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LAS COLORADAS PROJECT, Durango, Mexico
During the first quarter of fiscal 2008, the Company entered into an agreement to acquire a 100% interest in the Las Coloradas property and mill located in Durango, Mexico. This project consists of 17 concessions covering approximately 4,900 hectares in the western section of the State of Durango. The project is located in the heart of one of the best known epithermal gold -- silver districts in Mexico. Significant deposits in the region include the Tayoltita, Guadalupe de los Reyes, Cosala and San Jose de Gracia deposits.
The following is an extract from a 1994 report prepared by G.W. Park titled "Summary Report on Las Coloradas Mining District, Mexico". The Company has not independently verified this information. "The Las Coloradas Project was in production intermittently from 1937 to 1991 ... Between 1989 and 1994 approximately 4,468 tonnes of gold-silver ore were produced from the Santa Anita workings with reported average grades of 15 grams of gold per tonne and 2,700 grams of silver per tonne. Average recovery from the mill and cyanide recovery system was over 90% for gold and 75% for silver. Operations were shut down due to increasing costs and inefficient workings. Exploration at Las Coloradas dates back to the mid 1930's when high grade bonanza gold and silver was discovered. Visible gold was initially identified in outcrop with reported grades as high as 907 grams of gold per tonne ... The main controlling feature is a four kilometre long north-northwest trending fault system along which many of the area mines have been developed to date ... Assay values from the drift along the Guadalupe vein ranged from 0.5 to 26 grams of gold per tonne and from 30 to 1,015 grams of silver per tonne."
The Company has completed a systematic surface exploration program along the length of the principal vein system with a focus on the known ore shoots. The Company is currently assessing the extent and significance of several bonanza-grade gold values recovered from the vein. Road rehabilitation has commenced as drilling is planned for early 2008.
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