RESOURCE ESTIMATION ON THE DORADO/LAJITAS GOLD PROPERTY MARICUNGA GOLD-COPPER DISTRICT THIRD REGION, REPUBLIC OF CHILE FOR CAPELLA RESOURCES LTD. Dartmouth, Nova Scotia, Canada Effective: August 17, 2011

BRIAN COLE P.GEO. CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

TABLE OF CONTENTS

1 SUMMARY ...... 1

2 INTRODUCTION ...... 3

3 RELIANCE ON OTHER EXPERTS ...... 4

4 PROPERTY DESCRIPTION AND LOCATION ...... 4

4.1 PROPERTY DESCRIPTION ...... 4 4.2 TERMS OF ACQUISITION ...... 7 4.2.1 Lajitas Option with Compañia Cerro El Diablo ...... 7 4.2.2 Agreement between International Mineral Resources, Ltd and the Company ...... 7

5 ACCESS, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY ...... 7

6 PROPERTY HISTORY ...... 9

6.1 DRILLING ...... 9 6.2 HISTORIC MINERAL PROCESSING AND METALLURGICAL TESTING ...... 10 6.3 HISTORIC MINERAL RESOURCE ESTIMATE ...... 10

7 GEOLOGICAL SETTING AND MINERALIZATION ...... 11

7.1 REGIONAL GEOLOGY ...... 11 7.2 DISTRICT AND PROPERTY GEOLOGY ...... 14 7.2.1 Lithology ...... 14 7.2.2 Structure ...... 15 7.2.3 Alteration ...... 16 7.3 MINERALIZATION ...... 17

8 DEPOSIT TYPES ...... 18

9 EXPLORATION ...... 19

9.1 SUMMARY OF ACTIVITIES ...... 19 9.2 GEOPHYSICAL SURVEYS ...... 20 9.2.1 Ground Magnetic and IP Surveys ...... 20 9.2.2 Hyperspectral Imagery ...... 22 9.3 TRENCH SAMPLING ...... 26 9.3.1 2008 Program ...... 26 9.3.2 2009/2010 Program ...... 27

10 DRILLING ...... 28

10.1 REVERSE CIRCULATION (2006) ...... 28

BRIAN COLE P.GEO. Page i CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

10.2 DIAMOND DRILLING (2008) ...... 29 10.2.1 Diamond Drill Holes LJ08008/8A, LJ08009, LJ08010 ...... 29 10.2.2 Diamond Drill Hole LJ08011 ...... 30 10.3 REVERSE CIRCULATION (2009/2010) ...... 31

11 SAMPLE PREPARATION, ANALYES AND SECURITY ...... 33

11.1 SAMPLING METHOD AND APPROACH ...... 33 11.1.1 Reverse Circulation Drill Samples ...... 33 11.1.2 Trench Samples ...... 33 11.1.3 Diamond Core Samples ...... 33 11.1.4 Control Samples ...... 34 11.2 SAMPLING PREPARATION, ANALYSES, AND SECURITY ...... 34 11.2.1 Reverse Circulation Drill Samples ...... 34 11.2.2 Trench and Diamond Drill Core Samples ...... 34 11.2.3 Laboratories ...... 35 11.2.4 Sample and Assaying Integrity ...... 35

12 DATA VERIFICATION ...... 37

13 MINERAL PROCESSING AND METALLURGICAL TESTING ...... 37

14 MINERAL RESOURCE ESTIMATE ...... 38

14.1 INTRODUCTION ...... 38 14.2 EXPLORATORY DATA ANALYSIS ...... 38 14.2.1 Topographic Base ...... 39 14.2.2 Specific Gravity Parameters ...... 39 14.3 METHODOLOGY AND RATIONALE ...... 40 14.4 OXIDE VS. SULPHIDE DISTRIBUTION ...... 44 14.5 RESOURCE ESTIMATION MODEL...... 47 14.6 LIMITING FACTORS ...... 47

15 ADJACENT PROPERTIES ...... 50

16 OTHER RELEVANT DATA AND INFORMATION ...... 52

17 INTERPRETATIONS AND CONCLUSIONS ...... 52

18 RECOMMENDATIONS ...... 52

19 REFERENCES ...... 55

CERTIFICATE OF QUALIFICATIONS AND DECLARATION ...... 58

BRIAN COLE P.GEO. Page ii CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

LIST OF TABLES Table 4.1 Claims controlled by Compãnia Minera Cerro El Diablo at the Dorado Gold Property– Third Region, Chile Table 6.1 Dorado Property RC Drilling Highlights (1997) Table 6.2 Minera Santa Fe Pacific, Dorado (Lajitas) Property Hot Cyanide Procedure Table 10.1 Significant RC Drill Intersections (2006) Table 10.2 Significant Drill Intersections (2008-2010) Table 13.1 Metallurgical Results, Bottle Roll Tests Table 14.1 Lajitas Resource Model Table 15.1 Gold Deposits of the Maricunga Belt, Region III, Chile Table 19.1 Proposed Budget

LIST OF FIGURES Figure 4.1 Dorado/Lajitas Property Map Figure 5.1 Dorado / Lajitas Property (photo) Figure 7.1 Map of North Central Chile showing Gold/Silver & Copper Deposits Figure 7.2 Location Map of the Maricunga and El Indio-Pascua Belts relative to other major Neogene Deposits and Districts in Southern-Central Andes Figure 7.3 Location Map, Capella Resources Ltd. Claims in the Maricunga Gold District, Chile Figure 7.4 Topographic Compilation Figure 7.5 North – South Trending Regional Control Structure (Photo) Figure 7.6 Structure of Resource Area Figure 7.7 Multiphase Quartz Veining – DDH LJ08011 (Photo) Figure 8.1 Generalized Porphyry Model Figure 9.1 Geophysical Compilation Figure 9.2 Hyperspectral Survey: Property View Figure 9.3 Hyperspectral Survey: Resource Area View Figure 9.4 3D Rendering of Structure of Resource Area with Trenching Figure 10.1 Plan of Drill Hole Collars Figure 10.2 Plan View: DDH LJ08011 Figure 11.1 Gold Mineralization Distribution by Sample Type

BRIAN COLE P.GEO. Page iii CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

Figure 14.1 Gold Decile Distribution Figure 14.2 Section 5200N Figure 14.3 Section 5050N Figure 14.4 Longitudinal Section Plane: East Zone Figure 14.5 Longitudinal Section Plane: West Zone Figure 14.5 Longitudinal Section Plane: West Zone Figure 14.6 Distribution of Oxide and Sulphide Rock: Sulphide Floor Figure 14.7 Distribution of Oxide and Sulphide Rock: Sulphide Floor with Wire Frames Figure 14.8 Distribution of Oxide and Sulphide Rock: Mixed Floor with Wire Frames Figure 14.9 Distribution of Oxide and Sulphide Rock: Oxide Layer with Wire Frames Figure 14.10 Distribution of Oxide and Sulphide Rock: Vertical Longitudinal Section Figure 14.11 Constrained Grade Models: Looking NNE Figure 14.12 Constrained Grade Models: Looking SSW Figure 14.13 Grade – Tonnage Comparison

BRIAN COLE P.GEO. Page iv

RESOURCE ESTIMATION ON THE DORADO/LAJITAS GOLD PROPERTY MARICUNGA GOLD-COPPER DISTRICT THIRD REGION, REPUBLIC OF CHILE FOR CAPELLA RESOURCES LTD. DARTMOUTH, NOVA SCOTIA, CANADA EFFECTIVE: AUGUST 17, 2011

1 SUMMARY Capella Resources Ltd., (the “Company”), is an exploration and mineral development company listed on the Canadian TSX Venture stock exchange (KPS:TSX-V). The Company is currently developing exploration projects in Chile, Peru, the United States, and Canada. This document is confined to a description of the Dorado / Lajitas Gold Property (the “Property”) located in the Maricunga Gold and Copper District of northern Chile. This report builds upon an initial account describing both the Property and the nearby Nevada Project (Cole, 2006). Much of the same background information is repeated within this report. New information includes the results of several reverse circulation and diamond drilling programs, ground geophysical magnetic and induced polarization surveys, an airborne hyperspectral survey, and trenching/road cut sampling. A resource estimation has also been undertaken, which is the principal focus of this report. The Andean Cordillera of Peru, Bolivia, Argentina, and Chile host some of lowest cost gold mines in the world due to supergene oxidation of shallowly emplaced high sulphidation epithermal gold deposits. This combination of weathering regime and deposit type is unique to the western Americas and is preferentially manifested in Tertiary-age volcanic rocks of the Andean Cordillera. The Yanacocha and Pierina Mines, both in Peru, and the Pascua-Lama, Veladero deposits in Chile and Argentina represent the largest examples of these gold deposits. The Maricunga Gold Belt of northern Chilean hosts the Marte-Lobo, Maricunga (aka Refugio), La Coipa, Cerro Casale, Volcan, and Capiche deposits that contain a total of more than 55 million

BRIAN COLE P.GEO. CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT ounces of gold. These deposits are predominately porphyry gold stockwork systems (±copper) contained within advanced argillic alteration zones that locally host high sulphidation epithermal gold deposits. The Property is located in the Maricunga Gold and Copper District approximately 700 kilometres (“km”) northwest of Santiago, Chile. It consists of six granted exploitation claims and three exploration claims in transition to exploitation status, totalling 1,600 hectares (“ha”) in area. The Chilean company Compañia Minera Cerro El Diablo identified and acquired the prospects in 2004 based on the identification of satellite Thematic Map (“TM”) clay and iron alteration anomalies, the existence of permissive igneous and volcanic history, as well as a historic gold resource and occurrences. Prior to acquisition by Compañia Minera Cerro El Diablo, the exploration history of the Dorado / Lajitas property included limited surface sampling and reverse circulation (“RC”) drilling which had produced anomalous gold values as well as a reported historic 348,000 troy ounce (“oz”) “indicated” gold resource on the Property. This was estimated in 1997, prior to the implementation of NI 43- 101 legislation. The Company is not treating this as a NI 43-101 compliant resource. Geophysical studies, including remote sensing, coupled with field evidence from drilling and trenching convincingly demonstrates a significant sulphide-bearing dioritic multiphase porphyry intrusive exists on the Property, accompanied by alteration of the high sulphidation type. This alteration signature is consistent with that of porphyry gold and copper in a high sulphidation epithermal system, and similar to that noted at Veladero, Pierina, and Yanacocha. Recently, the advanced stage Caspiche Project of Exeter Resources, located within 50km of the Property, has been demonstrated to have similar geological features. A mineral resource estimate was completed that estimates an Inferred Resource of approximately 35 million tonnes grading 0.45 grams gold per tonne (“g/t Au”) in August 2011. This translates to approximately 515,000 million troy ounces contained gold. Estimation method used was the constrained block model type. The resource estimate was performed to conform to CIMM definitions (2005). Cut-off employed was 0.2g/t Au and the specific gravity utilized was 2.7g/cm3. Gold mineralization is related to dioritic porphyry intrusive rock and adjacent pyroclastic volcanic vent rock at the fault intersection between a pair of northerly trending fault structures and several westerly trending cross-cutting faults, with the latter exhibiting signs of being long lived and episodic. The north trending structures each host a gold zone, between 250m to 300m long and separated on average by a distance of 75 metres (“m”). Zone widths average 75m, but range from 25m to 125m. A total of 41 drill holes with a cumulative total cumulative of 8,472m has been drilled on the Property to date; the Company has drilled 27 holes and 7,300m of this total. Results from 28 inclined drill holes with a cumulative total of 6,951m were utilized in the resource estimation. These holes have an average depth of 250m, with the deepest being 482m. Dips range between -50° and -

BRIAN COLE P.GEO. Page 2 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

75°. Holes are spread across nine section lines spaced at 50m intervals. Core diameters are either HQ or NQ. Resource was projected no more than 50m from the terminal section lines. In situations where drill holes collared and/or ended in mineralization above cut-off, the area of influence of a resource polygon was not extrapolated beyond 25m, except where supported by adjacent sections. These types of deposits tend to have more vertical continuity than lateral. The floor of the grade model was projected to an elevation 4,250m asl for the most part, or 200m – 270m below surface. Where drilling was deeper locally, the floor was extended to an elevation depth of 4,200m asl, or alternatively 325m below surface. The Resource is located on a hillside with a surface elevation difference of 125m from top to bottom. Six samples of drill core have been metallurgical tested by the bottle roll method. The samples were taken intermittently down a single mineralized hole to a depth of 200m. The tests indicate favourable gold recovery from conventional cyanidation and further suggest that heap leach techniques may be feasible. Recoveries range from 63% - 73% in a 96 hour bottle roll. This indicates that oxidation of gold mineralization at Lajitas extends to depths greater than 200m below the surface. Modified Acid/Base Accounting tests performed on three of the above samples were found to contain no detectable sulphur. This preliminary testing thereby suggests Lajitas Resource rock would not be acid generators in a natural weathering environment. At this point, there is no reason apparent which would preclude the Lajitas Resource from being successfully developed, barring the normal sequences of establishing sufficient tonnage, tenor, as well as favourable metallurgy. The largest hurdle for the project is the successful acquisition of water rights for processing. A program of trenching and 6,000m of drilling is recommended to further expand and upgrade the Lajitas Resource as well as evaluate new target areas. A budget to support the program is outlined to cost US$3.1 million. Note: All currency values in this report are quoted in US dollars unless otherwise indicated. All maps are in UTM Zone 19S – WGS84 coordinate system. All illustrations not sourced and dated were compiled by the author for the purposes of this report.

2 INTRODUCTION The Company commissioned the author to update the aforementioned report submitted on June 01 2006 and describe the results of the new work and otherwise revise wherever necessary. The Company also requested a resource estimation be undertaken based upon the drilling results to date.

BRIAN COLE P.GEO. Page 3 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

The author field supervised the conduct of the work for the reverse circulation drilling as well as an initial diamond drill program attempt, including the sampling and shipping of the samples to an accredited laboratory within Chile in 2006 and early 2008. The author also monitored the activities of a second diamond drill program undertaken in late 2008 that was managed by Capella Resources Ltd personnel. Lastly a RC drill program performed in late 2009/early 2010 was also monitored by the author with him being at the project during the last eight weeks of the program. This report also includes information from historical document review. The historical information presented herein comes largely from an assortment of public and private sources listed in Section 19.

3 RELIANCE ON OTHER EXPERTS Robert Ellis and Dr. Amer Smailbegovic are experts in the areas of geophysicists and remote sensing respectively. Both have made contributions to this report. Although the author is not a specialist in either of these fields, there is sufficient familiarity to judge the work sound. The legal firm Bofill Mir & Alvarez Jana of Santiago Chile rendered property opinion on the Property on May 24, 2011. Their comments have been incorporated into this report. The ownership and status of the Property as described in this report, as gleaned from pertinent documentation provided by the Company, are correct to the author’s knowledge as of the effective date of this report. However, the author has little knowledge in the area of Chilean mining law and disclaims any responsibility for any statements made with regards to property ownership and status.

4 PROPERTY DESCRIPTION AND LOCATION

4.1 Property Description Compañia Minera Cerro El Diablo (“Cerro El Diablo”) is the registered owner of the Dorado Property within Chile. Rony Zimerman manages this company from an office at Avda. Andrés Bello 2711, Piso 8, Torre Costanera, Las Condes, Santiago de Chile. The Company entered into an Assignment agreement with a third party, International Mineral Resources, Ltd. (“International”), in order to acquire a 100% interest in Cerro El Diablo and the Property in 2006. Terms of the agreement are outlined in Section 4.2. The legal firm of Bofill Mir & Alvarez Jana of Santiago Chile rendered property opinion on the Property on May 24, 2011. They found all dues are current and paid in full and deemed the Property in good standing. The Property is located in the County of Copiapó , Third Region, Republic of Chile approximately 700km north-northwest of Santiago, Chile (Figures 4.1 and 7.3). The Dorado Property is centred on 6,979,700N; 507,000E UTM - Zone 19 South (WGS84). The Property collectively consists of 1,600ha of exploitation claims and exploration claims in transition to exploitation status. Part of the Dorado property position is comprised of three exploitation claims, collectively 200ha in area, BRIAN COLE P.GEO. Page 4 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

and were acquired by way of option agreement with an unrelated party. The specifics and terms of the option agreement (the “Lajitas Option”) are described below. The Company subsequently completed all terms of the option and controls a 100% interest with no retained royalty to the optioner. The Lajitas Option henceforth is considered a collective claim member of the Dorado property and will not be referred to as a separate entity. Table 4.1 outlines the particulars of the Dorado and Lajitas claims:

Table 4.1: Claims Controlled by Compañia Minera Cerro El Diablo Dorado Gold Property – Third Region - Chile File Claim Name Area Filing Date Claim Register of Mines Land Tax Status Number Dorado Area (ha) Type 2008-2009 3289-2005 2nd Court DORADO 1, 1-60 300 11-09-2005 M COPIAPÓ Paid Pending 3290-2005 2nd Court DORADO 2, 1-60 300 11-09-2005 M COPIAPÓ Paid Pending 3291-2005 2nd Court DORADO 3, 1-60 300 11-09-2005 M COPIAPÓ Paid Pending 1148-2006 4th Court DORADO 4 1-20 100 03-02-2006 M COPIAPÓ Paid Granted 1149-2006 4th Court DORADO 5 1-20 100 03-02-2006 M COPIAPÓ Paid Granted 1150-2006 4th Court DORADO 6 1-60 300 03-02-2006 M COPIAPÓ Paid Granted 03201606-2 2nd Court LAJITAS 1 1/10 100 2000 M COPIAPÓ Paid Granted 3272-2005 2nd Court LAJITAS 2 1/7 70 11-09-2005 M COPIAPÓ Paid Granted 3273-2005 2nd Court LAJITAS 3 1/3 30 11-09-2005 M COPIAPÓ Paid Granted M= Mining Exploitation Claim 1600 E= Exploration Claim

Chile is a country with a stable mining industry with mature mining laws. The mineral estate title is senior to that of the surface estate in Chile. Cerro El Diablo owns no surface titles and there are no known surface rights holders within the bounds of the Property. The titleholder of an exploration concession in Chile is allowed to conduct exploration activities such as surface sampling, trenching, and small scale drilling, and is granted mineral tenure for two years as long as the claims are kept current by paying the annual taxes. Chilean mining law provides for a two year extension to an exploration claim by reducing the size of the claim by one half or the owner has the option of converting the exploration concession into an exploitation concession after the initial two year term by conducting a survey of claim boundaries and monumenting the corners. Exploitation claims have an indefinite term as long as annual rental payments are paid. Annual tax levees are a function of both area and claim type, with exploitation concessions attracting a higher lease than exploration concessions. The total annual due for the Property is approximately US$30,000. This will approximately double when the three remaining exploration leases are converted to exploitation later this year.

BRIAN COLE P.GEO. Page 5 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

Exploration concessions are paper staked and do not require a survey whereas exploitation concessions are required to be surveyed before being granted. Advanced exploration activities require additional environmental permitting, which to the author’s knowledge, the Company is advancing with. There are no known environmental liability issues inherent to the Property. Notification of the Intent to Work is filed with the Servicio Nacional de Geologia y Mineria prior to work commencing.

BRIAN COLE P.GEO. Page 6 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

4.2 Terms of Acquisition 4.2.1 Lajitas Option with Compañia Cerro El Diablo Cerro El Diablo entered in to an agreement with Inversiones Cerro Dorado Ltda., a Chilean corporation, to acquire the Lajitas 1 1/10, Lajitas 2 1/3, and Lajitas 3 1/3 mining exploitation claims (collectively 200 hectares). The Company paid a total of US$360,000 over a period of five years, with the last and final payment being made in January 2008. The Company now controls a 100% interest in the Lajitas Option with no retained lien by the optioner. 4.2.2 Agreement between International Mineral Resources, Ltd and the Company International held an option to acquire a 100% interest in Cerro El Diablo, inclusive of the Lajitas Option. International assigned the option to the Company in exchange for the following: 1) payment of US$60,000, 2) 500,000 common shares of the Company, 3) The Company initially granted a 5% Net Smelter Royalty (“NSR”) interest to International on gold and all other mineral production. This was subsequently modified. In the consideration for the issue of 1.25 million common shares, the Company may exercise its option to reduce the NSR from 5% to 2% by paying US$3 million in cash, exercisable for a period of three years, on or before August 29, 2011. The issue of the shares was made prior to the Company performing a 10:1 reserve share split in early 2009. 4) The Company subsequently terminated the agreement dated August 29, 2008, as announced on September 26, 2008, with respect to the option to reduce the royalty on the Property. 5) The Company, International, and Bittner have entered into an agreement dated March 01, 2011 pursuant to which the royalty on the Lajitas property (the "Lajitas Royalty") will be permanently reduced from 5% to 2% by the Company paying to International and Bittner $300,000 cash, in equal amounts. Pursuant to the agreement, the Company has also been granted an option to reduce the Lajitas Royalty by an additional 1% by paying US$2 million, such option to be exercised at any time.

5 ACCESS, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY The Property is located on the Chilean altiplano above 4,000m mean sea level flanking the east side of Volcan Copiapó (Figure 7.3). Volcan Copiapó is a 6,050m high strato-volcano which dominates the physiography of the district. The surrounding rolling alpine pampa and sometimes-extreme relief of the mountains define the eastern extent of the Atacama Desert. Topographic relief on the Property is high with elevations ranging between 4,200m and 5,000m above sea level. Intermittently flowing streams occupy the drainages and depend on snowmelt for water although Quabraba Lajitas usually flows year-round.

BRIAN COLE P.GEO. Page 7 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

The climate is dry, windy, and cold with precipitation occurring as snow during the winter from May until September. The summers are sunny, cool, and very dry. The vegetation is sparse consisting of grasses and shrubs confined to the drainages with water. Birds like the flamenco and wild ducks represent some of the fauna that inhabits the area. In addition, the fox, puma, and vicuña (llama) share the barren landscape migrating widely to subsist. Access to the area is via commercial air service from Santiago to Copiapó (1.25 hours) and then by 4-wheel drive vehicle from Copiapó approximately 180km or 3 - 4 hours to the east, mostly on all- weather gravel roads. Access to the Property is limited to drill access roads. These must be cleared periodically due to rockslides, particularly after the winter’s snow accumulation has melted. The closest major city is Copiapó , the largest city in the Atacama region, with population of over 210,000 (ca 2010). The economy is based on the mining and agro-industry. There are no small villages in the high alpine due to the harsh conditions. Infrastructure exists only at the active mines located within the region, which include La Coipa and Maricunga Gold Mines. The nearby Marte Lobo Project is under development. Access to water for drilling is difficult in the Atacama Desert, especially since the last few years have experienced less than average precipitation. The Company has drawn its water from the Quabrada Lajitas without problem to date. The Property is of sufficient size to support mining operations.

BRIAN COLE P.GEO. Page 8 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

6 PROPERTY HISTORY

6.1 Drilling Minera Santa Fe Pacific Chile Ldta. (“Santa Fe”) conducted exploration on the El Dorado (Lajitas) property by trenching and drilling during the 1996 field season. Santa Fe controlled 15 square kilometres (“km2”) of which 10% is included in the project area. During March 1996, 1,700m of bulldozer trenching was completed and defined mineralized zones 50m - 70m wide averaging 0.8g/t Au. First pass RC drilling consisting of seven holes and a cumulative total of 1,402m tested mineralized zones in October 1996. The drill program gave encouraging results, as five holes were mineralized with intervals up to 50m wide averaging up to 1.32g/t Au. Detailed mapping of the main zone was completed in November 1996 with second pass RC drilling completed in December. An additional seven holes and 1,172m were drilled to test the extent of the mineralized zone with five holes intersecting mineralization.

Table 6.1: Dorado Property RC Drilling Highlights October & December 1996 Programs Drill Hole Total Depth From To Gold Width * (m) (m) (m) (g/t) (m) DTH-LA-01 300 DTH-LA-02 144 0 36 0.88 36 DTH-LA-03 188 0 12 0.86 12 54 84 1.37 32 166 174 1.27 8 DTH-LA-04 170 32 50 0.52 18 128 170 0.77 42 DTH-LA-05 220 168 212 0.78 44 DTH-LA-06 180 0 40 1.21 40 104 152 0.52 50 DTH-LA-07 200 DTH-LA-08 200 DTH-LA-09 96 0 6 0.38 6 DTH-LA-10 186 25 54 0.68 28 56 66 0.41 20 80 96 0.58 16 116 120 0.63 4 DTH-LA-11 174 32 44 0.81 12 56 80 0.69 24 DTH-LA-12 200 12 24 0.45 12 DTH-LA-13 160 DTH-LA-14 156 * - true width of mineralized intervals unknown Inversiones Cerro Dorado Ltda. acquired the property after Santa Fe released most of the property in 1997. No known work was performed after that date and Cerro El Diablo acquired the bulk of Dorado property by way of purchase at tax auction in November 2002. The balance, inclusive of the resource, was acquired under the aforementioned option agreement. There has been no known gold production at the Dorado Project.

BRIAN COLE P.GEO. Page 9 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

6.2 Historic Mineral Processing and Metallurgical Testing Santa Fe conducted preliminary hot cyanidation tests on mineralized material from drill hole cuttings from Dorado. The mineralized material appears to be heap leachable with recoveries on the order of 80%.

Table 6.2: Minera Santa Fe Pacific - Dorado (Lajitas) Property Hot Cyanide Procedure Sample Hole Interval Au (g/t) Au (g/t) Difference AuLlx (g/t) Recovery (m) Original met % met % 8723 DTH-LA-02 24-26 1.11 1.09 2 0.72 66 8760 DTH-LA-02 98-100 0.25 0.29 -16 0.24 83 8821 DTH-LA-03 74-76 6.92 7.69 -11 5.4 70 8836 DTH-LA-03 104-106 0.68 0.89 -31 0.84 94 8868 DTH-LA-03 168-170 2.05 2.19 -7 1.56 71 8895 DTH-LA-04 34-36 1.01 1.09 -8 1.08 99 8943 DTH-LA-04 130-132 0.83 0.84 -1 0.76 90 9057 DTH-LA-05 188-190 0.55 0.69 -25 0.48 70 9091 DTH-LA-06 30-32 1.76 2.09 -19 1.44 69 From Toro & Muehlebach (1997)

6.3 Historic Mineral Resource Estimate Santa Fe estimated an “indicated” mineral resource of 348,000oz gold. The aforementioned fourteen RC drill holes, more or less at 50m centres, as well as surface trenching were used to estimate the “indicated” mineral resource. J.C. Toro and W. Muehlebach, geologists with Minera Santa Fe Pacific Chile Ltda., prepared the estimation in January 1997. The cross section polygonal method was employed to estimate the resource. A specific gravity (“SG”) of 2.5g/cc was utilized, which seems reasonable. The extent of the database used to derive this average SG value is not known. An economic grade cut-off of 0.30g/t Au was employed. Verification RC drilling performed by the Company in 2006, described more fully below in Section 10.1, encountered similar widths and tenor as reported in the initial testing and even expanded upon the zones of mineralization. Additional follow-up work by the Company has indicated that this initial resource estimate was overstated for the level of work, but subsequent work performed by the

BRIAN COLE P.GEO. Page 10 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

Company has demonstrated an even larger resource exits at Lajitas.

7 GEOLOGICAL SETTING AND MINERALIZATION

7.1 Regional Geology The complex geologic fabric of the region is the result of a combination of Paleozoic through Triassic accretion along the continental margin, overprinted by subduction of the Nazca Plate beginning in the Jurassic (Figure 7.2). The central Andes' basement was assembled in the late Paleozoic by accretion of the Coastal Terrane, the Chileania Terrane, the Precordillera terrane, and the Arequipa-Antofalla Craton. By Jurassic time, the central Andean magmatic arc had progressed eastward over time, implying a

BRIAN COLE P.GEO. Page 11 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

process of "tectonic erosion" (instead of the more typical development of a fore-arc prism and trenchward progression of the magmatic arc). These successive magmatic belts were commonly associated with, or succeeded by, back-arc basins in Argentina. The region was cut by a series of arc-parallel transpressive strike-slip faults that also become progressively younger to the east. The region began to be deformed by a series of NNE to N-striking reverse faults in the Eocene, and pulses of this style of deformation continued until at least the Late Miocene.

BRIAN COLE P.GEO. Page 12 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

The modern volcanic arc of the central Andes began in northern Chile at 26 Ma (Jordan et al., 1989, Coira et al., 1982, 1993) after rupturing of the Farallon Plate and subsequent increase in the subduction rate during the Upper Oligocene. The Oligocene - Miocene Dona Ana Fm. volcanics are representative of the ~300 km long volcanic belt which runs from latitudes 26°S to 29°S along the Chile / Argentina frontier. This volcanic belt probably has progressed from north to south over time due to the effects of oblique subduction. These volcanics represent predominantly large, complex stratovolcanoes of calc-alkaline to shoshonitic affinity. The Maricunga - El Indio region has an anomalously shallow-dipping Benioff Zone, a feature that has been empirically tied to the most productive gold belts in the Andes (Figure 7.2). Depth of the subduction zone decreased from ~ 20Ma, and continued until ~ 6 Ma when it reached the present angle of subduction. This phase is associated with important Au - Cu - Ag mineralization in much of the region (Mpodozis et al, 1995). The regional structural geology is dominated by Andean style faulting. Folding is rare. The three principal fault trends are N-S (to NNE), NW, and E-W. Intersections of the N-S fault set with the NW-striking fault set are common loci of major volcanoes (eg: Volcan Copiapó ) and major ore deposits in the region (ie: Pascua / Veladero, El Indio, Cerro Casale). This is a typical structural setting for Pacific Rim epigenetic deposits (the "arc-parallel" set intersecting the "arc-normal" set) (Corbett & Leach, 1998). King (1992) defined the structural setting in the Maricunga region as controlled by a fundamental series of E-W striking faults and related these other three sets of faults to the fundamental faults by a transpressive strain setting. The N-S (NNE) fault system has the greatest strike continuity. These faults commonly have mappable traces more than 50km and are thought to have initiated in the Eocene, forming large horsts. They continued to deform intermittently from the Oligocene through the Pliocene. The faults expose the deepest basement known in the region and have vertical displacements on the order of 0.5km to 3 km. They also probably have a slight dextral component of movement. Typical faults of this set are the Banos del Toro Fault in the El Indio Belt, and the La Gallina Fault in the southern Maricunga. The other important fault set in the region is NNW to WNW-striking sinistral faults. To the north, in the Maricunga region, Mpodozis et al (1995) has shown that these faults also originated in the Eocene and suffered intermittent deformation until at least the Late Miocene. These faults control much of the shallow intrusive activity and mineralization in the central Andes. The role of E-W faulting in the region is controversial. King (1992) believed that these structures, which are neither easily mapped nor obvious on LandSat images, were really the fundamental structural deformational elements of the region. Martinez et al. (1993) described this set in the Valle de Cura region as forming only minor offsets, and discounted this as the fundamental deformation. The Maricunga Gold Belt comprises a NNE trending chain of andesitic to dacitic volcanoes over an area approximately 200km long and 30km wide. These form part of a late Oligocene-Miocene

BRIAN COLE P.GEO. Page 13 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

continental margin plutonic volcanic arc. The Maricunga contains at least 14 major prospects, including three operating mines and two substantial idle resources (Marte/Lobo & Aldebaran). The belt also hosts a series of variably eroded stratovolcanoes with associated dome fields ranging in age from 32 to 5 Ma (Vila and Sillitoe, 1991). There were six distinct magmatic pulses that produced the majority of the volcanic rocks and associated high-level intrusive stocks. However, Mpodozis et al. (1995) indicated that there were only two events in the Maricunga which are known to be strongly associated with mineralization: a phase of dacitic volcanism from 26-21 Ma (ie: Refugio, La Coipa) and another from 16-12 Ma (ie: Aldebaran, Marte/Lobo). In the El Indio belt, further to the south, Maksaev et al (1984) described two major pulses of volcanism of the same age (27-19 Ma and 16 - 11 Ma).

7.2 District and Property Geology 7.2.1 Lithology Andesitic and dacitic volcanic rocks of Eocene-Oligocene age are the main units outcropping in the Dorado project area. These rocks overlie the Permo-Triassic basement (Chlolloy Formation) of acidic volcanic and intrusive rocks. The Eocene-Oligocene volcanics are in turn overlain by

BRIAN COLE P.GEO. Page 14 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

dacitic flows interlayered with Pliocene gravels (post mineral cover). The Eocene-Oligocene volcanics are intruded by subvolcanic bodies of quartz dioritic-dacite porphyry. These intrusives at Dorado are interpreted as ranging in size from small dikes/sills to major intrusive in size. Where observed, these intrusions have an association with phreatic breccias. The age of the porphyries is uncertain, but probably is 20-22 million years old based on radiometric ages of similar rocks in the district, within the age range of younger pulse identified by Maksaev et al (1984). 7.2.2 Structure The structural setting is complex with several superimposed events. Primary features observed are 1) NS-NNW faults, and 2) EW-NE faults (less developed). These faults are believed to have developed during extension associated with major regional NW trending, left-lateral strike slip faulting. This district scale faulting appears to have been long-lived, active since the Triassic and controls major geological features in the Maricunga, such as the location of volcanic centres and associated hydrothermal systems, alteration, and gold deposits. Some of the NS-NNW faults were reactivated during a Miocene compressional event that produced a series of fault blocks forming horst and graben structures. There are also EW and NE faults that may be part of this block forming process. Dorado is located on a north-south trending uplifted block 1.2km wide. The uplifting prevented the block from being covered by post mineral latitic flows that cover a large area to the north of the gold resource area, and masking any signature of a hydrothermal system and potential gold mineralization. The Property is centred on a major fault intersection of a conjugate pair of east-west and north- south trending faults (Figures 7.4 & 7.5). The signature is mainly topographic in nature but is supported in magnetic data as well as hyperspectral data. The east-west rendered structure basically follows the Quabrada Lajitas stream valley whereas the north-south is a major topographic cleft (Figure 7.5). This major structural intersection likely represents a regional structural control at Lajitas for the porphyry

BRIAN COLE P.GEO. Page 15 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

intrusive and attendant mineralization. Over 240 measurements were made of planar features consisting of mainly joints and faults but some veins, in the Resource area. Two planar fabrics are apparent: 295°-60°N and 355°-60°E. Over 45 vein measurements coincide with both these tectonic fabrics. Figure 7.6 depicts the local structural setting of the Resource area. The East and West Zones are hosted in two paired fault structures trending north-northeast (“NNE”). The East Zone dips 70° east and the West Zone 85° west. The mineralized zones are cross-cut by several west- northwest (“WNW”) trending faults. Dip is not known, but is suspected to be steeply to moderately towards the north. At least some of the displacement along the cross-faults has been post-mineralization as indicated by the apparent dislocations of the mineralized zones. This displacement does not exceed 25m laterally and is in a dextral sense. Vertical displacement is downwards to the south, but the absolute amount is unknown. The apparent sense of movement is consistent with the structural model developed from the available structural data. Figure 9.4 illustrates in a 3D representation the same structural elements and mineralized zones as Figure 7.6. 7.2.3 Alteration Alteration and mineralization are related to sub-volcanic porphyry intrusions and inherent vent structures. Both pre- and post-mineral porphyries are present and are manifested as chloritic and argillic facies alteration. Syn-mineral porphyries have potassic alteration (sericite) associated with the main mineralizing event with argillic alteration facies correlated to the latest

BRIAN COLE P.GEO. Page 16 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

stages. Silicification observed so far is localized and often related to gold mineralization. Alteration is considered further in Section 9.2.2, where the results of an airborne hyperspectural survey are discussed.

7.3 Mineralization Gold mineralization and the Resource lie in an area of poor outcrop exposure. The possible existence of a porphyry gold-copper system at depth was identified early on given the geometry of alteration and the gold anomaly. Subsequent work has only substantiated this hypothesis. Significant known gold mineralization occurs in an area of about 400m X 400m in two tabular bodies, as interpreted from RC and diamond drilling data. The zones range from 250m to 300m in length and range from 25m to 125m in width, with average width being in the 75m range. The Western Zone dips steeply west and the Eastern Zone steeply to moderately east. Both zones are essentially tabular in form, with the Eastern Zone funnel-shaped at its northern end. Widths of the zones are largely established by drilling; the southern ends remain open. The northern end appears to be truncated by post-mineral cross-faulting. The northern funnel-shaped portion of the Eastern Zone occurs where this cross-fault cuts and tenor is elevated at this location. The cross-fault may have been active contemporaneously with mineralization as well. The rake of the funnel is consistent with the line of intersection of the cross-fault and northerly trending fault ( ʃ 065° – 75°). Limited, sporadic, but significant mineralization also occurs along a line bisecting the two primary mineralized zones. This mineralization appears to be hosted in a relatively thin (25m wide) dike that has been traced intermittently by sampling for 100m along strike. The resource area is a vent structure consisting of porphyry intrusive with lesser tuff and coarser pyroclastics. Stages of alteration and mineralization are multi- phased (Figure 7.7). Gold mineralization is most typically associated with tectonically disturbed zones accompanied by argillic clay alteration overprinted by silicification and occasionally with quartz veinlets. A better grade of tenor results in areas of quartz veinlet mineralization. Areas of BRIAN COLE P.GEO. Page 17 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

higher grade gold mineralization (>1ppm) are engulfed by an expansive and very wide spread cloud of anomalous gold (>100ppb) within the country rock in the resource area, which measures 300m x 400m. Although zones of breccia occur, they do not appear to be intimately linked with gold mineralization. Many of the fault zones observed are suspected to be post-mineralization. The occurrence of sulphide minerals with gold is uncommon, mainly due to the fact that gold encountered to date has been mainly in oxidized rock. Anomalous copper mineralization has only been encountered in one instance to date. Although anomalous copper is sympathetic with zones of higher gold tenor, there is a significant oxidized zone containing copper that occurs between a gold mineralized horizon and the primary intrusive. This zone is described more fully in Section 10.2.2

8 DEPOSIT TYPES The Maricunga hosts a series of epithermal high sulphidation (“HS”) and porphyry-style gold-silver- copper deposits. The more important deposits are La Coipa (Au-Ag HS epithermal), La Pepa (Au-Ag HS epithermal), El Hueso/ADLF (Au replacement), Marte/Lobo, Refugio (porphyry/epithermal Au), and Aldebaran-Co. Casale (porphyry Au-Cu). Combined gold resources in the belt are in the order of 55 million ounces gold. Figure 8.1 shows a generalized porphyry model and the relationship between the porphyry and epithermal environments. As previously stated there are two major types of ore deposits in the region; "gold porphyry" deposits (of which several are cupriferous), and epithermal deposits. The gold porphyries are essentially high-level diorite / quartz-diorite porphyry systems with sheeted veins in the cupolas of shallow-injected stocks. These porphyries are the predominant deposit type in the Maricunga. They are associated with potassic and sheeted silicic alteration, where the majority of the gold is contained within veinlets. The sulphides in these deposits are predominantly pyrite, with only minor chalcopyrite, bornite, and molybdenite (Vila & Sillitoe, 1991). The Aldebaran porphyry Au-Cu deposit (Cerro Casale) is the only porphyry deposit in the Maricunga with a substantial copper content (0.3%). The porphyry systems commonly have a halo of argillic alteration with associated pyrite. Several also have epithermal caps and/or have epithermal alteration telescoped down onto the porphyry (ie: Caspiche). The upper portions of some of these porphyry systems probably had their potassic core destroyed by late epithermal argillic alteration. Ages of the Maricunga porphyry systems range from 23 to 12 Ma (Vila & Sillitoe, 1991). Jannas et al. (1999) documented four basic types of high sulphidation epithermal gold-silver deposits in the El Indio belt to the south: vein systems (El Indio), tectonic/ hydrothermal breccias (Tambo), stratabound (Esperanza of Pascua district, and parts of Pascua), and disseminated/structural (Pascua). It is now known that the Pascua and nearby Veladero deposits are essentially diatreme breccia complexes which have been mineralized. At Pascua, one-third of the

BRIAN COLE P.GEO. Page 18 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

Generalized Porphyry Model

From Vila and Sillitoe (1991) Figure 8.1

ore is within a diatreme complex, but two-thirds of the gold is within the breccia, because the ore within the breccia is much higher grade (Heberlein, 2000). The age of mineralization in the El Indio Belt is believed to be mostly in the range of 6-8 Ma (Jannas, 1999, Heberlein, 2000), although Jones et al (1999) indicated the age of mineralization at Veladero is 14 Ma.

9 EXPLORATION

9.1 Summary of Activities In 2006 the Company performed a limited magnetic survey over the historic gold resource area as well as a reverse circulation drill program to confirm the presence of the resource. Subsequently, a broader magnetic survey was made in 2007 which covered the majority of the Property. A single

BRIAN COLE P.GEO. Page 19 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

line survey of IP was also made. Securing a drill rig and crew in Chile to test the highly positive targets resulting from the surveys was an extreme challenge for the Company, due to their inordinate unavailability at the time. The Company thrust forward with bulldozer work in January 2008 to construct road access and prepare drill pads for identified targets in anticipation of successfully securing a rig. In April 2008 a drill rig and crew were finally brought together in a less than ideal situation, but the Company elected to pursue the gamble of the novel and innovative solution because the alternative was the targets of this highly attractive property would not get tested for an additional year. The new road cuts exposed were sampled over April and May 2008 and a limited amount of diamond drilling completed after a very arduous start-up period. Later that year in October, three additional lines of IP were performed, followed by a 1,365m, 4-hole diamond drill program during November and December. Some limited additional road cut sampling was undertaken later in April 2009. Drilling recommenced in late November 2009 and work continued until late March 2010, except for the Christmas break. A total of 16 RC drill holes were drilled with a cumulative length of 4,529m, mostly to define mineral resource with lesser metreage designed to test target zones identified from trenching. In addition, a further 4.2km of road cut was opened and 1,021 trench samples taken. Lastly, an airborne hyperspectral survey was flown over the entire Property and a high resolution Digital Elevation Model (“DEM”) was completed in April and June 2011 respectively.

9.2 Geophysical Surveys 9.2.1 Ground Magnetic and IP Surveys As previously mentioned, a ground magnetic survey of limited scale was performed over the gold resource area prior to the 2006 RC drilling program to help guide drill targeting. A much larger survey expanded out from the initial survey and was performed over most of the Property prior to the 2008 diamond drilling program. The following discussion has been modified, expanded upon, and updated after Ellis (2007): A ground magnetic survey and one induced polarization (“IP”) and resistivity line was completed on the Property in March 2007, while three additional cross lines were surveyed later in October 2008. The acquisition contractor was Argali Geofisica EIRL operating out of Antofagasta, Chile. Survey design, oversight, and interpretation were done by EGC Inc. based in Reno, Nevada, USA in both cases. The objective of the ground magnetic data was to identify structure and map the extent of dioritic intrusions and possible magnetite destructive alteration on the Property. The IP lines were placed to cross the Property and go across the known mineralization.

BRIAN COLE P.GEO. Page 20 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

Pyrite can be a common accessory mineral in argillic alteration and would show up on the IP data as well as any other accessory sulphide within the intrusive. Increased porosity and permeability in the argillic halo will also decrease the resistivity of the host volcanic section. The ground magnetic data were collected along east-west lines spaced at 200m using a GSM- 19W v7.0 GPS referenced “walking” overhauser technology magnetometer and a GSM-19 v6.0 overhauser technology base to monitor the diurnal variation. The data were plotted and various enhanced images made in OASIS Montaj. A total of 20.8 line kilometres of IP was measured using a pole-diploe array with a-spacing of 200m and n-spacing of 1 to 6. A GDD 3.6kW transmitter with a Honda 6.5 kW motor generator power supply and an ELREC Pro 10 channel receiver was used for data acquisition. IP data were collected in time domain with 2-second ¼ cycle 50% duty cycle current waveform and an integration window from 480msec to 1840msec. The IP and resistivity results were modelled using the UBC inversion program DCIP2D v3.2. The reduced-to-pole ground magnetic data and location of the IP lines are shown in Figure 9.1.

BRIAN COLE P.GEO. Page 21 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

The magnetic data shows the western 65% of the Property is a magnetically complex environment probably dominated by volcanic flows and flow rocks with different magnetic properties. Remnant magnetization may contribute to some of the strong magnetic lows in this area. The eastern 35% of the property is less magnetically complex possibly due to the lack of volcanic flows common to the west or more uniformly magnetized volcanic rocks. South of UTM 6,978,750N as well as west of UTM 506,650E in the southwest quadrant of the map, these rocks appear to be very resistive low chargeability cap rock forming the ridge line surrounding the erosional depression exposing the mineralization at the Lajitas Resource. Approximately 1.5km south-southeast of the resource area is a horseshoe shaped magnetic high surrounded by a series of strong magnetic lows (Figure 9.1). The central magnetic high correlates with coincident moderate resistivity low and elevated chargeability high suggesting the moderately high resistivity is mapping an intrusive. The surrounding magnetic and resistivity lows are not distinguished as IP anomalies. The likely cause for the magnetic and resistivity lows is that they are responding to argillic alteration surrounding a circular intrusive. The pattern described above is consistent with the geophysical model for the interpreted geological situation. Extending this interpretation further, the intrusive is elliptical in shape, 1,000m x 1,500m in size, and the mapped clay alteration halo is 2.5km in diameter. The Lajitas Resource is nestled between the north-northwest boundary of the resistivity low, inside the resistivity donut, but flanking the edge of the chargeability high anomaly. 9.2.2 Hyperspectral Imagery Dr. Amer Smelbegovic, a geophysicist with a specialty in remote sensing, reports the following:

9.2.2.1 Background on Hyperspectral Imagery The use of Hyperspectral imagery (“HSI”) for mineral mapping and identification is becoming more accepted, following almost two-decades of work over mineralogical sites of interest such as Cuprite and Virginia City, Nevada (Swayze, 1997; Kruse,1988; Kruse, 1999) and work by the USGS spectral laboratory (Clark et al., 1993-1995). Taranik and others (2007) have defined the elements of the natural background (landscape surface cover composed of consolidated rocks, unconsolidated rock weathering products, soils, coatings on rock materials, vegetation, water, materials constructed by humans, mixtures, anthropogenic gases indicative of industrial processes) using various HSI sensors and methods. The alteration minerals targeted for detection with hyperspectral airborne sensors minerals have abundant spectral absorption features throughout the visible/near-infrared (VNIR, 0.4-1.0 μm) and short-wave infrared (SWIR, 1.0-2.5 μm) wavelength ranges (Hunt, 1980, p.35). These phenomena result from the interaction of electromagnetic (“EM”) energy with the atoms and molecules which comprise the minerals (Hook and others, 1999 p.59). Many iron minerals have subtle spectral features in the 0.4 to 0.9 μm range caused by the electronic processes of Fe-ions. Charge transfer phenomena cause strong absorption in iron minerals at wavelengths smaller than 0.5 μm (Hunt, 1980, p. 32; Clark, 1999, p.16). The minerals containing hydroxyl (OH) group have BRIAN COLE P.GEO. Page 22 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

characteristic spectral absorption features in the 2.1 to 2.4 μm wavelength range, which are caused by the vibrational processes in the crystal lattice; in this case stretching of the hydroxyl (OH) ion (Clark, 1999, p.27; Hunt, 1980, p.33) in combination with metal-OH bands, which vary. Combination of remote sensing methods with field ground-truthing is already showing signs of promise in discerning natural resources at the numerous localities in the world (e.g. Bedell, 2004). Combined insight into the soil mineralogy is allowing geologists to explore the new sites of potential interest (shown as anomalous areas on remote sensing imagery) and also work in assaying and localizing the exact areas of mineralization. The analysis of multiple high- resolution datasets, including hyperspectral imagery and ground-based spectroscopic surveys can confirm the presence of hydrothermal alteration aureoles (associated with epithermal precious metal deposits). The previous case studies have shown that by understanding the mineralogical profile of the target area, one can significantly economize the exploration effort. Sabine (1999, p.384) describes the image analysis processes as a stream of recognition of spatial and spectral patterns in image data that through the use of appropriate models eventually evolves into interpretation of landscape attributes. The landscape attributes are then explained (through the geologic interpretative process) to develop geologic information pertinent to the geomorphology, lithostratigraphy or structure of the area. Ultimately, the information that can be derived from an image is related to the characteristics of the pixels comprising the image – where the group of pixels with the similar tonal attributes can be identified as a particular area of geologic interest (showing linear trends, bright areas and so on). The steps in the analysis and deriving geologic knowledge from the image can be summarized as following (Sabine, 1999 p.386): Radiance (Brightness) measurement -> Groups of Pixels -> Textural/Spectral units -> Landscape attributes -> Geologic Processes -> Geologic Models.

9.2.2.2 Lajitas Data Collection and Analysis The hyperspectral imagery at Lajitas was acquired in early April 2011 by SpecTIR LLC. from Reno, NV. The data were collected under clear conditions at 3m lateral ground sampling distance (GSD) (pixel size) and entire visible – shortwave infrared range. The instrument used for data collection is a 350 band, configurable hyperspectral imaging system ProSpecTIR VS. The initial data pre-processing and calibration was conducted by SpecTIR and the finalized reflectance data delivered to Capella Resources where the subsequent analysis was made by Amer Smailbegovic, Ph.D., CPG. The analysis of hyperspectral data improves the quality of mapped surface hydrothermal alteration by allowing differentiation of individual alteration mineral zones, dominated by particular mineral endmember(s). The hyperspectral imagery is particularly sensitive to the occurrences of clay, silicate and sulphate minerals, which are broadly subdivided into several categories, each suggestive of a particular alteration type. These broad classes are defined as follows:

BRIAN COLE P.GEO. Page 23 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

• Propylitic alteration: chlorite, epidote, biotite, goethite, • Argillic alteration: illite, montmorillonite, smectite, muscovite • Advanced Argillic: dickite, pyrophillite, sericite, halloysite, microcline • Acid-Sulphate (High-sulphidation): alunite, kaolinite, jarosite, buddingtonite, gypsum

9.2.2.3 Observations: Results of the hyperspectural survey are displayed in Figures 9.2 and 9.3. There is a distinct difference between the northern and southern segments of Lajitas: • the northern segment chiefly exhibits argillic and propylitic alteration; • the southern segment shows several zones of high-sulphidation alteration zones, in addition to a predominantly argillic zone towards the centre. The northern segment (north of Dorado canyon), where the drilled resource zone occurs, shows all of the traits of an argillic-propylitic alteration zone. The area is dominated by illite/montmorillonite mix in the resource zone and chlorite-epidote assemblage towards the periphery. Ground truthing results with the portable ASD spectroadiometer and comparison of image-derived spectra with USGS spectral library confirm these findings. The region may therefore represent either a deeper portion of the mineralization system that has been exposed by the faulting or a more distal low-sulphidation vein swarm system. The southern segment of the concession (south of Dorado canyon), which remains largely undrilled, exhibits a 200m wide high sulphidation “bulls-eye-like” alteration zone in the western- central region, showing apparently different portions of an alteration system around a buried

BRIAN COLE P.GEO. Page 24 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

intrusive. The high-sulphidation trend continues on the edge of the southern portion of the concession, forming almost a ring-like shape. The presence of acid-sulphate minerals also coincides with the observed magnetic “high” zone and zones of increased chargeability on the IP data. The ring is encompassing a circular portion of predominantly illite-montmorillonite-sericite (argillic) alteration. In this aspect, the acid-sulphate minerals may represent the cap rock and the high temperature zone, while the disseminated mineralization may be situated towards the centre. It is unclear whether the small porphyry-like alteration in the western central region is potentially an independent mineralized system or is related to the larger system. The results of ground examination support the presence of alunite/kaolinite/jarosite in the southern portion of the concession and the presence of alunite/pyrophillite/sericite in proximity to the western-central porphyry. The match is also established by the USGS spectral library. From the exploration standpoint, there are several particularly interesting locations: • the western-central porphyry; • the south western portion of the area where the acid-sulphate and advance argillic alteration are in an apparent contact; • the apparent quartz-alunite ledges in the eastern portion of the area; • and the central argillized zone, which bears similarity to the drilled resource zone in the northern segment.

BRIAN COLE P.GEO. Page 25 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

A complicating factor in presenting a detailed alteration map is the numerous landslides within the Lajitas concession block. The large episodes of mass wasting have covered some of the alteration zone and have introduced material that is derived from elsewhere. Several of these slides are apparent on both high-resolution and hyperspectral data and have not been classified as a part of this interpretation.

9.3 Trench Sampling 9.3.1 2008 Program Approximately 6.7km of new access road was excavated by bulldozer for the purposes of drill pad access in preparation of the 2008 diamond drill programs. Wherever new altered rock was revealed, the exposures were continuously sampled by a string of chip samples at 1m intervals or by chip/grab combinations along 2m to 4m intervals. A total of 1,044 samples were collected and assayed by fire assay for gold in the 2008 program with some modest anomalous zones being outlined. All the rock exposed consisted of clay altered volcaniclastic, predominately a crystal tuff of intermediate composition, but with coarser clastic horizons ranging from lapilli tuff to volcanic bombs. Alteration is more or less of constant type and intensity on the north side on Quebrada

BRIAN COLE P.GEO. Page 26 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

Lajitas, but lessens in intensity as distance and elevation increases on the south. Rock exposures either side of the Quebrada Lajitas (stream) are heavily oxidized and gossaned and extend over an area approximately 750m across the stream valley. The rare thin quartz vein with open space filling textures has been observed within these rocks. This gossan area correlates with the IP Chargeability high anomaly. 9.3.2 2009/2010 Program Total of 1,021 road cut samples were collected during the 2009/2010 drill program. These were primarily focused in the immediate resource area, as well as several benches that continue east of the Resource area and back behind the ridge. Rock geochemically anomalous in gold was identified approximately 400m east of the Lajitas Resource. Many samples range from high tens of ppb gold to just less than 200ppb, with a few spikes up to 350ppm gold. One string of more or less consistently elevated samples along a road cut is approximately 150m long, while two additional slightly more subdued zones further north are in the order of 75m long each. Samples in this area were continuous chip samples at 1m long intervals. Figures 9.4 and 10.1 depict trench mineralization in relation to the Lajitas Resource and east of

BRIAN COLE P.GEO. Page 27 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

it. Trenching results were used to help craft the wireframes that constrained the Resource, but trench assays were not incorporated in the resource database. Subsequent diamond drilling targeted to test the anomalous gold values found east of the Resource and behind the ridge failed to detect any significant gold mineralization at depth.

10 DRILLING The Company has drilled a total of 27 RC and diamond drill holes on the Property with a cumulative metreage of 7,300m. A drill hole plan is presented in Figure 10.1. Most holes intersect the mineralized zones at reasonable angles. However others, most notably at the north end of the East Zone, cut mineralization obliquely. This is due in part to prohibitive locations for drill hole collars due to high topographic relief as well as a poor understanding of the orientation of the mineralization at time of drilling (see Figure 14.2 for example).

10.1 Reverse Circulation (2006) A reverse circulation drilling program was completed within the resource area in late 2006. The program lasted from September 23 to October 22, 2006, inclusive of road clearing and drill site preparation time. A total of 1,709m were drilled over seven holes. The primary objective of the program was to confirm the presence of a gold resource outlined by Minera Santa Fe Pacific Ltda in 1996 (“Santa Fe”), a noncompliant NI 43-101 “indicated” resource of 348,000oz gold based upon 14 drill holes in 2,674m of reverse circulation drilling. Average tenor of the mineralized zones reported ranged between 0.4 to 0.8g/t Au. The database consisted only of 2D drill collar

Table 10.1: Significant Drill Intersections (2006) Hole No. To From Interval Gold Comments Azimuth Dip Final Zone Width g/t Hole (m) * Depth LJ06001r 0 10 10 1.24 Including 2m @ 3.82g/t. 290 -60 300 Oxide 98 158 60 0.40 166 282 116 0.88

LJ06002r 142 234 92 0.95 110 -60 282 Oxide 276 282 6 0.63 Hole ended in mineralization.

LJ06003r 156 176 20 0.53 280 -50 234 Oxide 206 220 14 0.62

LJ06004r 98 170 72 0.70 110 -50 174 Oxide

LJ06005r 158 216 58 0.63 110 -60 300 Oxide 298 300 2 2.38 Hole ended in mineralization.

LJ06006r 70 148 78 0.60 290 -50 200 Oxide

LJ06007r 0 192 192 0.72 50 -50 219 Oxide

* - Down-the-Hole Length Interval. Intercepts not determined using a gold cut-off Total Metres 1,709 BRIAN COLE P.GEO. Page 28 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

locations, hole attitudes, and uncorroborated assays. Any geological logs were lost. The target area is lies at an elevation of 4,500m in a vicinity of high topographic relief. All holes drilled in the 2006 program intersected significant broad zones of low-grade gold mineralization of similar tenor to those encountered by Santa Fe. Lateral extent of known zones of mineralization was expanded. Table 10.1 outlines the significant intersections encountered. Three holes of the seven were targeted to twin Santa Fe holes as well as test for depth extension: LJ06001r, LJ06002r, and LJ06005. Four additional drill holes were targeted to test for the dip and full width of apparent mineralized zones, as well as new targets based upon a magnetic geophysical survey. Dips of all holes drilled ranged between -50° and -60°. Drilling proceeded more slowly than anticipated due to an unexpectedly high water table. Approximately 48% of all samples collected were wet. There are definite recovery problems with the wet samples as a significant fines component is washed away. Weights of samples assayed bear this out. The weight of dry samples average 8.4kg while wet samples average only 6.1kg. The 8.4kg average sample weight in dry samples would infer approximately an 80% sample recovery. Quick geological logs from the chip trays were made in the field. Detailed logging was completed in Copiapó by a local geologist specializing in chip logging. Drill holes LJ06001r, LJ06002r, and LJ06005r twin Santa Fe holes plus were extended to the 250m to 300m depth range. Holes LJ06004r and LJ06006r were intended to be drilled over top of holes LJ06001r and LJ06005r respectively to test for the dip of apparent mineralization. However, topographic issues precluded this configuration and a scissor configuration was adopted. Hole LJ06003r was spotted to test a circular magnetic low at the intersection point on two apparent mineralization zones and Hole LJ06007r to test across a magnetic low trough. The assay configurations of the twinned holes compare generally well. There is some discrepancy between the pair LJ06002r and SF03 in terms of the magnitude of the mineralized zone however.

10.2 Diamond Drilling (2008) The Company mobilized a diamond drill core rig to the Property in late March 2008 to test IP and magnetic targets consistent with the deposit models for gold porphyry ± copper and epithermal gold. The pads for most hole collars were constructed with access roads connecting them. Due to mechanical problems related to the drill and impending winter conditions, the program was cut short to only one uncompleted hole. In November 2008, the drill program recommenced and continued until late December. A total of four holes was drilled with a cumulative total of 1,365m. Core sizes were HQ and NQ. 10.2.1 Diamond Drill Holes LJ08008/8A, LJ08009, LJ08010 Hole LJ08008 was drilled parallel to the north-south trending IP line in a southeast direction to test the IP Chargeability high. The hole only reached 90.8m depth before being abandoned for

BRIAN COLE P.GEO. Page 29 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

the winter. It was restarted in the later 2008 drill campaign (LJ08008A) and drilled to an ultimate depth of 359.8m. Hole LJ08009 was drilled further south along the same IP line as Hole LJ08008/8A to test the magnetic high anomaly. It was stopped after 33.1m as the core exhibited only weak clay alteration and no other alteration indicative to gold mineralization. Hole LJ08010 was collared to test an area containing a magnetic high alteration at the intersection area of the regional controlling structures. This hole and was abandoned in a fault zone at 488m. In the above diamond drill holes, essentially only two rock types were encountered: uppermost are intermediate pyroclastic rocks, not always present, over pyritic dioritic porphyry, differentiated by green and blue legend respectively in Figure 10.2. The pyroclastic consists of clay altered volcaniclastic: predominantly a matrix supported crystal tuff of intermediate composition with horizons of lapilli-tuff and volcanic bombs. The porphyritic intrusive rock consists of 5% - 20% (0.5mm – 3mm) euhedral to anhedral phenocrysts of feldspar and much lesser amphibole in a very fine grained to aphanitic groundmass. The rock typically carries up to 1% very fine grained pyrite (up to 5% locally) and trace chalcopyrite. The sulphide content seen accounts for the IP Chargeability anomaly. Clay alteration is really only noticeable in the volcanic rock overlying the porphyry intrusive at Hole LJ08008/8A as well as westwards with depth, at Hole LJ08010. The oxide/sulphide interval varies in depth from near surface to 43m down-the hole in these three holes. The holes were blanket sampled and assayed for gold and intermittently for copper. No significant assays of either metal were returned. 10.2.2 Diamond Drill Hole LJ08011 Hole LJ08011 was drilled from the same pad as RC hole LJ06002r and was targeted to extend known gold mineralization at depth. A plan view plot of the hole is plotted on Figure 10.2. The protolith and its configuration is a similar situation as at the location of Hole LJ08008/8A with volcanoclastic overlying dioritic intrusive. The clay alteration is stronger and rock is oxidized to a depth of 375m down-the-hole. The outstanding difference is the presence of slight to moderate pervasive silicification with minor localized amounts of quartz veinlets, which are accompanied by significant low grade gold as well as anomalous copper mineralization. Silicification is confined mostly within the intrusive near the contact with the volcanics. Silicification of more or less consistent moderate intensity was logged between 130m – 354m down-the-hole, a length of 214m. Figure 10.2 graphically illustrates the relationships. A gold mineralization intersection of 0.91g/t Au over 261m was returned (90m – 351m). Within this interval is a higher grade zone grading 1.58g/t Au over 105.7m (142.5m – 247.2m).

BRIAN COLE P.GEO. Page 30 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

Anomalous copper mineralization peaks sympathetically with gold mineralization of higher tenor, but the most significant values underlie the gold mineralization zone, within the silica alteration halo. All rock was oxidized and the only evidence of the copper mineralization in the zones of higher tenor is the occurrence of hematitic red blebs and seams of clay. The best return was 0.15% copper over 33m (294m – 327m). Core recovery is very high, except in areas of faulting.

10.3 Reverse Circulation (2009/2010) The Company mobilized a RC drill rig to the Property in late November 2009. Drilling continued unabated till the end of March 2010, except for a brief pause for Christmas break. A total of 16 RC drill holes was drilled with a cumulative length of 4,529m, mostly to define mineral resource or check anomalous trenching results. Drill hole collars for LJ09012r, LJ09013r, LJ0914r, LJ10026r are located 350m east, 400m east- northeast, 450m northeast, 450m east respectively of the Resource area. LJ09012r was drilled to the northeast and intersected a new modest zone of gold mineralization of 74m at 0.11g/t Au. LJ09013r is drilled to the northeast and encountered no gold mineralization. LJ09014r intersected anomalous gold (8m at 0.08g/t Au) at the bottom of the hole, possibly representing the edge of

BRIAN COLE P.GEO. Page 31 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

the extreme northern extension of the Resource zone. LJ10026r was drilled north to test anomalous trenching results, but no significant mineralization was intersected. Holes LJ10019r and LJ10023r were drilled south and west respectively of the Resource area. LJ10019r was drilled to test the north trending structure hosting the Resource south of the Quabrada Lajitas and LJ10023r was drilled to test a magnetic low but was terminated at 162m due

Table 10.2: Significant Drill Intersections (2008-2010) Hole No. To From Interval Gold Comments Azimuth Dip Final Zone Width g/t Hole (m) * Depth LJ08008 nil 155 -50 359

LJ08009 nil 155 -50 33

LJ08010 nil 310 -50 488

LJ08011 90 351 261 0.91 including 105.7m @ 1.58 120 -60 482 Oxide

LJ08012r 128 204 74 0.22 50 -60 205 Oxide

LJ10013r nil 50 -60 280

LJ10014r 292 300 8 0.08 310 -60 300 Oxide

LJ10015r 0 318 318 0.68 including 140m @1.02g/t 120 -60 318 Oxide Hole ended in mineralization. LJ10016r nil 110 -60 276 Sulphide

LJ10017r 102 194 92 0.74 110 -55 264 Oxide & Mixed

LJ10018r 140 296 156 0.55 including 30m @ 0.99g/t 175 -75 342 Sulphide

LJ10019r nil 115 -60 300 Oxide

LJ10020r 268 330 62 0.47 Hole ended in mineralization. 110 -60 330 Mixed

LJ10021r 66 208 142 0.57 including 48m @ 1.07g/t 110 -60 306 Oxide

LJ10022r 76 272 196 0.28 285 -60 296 Oxide

LJ10023r nil 110 -60 156 Oxide

LJ10024r 224 246 22 0.52 Hole ended in mineralization. 23 -60 246 Oxide

LJ10025r 6 176 170 0.56 110 -60 310 Oxide

LJ10026r nil 360 -60 300

LJ10027r 122 300 178 0.49 360 -60 300 Oxide

* - Down-the-Hole Length Interval. Intercepts not determined using a gold cut-off Total Metres 5,891 BRIAN COLE P.GEO. Page 32 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

to faulting, short of the planned depth of 300m. Neither hole intersected any significant gold mineralization. The balance of the 11 holes were step-outs from the Resource area, both north and south along strike. Significant drill intersections for the drilling performed 2008 through 2010 are listed in Table 10.2: Holes LJ08011 through LJ10015r (inclusive) were assayed for copper in addition to gold, but only geochemically anomalous levels were detected.

11 SAMPLE PREPARATION, ANALYES AND SECURITY

11.1 Sampling Method and Approach 11.1.1 Reverse Circulation Drill Samples All drill holes in both RC drill programs were blanket sampled at two-metre intervals. Dry samples were split using a standard riffle splitter. A 3-times split was performed to yield two 6kg to 10kg samples. Once the water table was encountered, a wet splitter was utilized. Dry samples were bagged in sturdy polyethylene sheet bags while wet samples were placed in polyethylene spun woven bags to allow the water to drain off. The depth at which water table was encountered was recorded. One sample split was shipped to the assay laboratory for assay and the other was held in secure storage in Copiapó. As previously indicated, approximately 50% of the samples collected were wet. Sample weights were highly variable for the wet samples leading to a concern about the level of sample recovery. Subsequent statistical analysis comparing dry vs. wet sample distributions indicate they are similar. This result is taken to indicate no great problem in terms of sample quality. 11.1.2 Trench Samples Trench locations were mapped by handheld GPS. Chip samples were taken at measured 1m – 2m intervals across a bulldozer cut wall. Sample limits were marked by fluorescent spray paint. Chip samples consisted of a more or less continuous record across the interval and averaged approximately 4kg of material. Chips were placed into sturdy plastic bags, a sample number inserted, and the bag securely closed by heavy duty wire stapler. 11.1.3 Diamond Core Samples Core boxes were trucked from the site to Copiapó. Standard protocol for drill core was to be logged, photographed, and geoteched (recovery, RQD, and SG for each 3m interval) at the facility there. Core was blanket sampled at 1.5m intervals unless there was a geological reason to modify. The core was split by sawing by Company personnel. One half the core was retained in secure storage and the split samples shipped to the laboratory.

BRIAN COLE P.GEO. Page 33 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

11.1.4 Control Samples It was protocol to insert blank samples into the sample stream every 15 – 20 samples or in zones of suspected mineralization. Duplicate samples were taken from the core box every 20 samples and retained pending results of the initial assaying. The 2009/2010 drilling program included Standard Reference Samples (“SRS”) as well.

11.2 Sampling Preparation, Analyses, and Security The following protocols outlined below are within acceptable industry standards: 11.2.1 Reverse Circulation Drill Samples Samples remained in the custody of Company personnel until shipment to the lab. Samples were shipped either by a pick-up service by the laboratory or driven to Copiapó by Company personnel followed by shipment to the laboratory by independent contractor secured by the Company. All samples were prepared and analyzed pursuant to the following standardized sample prep and analysis package: • Received sample weight after drying • Crushing QC test • Pulverizing QC test • Sample login • Fine crushing – 70% <2mm • Split sample – riffle splitter • Pulverize 800g to 85% <75 Φm • Gold (30g) Fire Assay AA finish. Standing instructions were to automatically rerun the pulp of any sample assaying ≥1 g/t Au using an AA finish and any sample assaying ≥3 g/t Au using a gravimetric finish. 11.2.2 Trench and Diamond Drill Core Samples Samples were shipped from Copiapó to the laboratory by an independent contractor secured by the Company. All samples were prepared and analyzed pursuant to the following standardized sample prep and analysis package: • Crush entire sample 95% <2.3mm • Split sample with Rotary Sample Divider to 800gm • Pulverize the subsample to 85% <200 mesh • Fire assay Au 30g atomic absorption (“AA”) finish (20% duplicates)

BRIAN COLE P.GEO. Page 34 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

• When requested, copper is analyzed for by 3 acid digestion (HNO3, HCLO4, HCL) followed by analysis by AA. Like the RC samples, standing instructions were to automatically rerun the pulp of any sample assaying ≥1 g/t Au using an AA finish and any sample assaying ≥3 g/t Au using a gravimetric finish. 11.2.3 Laboratories Samples were sent to several different laboratories during the life of the project and all are independent of the Company. All labs have ISO 9000:2008 accreditation, or higher: • ALS Chemex in La Serra, Chile for the 2006 RC drilling project; • SGS Laboratories in Santiago for the 2008 drilling project; • and to Activation Labs in Coquimbo, Chile for the 2009/2010 project phase. 11.2.4 Sample and Assaying Integrity Regression charts of duplicate and replicate samples verses original samples illustrate a high degree of correlation. Blank samples assayed at or near detection limits in all cases indicating a remote likelihood of cross contamination between samples during laboratory preparation. Standard Reference samples did not exceed confidence range levels. In the absence of more rigorous analytical checking, sample tenor distribution analysis can reveal potential sample preparation and analytical deficiencies. The character of the curves will indicate different sample populations as well as point to suspect sample preparation and analytical problems. Cumulative frequency distribution curves were plotted for Capella vs. Santa Fe sampling, by sample type, as well as by wet vs. dry RC samples (Figure 11.1). Comparative Cumulative Frequency Probability plots of the Capella and Santa Fe assay databases show a consistent gold population. The Company’s Total Sample curve plots slightly left of the Santa Fe curve, showing the former is a “richer” population (i.e. contains a larger proportion of higher grade samples), but the slope of the two curves (the variance) is comparable between the two sample populations, especially in the range of the bulk of the assays of economic significance (0.2 to 1.25g/t Au). A subtle change in slope of the curves at the 1.25g/t Au level suggests a higher-grade gold population or possibly sampling irregularities at that point. Cumulative Frequency Probability plots were also prepared comparing the gold population distributions of Dry verses Wet RC samples. The two curves are smooth and nearly mirror each other in terms of slope (variance) suggesting there has been no appreciable loss in integrity of the gold content in the wet samples verses dry due to the loss of recovery and the presence of high water content. In fact sampling error seems to be creeping into the Dry samples above 1.25g/t Au. Riffling and a gold fraction loss are always a concern in RC drill samples. A Cumulative Frequency Probability plot of core samples show this data set to contain the highest degree of variance, as indicated by the steeper slope of the curve; the curve remains

BRIAN COLE P.GEO. Page 35 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

smooth however, so is not seen to be pointing to a significant problem. A possible explanation is the core sample originates from a sample with a much smaller volume than a RC sample. Overall, the dataset is sound, albeit some departures begin to creep in above the 1.25g/t Au range.

BRIAN COLE P.GEO. Page 36 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

12 DATA VERIFICATION The author supervised the field operations of the project in its early stages and has made regular visits during the course of all drilling programs. The author visited the site several occasions during the last drill program in 2009/2010 while based in Copiapó for the last eight weeks of the program. The author maintained sampling integrity via the protocols outlines in Section 11 as well as was instrumental in the preparation of the drill hole database. The information disclosed in this report was collected in a sound fashion and is of sufficient quality to make reliable and informed decisions upon, within the scope allowable.

13 MINERAL PROCESSING AND METALLURGICAL TESTING A series of metallurgical tests has been carried out in the United States by McClelland Laboratories, Inc. of Sparks, Nevada on a total of nine composite core samples from Drill Hole LJ08011 with composite assay grades ranging from 0.33g/t Au to 3.32g/t Au. Composite length ranged from 4.5m to 16.2m. Three tests were reported on February 09 2010 and an additional six were reported on June 07 2010. The composites are made up from half splits of the ½ split core in storage. The core was crushed to 6.3mm diameter. Samples in Table 13.1, detailing the metallurgical results, have been arranged by descending depth.

The objective of the test work was to determine if gold recovery from Lajitas gold mineralization using conventional cyanidation processes.

Recoveries range from 63% - 73% in a 96 hour bottle roll. This indicates that oxidation of gold mineralization at Lajitas extends to depths of greater than 200m below the surface. The tests indicate favourable gold recovery from conventional cyanidation and further suggest that heap leach techniques may be feasible. Additional testing is required to cover more expansive coverage

Table 13.1: Metallurgical Results, Bottle Roll Tests Capella Lajitas Core Intercepts, P80 6.3mm Feeds Core Intercept, Metres 1040 1041 1042 1043 1044 1045 653 652 651 Metallurgical Results 54.0 - 58.5m 58.5 - 64.5m 106.5 - 111.0m 114.0 - 118.5m138.0 - 142.5m 142.4 - 147.0m 171.0-178.5m 166.5-171.0m 220.5-236.7m Composite Length 4.5m 6.0m 4.5m 4.5m 4.5m 4.6m 7.5m 4.5m 16.2m Extraction: % Total Au Au Au Au Au Au Au Au Au Au in 2 hours 22.2 22.8 26.3 21.4 29.2 25.6 41.3 35.6 42.3 in 6 hours 37.7 40.8 42.2 36.3 41.1 39.3 59.0 50.3 54.9 in 24 hours 57.5 62.5 54.9 60.6 60.7 60.7 64.4 56.4 67.2 in 48 hours 59.4 66.1 60.4 64.4 62.7 66.2 71.4 68.2 72.4 in 72 hours 61.3 70.6 62.3 71.8 64.6 72.0 77.0 77.5 74.6 in 96 hours 63.3 76.8 67.9 79.4 70.3 72.3 79.0 77.7 76.1 Extracted (g/t Au) 0.257 1.412 0.271 0.669 0.289 0.593 2.406 2.587 1.430 Tail Assay (g/t Au) 0.149 0.427 0.128 0.174 0.122 0.227 0.641 0.744 0.449 Calculated Head (g/t Au) 0.406 1.839 0.399 0.843 0.411 0.820 3.048 3.331 1.879 Assay Head (g/t Au) 0.234 1.625 0.395 0.762 0.392 0.806 3.144 3.257 1.886 NaCN Consumed (kg/t) 0.10 0.07 0.14 0.32 0.15 0.37 0.40 0.49 0.64 Lime Added (kg/t) 3.2 3.8 7.5 6.7 4.7 6.2 5.4 4.3 4.8 Final Leach pH 11.0 11.1 11.2 11.1 11.0 11.2 11.3 10.9 11.0 Silver Extracted (g/t Ag) 0.52 0.19 0.08 0.02 0.05 0.12 0.17 0.21 0.14 Note : Drill Core Composites constructed from ¼ HQ and NQ splits. BRIAN COLE P.GEO. Page 37 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

of the mineralized zones, but thus far, initial results are positive. Modified Acid/Base Accounting (Mod ABA) tests were performed on the three composite core samples from Drill Hole LJ-08011 (00651, 00652, 00653). These results indicate that two of the three samples tested contained no detectable sulphur. The third sample (00653, 171.0 - 178.5m) contained only 0.07% total sulphur. None of the three samples contained detectable pyritic sulphur. Consequently, all three samples displayed no detectable acid generation potential (<0.3 tons CaCO3 equivalents/1,000 tons solids). Additionally, all three samples displayed greater than 50 tons CaCO3 equivalents/1,000 tons solids of acid neutralization potential. In summary, all three samples displayed a large net acid neutralization potential with very low acid generation potential and would not be expected to be significant acid generators in a natural weathering environment.

14 MINERAL RESOURCE ESTIMATE

14.1 Introduction The author completed an Inferred Resource Estimate of the Property in July and August 2011. The resource estimation was compiled by the 3D block model method and the estimation was performed commensurate with CIMM Standards on Mineral Resources and Mineral Reserves (2005) as well as CIMM Practice Guidelines for Estimation of Mineral Resources and Mineral Reserves (2003).

14.2 Exploratory Data Analysis The Dorado/Lajtias drill hole database contains information from four core and 23 RC holes (7,300m) completed between 2006 and 2010. It also contains 14 historic RC holes drilled by Santa Fe in 1997 (1,704m). Of these, 29 holes were used to shape the current resource model. It was elected to incorporate the historical information from Santa Fe. To not do so would not describe the most likely representative extent and tenor of the mineralization outlining the mineral resource. Three of the Santa Fe holes were twinned by the Company in 2006 with acceptable comparative results. Further statistical comparative analysis shows the Santa Fe assay database to share the same characteristics as that of the Company’s. Other observations from cross-section work see the Santa Fe data meshing well with that of the Company. The author accepts the historic Santa Fe work as valid for this Inferred Resource. However, further work to increase the confidence level of the resource in the future will need to reduce the influence of the Santa Fe drilling results. The vast bulk of the resource occurs in dioritic porphyritic intrusive rock with far less amounts in pyroclastic volcanic rock peripheral to or rafted within the mineralized intrusive bodies. Since little Specific Gravity information exists, especially broken down by litho rock type, it was decided not to incorporate litho modelling within the resource estimate.

BRIAN COLE P.GEO. Page 38 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

14.2.1 Topographic Base The Digital Elevation Model (“DEM”) utilized for topographic control was prepared from high resolution stereo satellite images and is accurate to 1m resolution. The dataset was prepared by PhotoSat Information Ltd. of Vancouver in June 2011. The XY control of drill hole collars was by handheld GPS with the elevation (Z) taken from the DEM model. Drill hole collars within the Resource vary from 4,462m to 4,589m elevation, a vertical difference of 127m. 14.2.2 Specific Gravity Parameters As previously mentioned, the Company has performed little Specific Gravity (“SG”) testing. All drill core from Holes LJ08010 and LJ08011 were blanket tested at 1.5m intervals by the water displacement method by Company personnel. The mean of 631 samples is 2.7g/cc (range 1.46 - 3.88). The preponderance of weight of numbers tends to yield an acceptable mean, which was the SG value used in the resource estimate. More definitive SG measuring should be undertaken in the future.

BRIAN COLE P.GEO. Page 39 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

14.3 Methodology and Rationale The compiled database was loaded into the MapInfo/Discover/Discover3D mineral exploration software package. The data was validated by the author. Prior to compositing, grade distribution in the raw sample data was examined to determine if grade capping or special treatment of high outliers was warranted. Cumulative log probability plots were examined for outlier populations and decile analyses was performed. As a general rule, the cutting of high grades is warranted in decile analysis if:

• the last decile (upper 10% of samples) contains more than 40% of the metal; or • the last decile contains more than 2.3 times the metal of the previous decile; or • the last centile (upper 1%) contains more than 10% of the metal; or • the last centile contains more than 1.75 times the next highest centile.

Decile analysis is presented in Figure 14.1. The last decile contains >50% of the metal indicating capping is warranted. The last percentile contains almost 10% of the metal. Prior examination of the cumulative log probability plots indicates that sampling irregularities were beginning to appear in the 1.25g/t Au range, especially in the dry RC samples. It was elected to cap gold tenor at this conservative value, at the 99th percentile level. The capping affects 120 samples.

BRIAN COLE P.GEO. Page 40 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

Sample asays were composited at 5m intervals down-the-hole. Cross-sections were generated at 50m intervals, more or less consistent with the drill hole density. Except in one focused area, most sections only contain one to two drill holes per resource zone, sometimes at poor intersection angles or only partially cut the zone of mineralization. A cut-off of 0.2g/t Au was chosen as it is commensurate with deposits of similar type as well as within the same mining camp. For example, a 0.2g/t Au cut-off, was used for oxide material in a recent resource estimation of the Caspiche Project (Wakefield & Marinho, 2010) The Resource Model was estimated by a grade block model constrained by a wire frame. The Resource is early stage and it would be premature to utilize variogramology. Some sections only contain a single hole in each zone or only cross a fraction of the mineralized zone. A focused area contains numerous holes, but it is suspected many of them have been drilled down the dip of the mineralization. This situation was caused in part from limited drill collar access due to high topographic relief. Also, some holes collared and/or ended in mineralization above cut-off. As a result, the search ellipsoid was constructed to emphasize the mineralization pattern within the plane of the sections, but also still honour the along strike component. Also, the two mineralized zones share similar trend, but the dips differ. The East Zone dips 70° east while the West Zone dips 85° west. The two zones were modelled independently but share all other

BRIAN COLE P.GEO. Page 41 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

parameters in common except for the tilt of the Major Axis: • Major Axis -75m at azimuth of 210° - tilted 70° east for the East Zone and 85° west for the West Zone; • Minor Axis – 30m; • Depth Axis - 20m. The gridding algorithm was run with four search expansions, three grid passes, with two composites being required to form a grade cell. Grade blocks were dimensioned 10m L x 5m W x 10m D. The combination of the search expansions and grid passes fills the cells between section lines with more or less representative tenors. This arrangement produced the best flow of mineralization within the block model given the interpreted geological model and the sparse data. Only cells within the constraint of the wireframe were considered representative of tenor within the context of the resource classification. Appropriate projection distances to fashion the constraining wireframe were based upon a combination of deposit type, form of mineralization, geological evidence, and experience. There has been an effort by the author to present a balanced picture, one that neither underestimates nor overestimates the contained gold resource given the type of deposit, data at hand, and the class of resource confidence. Polygons were drafted on to each cross-section. The polygons

BRIAN COLE P.GEO. Page 42 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

form a basis of a wireframe that constrains the resource at intervals in envelope slices where it is expected tenor will be at or above cut-off. The polygons were constructed to flow more or less seamlessly in terms of breadth. It is noted that cross-faulting has dislocated the resource zones slightly. However to what degree the zones have been dislocated in both the vertical as well as the lateral sense is poorly understood. Considering the confidence level in an Inferred Resource, it was elected to let the mineralization flow seamlessly from one cross-section to the next. Two example cross-sections are depicted in Figures 14.2 and 14.3. Mineralization was projected no more than 50m at either end of the Resource. As previously mentioned, some holes started and/or ended in mineralization. Mineralization was not projected passed 25m across strike, unless supported by adjacent sections. Vertical continuity of mineralization in these types of deposits tends to be good. The floor of the grade model was projected to an elevation 4,250m asl for the most part, or 200m – 270m below surface. Where drilling was locally deeper, the floor was extended to an elevation of 4,200m asl, or alternatively 325m below surface. The Resource is located on a hillside with a surface elevation differential of 125m. Longitudinal Section views of the two gold zones are presented in Figures 14.4 and 14.5.

BRIAN COLE P.GEO. Page 43 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

14.4 Oxide vs. Sulphide Distribution The degree of oxidation was logged and categorized when logging RC chips and drill core. Three designations were used: Oxidized, Mixed, and Sulphide. Up to 5% of fresh sulphide of the total apparent original sulphide content in a sample could be present in oxidized sulphide content and still be logged as Oxide rock, and vice versa for oxidized sulphide content within a Sulphide rock designation. Interpreted Oxidation fields are mapped on the example cross-sections (Figures 14.2 and 14.3). Figures 14.6 through 14.9 provide a 3D representation of the distribution of the three oxidation categories in the resource area: • Figure 14.6 shows the Sulphide floor. A dislocated protrusion of sulphide facies rock juts upwards. This more or less underlies the northeast trending topographic promontory (seen at surface) which bisects the two mineralized zones hosting the Resource. The Sulphide floor also steps downward and/or slopes towards the south. • Figure 14.7 depicts how the Resource zones straddle the Sulphide protrusion. • Figure 14.8 shows the Mixed Oxide layer overlying the Sulphide floor. • Figure 14.9 illustrates the capping Oxide blanket. The surface traces of faults (mapped linears from the DEM which match dislocations in the Resource), correspond with the dextral jog in the Sulphide protrusion. • Figure 14.10 shows a longitudinal section of the various oxide layers through the axis of the Sulphide protrusion. A trough is apparent which corresponds with the northern most

BRIAN COLE P.GEO. Page 44 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

cross-fault and rock is apparently dislocated in a vertical sense towards the south at the northern and middle cross-faults. This trough matches the expected sense of displacement for these structures. Cross-faulting is apparently long lived as the sulphide protrusion, the mineralized dike, and the resource zones are all displaced by differing amounts. The Resource is almost completely contained within Oxidized rock and to lesser extent Mixed Oxide rock. Very little of the Resource is hosted within Sulphide facies rock. The oxidization boundary interpretation is too subjective at this point to make a more definitive breakdown.

BRIAN COLE P.GEO. Page 45 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

BRIAN COLE P.GEO. Page 46 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

14.5 Resource Estimation Model Three dimensional views of the constrained grade block model are presented in Figures 14.11 and 14.12. The resource estimation model is outlined in Table 17.1. An Inferred Resource has been estimated at approximately 35 million tonnes grading 0.45g/t Au at a cut-off of 0.2g/t Au and capping of 1.25g/t Au. This translates to approximately 515,000 troy ounces of contained gold. Several other cut-off grade levels with respective tonnages within the constraint of the wireframes are also listed. A Grade vs. Tonnage chart is presented in Figure 14.13.

14.6 Limiting Factors The project is located in an area proximal to other mines or developing mineral projects. The geology, deposit and mineralization type, and elevation of the Dorado /Lajitas property are similar to these. Chile has a solid reputation for being mining friendly. As such, there is no reasonable basis as to why a mineral deposit on the Dorado Property would not go to production, assuming all the normal parameters of sufficient tonnage and tenor, as well as favourable metallurgy are met. The largest hurdle to producing at Lajitas is the acquisition of sufficient water for processing.

BRIAN COLE P.GEO. Page 47 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

It is the understanding of the author that the Company is actively pursuing water rights acquisition.

BRIAN COLE P.GEO. Page 48 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

BRIAN COLE P.GEO. Page 49 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

Table 14.1: Lajitas Resource Model East Zone Lajitas, Chile Cut-Off Grade Volume SG Tonnes Tenor Gm Oz 0.1 8,060,500 2.7 21,763,350 0.41 8,965,847 288,259 0.2 7,607,500 2.7 20,540,250 0.43 8,763,703 281,760 0.3 5,769,000 2.7 15,576,300 0.48 7,472,730 240,254 0.4 3,303,000 2.7 8,918,100 0.57 5,126,068 164,807 0.5 1,914,000 2.7 5,167,800 0.67 3,477,413 111,801 Dilution below 0.2 within Wire Frame 461,500 2.7 1,246,050 0.16 204,147 6,563 West Zone Lajitas, Chile Cut-Off Grade Volume SG Tonnes Tenor Gm Oz 0.1 5,752,500 2.7 15,531,750 0.47 7,372,766 237,040 0.2 5,539,000 2.7 14,955,300 0.49 7,276,950 233,959 0.3 4,553,000 2.7 12,293,100 0.54 6,598,444 212,145 0.4 3,797,000 2.7 10,251,900 0.59 6,078,249 195,420 0.5 2,247,500 2.7 6,068,250 0.67 4,065,728 130,716 Dilution below 0.2 within Wire Frame 222,000 2.7 599,400 0.16 97,762 3,143 Total Lajitas, Chile Cut-Off Grade Volume SG Tonnes Tenor Gm Oz 0.1 37,295,100 0.44 16,338,614 525,299 0.2 35,495,550 0.45 16,040,653 515,719 0.3 27,869,400 0.50 14,071,174 452,399 0.4 19,170,000 0.58 11,204,317 360,227 0.5 11,236,050 0.67 7,543,140 242,518 Dilution below 0.2 within Wire Frames 1,845,450 0.16 301,909 9,707 Note: Tonnage Values not rounded.

15 ADJACENT PROPERTIES The Maricunga Belt is a prolific gold – copper producer with many past or current producing and advanced staged projects. The latter have only been discovered since the resurgence of the prices in gold and copper at the turn of the century. Table 15.1 lists several projects within the vicinity of the BRIAN COLE P.GEO. Page 50 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

Dorado/Lajitas Project that exhibit similar deposit styles as the model at the Property. The location of most of these is plotted on Figure 7.3. These properties are feasible to operate at 4,500m elevation as successful production by heap leaching at the Maricunga Gold Mine (formerly Refugio Gold Mine) bears out. The information listed in Table 15.1 comes either from recently posted reports in the public domain or company websites. The author has no personal knowledge as to the validity of the data which is presented here for informational purposes only.

Table 15.1: Gold Deposits of the Maricunga Belt, Region III, Chile Historic Owner or Deposit Contained Metal Tenor & Tonnage Production Operator Marte-Lobo Proven & Probable Reserves Kinross Mine 6 million (“M”) oz Au 164 M tonnes @ 1.14g/t Au

Measured & Indicated Resource 908,000 oz Au 34 M tonnes @ 0.83 La Copia Mine 1.7 M oz Au Proven / Probable Reserves: Kinross 100 M oz Ag 938,000 oz Au 21.7 M tonnes @ 1.34 g/t Au 32.97 M oz Ag 21.7 M tonnes @ 47.2 g/t Ag

Measured / Indicated Resources: 486,000 oz Au 14.7 M tonnes @ 1.03 g/t Au 20.67 M oz Ag 14.7 M tonnes @ 43.8 g/t Ag Maricunga Mine 4.0 M oz Au Proven / Probable Reserves: Kinross (formerly 6.1 M oz Au 269.8 M tonnes @ 0.70 g/t Au Refugio) Measured / Indicated Resources: 3.4 M oz Au 187.6 M tonnes @ 0.57 g/t Au Cerro Casale Proven / Probable Reserves: Kinross & Mine 5.8 M oz Au 303 M tonnes @ 0.59 g/t Au Barrick 14 M oz Ag 303 M tonnes @ 1.5 g/t Ag 1.45 billion lbs Cu 303 M tonnes @ 0.22% Cu

Measured / Indicated Resources: 792,000 oz Au 60 M tonnes @ 0.41 g/t Au 2 M oz Ag 60 M tonnes @ 1.1 g/t Ag 239 M lbs Cu 60 M tonnes @ 0.18% Cu Volcan Gold 8.8 M oz Au (Measured / 389 M tonnes @ 0.71 g/t Au Andina Minerals Project Indicated)

671,000 M oz Au (Inferred) 170 M tonnes @ 0.50 g/t Au Caspiche Project Measured & Indicated Resource Exeter 21.3 M oz Au 1,316M tonnes @ 0.50g/t Au Resources 48.4 M oz Ag 1,316 M tonnes @ 1.14g/t Ag 3.0 B lbs Cu 1,316 M tonnes @ 0.18% Cu

The tenors and tonnages discussed above are not necessarily indicative that the same will be present on the Property.

BRIAN COLE P.GEO. Page 51 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

16 OTHER RELEVANT DATA AND INFORMATION To the author’s knowledge, there is no additional relevant information.

17 INTERPRETATIONS AND CONCLUSIONS The results of multifaceted studies correlate well and have determined that: 1) Geophysical studies, inclusive of remote sensing, coupled with field evidence from drilling and trenching have convincingly demonstrated a significant sulphide-bearing dioritic porphyry intrusive exists on the Property, accompanied with attendant alteration of the high sulphidation type. The geological setting is consistent with other deposits hosting mines in the area. 2) Gold mineralization is hosted at or near the contact of a porphyry intrusive with volcaniclastic rocks. Although all rock is argillicly altered, silicification with very subordinate quartz veinlets, is the key link with gold mineralization of higher tenor. 3) The Lajitas Resource Zones are hosted in a pair of parallel north trending fault structures at an intersection with several WNW trending cross-structures. Cross faulting has been long lived and has dislocated the resource locally. 4) Most gold mineralization encountered has been of an oxidized nature. 5) An Inferred Resource has been estimated to contain approximately 35 million tonnes grading 0.45g/t Au at a cut-off of 0.2g/t Au. 6) Limited metallurgical work performed indicates the oxidized rock is amenable to leaching with recoveries in the 63% to 73% range. Also, limited Modified Acid/Base Accounting (Mod ABA) testing indicates that the samples tested contained no detectable sulphur. This points to the Lajtias Resource rock having low potential for being an acid generator in a natural weathering environment. 7) At this point, there is no reason apparent that would preclude the Lajitas Resource from being successfully developed, barring the normal sequences of establishing sufficient tonnage, tenor, as well as favourable metallurgy. The largest hurdle for the project is the successful acquisition of water rights for processing. 8) Hyperspectral survey results together with other interpretative work indicate other potential targets exist on the Property.

18 RECOMMENDATIONS Additional work is warranted and recommended. The thrust of future development on the Property should be to expand and build confidence in the Lajitas Resource as well to evaluate the newly recognized exploration targets from hyperspectral survey work. This work is envisaged to include additional trenching, as well as approximately 6,000m of drilling. BRIAN COLE P.GEO. Page 52 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

A budget to support the program is outlined to cost US$3.1 million (Table 18.1). The author judges the above listed recommendations are commensurate with the stage of the project and the Property exhibits sufficient potential to justify the work. The author also deems the budgetary estimates for the project are in line for the proposed stage of project development as well as the project’s geographic location.

Respectively submitted,

{Signed and Sealed} ______Brian Cole P.Geo. (HBSc Geology) Consulting Geologist Effective: August 17, 2011 Dated: August 17, 2011

BRIAN COLE P.GEO. Page 53 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

Table 18.1: Proposed Budget Doroado / Lajitas Project Chile Salaries and Wages Activity Subtotal Technical Temp/Seasonal/Contract

Geological and Technical Geological $220,000 Consultants - in country $80,000 Geophysics Airborne - Ztem $100,000 Geophysical $8,000 $408,000 Surface Work Surface Drilling (6,000m) $1,800,000 Analysis - Fire Assay $120,000 Analysis - Metellugical $20,000 Field Expenses $120,000 Roads/Site Prep $150,000 Water Rights Development $300,000 $2,510,000 Environmental Permitting/Reclaimation $30,000 Base Line Study $15,000 $45,000 Property Costs Government Land Holding Costs $15,000 $15,000 Adminstrative and General Travel Expenses $30,000 Communications $1,000 Office Supplies and Services $6,000 Rent - office and warehouse $10,000 $47,000 Machinery Expenses Transportion Vehicles Rent/Leases $100,000 $100,000 Project Total US$ $3,125,000

BRIAN COLE P.GEO. Page 54 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

19 REFERENCES

Bedell, R.L. (2004) Remote Sensing in Mineral Exploration; Society of Economic Geologists Newsletter, Number 58, July, 2004,8 p.

Cahill T and Isacks BL (1992) Seismicity and shape of the subducted Nazca Plate: Journal of Geophysical Research, v. 97, p. 17,503–17,529.

Clark, R.N., Swayze, G.A., Heidebrecht, K.B., Goetz, A.F.H., and Green, R.O. (1993) Comparison of methods for calibrating AVIRIS data to ground reflectance; in Summaries of the Fourth Annual JPL Airborne Geoscience Workshop (R.O. Green, Ed.), JPL Publ. 93-26, Jet Propulsion Laboratory, Pasadena, CA, pp. 35-36.

Clark, R.N., Swayze, G.A., Heidebrecht, K.B., Green, R.O., and Goetz, A.F.H. (1995) Calibration to surface reflectance of terrestrial imaging spectrometry data: Comparison of methods; in Summaries of the Fifth Annual JPL Airborne Earth Science Workshop (R.O. Green, Ed.), JPL Publ. 95-1, Jet Propulsion Laboratory, Pasadena, CA, pp. 41-42.

Coira B, Davidson J, Mpodozis C, & Ramos V (1982) Tectonic and magmatic evolution of the Andes of northern Argentina and Chile. Earth-Science Reviews 18, 303-332.

Cole BL (2006) An Independent Review of the Nevada and Dorado Gold Properties, Maricunga Gold – Copper District, Third Region – Republic of Chile for Capella Resources Ltd: a report submitted June 01, 2006.

Coria B, Kay SL, Viramonte J (1993) Upper Cenozoic magmatic evolution of the Argentine Puna; A model for Changing Subduction Geometry. Int. Geol. Review, 8, 677-720.

Corbett GJ and Leach TM (1998) Southwest Pacific Rim Gold-Copper Systems: Structure, Alteration, and Mineralization. Society of Economic Geologists, Special Publication Number 6, 237 p.

Ellis R (2007) 2007 Geophysical Survey- Lajitas Project, Northern Chile; memo to Brian Cole from Ellis Geophysical Consulting Inc., Reno, Nevada, USA, dated November 05, 2007.

Heberlein DR (2000) The Pascua-Lama Project, Chile/Argentina - Barrick Exploraciones Argentina S.A., 2000/2001 MEG Luncheon Talks: ABSTRACTS

BRIAN COLE P.GEO. Page 55 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

Hunt, Graham, R. (1980) Electromagnetic Radiation: The communication Link in Remote Sensing; in Remote Sensing in Geology. Barrys S. Seigal and Alan R. Gillespie, Ed.p.6-45. 1980.

Jannas RR, Bowers TS, Petersen U, and Beane RE (1999) High-Sulphidation Deposit Types in the El Indio District, Chile in Geology and Ore Deposits of the Andes, Economic Geology Special Publication 7, Ed, B.J., Skinner, p. 219-266.

Jordan TE, Isacks BL, Allmendinger RW, Brewer JA, Ramos VA, and Ando, CJ (1983) Andean tectonics related to geometry of subducted Nazca plate. Geological Society of America Bulletin, V. 94, pp. 341-361.

Kruse, F. A. (1988) Use of Airborne Imaging Spectrometer data to map minerals associated with hydrothermally altered rocks in the northern Grapevine Mountains, Nevada and California: Remote Sensing of Environment, V. 24, No. 1, p. 31-51.

Kruse, F. A. (1999) Visible/Infrared Sensors and Case Studies, Chapter 11, in Rencz, A., (ed.), Remote Sensing for the Earth Sciences, Manual of Remote Sensing, Volume 3, p. 567 – 606.

Newmont Gold Corporation (2002) Annual Information Form – 06-24-02 – SEDAR

Maksaev V, Moscoso R, Mpodozis Y, and Nasi C (1984) Las unidades volcánicas y plutónicas del Cenozoico Superior en la Alta Cordillera del Norte Chico (29º-31ºS): geología. lteración hidrotermal y mineralización. Revista Geológica de Chile, Nº 21, pp. 11-51.

Minera Mount ISA Chile S.A., Junio (1994) Proyecto Paredones – Reconocimiento Geologico De Los Pedimentos Nevada, Nirvana, Betsabe Y Pandora, Alto Cordillera De Copiapó , III Region, Chile, Sociedad Marin Asesorias Geologicas Mineras Ltda., MAG Ltda.

Mpodozis C, Cornejo P, Kay SM, and Tittler A (1995) La Franja de Maricunga: sintesis de la evolucion del frente volcanico Oligoceno-Mioceno de lazona sur de los Andes Centrales, Revista Geologica de Chile, v. 22, 273-314.

Muntean JL & Einaudi MT (2001) Porphyry-Epithermal Transition: Maricunga Belt, Northern Chile, p. 743, Economic Geology, V 96, N 4, July.

Sabine, Charles (1999) Remote Sensing Strategies for Mineral Exploration. In Manual of Remote Sensing. Vol. 3. p.379-449 Edited by Rencz, Andrew, N.; ASPRS & John Wiley and Sons, Inc., New York.

BRIAN COLE P.GEO. Page 56 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

Swayze, G.A., 1997 The hydrothermal and structural history of the Cuprite Mining District, Southwestern Nevada: An integrated geological and geophysical approach, Ph. D. Dissertation, University of Colorado, Boulder, Colorado, p. 399. Available from University Microfilms Inc., Ann Arbor, Michigan

Sasso AM and Clark AH (1998) The Farallón Negro group, northwest Argentina: Magmatic hydrothermal and tectonic evolution and implications for Cu-Au metallogeny in the Andean back arc: Society of Economic Geologists Newsletter, v. 34, p. 1, 8–18.

Smailbegovic A, Ellis R, Cole B, and Jordan J (2007) Cigars of Lajitas (Combined Imaging, Geophysical Assessment, and Remote Spectroscopy); a PowerPoint presentation prepared by Amer Smailbegovic and presented at the Exploration 07 symposium in Toronto, Ontario, Canada.

Taranik J.V. (1988) Application of Aerospace Remote Sensing Technology to Exploration for Precious Metal Deposits in the Western United States, Bulk Mineable Precious Metal Deposits of the Western United States, Symposium Proceedings, GSN, Ed. Robert W. Schafer, 1988.

Toro JC & Muehlebach W (1997) Lajitas Project Results, Minera Santa Fe Pacific Chile Ltda.

Vila T and Sillitoe RH (1991) Gold-rich porphyry systems in Maricunga Belt, Northern Chile;, Econ. Geol. V 86, pp 1238-1260.

Wakefeild RM and Marinho R. (2010) NI 43-101 Technical Report, Caspiche Property, Region III, Chile; a report Prepared for Exeter Resource Corporation, effective March 12 2010.

BRIAN COLE P.GEO. Page 57 CAPELLA RESOURCES LTD. DORADO / LAJITAS PROJECT

CERTIFICATE OF QUALIFICATIONS AND DECLARATION I, Brian Leslie Cole, P.Geo., do hereby certify that:

1. I currently have a business address at 3979 Victoria Ave, Vineland, Ontario, L0R 2C0, Canada. 2. I am a graduate of Lakehead University, Thunder Bay, Ontario, with an Honours Bachelor of Science degree – Geology, completed 1978. 3. This certificate applies to the Technical Report entitled “Resource Estimation on the Dorado/Lajitas Gold Property, Maricunga Gold-Copper District, Third Region, Republic of Chile”, dated August 17, 2011. 4. I have worked as a geologist for a total of 33 years since my graduation, both domestically and internationally. Experience has been primarily focused in gold exploration and to a lesser degree in base metal, diamond, uranium exploration, and geothermal. More specifically, I have reviewed or performed mineral resource estimations of gold intermittently over the last 20 years. These have mainly dealt with epithermal, porphyry-related, and lode gold deposit types in South America and the Caribbean. 5. I am a Practicing Member in good standing with the Association of Professional Geoscientists of Ontario, (APGO member #0165), the Professional Engineers and Geoscientists of Newfoundland and Labrador (#04830), as well as the Association of Professional Geoscientists of Nova Scotia (APGNS #0155). 6. I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101), and past relevant work experience, I fulfill the requirements of a “qualified person” for the purposes of NI 43-101. 7. I am responsible for all sections of the technical report titled “Resource Estimation on the Dorado/Lajitas Gold Property, Maricunga Gold-Copper District, Third Region, Republic of Chile” and dated effective August 17, 2011 (the “Technical Report”) relating to the Dorado/Lajitis Project in Chile. I visited the aforementioned property numerous times from 2006 to March 2010. 8. I authored an initial report about this property in 2006. I have been involved with this property since that date. 9. To the best of the author’s knowledge, information, and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. 10. I am independent of the issuer as described in section 1.4 of NI 43-101. 11. I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form. 12. I consent to the filing of the Technical Report by Capella Resources Ltd. with any stock exchange and other regulatory authority and any publication by them for regulatory purposes, including electronic publication in the public company files on their websites accessible by the public, of the Technical Report. Dated this 17th day of August, 2011

{Signed and Sealed}

______Brian Cole P.Geo.

BRIAN COLE P.GEO. Page 58