Table 1-2 Mineral Reserves at Orosur’s San Gregorio Project

Proven Reserves Probable Reserves Total Proven and Probable

QP Notes cut off Tonnes Grade Contained Tonnes Grade Contained Tonnes Grade Contained Deposit (g/t Au) (000’s) (g/t Au) Ounces (000’s) (g/t Au) Ounces (000’s) (g/t Au) Ounces Underground Reserves Arenal Deeps AMEC 1,5 1.568 2,87 145.000 1.568 2,87 145.000 Open Pit Reserves San Gregorio OMI 0,5 136 1,19 5.000 1.846 1,15 68.000 1.985 1,15 73.000 Santa Teresa OMI 0,5 224 1,13 8.000 508 0,91 14.000 732 1,01 22.000 Ombú OMI 0,5 45 3,58 5.000 45 3,58 5.000 Veta Sur OMI 0,5 21 2,78 2.000 54 2,79 5.000 74 2,79 7.000 Zapucay OMI 0,5 45 1,43 2.000 160 1,22 6.000 205 1,27 8.000 Zapucay - Knob Hill OMI 0,5 145 1,59 7.000 269 1,49 12.000 414 1,53 19.000 Argentinita OMI 0,5 328 1,86 20.000 328 1,86 20.000 Cas trillón OMI 0,5 38 1,12 1.000 13 1,33 600 51 1,17 1.600 Sobresaliente OMI 0,7 147 1,30 6.000 147 1,33 6.000 Pic af lor OMI * 35 3,47 4.000 35 3,47 4.000 Stockpiles - High 6 1,55 300 6 1,55 300 Stockpiles - Medium 444 1,02 15.000 444 1,02 15.000 Stockpiles - Low 1.060 0,64 22.000 1.060 0,64 22.000 Total 608 1,28 25.000 6.482 1,55 322.900 7.094 1,53 347.900

1 troy ounce = 31,1035 grams

General Notes: Qualified Persons (QP) for respective reporting of Mineral Resources and Reserves Totals may not be exact due to rounding Orosur Mining Inc (OMI) Mineral Reserves are completely w ithin the stated Mineral Resources w ith mining factors applied. Qualified Person for Mineral Resources W.F. Lindqvist (P. Geo) Mineral Reserves are in situ as at 1 June, 2010 Qualified Person for Mineral Reserves Randall Corbett (P. Eng)

Mineral Resources are current as 1 June, 2010 Mine Development Associates (MDA): UG Mineral Resources are completely w ithin stated OP Mineral Resources (w here relevant) Qualified Persons for Mineral Resources and Reserves Steven Ristorcelli (C.P.Geo) and Peter Ronning (P.Eng) Deposit Specific Notes; Golder Associates (Golder): Non-Explotation permit Mineral Reserves Qualified Person for Mineral Resources Dr Marcelo Godoy * Picaflor has an Exploration Permit. An application for an Exploitation Permit is in process Qualified Person for Mineral Reserves Juan Pablo Gonzalez AMEC Qualified Person for Mineral Reserves John Barber, P.E.

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1.15 Mining Operations

Open pit mining operations are performed by an Owner-operated fleet, using conventional truck-and–shovel operations at the Ombú, Veta Sur, Santa Teresa, San Gregorio and Sobresaliente deposits. OMI plans to employ a contract fleet and workforce for the Castrillon, Zapucay 1, Zapucay 2, Argentinita and Picaflor. Contractors also employ conventional open pit mining methods. Underground mining methods are planned for the Arenal Deeps mine and will be performed by a combination of Owner and contractor mining crews.

1.15.1 Open Pit Mining Operations

Mining is performed by conventional drill and blast, load and haul open pit methods. Bench heights are between 2 and 3 meters depending on the load equipment. The pit slopes angles have been designed in the range of 45 to 60 degrees, and the ramp width is between 8 and 20 meters and 10% gradient. At the bottom of the pit the ramp gradient was increased to 12%.

Mobile mining fleet of Komatsu haul trucks (50 tonne), excavators and auxiliary equipment will be used by Orosur in Ombú, Santa Teresa, Veta Sur and San Gregorio. Blast drill holes in all open pits will be drilled with Tamrock Pantera 1500 blasthole rigs. The mobile mining fleet is serviced and maintained to industry standards and is in good condition.

Contractor mining utilizing relatively small excavators and road trucks of approximately 18 t capacity are engaged in mining vein deposits.

The expected daily production for Orosur fleet varies in a range from 20,000 to 30,000 tonnes. For contractors it is between 7,000 to 12,000 tonnes.

All mineral mined will be transported to plant stockpile. When the San Gregorio deposit reaches full production, ore would be taken to an alternative ROM pad near the plant.

1.15.2 Planned Underground Operation

In underground operations, Contractor’s and Owner’s crews will be used to develop the mine.

The Transverse Stoping (TS) method consists of primary and secondary stopes. Mining commences in the central primary stope on the lowest mineralized level and continues in adjacent primary stopes. A 50 m long stope will be immediately backfilled following mining. Backfill is dumped from the drill drift into the empty stope using a load-haul-dump (LHD) unit. Following completion of the primary stopes, mining of the adjacent secondary stopes commences. This pattern of extraction will continue vertically until the mineralized zone is depleted.

The Inclined Room and Pillar (IRP) method is used along the footwall of the ore zone where the ore is on average less than 10 m thick. The method uses a production drift, which is driven to the end of the ore zone. Once the production drift is complete on the level, the stopes (above the production drift) are then

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mined retreating toward the level access drift. The stopes are followed by a 10 m long pillar. The pillar ensures stability of the area without the need for backfill, which helps keep the operating costs low for this mining method.

Level development includes all lateral development off the decline used to access the IRP mining horizons and the TS stopes. Due to the combined use of IRP and TS mining methods, the main level accesses are spaced every 25 m vertically. This spacing is based on two IRP mining horizons.

Mine access will be provided via the portal located near the bottom of the existing open pit. Pump stations are planned for levels -70, -145, -220, and -245 masl. Ventilation design is based on providing sufficient airflow to specific mining locations to dilute contaminants to acceptable exposure limits. Powder and cap magazines are included in the mine design. Power is supplied to the underground mine by means of a 15 kV high-resistance grounded system.

Mill feed from underground will be dumped into a 120 t capacity bin that is set up to load the Komatsu™ haul trucks being used to haul open pit ore to the mill at San Gregorio. Backfill for the mine will consist of waste rock from the Arenal open pit dumps, which will be dumped down a vertical raise to the underground workings.

Operations at the Arenal open pit were supported by shops, fuel stations, offices, and other facilities which were located away from the pit crest, near the waste dumps. These facilities are available to support Arenal Deeps operations.

Access roads are in place and have been used by Orosur for operations. The haul road from Arenal to the San Gregorio process facility is in good shape and is regularly used. The haul road weak spot is the causeway over the river near the mine. This occasionally floods and is closed. When this happens, personnel can access the mine via alternate routes, but use of the haul road, and hence ore haulage is curtailed until the flood waters recedes, usually within one to two days. When this happens, mining is expected to continue, with ore being stockpiled at the pit crest. Haulage would recommence once the road is re-opened.

1.15.3 Sequencing

The Mining schedule and utilization of Owner’s mining equipment was planned considering waste excavation sequence of Santa Teresa and San Gregorio pits and the use of that waste for the construction of the new tailings storage facility (TSF 2) and closure of the existing tailings storage facility (TSF1).

Arenal Deeps ore will be hauled to the treatment plant every month and it represents a minor percentage of total material moved.

During the first semester of operation Veta Sur exploitation is going to be finished. The equipment that will be available after finishing Veta Sur, will be used to start civil works in the TSF2.

The first year of production mining equipment will be allocated to Sobresaliente, Santa Teresa and moving waste in Zapucay. At the same time, waste from Santa

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Teresa will be used for the construction of TSF2 and the closure of TSF1. Exploitation of Sobresaliente ends at the beginning of the second year.

On the second year, TSF2 construction will require most of the mining equipment utilization and mining in San Gregorio is expected to begin. At this step, waste from San Gregorio will be used for TSF2 construction. Santa Teresa exploitation is expected to finish during the second year.

The mining of Zapucay, Argentinita and Picaflor was planned in order to maximize plant production during the first years of the mining schedule. These deposits are mined using Contractors.

Zapucay will be mined during the first year, Argentinita on the second and Picaflor on the third. This schedule allows increasing exploration activities in Argentinita and Picaflor in order to increase reserves.

1.16 Process

The processing facility has been operating for a period of more than 10 years. This has proven the viability of the existing processing plant in treating all material types from the local deposits and provides a high level of confidence concerning the treatment of the ore deposits included in the LOM in terms of metallurgical response.

A mining schedule was developed, and fed into the long-term mine process plant forecast as constructed by Orosur personnel for the San Gregorio process plant. The plant forecast includes contributions from a number of open pit sources, as well as the Arenal Deeps underground mine.

Relevant points to note from the process plant production forecast are as follows:

• During the first three years of operation, the Arenal Deeps ore is going to be fed blended with softer ores as Zapucay, Santa Teresa and Argentinita, causing the throughput to be higher and more variable than if Arenal ore was fed alone.

• From the fourth year on, the blend will be Arenal Deeps and San Gregorio. Leading to a lower and more stable throughput.

• Sobresaliente will be fed on the second and third year of the LOM and due to its low average gold recovery (80 %), will reduce the global average gold recovery below 93 %.

• As in the case of the throughput, the San Gregorio – Arenal Deeps blend that is going to be fed from the fourth year on, is expected to give more stable recoveries in the order of 93 %.

1.17 Tailings

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high environmental standards, and downstream monitoring is effective. Rice is farmed downstream from the TSF without any apparent contamination problems.

1.18 Capital and Operating Costs

Capital costs are based on quotations, and actual average costs.

Operating Costs are based on actual 2009 operating figures corrected by expected increase.

Exploration expenditures are not included in the analysis.

The LOM capital costs are summarized in Table 1-3.

Table 1-3 Life of Mine Capital Costs

Item (US$ - 000) Underground 24,69 Development and Studies 850 Tailings 8,807 Reclamations 1,025 Plant 545 Laboratory and Adm. 147 Major Components 2,342 Mobile Equipment 410 Infrastructure 362 San Gregorio Project 3,688 Contingency 2 Total Capital Costs 44,865

The operating costs estimate, for the life of the project, is shown in Table 1-4.

Table 1-4 Life of Mine Operating Costs

000's US$ US$/t Ore Mine 104,460 18.0 Process 63,988 11.0 General & 20,158 3.5

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Administrative Royalty 12,783 2.2 Metal Charge 4,147 0.7 Total 205,536 35.4

1.19 Markets

Argor-Heraeus SA currently purchases all products from the San Gregorio project on standard commercial terms. The doré is transported to the Mendrisio refinery in Switzerland. It is expected that the agreement will remain in effect for the dore produced from the Project.

1.20 Financial Analysis

The results of the economic analysis represent forward-looking information as defined under Canadian securities law. The results depend on inputs that are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those presented here. Factors that could cause such differences include, but are not limited to: changes in commodity prices, costs and supply of materials relevant to the mining industry, the actual extent of the mineral resources compared to those that were estimated, actual mining and metallurgical recoveries that may be achieved, technological change in the mining, processing and waste disposal, changes in government and changes in regulations affecting the ability to permit and operate a mining operation. Forward-looking information in this analysis includes statements regarding future mining and mineral processing plans, rates and amounts of metal production, cahs flows, tax and royalty terms, smelter and refinery terms, the ability to finance the project, and metal price and currency exchange rate forecasts.

Financial analysis of the project was carried out using a discounted cash flow (DCF) approach. This method of valuation required projecting yearly cash inflows (or revenues) and subtracting yearly cash outflows (such as operating costs, capital costs, royalties, and employee and other indirect taxes). The resulting net annual cash flows were discounted back to the date of valuation and totaled in order to determine the net present value (NPV) of the project at selected discount rates.

Sensitivity runs were performed on NPV 7% and NPV 10% for a ±30% change in capital costs, operating costs and metal prices. These are shown in Figure 1-1 and Figure 1-2.

The project is extremely sensitive to metal price, and next most sensitive to changes in operating costs, then capital costs.

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Figure 1-1 Sensitivity, NPV at 7%

Figure 1-2 Sensitivity, NPV at 10 %

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2 INTRODUCTION

A National Instrument 43-101 (NI 43-101) Technical Report (The Report) was prepared on the San Gregorio Project, Uruguay (the Project), on behalf of Orosur Mining Inc. (OMI). The Report supports disclosures in the OMI press release dated 7 September 2010, entitled “Orosur Mining Inc. Announces Results of the Feasibility Study For Arenal Deeps in Uruguay” and in OMI’s voluntarily-lodged annual information form (AIF).

All Mineral Resources and Mineral Reserves are in the region of the San Gregorio Project, which comprises a 1.2 Mtpa CIL treatment plant, adjacent Tailings Storage Facility (TSF) and infrastructure.

Most important deposits (San Gregorio, Santa Teresa, Arenal and Veins) are located within 2 km. Other projects in the vicinity are: Zapucay-Argentinita (currently in production) located 30 km South-East, Sobresaliente and Castrillon situated 6 km North and Picaflor sited 3 km North-East. Additionaly, there is another Project outside the Crystalline Island, located 350 km South in the Florida Department.

2.1 Qualified Persons

The qualified person for Orosur Mining Inc. R. Corbett General Manager San Gregorio, responsible for this technical report is a full-time employee of OMI whom, as part of his duties, personally inspected all properties and activities under their responsibility on a routine basis. Mr. Corbett has a Bachelor of Engineering (Mining) Degree from Technical University of Nova Scotia (T.U.N.S.), is a Professional Engineer (P. Eng.) registered in the Province of Ontario and has more than 25 years operational, engineering and development experience.

The other qualified person for orosur Mining Inc. Dr. W. Lindqvist is a member of the Board of Directors of Orosur and has visited all of the properties discussed in this report at least once during his membership on the board. Dr. Lindqvist holds a PhD in Applied Geology from Imperial College, London, has been a member of the AusIMM for 46 years and has had 40 years of experience in international minerals exploration and property evaluation.

John Barber, PE, is a Principal Mining Engineer with AMEC. He visited the San Gregorio property from 22 to 25 February 2010 and personally inspected the Arenal open pit and the Arenal Deeps drill core. The scope of his personal inspection was to assess the feasibility of developing an underground mining operation for the Arenal Deeps deposit.

2.2 Effective Dates

The report has a number of effective dates which represent the cut-off date for the information used, including:

• 31 May 2010 effective date of Total Open Pit Reserves

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• 15 March, 2010 effective date of the Arenal Deeps Mineral Resource estimate

• 1 June, 2010 effective date of the Arenal Deeps Mineral Reserve estimate

• 24 August, 2010 effective date of the completion of the Arenal Deeps feasibility study

The effective date of the technical report is taken to be October 5, 2010 which is the date of the press release on Vaca Muerta exploration drilling which information is included in the Report.

2.3 Previous Technical Reports

Orosur has previously filed technical reports on the Project as follows:

Ristorcelli, S., and Ronning, P., 2010: Technical Report on the Arenal Deeps Deposit, Minas de Corrales Project Department of Rivera, Uruguay: unpublished technical report prepared by Mine Development Associates for Orosur Mining Inc., effective date 15 March 2010.

Under the former company name, Uruguay Mineral Exploration Inc., Orosur also filed the following technical reports:

Gonzalez, P.B., Godoy. M., Sadek, J., and Schroder, G., 2009: Form 43-101F1 Technical Report, Preliminary Feasibility Study for the Arenal Deeps Underground Mine: unpublished technical report prepared by Golder Associates for Uruguay Mineral Exploration Inc., effective date 24 September 2009.

Sadek, J.A., and Schroder, G.A, 2007: Form 43-101F1 Technical Report Mineral Resource and Mineral Reserve Estimation of the Minas de Corrales Project: unpublished technical report prepared for Uruguay Mineral Exploration Inc., effective date 1 October 2007.

Shaw, W.J., Godoy, M., and Cortes Castro, O.E., 2007: Resource Estimation of Gold Deposits, San Gregorio, Uruguay: unpublished technical report prepared by Golder Associates for Uruguay Mineral Exploration Inc., January 2007.

Jones, C., 2005: Minas De Corrales Project, Independent Technical Review: unpublished technical report prepared by RSG Global for Uruguay Mineral Exploration Inc., August 2005.

Lindqvist, W.F., 2004: Review Of Uruguay Mineral Exploration Inc. Resource Estimates for the Minas De Corrales Gold Project in Northern Uruguay Announced By Media Release On March 8th 2004: unpublished technical report prepared for Uruguay Mineral Exploration Inc., effective date 22 May 2004

Pitt, M., 2003: Technical Report on the Minas De Corrales Project Northern Uruguay: unpublished technical report prepared for Uruguay Mineral Exploration Inc., effective date 16 October 2003.

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These reports and the reports and documents listed in the Reference section of this Report were used to support preparation of the Report.

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3 RELIANCE ON OTHER EXPERTS

Section 4 of this report contains information relating to mineral titles and licenses, permitting, regulatory matters, and legal agreements. While the authors have some understanding of these issues in the context of the mineral industry, they are not legal or regulatory professionals.

For the information in sections 4.2 (property title), 4.3 (area of the property), 4.4 (mineral title), 4.5 (surface rights) and 4.6 (royalties), the Qualified Persons (QPs) that authored the report have fully relied upon the opinion of Mr. Daniel Segovia, Surveyor Engineer for Orosur; Mr. Segovia is a professionally registered land surveyor.

For the information in sections 4.8 (environmental permits) and 4.9 (environmental liabilities), the QPs have fully relied upon the opinion of Mr. Javier Martinez, Environmental Manager for Orosur; Mr. Martinez is a professionally registered M.Sc. Chemical Engineer.

For the information in sections 18.6 (taxes) and 18.9 (financial analysis), the QPs have fully relied upon the opinion of Mr. Ignacio Salazar, Chief Financial Officer for Orosur; Mr. Salazar holds a Masters Degree in Economics and Business Administration and a Master Degree in Law from de university of Deusto in Spain.

The AMEC QP disclaims responsibility for the information provided by these Other Experts as allowed under NI 43-101.

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4 PROPERTY DESCRIPTION AND LOCATION

4.1 Location and property boundaries

The San Gregorio Project is located in the Department of Rivera, in the so called Crystalline Island, about 70 km south of the international border with Brazil, about 450 km north of Uruguay’s capital city, Montevideo, and 70 km northeast of the city of Tacuarembó. The San Gregorio project is centered on longitude 55º 30.4’ West and latitude 31º 35.2’ South.

The Crucera deposit is centered on longitude 53º 54.0’ East and latitude 62º 44.90’ North.

The property has a gold ore treatment plant, a tailings storage facility, waste dumps and service areas.

OMI is also considering the feasibility of trucking mineralization from Crucera deposit, which is about 410 km from San Gregorio, for treatment through the San Gregorio plant.

4.2 Property and Title in Uruguay

Foreign investment by both legal entities and individuals is encouraged, and does not require special Government permits. Investment can be made in any currency. Foreign investors can use either a local corporation structure, or establish a branch of a foreign enterprise. There are no impediments to hiring foreign personnel. The Uruguayan State guarantees free repatriation of capital, and free remittance of dividends and profits; such fund transfers can also be made in any currency.

4.2.1 Mineral Title

Uruguay’s mining code was promulgated in 1982. Mineral rights are vested in the State, and can be granted as one of three licenses (Refer to Table 4-1):

• Prospecting License. Allows the holder to carry out any, and all work aimed at searching for one or more minerals in a given area. Once the first two years have passed, the area covered by the license must be reduced by 50%. The holder of the license chooses which parts of the original Prospecting License to relinquish.

• Exploration License. Gives the holder the right to perform activities with the purpose of proving whether a deposit exists, identifying its characteristics, and determining the volume, quality and fineness of the mineral, as well as

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undertaking economic assessments. The holder of this License is allowed to set up a pilot plant, once he has applied for and been given the appropriate mining and environmental authorizations, and he can dispose of all the substances extracted in the quantities established in the authorization.

• Concession to Exploit. Qualifies the holder to exploit one or more mineral substances, in a given area, and dispose of the output from the deposit. In order to obtain this title, an environmental impact analysis must first be approved, according to the legal provisions in force since 1994.

Table 4-1 Licenses and Durations

Possible Area Title Operation Extensions Term Area Reduction Prospecting 200,000 License 2 years 1 1 year ha 50% Exploration 1 year License 2 years 2 each 2,000 ha 50% Exploitation License 30 years - (*) 15 year 1,000 ha -

The National Mining and Geology Directorate (DINAMIGE), which forms part of the Ministry of Industry, Energy, and Mining, is the only State agency responsible for the control of mining and the management of the subsoil. It is the competent agency in charge of granting Prospecting and Exploration Licenses, while the ministry has been entrusted with awarding the concession of Exploitation Licenses.

4.2.2 Royalties

Government royalties are applied to the net mine mouth value of gold produced; that is, sales revenue less operating costs excluding mining. For ease of calculation the Uruguayan ministry responsible for mining estimates a fixed rate to apply for every tonne of ore treated. It has been the practice of the ministry to review this fixed rate for head grade, recovery and gold price twice per year; in 2009, a royalty of 5% to 8% was applied to an average of $33.5 per ton treated. Of this royalty, 37.5 % was paid to the State and 62.5 % to the landowners.

4.2.3 Surface Rights

Under Uruguayan law, surface rights are independent of mineral rights, and land access and use must be negotiated with the surface rights holder.

4.2.4 Water Rights

The Water Code, Decree No 14.859 of 1978, establishes the legal framework for water resources management in Uruguay. The Water Code grants sole ownership and managerial responsibilities of superficial and groundwater resources to national and municipal government, including the establishment of water user fees. The Water Code however maintains water property rights to

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private owners issued prior to the enactment of the Water Code, if registered appropriately. Uruguayan government grants water use rights through concessions and permits based on quantity, end purpose, and general interest related to water use.

4.2.5 Environment

The Uruguayan Constitution establishes environmental protection as a matter of general interest. The Ministry of Housing, Territory and Environment supervises all environmental matters, through the National Environment Directorate (DINAMA). A party that causes environmental damages, environmental pollution, or breaches environmental rules or laws has civil responsibility for remediation.

On January 19, 1994, the Uruguayan Government enacted Law 16.466, (regulatory decree passed September 21, 1994) which established the requirement for mining companies to be issued with an Environmental Impact Authorization ("EIA") prior to the commencement of construction and mining activities.

Uruguay mining legislation requires all mining titles to be supported by guarantees for any environmental rehabilitation requirements resulting from exploration or mining activities. These guarantees are required to be posted by qualified financial institutions. Orosur have the required guarantees in place.

4.3 Area of the property

The total area of the property, which includes all of the mineral deposits and facilities, is 2,061 ha. A detail of the areas is presented in Table 4-2.

4.4 Mineral Tenure

4.4.1 Tenure History

Initial gold production from organized mining in the region was reported in 1869. During the period 1878 to 1909, French companies organized the region's mining activities and consolidated ore processing operations at a now historic facility on the Cuñapiru River. Intermittent production continued in the region until 1916 with recorded gold production from the region totaling approximately 90,000 ounces (2.8 t). The old underground mine at San Gregorio, with total recorded production of 64,300 ounces (2 t), was the largest producing gold mine in Uruguay until operations ceased in 1914.

The San Gregorio Mine remained idle until 1983–1985 when Amax Gold, Inc. a US company, conducted mineral exploration throughout the mining district. In 1988, the Brazilian companies Companhia de Mineracao e Participacoes (CMP) and Companhia de Mineracao de Amapa (CMA) acquired the mining property and conducted additional exploration at San Gregorio. Between March 1993 and January 1994, American Resource Corporation (ARC) conducted an evaluation of the properties and acquired 100% of the project through the purchase of all outstanding stock of the CMP/CMA operating company Stel S.A.

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In 1996, ARC merged with Rea Gold Corporation (Rea Gold). The San Gregorio mine commenced operation in 1997, with Rea Gold as operator. Crystallex International Corporation (Crystallex) acquired the mine and surrounding tenements in 1998.

Uruguay Mineral Exploration Inc. (UME) acquired the San Gregorio mineral assets of Crystallex in 2003, paying US$2 million. UME also paid approximately US$2.8 million to fund the closing-out of all gold forward sales from the San Gregorio mining operation.

UME changed its name to Orosur in late 2009, following the acquisition of Fortune Valley Resources Inc.

4.4.2 Mineral Title

The San Gregorio project comprises 18 tenements, 4 of which are under application, covering an approximate area of 2,061 ha (Table 4-2).

Table 4-2 Mineral Tenure Summary

Tenement Tenement Tenement ID Company Area (ha) Expiry Date OBS Name Type

San Gregorio / 462/89 Main Pit Exploitation LORYSER 122 15-Dec-19 (partial ANEP) Zapucay- 634/90 Exploitation GLENDORA 188 22-Aug-18 Argentinita Santa Teresa MINERA SAN 514/92 /Polvorin/ Exploitation 124 14-Aug-11 GREGORIO Chirca / Ombú San Gregorio MINERA SAN 285/93 Ext Oeste / Exploitation 63 04-Oct-24 GREGORIO Main Pit 823/93 Veta A Exploitation DALVAN 243 20-Apr-14 Santa. Teresa MINERA SAN 706/97 W / Santa Exploitation 38 22-Jan-17 GREGORIO Teresa N 69/04 Arenal (p) Exploitation LORYSER 215 06-Oct-19 It is the same area as without an 972/05 Sobresaliente Exploitation LORYSER 65 Tenement 826/00 expiry date yet exploration it is the same area as without an 1757/08 Castrillon Exploitation LORYSER 26 Tenement 1217/03 expiry date yet exploration MINERA SAN 1236/07 Crucera Exploitation 34 15-Jul-20 GREGORIO not granted 024/09 Arenal 1 Exploration LORYSER 81 Application in process yet not granted 026/09 Arenal 2 Exploration LORYSER 58 Application in process yet Expired but a new 1912/05 Arenal Este Exploration LORYSER 41 21-Aug-10 application has been lodged

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MINERA SAN 614/09 Picaflor Exploration 79 22-Apr-12 GREGORIO 2062/07 Vaca Muerta Exploration BOLIR 482 20-Oct-11 not granted 1809/09 Arenal Este Prospecting GLENDORA 51 Application in process yet not granted 132/10 CºCruz/Veta A Prospecting LORYSER 28 Application in process yet not granted 133/10 Santa Maria Prospecting LORYSER 104 Application in process yet Application in process. The new TSF occupies not granted 19 ha on OMI`s Padron 342/07 Juana Cal Prospecting GLENDORA 19 yet 10655. Total area of this prospecting permit is 5762 ha

TOTAL 2061

*All the Companies are wholly-owned subsidiaries

Concessions 462/89, 514/92, 285/93, 706/97, 634/90, 823/93 and 69/04 were mortgaged in favor of Macquarie Bank Limited on 8 December, 2004. The mortgages were signed as a guarantee for a line of credit which has not been used. At the moment the balance for that line of credit is 0 (zero).

Tenements are held in the names of wholly-owned subsidiaries of Orosur. As per Uruguayan requirements for grant of tenure, the concessions comprising the Project have been surveyed on the ground by a licensed surveyor.

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A tenure map, showing the tenures for the whole Project is presented in Figure 4-1, Figure 4-2, Figure 4-3 Land Property Near Mine

, Figure 4-4 and Figure 4-5.

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Figure 4-1 Mineral Tenures - Uruguay

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Figure 4-2 Isla Cristalina District

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Figure 4-3 Land Property Near Mine

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Figure 4-4 Land Property Near Mine (Air Photo)

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Figure 4-5 Land Property Near Mine (Geology)

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Figures showing tenements for Zapucay-Argentinita, Sobresaliente, Castrillón, Crucera, Picaflor and Vaca Muerta are presented in Section 7.

4.5 Surface Rights

Orosur has purchased most of the land affected by current mining operations. This has allowed unrestricted access for exploration and drilling activities.

A summary of surface rights is presented in Table 4-3, Figure 4-6 , Figure 4-7 and Figure 4-8.

Table 4-3 Surface Rights

Tenement Tenement Land Property % OMI % Others OMI Others ID Name Type Ownership of Ownership of Owner Padrones Padrones the land the land

Gregorio / Main Pit 10651 and 462/89 (partial ANEP) Exploitation 64.49 10652 35.51 6870 ANEP 2559, 8625, 27.5 3687, 7576 Ariel Alvarez

3.4 1455, 8274, Morán

15.82 5331 Oliva Zapucay- 1456, 1457, 634/90 Exploitation 10.11 Argentinita 10869 39.27 8510, 8758 Mello

3.15 2448 Martinez

0.42 4804 Gomez

0.33 5260 Da Silva

Santa Teresa /Polvorin/ 10648, 10650, 514/92 Chirca / Ombú Exploitation 100 10653 10655 0

San Gregorio 10650, 10651, Ext Oeste / 10652, 10653, 285/93 Main Pit Exploitation 100 10655 0 10651, 10652, 823/93 Veta A Exploitation 100 10653, 10655 0

Santa. Teresa W / Santa 706/97 Teresa N Exploitation 100 10655 0

69/04 Arenal (p) Exploitation 81.96 1308 18.04 6870 ANEP

972/05 Sobresaliente Exploitation 0 100 1043 Moreal S.A.

47.63 1021 Flia Blanco 1757/08 Castrillon Exploitation 0 52.37 1016 Flia Lopez

1236/07 Crucera Exploitation 0 100 10342 Maria Wohler

614/09 Picaflor Exploration 0 50.98 3107 Flia Silva

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49.02 4350 Flia Nogueira

8.43 8367 Elsa Saravia

2062/07 Vaca Muerta Exploration 0 Cohelo 60.39 8368 Pimentel

31.18 9664 Flia Saravia

024/09 Arenal 1 Exploration 0 100 6870 ANEP

026/09 Arenal 2 Exploration 0 100 6870 ANEP

1912/05 Arenal Este Exploration 0 100 1482 Berrutti

1809/09 Arenal Este Prospecting 0 100 1482 Berrutti

132/10 CºCruz/Veta A Prospecting 100 10655 0

133/10 Santa Maria Prospecting 100 10655 0

Many landowners. The area 342/07 Juana Cal Prospecting 4.1 10655 95.9 occupied by new TSF is 100 % on OMI's padron.

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Figure 4-6 Surface Rights Ownership (Plan View)

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Figure 4-7 Surface Rights Ownership (Plan View)

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Figure 4-8 Surface Rights Ownership (Air Photo)

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Table 4-4 presents a summary of the agreements held with landowners.

Table 4-4 Agreements with landowners and easements

Landowners agreements

(easements) % OMI Tenement Tenement Type Ownership ID Name Easement of the land Agreement Name granted by the signed Government

Gregorio / 462/89 Main Pit Exploitation 64.49 ANEP Yes Yes (partial ANEP)

Ariel Alvarez Yes In process

Morán Yes Yes

Oliva Yes In process Zapucay- 634/90 Exploitation 7.48 Mello Yes In process Argentinita Martinez Yes In process

Gomez Yes In process

Da Silva Yes In process Santa Teresa /Polvorin/ 514/92 Exploitation 100 Chirca / Ombú San Gregorio 285/93 Ext Oeste / Exploitation 100 Main Pit

823/93 Veta A Exploitation 100

Santa. Teresa 706/97 W / Santa Exploitation 100 Teresa N

69/04 Arenal (p) Exploitation 81.96 Berruti Yes Yes

972/05 Sobresaliente Exploitation 0 Moreal S.A. Yes Yes

Flia Blanco Yes In process 1757/08 Castrillon Exploitation 0 Flia Lopez Yes In process Maria 1236/07 Crucera Exploitation 0 In process Yes Wohler 024/09 Arenal 1 Exploration 0 ANEP Yes In process

026/09 Arenal 2 Exploration 0 ANEP Yes In process

1912/05 Arenal Este Exploration 0 Berrutti Yes Yes

Flia Silva Yes In process 614/09 Picaflor Exploration 0 Flia Yes In process Nogueira 2062/07 Vaca Muerta Exploration 0 Elsa Saravia In process Yes

Cohelo In process Yes Pimentel

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Flia Saravia In process Yes

1809/09 Arenal Este Prospecting 0 Berrutti In process In process CºCruz/Veta 132/10 Prospecting 100 A 133/10 Santa Maria Prospecting 100

All the area occuppied by 342/07 Juana Cal Prospecting 4.1 the new TSF In process is on OMI´s padron Access to the land for mining operation purposes is possible if:

• OMI is the owner of surface rights or • OMI has an agreement signed with the surface owner or • The Government has granted OMI and easement

4.6 Royalties

The government of Uruguay levies a production royalty, based on the value of ore at the mine mouth (sales revenue less operating costs excluding mining), that consists of a 3% royalty paid to the underlying landowner and a 2% royalty paid to the government during the first 5 years, and 8% (5% to landowner and 3% to the government) after the fifth year. Exploitation permits are held over all disclosed sources of Mineral Reserves for the San Gregorio Project (Refer to Table 4-5).

Table 4-5 Royalties

% OMI Ownership of Tenement Tenement the land Royalty ID Name Type Landowners Goverment

Gregorio / Main Pit 462/89 (partial ANEP) Exploitation 64.49 5% 3% Zapucay- 634/90 Argentinita Exploitation 7.48 5% 3%

Santa Teresa /Polvorin/ 514/92 Chirca / Ombú Exploitation 100 5% 3%

San Gregorio Ext Oeste / 285/93 Main Pit Exploitation 100 5% 3%

823/93 Veta A Exploitation 100 5% 3%

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Santa. Teresa W / Santa 706/97 Teresa N Exploitation 100 5% 3%

69/04 Arenal (p) Exploitation 81.96 5% 3%

972/05 Sobresaliente Exploitation 0 3% 2%

1757/08 Castrillon Exploitation 0 3% 2%

1236/07 Crucera Exploitation 0 3% 2%

024/09 Arenal 1 Exploration 0

026/09 Arenal 2 Exploration 0

1912/05 Arenal Este Exploration 0

614/09 Picaflor Exploration 0

2062/07 Vaca Muerta Exploration 0

1809/09 Arenal Este Prospecting 0

132/10 CºCruz/Veta A Prospecting 100

133/10 Santa Maria Prospecting 100

342/07 Juana Cal Prospecting GLENDORA 33157

4.7 Sectorial Permits

Explosives usage is regulated by the National Army, which establishes requirements for transport, storage and explosive usage, granting the corresponding authorization.

Ore transport is subject to national route load transport regulations, under the responsibility of Transport and Public Works Ministry. In that context, trucks are required to be authorized and fit the requirements for maximum load per axle.

The Project complies with fire prevention and control regulations, and is authorized by the National Fire Department, under the responsibility of the Ministry of the Interior.

Authorizations granted by local governments are limited to construction permits. Since late 2009 the Law of Land Planning has been enforced, which authorizes the mining activities development in rural lands, and for that reason, land usage permits are no longer required.

All sectorial permits, including the tailings storage facility construction, were granted at the beginning of the operation in 1997 and are still valid without expiration limits.

For every new deposit that has been incorporated, corresponding permits have been sorted out.

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4.8 Environmental Permits

According to the Uruguayan regulatory framework, no environmental permits are required for prospection and exploration stages. Exploitation of mineral deposits requires going through an Environmental Impact Assessment process (Environmental Impact Assessment Law) and obtaining the so called Previous Environmental Authorization granted by the Ministry of Housing, Land Planning and Environment.

Industrial effluents, as runoff from the tailing storage facility, also require an authorization granted by the Ministry of Housing, Land Planning and Environment. Up to date, there are no other regulations as those related to chemicals, hazardous wastes or gas emissions.

All of the mineral deposits under exploitation have the environmental authorization given by the Uruguayan Ministry of Housing, Land Planning and Environment. Deposits that are no yet under exploitation, have different degrees of advance in the process of obtaining environmental permits, according to the corresponding legal framework. A summary of the historic and current situation for each project is presented in Table 4-6.

Some projects, like the expansion of Arenal Pit, that included the diversion of the Corrales river, required the acquisition of two additional permits; one granted by the hydrologic resources regulator (National Direction of Hydrography) and another one granted by the Department of Forestry (Ministry of Agriculture, Livestock and Fishing) authorizing the riverside coppice modification. These permits are sorted out simultaneously to the Previous Environmental Authorization processing.

The tailings storage facility was constructed in stages, having been granted a global authorization at the beginning of the operation, and partial authorizations on each expansion. Currently, the TSF is in its last stage and is expected to operate until December 2011. The project for the construction of a new tailing storage facility has been subjected to the Previous Environmental Authorization process. An EIA was also completed for the proposed second tailings storage facility (TSF2), to be constructed during 2011. No potential impacts of environmental significance were noted. As the dam is designed to operate on a zero discharge principle, there are not expected to be any discharges of significance. However, monitoring programs to check cyanides, sulfates, chloride levels, total dissolved salts, contained metals and solids in solution (clarity) will be regularly undertaken.

To support the underground plan, an updated EIA was performed for Arenal Deeps, which reviewed the existing and baseline data for hydrology, emissions, noise levels, flora and fauna, human and cultural impacts, and effects on the landscape. The closure plan was also updated.

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Table 4-6 Environmental Permits Summary

Project Background Current situation

The underground mine is considered as a new step in “Arenal Mine” project.

To support the underground plan, an Environmental approval for open pit mining updated EIA was performed for operations at Arenal has been granted. To Arenal Deeps, which reviewed the date, the “Arenal Mine” has passed the existing and baseline data for following projects through the assessment and hydrology, emissions, noise levels, approval to the Uruguayan Ministry of Housing, flora and fauna, human and cultural Land Planning and Environment: impacts, and effects on the Arenal Deeps landscape. • Environmental impact study of Arenal Open Pit, granted environmental approval The EIA was presented on April 29, by Ministerial Resolution Nº 502/2004. 2010 to the Ministry of Housing, Land • Environmental impact study of Extension Planning and Environment. Arenal Open Pit, granted environmental approval by Ministerial Resolution Nº As a result of the EIA no new 98/2007. significant environmental impacts were identified, so it does not foresee difficulties in obtaining this new authorization.

Ombú granted environmental This open pit is located within the main Ombú approval by Ministerial Resolution Nº exploitation area of San Gregorio Project. 1030/2009.

An updated EIA is currently being This project is an important extension of “San developed. Gregorio” open pit. San Gregorio Being an extension of an open pit Oeste Environmental impact study of “San Gregorio” located within the main exploitation granted environmental approval by Ministerial area of the San Gregorio Project, the Resolution Nº 166/1996. Company does not foresee difficulties in obtaining this permit.

This project is an extension of “Santa Teresa” open pit. Santa Teresa No new permit is required. Environmental impact study of “Santa Teresa” granted environmental approval by Ministerial Resolution Nº 506/2001.

This open pit project is located 30 Km from main exploitation area of San Gregorio Project. Zapucay-Argentinita granted environmental approval by Ministerial Zapucay- Environmental approval for open pit mining Resolution Nº 988/2010. Argentinita operations in the north of the area has been granted (Ministerial Resolution Nº 230/2003,

129/2004, 712/2004, 164/2006 y 190/09).

The project includes 4 new pits, two in the

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north and two in the south.

The EIA is currently being developed.

This open pit project is located 4 Km from main Picaflor The project area has no exploitation area of San Gregorio Project. environmental peculiarities, so do not foresee difficulties in obtaining this permit.

Castrillón & Sobresaliente projects granted environmental approval by Castrillón & These open pit projects are located 6 Km from Ministerial Resolution Nº 287/2004 Sobresaliente main exploitation area of San Gregorio Project. and 286/2004, respectively.

This open pit is located within the main Veta A granted environmental Veta A exploitation area of San Gregorio Project, south approval by Ministerial Resolution Nº of TSF. 322/2007.

This project is a small extension of “Extensión Este” open pit. Veta Sur No new permit is required. Environmental impact study of “San Gregorio” and “Extensión Este” granted environmental approval by Ministerial Resolution Nº 166/1996.

Crucera project granted environmental approval by Ministerial This open pit project is located 400 Km from Crucera Resolution Nº 547/2010. main exploitation area of San Gregorio Project.

An update EIA was performed and submitted for approval to the Ministry of Housing, Land Planning and The San Gregorio project has a tailings Environment, on July 5, 2010. storage facility (TSF), currently on its eighth and final lift. The environmental permit was Tailings Storage granted as an integral part of the San Gregorio Taking into account that the existing Facility project (Ministerial Resolution Nº 166/1996). TSF is being operated to high environmental standards, without environmental impacts, and that were A new TSF was projected during not identified new significant 2010. environmental impacts, does not foresee difficulties in obtaining this new authorization.

4.9 Environmental liabilities

The significant environmental aspects for the San Gregorio Gold Project have been determined through environmental impact studies. Approvals have been granted in the form of Environmental Permits.

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The Uruguayan National Environmental Directorate (DINAMA) regulates the environmental management of the San Gregorio Gold Project.

From 2008, DINAMA has performed an annual site inspection. Inspection reports are archived by Orosur. No relevant observations have been made to date.

4.9.1 Baseline Studies

Baseline studies are performed as part of the Environmental Impact Assessments that have to be done in order to be granted the corresponding environmental permits.

From the start of mining operations, the San Gregorio Project has been subject to the Uruguayan Environmental Impact Law, and for that reason the original deposit as well as all subsequent deposits that have been developed, were subjected to the Environmental Impact Assessments and the corresponding baseline studies.

Additionally, as part of the Company’s Environmental Management Program, flora, fauna and water quality assessments are performed periodically, with the contracting of external specialists and laboratories. This information is documented in the yearly Environmental Report that the Company prepares and submits to DINAMA’s revision.

An audit was performed in 2006 by independent consultants Martinick Bosch Sell Pty Ltd, of Perth, Western Australia. This audit included:

• Waste rock characterization: Geochemical assessments were undertaken of the ore and waste rock from the San Gregorio Gold Project (Golder, 2004). The outcome of this assessment was that the ore and waste rock for the project was characterized as ‘Non-acid Forming’ (NAF). Therefore, the project’s waste rock does not typically generate acid rock drainage.

• Waste rock facilities: Historical waste rock stockpiles were constructed with one slope at the angle of repose (rill angle). From 2004, a slope angle of 30º has been used. Progressive reclamation has been undertaken with topsoil placement as the final limits of the waste rock stockpile are constructed. The program of operational waste rock placement and progressive reclamation has been deemed successful by the local regulators.

• Water resources: The site’s water resources comprise a surface water catchment area (fresh water dam) and three groundwater production bores. This is complemented with the mine dewatering and tails return water. There is no legal requirement for licensing of the groundwater bores and there are no water extraction limits/water use allocations. However, metering of the extracted water is undertaken. The regional water supply resources are a combination of surface water catchments and groundwater extraction. There have been no recorded incidents of the site water use/extraction impacting on surrounding water users. Surface and groundwater water monitoring is undertaken in accordance with regulatory requirements. Monitoring of the water quality and aquatic systems

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(i.e., sampling of aquatic fauna) of the Arroyo Corrales is undertaken. Groundwater levels and quality is monitored around the tailings storage facility (TSF). The surface water management network comprises surface storm water drainage, culverts for river crossings and the use of sedimentation basins to treat mine dewatering and storm water discharges. Monitoring of the site’s receiving waters has not shown any significant impacts resulting from site discharges.

• Discharge waters: historically, monitoring has detected some nitrate in the mine discharge water. The source for this was attributed to the use of nitrate- based explosives in the open pit operations. The site response to this was to improve explosives management and establish a program to monitor nitrate concentration in the mine dewatering, storm water discharges and the receiving stream waters. There is no legal limit for nitrate concentration in the mine discharge, but there is a water quality limit of 45 mg/L for the receiving stream waters (i.e., monitored immediately downstream of the point of mine discharge). Historical monitoring has shown that this legal limit has not been exceeded. The site has a series of sedimentation ponds in place to treat mine discharge and storm waters to remove sediments prior to discharge from site. Water quality monitoring within these sedimentation ponds is undertaken weekly for pH, cyanide and nitrates. Water quality monitoring is also undertaken of the receiving waters (Corrales River and other streams within the project area). Water quality results of the discharge waters and receiving waters have been within acceptable limits to date.

• Solid wastes: Inert solid wastes (domestic and industrial) are disposed of to an on-site landfill. This is managed in accordance standard sanitary landfill practices (i.e., waste is dumped within an open excavated area atop of a waste rock stockpile and covered weekly). Hydrocarbon wastes are transported off-site for recycling as a component of the supply contract. There are no other chemicals wastes. Packaging from the solid sodium cyanide is disposed in accordance with local regulations and comprises the following: used bags are pressed and disposed off within the TSF; used boxes are taken to a designated area adjacent to the site landfill for burning.

• Dust generation: Dust generation sources on site are primarily from vehicle movements, open/unsealed areas and blasting. Dust management measures comprise the use of water trucks and re-vegetation (sealing) of unsealed areas. Dust emissions to the nearby town (Minas de Corrales) approximately 2 km from the mine boundary are not considered by the local regulators or the local community to be significant. The local regulators have undertaken some ambient dust monitoring within the town and found the levels to be within regulatory limits.

• Topsoil management: Topsoil is salvaged from all new disturbed land with the preference for direct redeployment onto areas requiring rehabilitation. Where this cannot be achieved, topsoil is stockpiled for later reuse. This stockpiling is undertaken in manner to minimize erosion and the deterioration of soil structure.

• Flora and Fauna: Flora, fauna and natural habitat assessments were undertaken as part of the project’s initial environmental impact assessment. The project area and its surrounds has generally been previously cleared and modified for rural use (primarily grazing with some cropping). The assessments

4-24 of the project area did not identify any flora, fauna or natural habitats of high conservation significance. However, some areas such as streams, and banks were designated as being of significance locally and have been preserved wherever feasible. Flora and fauna monitoring is undertaken periodically within the project area. This monitoring has a dual purpose; the recording of the health of the preserved habitat areas and also to gather and record further information on the general project area’s flora and fauna.

• Soil use: The area is predominantly used for mining activities, and cattle grazing, with mixed sheepherding and cattle. There are no protected natural areas.

• Soil: The soil has an arable proportion below 25% due to very low soil thicknesses, very rugged topography, and very high erosion risk. The highest areas are undulating with slopes less than 10º and outcropping bedrock. The lower areas are flat and readily flood. The ability to use natural pasture is medium to low.

• Hydrography: The proposed Arenal Deeps mining area is on the right side of the Corrales stream and the river mouths of the Glen del Barro in which the San Gregorio open pit and waste rock facility are developed. The Corrales stream is a tributary of the Cuñapirú stream, which in turn is a tributary of the Tacuarembó River that runs into the Negro River. The stream source is in the highlands adjacent the Brazilian border. It is characterized as an alluvial meandering stream with sections where the river bed and margins have cut down into bedrock. Currently, about 1.4 km of the stream has been diverted about 1 km off the original course. Crossing the stream is a causeway for truck crossings. In addition, a flood dam, a bridge on Route 28 (to 3.5 km upstream) and OSE Dam (5 km upstream) have been built.

• Archaeology: No vestiges of prehistoric cultures or archaeological sites, which can be affected by mining activity, were located in the project area.

• Climate and Meteorology: The project area is classified as a temperate rainforest with rainfall occurring during all months of the year. The average annual rainfall for the period 1931-2004 was 1,318 mm. The monthly average is about 110 mm, with the maximum average precipitation typically falling in March (125.9 mm) and minimum monthly precipitation occurring in December (87.5 mm). The average wind speed is 10.5 km/h and reaches a maximum of between 35 and 50 km/h. Winds are predominantly from the east (40%) and east- northeast (20%). The temperature averages 18C annually, with the peak average maximum of 25.4C in January and minimum of 9.7C in July. The average evaporation is 1,154 mm/year, peaking in the summer months (December, January, and February). Relative humidity averages about 71% annually, with the minimum in January (21%) and highest in July (92%).

The area were the Crucera deposit is sited has an annual average temperature of 16,8 ºC and an annual average precipitation of 1.200 mm, evenly distributed across the four seasons. The soils and surface formations on the project zone are thin and are related to substrate disaggregation and remobilization. The productive use of the area is predominantly for grassing, mainly for

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sheepherding. The phreatic stratum is discontinuous, associated with fractures and granite deep alteration zones. The project will develop in the central portion of the Chamame basin; Chamame stream being itself a tributary of the Casupa stream which flows into the Santa Lucia river. Dominant ecosystem is of grasslands in high and medium high hills with presence of native coppice. Fauna is typical from prairies anthropogenically modified, which is common in Uruguayan grassing lands.

The intervention and surrounding areas of the San Gregorio project (pits, waste dumps, tailings storage facilities, beneficiation plant and haulage road) do not belong to protected areas or to archaeological, historical, cultural or tourist zones of special interest. In any case, streams or ground water contamination problems occur, both upstream and downstream the intervention areas. Also in the surrounding area there are no conflicts of use in relation to water courses. Surveys of Flora and Fauna did not identify the presence of spatially sensitive or at risk of extinction species.

4.9.2 Remediation and Closure

Uruguay mining legislation requires all mining titles to be supported by guarantees for any environmental rehabilitation requirements resulting from exploration or mining activities. The total guarantees, of which the San Gregorio Project is a component, provided as at July 2010 were approximately US$ 313,000 (Refer to Table 4-7).

Table 4-7 DINAMIGE Guarantees

Tenement Tenement Tenement Company OBS GUARANTEE ID Name Type USD

Gregorio / Main Pit 462/89 (partial ANEP) Exploitation LORYSER 18744 Zapucay- 634/90 Argentinita Exploitation GLENDORA 28872

Santa Teresa /Polvorin/ MINERA SAN 514/92 Chirca / Ombú Exploitation GREGORIO 19042

San Gregorio Ext Oeste / MINERA SAN 285/93 Main Pit Exploitation GREGORIO 9670

823/93 Veta A Exploitation DALVAN 57814

Santa. Teresa W / Santa MINERA SAN 706/97 Teresa N Exploitation GREGORIO 5843

69/04 Arenal (p) Exploitation LORYSER 23831

it is the same area than Tenement 972/05 Sobresaliente Exploitation LORYSER 826/00 9991

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it is the same area than Tenement 1757/08 Castrillon Exploitation LORYSER 1217/03 4010 MINERA SAN 1236/07 Crucera Exploitation GREGORIO 5225

024/09 Arenal 1 Exploration LORYSER 5568

026/09 Arenal 2 Exploration LORYSER 3987

1912/05 Arenal Este Exploration LORYSER 6302 MINERA SAN 614/09 Picaflor Exploration GREGORIO 5431

2062/07 Vaca Muerta Exploration BOLIR 74175

1809/09 Arenal Este Prospecting GLENDORA 298

132/10 CºCruz/Veta A Prospecting LORYSER 154

133/10 Santa Maria Prospecting LORYSER 572

342/07 Juana Cal Prospecting GLENDORA 33157 Total 312686

A site-wide decommissioning plan has been produced and is updated and audited every year. The Plan includes the establishment of all environmental liabilities with the corresponding costs.

Activities included in the Plan are:

• Dismounting of treatment plant facilities

• Pit conditioning

• Waste dumps re-vegetation

• Treatment of effluents containing cyanide

• Sealing of the Tailing Storage Facilities

• Post-closure monitoring

According to the latest update (June 2010), the Closure Plan costs are U$S 4,564,870. In developing the Closure Plan, a scenario of productive activity until 2017 and a 4 year post-closure monitoring is assumed. The detail of the activities planned for the next 4 financial years is presented in Table 4-8.

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Table 4-8 Detail of activities and Closure Plan costs

Year Activities Cost (U$S) TOTAL (U$S)

Waste dump reclamation Pila Arenal (1) 70.000

2010 Waste dump reclamation Castrillón (1) 20.000 390.000

Closure TSF1 (1) 300.000

Pit reclamation Castrillón 6.390

Waste dump reclamation Arenal (2) 89.100

Waste dump reclamation San Gregorio (1) 70.000

Waste dump reclamation Castrillón (2) 5.800 2011 1.186.590 Waste dump reclamation Zapucay 47.300

Waste dump reclamation Santa Teresa (1) 62.000

Wastewater treatment TSF1 (1) 150.000

Closure TSF1 (2) 756.000

Pit reclamation Zapucay 15.620

Pit reclamation Argentinita 10.650

Pit reclamation Sobresaliente 10.650

Pit reclamation Crucera 9.230

Waste dump reclamation Crucera 43.000

Waste dump reclamation San Gregorio (2) 70.000 2012 802.650 Waste dump reclamation Sobresaliente 25.800

Waste dump reclamation Argentinita (1) 70.000

Waste dump reclamation Santa Teresa (2) 62.700

Waste dump reclamation Picaflor (1) 15.000

Wastewater treatment TSF1 (2) 170.000

Closure TSF1 (2) 300.000

2013 Pit reclamation Picaflor 6.390 173.390

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5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

5.1 Accessibility

The San Gregorio project is situated in the Department of Rivera, approximately 450 km north of Uruguay’s capital city, Montevideo, and approximately 70 km south of the international border with Brazil. A paved road extends from Montevideo to the small township of Minas de Corrales, located north–northwest of the Project. From Minas de Corrales, an 8.5 km gravel road accesses the Project.

Access within the Project area is provided by good gravel and dirt roads. Low- lying sections of roads may be temporarily closed to traffic when rainfall is high; this has historically had little impact on mining operations.

Commercial air flights operate from Montevideo to Rivera, some 100 km from the project.

Access to the Crucera Project (Florida Department) is made from Montevideo through Nº 7 national route (paved) and then through Nº58 secondary route (paved). Final access is through a gravel road. Access to the treatment plant from that Project, would be through national roads Nº 7 and 56 (paved) until reaching national route Nº5, and then following this route in the North direction as stated previously. The use of rail transit to San Gregorio is being investigated.

5.2 Climate

The regional climatic profile is temperate with no pronounced wet season. Rainfall data from 1996 to 2002 indicate a minimum monthly precipitation of 4 mm (July 1997) and a maximum of 441 mm (December 1997). The lowest annual rainfall was 1,115 mm in 1997, and the highest was 2,553 mm in 2002. Average annual rainfall for the period 1931 to 1990 was 1,261 mm, and the average annual rainfall for the period 1996 to 2002 was 1,693 mm.

The average annual evaporation rate for the period 1930 to 1990 was 1,236 mm. The average annual evaporation rate for the period 1999 to 2002 was 1,313 mm.

The highest average maximum daily temperature on record is 34°C (January), and the lowest is 18°C (June). The highest average minimum daily temperature on record is 19°C (January, February and March), and the lowest is 6°C (June). The average annual temperature is 16°C (Lindqvist, 2004).

The wind direction is predominantly from the east (58% of the time) and east– northeast (30% of the time).

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The Crucera project area has similar climatic conditions.

Project operation is generally possible all year round. Some intermittent interruptions may occur during large storms, when low-lying road portions may be flooded for short durations.

5.3 Local Resources and Infrastructure

The principal towns in the region are Tacuarembó, Rivera, and the small town of Minas de Corrales. Minas de Corrales has a population of about 3,300, which provides basic services, such as schools, a hospital, shops, some engineering workshops, a service station, and repair shops. Tacuarembó and Rivera have larger populations and commercial airstrips, and can provide more advanced services.

The local road system is very good, with paved roads between regional centres and the township of Minas de Corrales.

Infrastructure on site comprises:

• Eight open pits

• Waste rock facilities (WRFs) adjacent the open pits

• Low and moderate-grade stockpiles

• Tailings storage facility (TSF)

• A conventional carbon in leach (CIL) plant with a nameplate capacity of 1.1 Mt/a

• Sample preparation and assay laboratory, mill workshop, mill warehouse, mine warehouse, truckshop and a change room/lunchroom

The San Gregorio project has an existing tailings storage facility (TSF), currently on its eighth and final lift. The TSF was established in the mid-1990s to support the initial San Gregorio open pit operation. The existing TSF is being operated to high environmental standards, and downstream monitoring is effective. Rice is farmed downstream from the TSF without any apparent contamination problems.

A new facility, TSF2, is planned to be located on one end of the existing TSF, and is currently in the government approvals stage. This facility will provide sufficient storage for tailings produced from the proposed Arenal Deeps operation.

Power is generated by hydro-electric and fuel oil and the national reticulation system is extensive and is relatively reliable. The San Gregorio project is serviced with a 150 kV high tension power line of the national grid. About 3,400,000 kW/hr of power are purchased from the grid each month to supply overall power to the project of 4,800 kW per operating hour. A backup power plant sufficient to run the leach plant is available.

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Cellular telephone connection is available throughout most of the country, including the Minas de Corrales area. Optic fibre connection is also reticulated to the San Gregorio project.

Process water for the existing operations is sourced from a fresh water dam adjacent to the process plant and from recycled tailings water. The dam captures the local catchments and has provided sufficient capacity to date. During extended periods of low rainfall and high evaporation, sufficient quantities of water are available from inoperative open pits.

A causeway has been constructed across the Arroyo Corrales to haul ore from Zapucay 1, Zapucay 2, Argentinita, Picaflor and Arenal Deeps directly to the ore treatment plant at San Gregorio. On average, this crossing is flooded several times per year for periods up to four days. Orosur notes that the crossing is easily restored within a day of subsiding water levels.

As part of the diversion of the Arroyo Corrales, two flood protection dykes were constructed. These dykes have been built to protect the Arenal open pit, and eventual underground operation, against an estimated 1-in-1,000 year flood event.

5.4 Physiography, Flora and Fauna

The San Gregorio project area comprises gently rolling grasslands divided by broad river valleys. The regional elevation varies between 100 metres and 350 metres above sea level. The grasslands are extensively farmed, primarily for beef, but also for timber and various cereal crops.

The Crucera area has similar physiographic, flora and fauna conditions to that of San Gregorio.

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6 HISTORY

Gold prospecting and mining activities in the Minas de Corrales area were first recorded in the mid 1800s. Gold production from organized mining in the region was first reported in 1869 when French companies organized the region’s mining activities and consolidated the ore processing operations at a now-defunct facility on the Cuñapiru River.

The British operated gold mines in the Minas de Corrales area from about 1910 to 1914, utilizing a hydroelectric plant constructed by the French in the 1870s to support gold mining in the region. The French also built a treatment plant at the same site on the Rio Cuñapiru and constructed an aerial tramway to transport ore to the plant. Total production from the mid-1880s to 1914 from the Minas de Corrales area is estimated at approximately 90,000 oz Au (Lindqvist, 2004). San Gregorio, with a total recorded production of 64,300 oz Au from open pit and underground, was the largest and longest producing gold mine in Uruguay until operations ceased in 1914. Other producers in the immediate area included the Santa Ernestina, Sobresaliente, Peru and Nueva Australia mines which accounted for the bulk of the remaining production.

Except for seven years when it was operated by a local Uruguayan company that produced about 6,000 oz Au, the San Gregorio mine lay dormant from 1914 until the mid-1980s.

Amax Gold, Inc. commenced the first modern exploration program in the region during 1983–1985. In 1988, CMP and CMA conducted additional exploration at San Gregorio. Between March 1993 and January 1994, ARC completed an evaluation of the San Gregorio project, and acquired 100% of the CMP/CMA operating company Stel S.A. A feasibility study was completed in 1994. In 1996, ARC merged with Rea Gold. The San Gregorio open pit mine commenced operation in 1997, with Rea Gold as operator.

Exploration completed between 1983 and 1996 has limited documentation. Airborne geophysics, soil sampling, and drilling appear to have been completed.

Crystallex acquired the mine and surrounding tenement package in 1998. Exploration efforts were focused on the expansion of the known San Gregorio and Santa Teresa deposits. However, activities were limited by the small ground holding available, and Crystallex sold out its Uruguayan mineral property interests to Orosur in 2003.

Orosur began operating in Uruguay in 1996 and compiled an extensive country- wide database utilizing information from previous explorers. Exploration activities commenced in the Minas de Corrales area in 1997 and Orosur acquired approximately 40,000 ha of prospecting and exploration permits adjacent to the Crystallex mining operation and along the strike of the Rivera shear zone. Work has included ground magnetic surveys, airborne geophysics, induced polarization (IP) surveys, Max-Min surveys, geochemical investigation of soils and outcrops, field mapping, structural mapping on regional and local bases, trenching, rotary air blast (RAB), reverse circulation (RC) drilling and core drilling. Mineral

6-1 resources and mineral reserves were updated by Orosur personnel or third-party consultants in 2004, 2005, 2007, 2009, and again in 2010.

From 2003, Orosur has continued open pit mining operations, using both Owner- operated and contract crews. Orosur delineated multiple sources of mill feed from the San Gregorio, Ombú, Zapucay, Arenal, Castrillón and Sobresaliente deposits. Orosur is currently mining the San Gregorio East Extension, Santa Teresa and Zapucay open pits as well as sourcing quartz-vein ore (the Vetas) from known deposits in the exploitation tenements. Low-grade and medium- grade stockpiles also provide mill feed. Production by Orosur is summarized in Table 6-1.

Table 6-1 Orosur Production Figures 2002–2009 (years ending 31 May)

2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 Total excavated (Mt) 5.83 5.53 6.88 10.27 12.37 12.30 12.82 Ore processed (Mt) 1.14 0.94 1.19 1.27 1.31 1.24 1.36 Gold grade (g/t) 2.03 1.71 2.06 2.65 2.45 2.45 1.73 Gold recovery 92.1% 92.9% 95.0% 93.7% 93.1% 92.4% 92.7% Gold produced (ounces) 68,357 48,241 75,054 101,304 96,421 90,668 70,147

Arenal Deeps was discovered in 2008 as a result of progressive down-dip drilling of the Arenal deposit. A pre-feasibility study on a potential underground operation was completed in 2009, leading to a feasibility study in 2010.

Crucera was initially identified and drilled by Minera San Jose in 1992 and trial mining was undertaken (based on visual assessment of earthworks at site). In 2007 Orosur completed about 4000 m of follow up RC and diamond drilling; after that, an inferred resource of 560K tonnes @ 2.33g/t (42 koz Au with cut off grade of 0.5g/t) was estimated by MDA.

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7 GEOLOGICAL SETTING

Proterozoic basement rocks of the of the Nico Perrez Terrane are exposed through an erosional window into overlying Paleozoic sediments forming a 110 km long by 20-40 km wide belt called the Isla Cristalina (IC) Belt (Figure 7-1).

The belt is generically referred to as a granite-greenstone belt; however, the metamorphic grades within the belt range from greenschist to granulite. Anomalous gold mineralization is present along the entire 110 km strike length of the IC belt and is spatially associated with the regional scale Rivera Shear fault. The San Gregorio Shear Zone (SGSZ), which controls the San Gregorio gold lodes and related deposits, may have formed along a re-activated western section of the Rivera Shear (Figure 7-2).

Gold deposits are hosted in both metamorphic basement and granitic intrusive rocks that have been dated at 1.2 Ga and 0.6 Ga, respectively. Figure 7-3 shows a schematic lithological succession diagram, which relates the various pulses of granitic intrusion to the metamorphic rocks.

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Figure 7-1 Regional Geology Plan

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Figure 7-2 Geology Plan, Isla Christina Greenstone Belt

Figure 7-3 Schematic Lithology Diagram

Various styles of gold mineralization are present within the IC belt; however, most of the gold production has come from quartz–carbonate–sulfide lodes and silica– sulfide stockwork veining hosted along and adjacent to the shear structures. Typical alteration assemblage of the gold-bearing lodes is silica–sericite– carbonate–sulfide with chlorite, calcite and epidote haloes

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7.1 Project Geology

In the deposits of the San Gregorio Mine area, in particular Santa Teresa, San Gregorio, and Arenal, gold mineralization is associated with an east-trending brittle–ductile fault zone, termed the San Gregorio fault system. The San Gregorio fault system dips to the south at a moderate to steep angle, is over 100 m wide, and is typically well constrained by hanging wall and footwall structures. In the case of the Arenal deposit, the hanging wall and footwall structures are mapped as discrete faults locally called H1 and F1, respectively. Within the fault zone, gold mineralization clearly rakes across the structure and plunges to the southeast. The rake appears to be controlled by sub-vertical, northwest-oriented fracturing, which commonly displays dextral offsets.

7.2 Deposits

7.2.1 Santa Teresa

The Santa Teresa area contains the western-most economic gold lodes along the San Gregorio Shear Zone including Santa Teresa (the main lode), Santa Teresa East (STE), Santa Teresa North (STN) and Polvorin. By the end of 2009, the Santa Teresa deposits have collectively produced more than 100,000 oz Au. Currently a cut-back is underway at the main Santa Teresa pit.

Gold mineralization at Santa Teresa lies along and adjacent to a moderate to steeply south-dipping, east-west-striking shear fault. The host rocks are Proterozoic age intercalated granite, monzonite, and diorite rocks that have been metamorphosed to amphibolite facies. Gold mineralization is associated with silica–sericite–carbonate alteration and forms quartz–carbonate–pyrite lodes and silica–pyrite stockwork veining. The presence of multiple deposits at Santa Teresa is attributed to the structural complexity of the area since both STN and Polvorin are controlled by oblique, footwall structures to the main shear.

Santa Teresa location is shown in Figure 7-4

7.2.2 Veta A and Veta Sur

The Veta Sur and Veta A deposits are related only in that they are both mineralized shear structures with similar size and geometry hosted in the hanging wall of the main San Gregorio Shear Zone. The Veta A pit was completed in September 2008. Mining continues at Veta Sur. The deposits have produced about 50,000 oz gold to the end of 2009.

Both the Veta Sur and Veta A deposits are hosted in oblique, low-angle shear structures in the hanging wall of the SGSZ and are called “vetas” due to their vein-like appearance.

Gold mineralization is hosted in typical diorite to monzonite rocks that are altered from chlorite to sericite, adjacent to quartz–carbonate–pyrite ± galena lodes up to 20 m wide. The lodes are deposited along a principal, narrow shear structure or fault that dips moderately to the southeast, and have either suffered syn-mineral folding or post-mineral faulting.

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Veta A and Veta Sur locations are shown in Figure 7-4.

7.2.3 San Gregorio

The San Gregorio deposit is the central lode along the San Gregorio Shear Zone (SGSZ) and was the focus of historic mining activities in the Minas Corrales District. The San Gregorio deposit has historically produced in excess of 400,000 oz of gold from two open pit deposits down to approximately 200 m vertical depth. Recent mining activities by Orosur include a cut back of the east pit (East Extension).

Gold mineralization at San Gregorio is distributed along and adjacent to a moderate to steep, south-dipping, thrust fault that collectively forms a shear zone. The host rocks are Proterozoic age granite, monzonite, and diorite rocks that have been metamorphosed to amphibolite facies.

Gold mineralization is localized along a central quartz-carbonate-pyrite lode with variable amounts of silica–pyrite stockwork veining immediately adjacent in the footwall and hanging wall. The altered shear zone is up to 100 m wide and is generally composed of silica–sericite–carbonate–pyrite alteration and strongly- deformed rocks including abundant breccias in the footwall.

The deepest hole drilled to date (710 m) was drilled below the San Gregorio lode and intersected narrow, high-grades greater than 300 m down dip of the nearest mineralized interval.

San Gregorio location is shown in Figure 7-4.

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Figure 7-4 Deposit Location Plan, San Gregorio Area

7.2.4 Ombú

The Ombú deposit lies within the San Gregorio shear zone. This deformation zone extends along the WNW-ESE trend (azimuth 290 degrees), dipping between 40-50 degrees to the south.

The stratigraphy, from south to north, corresponds to basic-intermediate intrusive rocks, ranging from monzonites to diorites, fine to medium grained, generally undeformed to foliated. In contact to the north there are Qz-Kfeld granites, medium grained, locally pegmatitic , normally strongly foliated. Along the main contact zone occurs strong silicification, within a fault zone (F1) that separates hangingwal (to the south) from footwall (to the north).

A brittle deformation event roughly N-S trending, overprints the preexisting foliation generating breccias and cataclasites.

Hydrothermal processes happened at the time of the deformation events, altering the preexisting lithologies through the following stages:

a) Carbonatization.

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b) Sericitization. c) Sulphidation. d) Silicification.

The gold mineralizing event is mainly associated with the sulphidation and silicification processes (gold mainly as inclusions in the pyrite, locally secondary on quartz veinlets), affecting mostly the basic-intermadiate rocks (hangingwal mineralization). The ore zone ranges between 5 m and 20 m wide, with average medium grade between 1-1.5 g/t.

Ombú location is shown in Figure 7-4.

7.2.5 Arenal

The Arenal deposit is the eastern most gold lode along the San Gregorio Shear Zone (SGSZ). Arenal was mined as an open pit to a depth of 200 m from October 2004 until April 2009. Arenal and Arenal deeps are located about 2 km east of the San Gregorio plant.

The Arenal deposit is hosted within basement gneissic rocks metamorphosed to amphibolite facies. Primary lithologies present are quartz monzonites, monzonites, and diorites with the intensity of gneissic textures increasing in the more felsic rocks. Figure 7-5 shows the geology within the mined-out open pit.

Figure 7-5 Geology Plan, Arenal Open Pit

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The mineralization was deposited along a moderately south-dipping, east-striking shear zone. At least two main phases of thrusting are apparent within the Arenal deposit: the San Gregorio fault system that hosts the main deposits at the San Gregorio mine, which is essentially a north-directed shear system, followed by the syn-mineral northwest-directed thrusting resulting in the re-activation of the San Gregorio fault system and causing the internal fracturing and ground preparation hosting the bulk of the mineralizing fluids. At Arenal, the San Gregorio fault system is well constrained by upper and lower fault contacts, locally called H1 and F1 to represent the Hanging wall contact (H1) and Footwall contact (F1). The shear zone is typically 50-100 m wide and is often mineralized throughout the entire zone. Higher gold grades are inferred to be controlled by the later fracturing, and ore shoot geometry has been a focus during the exploration and resource definition phase.

Holcombe (2009) noted that there is a clear discordance between the units in the hanging wall and those in the footwall. Those in the hanging wall are sub- horizontal, whereas those in the footwall strike northwest to north and dip moderately to the east. The degree of discordance reflects substantial displacement across the F1 fault. Northwest-trending faults associated with a high-grade zone in the pit do not appear to pass into the footwall, but appear to be local faults.

Mineralization forms discrete zones (lodes) characterized by silica–sericite– carbonate–pyrite alteration and broader areas of silica–pyrite stockwork veining.

The mineralization of the Arenal deposit has drill defined dimensions of approximately 900 m along strike at surface and >700 m down dip/plunge. The mineralization at, and adjacent to, Arenal remains open to the east along the main SGFS and down plunge to the southeast along the fault/fracture-controlled fabric. The Arenal deposit is constrained to the west and east by northwest- oriented, offsetting, tear faults with >1 km of inferred dextral movement.

Arenal dips moderately at approximately 40–50º to the south and steepening to greater than -70º at depth. The deepest drill hole to date at Arenal, at 634 m, intersected mineralization at 550 m depth, approximately 60 m down-dip of the nearest drill hole, and indicates that the shear is still mineralized.

7.2.6 Castrillon

The Castrillon deposit is located 11 km north by road from the San Gregorio plant. Mining commenced 2009.

The Castrillon gold mineralization occurs along a 3–5 m wide quartz–pyrite vein hosted in the Sobresaliente potassic granite intrusive. The vein dips steeply to the northwest and can be traced for 300 m along strike and 100 m down dip.

Castrillon location is shown in Figure 7-6 and Figure 7-7.

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Figure 7-6 Deposit Location Plan, Sobresaliente and Castrillon Area

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Figure 7-7 Castrillon (Plan View)

7.2.7 Sobresaliente

The Sobresaliente deposit is hosted in the Sobresaliente potassic granite intrusion and is 10 km north of the San Gregorio Mine Complex. There is evidence of some small scale historic mining.

Sobresaliente is hosted entirely within a broad structural zone within the intrusion and the gold mineralization is associated with disseminated pyrite as well as quartz–pyrite stockworks and sheeted veining. In addition to the known mineralization, there are partially-explored, sub-parallel, gold-bearing quartz veins and mineralized rhyolite dykes that have kilometer-scale strike lengths and significant potential for additional discovery of mineralization.

Sobresaliente location is shown in Figure 7-6 and Figure 7-8.

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Figure 7-8 Sobresaliente (Plan View)

7.2.8 Zapucay, Knob Hill, and Argentinita

The Zapucay and Argentinita deposits are located 29 km southeast of the San Gregorio Plant, and ore is trucked from the deposits to the plant for treatment. Zapucay was originally mined during the late 1900s, but more recently has produced about 51,000 oz Au, in two periods: between 2003 and 2005 and again during 2009. Mining is currently stopped but is scheduled to recommence during 2010.

Mineralization continues south of the Zapucay pit but has been partially eroded away by the Zapucay River. A prominent hill south of the river was explored and found to host similar mineralization to Zapucay and now is considered to be the continuation of the mineralized Zapucay Shear. The hill is referred to as Knob Hill. Further south again along the mineralized shear there is another deposit, Argentinita.

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The Zapucay, Knob Hill, and Argentinita deposits occur within a low angle, folded shear structure at or near the contact between granitic gneisses and underlying diorite rocks and is referred to as the Zapucay Shear. The mineralization is hosted in folded, silicified mylonites and sub-horizontal quartz-carbonate veins. The principal alteration assemblage associated with the mineralization comprises silica–carbonate–sericite–pyrite–chlorite.

Zapucay, Knob-Hill and Argentinita locations are shown in Figure 7-9 and Figure 7-10.

Figure 7-9 Deposit Location Plan, Zapucay, Knob Hill, and Argentinita Area

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Figure 7-10 Zapucay and Argentinita (Plan View)

7.2.9 Crucera

The Crucera deposit area is located 110 km north of Montevideo and 410 km from the San Gregorio Operation. The deposit is hosted in the eastern portion of the Piedra Alta terrain (refer to Figure 7-1).

The Piedra Alta terrain hosts two granite-greenstone belts that are considered prospective for gold mineralization; La Florida and Arroyo Grande.

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The Crucera deposit is in the La Florida belt. It is a shear-zone hosted deposit, the shear trending at between 290-315º and dipping at 70º to the north-northeast. The host lithologies are granodiorites-tonalites, that contain an irregularly outcropping quartz-pyrite vein that has a strike length of at least 700 m.

Gold mineralization is related to the main transparent/milky quartz vein, which is hosted in a sheared and altered fine-grained chlorite mafic schist with disseminated pyrite. Iron oxides after sulphides have been noted in the quartz vein outcrops.

OMI is evaluating the deposit as potential mill feed for the San Gregorio mill. The feasibility of transporting and processing mineralization is under review.

For a plan view of Crucera, refer to Figure 7-11.

Figure 7-11 Crucera (Plan View)

7.2.10 Picaflor

The Picaflor deposit is located approximately 5 km northeast of the San Gregorio Mill. Geologically it corresponds to a shear-hosted lode deposit within the Minas de Corrales Granite. Gold mineralization corresponds to quartz-pyrite veins as well as brecciated / hematitised granites drilled-tested along 300 m and at least 100 m down-dip. The main structural control is WNW, dipping -65 deg to the

7-14

south. Two to three meters wide high-grade intervals are typical within a mineralized envelope five to twelve meters wide).

To the west, the structures appear to continue underneath the town of Minas de Corrales where historic workings indicate some gold production; however, there are no available records. To the east, the structure continues into the Peru prospect area.

Picaflor location is shown in Figure 7-12.

Figure 7-12 Deposit Location Plan, Picaflor Area

7.3 Prospects and Targets

A number of prospects and exploration targets have been delineated within the Minas de Corrales region and are discussed in the following subsections. Locations are shown in Figure 7-13.

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Figure 7-13 Location Plan, Prospects and Targets

7.3.1 Nueva Australia

The Nueva Australia prospect is interpreted to be the faulted offset and westward continuation of the San Gregorio Shear Zone. Initial mapping, sampling, geophysics and wide-spaced, shallow drilling confirmed the anomalous gold trend, and recently, a round of deeper drill holes was completed to test the down- dip potential. The first deep hole intersected 3.7 m at 10.6 g/t Au from 445.9 m depth. Although two subsequent drill holes failed to replicate the intercept, Orosur considers that potential remains to define mineralization that could be exploited by underground mining methods.

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7.3.2 Peru

The Peru prospect is located in the Minas de Corrales granite intrusive, approximately 8 km northeast of the San Gregorio Mill. East of Peru the structure continues into the Areicua prospect area.

Figure 7-14 Peru (Plan View)

7.3.3 Areicua and Laureles

The Areicua and Laureles prospects are located about 10 km northeast and 12 km east of the San Gregorio plant, respectively, and lie within and along the edge of one of several granitoid intrusive bodies within the Mina de Corrales district.

Laureles is prospective for shear-hosted mineralization along and adjacent a fault contact between a granitic intrusive to the north and deformed basement rocks to the south. Initial drilling identified a single, narrow mineralized shear that includes a small folded zone where mineralization has been concentrated into a short high grade shoot.

The Areicua prospect comprises northeast-oriented quartz–pyrite veins that cut granitic rocks; similar to the Picaflor-Peru prospects 2 km to the west.

7.3.4 Vaca Muerta

The Vaca Muerta prospect is located 85 km ESE from the San Gregorio Operation. The area is characterized by very low outcrop density.

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Geologically, Vaca Muerta is dominated by the presence of granite-gneisses moderately to strongly deformed along Az 270-290º and dipping moderately to steeply (55-70 deg) to the SW. This fabric is consistent with shearing related to the Rivera Shear Zone, a structural corridor that runs along the entire Isla Cristalina (~110 km along WNW-ESE trend); the prospect is located along its southern edge.

Within the mentioned lithologies, a wide, deformed ironstone (He+Mt+Qz) trends Az 280º, and secondarily, discrete lenses of monzonites and quartz veins (with FeOx and Py) along Az 265-285º, and dispersed acid to intermediate dykes along Az 330º.

The main mineralized zone in the prospect has an extension of 600 m along Az 290º.

Gold mineralization is related to sheared-altered portions along the basement granitoids, producing foliated rocks altered to FeOx, sericite, chlorite and disseminated pyrite, with the presence of quartz veins.

Genetically, gold mineralization is associated with hydrothermal fluids that circulated along two shear systems: the main one, related to the Rivera Shear System (Az 290º) and another one along Az 330º.

The prospect was drilled in 1999 by Crystallex (18 RC drillholes, 1378 m), with the best intercept in RCVM02 (37m @ 0.5 g/t Au from 15 m). Recently, Orosur has completed a seven hole reverse circulation drilling programme at Vaca Muerta totalling 600 metres and all seven holes encountered anomalous gold values. The best intercepts, results shown in Table 7-1, demonstrate strong, shallow gold mineralization that is open along strike in both directions as well as down dip.

Table 7-1 Vaca Muerta Drill Results

Hole From To Interval (m) Au g/t VMRC016 43 59 16 2.58 VMRC018 63 66 3 1.71 VMRC019 53 79 26 2.30

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Figure 7-15 Vaca Muerta (Plan View)

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8 DEPOSIT TYPES

The deposits discovered by Orosur to date in the San Gregorio project area are considered to be typical of mesothermal vein-style, or orogenic-style gold deposits. The discussion below is sourced from Moritz (2000), Goldfarb et al., (2005), and Groves et al., (1998; 2003). Orogenic deposits have many synonyms, including mesozonal and hypozonal deposits, lode gold, shear zone- related deposits, or gold-only deposits.

Orogenic gold deposits occur in variably deformed metamorphic terranes formed during Middle Archaean to younger Precambrian, and continuously throughout the Phanerozoic. The host geological environments are typically volcano– plutonic or clastic sedimentary terranes, but gold deposits can be hosted by any rock type. There is a consistent spatial and temporal association with granitoids of a variety of compositions. Host rocks are metamorphosed to greenschist facies, but locally can achieve amphibolite or granulite facies conditions.

Gold deposition occurs adjacent to first-order, deep-crustal fault zones. These first-order faults, which can be hundreds of kilometers long and kilometers wide, show complex structural histories. Economic mineralization typically formed as vein fill of second- and third-order shears and faults, particularly at jogs or changes in strike along the crustal fault zones. Mineralization styles vary from stockworks and breccias in shallow, brittle regimes, through laminated crack-seal veins and sigmoidal vein arrays in brittle-ductile crustal regions, to replacement- and disseminated-type orebodies in deeper, ductile environments.

Mineralization can be disseminated, or vein hosted, and displays a timing that is structurally late, and is syn- to post-peak metamorphic. Quartz is the primary constituent of veins, with lesser carbonate and sulphide minerals. In volcano- plutonic settings, pyrite and pyrrhotite are the most common sulphide minerals in greenschist and amphibolite grade host rocks, respectively.

Gold is usually associated with sulphide minerals, but can occur as free gold. Within the Minas de Corrales area, gold to silver ratios typically range from 1:1 to 1:3 and, less commonly, the ratios can reach 1:5 and over.

Alteration intensity is related to distance from the hydrothermal fluid source, and typically displays a zoned pattern. Scale, intensity, and mineralogy of the alteration are functions of wall rock composition and crustal level. The main alteration minerals can include carbonate (calcite, dolomite, and ankerite), sulphides (pyrite, pyrrhotite or arsenopyrite), alkali-rich silicate minerals (sericite, fuchsite, albite, and less commonly, K-feldspar, biotite, paragonite), chlorite, and quartz.

The larger examples of orogenic deposits are generally 2 km to 10 km long, about 1 km wide, and can persist over 1 km to 2 km vertical extents.

8.1 Comment on Section 8

The deposits of the Project area are considered to be examples of shear-zone lode gold deposits, based on the following:

8-1

• Development in a volcano-plutonic terrane, association with granitoids;

• Association with a regional fault system;

• Mineralization typically hosted in later-stage structures;

• Strong structural control on mineralization, related to jogs and rheology contrasts;

• Better grades associated with cataclasite and tectonic breccias;

• Vein and disseminated mineralization styles;

• Gold mineralization in association with pyrite; gold can occur as free grains;

• Alteration is zoned, from distal to proximal to the hydrothermal fluid source. Alteration typically includes silicification, albitization and pyritization.

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9 MINERALIZATION

Mineralization within the San Gregorio Shear Zone (SGSZ) occurs as infill of brittle fractures by silica-sulphide-gold bearing hydrothermal solutions. Brittle fracturing and brecciation occur within a wide shear zone with well-defined fault boundaries. Fractured and brecciated zones are sealed with silica, and typically contain disseminated sulphide minerals and stockwork quartz–sulphide veining. High-grade gold zones form plunging ore shoot geometries, which are largely controlled by northwest-directed thrust faults.

Pyrite is the dominant sulphide mineral; however, minor galena and chalcopyrite have been observed. Gold grades are closely associated with overall pyrite content; however, there are at least two phases of pyrite mineralogy: disseminated, medium- to coarse-grained pyrite associated with pervasive silicification, and fine, dark pyrite hosted within and along selvages of silica stockwork veining. Gold is typically fine-grained. Visible gold is rare.

The main alteration assemblage associated with gold mineralization within the hosting structures comprises chlorite–(epidote)–carbonate–sericite–silica–pyrite. Potassium feldspar alteration and coarse crystalline quartz and potassium feldspar “pegmatite” has been noted to be associated with mineralization locally in many of the deposits.

Within the Minas de Corrales area, gold to silver ratios typically range from 1:1 to 1:3 and, less commonly, the ratios can reach 1:5 and over.

9.1 San Gregorio

Most of the previous ore production was from the main San Gregorio open pit, where mineralization associated with the shear zone mylonites occurs within zones of intense silicification, brittle fracture, and quartz veining, generally at the contact between felsic (hangingwall) and mafic (footwall) igneous rocks. Higher grade gold mineralization has a west-southwest plunge at San Gregorio, which is a reflection of the intersection of northeast-trending, westerly-dipping faults with the shear zone.

A relatively high-grade ore shoot has been defined at the base of the San Gregorio open pit. The shoot plunges to the west–southwest below the current base of the main San Gregorio open pit at its western end, below the San Gregorio West open pit.

For a cross section of San Gregorio deposit refer to Figure 9-1.

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Figure 9-1 San Gregorio – Cross Section (Looking East)

9.2 Santa Teresa

The Santa Teresa deposit is located to the west of San Gregorio along the strike of the shear zone, and has been mined from three open pits. The style of alteration and mineralization is essentially the same as for the San Gregorio deposit. The Santa Teresa mineralization is of relatively low grade.

For a cross section of Santa Teresa deposit refer to Figure 9-2.

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Figure 9-2 Santa Teresa – Cross Section (Looking East)

9.3 Arenal

Gold mineralization is associated with a fractured zone of silicification and hydrothermal alteration generally near the contact between a relatively unaltered diorite in the hangingwall and deformed mafic and felsic igneous rocks in the footwall. The dip of the mineralized zone is consistent with the dip of the shear zone, at approximately 45° to the south.

Mineralization at Arenal was traced by systematic drilling programs for approximately 450 m along strike to the east of the Arroyo Corrales, approximately 150 m west of the Arroyo Corrales, and approximately 300 m down dip. Mineralization appears to be terminated by a northwest trending structure to the west, and the grade diminishes to the east, where the mineralized zone appears to widen.

In the central area at Arenal, the mineralized zone was geologically continuous, and gold grades also showed good continuity. This mineralization was mined during the Phase I open pit development.

Mineralized thicknesses in this part of the deposit ranged from 20 m to 50 m.

Higher grade gold mineralization has a south–southeast plunge at Arenal, which is a reflection of the intersection of northwest-trending faults with the shear zone.

Figure 9-3 presents a typical section through the Arenal Deeps deposit.

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Figure 9-3 Arenal – Cross Section (Looking East)

9.4 Veta A and Veta Sur

For a cross section of Veta Sur refer to Figure 9-4.

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Figure 9-4 Veta Sur – Cross Section (Looking South West)

9.5 Ombú

Hydrothermal processes happened at the time of the deformation events, altering the preexisting lithologies through the following stages:

a) Carbonatization.

b) Sericitization.

c) Sulphidation.

d) Silicification.

The gold mineralizing event is mainly associated with the sulphidation and silicification processes (gold mainly as inclusions in the pyrite, locally secondary on quartz veinlets), affecting mostly the basic-intermediate rocks (hanging-wall mineralization). The ore zone ranges between 5 m and 20 m wide, with average medium grade between 1-1.5 g/t Au.

A typical cross section of Ombu is shown in Figure 9-5.

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Figure 9-5 Ombu – Cross Section (Looking East)

9.6 Castrillón

A cross section of Castrillon is shown in Figure 9-6.

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Figure 9-6 Castrillon – Cross Section (Looking North)

9.7 Sobresaliente

A typical cross section of Sobresaliente is shown in Figure 9-7.

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Figure 9-7 Sobresaliente – Cross Section (Looking North)

9.8 Zapucay, Knob Hill and Argentinita

Zapucay and Argentinita cross sections are shown in Figure 9-8 and Figure 9-9.

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Figure 9-8 Zapucay – Cross Section (Looking East)

Figure 9-9 Argentinita – Cross Section (Looking North West)

9.9 Crucera

Host rocks are granodiorites-tonalites, that contain an irregularly outcropping quartz-pyrite vein that has a strike length of at least 700 m. Gold mineralization is related to the main transparent/milky quartz vein, within a sheared and altered

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fine-grained chlorite mafic schist with disseminated pyrite. Iron oxides after sulphides have been noted in the quartz vein outcrops.

For a cross section of Crucera refer to Figure 9-10.

Figure 9-10 Crucera – Cross Section (Looking East)

9.10 Picaflor

Gold mineralization corresponds to quartz-pyrite veins as well as brecciated / hematitised granites drilled-tested along strike for 300 m and at least 100 m down-dip. The main structural control is WNW, dipping -65 deg to the south. Two to three meter wide high-grade intervals are typical within a mineralized envelope five to twelve meter wide).

A cross section of Picaflor is shown in Figure 9-11.

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Figure 9-11 Picaflor – Cross Section (Looking North West)

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10 EXPLORATION

Activity in the region resumed in the mid-1980s. The project was successively held by American Resource Corporation, Rea Gold Inc., and Crystallex International Corporation Inc.

Although the San Gregorio mine was reopened during this time (1997), there is no record of any systematic exploration having been carried out on the property by previous operators.

Orosur began exploration in the Minas de Corrales area in 1997, and in 2003 discovered the Arenal deposit. Later that year, Orosur purchased the mineral assets of Crystallex, including the San Gregorio mine and mill.

Within the Minas de Corrales project, Orosur has undertaken extensive drilling and has mined the Arenal, San Gregorio, Santa Teresa, and Zapucay open pits. Since the San Gregorio plant was commissioned in 1997, the Minas de Corrales district has produced about one million ounces of gold.

Orosur has conducted extensive geophysical surveying, both air and ground; various types of geochemical sampling programs – rock, soil, and stream sediment; geological mapping; trenching; and drilling (Reverse Circulation and Core).

10.1 Grids and Surveys

Airborne geophysical surveys have been undertaken by contractors and normally referred to the coordinate system UTM 21S (WGS 84 ellipsoid). Ground surveys done by Orosur, including drill hole collars, are normally carried out on the coordinate system Gauss-Kruger (Hayford ellipsoid 1924, datum Yacaré).

10.2 Geological Mapping

Structural interpretation from aerial photography has been performed by Michael Baker, an independent geological consultant. On-ground structural mapping is undertaken on behalf of Orosur by third-party consultants Holcombe, Coughlin, & Associates, and Telluris Consulting.

Mapping is used to help delineate additional exploration targets and to aid in construction of three-dimensional resource models.

Geochemical sampling was undertaken by Orosur and predecessor companies. Sample locations and types are summarized in Figure 10-1, Figure 10-2, Figure 10-3 and Figure 10-4. Interpretation of these data resulted in definition of a number of targets for trench and drill testing.

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Figure 10-1 Geochemical Map – Isla Cristalina (Central)

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Figure 10-2 Geochemical Map – Isla Cristalina (East)

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Figure 10-3 Geochemical Map – IslaCristalina (West)

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Figure 10-4 Geochemical Map – Crucera

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10.2.1 Geophysical Surveys

10.2.1.1 Airborne Surveys Regional airborne geophysical surveys were flown over the area by Dighem on behalf of Rea Gold in 1996. The surveys were carried out at a line spacing of 200 m, and the data are semi-regional in nature. No information on flight heights or contractors is available.

Figure 10-5 Isla Cristalina- Rivera. Dighem airborne geophysical survey.

Airborne geophysics on behalf of Orosur has been performed by Bell Geospace Inc. The surveys were used to identify structures and zones of anomalous magnetic, radiometric or electromagnetic response that could help delineate additional drill targets.

10.2.1.2 Ground Surveys All geophysical programs are coordinated, evaluated and supervised by Ellis Geophysical Consulting Inc. Ground magnetic surveys were undertaken by the

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contractor Argali Geofisico EIRL. Currently IP surveys, ground magnetic surveys, and Max-Min surveys are performed by Orosur personnel.

The surveys were also used to identify structures and zones of anomalous magnetic, radiometric or electromagnetic response that could help delineate additional drill targets.

10.2.2 Trenching

Trenching in the project has been performed using a backhoe, excavating to an average depth of 1.5 m. As of October 22nd 2010, a total amount of 316 trenches were excavated in the project, accounting for 11194.35 m.

Table 10-1 Trenches

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Figure 10-6 San Gregorio – Trench location (Plan View)

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Figure 10-7 Crucera – Trench Location (Plan View)

10.3 Drilling

Drilling completed on the Project is discussed in Section 11 of the Report.

10.4 Bulk Density

Bulk density data collected to date on the Project are discussed in Section 12 of this Report.

10.5 Geotechnical and Hydrology

Geotechnical and hydrological information are discussed in Section 18 of this Report.

10.6 Exploration Potential

The SGSZ remains highly prospective for additional shear-zone hosted deposits. Exploration potential remains at depth in the Arenal Deeps and San Gregorio deposits. Prospects and targets discussed in 7.3 have exploration potential.

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11 DRILLING

Exploration and resource drilling by Orosur is a combination of RC and core drilling, historically mostly performed with Orosur-owned drill rigs and occasionally with rented drill rigs. Since August 2010, drilling is carried out exclusively by a contractor.

Before 2006, conventional RC hammers were used; after that, drilling with RC- faced hammers became the normal procedure. This improved sample recoveries; typically over 85% on RC and over 95% on DD.

Down-hole contamination on wet RC drill holes (before 2006) has not been demonstrated; RC holes have been twinned with DD holes. In Arenal (two pairs) showing acceptable good correlation. More recent drilling has decreased the probability of contamination by using RC with-face sampling hammers, and representative sampling has also been improved with the use of wet splitters.

Grids on exploration drilling are normally 100*100m to 50*50m; with resource definition drilling on grid spacing 25*50m to 25*25m.

Drilling completed on October 22nd 2010 is as follows:

RC (RCPC): 3090 holes (244,046.41 m)

DD: 697 holes (94,425.22 m)

Rab: 1109 holes (7,693.95 m)

Total: 4896 holes (346,165.58 m)

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Table 11-1 Drilling Data

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Figure 11-1 San Gregorio – Drill Hole Collars (Plan View)

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Figure 11-2 Zapucay – Argentinita. Drill Hole Collars (Plan View)

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Figure 11-3 Crucera – Drill Hole Collars (Plan View)

11.1 Legacy Drill Programs

Limited information is available from drill programs completed by previous operators.

Drilling by Crystallex was a combination of RC and core drilling. No information regarding the Crystallex drilling is readily available; however, MDA considers that it appears to have been undertaken to expected industry standards. In the case of San Gregorio, good data reconciliation between Crystallex’s drill holes and ore control during production supported the incorporation of its data with that of Orosur.

11.2 Orosur Drill Programs

Exploration and resource drilling by Orosur is mostly a combination of RC and core drilling methods. The proportion of each method is determined by the availability of drill rigs, the type of information sought, the specific area of the deposit being drilled and the stage of resource definition of the deposit. In general, the ratio RC:DD is 4:1. Orosur owned and operated its drill rigs until August 2010 as detailed in Table 11-2.

Table 11-2 Orosur Owned Exploration Drilling Rigs (until August 2010)

Drill Model Drill Type Quantity

UDR 650 EXP RC/DC 1

Ingersoll-Rand DM45 (converted to RC) RC 2

UDR 200 EXP DC 1

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Buggy Rig RC 2

RAB Rig RC 1

Orosur has also complemented its drilling fleet when required with RC or DD rigs available from contractors. Since August 2010, drilling has been provided by the local contractor Nivelia S.A.

As mineral deposits are drill-delineated, drill holes are designed to intersect as close as possible to perpendicularly to the known or estimated mineralized feature being investigated, typically either a vein or a structure.

Normal practice at the San Gregorio project has been to drill deposits for Mineral Reserve definition on 25 m sections along strike. Nominal drill spacing down dip is 25m at least to a depth of 200 m and then at 50 m spacing.

Use of RC pre-collars has been put into practice for deeper ore intersections of >150m to reduce costs and speed-up the resource delineation process. Pre- collars are drilled with RC rigs and later entered and completed with a diamond drill.

Core is drilled at diameters of NQ (47.6 mm core diameter) and HQ (63.5 mm diameter), with a preference for HQ due to the larger sample size.

RC drilling utilizes conventional and face sampling hammers with a diameter range of 4.75 to 5.5 inches.

Core trays were placed near the core barrel so that the core was put in the tray in the same orientation (top-bottom) as it came out of the barrel. Rubble was piled to about the length of the whole core that its volume would represent.

Any break in the core made during removal from the barrel was marked with an “X.” When breakage of the core was required to fill the box, edged tools and accurate measure of pieces to complete the channels was common practice to minimize core destruction. The end of every run is marked with a wooden tick and the final depth of the run.

Core was transferred to wood-made core boxes, marked with “up” and “down” signs on the edges of the boxes using indelible pen. The drill hole number, box number and starting depth for the box was written before its use, whilst end depth were recorded upon completion. All information was marked with indelible pen on the front side of the box and also on the cover.

Transport of core boxes to the core shed was done by personnel from the company that was managing the drill program, or the drilling supervisor. Core handling logs were completed that included details for all persons involved in any step during the logging and sampling procedures.

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11.3 Geological Logging

Experienced geologists logged all drill cuttings and core. RAB and RC chips were typically logged at the drill, while core was typically logged at the core logging facility.

Logging is typically performed on paper, then hand-entered into the database. The geological coding has evolved from historical observation and is partly built on historical observations of the local geology. The legend and logging records lithology, alteration, structure, geology, mineralization, and oxidation for each sample interval. Unique features not accounted for in the legend are noted in written comments.

The integrity of database entries is tested using computer software, which examines the database for unique codes, mismatching drill hole depths in collar files and overlapping “from” and “to” intervals.

Drill core has been photographed since 2008, and the photographs retained. Prior to 2008, 15 of 74 holes were photographed. A chip tray record is retained for RC samples.

Geotechnical logging was initially performed only on selected core drill holes. From 2008, all drill core has been geotechnically logged. Trained personnel record attributes such as lithology, core recovery, rock quality designation (RQD), joint frequency, joint condition, degree of breakage, degree of weathering and alteration, and hardness. Logging may also incorporate fracture conditions, joint conditions, number of fractures, and number of veins.

11.4 Collar Surveys

Both RC and core holes case the overburden with 6-inch steel pipe while drilling and later leave PVC pipe to mark the collar and attempt to leave the hole open until a program has been finalized at which point a cement “block” is placed on the collar to seal and mark the hole. Relevant hole identification data are written on the PVC pipe and later on the cement block.

Mine-area drill hole collars, are surveyed by the Orosur mine surveyors using Total Station instruments. Handheld global positioning system (GPS) instruments, topographic plans and aerial photographs provide acceptable location control for the regional exploration drill programs.

11.5 Down-hole Surveys

Core is orientated with a Reflex ACTTM™ instrument wherever possible.

No down-hole surveying was routinely conducted during initial drilling by Orosur, but Orosur now performs appropriate down-hole surveying in all diamond drill holes (Jones, 2005; Gonzales et al., 2009). Orosur informed MDA that since December 2007 (ALDD075 to ALDD138), core holes have routinely had down- hole surveys, as had most of the core holes from October 2004 to November 2006 (ALDDH-34 to ALDDH-74). RC holes have also been routinely surveyed

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since August 2009. Although in 2007 Golder Associates (2007) had recommended that existing inclined holes over 200 m long be resurveyed, Orosur informed MDA that the resurvey was not done because the shallowest drill holes were within open pit limits, and the deeper drill holes are normally collapsed.

11.6 Drill Recovery

Lindqvist (2004) reported that RC samples are weighed and recoveries calculated and monitored. He noted:

Recoveries are generally better than 90% and contamination does not appear to be an issue.

Recovery data are currently not typically recorded for RAB or RC drill programs. Core recoveries are recorded.

11.7 Blast Hole Drilling

Blast holes were drilled using a Tamrock™ machine (Pantera) to a depth of 6 m, and samples were cut to coincide with the bench height, which was typically 2.5 m to 3 m. These machines used a conventional recovery system through a mobile cyclone, with the sample being put into two separate cones for each hole.

During the time of the San Gregorio and Santa Teresa initiall operations (1997 to 2003), blast holes were drilled using Ingersoll-Rand™machines, drilling on a 5 m bench height basis.

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12 SAMPLING METHOD AND APPROACH

Currently core sampling averages approximately 1m intervals. Samples are not less than 0.5m and not more than 2m and are defined by geological features and especially mineralization. Recent RC sampling is also undertaken on 1m intervals; in the past (pre-2006) sampling intervals where either 1m (for example San Gregorio deposit) or 2m (for example Arenal deposit).

Sample preparation and analyses are conducted at an on-site laboratory, originally operated by American Assays Ltd. but now owned by Orosur and operated by Orosur laboratory personnel.

Gold analyses are performed by conventional fire assay methods using a 30g charge. Orosur currently routinely submits duplicates, blanks, and standard reference samples to the laboratory with drill samples and uses Acme Analytical Laboratories in Santiago, Chile, for check assaying; in addition, the laboratory utilizes its own quality control procedures.

All sampling in the field is carried out by Orosur staff under the supervision of the site geologists, who are also Orosur employees.

12.1 Geochemical Sampling

Geochemical samples were collected during early-stage exploration on the Project and are superseded by drill data.

Pitt (2003) reports that soil samples were taken with a hand auger from the top of the C horizon. Samples generally were 0.5 kg and a geological description was tabulated. Sample spacing was nominally 200 m by 25 m in target areas with infill as required.

12.2 RAB Sampling

Lindqvist (2004) reported that where RAB drilling was used, a composite sample was taken every rod length (1.7 m).

12.3 Sampling

RC sampling is undertaken using 1 m intervals. The dry sample intervals are weighed in the field and then split using a Gilson™ splitter to a nominal weight of 3–5 kg, which is sent to the laboratory for preparation and assay.

All wet samples are split using a hydraulic wet splitter and collected in Micropore™ bags.

The remaining sample material is left at the drill site in marked bags until the chemical analysis has been completed and the data has passed the QA/QC validation process.

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12.4 Core Sampling

Initially core samples averaged 2 m in length, but that could vary depending upon geology (Jones, 2005; Golder Associates, 2007).

Since 2008, core sampling approximately averages 1 m intervals by not sampling less than 0.5 m and not more than 2 m as defined by geological features and especially mineralization. Half-core is sent for assay following cutting of the core lengthways using a diamond saw perpendicular to the main mineralizing fabric.

Sample length is approximately correspondent to true width of mineralization.

12.5 Blast Hole Sampling

Golder Associates (2007) provided details on blast-hole sampling. Blast holes were drilled using a Tamrock machine (Pantera) to a depth of 6 m, and samples were cut to coincide with the bench height, which was typically 2.5 m to 3 m. These machines used a conventional recovery system through a mobile cyclone, with the sample being put into two separate cones for each hole. A 5 kg sample was collected by tube increments in a 12 cm-diameter tube and was sent to the laboratory at the mine site for assay.

During the time of the San Gregorio and Santa Teresa initiall operations (1997 to 2003), blast holes were performed using Ingersoll-Rand™machines, drilling on a 5 m bench height basis.

In present time, Tamrock drill rigs are used and sampling procedures are the same as mentioned in Golder’s report (2007); one sample (cone) is produced every 2 or 3 m depending on the bench height (typically 2 to 3 m).

Blast hole grades are used to delimit open pit ore production bodies, considering a historical cut-off grade of 0.5 g/t Au.

12.6 Quality Assurance and Quality Control

The quality assurance and quality control (QA/QC) programs for the Project are discussed in Section 13.

12.7 Density (Specific Gravity) Determinations

Although no routine bulk density determinations were undertaken during the initial Orosur drilling programs, Orosur has since introduced routine bulk density determinations in accordance with exploration priorities and requirements.

Only limited laboratory-based determinations have been performed for the disclosed Mineral Reserves due to the wealth of historical production data, which indicates good reconciliation with estimates (Gonzales et al., 2009).

Bulk density test work for the San Gregorio project was performed by Cientec Laboratories Brazil in 1999 with 83 samples being evaluated. The core samples were weighed dry and wet and were also immersed in water, and the density was

12-2 calculated using the standard formula. The lowest result of that testing was 2.44 t/m3, and the highest was 2.982 t/m3.

Additional density analysis was conducted by Cientec Laboratories Brazil on 65 samples covering all main ore and waste rock types at Arenal in 2004. Jones (2005) reported that an average bulk density value of 2.78 t/m3 has been applied to both ore and waste.

No changes in density with depth consistent with the weathering profile have been investigated.

MDA concluded that the results of the density determinations continue to provide an appropriate basis for production purposes.

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13 SAMPLE PREPARATION, ANALYSES, AND SECURITY

From Project inception to date, Project staff employed by Orosur was responsible for the following:

• Sample collection

• Core splitting

• Density determinations

• Sample preparation

• Sample analysis

• Sample storage

• Sample security.

In the authors opinion all security, sample preparation and analytical procedures are done to a high industry standard. This can be verified by the high compliance and achievement in various ‘Round Robin’ exercises completed yearly with other Assay Laboratories

13.1 Analytical Laboratories

American Assays Ltd. (AAL) set up the original San Gregorio project mine site laboratory. It is not known if the facility was accredited.

Sample preparation and analyses are currently conducted the former AAL on-site laboratory that is now owned by Orosur, and operated by Orosur laboratory personnel. The laboratory is not accredited.

In August 2006 an extension to the laboratory was commissioned with new equipment and is treating approximately 450 samples and completing 850 assays per day. The laboratory handles grade control samples and all metallurgical samples, in addition to the exploration and resource drill samples.

The exploration samples are run at different times than the production samples and fired in separate ovens.

Check assays on pulps are routinely performed at the independent external laboratories of Alfred Knight in Lima, Peru and ACME in Santiago, Chile. Additional checks are performed by American Assays in Reno, Nevada. All these laboratories are certified to international standards.

All samples from the San Gregorio Project including Crucera are processed in the on-site laboratory following procedures described below.

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ICP multi-element assays used to be performed at ACME Laboratories, but since November 2008, the on-site laboratory acquired an ICP machine and samples are currently processed on site.

13.2 Sample Preparation and Analysis

Samples are received and dried in electric ovens prior to crushing in a jaw crusher to P85 10#. The crushed samples are split to approximately 1 kg prior to pulverising. Coarse rejects are stored for approximately one month and then discarded.

The samples are milled in a Labtech Essa LM2 to a particle size of P95 150#, and the resulting pulp is split to produce a final pulp for assay of approximately 100 g. The remaining pulp material is stored on site in an appropriate facility.

Gold analyses are undertaken by conventional fire assay methods using a 30 g charge, which is weighed on an electric balance. The pulp charge is mixed with flux in the fire pot and fired in a gas furnace at 1,000°C for one hour, followed by cupellation in an electric cupellation furnace, also set at 1,000°C for one hour.

The resulting prill is digested in dilute hydrochloric and nitric acid over a hot plate prior to final analyses for gold and silver using one of two AA 240FS and one Spectra AA-5 Varian atomic absorption spectrography (AAS) machines.

A separate room is used for gravimetric analyses as a check on high-grade AAS results from operations.

All tasks are subject to internal laboratory protocols and controls.

13.3 Quality Assurance/Quality Control Programs

Orosur routinely submits duplicate, blanks and standard reference samples to the laboratory with the trench and drill samples (RAB, RC and core).

RC field duplicates, comprising a second sample split made at the drill rig, are collected at a frequency of one in 15 and submitted to the laboratory sequentially with the original sample batch. Core duplicates, comprising of half core, are taken at a frequency of one in 40.

Blank material sourced from a local quarry is submitted at a frequency of one in 20 samples.

Three internal Orosur standard reference materials (SRMs) are inserted into the sample stream at a frequency of one in 40. In addition, three Rocklabs SRMs are used randomly and inserted into the sample stream in place of the internal SRMs as a further check of laboratory accuracy.

The quality control samples are closely monitored and any batch containing a failed QA/QC sample is re-assayed.

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The laboratory quality control procedures include duplicate assays of a second 100 g pulp split undertaken at a nominal frequency of one in 10 (pulp duplicates), and second splits made following primary crushing at a frequency of one in 20 (preparation duplicates). A barren quartz sand wash is passed through the ring mills between each sample and all crushing, milling, weighing and splitting equipment are cleaned thoroughly with compressed air.

The laboratory also includes a blank and three SRMs to monitor accuracy on a daily basis, and a single blank is inserted into each batch.

The AAS machine is calibrated daily using gold solution standards. The electric balances are calibrated daily and serviced monthly. The plastic acid dispensers are checked daily and replaced after 6–8 months.

13.4 Databases

The drill hole databases are separated by deposit (eg. Arenal, San Gregorio, Santa Teresa, etc.) and were initially stored in MS Excel® files. No database management software was originally used. From April 2007, data are stored in the form of a Microsoft Access® database.

All geological and geotechnical data were entered manually into the system, as were drill hole collar and down hole survey data.

Assays were received electronically from the laboratories and imported directly into the database.

Data are verified prior to mineral resource estimation by means of in-built program triggers within the mining estimation software. Checks are performed on surveys, collar co-ordinates, lithology data, and assay data.

Paper records were kept for all assay and QA/QC data, geological logging and bulk density information, downhole, and collar coordinate surveys.

13.5 Sample Security

Sample security relied upon the fact that the samples were always attended or locked at the core shack or laboratory.

Chain of custody procedures consisted of filling out sample submittal forms that were sent to the laboratory with sample shipments to make certain that all samples were received by the laboratory.

13.6 Sample Storage

Half-cores are stored on site in a core storage warehouse. Pulps and coarse rejects are also stored on site.

Field coarse rejects with Au values on top of 400 ppb are kept and stored in the core storage warehouse.

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Coarse rejects from laboratory preparation are stored for 3 months. Samples are discarded after that period of time.

All of the pulps are stored in boxes according to the sample batch. These are stored at the core storage warehouse indefinitely.

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14 DATA VERIFICATION

A number of data verification programs and audits have been performed over the Project history, primarily in support of compilation of technical reports on the Project.

14.1 Jones (2005)

Data verification performed by RSG Global (Jones, 2005), comprised an assessment of analytical data generated by then-laboratory operator AAL, a review of twin hole data, and a database check.

Assessment of assay results on inter-laboratory and AAL pulps by RSG Global indicated that:

• “Pulp precision is relatively poor and should be improved, particularly when considering that the coarse gold component of the ore is negligible…Precision does not deteriorate at higher grades. The data appear to be accurate, with no evidence of consistent bias occurring at any of the laboratories”

• “The fact that the preparation duplicates show generally better precision than the pulp duplicates (repeat assays) is not consistent with expected results and is difficult to explain”

• “It would appear that the UME RC sampling procedures are not causing more error than normally expected”

A review of twinned RC and core drill holes showed some differences, but as there were only two twinned drill hole sets, no significant statistics could be calculated. Jones (2005) noted that

“A brief visual check of the RC drilling database indicates that there are no material differences in the grade distribution between wet and dry RC samples, and there is no obvious smearing of grade downhole due to wet conditions”

The Orosur Arenal database was validated by RSG Global using pre-set check facilities in commercially-available Micromine® software. The following general activities were undertaken during database validation:

• Cross check total hole depth and final sample depth data

• Check for overlapping and missing sampling intervals

• Check drill hole survey data for unusual or suspect downhole deviations

• Check lithology and alteration codes

No material errors were identified.

RSG Global also undertook a database check on site by comparing database entries with hard-copy assay sheets and drill hole logs. This work was carried

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out on all assay results ≥5 g/t Au, which equates to 7% of the Arenal drill core database for assays ≥ 0.1g/t Au, and 11% of the equivalent Arenal RC database. No errors were noted.

14.2 MBS Environmental, 2006

MBS Environmental performed a site-wide environmental audit in 2006. MBS noted that environmental management for the San Gregorian Gold Project is undertaken in manner that is generally compliant with local and national regulatory requirements (i.e. one penalty issued in October 2004), and generally conforms to international industry environmental standards and practices.

The review identified some low to moderate non-conformances against the Equator Principles and World Bank/IFC standards and guidelines that also represent low to moderate environmental risks. These non-conformances were as a result of a combination of management practice and management system issues and were representative of the status with the development of the Project’s overall management systems at the time of the audit. MBS prepared a list of recommendations and areas for which additional protocols and procedures and monitoring activities were to be focused.

MBS concluded that the application of appropriate risk reduction/management measures resulted in generally low to moderate levels of residual environmental risks for the Project:

“Based on the risk evaluation criteria, these levels of environmental risk are considered to be acceptable (i.e. Category 3 risk definition – generally compliant and conforming project activities).”

14.3 Golder 2007

A comprehensive database validation was carried out by Golder (Shaw et al., 2007) for the San Gregorio, Santa Teresa, and Arenal databases using proprietary software. No significant errors were detected in these databases. The lack of survey measurements was the only anomaly identified.

14.4 Golder, 2009

Gonzalez et al. (2009) reviewed the data available on Arenal Deeps for Golder, concluding:

“The initial recording of all data is generally in hardcopy on formats prepared for the type of information being collected. The second phase of data recording is the manual transferral from hardcopy to Microsoft Access. Various validations and checks exist in Access that will not allow the entry of erroneous data. The importation of all geochemical results is controlled by queries set up in Access, eliminating any “copy and paste” errors.

An automatic link exists between Access and Micromine, again eliminating any “copy and paste” error. Different user permissions have been set up in Access to reduce the possibility of data errors/deletion/manipulation. To minimize the

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impact of erroneous data, efforts are made to limit data storage to single source files with limited personnel having access to them. Whenever errors are encountered, they are corrected on the source files.

Appropriate automatic computer back-ups are performed of all source files.

Data verification is performed in many ways, including visual checks of the results by geologists, validation checks in Micromine and engineers using computer software and hardcopy printouts during geological interpretation, geostatistical evaluation and geological model interpolation.”

14.5 Smee, 2010

Independent consultant, Dr B. Smee, of Smee and Associates Consulting Ltd., Vancouver, Canada, reviewed the QA/QC data available for the Arenal deposit. He concluded that the Arenal Project had a program of analytical and sampling quality control in place for the resource drilling program reviewed that met or exceeded the requirements of NI 43-101. This program included the insertion of property specific standards, field blanks, and field duplicates. The laboratory also reported pulp and preparation duplicates.

A number of recommendations were made as a consequence of the review, including:

• Some of the field blanks used were subsequently found to contain gold mineralization. Several of the failed analytical batches that contained these high blanks should be tested from the pulp to confirm this interpretation. • The suspicion that some of the Orosur Standard Reference Materials (SRMS) may not be reported correctly by the Orosur laboratory is probably true. • The quality control program done by UME for the Arenal Resource drilling program meets or exceeds the requirements of NI 43-101. The Arenal Analytical data is suitable for use in a resource calculation. • It is not obvious in the database that the gravimetric data has been inserted for all the Orosur-3 data. This should be checked. • The duplicate database should be carefully checked to ensure that the preparation duplicates are actually correct. • The precision from the drill duplicates indicates that the weight that is given to an individual economic gold grade should be quite low, as the error on that grade is near 60%.

14.6 MDA, 2010

As part of the verification process prior to the mineral resource estimation discussed in Section 17 of this report, MDA performed (Ristorcelli and Ronning, 2010) an on-site audit of part of the database, and performed an office-based check using software tools to compare original digital sources of data to tables in the database.

During the site visit, the partial database check comprised comparing the database to original paper sources for part of the down-hole survey, sample interval, geotechnical, and specific gravity data. MDA field-checked the locations

14-3 of 11 drill-hole collars using a hand-held global positioning system instrument (GPS). MDA also observed the procedures that Orosur uses for measuring specific gravity.

MDA concluded that:

• The partial audit indicated no significant errors within the database

• Drill collar locations were within the error expected of a hand-held GPS versus a Total Station instrument

• In general, the procedures for measuring specific gravity were very good

The digital audit of the Orosur-provided database indicated:

• On review of the analytical database, which was an iterative process, an error rate of 0.7% was identified. Of the 17,800 samples listed in the check assay table, 15,168 samples had numbers matching sample numbers in the Arenal assay table provided by Orosur‟s exploration department. In total, the assay table contains results for 34,622 analyses, so the digital audit covered about 44% of them. However, because older assays were from early Arenal exploration but newer assays are from more recent Arenal Deeps exploration, the audit covered over 44% of the Arenal Deeps analyses. The final error rate was considered acceptable, and the analytical results suitable for mineral resource estimation purposes.

• The collar table in the Arenal database contains records for 720 drill holes. In comparing that with the independently-compiled collar table, 541 hole identifiers were found to match. Twelve drill holes were found to have differences exceeding two centimeters, and six had differences exceeding a metre. MDA noted that in all but one case, the original collars no longer exist, making it impossible to re-survey them. In the one case in which a re-survey was possible, the database coordinates were found to be correct. As a consequence, MDA reviewed the possible effects of the collars being wrong in terms of the global resource and found that they were not significant. In the mineral resource estimation in Section 17, MDA used the collar coordinates from the project database, not those from the surveyor’s files, a choice MDA considered to be justified based on the results of the one check that was possible.

• Some, albeit minor, reverse circulation wet drilling down-hole contamination was noted. Internal to a mineralized zone, the detection of contamination could not be determined. However, where samples displayed characteristics of down- hole contamination at the bottoms of mineralized zones, or with adjacent drill holes, or with blast holes, MDA restricted such samples form supporting any classification higher than Inferred Mineral Resources.

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15 ADJACENT PROPERTIES

There are no immediately adjacent properties that are at the same stage of development as the Project.

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16 MINERAL PROCESSING AND METALLURGICAL TESTING

16.1 Metallurgical Testwork

A summary of metallurgical testing analyses that have been carried out is presented in Table 16-1.

Gold recovery results for most desposits indicate no major differences compared to the average achieved at the treatment plant during the period 2007-2010 (around 93 %). One special case is that of Sobresaliente, which presents recoveries averaging 80 %, and for that reason, provisions have been made in the Life of Mine (LOM) plan to account for this lower recovery.

Ores from Arenal Deeps and San Gregorio are expected to present harder behavior, based on grinding tests performed in SGS-Lakefield Santiago and previous experience with Arenal and San Gregorio open pits.

Other deposits like Santa Teresa, Zapucay, Argentinita have limited hardness information, but experience indicate that they present lower hardness indexes, therefore leading to an enhanced throughput.

Grinding tests performed on Sobresaliente ore indicate moderate hardness.

Limited metallurgical testwork has been performed for the Crucera deposit, which indicates gold recoveries above 91 % and lower hardness index (BWi 16 kWh/t) compared to the ore from the other pits.

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Table 16-1 Metallurgical Testwork Results

Leach Tests Grinding and Abrasion Tests

Au Ag Au head Ag head SPI SMC Deposit Laboratory Nº Samples recovery (recovery BWi (kWh/t) Ai grade (g/t) grade (g/t) (min) (Axb) (%) (%)

Argentinita SGS 4 1,2 97 15 0,44

Argentinita Internal 3 1,5 1,0 94 47

Castrillón Internal 11 4,2 2,4 88 35

Castrillón Internal 5 3,3 88

Crucera SGS 1 7,9 96 16 0,34

Crucera Internal 7 3,3 91

San Gregorio SGS 1 2,7 99 21 0,63

San Gregorio Internal 6 1,8 2,7 92 46

Santa Teresa SGS 1 3,5 99 19 0,51

Santa Teresa Internal 9 1,5 2,4 95 41

Sobresaliente Internal 3 1,0 0,8 81 28

Sobresaliente SGS 1 20 0,44 89

Zapucay Internal 8 3,0 1,4 96 54

Veta A SGS 7 3,8 91 19 0,16

Arenal Open Pit Metcon 1 0,9 7,0 89 71 20

Arenal Deeps SGS 6 21 0,41 108 32 Arenal Deeps SGS 18 2,9 7,1 90 57

Arenal Deeps Internal 71 3,4 6,88 91 44

The abbreviations BWi, Ai, SPI and SMC, related to grinding tests are explained in detail below.

External testing was done in SGS-Lakefield Chile and Metcon Laboratories Australia.

Leach tests consisted in bottle roll tests which are based in gold and silver solubility in diluted alkaline cyanide solutions. The procedure consists in grinding the sample to a specific size, putting the sample in a bottle together with an alkaline cyanide solution and letting the bottle roll in a roller for a certain amount of time, allowing the gold and silver to leach. Specific conditions for each laboratory are presented in Table 16-2.

16-2

Table 16-2 Leach tests conditions

OMI Laboratory SGS Metcon % under 150 90 100 80 % solids 43 43 43 NaCN (g/L) 0,5 0,5 1,0 Time (h) 28 28 24

Grinding tests consisted in Bond Work Index (BWi) determinations, SAG mill comminution testing (SMC), SAG mill Power Index testing (SPI) and Abrasion Index testing (Ai). These tests are run in order to determine the competency of the ore from the perspective of the ball mill power consumption, SAG mill grinding and natural abrasivness, which impacts on chute and liner wear rates and grinding media consumption.

16.1.1 Arenal Deeps

From operational experience with Arenal Open Pit ores, the two main metallurgical characteristics of this ore are the silver to gold ratio, which impacts on gold recoveries and cyanide consumption and the hardness, which affects throughput.

Leach tests performed on Arenal Deeps samples confirm that the underground ore behaves similarly to the open pit ore.

A summary of the test results obtained at SGS-Lakefield is as follows:

• At 28 hours of leaching time, recoveries between 83% and 95% occurred. The arithmetic average of the gold recoveries was 90.1%. This agrees well with the on-site metallurgical tests on the Arenal Deeps ore which had an arithmetic average gold recovery of 90.8%.

• Gold in the finer fractions leaches quickly and easily giving an initial fast leach rate. This is followed by the slower leaching of gold and silver electrum.

• At a leach time of 28 hours the recovery of gold has not reached equilibrium (i.e., it is not complete). Therefore, it is evident that more than 28 hours of leaching will be required to reach maximum gold recovery or that additional cyanide will be required to increase electrum leach rates.

• In order to guarantee a gold recovery of greater than 90% a leach time of up to 72 hours will be required at low cyanide concentration levels (this is also dependent upon the cyanide addition rate);

• The samples have low levels of copper and silver. The recoveries of copper and silver in these samples are between 10% and 70%. No significant increase in recoveries of these elements is noted between 23 and 28 hours. The arithmetic average for silver recovery was 55.2% after 23 hours and 57.2% after 28 hours of leaching.

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• An average lime consumption of 0.9 kg/t. However, a pH of 11 was employed during the tests, which is slightly higher than that employed in the plant.

• An average cyanide consumption of 0.25 kg/t was noted.

The results for gold and silver recovery are shown in Figure 16-1 and Figure 16-2.

Figure 16-1 Deeps Leach Tests – Gold Recovery

Arenal Deeps Leach Tests - Gold Recovery 100 90 80 70 60 50 40 30

Gold Recovery (%) Gold Recovery 20 10 0 0 5 10 15 20 25 30 Time (hours) M139 M140 M141 M142 M143 M144 M145 M146 M147 M148 M149 M150 M151 M152 M153 M154 M155 M156

Figure 16-2 Arenal Deeps Leach Tests – Silver Recovery

Arenal Deeps Leach Tests - Silver Recovery 90

) 60

30 Silver Recovery (% Recovery Silver 20

0 0 5 10 15 20 25 30 Time (hours)

M139 M140 M141 M142 M143 M144 M145 M146 M147 M148 M149 M150 M151 M152 M153 M154 M155 M156

16-4

The Arenal Deeps ore has the following attributes:

• Has fine free liberated gold which leaches quickly into solution in the first four to five hours • This is followed by a period of leaching of electrum which contains variable amounts of gold and silver percentages • The leaching of electrum containing silver with variable quantities of silver means that the silver leach rates are slow and variable depending on the silver content in the electrum. This is also evident from the silver leach rate curve (refer to Figure 16-2).

Samples submitted to SGS in order to determine grinding characteristics presented the following results:

• “hard” from the perspective of SMC testing with “A × b” results of 29 and 36 respectively. • “tough” when compared against the database of BWi values for other tests conducted at SGS. • Moderately abrasive to abrasive. • “tough” to moderately tough” from the perspective of SPI.

These results match the observed characteristics of Arenal open pit ores.

16.1.2 San Gregorio, Santa Teresa and Zapucay

Although the amount of samples that have been tested for these deposits is limited, there is previous significant operational experience in treating each of them.

Internal laboratory tests results show recoveries of 92 %, 95 %, and 96 % for San Gregorio, Santa Teresa and Zapucay respectively.

Historical recoveries (1997 to 2001) for San Gregorio ore average 92,5 % (see Table 16-3), which agrees with internal laboratory test results. Experience with this ore indicates that it is hard and abrasive, what matches SGS results shown in Table 16-1.

Zapucay and Santa Teresa ores, have always been fed as part of a blend, and for that reason there are no single operational results for these ores. Observations made during the treating of these ores indicate that they are softer and enhance plant average recoveries.

16.1.3 Argentinita

Metallurgical testing for this ore is limited.

Argentinita deposit is very close and of the same mineralogical characteristics as Zapucay. Metallurgical behavior was expected to be similar to Zapucay’s, and preliminary results obtained at internal and external labs confirm so (high gold recoveries in the order of 94 to 97 % and BWi of 15 kWh/t which indicates a soft ore).

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16.1.4 Sobresaliente

Sobresaliente is the only deposit that has shown lower recoveries compared to average historical recoveries of other deposits in the San Gregorio area (92 – 94 %), and for that reason a lower recovery (80 %) was considered for the LOM planning. Apart from the results presented in the summary table, diagnostic leach tests were performed on three samples in SGS-Lakefield Chile in 2010, in order to determine the cause for lower recoveries. Conditions for those tests were as follows:

• 80 % passing 75 µm. • 2 g/L NaCN on cyanidation steps. 1. Free gold leach with cyanide. 2. Treatment with sulfuric acid to dissolve carbonates, pyrrhotite and secondary sulfides. 3. Cyanidation. 4. Treatment with nitric acid to dissolve pyrite, arsenopyrite and other remnant sulphides. 5. Cyanidation

Results indicated that 90 % of the gold is leachable with fine grinding, 5 % is locked up in acid soluble species, probably iron oxides and 5 % is locked up in sulphides and silica.

Grinding tests performed on one sample indicate that the ore moderately hard.

16.1.5 Crucera

Metallurgical testing for the Crucera deposit is limited.

Results indicate gold recoveries ranging from 91 to 96 % and soft behavior (BWi 16 kWh/t).

16.2 Historic Plant Throughput and Gold Recovery Data

Historical throughput and gold recovery data is presented in Table 16-3 and in Figure 16-3 and Figure 16-4.

16-6

Table 16-3 Historical Data

Au Availability Throughput Year Tonnes Recovery (%) (t/h) (%) 1997 782.123 92,4 72,8 123 1998 1.033.969 93,6 93,3 127 1999 1.058.887 92,6 91,3 132 2000 1.087.102 93,3 93,7 132 2001 1.092.388 91,1 93,5 133 2002 1.105.618 92,2 91,6 138 2003 1.018.560 91,9 82,9 140 2004 1.125.619 94,8 92,2 139 2005 1.212.202 94,6 94,5 146 2006 1.280.246 92,6 94,8 154 2007 1.287.645 93,1 93,9 157 2008 1.269.086 92,6 93,8 154 2009 1.496.154 93,0 97,3 176

Figure 16-3 Gold Recovery and Throughput

16-7

Figure 16-4 Tonnes Per Year and Availability

Historically, the treatment of primary ores, as Arenal and San Gregorio open pit ores, with work indexes in the range from 20 to 24 kWh/t has led to a reduction in plant throughput rates. A strong relationship between Arenal Open pit ore content and mill throughput rates is evident despite the following:

• Up to seven different ore types have been blended and added to the processing plant at any one time

• The optimization of the mill has been an ongoing exercise, and certainly there has been an optimization of power utilization within the crushing and grinding circuits since Orosur (UME) gained control of the processing facility in October 2003.

It is evident that the specific power requirements to crush and grind Arenal open pit ore are higher than for the majority of the other ore types being treated. When the percentage of Arenal open pit ore in the mill feed blend increases, mill throughput rates reduce.

The relationship between Arenal open pit ore content and gold and silver recovery is difficult to distinguish with trending on a monthly basis as other factors appear to have a stronger impact on these recoveries rather than the amount of Arenal Open pit material in the mill feed blend. These factors would include but are not limited to the following:

• Process plant grind size to the CIL circuit. Coarser grinds have the effect of reducing the recovery of silver onto activated carbon in the CIL circuit.

• Cyanide addition strength to the CIL circuit. Lower strengths reduce the amount of silver recovered onto activated carbon in the CIL circuit.

16-8

• Elution circuit stripping rates (gold and silver CIL circuit inventory levels).

• The mineral make-up of the ore fed to the plant in terms of quantity of electrum present in the process plant feed. Higher quantities of electrum compared to free gold present will reduce the recovery of gold and silver.

• The total amount of precious metal (gold and silver quantity) fed to the process plant which is determined by the grades and process plant throughput rates.

It is apparent that so long as leach feed grinds are maintained at a p80 of 150 µm or finer, then gold and silver recoveries are maintained at around 93% for gold and 45% for silver in the case of the Arenal Open pit ores when blended with other ore types.

In terms of reagent and consumable consumptions, for Arenal open pit ores there appears to be a reasonably strong correlation in the following two areas:

• Cyanide consumption

• Ball mill grinding media consumption.

Cyanide consumption increases as a consequence of the increase in cyanide addition to counteract higher silver to gold ratios in the Arenal open pit ore. The average cyanide consumption for the 2008–2009 period was 0.482 kg/t.

Ball mill grinding media consumption increases due to the need to keep a higher ball charge in the mill in order to maximize power, to overcome Arenal open pit hardness.

The relationships between the percentage of Arenal open pit ore and lime, carbon and total grinding media consumption are less pronounced. Usually, higher lime consumption is observed when oxidized, more altered ores are fed to the Plant.

Metallurgical performance in the plant has been relatively consistent over the last two years of operation (January 2008 to January 2010). Gold recovery has been averaging just below 93% and silver recovery has averaged just above 45% recovery for this period.

Average gold recovery in 2008 was 92.7% and in 2009 was 93.1%, whilst for silver recovery the recorded levels were 46.2% and 44.6% in 2008 and 2009 respectively. This is despite the fact that both gold and silver grades reduced considerably from 2008 to 2009.

The average gold head grade in 2008 was 2.1 g/t and in 2009, 1.4 g/t, whilst the silver grade in 2008 was 10.2 g/t and in 2009 was 3.2 g/t. The high silver to gold ratio in 2008 of 4.9 to 1 compared to the ratio of 2.3 to 1 in 2009 has had an impact on both gold and silver recoveries. This is predominantly the effect of treating higher proportions of Arenal Open pit material in 2008, particularly at the beginning of 2008. The effect of the higher silver to gold ratio in 2008 has also been a reduction in gold recovery despite the higher gold grade in 2008.

16-9

16.3 Projected Metallurgical Performance and Proposed Mill Schedule

Figure 16-5 shows the projected feed blend and the predicted throughput rates during the Project LOM.

Figure 16-5 Projected Feed blends (% tonnes – left axis) and predicted throughput (right axis)

Key:

• ZP: Zapucay • SV: South Vein • ST: Santa Teresa • CAST: Castrillon • SGEO: San Gregorio • STE: Sobresaliente • SPAR: Stock piles Arenal • ARUG: Arenal underground

Variations in throughput in Figure 16-5 are related to individual work indexes (ore hardness). Softer ore from deposits as Zapucay and Santa Teresa are expected to be fed during the first 3 years, causing the throughput to increase. Following this period, the blend is only composed of Arenal deeps and San Gregorio ores, both having similar hardness and causing the throughput to stabilize at a lower value.

In Figure 16-6, the predicted gold recovery is presented together with the projected ore blend on a gold ounces basis.

16-10

Figure 16-6 Projected Feed blend (% ozt – left axis)) and expected recovery (right axis)

Key:

• ZP: Zapucay • SV: South Vein • ST: Santa Teresa • CAST: Castrillon • SGEO: San Gregorio • STE: Sobresaliente • SPAR: Stock piles Arenal • ARUG: Arenal underground

Gold recoveries for the 2007-2010 period average 93 %, and that is the expected average recovery for most of the deposits that are projected to be fed during the LOM. A particular case constitutes Sobresaliente ore, which as previously mentioned, presents recoveries averaging 80 %. The introduction of Sobresaliente ore in the blend during the second and third year, explains the lower gold recoveries expected during those years. As in the case of the throughput, after that period the ore blend is constituted of Arenal Deeps and San Gregorio, leading to a stabilized recovery.

16.4 Process Facilities

The process facilities were commissioned in 1997, and have been operating for over 10 years. This has proven the viability of the existing processing plant in treating all material types from the local deposits and provides a high level of confidence concerning the treatment of the Arenal Deeps orebody in terms of metallurgical response.

16-11

Ore from Arenal, San Gregorio, Santa Teresa, Zapucay and the Veins has been treated through the existing Orosur treatment plant. It is understood by Orosur that the metallurgical test work for these deposits is relatively limited. However, the metallurgical responses of these ores are well understood at a production scale.

The ore treatment plant is a conventional carbon-in-leach (CIL) plant built by Minproc in 1996 and commissioned in January 1997. The plant has a nominal throughput of 1.1 Mt/a and comprises of a single-stage crushing circuit using a 500 mm aperture grizzly and a jaw crusher fed using a front end loader (FEL). The nominal crushed ore size is 100% passing 150 mm. The crushed ore is then conveyed to a stockpile containing 1,000 live tonnes of ore (5,000 tonnes in total). An emergency stockpile adjacent to the surge stockpile contains a further 2,000 t of contained ore in the event of extended crushing plant stoppages.

The crushed ore is reclaimed from the main stockpile using two ore feeders underneath the main surge stockpile onto a main feed conveyor and then fed into a 20 x 10 ft (D x L) semi-autogenous grind (SAG) and a 13 x 20 ft (D x L) ball mill circuit in an SAG/ball/crush (SABC) configuration. The SAG mill is in closed circuit with a scats crusher to prevent the buildup of critical sized material in the SAG mill. The ball mill runs in closed circuit with a bank of 15-inch hydrocyclones with cyclone underflow returning to the ball mill and cyclone overflow reporting through to the CIL circuit. The final product size target is 80% passing 150 µm.

The CIL circuit comprises seven 850 m3 tanks: one leach and six adsorption tanks containing activated carbon. The nominal circuit residence time is 24 hours at the nominal throughput rate and circuit density. Activated carbon is stripped using the pressure Zadra elution process and carbon reactivated in two separate horizontal kilns before being returned to the adsorption circuit.

A simplified depiction of the overall process flow sheet is shown in Figure 16-7.

16-12

Figure 16-7 Process Flow Diagram

The major improvements made to the processing facility since the purchase of the operation (including process plant) in 2003 by Orosur (originally UME) in October 2003 include the following:

• Oil filters for the automatic lubrication system of both mills which was historically a major contributor to plant downtime.

16-13

• Upgrade of the gold room including a new oven, additional electrowinning cell and the installation of an upgraded security system.

• Structural steel replacements in various sections of the plant including the cyclone nest, carbon safety screen, dribble chute of primary crusher and discharge chute of the ball mill.

• Overhaul of the leach tanks include the fitting of a sacrificial steel lining inside the tanks and the fitting of a new agitator configuration.

• Purchased spare girth gears for both mills. The original girth gears are still installed.

• Increase in motor size on the SAG mill only from 1,500 kW to 1,865 kW to remove a plant bottleneck and match the motor size on the ball mill. The structural integrity of the SAG mill and moving components (girth gear, pinion and gear box) allowed for a larger motor to be fitted.

• Replacement of primary crusher.

• Refurbishment of scats crushing circuit including the fitting of a second new 132 kW Sandvik™ crusher in series.

• Tailings discharge line upgrade (increased diameter) to allow pumping to all sections of the existing tailings dam for the final lift (lift 8).

• Refurbishment of the existing regeneration kiln and installation of a larger new kiln to a maximum capacity of 325 kg/h carbon regeneration and a nominal treatment rate of approximately 260 kg /h.

• Refurbishment of the elution circuit including the replacement of the heating system to a direct gas heating system replacing the oil heat exchanger system installed originally. This has reduced elution circuit downtime significantly associated with the cleaning of heat exchanger plates.

• Replacement of back-up generator.

• Purchased an extra main transformer replacement for both mills.

The upgrading of the plant and equipment has led to increased plant throughput rates and an improvement in plant mechanical availability. As a result, throughput has increased from around 2,600 dry tonnes per day to around 4,000 dry tonnes per day. Gold recoveries have been maintained through the years in spite of the higher throughput. This has been achieved with improved utilization of mill power, and improved control over lime and cyanide control along with improved activated carbon management within the adsorption and elution circuits. Plant availability has increased significantly to levels exceeding 95% on an annual basis.

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17 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

Orosur engages independent consultants to estimate Mineral Resources material to the Company in accordance with NI 43-101.

Mine Development Associates (MDA) estimated the Mineral Resources for Ombú, Argentinita, Sobresaliente, Veta A, Crucera and Arenal Deeps deposits.

Golder Associates S.A. (Golder) estimated the Mineral Resource for the San Gregorio and Castrillon deposits.

Mineral Resource estimates for Santa Teresa, Veta Sur, Zapucay, Zapucay-Knob Hill, Picaflor and Stockpiles were performed under the supervision of Devin den Boer (P.Geo) (Formerly Orosur’s Exploration Manager) and under the responsibility of Orosur’s qualified person, Dr. William Lindqvist.

The combined Mineral Resources of Orosur’s San Gregorio Project are as shown in Table 17-1 as at 1 June 2010.

Mineral Reserves of the San Gregorio Project for open pits were estimated in accordance with NI 43- 101 requirements under the responsibility of Orosur’s qualified person, Randall Corbett (P.Eng). In the case of Castrillon and San Gregorio, the Mineral Resources estimated by Golder Associates S.A. were used as the bases for open pit optimization. In the case of Argentinita, Ombú and Sobresaliente, the Mineral Resources estimated by MDA were used as the bases for open pit optimization.

Mineral Reserves of the San Gregorio Project for underground were estimated in accordance with NI 43-101 requirements under the responsibility of AMEC’s qualified person, John Barber (P.E.).

The Mineral Reserves of Orosur’s San Gregorio Project are fully within the disclosed Mineral Resource quantities with mining factors applied. The Mineral Reserves as of 1 June 2010 are shown in Table 17-2.

17-1

Table 17-1 Mineral Resources at Orosur’s San Gregorio Project

Measured Resources Indicated Resources Total Measured and Indicated Inferred Resources

QP Notes cut off Tonnes Grade Contained Tonnes Grade Contained Tonnes Grade Contained Tonnes Grade Contained Deposit (g/t Au) (000’s) (g/t Au) Ounces (000’s) (g/t Au) Ounces (000’s) (g/t Au) Ounces (000’s) (g/t Au) Ounces Underground Resources Arenal Deeps MDA 1,5 846 3,52 96.000 1.297 3,68 153.000 2.143 3,61 249.000 63 3,77 8.000 Total 846 3,52 96.000 1.297 3,67 153.000 2.143 3,61 249.000 63 3,95 8.000 Open Pit Resources San Gregorio Golder 0,5 511 1,08 18.000 8.009 1,02 263.000 8.520 1,02 281.000 3 0,95 100 Santa Teresa OMI 0,5 433 1,01 14.000 1.122 0,85 31.000 1.555 0,90 45.000 236 0,83 6.000 Ombú MDA 0,5 454 1,24 18.000 454 1,24 18.000 29 0,93 1.000 Veta A MDA * 0,5 428 2,00 27.000 428 2,00 27.000 38 1,40 2.000 Veta Sur OMI 0,5 44 2,60 4.000 145 2,67 12.000 189 2,66 16.000 47 2,27 3.000 Zapucay OMI 0,5 46 1,41 2.000 170 1,20 7.000 216 1,25 9.000 3 0,96 100 Zapucay - Knob Hill OMI 0,5 192 1,59 10.000 359 1,52 17.000 550 1,54 27.000 Argentinita MDA 0,5 1.701 1,52 83.000 1.701 1,52 83.000 502 1,04 17.000 Castrillón Golder 0,5 46 1,09 2.000 17 1,24 700 63 1,13 2.700 142 1,04 5.000 Sobresaliente MDA 0,7 431 1,16 16.000 431 1,16 16.000 61 0,92 2.000 Picaflor OMI 56 3,14 6.000 56 3,14 6.000 50 2,31 3.800 Crucera MDA 2,0 150 3,67 18.000 Stockpiles - High 6 1,55 300 6 1,55 300 Stockpiles - Medium 444 1,02 15.000 444 1,02 15.000 Stockpiles - Low 1.060 0,64 22.000 1.060 0,64 22.000 Total 1.271 1,22 50.000 14.401 1,12 518.000 15.672 1,13 568.000 1.261 1,43 58.000

Note: Mineral resources are not mineral reserves and do not have demonstrated economic viability * Veta A Resource includes 336kt @ 1.94gpt under the operating Tailings Storage Facility

17-2

Table 17-2 Mineral Reserves at Orosur’s San Gregorio Project

Proven Reserves Probable Reserves Total Proven and Probable

1 troy ounce = 31,1035 grams

Ge ne ral Note s: Qualified Persons (QP) for respective reporting of Mineral Resources and Reserves Totals may not be exact due to rounding Orosur Mining Inc (OMI) Mineral Reserves are completely w ithin the stated Mineral Resources w ith mining factors applied. Qualified Person for Mineral Resources W.F. Lindqvist (P. Geo) Mineral Reserves are in situ as at 1 June, 2010 Qualified Person for Mineral Reserves Randall Corbett (P. Eng)

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17.1 Mineral Resource Estimation – Arenal Deeps

The Arenal Deeps mineral resource estimate and grade shells were prepared by Mine Development Associates (MDA). The mineral resource estimates were prepared using 3D models in the commercial mine planning software MineSight® with reference to the Canadian Institute of Mining Metallurgy and Petroleum (CIM) Definition Standards (2005) and CIM Best Practice Guidelines. Mineral resources were constrained inside open pit shells constructed using the commercial mine programming software Whittle®.

17.1.1 Database

MDA received the Arenal drill-hole database from Orosur in the form of a Microsoft Access® database, a copy of the Access® database in use at the mine site. The database contains 27 tables that Orosur uses for various aspects of its operations at the site. For the estimation database used in MineSight®, MDA made use of data from five of the tables: a collar table, down-hole survey table, geology table, assay table, and geotechnical data table. Many additional fields exist in Orosur’s database, some of which MDA used as reference information even though the data were not loaded into MineSight®.

MDA received four iterations of the Arenal drill-hole database, the first during the site visit of September 2009 and the last on January 9, 2010. The database was closed for estimation purposes on January 9, 2010.

17.1.2 Domains

Three mineral domain boundaries were defined: one at ~0.15 g/t Au (the low- grade halo), one at ~0.4 g/t Au (low-grade disseminated pyrite), and one at ~3 g/t Au (high-grade, extensively deformed). The two principal mineral domains are typically separated by sharp contacts spanning distances of a few centimetres to one metre. Sometimes these contacts are intermixed and appear less abrupt, though this is less common. The hard contacts between the two domains, high- grade and low-grade, are reported by Orosur staff to occur both laterally and at the tops and bottoms of the zones. Core review by MDA found this assessment to be reasonable.

17.1.3 Geological Model

The geological staff of Orosur provided geological guides and performed reviews of the geological interpretations during the modeling process. Orosur’s geological model is based on interpretations of:

• Zones of mineralization • Zones of deformation • The H1 and F1 faults, which envelop the bulk of the mineralization • The northwest-bounding fault.

Mineralization outside the defined grade domains is discontinuous and was modeled as such. Mineralized areas with apparent contaminated RC drill holes

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were left outside the domains, thereby not being reported in the mineral resource estimate.

17.1.4 Examination of Extreme Values

Outlier capping was determined for each domain separately, based principally on the quantile plot profile of each domain and the coefficient of variation (CV) of each domain data set, and by reviewing the locations of these outliers. MDA capped assays to 8 g/t Au in the halo, to 12 g/t Au in the low-grade disseminated pyrite domain, and to 45 g/t Au in the high-grade, extensively-deformed domain.

17.1.5 Composites

Following capping, MDA composited the samples to 2 m down-hole lengths, compositing across all but the abrupt high-grade contacts. These 2 m down-hole composites were then coded by the sectional interpretations.

17.1.6 Variography

Following compositing, MDA calculated correlograms using numerous directions and lag lengths, but concentrated on those directions in the plane of mineralization, namely azimuth 0º and dip +30º with no rotation. MDA calculated correlograms for the halo and low-grade domains together, the high-grade domain alone, and all three domains combined. The nugget effect in the high- grade and combined low-grade domains were very high.

17.1.7 Model Setup

All reported mineral resources are diluted to full blocks (5 m (east–west) by 3 m (north–south) by 3 m (vertical)).

17.1.8 Estimation Methodology

Blocks within a mineralized domain were interpolated using composites assigned to the same domain. MDA chose to interpolate the grades using inverse distance weighting to the third power (ID3). Estimation was done in single passes, separately for each domain. Composites from each zone were used to estimate grades into each respective domain. The reported grades are the weight- average grade (or “diluted” to 5 m by 3 m by 3 m blocks) of each domain.

17.1.9 Bulk Density Assignment

A density value of 2.78 t/m3 was assigned to both ore and waste in the block model.

17.1.10 Model Validation

The following model verification checks were performed:

• A check of cross-sectional and level-plan areas to insure consistency of the level-plan interpretations.

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• Two additional estimates, using different interpolation methods, one kriged and one using a nearest neighbor estimate, were undertaken. Both estimates compared relatively well at a 0 g/t Au cut-off with the reported ID3 estimate.

• A comparison the bench composites with the coincident blocks as well as with the three models. Results were within expected parameters.

The domain models were compared with and without the blast-hole data inside the Arenal pit limits. Each domain volume, halo, low grade, and high grade, were within 6% of each other comparing those modeled with to those modeled without the blast holes. The highest-grade domain, the one that represents the material to be mined, was 1% smaller in the zones defined without blast holes than the zones defined with blast holes. MDA noted that the location of predicted grades is difficult to do. For the open pit, MDA considered that this would not be an issue, but in underground development and mining, this was a problem and could only be alleviated by extensive development drilling.

The same domains were also modeled on section and on plan using the blasthole data. Contorted geometries of the zones were noted by MDA where there is detailed blast hole drill data. MDA recommended that infill development drilling and/or development drifting must be done prior to commercial underground mining production and before final stope design; and noted that this is a required task for successful mining.

A comparison for Arenal was made of in-pit resources estimated solely by the blast holes with no imparted bias to in-pit resources estimated using the modeling estimation parameters and procedures and only the exploration data. The results showed that the exploration model was about 11% low in tonnes and 6% low in grade.

17.1.11 Resource Classification

Continuity in the high-grade extensively deformed zone is not yet well established. In the principal well-mineralized area that would be the potential target of underground mining, the high-grade domain shows significant continuity albeit irregular and without any associated useful predictive geological feature. Infill drilling will be necessary to optimize mining prior to production.

Those criteria used to exclude mineralized samples from making at least Indicated material were:

• The samples were below the F1 fault without demonstrated continuity, e.g. found in adjacent holes • The samples were a continuation of a mineralized zone having a particularly gradational boundary, • The mineralized zone containing the samples had a “pregnant” shape (e.g., a bulbous lower contact substantially thicker and deeper than the surrounding holes).

Few areas were identified where these occurred.

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Classification criteria for the Indicated and Inferred Mineral Resources at Arenal Deeps are given in Table 17-3.

Table 17-3 Arenal Deeps Resource Classification Criteria

Category Zone Maximum Distance (m) Minimum Number of Minimum Number of Samples Drill Holes

Measured In zone 10 n/a 3

Outside mineralized 511 zone

Indicated In zone 40 N/A 3

Outside mineralized 20 3 1 zone

Inferred In zone Inside zone and not classified as Measured or Indicated

Outside mineralized None zone

17.1.12 Assessment of “Reasonable Prospects for Economic Extraction”

MDA selected a cutoff of 1 g/t Au for reporting Mineral Resources based on existing and engineered operating costs for underground operating conditions. MDA notes that in actuality, the true cutoff would be ~1.5 g/t Au; however, “internal” cutoffs or higher gold prices would render lower grades economic.

17.1.13 Mineral Resource Statement (MDA)

Mineral Resources estimated by MDA were classified in accordance with the 2005 CIM Definition Standards for Mineral Resources and Mineral Reserves. The topography used to constrain the estimate is the July 2009 topographic surface.

Mineral Resources are inclusive of Mineral Reserves, and are summarized in Table 17-4 (Measured Mineral Resources) and Table 17-5 (Indicated Mineral Resources) and Table 17-6 (Inferred Mineral Resources). The base case estimate in each table is highlighted.

The Qualified Person for the MDA Mineral Resource estimate is Steven Ristorcelli, C.P.G.

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

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Table 17-4 Measured Mineral Resources, Reported at Various Cut-off Grades (MDA base case at 1.5 g/t Au highlighted)

Cutoff (g/t Au grade (g/t Tonnes Gold Ounce s Au) Au) 1.00 1,416,000 2.59 118,000 1.10 1,260,000 2.78 113,000 1.20 1,128,000 2.98 108,000 1.30 1,017,000 3.17 103,000 1.40 928,000 3.34 100,000 1.50 846,000 3.52 96,000 1.60 777,000 3.70 92,000 1.70 717,000 3.87 89,000 1.80 667,000 4.03 86,000 1.90 625,000 4.18 84,000 2.00 586,000 4.33 82,000 2.50 438,000 5.04 71,000 3.00 351,000 5.60 63,000 4.00 215,000 6.96 48,000 5.00 141,000 8.29 38,000

Table 17-5 Indicated Mineral Resources, Reported at Various Cut-off Grades (MDA base case at 1.5 g/t Au highlighted)

Gold Cutoff Au grade (g/t Tonnes Gold Ounce s (g/t Au) Au) 1.00 2,587,000 2.44 203,000 1.10 2,195,000 2.69 190,000 1.20 1,901,000 2.93 179,000 1.30 1,654,000 3.18 169,000 1.40 1,458,000 3.43 161,000 1.50 1,297,000 3.68 153,000 1.60 1,181,000 3.89 148,000 1.70 1,096,000 4.06 143,000 1.80 1,025,000 4.22 139,000 1.90 964,000 4.37 135,000 2.00 908,000 4.52 132,000 2.50 711,000 5.16 118,000 3.00 578,000 5.71 106,000 4.00 398,000 6.72 86,000 5.00 265,000 7.87 67,000

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Table 17-6 Inferred Mineral Resources, Reported at Various Cut-off Grades (MDA base case at 1.5 g/t Au highlighted)

Gold Cutoff Au grade (g/t Tonnes Gold Ounce s (g/t Au) Au) 1.00 99,000 2.84 9,000 1.10 90,000 3.01 9,000 1.20 82,000 3.20 8,000 1.30 75,000 3.39 8,000 1.40 68,000 3.60 8,000 1.50 63,000 3.77 8,000 1.60 58,000 3.96 7,000 1.70 55,000 4.09 7,000 1.80 51,000 4.27 7,000 1.90 47,000 4.50 7,000 2.00 44,000 4.65 7,000 2.50 34,000 5.34 6,000 3.00 28,000 5.92 5,000 4.00 21,000 6.81 4,000 5.00 16,000 7.45 4,000

Notes to Accompany Mineral Resources Tables:

1. Mineral Resources that are not Mineral Reserves and do not have demonstrated economic viability 2. Mineral Resources are inclusive of Mineral Reserves 3. Mineral Resources are reported at various g/t Au cut-off grades, with the base case highlighted. 4. Mineral Resources are reported as undiluted. 5. Mineral Resources are reported within a conceptual pit shell 6. Mineral Resources are reported using a long-term gold price of US $900/oz, mining costs at US $29 per tonne, with processing costs at US $11 per tonne , G&A $3 per tonne and an average process gold recovery of 93%. The cost of gold sales was estimated to be US $12 per ounce.

17.1.14 AMEC Resource Estimate Review in Support of Mineral Reserve Declaration on Arenal Deeps

AMEC visited the Project site, and digitally reviewed the block model and mineral resource estimates supplied by MDA and found the following:

• All of the important mineralization-controlling faults were appropriately modeled by MDA • The Orosur on-site geologist agreed with the selection of the grade domains by MDA, which were based on breaks in cumulative log probability plots of composites. These breaks are supported by geology and visible in the core as “halo”, “low-grade disseminated pyrite”, or “high-grade extensively deformed”. AMEC is of the opinion that MDA performed appropriate interpretation of the geology to support the domains as suggested by the probability plots. • AMEC inspected the model in north–south sections, east–west sections, and in plan. Domains were found to match composites, and to be well

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constructed. Domain solids were used to code the blocks for grade estimation and also percent of the block contained within the domain. • For each domain contained in a block, MDA estimated a gold grade and stored the volume percent of each domain. AMEC found the Au estimated blocks to match the composites visually. • AMEC agrees with the 5 m x 3 m x 3 m (x, y, z) block size selected by MDA • From examination of box plots, AMEC found the restriction of extreme grades to be reasonable, and the cap values to be acceptable. • AMEC checked the block model estimates for global bias by checking the mean NN model gold grade against the mean IDW model gold grade, the preferred estimation method and used for reporting Mineral Resources. Mean grades were found to match very well. • From a review of the contact plots AMEC agrees with MDA’s selection of hard boundaries used between the domains for grade estimation. The plots show a sharp contact between the selected domains. • AMEC checked for local trends in the grade estimate by comparing mean grade estimation from the NN model against the IDW model at a zero gold cut-off grade in swaths through the model on easting, northing and in elevation. Block domain percents from each block were used to weight the mean grade for each of the domains. The trends are behaving as predicted.

AMEC has found that most operating mines can tolerate random discrepancies between actual production and estimates of contained metal of as much as 15% in a quarter without materially affecting short-term plans. Similarly, deviations from forecast of as much as 15% in any one year do not typically threaten the economic viability of an operation. Therefore, AMEC uses the statistical criterion that yearly ore production grade and tonnage should be known at least ±15% with 90% confidence in order to fall in the Indicated Mineral Resource category. The criterion for Measured Mineral Resources is ±15% with 90% confidence for quarterly production.

AMEC ran the confidence limits test for the Arenal Deeps Project. The test uses the composite CV values, ranges from composite variograms, and an estimated annual production rate. AMEC ran the test twice, once with a nominal underground production rate of 1,500 t/d, and also at 1,000 t/d.

At 1,500 t/d, test results show a nominal drill spacing required for Measured and Indicated as follows:

• Measured Mineral Resource: 15 m x 15 m • Indicated Mineral Resource: 40 m x 40 m

At 1,000 t/d, test results show a nominal drill spacing required for Measured and Indicated as follows:

• Measured Mineral Resource: 12.5 m x 12.5 m • Indicated Mineral Resource: 30 m x 30 m

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AMEC recommends the following rules for classification of resources. The rules are applied using the recommended drill hole spacing from the drill hole spacing study results.

To classify the Measured Resources only a three-hole rule is allowed. This is intended to insure the block is surrounded by data, and the grid spacing used is separate from the one used to classify Indicated resources. The closest sample must be within half the diagonal spacing plus 10%. No small area around a drill hole will be classified as Measured when the grid spacing is greater than that necessary to delineate Measured Resources.

To classify the block as Indicated, two holes used to estimate a block must occur within the required sample spacing plus 10%. The closest sample must be within half the diagonal spacing plus 10%.

After the blocks are classified using the above rules the resource class is checked in section and plan and adjusted if necessary to eliminate isolated pods of blocks that do not show continuity.

AMEC reviewed the MDA resource classification for the Arenal Deeps deposit and agrees with the assignment of the Indicated class and does not agree with the assignment of Measured.

Figure 17-1 shows a cross section through the MDA block model color coded by resource class. The section shows blocks classified as Measured around single drill holes.

Figure 17-1 Resource Classification, Example Cross-Section, 530 650E

MDA Resource Classification, Cross Section at 530,605E Looking West

Measured Indicated

40 m 100 m Class cut-offs 1, 2, 3, 4

AMEC re-ran the classification for both Measured and Indicated using the rules defined in the 1,500 t/d drill hole spacing study and came up with the results shown in Figure 17-2.

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Figure 17-2 MDA Resource Model with AMEC Recommended Resource Re-Classification, Example Cross-Section, 530 650E

AMEC Suggested Resource Classification, Cross Section at 530,605E Looking West

Indicated Inferred

40 m 100 m Class cut-offs 1, 2, 3, 4

AMEC is of the opinion that more drilling is needed to classify blocks at Arenal Deeps as Measured. MDA has shown that the blast hole data predicts a more variable grade distribution than the model predicted by the exploration data alone, although both datasets are within the same spatial volume.

AMEC believes the three hole rule and drill hole spacing defined by the 1,500 t/d drill hole spacing study should be required to classify resources as Measured at Arenal Deeps.

After discussion with Orosur personnel, AMEC agreed to retain the Mineral Resource confidence categories that had been defined by MDA, but would take the resulting uncertainty in the grade distribution into account when classifying Mineral Reserves.

AMEC restated the Mineral Resources using parameters that were derived from the mining studies, which indicated Mineral Resources could be reported at a base case of 1 g/t Au. AMEC also reviewed the upper and lower cut-off grades to ensure reasonable prospects of economic extraction.

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17.1.15 Upside Potential

Silver should to be included in the Mineral Resource estimate as silver is expected to be recovered as a possible by-product of the gold, and the presence of silver is likely to affect the process recovery where silver to gold ratios are over 2:1.

17.2 Open Pit Mineral Resource Estimation

17.2.1 Database

Drill-hole database from OROSUR was used for all deposits. Databases were made using data from five tables: collar, down-hole survey, geology, assay, and geotechnical data table.

Table 17-7 shows the date of closure of the database for each deposit, database format, and software used to estimate the resource.

Table 17-7 Database dates of closure

Deposit QP Date Closure Database Database in Software Veta A MDA July, 2007 Microsoft Access® MineSight® San Gregorio Golder February, 2007 MS Excel® Vulcan® Santa Teresa Orosur May, 2010 Microsoft Access® Micromine® Sobresaliente MDA November, 2006 MS Excel® MineSight® Ombú MDA November, 2006. MS Excel® MineSight® Veta Sur Orosur March, 2010 Microsoft Access® Micromine® Zapucay Orosur May, 2010 Microsoft Access® Micromine® Argentinita Orosur/MDA May, 2010 Microsoft Access® Micromine® Castrillon Golder November, 2008 Microsoft Access® Vulcan® Picaflor Orosur May, 2010 Microsoft Access® Micromine® Crucera MDA July, 2007. MS Excel® MineSight®

Estimation of mineral resources for the mineralized zone of Argentinita was performed in two stages. First stage was an estimation done by Mine Development Associates (MDA) on 31 of August 2007, and second stage was an estimation performed by Orosur’s technical staff for the North Sector in May of 2010, subsequent to a drilling campaign in that sector.

17.2.2 Domains

The number of domains for each deposit was defined in agreement with the mineralization and is shown in Table 17-8.

17.2.3 Geological Model

OROSUR’s Geology staff provided geological guides and performed reviews of the geological interpretations during the modeling process. OROSUR’s geological model is based on interpretations of:

• Zones of mineralization • Zones of deformation

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Mineralization outside the defined domains is discontinuous, was modeled as such, and in all cases was classified as Inferred. During the domain modeling, mineralized intervals where there may have been contamination within drill holes were left outside the domains, resulting in the potentially contaminated samples contributing only to Inferred material. Those criteria used to exclude mineralized samples from making Indicated material were a) if they had a particularly gradational boundary, and b) had a “pregnant” shape (e.g., bulbous lower contact substantially thicker and deeper than the surrounding holes).

17.2.4 Examination of Extreme Values

Various top cuts were applied to domains, depending on the deposit under consideration. Top cuts were established by assessing the point of inflection on a probability plot. Additionally, for high grades on top of 5 g Au/t in San Gregorio and Santa Teresa other restrictions were applied. Table 17-8 shows top cuts for each deposit.

17.2.5 Composites

All drill hole assays were composited into fixed-length 2 m, 3 m or 5 m down-hole composites honoring the zone boundaries in each deposit. Due to the local and presumably discontinuous mineralized intercepts outside the mineralized zones and the high CV, further restrictions were placed on the grade interpolations. Table 17-8 shows fixed-length used.

Table 17-8 Domains, Top Cuts, Composite length

Composite Deposit Domains Top Cuts length gr/t Au m Veta A 1 20 2 San Gregorio 1 14 5 Santa Teresa 5 all 7.6 3 Sobresaliente 2 30 and 5 5 Ombú 2 25 and 8 3 Veta Sur 2 9.6 and 1.5 1.5 Zapucay 3 all 5 2 Argentinita 3 25 and 8 3 Castrillon 1 not capped 2 Picaflor 1 14 1.5 Crucera 3 not capped 2

17.2.6 Variography

Variography was undertaken on all deposit by lithological domain. Variography results were used to determine the most appropriate search ellipse for interpolation.

In Picaflor the results were inconsistent with the mineralized structure and it would not be possible to be used in the interpolation, Orosur defined a method ID3 by interpolation with parameters according to its azimuth and dip of the structure and average distances of drilling.

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In Sobresaliente MDA calculated variograms in numerous directions and lag lengths. MDA ran numerous sweeps both horizontally and vertically and found that the deposit is relatively isotropic.

17.2.7 Estimation Methodology

All reported mineral resources are diluted to full blocks, Table 17-9 summarizes the block size used.

For resource estimation a number of different methodologies were used:

• Ombu, Veta A and Crucera were estimated using ordinary kriging methods. Estimations were done in single passes, separately for each domain. • Sobresaliente and Argentinita were estimated using ordinary kriging methods. Estimations were done in two estimation passes. • San Gregorio and Castrillon were estimated using ordinary kriging methods. Estimations were done in three estimation passes. • Santa Teresa, Veta Sur, Zapucay 1, Zapucay 2 and Picaflor were estimated using inverse distance weighting to the third power (ID3). Estimation was done in single passes, separately for each domain.

Depending on the deposit, maximum distance and minimum numbers of samples and holes were required to estimate a block.

Table 17-9 summarizes the density values assigned to all ore and waste in the block model for each deposit.

17.2.8 Model Validation

Model verification checks were performed in all deposits. A check of cross- sectional and level-plan areas to insure consistency of the level-plan interpretations and the visual validation indicates that the block grades honor the composite grades at their locations.

In Veta A, two additional estimates, using different interpolation methods, one kriged and one using a nearest neighbor estimate, were undertaken. Both estimates compared relatively well at a 0 g/t Au cut-off with the reported ID3 estimate.

17.2.9 Assessment of “Reasonable Prospects for Economic Extraction”

Different cutoffs were used for reporting Mineral Resources based on existing and engineered operating costs for open pit operating conditions. Table 17-9 shows cutoffs used.

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Table 17-9 Block size, Density and Cut off

Deposit Block size Density Cutoff East- North-vertical t/m3 gr/t Au Veta A 3 x 3 x 2 2.6 0.5 San Gregorio 5 x 2 x 5 2.7 0.5 Santa Teresa 4 x 3 x 3 2.7 0.5 Sobresaliente 5 x 5 x 5 2.7 0.7 Ombú 5 x 4 x 3 2.7 0.5 Veta Sur 2 x 2 x 2 2.7 0.5 Zapucay 1 and 2 3 x 3 x 3 2.6 0.5 Argentinita 4 x 4 x 3 2.6 0.5 Castrillon 2 x 2 x 3 2.6 0.8 Picaflor 1 x 1 x 2 2.7 0.5 Crucera 4 x 4 x 4 2.7 2.0

17.2.10 Mineral Resource Statement

Mineral Resources estimated were classified in accordance with the 2005 CIM Definition Standards for Mineral Resources and Mineral Reserves. The dates of topography used to constrain the estimate are summarized in Table 17-10.

Table 17-10 Effective Topography Date

Topography Topography Deposit Date Review Date Veta A July 2007 March 2008 San Gregorio May 2007 May 2010 Santa Teresa May 2010 Sobresaliente November 2006 Ombú November 2006 May 2010 Veta Sur May 2010 Zapucay January 2010 Argentinita July 2007 Castrillon March 2009 May 2010 Picaflor May 2010 Crucera July 2007

17.2.11 OROSUR Mineral Estimate Review

With the Resources estimated by MDA for Veta A deposit, OROSUR developed a pit. The excavation was executed in 2007 and 2008. The area of the deposit did not interfere with the TSF. During the operation of excavation, controlled blasts were performed to assure the stability of the TSF. After ending of operations, the area was reconditioned. The material placed to recondition the area does not affect the viability of the resource. An update of the resources was done in May 2010, using the topography performed in March 2008, after the excavation was finished.

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In the case of San Gregorio deposit with the Resources estimated by Golder, OROSUR developed a pit in the East Extension. The excavation was executed from 2007 to 2010. An update of the resources was done in May 2010 using the topography performed at end of April 2010, after the excavation was finished.

With the Resources estimated by MDA for the Ombú deposit, OROSUR developed a pit. The excavation was executed in 2009 and 2010. An update of the resources was done in May 2010 using the topography performed at the end of May 2010.

With the Resources estimated by Golder Associates for the Castrillón deposit in March 2009, OROSUR developed a pit, in March 2009. The excavation was executed in 2010. An update of the resources was done in May 2010 using the topography performed in May 2010.

All updates were done under the responsibility of Orosur’s Qualified Person, William Lindqvist.

In Argentinita North, additional drilling performed confirmed the same mineralization control, although a little weaker and extending in the zone of deformation, with a power of the mineralized structure of 1 to 3 m.

Mineral Resources estimated by MDA and OROSUR were classified in accordance with the 2005 CIM Definition Standards for Mineral Resources and Mineral Reserves. The topography used to constrain the estimate is the topographic surface from 31st July, 2007. Mineral resources are summarized in Table 17-11.

Table 17-11 Mineral Resources for Argentinita deposit as end of May, 2010

Rpt. MDA (Aug 31,2007) Rpt. Orosur (July,2010) Total Mineral Without Argentinita N Only Argentinita N Argentinita

Ore Ore Ore Resources Grade Metal Grade Metal Grade Metal Tonnage Tonnage Tonnage (g/t Au) (oz) (g/t Au) (oz) (g/t Au) (oz) (tonnes) (tonnes) (tonnes) Measured ------Indicated 1,325,131 1.47 62,592 135, 525 1.71 7,477 1,460,656 1.49 70,070 Inferred 445,077 1.38 19,735 569 2.04 37 445,646 1.38 19,772

The Qualified Person for the MDA Mineral Resource estimate is Steven Ristorcelli, C. P and Peter Ronning, P. Eng.

The Qualified Persons for the OROSUR Mineral Resource estimate are William Lindqvist and Randall Corbett (P.Eng)

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

17.3 Mineral Resource Estimation – Stockpiles

OROSUR has reported Indicated resources for available stockpiles on site as 1,510 kton at 0.75 g/t Au.

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The stockpiles comprise material sourced from various deposits that are stored in separate stockpiles on or near the ROM pad and on the crushed ore cone.

The tonnage of the stockpiles is a result of monthly ore control reconciliation and is supported by regular volumetric surveys performed using conventional methods by qualified surveyors employed by OROSUR. Since this material has already been excavated, estimates of mining dilution and excavation recovery factors have been included using the calculated factors from production ore control reconciliation procedures. It should be noted that ore control reconciliation at the Minas de Corrales Project does vary on a monthly contained gold ounce basis by up to ±20%, however over a longer moving average basis, reconciliation is very stable.

Recently material of these stockpiles was process and results vary in ±10% with the reported ones

Given both variations of this resource, it is the opinion of the OROSUR qualified person that classification is in the Indicated category.

A density value of 2.0 t/m3 was assigned to all stockpiles

The detail of the Stockpiles resource as at 1 June, 2010 is shown in Table 17-12.

Table 17-12 Mineral Resource - Stockpile

Deposit Tonnes Grade (g Au/t) Gold Ounces Arenal- medium grade 402,972 1.02 13,231 Arenal- low grade 413,535 0.73 9,714 San Gregorio- medium grade 13,331 0.92 394 San Gregorio- Low grade 162,349 0.61 3,205 Castrillon 1,104 1.50 53 Santa Teresa- High grade 5,100 1.56 255 Santa Teresa- medium grade 28,087 0.98 882 Santa Teresa- Low grade 483,945 0.56 8,789 Total 1,510,423 0.75 36,523 17.4 Mineral Reserves – Arenal Deeps

The proposed underground mining operation will use two mining methods, inclined room-and-pillar (IRP) and transverse stoping (TS).

Mineral resource estimates include portions of the deposit that lie within the proposed mining outlines, prior to incorporating unplanned dilution and an extraction recovery rate. The application of mineable shapes followed by incorporation of dilution and extraction rates resulted in a diluted tonnage and grade estimate, which forms the basis for the mine production schedule. Mineral resource estimates were prepared for both the IRP and the TS areas.

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17.4.1 Cut-off Grades

The cut-off grade calculation includes costs estimated for mining, haulage (underground to surface and surface haul to the run-of-mine (ROM) pad at the mill), processing, tailings, and general and administrative (G&A) costs. A metal price of US$850 per troy ounce of gold was used to estimate a sales price. Mill and refinery recovery and royalty estimates provided by Orosur were used to estimate the mining cut-off grade, which is shown in Table 17-13.

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Table 17-13 Mining Cut-off Grade Determination (US$850/oz gold price)

Items Transverse Stoping Inclined Room and Pillar

Costs

Mining, $/tonne material $13.59 $18.05

Rehandle $0.50 $0.50

Haul Pit Bottom to Crest $0.47 $0.47

Haul to Mill $0.67 $0.67

ROM Pad $0.75 $0.75

Mill, $/tonne ore $11.20 $11.20

Tailings $1.50 $1.50

G&A, $/tonne material $3.15 $3.15

Total, $/tonne ore $31.83 $36.28

Metal Prices

Gold, $/troy ounce ($/oz) $850.00 $850.00

Gold, $/gram ($/g) $27.33 $27.33

Mill Recovery 91% 91%

Refinery Recovery 100% 100%

Sales Price $27.33 $27.33

Refinery Charges, $/oz $14.00 $14.00

$/g $0.45 $0.45

Realized Price, $/g $24.46 $24.46

Royalty 3% 3%

Mining cut-off grade, g/t Au 1.32 1.51

Use: 1.30 1.50

Note: Process costs used in the financial analysis include the ROM, tailings, G&A and mill costs as a combined process figure. These costs are included in this table not as a single figure, but broken out by specific area.

These cut-off grades were used to create the three-dimensional shapes for the stopes using Vulcan® 3D mine planning software.

The tonnes and grades of material encountered in the drifts that will be required to be developed while accessing the stopes, and in the drill drifts and production

17-20 drifts for the stopes were estimated using a marginal cut-off grade calculation. This is included as Table 17-14.

Table 17-14 Marginal Cut-off Grade Determination (US$850/oz gold price)

Items Development

Costs

Mining, $/tonne material $2.50

Rehandle $0.50

Haul Pit Bottom to Crest $0.47

Haul to Mill $0.67

ROM Pad $0.75

Mill, $/tonne ore $10.10

Tailings $1.50

G&A, $/tonne material $3.15

Total, $/tonne ore $17.69

Metal Prices

Gold, $/oz $850

Gold, $/g $27.33

Mill Recovery 93.0%

Refinery Recovery 100%

Sales Price $27.33

Refinery Charges, $/oz $14.00

$/g $0.45

Realized Price, $/g $26.88

Royalty N/A

Mining cut-off grade, g/t Au 0.77

Use: 0.80

Note: Royalty is based on value at mine mouth. The marginal cut-off grade calculation assumes breakeven at mine mouth, so no royalty is included.

The proportion of Inferred Mineral Resources within the stope shells and development areas is negligible. For the purposes of the mine plan, and the

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financial analysis, all Inferred Mineral Resources were treated as waste, with an assigned zero gold grade.

17.4.2 Dilution

Both of the mining methods considered for underground mining produce varying dilution and recoveries. The overall dilution in a mineral reserve generally comprises two sources, planned dilution and unplanned dilution.

Planned dilution is made up of internal waste or dilution from the designed stope boundary encroaching over the economic cut-off grade shell. This may also be referred to as design dilution. Generally an attempt to increase the recovery of a mineral reserve will increase the planned dilution.

Unplanned dilution consists of waste material produced during the mining of a design envelope or the designed stope shape. This dilution is largely made-up of overbroken material that is outside of the economic cut-off grade shell. Depending on the mining method this material could be waste rock or backfill.

The TS method produces an estimated 8% dilution due to overbreak. Pillars between the stopes amount to 20% of the TS mining volume. The IRP method produces an estimated 5% dilution due to overbreak. Pillars between the stopes amount to 24% of the IRP mining volume.

Pillars are not considered recoverable, and are not included in Mineral Reserves.

17.4.3 Mineral Reserves

Mineral reserves for the Arenal Deeps Project were developed on mineralization that had been classified as Measured and Indicated Mineral Resources. AMEC considered that there was insufficient drill support on a production basis to convert Measured Mineral Resources to Proven Mineral Reserves, thus all of the Indicated and Measured Mineral Resources have been classified as Probable Mineral Reserves. The classifications used for mineral reserves are those outlined by the 2005 CIM Definition Standards for Mineral Resources and Mineral Reserves.

The mineral reserves are presented in Table 17-15. The Qualified Person is John Barber, P.E., an AMEC employee, and the effective date of the estimate is 1 June 2010.

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Table 17-15 Probable Mineral Reserves, J. Barber, P.E., Effective Date 1 June 2010

Contained Ounces Method Tonnes Grade (koz) (kt) (g/t Au)

IRP 276 2.53 22 TS 830 3.25 87 Total Probable Mineral Reserves in Stopes 1,106 3.06 109

Development 462 2.38 35

Total Probable Mineral Reserves 1,568 2.87 145

Notes to accompany Mineral Reserve Table:

1. Underground Mineral Reserves are confined to designed stopes; 2. A cut-off grade of 1.3 g/t Au is used for the TS, and 1.5 g/t Au for the IRP stopes; 3. Mineral Reserves are reported using a gold price of USD850/oz; 4. Tonnages and ounces are rounded to the nearest 1,000, grades are rounded to two decimal places; 5. Tonnage and grade measurements are in metric units, ounces are troy ounces 6. Development is low-grade development material that must be mined while extracting the mineral reserves contained within the stopes

17.4.4 Effect of Changes in Gold Price on Cut-off Grades

After the Mineral reserve estimates were completed, AMEC’s financial analysts agreed that because of the existing process plant and infrastructure, the mine being able start production within one to two years, and the relatively short project life (six years total), the Project could be assessed on a gold price of US$1,000/oz. AMEC reviewed the effect of the change to the gold price assumption on the cut-off grades used to constrain Mineral Reserves (Table 17-16).

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Table 17-16 Mining Cut-off Grade Determination (US$1,000/oz gold price)

Transverse Stoping Inclined Room and Pillar

Costs

Mining, $/tonne material $13.32 $17.36

Rehandle $0.50 $0.50

Haul Pit Bottom to Crest $0.47 $0.47

Haul to Mill $0.67 $0.67

ROM Pad $0.75 $0.75

Mill, $/tonne ore $11.20 $11.20

Tailings $1.50 $1.50

G&A, $/tonne material $3.15 $3.15

Total, $/tonne ore $31.56 $35.60

Metal Prices

Gold, $/oz $1,000.00 $1,000.00

Gold, $/g $32.15 $32.15

Mill Recovery 91% 91%

Refinery Recovery 100% 100%

Sales Price $32.15 $32.15

Refinery Charges, $/oz $14.00 $14.00

$/g $0.45 $0.45

Realized Price, $/g $28.85 $28.85

Royalty 3% 3%

Mining cut-off grade, g/t Au 1.11 1.25

Use: 1.10 1.25

Cut-off grades for both mining methods were lowered as a result of the change in gold price. This indicates that with careful underground grade control, there is potential for minor increases in mineralization tonnages that could be extracted from the designed stopes.

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17.5 Mineral Reserves – Open Pit Deposits

All mineral reserve estimations for Open Pit Deposit were performed by OROSUR personnel under the direct supervision of OROSUR´s qualified person. The Qualified Person is Randall Corbett (P.Eng), and the effective date of the estimate is 1 June 2010.

17.5.1 Dilution

For all open pit deposits, mining dilution of 5% at 0.3 gr/t Au and the a 97% excavation recovery have been applied on a tonnage basis in the conversion of resources to reserves. No dilution or excavation loss has been applied to the stockpile reserves.

These mining factors are approximate to actual performance measured from reconciliations.

17.5.2 Pit optimizations

Pit optimizations have been applied to the Measured and Indicates Resources for all deposits. This was performed using Whittle® pit optimization software.

Parameters of the resource block models used for open pit optimizations are shown in Tables Table 17-17 and Table 17-18 in local mine grid used for each deposit.

Table 17-17 Geological Block Model Parameters

San Gregorio Zapucay Sur Item Ombú Santa Teresa Veta Sur 2 W 1 Block Dimension- metres (East XzNorth x RL) 5 x 4 x 3 5 x 2 x 5 4 x 3 x 3 2 x 2 x 2 3 x 3 x 3 Area Defining Model Easting (m) Minimum 527,203 527,830 526,151 528,966 545,946 Maximun 527,818 529,190 526,517 529,256 546,149 Northing (m) Minimum 6,506,422 6,506,114 6,506,863 6,505,925 6,497,469 Maximun 6,506,738 6,506,492 6,507,597 6506165 6,497,628 Elevation (mRL) Minimum -38.5 -145 0 -15 208.5 Maximun 174.5 230 195 141 241.5 Density of Rock (t/m³) 2.7 2.75 2.7 2.78 2.6

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Table 17-18 Geological Block Model Parameters

Zapucay Sur Item Argentinita Picaflor Castrillon Sobresaliente 2 Block Dimension- metres (East XzNorth x RL) 3 x 3 x 3 4 x 4 x 3 2 x 2 x 2 2 x 2 x 3 5 x 5 x 5 Area Defining Model Easting (m) Minimum 546,106 545,770 528,930 528,901 528,153 Maximun 546,256 546,690 529,200 529,219 528,483 Northing (m) Minimum 6,497,024 6,495,714 6,513,220 6,513,151 6,511,013 Maximun 6,497,282 6,496,526 6,513,640 6,513,639 6,511,798 Elevation (mRL) Minimum 125 8.5 76 21.5 52.5 Maximun 227 245.5 196 210.5 242.5 Density of Rock (t/m³) 2.6 2.6 2.7 2.6 2.7

17.5.3 Geomechanical

Geomechanical assessment by consultants of the existing deposits was used to set appropriate design parameters for optimizations and subsequent designs.

A summary of global stability analysis is shown in Table 17-19 with estimated factors of safety for different ground water scenarios.

Table 17-19 Global Stability Analysis

Overall Roseta Factor of Safety Heigth Elevated Water Wall Zone Wall Angle Azimuth Water Level at Elevated (m) Level during (°) (°) Base Water Level Blasting North 1 200 51 340-110 4.3 3.4 2.9 North 2 200 51 340-110 4.4 3.6 3.1 South 1 200 49 110-340 3.1 2.3 2.1 South 2 200 51 110-340 2.9 2.1 1.8

The relatively high global factors of safety assessed are reflected in the existing San Gregorio, Santa Teresa and Arenal open pits where significant wall sections with overall angle of around 60º show minimal signs of deteriorations after several years. Stability analysis was performed by OROSUR personnel under the direct supervision of OROSUR´s qualified person for Zapucay Sur 1y 2 and Argentinita. A summary of stability is shown in Table 17-20.

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Table 17-20 Zapucay, Argentinita Stability Analysis

Wall Wall Factor of Angle Safety Pit Wall Height (º) (m)

Zapucay Sur 1 General 15 m 46º 7,60

Zapucay Sur 2 Bench 8 m 58º 7,00

Zapucay Sur 2 Inter 36,5 m 57º 2,10 Ramp

Zapucay Sur 2 General 44,5 m 49º 2,12

Argentinita 1 General 32 m 65º 2,10

Argentinita 2 Bench 27 m 60º 2,56

Argentinita 2 General 117 m 48º 1,61

17.5.4 Optimization Parameters

Actual costs were incorporated into the pit optimization process. The cost and commercial parameters used in the pit optimization process are summarized in Table 17-21 and Table 17-22.

Different gold prices were applied to different deposits bases upon the assumed time of processing.

Material for Ombú, Veta Sur and Castrillon, pits started in last fiscal year, therefore $ 850 /oz was applied.

Santa Teresa, Zapucay Sur 1and Zapucay Sur 2 and deposit will be treated and exhausted in the near term, therefore $ 1000 / oz gold.

Sobresaliente , Argentinita and Picaflor production are expected for the end of the fiscal year and the beginning of the next one, therefore $850/ oz gold.

San Gregorio deposit is not expected to complement the process plant feed for approximately two years, therefore $ 850/ oz gold was used to address the potential risk.

It should be noted that there may be conversion of resources to additional reserves at the time of excavation should the prevailing gold price be substantially higher than the assumptions.

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Given the relatively short life the deposits and the reducing capital investment required, it is the opinion of the OROSUR´s qualified person that no discount be applied in the optimization process.

Table 17-21 Optimization Parameters

San Gregorio Item Ombú Santa Teresa Veta Sur 2 Zapucay Sur 1 W Mininig Cost($/t mined) Base Cost $/t 1.8 1.80 1.8 1.9 1.8 Increment per metre depth 0.001 Increment per tonne ore 0.2 0.15 0.25 0.15 5.995 Process Cost ($/ t treated)+Adm 10 10 10 10 10.8 Other Operating Cost ($/ ton treated) 3 3.00 3 3 3 Gold Recovery (%) 93% 93% 93% 93% 93% Base Gold Price ( $/oz) 850 850 1000 850 1000 Assumed Silver Revenue addition (%) Discount Rate 0% 0% 0% 0% 0%

Table 17-22 Optimization Parameters

Item Zapucay Sur 2 Argentinita Picaflor Castrillon Sobresaliente Mininig Cost($/t mined) Base Cost $/t 1.8 1.8 1.8 1.8 1.8 Increment per metre depth 0.001 0.001 0.001 Increment per tonne ore 6.19 6.385 1.51 2.485 2.29 Process Cost ($/ t treated)+Adm 10.8 10 10 10 10 Other Operating Cost ($/ ton treated) 3 3 3 3 3 Gold Recovery (%) 93% 93% 93% 93% 80% Base Gold Price ( $/oz) 1000 850 1000 850 850 Assumed Silver Revenue addition (%) Discount Rate 0% 0% 0% 0% 0%

17.5.5 Effect of Changes in Gold Price

For the know Measured and Indicated Resources, optimizations results are relatively stable around the gold prices assumed. However, it is noted that significant step-wise increases in ore tonnages occurs for each of these deposits.

At San Gregorio, for example; a gold price of $ 1000/ oz would translate into a 50% increase in ore tonnes; a gold price of $ 1200/ oz would translate into a 80 % increase in ore tonnes.

The impact of gold price at the time of excavation will be dynamically evaluated for all open pits.

17.5.6 Pit designs

Pit designs were created using the results of the optimization process. Design parameters are summarized in Table 17-23 and Table 17-24.

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Table 17-23 Pit Design Parameters

San Gregorio Item Ombú Santa Teresa Veta Sur 2 Zapucay Sur 1 W Inter-ramp angle (°) 55 51 48 51 46 Ramp Width (m) 10 ´20-10 10 10 10 Ramp Gradient 10-12% 10% 10-12% 10 10 Batter heigth (m) 3 10 3 2 3 Batter angle(°) 65 65 65 65 60

Table 17-24 Pit Design Parameters

Item Zapucay Sur 2 Argentinita Picaflor Castrillon Sobresaliente Inter-ramp angle (°) 49 48 51 60 51 Ramp Width (m) 10 10 10 10 8 Ramp Gradient 10-12% 10-12% 10-12% 10-12% 12% Batter heigth (m) 3 3 2 3 5 Batter angle(°) 60 60 65 65 65

17.5.7 Mineral reserves

The estimated Mineral Reserves are detailed in Table 17-2.

The estimation of Mineral Reserves has been performed in accordance with NI 43-101. Within the ultimate pit designs of each deposit, Measured Resources have been converted to Proven Reserves and Indicated Resources are converted to Probable Reserves; Inferred Resources have not been used in any reserve estimation.

17.5.8 Open Pits comments

The pit design for the San Gregorio deposit impinges upon the existing ROM pad at the process plant due to the number of haul ramp switchbacks directly below it which are required for access. The removal of the affected area is economically justified (supported by optimization). By-pass of the Low tension power line that supplies the Arenal Workshop was done.

One of the pits of Argentinita intercepts the Zapucay river, a dam has been designed that intercepts it, allowing excavation of the deposit and later reclamation. Later, the dam will be removed, returning the river to the original course. The plans of remediation for the environmental permission have been elaborated.

The Stockpiles were made with material sourced from various deposits and are stored near the ROM pad at the treatment plant. These stockpiles have all been excavated from their respective source deposits and form part of the monthly ore control reconciliation procedure. Factors for mining dilution and excavation recovery have already been applied to the reconciled estimates.

Current rehandling operations from stockpiles are performed, via a front-end- loader which trams each loaded bucket from stockpile to the hopper above the treatment plant’s primary crusher, and via load and haul in truck for the stockpiles

17-29 that are more distant. The ROM pad is well maintained and production experience has shown that only insignificant quantities of loss are suffered through spillage or incorrect excavation.

Given the proven performance of the rehandling operations and the consistency of the results obtained in the process of these materials in the plant with the disclosed values, it is appropriate to convert the Indicated Resource as of 1 June 2010 directly into Probable Reserve without further mining factors being applied.

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18 ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORT ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES

18.1 Current and Proposed Mining Operations

18.1.1 Introduction

Orosur has been mining ore from a number of sources, initially in order to provide mill feed until the Arenal deposit was in production, and subsequently from the Arenal deposit itself. Last year San Gregorio East Extension, Santa Teresa and Ombú were put in production . The yearly forecast for 2010/11 is 56koz gold.

Contract mining utilizing relatively small excavators and road trucks of approximately 18t capacity are engaged in mining satellite vein deposits. Three satellite deposits currently under exploitation are Castrillón, Zapucay Sur 1 and 2. Contractors will also be engaged to varying degrees in the excavation of Argentinita and Picaflor.

Underground mining methods are planned for the Arenal Deeps mine and will be performed by a combination of Owner and contractor mining crews.

The current Orosur reserves are sufficient for a project life of over 5 years feeding the existing process plant.

Given the project’s experience with converting Inferred Resource to feedstock, the pending engineering evaluation of existing resources and the on-going exploration programs, it is reasonable to conclude that the remaining mine can be extended beyond 5 years.

18.1.2 Open Pit Mining Method and Equipment

Mining is by conventional drill and blast, load and haul open pit methods using 3m benches. In some cases 6m benches are blasted to facilitate the mucking cycles. At lower levels, with tight working conditions, three 3m benches are sometimes blasted to better manage the swell from blasting.

The mobile mining fleet of Komatsu haul trucks, excavators and auxiliary equipment was purchased new and commissioned during September 2004 to March 2005 and another excavator in November 2008. Two new Tamrock Pantera 1500 blasthole rigs were also purchased at the end of 2004 and another in July 2007. The mobile mining fleet is serviced and maintained to industry standards and is in good condition. Over the next two years consideration will be given to replacement equipment in accordance with the changing reserve position and specific machine performance.

18.1.3 Open Pit Grade Control and Reconciliation

Grade control sampling at all deposit are performed by collecting two 3m bench samples from each blasthole drilled by the Tamrock rigs, assisted by visual control. This method has proven to be effective, however, as part of Orosur’s

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continuous improvement efforts, investigations are underway concerning the use of RC sampling of multiple benches ahead of production.

Blasthole samples are collected at the drillhole collar using a plastic tube. Samples are collected from every blasthole having an approximate burden and spacing of 4m and 5m. The blastholes are surveyed by the mine survey team and all blasthole information (hole positions, hole numbers, assay results and geological information) is plotted on Micromine™ thus allowing ore blocks to be manually drawn onto the plans using geology and a 0.5g/t Au lower cutoff grade. The grades for each polygon are currently being determined by an ID2 model using bench blasthole assays in Micromine™. The final ore blocks are marked up in the pit by the survey team.

Reconciliation is being tracked on a monthly basis comparing the geological model, ore control and the process plant. Cumulative reconciliation is stable and supports the mining factors applied to resources, however reconciliations on a monthly basis show variation of up to ±20%. This obviously indicates a timing issue between the reconciliation procedures and the actual results obtained. Whilst this does not represent a material issue to Orosur, the policy of continuous improvement will be applied to optimize operational practices.

18.1.4 Open Pit Sequencing

Arenal Deeps ore will be hauled to the treatment plant every month and it represents a minor percentage of total material moved.

During the first semester of operation Veta Sur exploitation is going to be finished. The equipment that will be available after finishing Veta Sur, will be used to start civil works in the TSF2.

The first year of production mining equipment will be allocated to Sobresaliente, Santa Teresa and moving waste in Zapucay. At the same time, waste from Santa Teresa will be used for the construction of TSF2 and the closure of TSF1. Exploitation of Sobresaliente ends at the beginning of the second year.

The mining of Zapucay, Argentinita and Picaflor was planned in order to maximize plant production during the first years of the mining schedule. These deposits are mined using Contractors.

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18.1.5 Underground Mining Operation – Arenal Deeps

Sections through the planned mining operation are given in Figure 18-1 and Figure 18-2.

18.1.6 Transverse Stoping

The TS method will consist of primary and secondary stopes. Primary stopes will measure 50 m long by 20 m high by 20 m wide. Secondary stopes will have the same maximum dimensions, but include a 6 m internal pillar. An 8 m wide pillar will be located between the primary and secondary stopes. The pillars will allow backfill material to consist solely of waste rock, without requiring any cement.

The top cut (drill drift) and bottom cut (production drift) for all stopes will be driven at 5 m high by 5 m wide. The primary stopes will have a drill drift driven along both sides of the stope. This will allow vertical holes to be drilled along the edges of the stope, which will provide for better blasting control along the pillars. The secondary stopes will reduce the amount of development by only driving one central drill drift for each stope.

Mining will commence in the central primary stope on the lowest mineralized level and continue in adjacent primary stopes. A longhole drill will commence production drilling from the drill drift level. A drop raise will be blasted out followed by a slot blast, which will provide the necessary void for the remaining blasting sequence. A 50 m long stope will be immediately backfilled following mining. Backfill will be dumped from the drill drift into the empty stope using a load–haul–dump (LHD) unit. Following completion of the primary stopes, mining of the adjacent secondary stopes will commence. This pattern of extraction will continue vertically until the mineralized zone is depleted.

Immediate backfilling in both primary and secondary stopes is critical to the success of the mining method. Delayed backfill will likely result in pillar sloughing, ore loss, and potentially, stope failure.

18.1.6.1 Inclined Room and Pillar The IRP method will be used along the footwall of the ore zone where the ore is on average less than 10 m thick. The method will use a production drift, which is driven to the end of the ore zone. These production drifts will be driven up to 8 m wide with a shanty back on the hanging wall side of the drift to minimize overcut dilution. Once the production drift is complete on the level, the stopes (above the production drift) will then be mined retreating toward the level access drift.

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Figure 18-1 Mine 3D View, looking North

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Figure 18-2 Mine 3D View, Looking West

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The stopes, between the development levels, will be 7.5 m high by 15 m long, followed by a 10 m long pillar. The pillar will ensure stability of the area without the need for backfill, which will help keep the operating costs low for this mining method. There is an area in the design whereby the two mining methods will be adjacent to each other. In general, mining will progress from hanging wall to footwall. In this case the TS mining will take priority over the IRP method. This effectively means that the IRP method will be postponed until the completion of the TS mining. Detailed design of this interface cannot be undertaken until the ore zones are exposed in underground workings.

18.1.6.2 Development – Arenal Deeps

18.1.6.2.1 Portal Mine access will be provided via the portal located near the bottom of the existing open pit. The mine decline will serve as the primary access point for the underground workings. The decline is located north of the footwall zone to take advantage of the more competent rock. By keeping the location of the decline away from the fault area, which has poor ground conditions, the time and cost needed for the required ground support was reduced.

All mining and supervisory personnel will enter the mine through the portal via personnel carriers and pickup trucks. Some service lines including the primary electric power supply and dewatering discharge lines will be located in the decline. All waste and ore production will come out of the portal; additionally, all underground materials and supplies, including ANFO, concrete, rockbolts, and maintenance supplies will be delivered to the underground workings through this access.

18.1.6.2.2 Egress The main decline portal will be the primary means of egress over the life of the mine. Secondary egress, which is planned to be starting in July 2011, will be the ventilation raise to surface from the -20 level. Inclined ventilation raises will connect to development levels every 25 m. These raises will be supported and furnished with ladderways to provide secondary egress as well. In addition to serving as the primary production haulage route, the decline is also the sole means for distributing fresh air to various levels in the mine.

18.1.6.2.3 Development Levels Due to the combined use of IRP and TS mining methods, the main accesses are spaced ever 25 m vertically. This spacing is based on two IRP mining horizons. The IRP is mined along the footwall of the ore zone. This requires all of the accesses for the transverse stopes to be driven “through” the IRP areas. The IRP is mined on 12.5 m vertical horizons. The decline is therefore designed to access every second IRP mining horizon with a central access. The offset mining horizon is then accessed for either end of the decline.

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Truck loading arrangements are at each main level access. The intersection with the decline and the level access will have the back height increased to 6.5 m. The truck can then be side-loaded by the LHD

18.1.6.2.4 Pump Stations Pump stations are excavated and constructed on the -70, -145, -220, and -245 levels. Every other main access has a sump station to collect water draining from the level. Drain holes from the sumps will direct the water down to the next pump station.

18.1.6.2.5 Compressed Air A 1,200 cfm capacity compressor will be located on surface outside the portal to supply the maintenance pad and the mine. Onboard compressors on the drill jumbos and production drills will have sufficient capacity to allow these units to operate without additional compressed air requirements. It is assumed that the raise contractor will supply a portable compressor required to operate the raise climber.

18.1.6.2.6 Explosives Magazine Powder and cap magazines are included in the mine design. The magazines are located underground because there is not enough room on surface in the laydown area outside the portal to store explosives and placing the magazine outside the open pit greatly increases the cost and transportation time of the explosives to the working areas underground.

The magazines are located along a bypass drift parallel to the main decline approximately 200 m inside the portal. This location was selected because it causes less congestion with the underground activities. The configuration of this area will be such that one cut out will be driven for each type of explosive material. This will include a cap magazine, ANFO magazine, and emulsion magazine. A stope blast of approximately 70% of the total transverse stope was used as the criteria to determine the storage size of the cut-outs.

18.1.6.3 Ventilation – Arenal Deeps Ventilation design is based on providing sufficient airflow to specific mining locations to dilute contaminants to acceptable exposure limits. Mine contaminants include diesel exhaust, blasting fumes, and dust. The ventilation system is designed as an exhaust system, with the main exhaust fan creating negative air pressure at the mine entrance. All the mine’s return air raises are connected at each main development level from the -245 level up to the -20 level. From the -20 level the main vent raise exhausts the air to surface.

The production headings (drill drift and mucking drifts) are driven with fresh air being supplied to the face by auxiliary fans and ventilation bags pulling fresh air off the decline. As fresh air is forced into the working face, the exhaust air is forced out the stope access drift and pulled into the ventilation raise system. The fan on surface pulls the exhaust air up the ventilation raises and out of the mine. Ventilation doors at the access to each ventilation drift prevent short-circuiting of the air in this system.

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All main accesses will have a vent station to connect the ventilation raises between levels. Each ventilation raise access will also serve as the access for secondary egress out of the mine. All secondary egresses are located within the ventilation raises.

18.1.7 Mine Production Schedules

A mine production schedule has been developed by Orosur for the next 5 years as shown in Table 18-1.

Table 18-1 Life of Mine Plan

Mine Production 2010/11 2011/12 2012/13 2013/14 2014/15 Total Mine Excavation t 6,993,460 5,350,360 7,202,365 518,096 4,452,663 Total waste Excavation t 5,959,596 4,374,181 6,202,299 0 3,690,000 Total Ore Excavation t 1,033,864 976,179 1,000,066 518,096 762,663 Gold Ore Grade gpt 1.53 1.76 2.13 3.01 2.19

Plant Production Throughput t 1,400,000 1,400,000 1,000,066 1,000,000 1,001,233 Gold Head Grade gpt 1.32 1.41 2.13 1.97 1.87 Contained Gold Ounces oz 59,540 63,587 68,569 63,306 60,192 Recovery % 92.2 92.5 93.0 93.0 93.0 Recovered Gold Ounces oz 54,875 58,799 63,769 58,875 55,979

It is intended to produce approximately 56kozpa from all ore sources for the next financial year and as close as possible in accordance with the available grade from then on. The reader should note that due to the dynamic nature of the project’s evolving resources and reserves, changes are being evaluated on a routine basis.

This forecast is based upon the following assumptions:

• The performance of the mobile open pit mining fleet maintains its current levels of availability, utilization and productivity of the mobile equipment mining fleet maintains the actual performance with allowance made for aging.

• The metallurgical response of the ore maintains its performance actually achieved through the existing process plant.

• High excavation rates in comparison to the processed tonnage reflect the plan to provide an elevated head grade to the plant and to utilize equipment capacity.

• On-going near mine exploration is seeking additional deposits for future feed supplementation.

• Civil excavation of capital projects are included in the forecast. These include acceleration of the waste excavation sequence of Santa Teresa and San Gregorio pits. The accelerated waste sequence is to take advantage of equipment capacities to construct a new TSF and closure existent TSF.

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18.2 Tailings Storage Operations

About 4,642 Mm3 of tailings are expected to be generated in the period 2012 to 2017. The dam was expected to also accommodate about 500,000 m3 of water (based on operating experience gained with the current TSF) and an additional 500,000 m3 of water that would correspond to the design 1:10,000 year storm event (400 mm of rainfall falling in the one event). Orosur requested an additional 50% design capacity on these figures, to ensure TSF2 could accommodate any future mining expansion.

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Figure 18-3 Tailings Dam Layout

A similar layout was planned to that of the current TSF. Tailings will be contained within a rock bund, and deposited on a high-density polyethylene (HDPE) geomembrane laid on a compacted clay substrate. Tailings will be pumped from the process plant through pipes placed within a channel waterproofed with the same material. The TSF2 will be segmented (or separated) between areas of the dam with mobile decant return pumps. Four phases of lift are planned in the current TSF2 design, with potential for a fifth if required.

At closure, the TSFs will be pumped dry, and a soil cover applied. Slopes will be allowed to naturally re-vegetate.

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Surface structures and equipment in the dam vicinities will be removed with the only remaining infrastructure allowed to remain being monitoring structures in the discharge channels.

18.3 Infrastructure and Services

18.3.1 Introduction

Infrastructure and services are considered in place for open pit project, new complements are required for underground mine development.

18.3.2 Transport

The San Gregorio operations have been in production since 1996. There is a well-developed transportation system for delivering materials and supplies to the operation from all points in Uruguay, neighboring countries (Argentina and Brazil), and South America in general. The Orosur logistics personnel are knowledgeable and can arrange for transportation as required. Delivery of ore from the Arenal Deeps Mine to the San Gregorio mill will be by means of Orosur haul trucks (Komatsu 465 (50 t)) over Orosur haul roads.

Access roads are in place and have been used by Orosur for operations. The haul road from Arenal to the San Gregorio process facility is in good shape and is regularly used. The haul road weak spot is the causeway over the river near the mine. This occasionally floods and is closed. When this happens, personnel can access the mine via alternate routes, but use of the haul road, hence ore haulage is stopped. When this happens, mining will continue, ore being stockpiled at the pit crest, and haulage recommenced after the road is re-opened.

18.3.3 Power

Power is supplied from the national grid, and some 3,400,000kW of power are purchased from the grid each month to supply an overall power consumption on the project of 4,800kW per operating hour. A backup power plant is available; however this is only sufficient to run the leach plant.

Power generation in Uruguay is predominantly via large hydro electrical schemes on major rivers and artificial lakes. As such, the risk of power shortages increases with long periods of abnormal dry weather. During the ownership of the project by UME, no long term interruption of power supply has been suffered. Power provision remains an important issue for Uruguay’s industrial development and is being addressed with long term strategies by the government.

The Arenal Deeps will receive electric power from the Uruguay National grid, via a 15 kVa transmission line originating at Orosur’s Minera San Gregorio substation.

A 15 kVa pole line will deliver the power to a new mine substation to be built at the mine site. The supplied 15 kVa electricity will be stepped down to 4160 VAC for distribution around the mine site.

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The mine is ramp access, expected to have very low water inflow, and has no significant thermal gradient. From the bottom of the mine (-240 level) to the portal is less than 2 km walking distance (at +15%). AMEC is not aware of any poisonous or flammable gases in the deposit. There are no hoists or electrically- powered man riding conveyances in the mine.

Orosur Management has elected not to install a dedicated emergency power backup system or a secondary ring main with 100% redundancy.

If a complete power failure should occur and no emergency backup power system is in place, Orosur would experience a loss of production and potential flooding, but from a safety standpoint, all personnel underground could walk to the surface in less than an hour.

18.3.3.1 Power – Arenal Deeps Power will be supplied to the proposed underground mine by means of a 15kV high-resistance grounded system. The total estimated underground production loads peak at 2,092 kW during Year 3

Power will be provided by two (independent) cable feeders, routed separately, and operated redundantly. The portal power system will be provided by a 15kV/4.16 kV system, utilizing a 3 kVA transformer.

Mine load centers (MLCs) will be located at the -70, -145, -195, and -220 levels. The MLCs will feed power to production and development equipment and will be heavy-duty, skid-mounted power supplies, similar to unit substations. The MLCs will be 380 V, which will feed jumbos, bolters, ventilation fans, portable compressors, and auxiliary pumping needs.

18.3.4 Buildings

Apart from the administration offices, other buildings comprise the generally expected warehouse, workshops, laboratory etc. Orosur has made a number of improvements in this area, including the construction of new workshops for the Komatsu fleet and significant upgrading of other facilities.

18.3.5 Fresh and Potable Water System

Water is supplied from a raw water dam upstream from the TSF. The dam captures the local catchment and has provided sufficient capacity to date. Process water is recycled from the TSF and at times relatively fresh water is sourced from inoperative open pits which catch rainwater and groundwater.

Potable water will be delivered in tanks or as bottled water as is currently the situation at Arenal open pit and other parts of the Orosur operation. Service water for the mine will be recovered from the mine discharge and recycled. Makeup water will be brought in by tank truck from Orosur’s process water supply. The requirements for make-up water are expected to be minimal.

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18.3.6 Fire Protection

All mobile equipment for the underground and open pit mine will be equipped with Ansull, or equivalent, fire suppression systems. The shops and offices at Minas de Corrales Projects are equipped with fire extinguishers. Surface facilities will be provided with fire extinguishers of suitable capacity. Fire trucks are available from the town of Mina de Corrales and agreements are in place to support the mine if needed. Orosur maintains an ambulance and trained personnel on site

18.3.7 Sewerage and Waste Disposal

Industrial waste is disposed of in various approved disposal sites on the Orosur MSG operations. Chemically-hazardous waste from the process plant is disposed of in the permitted tailings storage facility. Sewerage at the offices is sent to a septic system and leach field. The system will require minor modifications to accept waste from the underground mine. The underground mine and portal will be equipped with portable toilets. Sewage from the underground mine will be hauled in tanks to the surface and transferred into the existing system.

18.3.8 Security

Security is provided by GRI, a special service division of the Uruguayan police force. Orosur’s process plant has controlled access. Access to the Orosur operational areas is guarded by a security post, but there are no internal security checks, except at the process facility.

Explosives are stored in locked, secured magazines

18.3.9 Site Drainage

Drainage into the Arenal open pit area will be controlled by a ring of berms and dykes around the pit. Rainfall prevented from entering the open pit by these berms will flow by gravity into the surrounding land and, eventually, into the local drainage. This water will not have come into contact with any industrial areas, so does not require treatment. Rainfall that drains into the Arenal open pit will be collected in the pit sump for pumping to the surface. Drainage from around the existing shop and office area will be treated per the existing permits.

18.3.10 Mine Water

Mine discharge water is expected to be of limited quantity, but will likely be contaminated with oils, hydrocarbons, and sediments. Underground, much of the sediment will be settled out. When the water is pumped to the surface at the portal, it will flow into an oil skimmer and be discharged into the pit sump. Water from the pit sump will be reclaimed for use as service water in the mine. Excess water will be pumped to surface for treatment and discharge.

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18.3.10.1 Dewatering – Arenal Deeps The overall objective of the dewatering system is to provide an economic, robust and reliable drainage and pumping arrangement. AMEC has assumed two, parallel, pump systems for the open pit dewatering. This assumption is based on Orosur continuing to use the existing 800 gallons per minute (gpm) dewatering system. A total of 1,800 gpm of dewatering is required to avoid overflow to the laydown area or the portal to the underground mine. Therefore, the second system or new parallel system is based on 1,000 gpm total flow using a Flygt submersible pump to a separate tank and a Peerless end suction pump to the high point to the marsh, together with the associated parallel piping system.

The underground mine dewatering pump capacity is based on an expected infiltration flow rate is 1,200 m3/d or 14 L/s. Pump utilization was assumed at 50%, to support a safe dewatering operation, and to provide additional capacity should water inflows that are above the expected rate be encountered. The resultant pump capacity was selected at 2,400 m3/d or 28 L/s.

Each level will have a water collection area with a drain hole down to the next level until a pump station level is reached. At level -70, -145, and -220 masl, dirty water will be collected behind a concrete stem wall with an attached Warman end suction centrifugal pump. The respective pump will pump water up to the next pump station or out of the underground mine and into the open pit sump as applicable.

A double lift pumping arrangement is recommended for the existing open pit. The double lift method will be similar to an existing double lift dewatering arrangement in use at the mine today. It is assumed that the existing dewatering system capable of moving 51 L/s or 800 gpm will remain in use. Dirty water would first be lifted from the effective hydraulic lower elevation (- 20 masl) in the open pit sump up to approximately 42 masl into a transfer tank. The second lift is from 42 masl to the high point in the pipe routing to the discharge point in the marsh (130 m masl).

The objective in selecting the following pumping rate was to maintain the water level in the open pit sump at a point that would both avoid overflow into the pit laydown area or into the underground mine portal during maximum inflow of water from both rain and underground mine dewatering. The pumping rate for the open pit is based on a measured peak rainfall of 300 mm falling over a three- day period in the watershed of the pit. Additionally, the pit sump will receive the discharge of the underground mine 2,400 m3/day or 440 gpm. A pump down period of 14 days was selected as reasonable. This resulted in a total pump rate of 9,342 m3/d or 1,800 gpm.

18.3.11 Communications

The San Gregorio mining operations are serviced by telephone, cellular phone, and internet access. The project is also linked to the national optic fiber communications network.

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18.3.12 Fuel Storage

Fuel storage shops were sufficient to support the open pit and underground mining operations. The fuel and oil storage facilities are operating under existing permits.

18.3.13 Roads

Access roads are in place and have been used by Orosur for operations. The haul road from Arenal to the San Gregorio process facility is in good shape and is regularly used. The haul road weak spot is the causeway over the river near the mine. This occasionally floods and is closed. When this happens, personnel can access the mine via alternate routes, but use of the haul road, hence ore haulage is stopped. When this happens, mining will continue, ore being stockpiled at the pit crest, and haulage recommenced after the road is re-opened.

18.4 Hydrogeology – Arenal Deeps

A hydrogeological review of the Project has been made by Ingesur srl of Montevideo (May, 2010). This review and analysis is a combination of empirical and numerical modeling and is based on the hydrogeological history at Arenal San Gregorio mine, combined with water level measurements around the Arenal open pit.

Modeling was performed to develop a conceptual model which was then back- analyzed based on historical water level measurements to determine a possible range of water inflows. At present, no packer testing has been performed in the various rock mass domains and permeability values have been determined based on pumping tests.

Based on hydrology and hydrogeology modeling, the potential inflows into underground have been estimated to reach the order of 17 L/s (1,500 m3/ day) and for this study steady state seepage at 14 L/s (1,200 m3/day) has been assumed. For the present study it has been assumed that mine dewatering will be adequate and that open stope and room-and-pillar mining will be performed under dry conditions i.e. < 5 L/min (0.08 L/s).

The present weakness that exists is confirmation of the permeability of the H1 (the predominant shear zone that controls the hanging wall of the orebody), F1 (the footwall shear zone that controls the orebody), and termination fault structures, and although a relatively conservative permeability value has been used, AMEC recommends that this is confirmed with packer testing within these units and all of the rock mass domains.

18.5 Rock Mechanics – Arenal Deeps

The rock mechanics review identified two key zones:

• Zone 1 is relatively thick from 20 m to 50 m and 160 m along strike is located at a depth below surface from 360 m to 280 m. The hanging wall

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and footwall of this zone varies from 90º to 40º. This zone is most applicable to mining by transverse open stoping. • Zone 2 has a relatively consistent average ore thickness of 8 m (range 4 m to 15 m) and has continuity along strike for around 170 m. This zone is located at a depth below surface from 300 m to 140 m and dips on average at 45º. The possible mining methods that are appropriate for this geometry are cut-and-fill or inclined room-and-pillar mining. The latter has been assessed for this region.

The rock mechanics review and analysis for the proposed underground mining operation was based primarily on a combination of analysis of geotechnical logging of oriented core (59 holes, dipping at 60º to 70º totaling 7,176 m), laboratory strength testing (66 Uniaxial Compressive Strength, 26 Brazilian tensile strength, 36 triaxial strength tests and 24 point load tests), and some limited surface mapping on the existing open pit walls to identify the structural discontinuities. Current evaluations are based primarily on accepted empirical analyses, numerical stress modeling using three dimensional linear elastic modeling, and experience at other similar operations. During the underground development ongoing studies will be performed, and as with all operations, additional site information will become available during mining.

18.5.1 Intact Rock Testing Summary

Based on local geology for the open pit and underground mining areas, there are 11 main structural domains, including five ore zone domains. The ore zone is contained between two major faults, however, it should be noted that these faults are healed structures and do not contain soft gouge material, but generally have a lower RQD.

The strongest rock unit encountered at Minas de Corrales in Arenal Deeps is FW Granites, followed by Diorite, and the ore zone, and the weakest units being the Dyke.

The pillar design is fundamentally based on the ore UCS and underscores the importance that additional UCS laboratory testing should be performed for ore zone rocks. This testing should be targeted primarily on the two key zones that have been designed in this study, to improve confidence in the mean UCS. It should be noted that during the development of any new mine as additional data becomes available this will be incorporated into the design. Mine design should always be progressive and evaluate the conditions during the development of drifts and access ways.

18.5.2 Joints

Based primarily on oriented core and a check of limited open pit wall joint mapping, the main dominant joint sets in each one of the structural domains have been identified.

Drilling has been preferentially oriented to the north (trend 000º–025º) and plunging generally between 65º–75º. The result of this is preferential bias of the sub-vertical foliation set and minimal intersection of any north–south-striking

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joints. It is highly recommended that additional geomechanical drilling is performed in other directions such as in an east–west orientation to reduce this bias. A significant amount of scatter of joint poles exists around the borehole axis, which may be attributable to the logging of mechanical breaks. Any future core orientation should be performed with strict logging of only natural fractures and a core orientation quality assessment from run to run should be made.

It would also be beneficial to perform acoustic televiewer logging of selected boreholes to supplement and verify the present core orientation data.

18.5.3 Rock Mass Characterization Summary

An assessment of the rock mass qualities that comprise the underground deposit and specific mining zones was determined from the geotechnical logging of oriented core based on the boreholes logged by Arenal Deeps project geologists and reviewed by AMEC. The poorest-quality rock mass is found in both the faults, which are generally characterized by a lower RQD and smooth joints and can be classified as a poor quality rock mass based on the Q-system. The next lowest quality rock mass is that of the hanging wall monzonites, which can be classified as a fair quality rock mass. The best and most consistent quality rock mass is that of the footwall granites and diorite which can be classified as a good quality rock mass. The two ore zones show behavior that is observed between the two faults with increase rock mass quality approaching the footwall fault. Ore zone 1 (OZ1) is a reasonable quality rock mass and can be classified as fair to good, while the ore zone 2 (OZ2), which is closer to the footwall, can be classified as a good rock mass.

18.5.4 Insitu Stress Regime

No in-situ stress measurements have been published to date in Uruguay. Based on the world stress map (Heidbach et. al., 2005), the orientation of the maximum principal in-situ stress direction is horizontal in a north–south direction (trend 015 degrees) and is perpendicular to plunge of the orebody. Based on experience this fits well with the development of the orebody direction and provides a maximum stress magnitude orientation on the deposit.

18.5.5 Stope Design

Transverse stoping has been considered for Zone 1 and based on the grade cut- off shell for this region, the hanging wall of the deposit varies between 90 degrees to 40 degrees from the bottom of the zone to the top. A primary– secondary stope mining sequence has been suggested, and due to the low grade, uncemented rock fill has been proposed as a backfill material. In order that the secondary stopes can be mined successfully, 8 m wide transverse barrier rib pillars will be left between stopes to contain the backfill material that is required to maintain global stability and stability of the hanging wall for successive lifts of stopes. The width of these barrier rib pillars were determined based on pillar stability analysis and numerical modeling.

If a maximum stope strike length of 20 m is used. then stope hanging walls will require cable bolt support to maintain stability, and for the shallowest hanging

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wall, would be stable for a supported strike length of 24 m. Stope backs would require cable bolt support for stope widths (ore thickness) exceeding 19 m and would be stable with support for the maximum ore width of 50 m. Endwalls will be stable unsupported for ore widths of up to 50 m. Internal vertical ore hanging walls will be stable without support for a 20 m wide stope strike.

The mining method that is proposed for Zone 2 is based on the non-entry method of room-and-pillar mining. All room-and-pillar methods require a balance between the size of the room and the size of the pillars, such that pillars must be stable at final extraction. Here the method is proposed to mine from a top-down retreat sequence, accessing the ore along strike from 8 m wide ore strike drives that are separated by a 12.5 m sub-level spacing.

Pillars have been designed to be 10 m wide with 15 m wide rooms along strike in order to maintain hanging wall stability. Rooms and pillars are offset on sequential levels below and will be developed by drilling up-holes and down- holes from the strike drives. The open stope stability graph method is considered strictly for non-man entry mining situations, which means that no personnel should ever be in the open stope or room area.

The actual hydraulic radii that will be developed between the pillars is 4.7 m based on a 45 degrees inclined hanging wall length 24.7 m and room width of 15 m. Thus based on the rock mass rating, the hanging wall should remain stable without the requirement of cable bolt support. However, it will be essential to maintain the hanging wall beam, which will require ore strike drive to have a shanty hanging wall of 65 degrees and to follow the determined ore boundary to prevent notching of the hanging wall. If local conditions indicate that the rock mass quality is lower than design then cable bolt support could be placed from ore strike drives to aid hanging wall stability.

18.5.6 Stress Modelling

In order to determine mining induced stress required for the stope dimension stability analysis and to determined average core pillar stresses for pillar stability analysis, three dimensional linear elastic modeling was performed for variations of each mining geometry using Map3D™ (Mine Modeling Ltd., 2010).

The numerical modeling indicates that the induced stress levels in the deeper zones at the core of the TS pillars range from around 25 MPa to 35 MPa and indicate that some stress induced fracturing may occur; however, no significant stress effects in the upper region of the ore zone are anticipated, which range from 20 MPa to 25 MPa. Stress spalling is generally considered to occur at around 0.3 to 0.4 UCS (here a UCS of 93 MPa for the ore is assumed) based on brittle failure of rock and rock masses (Martin et. al., 1999). These higher stresses in the bottom stopes are only developed following multiple lifts towards the end of the sequencing which is advantageous considering that these deeper rib pillars will be confined by backfill.

Based on the numerical model results, 8 m rib pillars with 6 m bridge pillars form the optimum stable pillars during the mining activities in the TS areas. Due to the irregular and “roll-over” shape of the orebody, very few secondary blocks would

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require the bridge pillars. However, the advantage is to shorten the effective rib pillar height and reduce the potential for buckling failure.

The recommended pillar sizes are 8 m for the rib pillars and 6 m for the bridge pillars in secondary blocks. Eight-meter rib pillars are preferred over the 6 m ribs as there is an additional buffer if some sloughing or over-mining of the rib pillars occurs. As the bridge pillars will be de-stressed, the 6 m width is expected to be adequate. It will be essential to prudently backfill all stopes as rapidly as possible to maintain stability.

In order to determine a preliminary room and pillar geometry for the IRP areas, first order approximation to pillar stresses was performed based on the tributary- area method (Hoek and Brown, 1980). Six different scenarios were analyzed using this analytical method to determine pillar stresses for different extraction ratios and geometries based on a set sub-level spacing of 12.5 m.

The pillar stress increases with depth, with pillars in the upper part of the zone in the range of 20 MPa to 30 MPa, with an increase to 30 MPa to 35 MPa in the lower zone. Additionally, the edges of the pillars in the deeper section might be anticipated to have some stress-induced fracturing and stress slabbing.

18.5.7 Ground Support Design

Cable bolt and ground support recommendations for the Arenal Deeps Project have been determined based on the present geotechnical information through an assessment of pit wall geotechnical mapping, geotechnical borehole logs, assessment of stope geometry and anticipated stress conditions. Support requirements are summarized in Table 18-2.

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Table 18-2 Primary Ground Support Standard

Span

< 5.5m > 5.5 m

1.8 m mechanical point anchor in the 1.8 m mechanical point walls anchor in the walls

1.8 m mechanical 2.4 m mechanical point point anchor in the anchor in the back back 9 ga 1.8×3 m welded 9 ga 1.8×3 m welded mesh screen down to mesh screen down to 1.5 m walls 1.5 m walls

1.8 m resin rebar/split sets in the walls

Fault (±10 2.4 m resin rebar in the back m either Development side of the 9 ga 1.5×3 m chain link mesh screen down to bench fault along (Tekflex/shotcrete is optional) – 7 cm Shotcrete potential for the drift) 25% of the cross-cut - where fault is exposed

6 m single cable bolts on a 2.5×2.5 m pattern in the back

1.8 m mechanical point anchors in the walls

2.4 m mechanical point anchor in the back Intersection 4.8 m Extension bolts in the back in square pattern (3 m (Span <10 spacing) – 6 m cable bolts on a 2.5 m×2.5 m pattern where m) span > 10 m

3 rows of mesh screen with 2.4 m rebars in the corners for long term intersections (>1 year)

Longitudinal Sub Level 1.8 m mechanical point anchor in the walls Stopes (Stope 2.4 m mechanical point anchor in the back width <20 m and the Height <45 9 ga 1.8×3 m welded mesh screen to 1.5 m walls m)

Span: 5.5 – 10 m Span: <5.5 m Production 1.8 m mechanical point 1.8 m mechanical anchor in the walls point anchor in the Room and walls Pillar (Span 2.4 m mechanical point <10 m, anchor in the back Height 5 m) 2.4 m mechanical point anchor in the back 9 ga 1.8×3 m welded mesh screen to 1.5 m walls 9 ga 1.8×3 m welded mesh screen to 1.5 m 4.8 m extension bolts

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walls in the HW and back

18.6 Taxes

Following there is a description of main taxes in Uruguay for a gold mining company.

18.6.1 Corporate Income Tax (IRAE):

• The Corporate Income Tax (IRAE) is an annual tax of 25% on profits from Uruguayan sources derived from economic activities of any nature. Uruguayan sources of income are those obtained from activities carried out, goods located or rights economically exploited in Uruguay. As a general principle, taxable net income is defined as gross income less the direct costs of goods, and expenses necessary to obtain and maintain the source of that income. Certain type of expenses may not be deductible. • The tax is assessed in Uruguayan pesos. Exchange differences are computable on an accrued basis. • A fiscal adjustment for inflation is mandatory. • Transfer pricing rules are applicable (OECD basis). • Fiscal losses may be carried forward for a 5 year period. The amount of losses is subject to inflationary adjustment. No carry-back is allowed. • Monthly advances should be paid. • Dividends distributed are subject to a complementary 7% tax rate up to the fiscal net income distributed.

18.6.2 Capital Tax (IP):

• Assets located in the country are subject to Capital Tax (IP) at the close of the fiscal year. Certain liabilities are deductible from the taxable assets (i.e. debts with local financial institutions and local commercial debts); certain assets are exempted, mainly mobile industrial equipment. • The rate for legal entities is 1.5%. • Monthly advances should be paid. • IP is also levied by way of withholding on credits held by foreign entities or individuals against debtors located in Uruguay at each civil year end, unless they were originated in imports, loans or deposits.

18.6.3 Value Added Tax (IVA):

• Value Added Tax (IVA) is levied on the domestic circulation of goods and services and imports. • The basic rate is 22%. • Some goods and services are exempt from this tax. • Exports are not taxed and the related tax credit is reimbursed.

18.6.4 Social security Contributions:

Monthly employers must pay contributions and must withhold and pay employee contributions, which are applied on all remunerations paid to the worker.

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Contribution rates are as presented in Table 18-3.

Table 18-3 Contribution Rates

Employer Employee

contributions contributions

Social security contributions: retirement pensions, old age 7.5 % cash 15% or disablement and benefits unemployment Insurance

3%, 4.5% or 6% depending on Health insurance 5% salaries and children in charge

Labor restructuring 0.125% 0.125%

18.6.5 Mining royalty:

An annual mining royalty is imposed on precious metals. The taxable amount to determine the mining royalty is the value of production at mine mouth determined by the net revenues received from sales less the cost of processing and transport. A total rate of 5% is applied during the first 5 year of production, of which 2% is received by the Government and a 3% by the landowner; after the fifth year of production the rate increase to a total 8% of which 3% is received by the Government and 5% by the landowner.

18.7 Marketing

Argor-Heraeus SA currently purchases all product from the San Gregorio Project on standard commercial terms. The doré is transported to the Mendrisio refinery in Switzerland.

It is expected that the agreement will remain in effect for the doré produced from the Project.

18.8 Capital Costs

Capital costs are based on quotations, and actual average costs.

The LOM capital costs are summarized in Table 18-4.

Table 18-4 Life of Mine Capital Costs

Item (US$ Description - 000)

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Underground Direct capital costs, Construction Indirect 24,690 Costs, Contingency. Development Project Studies and Studies 850 Tailings TSF1 closure and 8,807 constructions of TSF2 Reclamations Reclamation costs for Castrillon, Arenal, San Gregorio, Santa Teresa, Zapucay, Picaflor and 1,025 Sobresaliente Plant Secondary crushing improvement and new 545 crane Laboratory and New lab equipment Adm. 147 Major Major components for Components 2,342 Mobile Equipment Mobile New Mobile Equipment 410 Equipment Infrastructure Infrastructure for Zapucay deposit exploitation, Pumping station, Maintenance 362 infrastructure San Gregorio Pre-operational costs Project 3,688 Contingency 2,000 Total Capital Costs 44,865

Underground costs are the main component and include the following:

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Table 18-5 Life-of-Mine Capital Cost Summary – Arenal Deeps

Item Cost (US$-000)

Direct Capital Costs 21,346

Construction Indirect Costs 491

Contingency 2,853

Total Capital Costs 24,690

18.9 Operating Costs

Operating Costs are based on actual 2009 operating figures corrected by expected increase.

Life of Mine operating costs are presented in Table 18-6.

Table 18-6 Life of Mine Operating Costs

000's US$ US$/t Ore Mine 104,460 18.0 Process 63,988 11.0 General & Administrative 20,158 3.5 Royalty 12,783 2.2 Metal Charge 4,147 0.7 Total 205,536 35.4

Table 18-7 Presents operating costs discriminated by open pit and underground operations.

Table 18-7 Life of Mine Operating Costs- Open pit and Underground Operations

Arenal - UG Open Pit 000's US$ US$/t Ore 000's US$ US$/t Ore Mine 39,076 24.92 65,384 15.45 Process 17,296 11.03 46,692 11.03 General & Administrative 5,886 3.75 14,272 3.37 Royalty 6,214 3.96 6,569 1.55 Metal Charge 1,883 1.20 2,264 0.53

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Total 70,356 44.87 135,18 31.93

18.10 Financial Analysis

The results of the economic analysis represent forward-looking information as defined under Canadian securities law. The results depend on inputs that are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those presented here. Factors that could cause such differences include, but are not limited to: changes in commodity prices, costs and supply of materials relevant to the mining industry, the actual extent of the mineral resources compared to those that were estimated, actual mining and metallurgical recoveries that may be achieved, technological change in the mining, processing and waste disposal, changes in government and changes in regulations affecting the ability to permit and operate a mining operation. Forward-looking information in this analysis includes statements regarding future mining and mineral processing plans, rates and amounts of metal production, cash flows, tax and royalty terms, smelter and refinery terms, the ability to finance the project, and metal price forecasts.

Financial analysis of the project was carried out using a discounted cash flow (DCF) approach. This method of valuation required projecting yearly cash inflows (or revenues) and subtracting yearly cash outflows (such as operating costs, capital costs, royalties, and taxes). The resulting net annual cash flows were discounted back to the date of valuation and totaled in order to determine the NPV of the project at selected discount rates.

Exploration expenditures are not included in the analysis.

18.10.1 Basis of Financial Analysis

Key assumptions supporting the financial analysis were:

• Mineral reserves will be processed over a planned mine life of approximately six years. • Gold recoveries are estimated for each year of production assuming 80 % recovery for Sobresaliente deposit and 93 % for other deposits. • The Base Case incorporates smelting and refining terms. • The analysis uses a gold price of US$ 1,212/ozt for the first year, US$ 1,150/ozt for the second year and US$ 1,000/ozt for the following years. • Operating costs used for the financial analysis are averaged. • The cash flow model is pre-tax.

The pre-tax net cash flow for the project is US$ 70.0 million. The project has a NPV at 7.0% of US$ 52.4 million and a NPV at 10.0 % US$ 46.7 million.

Determination of Pay Back Period (PBP) for a long operating mine is not relevant.

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The cash flow table is presented as Table 18-8Error! Reference source not found..

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Table 18-8 San Gregorio Project Cash Flow

2010 2011 2012 2013 2014 2015 Actual Forecast Forecast Forecast Forecast Forecast

Gold Price USD/Oz 1,063 1,212 1,150 1,000 1,000 1,000 Gold Produced Ounces 56,050 54,875 58,799 63,769 58,875 55,979

Plant Throughput Tonnes 1,531 1,400 1,400 1,000 1,000 1,000 Average Grade g/t Au 1.24 1.32 1.41 2.13 1.97 1.87

Revenue US$ m 67 69 65 60 57 Other Revenue US$ m 3 1--- Costs US$ m -47 -43 -49 -29 -34 Corporate Cost US$ m -3 -3 -3 -3 -3 Capex US$ m -15.5 -20.2 -4.6 -2.3 -0.2 Cash Flow Generated by Reserves US$ m 8.7 13.2 16.3 24.9 50.5 70.0

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18.10.2 Sensitivities

Sensitivity runs were performed on NPV 7% and NPV 10% for a ±30% change in capital costs, operating costs and metal prices. These are shown in Table 18-9 and in graphic format in Figure 18-4 and Figure 18-5.

The project is extremely sensitive to metal price, and next most sensitive to changes in operating costs, then capital costs.

Table 18-9 Sensitivitiy, NPV at 7% and 10%, (000’s US$)

Change in Factor SENSITIVITY OF NPV @ 7.0% Factor -30% -20% -10% 0% 10% 20% 30% Capital expenditure 1 63,015 59,479 55,942 52,406 48,870 45,334 41,798 Operating expenditure 2 99,353 83,704 68,055 52,406 36,757 21,108 5,459 Metal price 3 -18,405 5,199 28,803 52,406 76,010 99,614 123,217 Labour 4 60,857 58,040 55,223 52,406 49,589 46,773 43,956 Power 5 57,101 55,536 53,971 52,406 50,841 49,276 47,712 Fuel 6 59,448 57,101 54,754 52,406 50,059 47,712 45,364 Factor

Change in Factor SENSITIVITY OF NPV @ 10.0% Factor -30% -20% -10% 0% 10% 20% 30% Capital expenditure 1 56,554 53,283 50,011 46,739 43,468 40,196 36,924 Operating expenditure 2 89,159 75,019 60,879 46,739 32,599 18,460 4,320 Metal price 3 -17,093 4,184 25,462 46,739 68,017 89,294 110,572 Labour 4 54,375 51,830 49,284 46,739 44,194 41,649 39,104 Power 5 50,981 49,567 48,153 46,739 45,325 43,911 42,497 Fuel 6 53,102 50,981 48,860 46,739 44,618 42,497 40,376 Factor

Figure 18-4 Sensitivity, NPV at 7 %

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Figure 18-5 Sensitivity, NPV at 10 %

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19 OTHER RELEVANT DATA AND INFORMATION

There are no other data relevant to the San Gregorio Project Mineral Resources, Mineral Reserves, and mining study.

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20 INTERPRETATION AND CONCLUSIONS

Following the review of the report the QP’s of Orosur Mining Inc. concluded:

20.1 Mineral Resource

• The San Gregorio Project contains a well documented mineral resource of 15.7 Mt at a grade of 1.13g/t (1.27 Mt Measured at 1.22 g/t and 14.40 Mt Indicated at 1.12 g/t).

20.2 Infrastructure

• The Local community has the infrastructure and residents that meet the needs of the Mine and Mineral Processing plant. • Competent Local Contractors are equipped and available to carry out required mining of Satellite surface deposits. • The Plant area contains all of the necessary infrastructure to carry on Processing for the Life of Mine. • Mine Technical and Maintenance facilities are modern and efficiently set up. • The assay Lab has excess capacity for Sample prep and analysis to accommodate any future increase in sampling required by the operations.

20.3 Geology

• The mine Geology is well understood. This simplifies exploration and should lead to an expansion of the existing resource base. • Local Geology is well understood and new discoveries are possible within the proximity of the mine.

20.4 Sampling and Grade Control

• Reliable Sampling and assaying form the foundation on which exploration, resource evaluation and mine production plans are based. It is critical to adhere to the developed procedures and perform orientation surveys along with stringent QA/QC checks in order to develop solid geological modeling. • Historically controls and procedures would not meet current best practices, but have improved vastly in the last 3 years of work. • In pit sampling has been performed but more care must be taken in developing a procedure that takes into account the trend and dip of the ore zones.

20.5 Surface Mining

In order to meet production targets the following steps are required:

• Exploration completed with the aim of obtaining a resource and Geological model • Optimization and Pit design are done to a high standard with costs and revenues matched to the schedule of production.

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• Permits obtained in a timely manner well in advance of the planned production. Exploration permits do allow for a ‘restricted’ amount of mineral to be mined but may not be the optimal rate of extraction. • Optimize the use of owner’s equipment when practical. • Continue to achieve high availabilities (+90%) of owner’s equipment by following the Preventative Maintenance program. Cost savings on equipment is being realized through more in-house rebuilds.

20.6 Milling

• Continue with high availabilities of the plant with continuous Preventative Maintenance program and adequate supply of spare parts. • Continue blending to obtain the optimum recoveries of gold. Improved silver recoveries are a possibility with good control of the blending, cyanide concentration and carbon stripping frequency. • Expediting the New Tailings dam permit is a necessity.

20.7 Computer Modeling

• The benefits of computer data management are very evident in modern mining. The use of the database system has greatly improved the data verification process and QA/QC programs. Computerization of data will greatly enhance the ability to model quickly and accurately.

20.8 Following completion of the Arenal Deeps underground study, the AMEC QPs concluded:

• The Arenal Deeps deposit is situated within a larger tenure and mining package, the San Gregorio project, formerly known as the Minas de Corrales project, adjacent to the township of Minas de Corrales, located in Northern Uruguay. The San Gregorio project currently contains a mining complex comprising 13 open pits and supporting infrastructure. • Documentation has been provided supporting Orosur’s rights to the mineral tenure of the Arenal Deeps deposit, which is held by a wholly-owned subsidiary of Orosur. Documents show Exploitation License 69/04 is valid until October 2019, with the ability to extend for a further 15 years; Exploitation License 462/89 expires on December 15, 2019, and can also be extended for a further 15 years. • Orosur has purchased most of the land affected by current mining operations. This has allowed unrestricted access for exploration and drilling activities. The Arenal pit was developed in two areas, of which the land is owned by two separate landowners. Triselco owns the land under most of the Arenal pit, while the western, minor portion of the pit is on land owned by Administración Nacional de Educación Pública (ANEP). Orosur advised AMEC that the Arenal Deeps mineral resource described in this report lies within the land area owned by Orosur/Triselco and ANEP; the underground operation to mine it will also be within Orosur/Triselco’s land. • For a deposit such as Arenal that has been mined for over five years, the government of Uruguay levies an 8% production royalty, based on the value

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of ore at the mine mouth, that consists of a 5% royalty paid to the underlying landowner and a 3% royalty paid to the government. • Exploitation permits are held over all disclosed sources of Mineral Reserves for the San Gregorio project, including the Arenal Deeps deposit. • The Arenal open pit was permitted in 2004, and operated from October 2004 until April 2009. Two environmental impact assessments (EIAs) were performed in support of the open pit operation in 2004 and 2007. • To support the underground plan, an updated EIA was performed, which reviewed the existing and baseline data for hydrology, emissions, noise levels, flora and fauna, human and cultural impacts, and effects on the landscape. The closure plan was also updated. • Understanding of the Project geology and mineralization, together with the deposit type, is sufficiently well established to support Mineral Resource estimation. • Exploration activities on the project have included regional and detailed geological mapping, rock, grab, and soil sampling, trenching, RC and core drilling, airborne geophysical surveys, ground magnetic and IP geophysical surveys, mineralization characterization studies, and metallurgical testing of samples. Density measurements on the different lithologies have also been carried out. This work identified both the mineralization exploited in the Arenal open pit, and the mineralization to be extracted from the Arenal Deeps underground mine. • A number of data verification programs and audits have been performed over the project history, primarily in support of compilation of technical reports on the project. • Metallurgical tests were performed on samples that were considered representative of the mineralization. Metallurgical testwork completed can support estimation of Mineral Resources and Mineral Reserves. Recovery figures used to support Mineral Resources and Mineral Reserves are partly based on metallurgical testwork and partly on historic production and throughput data, and are appropriate to the mineralization styles. • The Arenal Deeps mineral resource estimate and grade shells were prepared by Mine Development Associates (MDA) personnel and reviewed by AMEC personnel. Geological models are appropriate to the deposits. Blocks within a mineralized domain were interpolated using inverse distance weighting to the third power (ID3). Mineral Resources are constrained using a gold cut-off grade that takes into account optimistic, but reasonable economic parameters. • Mineral Reserves result from modifying factors being applied to the Mineral Resources, and incorporate allocation for dilution and pillars. Mineral Reserves have been classified as Probable Mineral Reserves because there is as yet insufficient drill support at a production level for a higher- confidence classification. To support classification of Proven Mineral Reserves, AMEC has recommended an infill drill program on 15 m centers to provide detailed information on the expected geology and mineralization that will be mined in the planned stopes. This program and its costs have been incorporated into the Project financial schedule. • Project operation currently occurs year round, and it is expected that production from the Arenal Deeps Project would also occur year-round. The proposed underground mining operation assumes two mining methods, inclined room-and-pillar (IRP) and transverse stoping (TS).

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• Operations at the Arenal open pit were supported by shops, fuel stations, offices, and other facilities which were located away from the pit crest, near the waste dumps. These facilities are available to support Arenal Deeps operations. • The Arenal Deeps mine will be built as an expansion of the existing San Gregorio mining operations. As such, many of the infrastructure and transportation facilities are already in place and operational. • The San Gregorio project has an existing tailings storage facility (TSF), currently on its eighth and final lift. A new facility, TSF2, is planned to be located on one end of the existing TSF, and is currently in the government approvals stage. This facility will provide sufficient storage for tailings produced from the proposed Arenal Deeps operation • The financial analysis indicates that the Arenal Deeps Project, evaluated using the assumptions outlined in this Technical Report, returns a positive NPV.

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21 RECOMMENDATIONS

21.1 Tenure and Permitting

• Tenure must be continually updated and current. Best practices must be maintained in the application for Permits and the negotiation with land owners well in advance of Exploration/Exploitation. • Maps must be updated and available for exploration and operations personnel. • The Recommendations are to be carried out by OMI Personnel at a budgeted operating cost of $40,000 per annum.

21.2 Engineering and Geology

• Reserve modeling must be done in a timely manner with the aid of an accurate database that is fully QA/QC compliant. • Optimization and design is to be done to the highest standard and using costs and metal prices reflecting the schedule of production. • Accurate survey and sampling must be consistent and data preserved securely. • Good communication with operations is a necessity. • The Recommendations are to be carried out by OMI Personnel at a budgeted operating cost of $100,000 per annum.

21.3 Mill

• Simulation modeling is to be conducted with the aim at optimizing throughput and recoveries. The cost of consultants for studies is budgeted for in the current year under ‘Studies in Uruguay’ with an estimated cost for this study to be $15,000. • Investigation into further increasing silver recoveries is warranted with the higher silver grades expected from Arenal. The cost of consultants for studies is budgeted for in the current year under ‘Studies in Uruguay’ with an estimated cost for this study to be $20,000. • Expedite the New Tailings Project with the aim to use waste produced from the nearby pits as the source of dam building material. Total Capital Cost expected to be $7.2 Million. • Maintain high standards in handling effluent and maintain no cyanide discharge policy. The operating cost budgeted for the tailings treatment plant is $800,000 per year. Operating Costs are expected to be within the budget.

21.4 Reclamation

• Continue with the high standards set in the reclamation of the current tailings facility. Total Capital budget of $1.6 Million. • Maintain the policy of waste dump reclamation when reserves are exhausted in the pits. A Capital budget of $800,000 per year over the next 5 years has been allowed for the reclamation of Pits. Actual Costs for

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Completed Reclamation of Castrillon Pit is under budget. Capital cost for Reclamation is expected to be on Budget.

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22 REFERENCES

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Goldfarb, R.J., Baker, T., Dube, B., Groves, D.I., Hart, C.J.R. and Gosselin, P., 2005: Distribution, Characters and Genesis of Gold Deposits in Metamorphic Terranes: Economic Geology 100th Anniversary Volume, Society of Economic Geologists, Littleton, Colorado, USA, pp. 407-450.

Groves, D.I., Goldfarb, R.J., Gebre-Mariam, M., Hagemann, S.G., and Robert, F. 1998: Orogenic gold deposits: A Proposed Classification in the Context of their Crustal Distribution and Relationship to Other Gold Deposit Types: Ore Geology Review, Special Issue, Vol. 13, pp. 7-27.

Groves, D.I., Goldfarb, R.J., Robert, F., and Hart, C.J.R., 2003: Gold Deposits in Metamorphic Belts: Overview of Current Understanding, Outstanding Problems,

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Future Research, and Exploration Significance: Economic Geology, Vol. 98, pp. 1-29.

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Orosur Mining Inc., 2010a: Environmental Impact Assessment Report, TSF2: April 2010

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23 DATE AND SIGNATURE PAGE

The effective date of this Technical Report, entitled “NI 43-101 Technical Report for the San Gregorio Project, Minas de Corrales, Rivera, Uruguay” is 22 October 2010.

“Signed” 5 November 2010

Randall Corbett, P.Eng. Date B Eng (Mining) General Manager San Gregorio Project Orosur Mining Inc.

“Signed” 5 November 2010

William Lindqvist, MAusIMM, SEG and AIME Date PhD Applied Geology Non- Executive Director Orosur Mining Inc.

“Signed” 5 November 2010

John Barber, PE Date Principal Mining Engineer AMEC

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