San Timoteo

Claims

The San Timoteo property includes five claims, which total 793 hectares. These are San Timoteo, San Timoteo II, Oro Leon, Las Trojas and Bufalo B.

Exploration Program

During the last half of 2007 and throughout 2008, 34 diamond drill holes totaling 8,588 metres were completed on the San Timoteo property. In addition to the drilling a geophysical IP survey was completed over the San Timoteo II claim and an Advanced Spaceborne Thermal Emission & Reflection (ASTER) survey was also completed over the area. The exploration program also included the rehabilitation, mapping and sampling of the historic San Martin mine tunnel, which lies within the Las Trojas claim. Results from the direct underground sampling within the San Martin tunnel returned excellent results including 20 m grading 5.96 gms gold/tonne and 202 gms silver/tonne, 10 m grading 6.72 gms gold/tonne with 142 gms silver/tonne and 4.5 m grading 1.01 gms gold/tonne and 1,545 gms silver/tonne.
While the majority of the recent exploration campaign at San Timoteo was focused on delineating and expanding the known mineralized structure anchored by the historic San Martin tunnel workings, the Company also started exploring a new precious metal anomalous zone located approximately 750 meters north of San Martin which is called the Sucursal structure. This area, which also hosts an old mine tunnel, appears to be a large southwest to northeast corridor approximately 80 meters below surface returned assay values of 11.3 metres of 0.41 gms/tonne gold and 142gms/tonne silver, including a section of 4.61 metres grading 0.59 gms/tonne gold and 267 gms/tonne silver which in turn includes a 1.05 meter section grading 0.46 gms/tonne gold and 705 gms/tonne silver (gold equivalent value of 14.56 gms/tonne Au at a 50:1 silver/gold ratio).
The Sucursal structure is exposed on surface and is open at both depth and to the east with numerous tunnels and evidence of historic workings along strike, including the Las Animas mineralized structure which is located approx 780 m to the west).
The last drill holes on the San Timoteo property were drilled in the Sucursal area, which lies several hundred metres north of the old San Martin tunnel. Very encouraging values were obtained from these holes and follow up drilling is definitely warranted. Drill hole SU-08-01 intersected 0.59 grams/tonne gold and 267 grams/tonne silver over 4.6m including 0.46 grams/tonne gold and 70 grams/tonne silver over 1.05m. An offset drill hole to the west of SU-08-01 intersected 175 grams/tonne silver and 0.12 grams/tonne gold over 4.87m and an offset to the east intersected 129 grams/tonne silver and 0.17 grams/tonne gold over 2.55m.
The Company also searched for an electric underground drill for the holes that are still required within the San Martin tunnel itself. These holes will trace and further define several distinct high grade silver and gold zones within the tunnel itself identified by continuous chip sampling of the walls. The extent and overall grade of these high grade zones are important for the purpose on a resource calculation and the origin of them is important for continued exploration. The zones, which occur at different locations along the length of the tunnel, are very difficult and expensive to drill from surface due to topographic conditions. The surface is about 175 vertical metres above the tunnel and the steep hillside makes drill pad preparation only possible in certain areas. A mineral inventory or resource calculation is planned for the San Timoteo area after the underground drilling is completed.

Geology

Northeast trending structures and at least one east west structure cut intensely altered dacitic volcanics and minor sedimentary rocks of the Lower Volcanic sequence and small intrusive bodies. Stockwork veining extensive in some areas. Numerous old mine workings occur on this property, including several levels of adits on the San Timoteo claim; a major adit on the Las Trojas claim (the San Martin Mine) – which is the only old mine in uruachic known to have tracks, as well as several smaller tunnels. San Timoteo II contains the old Las Animas, Sucursal and Polo Norte mines.

Results

The chip sampling and mapping program has outlined the following mineralized areas within the recently rehabilitated tunnel San Martin tunnel which are denoted as Zones A, B and C.