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Greystar Resources Ltd.

- Angostura Project NI 43-101 Independent Technical Report

Table of Contents
1. Cover Page 2. Table of Contents 3. Summary .............................................................................................................................................. 3-7 3.1 3.2 3.3 3.4 3.5 Project Overview ........................................................................................................................ 3-7 Geology ...................................................................................................................................... 3-7 Site and Facility Description........................................................................................................ 3-8 Mineral Resource Estimate .......................................................................................................... 3-9 Mining ...................................................................................................................................... 3-10 3.5.1 Introduction ................................................................................................................. 3-10 3.5.2 Mine Design and Equipment........................................................................................ 3-10 Metallurgy................................................................................................................................. 3-12 Process Description................................................................................................................... 3-13 Infrastructure and Ancillary Facilities......................................................................................... 3-15 Waste Rock Management.......................................................................................................... 3-15

3.6 3.7 3.8 3.9

3.10 Capital Cost Estimate................................................................................................................. 3-15 3.11 Operating Cost Estimate ............................................................................................................ 3-16 3.12 Financial Analysis ..................................................................................................................... 3-16 3.12.1 Metal Price Estimates ................................................................................................... 3-16 3.13 Conclusions .............................................................................................................................. 3-17 4. Introduction ....................................................................................................................................... 4-18 4.1 Report Contributors................................................................................................................... 4-19

5. Reliance on Other Experts.................................................................................................................. 5-21 5.1 5.2 Metallurgy................................................................................................................................. 5-21 Strathcona Mineral Services Limited Report............................................................................... 5-21

6. Property Description and Location .................................................................................................... 6-22 6.1 Property mining claims and ownership ..................................................................................... 6-22

7. Accessibility, Climate, Local Resources, Infrastructure and Physiography ......................................... 7-26 8. History ............................................................................................................................................... 8-27

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9. Geological Setting .............................................................................................................................. 9-28 10. Deposit Types................................................................................................................................... 10-29 11. Mineralization.................................................................................................................................. 11-30 12. Exploration....................................................................................................................................... 12-31 13. Drilling ............................................................................................................................................. 13-33 14. Sampling Method and Approach ...................................................................................................... 14-35 15. Sample Preparation, Analyses and Security...................................................................................... 15-36 15.1 2003 to 2006 Programs........................................................................................................... 15-37 16. Data Verification.............................................................................................................................. 16-38 16.1 Assays 1995 to 1999 ............................................................................................................ 16-38 16.2 Assays 2003 to 2006 ............................................................................................................ 16-39 16.3 Bulk Density ........................................................................................................................... 16-39 16.4 Observations and Conclusions ................................................................................................ 16-40 16.5 Information Supplied by Greystar............................................................................................ 16-41 17. Adjacent Properties.......................................................................................................................... 17-42 18. Mineral Processing and Metallurgical Testing .................................................................................. 18-43 18.1 Introduction ............................................................................................................................ 18-43 18.1.1 Historical Testwork Data............................................................................................ 18-43 18.1.2 Third Party Contributors Metallurgical Testwork...................................................... 18-44 18.1.3 Recent Testwork ........................................................................................................ 18-44 18.2 Grinding Testwork .................................................................................................................. 18-45 18.3 Cyanidation Testwork ............................................................................................................. 18-45 18.3.1 Bottle Roll Cyanidation .............................................................................................. 18-46 18.3.2 Leach Residue Characterization ................................................................................. 18-50 18.3.3 Column Leach Tests ................................................................................................... 18-50 18.4 Flotation Testwork................................................................................................................... 18-52 18.5 Flotation Concentrate Oxidation Testwork .............................................................................. 18-52 18.6 Bio-oxidation Test Work.......................................................................................................... 18-52 18.7 Projected Gold Recoveries ...................................................................................................... 18-54 18.7.1 Heap Leach................................................................................................................ 18-54 18.7.2 Mill/Flotation ............................................................................................................. 18-54
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19. Mineral Resource and Potentially Mineable Mineral Resource Estimates......................................... 19-55 19.1 Resource Estimate ................................................................................................................... 19-55 19.2 Potentially Mineable Mineral Resource Estimate ..................................................................... 19-58 19.2.1 Lerch Grossman Mine Design Parameters .................................................................. 19-58 19.2.2 Lerch Grossman Potentially Mineable Mine Mineral Resources ................................. 19-59 20. Other Relevant Data and Information.............................................................................................. 20-61 21. Interpretation and Conclusions ........................................................................................................ 21-62 22. Recommendations............................................................................................................................ 22-63 22.1 Mining ....................................................................................................................................22-63 22.2 Metallurgy............................................................................................................................... 22-63 22.3 Geotechnical Investigations .................................................................................................... 22-64 22.4 Water Management................................................................................................................. 22-64 22.5 Risks.........................................................................................................................................22-64 23. References........................................................................................................................................ 23-66 23.1 Other references: .................................................................................................................... 23-66 24. Letters of Qualification, Dates and Signatures ................................................................................. 24-67 24.1 John Wells (Hatch) .................................................................................................................. 24-67 24.2 Keith Watson (Hatch) .............................................................................................................. 24-70 24.3 Brian Tough (Hatch)................................................................................................................ 24-73 24.4 Henrik Thalenthorst (Strathcona Mineral Services Limited) ...................................................... 24-76 24.5 Jack McPartland, Metallurgist/V.P. Operations of McClelland Laboratories Inc. ....................... 24-79 25. Additional Requirements.................................................................................................................... 25-1 25.1 Mining.......................................................................................................................................25-1 25.1.1 Summary...................................................................................................................... 25-1 25.1.2 Detailed Mine Design and Potentially Mineable Mineral Resource .............................. 25-5 25.1.3 Pit Dewatering ........................................................................................................... 25-21 25.1.4 Geotechnical Information .......................................................................................... 25-22 25.1.5 Mining Equipment ..................................................................................................... 25-22 25.1.6 Equipment Requirements and Purchase Schedule ...................................................... 25-25 25.2 Process Description................................................................................................................. 25-27 25.2.1 Summary.................................................................................................................... 25-27 25.2.2 Process Design Criteria .............................................................................................. 25-31 25.2.3 Crusher Plant ............................................................................................................. 25-31 25.2.4 Heap Leach................................................................................................................ 25-31
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25.2.5 Mill and Flotation Circuit ........................................................................................... 25-32 25.2.6 Concentrate Oxidation - Introduction......................................................................... 25-33 25.2.7 Flotation Concentrate Oxidation ................................................................................ 25-34 25.2.8 Concentrate Cyanidation and Merrill-Crowe .............................................................. 25-34 25.2.9 Cyanide Detox ........................................................................................................... 25-34 25.2.10 Heap Leach Pad Loading............................................................................................ 25-34 25.2.11 Heap Leach Operating Cycle ..................................................................................... 25-35 25.2.12 Heap Leach Solution Management............................................................................. 25-35 25.2.13 Merrill Crowe ......................................................................................................... 25-35 25.2.14 Refinery ..................................................................................................................... 25-36 25.3 Infrastructure and Ancillary Facilities....................................................................................... 25-36 25.4 Waste Rock Management........................................................................................................ 25-36 25.5 Operating Cost Estimate .......................................................................................................... 25-38 25.5.1 Summary.................................................................................................................... 25-38 25.5.2 General...................................................................................................................... 25-38 25.5.3 Labour - General ........................................................................................................ 25-39 25.5.4 Mine Operating Cost Estimate .................................................................................... 25-40 25.5.5 Heap Leach and Process Plant Operating Cost Estimate ............................................. 25-42 25.5.6 General and Administrative Operating Costs.............................................................. 25-46 25.6 Capital Cost Estimate............................................................................................................... 25-49 25.6.1 Basis of Estimate......................................................................................................... 25-51 25.6.2 Mine Capital Cost Estimate......................................................................................... 25-52 25.6.3 Estimate Basis by Facility............................................................................................ 25-55 25.7 Financial Analysis ................................................................................................................... 25-59 25.7.1 Metal Price Estimates ................................................................................................. 25-62 25.7.2 Gold and Silver Production Estimate .......................................................................... 25-62 25.7.3 Gold and Silver Payment Terms ................................................................................. 25-62 25.7.4 Contingencies ............................................................................................................ 25-62 25.7.5 Taxation and Royalties ............................................................................................... 25-62 25.7.6 Sensitivity Analysis..................................................................................................... 25-62 25.7.7 Comparison of Projected Gold Prices......................................................................... 25-63

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List of Tables
Table 3-1: Table 3-2: Table 3-3: Table 3-4: Table 4-1: Table 6-1: Table 12-1: Table 16-1: Table 16-2: Table 18-1: Table 18-2: Table 18-3: Table 19-1: Table 19-2: Table 19-3: Table 25-1: Table 25-2: Table 25-3: Table 25-4: Table 25-5: Table 25-6: Table 25-7: Table 25-8: Table 25-9: Table 25-10: Table 25-11: Table 25-12: Table 25-13: Table 25-14: Table 25-15: Table 25-16: Table 25-17: Table 25-18: Table 25-19: Table 25-20: Table 25-21: Table 25-22: Angostura Mineral Resource Estimate as of December 6, 2006 ............................................ 3-9 Lerch Grossman Potentially Mineable Mineral Resources .................................................. 3-10 Smooth Annual Mine Production ....................................................................................... 3-11 Operating Costs ................................................................................................................. 3-16 Relevant Sections from Strathconas Mineral Resource Estimate (August 30, 2006)............. 4-19 Summary of Angostura Project Licences ............................................................................. 6-23 Angostura Field Work by Period and Timing of Historical Resource Estimates.................. 12-32 Summary of Standards Performances for Gold.................................................................. 16-39 Summary of Specific Gravity Determinations ................................................................... 16-40 Ore Type Samples Submitted to CIMEX ........................................................................... 18-45 Bottle Roll Tests and Column Leach Tests ........................................................................ 18-47 Summary of Bioxidation and Cyanidation Test Results ..................................................... 18-53 Angostura Mineral Resource Estimate as of December 6, 2006 ....................................... 19-57 Revised Lerch Grossman Pit Slopes .................................................................................. 19-59 Lerch Grossman Potentially Mineable Mineral Resources ................................................ 19-60 Annual Mine Production .................................................................................................. 25-16 Smooth Annual Mine Production ..................................................................................... 25-18 Cumulative Dump Capacity (million tonnes).................................................................... 25-21 Waste Conveyors ............................................................................................................. 25-24 Production Fleet Purchase Schedule................................................................................. 25-26 Ancillary Equipment Requirements & Replacements ........................................................ 25-27 Commercial Gold Bioleaching Plants ............................................................................... 25-33 NP/AP Acid-Base Screening Criteria Recommended in Draft BC Guidelines .................... 25-37 Commonly Used NNP Acid-Base Screening Criteria ........................................................ 25-37 ABA Analyses .................................................................................................................. 25-38 Operating Costs ............................................................................................................... 25-38 Summary Staffing Requirement ........................................................................................ 25-39 Wage Category and Labour Cost ...................................................................................... 25-40 Annual Mine Unit Cost Summary US$/t material moved ............................................... 25-41 Pay Scales and Costs ........................................................................................................ 25-43 General and Administrative Personnel Costs (including burden)....................................... 25-47 G&A Costs ....................................................................................................................... 25-48 Capital Cost Estimate........................................................................................................ 25-50 Mine Equipment Capital Cost........................................................................................... 25-53 Base Case Financial Model............................................................................................... 25-61 Sensitivity Analysis........................................................................................................... 25-62 Gold Production Base Case........................................................................................... 25-63

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List of Figures
Figure 3-1: Figure 6-1: Figure 6-2: Figure 18-1: Figure 18-2: Figure 18-3: Figure 18-4: Figure 18-5: Figure 18-6: Figure 18-7: Figure 18-8: Figure 18-9: Figure 18-10: Figure 25-1: Figure 25-2: Figure 25-3: Figure 25-4: Figure 25-5: Figure 25-6: Figure 25-7: Figure 25-8: Figure 25-9: Figure 25-10: Figure 25-11: Figure 25-12: Figure 25-13: Schematic Flowsheet.......................................................................................................... 3-14 Greystars Mineral Concessions.......................................................................................... 6-23 Location Map..................................................................................................................... 6-25 Gold Extraction by Ore Type............................................................................................ 18-46 Gold Recovery vs Sulphur Head Grade, Bottle Roll Tests, Angostura Composites ............ 18-48 Gold Recovery vs Gold Head Grade, Bottle Roll Tests, Angostura Composites ................ 18-48 Silver Recovery vs. S Head Grade, Bottle Roll Tests, Angostura Composites..................... 18-49 Silver Recovery vs Ag Head Grade, Bottle Roll Tests, Angostura Composites ................... 18-49 Gold Recovery vs Sulphur Head Grade, Column Leach Tests, Angostura Composites ...... 18-50 Silver Recovery vs. Sulphur Head Grade, Column Leach Tests, Angostura Composites .... 18-51 Column Leach Tests Sizing Analysis Products ............................................................... 18-51 Gold Extraction versus Sulphide Oxidation Angostura Ore Samples.............................. 18-53 Gold Recovery vs. S Head Grade ..................................................................................... 18-54 Angostura Mine Site Base Case ........................................................................................ 25-3 Angostura Mine Site Option A ........................................................................................ 25-4 Mine Plan End of Year 1................................................................................................... 25-7 Mine Plan End of Year 2................................................................................................... 25-8 Mine Plan End of Year 3................................................................................................... 25-9 Mine Plan End of Year 4................................................................................................. 25-10 Mine Plan End of Year 5................................................................................................. 25-11 Mine Plan End of Year 6................................................................................................. 25-12 Mine Plan End of Year 7................................................................................................. 25-13 Mine Plan End of Year 8................................................................................................. 25-14 Mine Plan End of Year 9-12............................................................................................ 25-15 Schematic Flowsheet........................................................................................................ 25-30 Capex and Gold Price Versus IRR .................................................................................... 25-63

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3.
3.1

Summary
Project Overview
Greystar Resources Ltd (Greystar) is a development stage Canadian mining company based in Vancouver, Canada, whose principal business activities include the acquisition, exploration and development of resource properties. Greystars wholly owned Angostura gold and silver deposit is located in the northeastern region of Colombia, covering an area of approximately 15,000 hectares, some 450 kilometres to the north of the capital city of Bogata and approximately 67 kilometres northeast of the city of Bucaramanga. The Angostura deposit mineralization is a typical high sulphidation gold/silver deposit. This study presents concept design and costs to construct and operate the open pit mine and is based on a total ore treatment rate of 40,000 tpd (all tonnes are metric in this report). The preliminary mine plan developed is supported by two process routes of crushing and cyanidation heap leach for oxidized and low sulphur grade ore types and a mill, flotation and a bioxidation process route for the higher gold grade sulphidic ore type.

3.2

Geology
The Angostura property is situated within the western branch of the Eastern Cordillera in northeastern Colombia, and more specifically within the Santander Massif that consists of Precambrian gneisses and schists of the Guyana Shield. Intermediate intrusives of the Santander Plutonic Group were emplaced during a period of uplift in the Triassic/Jurassic. Younger porphyries common in the immediate area of, and likely related to, the mineralization area of Tertiary age. Regional faulting parallels the topographic fabric, and more local, northeasterly faulting is considered to have guided the intrusive rocks and the subsequent alteration and mineralization. Angostura is part of the Angostura-California gold province, a belt of epithermal gold occurrences of the high sulphidation type and characterized by the association of gold with silver, copper, arsenic, bismuth, molybdenum and tellurium. The existence of a breccia body hosting copper and molybdenum mineralization four kilometres from the site points to a connection with a (buried) porphyry system. Most of the gold is contained within several sets of anastomosing veins and tabular breccia zones. Alteration within the vein-like structures is dominated by silica, both in the form of free quartz and as silicification, and sericite, while the host rocks are strongly argillized. Several hydrothermal pulses are discernable and show a decrease of temperature with time, from >300 C to about 250 C, according to fluid inclusion studies.

Summary
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3.3

Site and Facility Description


The proposed Base Case mining option considered for the Angostura deposit is a conventional open pit truck/shovel operation supplemented with two pit rim crushers and conveying systems for both ore and waste. An ore crusher/conveyor system located on the north-west pit rim transfers primary crushed ore approximately 2 km to the secondary and tertiary crushers located adjacent to the plant site. Heap leach ore feed at a crushed size of 19 mm, is transferred to the valley heap leach. A 2,500 tpd capacity mill is located adjacent to the secondary and tertiary crusher installation. The stockpile will be crushed on a campaign basis and delivered to a 10,000 tonne storage stockpile. Owing to the site topography the proposed valley heap leach facility area identified as being the most suitable is approximately 1.5 km from the proposed mine pit, to the north east. A detailed geotechnical and environmental study is required to confirm the suitability of this site as well as a detailed water management investigation of this site. A standard wet tailings impoundment facility is proposed for the mill/flotation tailings product, located downstream of the heap leach facility. The tonnage of waste rock, as determined from the pit modeling exercise, is significant at 740 million tonnes. The general site topography limits the selection of a waste rock deposition site to the area southeast of the proposed pit. Initially waste will be hauled by trucks to the northern of the two proposed waste dumps and this will be replaced by a waste crusher and conveying system in Year 2 to transfer waste to the southern waste dump. The sulphide grade of the ore raises the question of acid oxidation products in the heap. This has the potential to adversely affect the gold dissolution and increase the lime consumption. Further testwork is recommended. An alternative heap leach facility consisting of an On-Off permanent leach pad is also described in the Scoping Study. This should be considered in the next pre-feasibility or a feasibility stage of the project. Sulphide ores in heap leach operations have the potential for acid generation after periods of 4-6 months or longer. This can significantly and adversely affect the gold cyanidation process and metal recovery.

Summary
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3.4

Mineral Resource Estimate


Greystar have provided the following estimate of indicated and inferred mineral resources for the Angostura deposit as of December 6, 2006: Table 3-1: Angostura Mineral Resource Estimate as of December 6, 2006 Thousands of tonnes and ounces of gold
Indicated Mineral Resources Tonnes Au (g/t) Au (oz) 92 1,290 144 Ag (g/t) 6 7 5 Cu (%) 0.01 0.02 0.01 Inferred Mineral Resources Tonnes Au (g/t) Au (oz) 365 5,539 778 786 5,873 13,341 2,385 50,450 3,206 2,557 8,919 67,518 2,750 55,989 3,985 3,343 14,792 80,859 83,274 3.3 2.2 1.7 0.5 0.6 1.4 2.8 1.8 2.8 0.8 0.7 1.7 2.9 1.8 2.6 0.7 0.7 1.6 1.6 39 392 43 13 109 596 217 2,835 291 62 213 3,619 256 3,227 335 75 322 4,215 4,216 Ag (g/t) 12 9 7 5 5 7 18 7 11 2 3 7 17 7 10 3 4 7 Cu (%) 0.01 0.04 0.01 0.01 0.02 0.02 0.04 0.05 0.05 0.01 0.03 0.05 0.04 0.05 0.04 0.01 0.02 0.04

Oxide Mineralization Veins Bulk Zones Disseminated Veta de Barro Main Area Veta de Barro Veta de Barro Main Area 2,974 34,732 4,372 1.0 1.2 1.0

Sub-Total Oxides Sulphide Mineralization Veta de Barro Veins Main Area Bulk Zones Veta de Barro Veta de Barro Disseminated Main Area Sub-Total Sulphide Mineralization Total Mineralization Veta de Barro Veins Main Area Bulk Zones Veta de Barro Veta de Barro Disseminated Main Area GRAND TOTAL June 30, 2006

42,078 7,172 114,019 10,109

1.1 1.2 1.4 1.9

1,526 271 5,000 623

7 7 6 7

0.02 0.02 0.05 0.03

131,301 10,146 148,751 14,481

1.4 1.1 1.3 1.7

5,893 363 6,289 767

6 7 6 7

0.04 0.02 0.04 0.02

173,378 166,389

1.3 1.3

7,419 6,982

0.04

The December 2006 estimate has a somewhat better ratio between resources in the indicated and in the inferred classes. Additional drilling to transfer the substantial tonnage currently in the inferred category will be required to improve on the high strip ratio associated with the present estimate of mineable mineral resources as detailed below.

Summary
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3.5
3.5.1

Mining
Introduction
The Angostura deposit is located on the upper end of the Quebrada La Baja drainage basin at elevations ranging from 2,600 to 3,400 meters a.s.l. The Potentially Mineable Mineral Resources calculated indicate 167 million tonnes grading 1.28 g/t Au, 5.82 g/t Ag and 2.3% sulphur. Total waste is 740 million tonnes, giving a strip ratio of 4.4:1. It should be noted that mineral resources that are not reserves do not have demonstrated economic viability. Mine design was developed using Lerch-Grossman simulation software. A number of Lerch Grossman runs were produced and the one selected for this study with the input parameters as described in Section 19.2.1.3 of this report produced the Potentially Mineable Mineral Resources shown in Table 3-2 below. This pit was developed using a 0.5 g/t Au cut-off grade to calculate Potentially Mineable Mineral Resources. Table 3-2: Lerch Grossman Potentially Mineable Mineral Resources Au (g/t) 1.1 1.4 1.5 1.2 1.1 1.0 1.1 8.1 4.5 4.6 1.3 Ag (g/t) 6 7 8 7 5 5 5 22 13 14 6 S (%) 0.4 1.3 2.7 0.9 1.5 3.3 2.8 1.7 3.9 3.8 2.4 Density 2.44 2.45 2.47 2.45 2.57 2.59 2.59 2.69 2.68 2.69 2.55 (mt) 24 18 4 47 31 81 112 0.5 9 9 167 217 7 620 787

Oxide (<0.8% Sulphur) Trans (0.8% to 2% Sulphur) Trans_HS (> 2% Sulphur) Total Oxide Sulphide To Leach Pad (< 2 % Sulphur) Sulphide To Heap (> 2% Sulphur) Total Sulphide to Leach Pad Sulphide To Mill (< 2 % Sulphur) Sulphide To Mill (> 2% Sulphur) Total Sulphide to Mill Total Ore (million tonnes) Total Contained gold - (g x million) - (oz. x million) Total Waste (million tonnes ) Total Material (million tonnes )

3.5.2

Mine Design and Equipment


The open pit mine proposed production schedule is shown in Table 3-3, and incorporates a smoothing of waste tonnage to allow for an optimization of mine equipment fleet.

Summary
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Table 3-3:
Road Construction ITEM Mine Production Ore Heap Leach - Oxide (kt) Au (g/t) Ag (g/t) S (%) (kt) Au (g/t) Ag (g/t) S (%) (kt) Au (g/t) Ag (g/t) S (%) (kt) Au (g/t) Ag (g/t) S (%) Waste Overburden Rock Total Waste Total Material (Ore + Waste) (kt) (kt) (kt) (tpd) 1,324 1.17 7.03 0.75 1,324 1.17 7.03 0.75 745 1.17 7.03 0.75 745 1.17 7.03 0.75 Units Years -2 & -1 Year +3 -Year 1

Smooth Annual Mine Production


Mine Production -Year 1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 - 12 Total

Heap Leach - Sulphide

Mill/Flotation

2,303 1.17 7.03 0.75 1,312 1.18 15.42 2.99 207 3.88 37.59 3.74 3,822 1.32 11.57 1.68

11,818 1.24 4.91 0.80 2,573 1.06 5.31 1.76 181 5.86 10.73 3.67 14,572 1.27 5.06 1.01

7,892 1.48 6.33 1.12 6,315 1.03 6.07 2.88 568 5.33 16.99 3.46 14,774 1.44 6.63 1.96

7,658 1.18 6.82 1.00 6,362 1.13 4.83 3.10 561 4.05 7.67 3.66 14,581 1.27 5.98 2.02

5,277 1.16 9.07 1.15 8,692 0.96 5.50 3.24 633 4.03 17.70 3.78 14,601 1.17 7.32 2.51

1,894 1.04 4.87 0.69 11,882 1.04 4.56 2.82 713 4.49 12.61 3.57 14,488 1.21 5.00 2.58

2,152 1.24 5.10 1.19 11,869 1.15 4.19 2.00 663 6.24 13.50 3.28 14,684 1.39 4.75 1.94

1,736 1.07 4.60 0.63 12,124 1.09 4.59 2.48 785 5.55 20.91 3.08 14,644 1.33 5.46 2.29

1,662 1.02 6.09 0.56 12,397 1.03 4.40 2.58 605 4.12 15.83 3.94 14,664 1.15 5.06 2.41

2,147 0.89 12.44 1.32 38,194 1.00 4.65 3.15 3,723 4.31 9.92 4.02 44,064 1.27 5.48 3.13

46,607 1.22 6.73 0.95 111,719 1.04 4.86 2.81 8,638 4.62 13.40 3.74 166,964 1.28 5.82 2.34

Total Ore

14,228 14,228 15,552

8,003 8,003 8,748

7,242 7,242 7,242

42,388 42,388 46,210

75,428 75,428 90,000

78,009 78,009 92,783

78,202 78,202 92,783

78,182 78,182 92,783

78,295 78,295 92,783

72,364 72,364 87,048

63,671 63,671 78,315

40,673 40,673 55,336

103,652 103,652 147,716

740,336 740,336 907,300

Summary
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The haul roads have been designed with a width of 30 metres and a maximum gradient of 10 degrees. The waste dump locations have been selected in an attempt to minimize both haul distances and elevation gain. However, these are unconventional dump locations and to ensure dump stability, a detailed geotechnical analysis will be required. Mining will be by conventional open pit methods utilizing 34 m3 hydraulic excavators and 223 tonne off-highway rear dump trucks, complemented by support and maintenance equipment. The waste pit rim crushing/conveying system will commence operation at the beginning of Year 2. During the pre-production period and in Year 1, the waste will be trucked directly to the northern of the two proposed waste dumps. The overall pit slopes used in this pit design have to be confirmed or adjusted as the recommended geotechnical investigation proceeds.

3.6

Metallurgy
Mr J McPartland of McClelland Laboratories, Inc. of Sparks, Nevada has directed the Greystar metallurgical test programme during 2006 and both recent and historical metallurgical test data has been used by Hatch for review purposes and in developing design criteria and a proposed metallurgical flowsheet in this Scoping Study. The metallurgical data has been augmented by various test programs including results from flotation testwork and preliminary oxidation testwork by G & T Metallurgical Laboratories, column and bottle roll cyanidation leach test work by Metcon Research Inc., bio-oxidation test work by Little Bear Laboratories, oxidation product cyanidation leach tests by Phillips Enterprises, Bond Work grinding tests by CIMEX and leach residue characterization by PMET. The column leach test results were used to develop the heap leach gold recovery model based on a sulphur grade relationship as defined as: % gold recovery = -21.029 Ln (% S Grade) + 72.839 Test results from the flotation, bio-oxidation and cyanidation testwork were used to develop gold and silver recovery estimates for this process route. Gold recovery of 79% and a silver recovery of 45% have been applied in the mine model and financial model.

Introduction
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3.7

Process Description
The proposed flowsheet to process the Angostura ore consists of a conventional valley fill heap leach operation and a grinding and flotation circuit followed by bio-oxidation of the flotation concentrate and cyanidation for gold and silver recovery. The operation will treat up to 40,000 tpd, with up to 5% of this tonnage being delivered to the flotation circuit. A three stage crushing operation has been proposed to deliver a minus 19 mm product to the heap leach. The high grade gold and sulphur ore type will be mined selectively and crushed on a campaign basis in the same crusher facility and transferred to a crushed ore stockpile of approximately 10,000 t capacity ahead of the grinding and flotation circuits. Milling to a particle size of P80 = 106 m will be followed by a flotation process stage. The flotation concentrate produced will then pass to a bio-oxidation process, followed by a standard cyanidation leach stage and filtration to separate the gold bearing solution from residual solids. The gold/silver leach solutions from the heap leach operation and the flotation concentrate cyanidation leach will be processed in a Merrill Crowe zinc precipitation facility for gold and silver recovery, the final refinery product being gold/silver dor. A schematic flowsheet is presented in Figure 3-1.

Introduction
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Figure 3-1: Schematic Flowsheet

Introduction
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Sulphide ores in heap leach operations have the potential for acid generation after periods of 4-6 months or longer. This can significantly and adversely affect the gold cyanidation process and metal recovery. It is recommended that further testwork be conducted to assess this including humidity cell testwork. An On-Off permanent leach pad is an alternative to the valley fill heap leach option.

3.8

Infrastructure and Ancillary Facilities


Plantsite roads near the open pit and waste rock dumps will be 30 m wide, constructed to meet the requirements of mine trucks of 223 tonne capacity. A water storage facility will be required to provide water to the secondary and tertiary crushing area, process plant and general mine area. Two smaller facilities are required at the primary ore and waste crushing installations and as a supply to water tankers for mine road dust control. Possible locations have not been determined. A potable water treatment plant will consist of a filtering facility and a hypochlorate addition system The primary sewage treatment plant serving the ancillary facilities will be a packaged Rotating Biological Contactor (RBC). Diesel fuel requirements for the mining equipment, process and ancillary facilities will be supplied from the main diesel fuel storage tank. Cyanide, delivered to site via shipping containers will be stored in a secure, dedicated cyanide storage building located near the process plant. The Angostura laboratory will include facilities for sample preparation, routine grade control assaying, metallurgical testing, wet assay laboratory and environmental tasks.

3.9

Waste Rock Management


The conceptual waste rock disposal plan is based on preliminary quantities derived from the mine plan. Limited data is available of the ARD potential of the waste rock and further investigations during subsequent engineering stages are required to define the waste rock ARD and mitigation requirements.

3.10

Capital Cost Estimate


The total capital cost of the project is estimated to be $665.4 million which includes $141.0 million sustaining capital for the waste crusher and conveyor installation in Year 1, conveyor extensions, extension of the heap leach pad in Year 5 and replacement of mine equipment. An amount of $143.9 million is included for capital leasing of mine fleet equipment. The intended level of accuracy of the capital cost estimate is +35% / -30%, with no allowance for either price escalation beyond the base date of the estimate (Q1 2007) or fluctuations in assumed currency exchange rates. Other relevant qualifications, assumptions and exclusions are set out in Section 25.6.1.

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3.11

Operating Cost Estimate


Operating costs are summarized in Table 3-4 below and are based on a total Life of Mine ore treatment of 167 mt, and an owner operated mining fleet from Year 1. This is based on an average life of mine stripping ratio of 4.4:1. Table 3-4: Area G&A Mining (Ore and Waste) Process (Heap Leach), 158.3 mt Process (Mill/flot/biox), 8.6 mt Total Life of Mine The Angostura Project will employ an estimated 498 people. Operating Costs $/tonne ore 0.34 4.45 1.93 18.35 7.57

3.12

Financial Analysis
This financial evaluation of the project has been undertaken on a discounted cash flow (DCF) basis for a 40,000 tpd processing rate. Mining of Potentially Mineable Mineral Resource will be complete after approximately 12 years. The Base Case Financial model is presented in Table 25.20. The Project financial analysis has been prepared based, in part, on the capital and operating cost estimates set out in this study. Therefore, the qualifications, exclusions and assumptions that relate to the cost estimates also relate to the economic analysis (e.g., the occurrence of any of the project risk factors identified in this study might have a material impact on the accuracy of this financial analysis). Other input to the model include metal prices by year, provided by Greystar. The base case financial evaluation indicates life-of-mine capital costs of $665.4 million with net cash flow of $491 million and an IRR of 14.2%. This excludes taxation, royalties, finance charges, working capital and closure costs. An inflation allowance has not been included in this financial evaluation. Working capital elements would include: Some inventories of operating supplies. Inventory of and also delays in payment of metal sold. Leach process time.

3.12.1 Metal Price Estimates


The base case financial analysis uses the following metal prices; in US dollars (2007), as provided by Greystar: Gold Silver Year 1 550 9 Year 2 525 9 Years 3-11 515 9

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3.13

Conclusions
Hatch has estimated the Capital Cost of the 40,000 tpd Angostura gold project to be US$665.4 million. The intended level of accuracy of the capital cost estimate is +35% / -30%, with no allowance for either price escalation beyond the base date of the estimate (Q1 2007) or fluctuations in assumed currency exchanged rates. Other relevant qualifications, assumptions and exclusions are set out in Section 25.6.1. Hatch has estimated the EPCM cost for the project as US$ 38.4 million. Hatch has estimated the life of mine operating costs to be 7.57 US $ / metric tonne of ore treated, based on Owner operated mining fleet and the life of mine average stripping ratio of 4.4:1. The potential for acid generation in the heap leach is a risk to the project which requires further investigation. The geotechnical study required for the pit stability analysis will be a key to future mine design and reserve calculations. This study should begin as soon as possible. The crushing and disposal of waste rock is one of the key issues for Angostura. Further evaluation is required during subsequent engineering phases. Water Management, particularly with regard to any potential impacts on water quantity and quality downstream from the project site is also seen as a key issue. The process milling and flotation flowsheet developed for the treatment of the high grade ore type is conventional. Hatch believes that the application of a bioxidation process route for the oxidation of the flotation concentrate is a viable option, however further investigation and metallurgical testwork is required. A financial analysis indicated that, at the Base Case conditions, the net cash flow is calculated to be US$ 490.9 million, with an IRR of 14.2%. The payback at the Base Case is 6.4 years as calculated in the financial model. These cash flows exclude taxes, royalties, finance charges, working capital, inflation allowance and closure costs

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4.

Introduction
Greystar Resources Ltd (Greystar) is a development stage Canadian mining company based in Vancouver, Canada, whose shares trade on the Toronto Stock Exchange (TSX: GSL) and on the Alternative Investment Market (AIM) operated by the London Stock Exchange (AIM: GSL). The Companys principal business activities include the acquisition, exploration and development of resource properties. Greystars wholly owned Angostura gold and silver deposit is located in the northeastern region of Colombia, covering an area of approximately 15,000 hectares, some 450 kilometres to the north of the capital city of Bogata and approximately 67 kilometres northeast of the city of Bucaramanga. The Angostura deposit mineralization occurs predominantly within porphyritic monzonites and the enclosing protozoic paragneisses and veins and sheeted veins and is a typical high sulphidation gold/silver deposit which has been actively explored by Greystar since 1995. However because of the security situation, little fieldwork was accomplished from 2000 until 2003, when Greystar commenced a substantial surface and underground exploration programme. In 2006, Greystar commissioned Hatch (Vancouver) (Hatch) to prepare an Angostura Project Scoping Study with the purpose of providing Greystar with an initial technical and economic project assessment. The Hatch scope of work includes Mining, Metallurgical Processing, Site Infrastructure, Capital and Operating Cost Estimates and an Economic Assessment. This work is conceptual in nature, and the intended level of accuracy of the capital cost estimate is +35%/-30%. Specific exclusions from Hatchs scope of work were Geology and Resource Estimation, Environmental, Metallurgical Testwork Program, Tax Calculation and Project Financing. The metallurgical test programme was overseen by Jack McPartland of McClelland Laboratories, Sparks, Nevada and the test data was used by Hatch to develop a conceptual process flowsheet and design criteria. The property description, geology and mineralization is detailed in Technical Report, Updated Mineral Resource Estimate, Angostura Gold Project, Santander Colombia, dated August 30, 2006, prepared by Strathcona Mineral Services Limited of Toronto, Canada and available on SEDAR.

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Table 4-1: 6 7 8 9 10 11 12 13 14 15 16 17 19.1

Relevant Sections from Strathconas Mineral Resource Estimate (August 30, 2006) Property Description and Location Accessibility, Climate, Local Resources, Infrastructure and Physiography History Geological Setting Deposit Types Mineralization Exploration Drilling Sampling Method and Approach Sample Preparation, Analyses and Security Data Verification Adjacent Properties Resource Estimate

Since the August 2006 Strathcona Report was written, additional exploration was completed at Angostura, and a new resource estimate prepared by Greystar using the additional information but adhering to the estimation parameters described in the August 2006 Strathcona Report. Excerpts from that report quoted in the current report have been updated as appropriate. The study presents concept design and costs to construct and operate the mine and is based on a total ore treatment rate of 40,000 tpd, with the mine plan determining the schedule of ore feedstock to the two process routes of cyanidation heap leach and a mill, flotation and biox process route. Operating costs were determined from recent vendor pricing of consumables, a labour organization structure applying Colombian pay scales, power costs based on a unit rate as reported by Greystar and spares as recommended by equipment vendors. Mine fleet capital costs were allocated on a capital lease basis over 4 years with contract mining occurring for the pre-production period.

4.1

Report Contributors
Ind. QP Yes Yes Yes Yes Company Hatch Ltd. Previously Hatch Ltd. Contractor to Hatch Ltd. Strathcona Mineral Services Ltd McClelland Laboratories Inc. Primary Areas of Responsibility Study Compilation, Metallurgy, Mineral Processing, Cost Estimates and Financial Analysis Mine pit modeling and Resource Estimates Mining Geology Mineralogy, Drilling and Sampling Mining and Resource Estimates. (Previously reported August 2006) Metallurgical Sampling and Testwork Relevant Sections 3.1, 3.3, 3.6, 3.7 - 3.13, 4, 5, 16.5, 18, 20, 21, 22, 23, and 25.2 25.7 19.2.1.1, 19.2.1.2, and 19.2.2 3.5, 19.2.1.3, and 25.1 3.2, 3.4, 6 16.4, 17, and 19.1 See Section 5.

Responsible Person John A. Wells Keith Watson Brian Tough Henrik Thalenhorst

Jack McPartland

No

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IMPORTANT NOTICE This report (the Report) was prepared by the qualified persons listed in Table 4.1 (the QPs). Each QP assumes responsibility for those sections or areas of the Report that are referenced opposite their name in Table 4.1. None of the QPs, however, accepts any responsibility or liability for the sections or areas of the Report that were prepared by other QPs. The Report was prepared to allow Greystar Resources Ltd. (the Owner) to reach informed decisions respecting the development of the Angostura Project. Pursuant to its engagement with Hatch Ltd. the Owner is permitted to file the Report with the Canadian Securities Regulatory Authorities pursuant to provincial securities legislation. Except for the purposes legislated under provincial securities law, any use of the Report by any third party is at that partys sole risk. The Report is intended to be read as a whole, and sections should not be read or relied upon out of context. The Report contains the professional opinions of the QPs based upon information available at the time of preparation. The quality of the information, conclusions and estimates contained herein is consistent with the intended level of accuracy as set out in the Report, as well as the circumstances and constraints under which the Report was prepared, which are also set out herein. As permitted by Item 5 of Form 43-101F1, the QPs have, in the preparation of the Report, relied upon certain reports, opinions and statements of certain experts. These reports, opinions and statements, the makers of each such report, opinion or statement and the extent of reliance is described in Section 5 of the Report. Each of the QPs hereby disclaims liability for such reports, opinions and statements to the extent that they have been relied upon in the preparation of the Report, as described in Section 5. As permitted by Item 16 of Form 43-101F1, the QPs have, in the preparation of the Report relied upon certain data provided to the QPs by Greystar and certain other parties. The relevant data and the extent of reliance upon such data is described in Section 16.5 of this Report.

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5.

Reliance on Other Experts


In preparing its sections of this Report, Hatch is relying upon certain reports, opinions and statements of other experts. These reports, opinions and statements, the makers of each such report, opinion or statement and the extent of reliance is described below. Hatch hereby disclaims liability for such reports, opinions and statements to the extent that have been relied upon in the preparation of this Report, as described below. Hatch has relied on this information without independent verification.

5.1

Metallurgy
Metallurgical testwork results have been provided to Hatch by the Owner: or by third parties on behalf of the Owner. The following companies conducted metallurgical testwork on behalf of the Owner: 1. G. & T. Metallurgical Services Ltd., Kamloops, B.C., Canada. 2. Pittsburg Mineral and Environmental Technology Inc. 3. Phillips Enterprises, LLC Metallurgical Testing and Consulting Services. 4. Little Bear Laboratories, Inc. 5. Metcon Research Inc. 6. CIMEX Centro de Investigacion de Metalurgia Extractiva, Universidad Nacional, Medellin, (bond work index testing). For the purpose of the disclosure related to metallurgical testwork and estimated gold and silver recovery that is set out in Section 3.6 and Section 18 of this Report, Hatch has relied upon a letter from Mr. Jack McPartland confirming the accuracy and completeness of such disclosure. Mr. McPartland is a professional metallurgist and VP Operations at McClelland Laboratories. He has a BSc in Chemical Engineering (University of Nevada at Reno, 1986) and a MSc in Metallurgical Engineering (MacKay School of Mines at Reno, 1989), and has supervised the metallurgical testwork program for the Angostura Project since December 2005. Both recent and historical metallurgical test data has been used by Hatch for review purposes and in developing design criteria and a proposed metallurgical flowsheet in this Scoping Study.

5.2

Strathcona Mineral Services Limited Report


In preparing this report certain information has been extracted directly , and/or summarized from Strathcona Mineral Services Limited report Technical Report Updated Mineral Reserve Estimate, Angostura Gold Project Santandar, Colombia report, dated August 30, 2006. The sections in this report summarized from the Strathcona August 2006 report are shown in Table 4-1.

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6.

Property Description and Location


(The following information has been extracted from the Strathcona August 2006 Report and updated as appropriate.) The Angostura Project is located in the mountains of the eastern Cordillera in the Province of Santander, (at 7 23 North and 72 54 West) in the northeastern region of Colombia, approximately 350 km North-Northeast of the Colombian capital city Santa F de Bogot. Bucaramanga (pop 700,000), the capital city of Santander department is approximately 67 km by road from the project site and is serviced by frequent daily jet and turbo-prop flights from Bogot. The small town of California (pop. 1,500) is located 50 km by road to the northeast of Bucaramanga, in the district of Soto Norte and approximately 11 km from the project site. Other nearby towns such as Vetas, 1,700 inhabitants, and Surat, 3,900 inhabitants, are all within approximately 10 km of the project. Elevations on the project are between 2,600 and 3,400 meters a.s.l. The property is located near the boundary between two provinces (departamentos), Santander and Norte de Santander, and thus has to deal with two provincial administrations. The proposed mining and processing facilities of the Angostura project straddle this boundary, which might be problematic in that Santander is familiar with the existing small mining operations in the area whereas the administration of Norte de Santander has had less historical exposure to such activities.

6.1

Property mining claims and ownership


Mineral property rights are governed by the Colombian Mining Code, which has been subject to changes and amendments. The oldest version relevant to the Angostura property is Law 20 promulgated in 1969. Law 20 was superseded by decree 2685 in 1998, which in turn was amended by Law 685 in 2001, which continues in effect to the present time. Until 1998, the Colombian Ministry of Mines and Energy was directly responsible for the administration of the mining law as it relates to mining title. In 1998, these duties were devolved to a separate agency Minercol. On January 27, 2004, with resolution 180074 these responsibilities were transferred to the mining department of INGEOMINAS (the Colombian Geological Survey - Instituto Colombiano de Geologa y Minera). Over the course of their involvement in the project, Greystar have acquired, by purchase and by application to the governmental agencies, a total of 9 concessions covering a very substantial area of nearly 15,038.92 hectares in the Angostura area, as shown in Figure 6-1 and summarized in Table 6-1.

Property Description and Location


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Table 6-1:
Licence Original Designation Concession Concession Concession Concession Concession Exploitation Licence Concession Concession Exploitation Licence

Summary of Angostura Project Licences


Expiry Date 2027 October 13, 2008 Royalties Due 10% NPI None None None None None None None None Notes

Area (hectares) 5,244.86 9.19 1,184.12 4,061.10 3,890.50 3.50 600.00 40.00 5.65 15,038.92

3452 300-68 22346 AJ5-142 AJ5-143 127-68 343 69-79 101-68 Totals

September 18, 2007


November 14, 2034 June 21, 2037 April 19, 2010 February 9, 2037 July 9, 2026 April 19, 2010

NPI = net profits interest (Old areas of P. 3452 and EPL 47-68). (1) In process to be inscribed in the National Mining Register, the exact expiry date depends on the registering day.

Figure 6-1: Greystars Mineral Concessions

Property Description and Location


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An exploration licence (Licencia de Exploracion) as defined by the 1988 Mining Code, and continued unchanged in the 2001 revision, grants the holder the exclusive right to conduct exploration activities. The term of an exploration licence depends on its size. For an area up to 100 hectares (small), the initial term is one year, with an extension possible for one additional year; from 100 to 1000 hectares (medium), the initial term is two years, with an extension of one year; and for an area larger than 1000 hectares (large) the term is five years, with no extension possible. Work performed during the term of an exploration licence must be filed with the Ministry of Mines and Energy. After expiry, an exploration licence can be converted into a mining licence (Licencia de Explotacion) with a term of 10 years under the 1998 rules, or into a Concession Contract with a term of 30 years, renewable for a further 30 years under the 2001 law. The concept of mining licences has been abandoned as part of the 2001 Mining Code revision, but several of the small Greystar licences continue under this designation until their expiry date or until they are grouped under the new law (see above). A permit (Permiso) is the equivalent of both an exploration licence and an exploitation licence with a term of eight years under Law 20 of 1969. One of the Angostura licences (Permit 6979) was granted to the original owner under Law 20, while most of the remainder were granted under Decree 2685. All of the titles in the table acquired prior to 2006 have now been converted to concessions under the new 2001 mining law, article 349. Prior to their expiry as exploration licences and in order to qualify for the designation as a concession contract, a production plan and an environmental impact study must be submitted. In order to comply with this requirement, Greystar has advised that it has presented production proposals under the 1988 law so as not to be in default of this particular provision. It is the practice in Colombia to submit a minimum mining proposal to comply with the law. Since the requirement is minimal, such production objectives can be met by a small-scale operation. The Table 6-1 shows, the actual situation of the mineral licences of Greystar. The basic annual renewal fee is $5.30 per hectare for licences with an area of less than 2000 hectares, and is twice that amount for licences with an area from 2000 to 5000 hectares. The annual fees are payable in advance within 30 days of the anniversary date for each licence. Greystar has assured us that they are in full compliance with the corresponding payment schedule. Greystar has acquired, through purchase, a 100% interest in all of the licenses and permits itemized in Table 6-1, subject to a 10% net profits interest for the old area of the permit 3452 and for the licence 47-68 (now in the concession 3452), . Upon production, there is a government royalty of 4% on the gross value of gold production, calculated on 80% of the London gold price fixing, or an effective rate of 3.2%.

Property Description and Location


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Figure 6-2: Location Map

Property Description and Location


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7.

Accessibility, Climate, Local Resources, Infrastructure and Physiography


(The following section has been summarized from Section 4, Strathcona August 2006 Report.) The Angostura site is accessible from Bucaramanga on roads which are partly being paved via the small town of California, a road distance of 50 kilometres, and from there on a secondary road, an additional 11 kilometres. A number of drill roads provide access in the area of the concessions being worked by Greystar. Local traffic uses foot paths and horse trails that provide access throughout the area. The property is located in steep, mountainous and relatively rugged terrain at elevations ranging from 2600 to 3400 metres. Based on climatologic data from a number of nearby weather stations at comparable altitudes, the average annual temperature is 9 to 11 C, with little seasonal change. The average annual precipitation is 740 millimetres (mm), while the average annual evaporation is approximately 1300 mm, which identifies the site as a net evaporation area. Without significant changes in temperature, the seasons are defined by variations in precipitation. In the two wet seasons, from April to June and from September to November, about two-thirds of the annual precipitation is recorded. The Angostura Project is situated at the upper end of the Quebrada La Baja drainage basin, a catchment area of approximately 124 square kilometres above the town of California, of which the local catchment area of the Quebrada Angostura is a part with a total drainage basin of approximately 10.1 square kilometres. Golder and Associates in their report of March 17, 1999 Prefeasibility Design Report Angostura Project reported data obtained from three climatological stations, Surata, El Pozo and Berlin. The Berlin station is located approximately 25 km from the project site at a similar elevation, but in a different topographical setting. Vegetation in the area of the Angostura Project can be described as light alpine scrub consisting of grasses and shrubs such as "Fraillejon" (espeletia humbolt). There is significant growth of oak and eucalyptus trees along the watercourses in the lower elevations on the property. The local vegetation supports only a limited level of agriculture and livestock pasturing. The principal economic activity in the area is the small-scale exploitation of gold, while agriculture, cattle raising and basic commercial activities are of lesser significance. Agriculture is carried out using traditional methods with low yields and soil deterioration over time. Cattle are raised primarily for meat production. The area is served by the national electric power grid, which is described by Greystar staff as efficient and in a good state of repair. Land telephone service is essentially restricted to the municipality of California, but the exploration camp communicates via a microwave system directly with the Bucaramanga office.

Accessibility, Climate, Local Resources, Infrastructure and Physiography


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8.

History
(The following section has been extracted from the Strathcona August 2006 Report.) Early gold mining activities are reported to have occurred in the general area of the Angostura deposit since pre-colonial times and continued during Spanish rule with the mining of high-grade veins and placers in the area. After independence and throughout the last century, precious metals were mined on a small scale in the districts of Vetas and California, until 1944. Greystar became involved in the project in 1994 and conducted substantial exploration until 1999 consisting of surface mapping, sampling and diamond drilling. The drill hole database at the end of 1999 consisted of 181 diamond drill holes totalling nearly 52,000 metres. Because of security and economic considerations, little fieldwork was accomplished from 2000 until 2003, when Greystar commenced a substantial surface and underground exploration program, which is continuing. The additional work conducted has resulted in periodic resource estimates for the Angostura deposit, each estimate incorporating information from a larger exploration database. All of the historical resource estimates showed Angostura to be a large but relatively low-grade deposit with potential economic merit and provided the justification for Greystar to continue the exploration of the project, which has resulted in a gradual improvement of the data density covering the deposit, and has also succeeded in expanding its overall known size.

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9.

Geological Setting
(The following section has been extracted from the Strathcona August 2006 Report.) The Angostura property is situated within the western branch of the Eastern Cordillera in northeastern Colombia, and more specifically within the Santander Massif that consists of Precambrian gneisses and schists of the Guyana Shield. Intermediate intrusives of the Santander Plutonic Group were emplaced during a period of uplift in the Triassic/Jurassic. Younger porphyries common in the immediate area of, and likely related to, the mineralization are of Tertiary age. Regional faulting parallels the topographic fabric, and more local, northeasterly faulting is considered to have guided the intrusive rocks and the subsequent alteration and mineralization. Angostura is part of the Angostura-California gold province, a belt of epithermal gold occurrences of the high sulphidation type and characterized by the association of gold with silver, copper, arsenic, bismuth, molybdenum and tellurium. The existence of a breccia body hosting copper and molybdenum mineralization four kilometres from the site points to a connection with a (buried) porphyry system. Most of the gold is contained within several sets of anastomosing veins and tabular breccia zones. Alteration within the vein-like structures is dominated by silica, both in the form of free quartz and as silicification, and sericite, while the host rocks are strongly argillized. Several hydrothermal pulses are discernable and show a decrease of temperature with time, from >300 C to about 250 C, according to fluid inclusion studies.

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10.

Deposit Types
(The following section has been extracted from the Strathcona August 2006 Report.) The Angostura gold-silver project is part of the Angostura-California gold province of the Eastern Cordillera in northeastern Colombia, a belt of epithermal gold occurrences developed along the Rio La Baja regional fault that trends in a northeasterly direction from the town of California (Felder et al., 2000). The fault transects pre-Devonian granitoid bodies, high-rank metamorphic rocks and overlying Lower Cretaceous sediments quartzite, limestone and argillite. Intense hydrothermal activity related to Cretaceous and early Tertiary quartz porphyry intrusions gives rise to the gold-silver mineralization. The mineralization is described of the high sulphidation type and is characterized by the association of gold with silver, copper, arsenic, bismuth, molybdenum and tellurium, a classic porphyry-related epithermal metal association. Most of the gold is contained within several sets of anastomosing veins and tabular breccia zones. Alteration within the vein-like structures is dominated by sericite and silica, the latter occurring both in the form of free quartz and as silicification, while the host rocks are strongly argillized. Several hydrothermal pulses are discernable and show a decrease of temperature of formation with time, from >300 C to about 250 C, according to fluid inclusion studies reported in Felder et al., 2000. Locally, disseminated gold in the altered host rocks gives rise to low-grade mineralization in the strongly altered host rocks, particularly in the southern, deeper part of the project area. The discovery of copper-molybdenum mineralization in an intrusive breccia some four kilometres to the south of Angostura suggests that the gold mineralization at Angostura may be associated with a porphyry system at depth.

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11.

Mineralization
(The following section has been extracted and updated from the Strathcona August 2006 Report.) The Angostura gold-silver mineralization occurs in a swarm of veins and mineralized structures that strike east-west, northeast-southwest and northwest-southeast and dip steeply to the north. Recent structural studies have identified five stages of mostly brittle deformation, four of which are mineralized. It is the continued history of deformation and intrusive activity that provided the thermal impetus and structural pathways for a major precious-metal deposit. The mineralized structures may be single veins, but are more often made up of several, closely spaced composite veins. Almost two hundred individual veins and composite structures have been correlated to date on the basis of surface mapping, mapping of underground workings, and interpretation of drill hole data that vary in width from less than two metres for individual veins to over 40 metres for composite structures. The gold mineralization has two grade populations. The majority of values (92%) are less than two grams per tonne (g/t) and show good continuity within the veins. A small high-grade population represents high-grade shoots and vein segments located in structurally favourable locations such as at the junction of two veins of different direction. Mapping and sampling of underground openings has confirmed the general grade character of the veins and of a few highgrade shoots. The current drill hole density, however, is generally not capable of providing reliable data on the size and shape of the shoots, which have an influence on the overall resource grade larger in proportion than their small volume. The realistic modelling of the volume and of the grade of the shoots is thus a prerequisite for any reliable resource estimate. There are two areas in the northern part of the deposit that were modelled as relatively large bulk zones. This concept was introduced to account for continuous mineralization found in these areas that is difficult to resolve into individual veins. In addition to veins, disseminated mineralization above cut-off grade occurs in several areas between the veins, most notably in the south of the Angostura property. Part of this mineralization constitutes obvious veins that have not been found in adjacent holes, while the remainder is more properly called disseminated. Surface oxidation has affected the rocks at Angostura to depths of up to 170 metres along specific structures. It is more generally in the range of 10 to 30 metres at the edge of the deposit, and attains depths that vary from 40 to 100 metres in the central parts. The oxidation is irregular in shape and is of partial character, i.e., fine-grained sulphides in dense quartz often remain fresh even near surface, while the coarser sulphides are often completely oxidized. Greystar developed a sulphide model in January of 2007 based on a total of 81,306 sulphur analyses. The sulphur variography was developed by Ing. Elmer Idelfonso, the consulting geostatician from Lima Peru. In order to reflect the geology of the sulphides the deposit was divided into different domains. These includes veins, disseminated sulphides and areas devoid of mineralization for both oxides and sulphide zones.
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12.

Exploration
(The following section has been extracted and updated from the Strathcona August 2006 Report.) The considerable exploratory work completed to the end of December 2006 by Greystar is summarized in T a b l e 1 2 - 1 by period, with the period-ends coinciding with historical resource estimates. The December 2006 estimate of the Angostura mineral resources is based on the sampling and drilling summarized in the Total line in Table 12-1. The resource model that was used by Hatch for this study is as of December 6, 2006 (Greystar press release dated December 13, 2006), and constitutes an update of the estimate Strathcona reported upon based on an additional 26,000 metres of drilling. From 1994 to 1999, exploration of the Angostura property by Greystar had consisted mainly of surface work which included geologic mapping, surficial rock sampling, and a substantial amount of diamond drilling aggregating 52 000 metres in 181 diamond drill holes. A small part of the underground openings created by artisan miners was also mapped and sampled. The database created by these activities underlies the 1999 KTS resource estimate described in the next section. Because of the very adverse security situation in the area, and the general economic problems faced by junior mining companies, no substantive field work was conducted by Greystar at Angostura from late 1999 until mid-2003 except for the sampling and mapping of the existing and accessible underground openings that took place in late 1999 and early 2000. In June of 2003, after the normalization of the security situation, a surface drilling program commenced that, to the end of May, 2004, had added 61 diamond drill holes with a total length of more than 19 000 metres to the project database. Most of this additional drilling was designed as infill drilling in the main areas of mineralization, or as add-on drilling particularly along its southern fringe, where little previous information was available. After an unsuccessful attempt at the 2,820 metre elevation, an underground development program was started in early April 2004 by collaring a tunnel on the 2847-metre elevation consisting of two parallel east-west drives some 350 metres apart, with a connecting cross-cut. These excavations serve as a base for detailed underground diamond drilling. The tunnel also provides access to some of the known mineralized structures for detailed underground drifting and sampling. Surface and underground diamond drilling with up to twelve drill rigs has continued uninterrupted from mid-2003, and is continuing.

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Table 12-1: Angostura Field Work by Period and Timing of Historical Resource Estimates Period Surface Sampling Surface Diamond Drilling Metres # of # of Holes Metres Number Sampled Assays Drilled of Assays 1995 to Late 1998 398 131 139 38,836 27,399 Late 1998 and 1999 7,336 2,014 44 15,255 11,809 KTS Mineral Resource Estimate 1999 2000 to June 2003 756 275 June 2003 to May 2004 61 19,032 12,495 Greystar/Strathcona Mineral Resource Estimate May 2004 June 2004 to March 2005 1,272 738 61 23,041 13,763 Greystar/Snowden Mineral Resource Estimate March 2005 April to September 2005 38 13,353 7,000 Greystar/Snowden Mineral Resource Estimate November 2005 September 2005 to June 100 39,616 21,969 2006 Greystar/Strathcona Mineral Resource Estimate June 2006 June 2006 to November 38 16,334 9,833 2006 Totals 9,762 3158 481 165,467 104,268 Tunnelling Metres 198 # of Muck Samples # Channel Samples 116 432 343 145 322 214 439 356 169 374 12 14 42 2,463 2,817 11,497 1,556 1,681 7,059 Underground Diamond Drilling # of Holes Metres # of Drilled Assays

32 476 369 923

274 2,272

140 1,115

348 2,283

24 92

5,658 22,435

3,249 13,545

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13.

Drilling
(The following section has been extracted and updated from the Strathcona August 2006 Report.) The great majority of data underlying the December 2006 resource estimate for the Angostura project is from diamond core drilling. Diamond drilling was performed by the following contractors: 1995 - Norbert Reinhart; 1996 to 1998- Terramundo Drilling; 1999- Major Drilling Inc; since June 2003 - Concorcio Geominas S.A. - Perfotec Ltda. (a Colombian contractor from Medellin), all using a variety of drill rigs. Core size varied from BQ (36.5 mm diameter) to NQ (47.6 mm) to HQ (63.5 mm). By far the majority has been NQ (79% of the total), with HQ and BQ core making up 18% and 3% of the total, respectively. Drill hole collars in the field are clearly marked by wooden stakes bearing the information of hole number, azimuth, inclination, and coordinates, and the collar locations have been verified by survey. The drill hole deviation was measured using the Tropari instrumentation through 1997, with the Sperry Sun system from 1997, and with the Swedish Reflex Easyshot system since 2003. The original deviation measurement spacing of 50 metres starting at a depth of 150 metres down-hole has been substantially tightened since 2003 to 25 metres down-hole starting with an initial reading immediately below the casing, to give better control. In the absence of magnetite in the rocks, these methods work well. The experience with the 25-metre readings indicates a systematic steepening of the holes by about 1.5~ in the first hundred metres, and azimuth deviations are of a similar order of magnitude, but they can be in either direction, right or left. The degree of steepening and change of azimuth at greater depths is somewhat smaller, reducing to 1 for the dip and 0.3 for the azimuth per hundred metres. These changes in drill hole attitude are small and reasonably predictable, so that, despite the absence of deviation determinations above a depth of 150 metres in the earlier drill holes, the actual location of these holes will not be far from where they are plotted. The average core recovery for the entire drill hole database is nearly 92%, with 80% of the intervals above a 90% recovery, and these figures include the initial, poorer near-surface recoveries to a depth of typically eight to ten metres. The core recovery below a depth of 35 metres increases to 95%. There is no apparent correlation between core recovery and gold grade, and a scattergram plotting core recovery vs. gold grade does not indicate any bias with respect to preferential loss of either high-grade or low-grade material. There is no statistical evidence that an assay bias has been introduced as a result of core loss. All drill core has been photographed starting in 1997, on film until 1999, digitally since June 2003. After photography, the Greystar geologists log the core in detail. Data recorded include the major and minor lithologies, the type and intensity of alteration, the rock colour, grain size, structural information such as brecciation and faulting, rock quality designation (RQD) since November 1997, and the degree of oxidation and weathering. The data was initially entered into paper log sheets and later into a computerized relational database. As a result of unsatisfactory logging procedures in the earlier years, a major program of re-logging to the improved standards was undertaken in early 1999.

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With the exception of the initial, near-surface few metres of each hole in which core recovery was poor, nearly all the drill core produced was sampled and submitted for assay, resulting in a very large assay database of 117,813 assays from drilling alone. Core sampling was, and continues to be by sawing. In 1995 to 1999, one-half core for BQ and NQ and one-quarter core for HQ was collected as a sample, to make the samples reasonably similar in mass. Since 2003, one-half core is taken regardless of core diameter, as this provides a more representative cut. The samples are bagged and shipped for assay (in the past) or transported to the site preparation facility, while the remainder is returned to the core box for reference. The average sampled core length was 1.3 metres in the earlier drilling, and has increased to the 1.5 metre range since 2003. The sample interval in the higher-grade sections was noticeably shorter in the 1995 to 1999 drill holes, but has evened out starting in 2003. In all cases, however, the longer samples were taken in areas believed to be of low-grade character. Few samples are less than 0.5 metres of core. Sampling observes obvious lithologic or alteration breaks. The drill core is stored in permanent facilities near the village of California and, for the older drill holes, in an industrial area of Bucaramanga.

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14.

Sampling Method and Approach


(The following section has been summarized and updated from the Strathcona August 2006 Report.) The great majority of data underlying the December 2006 resource update estimate for the Angostura project is from diamond core drilling. Data recorded include the major and minor lithologies, the type and intensity of alteration, the rock colour, grain size, structural information such as brecciation and faulting, rock quality designation (RQD) since November 1997, and the degree of oxidation and weathering. With the exception of the initial, near-surface few metres of each hole in which core recovery was poor, nearly all the drill core produced was sampled and submitted for assay, resulting in a very large assay database of 117,813 assays from drilling alone. Core sampling was, and continues to be by sawing. Surface and trench sampling was conducted by channel sampling where the lithology did not change in an outcrop. Discernable vein structures were sampled by panel sampling, with individual panels measuring one to four square metres. Chip samples were collected over pre-defined sections of outcrop showing no discernable difference in lithology or alteration. The recent 2850-level development (underground) has been sampled in two ways. Continuous chip sampling was done along the walls of the drifts and cross-cuts, but is incomplete. Individual fractures with obvious mineralization were sampled separately to pinpoint the location of the gold. The chip sample results were not used for the current resource estimate. The broken material of the majority of the rounds on the 2850 level taken was systematically sampled by shovel from each mine car, creating 975 samples of typically 150 to 160 kilograms per round, a sample ratio of nearly one percent (a round was typically 2.3 by 2.3 by 1.3 metres). Initially, grab samples were removed from the muck sample and submitted for assay, a less than satisfactory method. Following our February 2006 visit, re-sampling of the muck samples was instituted. The entire sample was dried if necessary, then crushed to minus 2.5 cm and homogenized in a cement mixer. A sub-sample of 10 kilograms was split out using a four-tiered arrangement of riffle splitters and subjected to the normal Greystar sample preparation and assaying protocols used for core from the surface drill holes as described in Section 10.2 of the Starthcona Report, August 2006. While there are a few areas in which the sampling methods employed in the Angostura project in the past and present may bear improvement, the past and ongoing sampling approach by Greystar is judged to be on par with industry standards, and any existing shortcomings are of an extent and magnitude that they do not represent an impediment to the reliability of the current mineral resource estimate for the project.

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15.

Sample Preparation, Analyses and Security


(The following section has been summarized from the Strathcona August 2006 Report.) During the earlier field programs (1995 to 2000), the samples collected in the field, from surface or from drillholes, were bagged, sealed and air freighted directly to Rossbacher Laboratories Ltd. of Vancouver being the principal laboratory used. All samples were initially assayed for gold using a standard geochemical method of acid digestion and atomic absorption spectroscopy (AAS), suitable for low gold concentrations. Samples with gold values between 0.5 and 1.5 g/t were subsequently subjected to routine fire assaying using a one assay-ton aliquot (one-half assay ton until the end of 1996), and those samples with gold values above 1.5 g/t gold were re-assayed using the pulp-and-metallics method, screening at 150 mesh. Samples with gold values between 0.5 and 1.5 g/t as determined by the geochemical method were subjected to routine fire assaying using a one assay-ton aliquot (one-half assay ton until the end of 1996). The remainder of the pulp of those samples yielding above 1.5 g/t gold from the initial geochemical method was re-assayed using the pulp-and-metallics method, screening at 150 mesh. For the incorporation of the Rossbacher gold assays into the database, an assay hierarchy by quality of the result was established. If only a geochemical value was available, then that value was used. If a geochemical and a fire assay were available, then the fire assay result was used. If in addition to a fire assay, a metallics assay was also available, then that figure was incorporated. There was no averaging of the results of different quality. Silver and copper were originally determined by AAS based on a 0.5-gram aliquot, with an a q u a r e g i a digestion. Silver values equal to or greater than 15 g/t were later re-assayed using the fire assay method. A large number of samples from the Angostura project were also assayed using the cyanide-leach method, for the purpose of comparing total gold (as determined by fire assay or metallics assay) to cyanide-soluble gold. The available 998 Rossbacher metallics screen assays demonstrate that for the large majority of the samples tested, only a relatively small portion of the gold resides in the coarse fraction retained on the 150-mesh screen. Below an assay of 50 g/t for the full sample, there is virtually no difference between the gold grades of the plus 150-mesh and the minus 150-mesh fractions. Only 34 of the 979 samples below 50 g/t contained more than 25% of their total gold in the coarse fraction, and this proportion did not change with the gold grade. Even among the 19 samples with assays >50 g/t, a high proportion of gold in the plus 150-mesh fraction was found in just three samples, with the other 16 being no different than the samples with assays below 50 g/t. These results characterize the Angostura gold mineralization as generally well-behaved from a sampling and assaying point of view.

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15.1

2003 to 2006 Programs


After resumption of field activities in June of 2003, a preparation laboratory on site was constructed to speed up the process and to reduce the sample mass to be shipped for assay. Samples derived from what appear to be weakly mineralized drill hole intervals are sent to ACME Analytical Laboratories Ltd. in Vancouver (ACME) for assay. A 15-gram aliquot is assayed using a thirty-element geochemical ICP gold method after aqua regia digestion. Any samples returning more than 0.4 g/t gold at ACME are re-assayed at Chemex, together with the stream of samples submitted directly from Colombia to Chemex for gold determination by fire assay with an atomic absorption spectrometer (FA/AAS) finish using a one assay-ton (29.2 grams) aliquot. A separate split of these samples is subjected to a multi-element ICP assay including silver following a four-acid digestion. High gold and silver assays above 100 grams per tonne (g/t) are re-assayed by one assay-ton FA with a gravimetric finish.

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16.

Data Verification
(The following section has been extracted and updated from Section 11 of the Strathcona August 2006 Report.) Greystar are currently using the Postgre SQL software, produced by the Bucaramanga firm of Systemas Integrados de Informacion y Digitalizacion (SIID), to manage the Angostura database. The system is installed in the Greystar Bucaramanga office and is fully integrated with the data acquisition activities in the field that are entered into a Palm daily and downloaded via the microwave communication system to Bucaramanga. A strict, controlled and structured set of fields and columns is used to manage the data flow, and the software thus controls the integrity of the data and will alert the database manager to any structural problems.

16.1

Assays 1995 to 1999


There was no Greystar-sponsored quality assurance/quality control (QA/QC) program in place for the drilling campaigns from 1995 to 1999. However, a substantial program of check assaying of pulp duplicates was undertaken at Bondar Clegg Laboratories during those years, and in 2003/04 a number of high-grade core intervals originally assayed in that earlier period were re-sampled and rejects submitted for check assaying at Chemex. The results were summarized in Table 7 of our 2004 report (Strathcona, 2004), showing that there was a tendency of the Rossbacher results for gold to be high by around 10% as compared to Bondar Clegg and Chemex. Greystar undertook a detailed analysis of the Rossbacher bias in 2004. This showed that the differences between Rossbacher and Bondar Clegg were restricted to assays above about 2 g/t and appeared to be traceable to certain groups of contiguous samples where the Rossbacher results were consistently and obviously high (the bad set), while other batches did not show this bias. The bad set, representing about 28% of the total, showed a large difference with Rossbacher being 44% higher than Bondar Clegg. Subsequently, the original sample batches corresponding to the bad set were identified, a total of 891 samples. From these, 344 of the original rejects could not be found, and another 20 mismatched samples and 7 samples with very high gold grades were eliminated from further consideration. The remaining 520 samples with a Rossbacher mean gold value of 6.6 g/t were re-assayed at Chemex who reported a mean of 6.2 g/t, and the lower Chemex values were substituted into the database of the KTS 1999 mineral resource estimate and the 1999 KTS resource model described in Section 5.3 and summarized in Table 4 was re-run. The effect on the estimated resource grade was very small, the relatively largest consequence being a 1% reduction of the gold grade of the indicated resources at the 3.0 g/t cut-off grade (Snider, 2004). The current resource database continues to use the Chemex check assay results instead of the original Rossbacher data.

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16.2

Assays 2003 to 2006


For the more recent drill programs that started in June of 2003, a QA/QC program external to the assay laboratory has been instituted. Field blanks consisting of limestone or barren gneiss were inserted into the sample stream at the rate of one in 25 to 30 by the project geologists. The insertion of reference materials (standards) into the sample stream started in March 2004, when the site sample preparation facility became operational. Since then, a total of 1675 samples from five different standards have been assayed. The standards were prepared and certified by CDN Resource Laboratories Ltd. of Vancouver, British Columbia. Triggers for a standard to have failed were generally set at reference value plus or minus two standard deviations (SD). The SD values were determined during the certification process. The results are tabulated below: Table 16-1: Summary of Standards Performances for Gold
Reference Achieved Value (g/t) 0.77 1.00 4.95 4.95 0.80 4.70 Limits Upper 0.86 1.09 5.43 5.61 0.91 5.21 Lower 0.70 0.95 4.67 4.69 0.73 4.45 Low Results Number Au of (g/t) Samples 4 0.65 22 36 21 5 2 90 0.87 4.10 4.07 0.57 3.88 4% High Results Number Au of (g/t) Samples 1 0.91 11 2 1 2 0 17 1.15 8.09 5.65 1.04 1%

Standard CDN-GS 1A CDN-GS-1B CDN-GS-5A CDN-GS-7 CDN-GS-10 CDN-GS-5B Total

Number of Samples 218 892 728 191 200 239 2288

Value (g/t) 0.78 1.02 5.10 5.15 0.82 4.83

The mean gold grades of all standards achieved by the laboratory tend to be slightly below the reference values, indicating that the laboratory may have an overall low bias for gold. This is also expressed by the number of low results that greatly exceeds the number of high results. The overall failure rate at 5% is barely acceptable. However, there was one run of 14 assays on standard 5A that were consistently low in early June 2005, indicating a systematic laboratory calibration problem. Selected (higher-grade) samples potentially impacting the resource estimate were re-assayed from batches where a standard had failed, and the re-assay value accepted into the database.

16.3

Bulk Density
Greystar have undertaken a large number of specific gravity (SG) measurements on drill core samples, using the wax immersion method (ASTM C914-98) in most cases. The results are summarized in Table 16-2

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Table 16-2: Summary of Specific Gravity Determinations Gold Grade Range (g/t) Oxide Zone Number of Samples 260 299 88 47 17 4 12 2 1 2 4 4 2 No Data No Data 742 Sulphide Zone Number of Samples 902 1,011 314 109 69 57 34 18 16 14 9 10 8 11 7 7 2,596

SG (Mean) 2.38 2.45 2.50 2.49 2.51 2.53 2.56 2.57 2.30 2.79 2.55 2.61 3.19

0.0 to 0.1 0.1 to 0.5 0.5 to 1.0 1.0 to 1.5 1.5 to 2.0 2.0 to 3.0 3.0 to 4.0 4.0 to 5.0 5.0 to 6.0 6.0 to 7.0 7.0 to 8.0 8.0 to 9.0 9.0 to 10.0 10.0 to 15.0 15.0 to 20.0 20.0 to 25.0 Total

Assigned Bulk Density 2.35 2.40 2.45 2.50 2.50 2.50 2.50 2.55 2.55 2.55 2.55 2.55 2.60 2.60 2.60

SG (Mean) Bulk 2.52 2.55 2.63 2.70 2.72 2.77 2.79 2.92 2.91 2.94 2.83 2.94 2.88 2.95 3.25 3.02

Assigned Density 2.50 2.50 2.60 2.65 2.70 2.75 2.80 2.85 2.85 2.85 2.85 2.90 2.90 2.90 2.95 3.00

16.4

Observations and Conclusions


Strathcona Minerals concludes that the assay database underlying the current mineral resource estimate for the Angostura deposit is probably biased high for a small part of the 1995 to 1999 Rossbacher assays. However, this now constitutes less than one percent of the total assay database and is therefore no longer an issue. The full QA/QC system as practised since 2003 conforms to industry standards, with the available check assay and standards assay data indicating the assay results for the years 2003 to 2006 as reliable, and that any contamination is a short-lived problem. Because of the generally fine-grained nature of the gold at Angostura, assay precision is uncommonly good, giving a high degree of confidence in individual assays.

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16.5

Information Supplied by Greystar


Hatch has relied upon certain information provided by Greystar in the preparation of the capital cost estimate, operating cost estimate and financial analysis. It includes: Local Colombian labour rates and costs. Gold and silver prices. Main access road construction costs. Diesel supply costs.

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17.

Adjacent Properties
(The following section has been extracted and updated from the Strathcona August 2006 Report.) There are a number of small-scale operations in the area of the Angostura project run by Colombian nationals and cooperatives. The largest of these, located at the south end of the Angostura concessions, exploits the Malvinas Vein at a reported rate of 25 or 30 tonnes per day of ore from a small underground operation. On May 18, 2006, Wildcat Silver Corp. of Vancouver (Wildcat), through its wholly-owned subsidiary Ventana Gold Corp., acquired the La Bodega property immediately adjoining the Angostura property (Licence P3451, and has started surface and underground sampling programs (Wildcat Silver Corp., 2006) pursuant to a Phase-1 exploration program recommended by Reeves, 2006. Wildcat has also acquired the California-Vetas property most of which is located well to the south of the Angostura deposit. However, two small parcels of concession 328-68 are located immediately to the east of the Angostura deposit and are located inside Concession 3452 described in Section 6 and shown in Figure 6.1. Small-scale mines exist such as El Silencio, Mina el Diamante, Veta de Barro and Los Laches on the Angostura property. These were purchased by Greystar, and upon completion of the purchase, these operations were stopped. Outside the Angostura property a number of other small mining operations occur along the La Baja Creek draining the area to the southwest toward the town of California. The Mina el Diamante, Veta de Barro and Los Laches are located on the Angostura property. From 2000 to 2002, in the period of absence of Greystar from the area, illegal miners nonetheless invaded many of the other workings. These operations were shut down in May 2003, prior to the illegal miners being able to claim any rights of occupancy, although some attempts persisted in the first year of restarting of activities by Greystar of entering the workings and extracting ore from them.

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18.
18.1

Mineral Processing and Metallurgical Testing


Introduction
This section summarizes the metallurgical testwork from which a proposed flowsheet, as described in Section 25.2, was developed and costed in this study. This flowsheet may be modified or changed as the results of future testwork, recommended in the Study, become available.

18.1.1 Historical Testwork Data


As an introduction the following summary of mineral processing and metallurgical testing has been taken directly from the Strathcona August 2006 Report: Mineral processing of Angostura-type mineralization is done by local operators in the valley below using water-powered arrastres and stamp mills for comminution, with the gold being extracted by amalgamation or cyanidation. Recoveries achieved are unknown but do indicate that Angostura style gold mineralization can be successfully treated even with simple methods. Initial metallurgical test work on Angostura samples was conducted in several campaigns and has been reported in detail in Strathcona, 2004 [Technical Report Mineral Resource Estimate Angostura Gold Project August 2004, Strathcona Mineral Service Ltd]. The most extensive qualitative work was undertaken as part of the drill core assaying process from 1995 to 1998 and consisted of determining the cyanide-soluble portion of the gold from more than 5000 drill core samples. The results cannot be quantified with respect to metallurgical recoveries, but they provide useful information when plotted on section. The area in which gold leach recoveries are above 80% fairly faithfully mimics the oxide zone as determined from visual observations during core logging. Recently, 152 samples from the Veta de Barro and El Pozo areas, where no such information was available to date, were submitted to Chemex for quick leach tests at Chemex, and additional samples from previously untested parts of the deposit are being collected for the same purpose. Non-systematic testwork to investigate the leach behaviour of samples at a variety of grind sizes from the Angostura deposit was undertaken in 1998 and 1999 with indications that the oxide material had superior leach recoveries,with leach recoveries from sulphide ore topping out at about 80%. Testwork resumed late in 2004 with column leach testing of three samples at Metcon Research of Tucson, Arizona (Metcon). Fourteen additional samples were tested at Metcon for their gravity concentration, leach and flotation behaviour in 2005 (two oxide, one transition and eleven sulphide) on a variety of crush and grind sizes. Gold head grades ranged from one to four g/t, in line with expected production grades. The results as summarized by Keane (2006) were reviewed on behalf of Greystar independently by McPartland (2006) who offered the following conclusions (summarized by us):

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1. The Angostura ore generally does not respond well to concentration by conventional gravity methods. This is in keeping with the mineralogy of the deposit, and confirms the metallics screen assay results reported in Section 10.1. 2. Bottle roll test results (72 hours) showed gold recoveries well above 90% for the oxide samples at 212 m and 75 m feed sizes. Gold recoveries in unweathered ore ranged from 44% to 90%, with the smaller feed size showing improved recoveries. The majority of the leachable gold and silver was extracted in the first six hours. 3. A mineralogical investigation of four unweathered leach residues (212 microns feed size) by Shannon (2005) showed gold in the leach residues to occur mostly as gold tellurides in pyrite grains, principally as grains of calaverite (AuTe) 1.5 to 10 microns. A small amount of the gold occurs with fine complex silver inclusions in pyrite or as fine native gold in silver sulphide inclusions in pyrite. Silver occurs mostly as silver sulphide and silver telluride inclusions in pyrite. 4. Column leach test results showed that, of the six samples evaluated, three representing (partly) oxidized material would be expected to be amenable to heap leaching after crushing to 19 millimetres ( inch). 5. Bottle-roll cyanide consumption generally was moderate to high and tended to increase with increasing copper content and, in the case of samples with unusually high copper content, was quite high. Column- test cyanide consumption generally was lower, and reflected the lower cyanide concentrations employed during column testing. 6. Scoping-level flotation testing showed that the fresh (unoxidized) samples responded reasonably well to concentration by conventional bulk sulphide flotation methods, but the oxidized ore did not. The historical testwork results used in preparing this report were obtained from various Metcon reports and summarized by J. McPartland of McClelland Laboratories and detailed in the Scoping Study and used in preparing the metallurgical floor sheet and process design criteria.

18.1.2 Third Party Contributors Metallurgical Testwork


Metallurgical testwork results have been provided to Hatch by the Owner or by third parties on behalf of the Owner. The following companies conducted metallurgical testwork on behalf of the Owner, and this has been relied on in preparing this Scoping Study: 1. 2. 3. 4. 5. 6. G. & T. Metallurgical Services Ltd., Kamloops, B.C., Canada. Pittsburg Mineral and Environmental Technology Inc. Phillips Enterprises, LLC Metallurgical Testing and Consulting Services. Little Bear Laboratories, Inc. Metcon Research Inc. CIMEX Centro de Investigacion de Metalurgia Extractiva, Universidad Nacional, Medellin, (Bond work index testing).

18.1.3 Recent Testwork


Mr J McPartland of McClelland Laboratories, Inc. of Sparks, Nevada has directed the Greystar metallurgical test programme during 2006 and has collated much of the historical metallurgical test
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data available and Hatch have relied on this information, without verification in preparation of this Scoping Study. The metallurgical data has been augmented by various test programmes including flotation testwork and preliminary oxidation testwork by G & T Metallurgical Laboratories, column and bottle roll cyanidation leach test work by Metcon Research Inc., bio-oxidation test work by Little Bear Laboratories, oxidation product cyanidation leach tests by Phillips Enterprises, Bond Work grinding tests by CIMEX and leach residue characterization by PMET. These individual reports are included in the Appendices of the Scoping Study. Testwork conducted during 2006 has been systematic with a view to developing design criteria and a proposed metallurgical flowsheet.

18.2

Grinding Testwork
A selection of ore type samples were prepared by Greystar geological staff and submitted to CIMEX in Medellin, Colombia, for Bond Work Index determinations. The results are tabulated in Table 18-1 below: Table 18-1: Ore Type Samples Submitted to CIMEX
Rock Type and Description Mineralized Gneiss with veinlets Hydrothermal Breccia Chloritized dyke Weakly altered Gneiss Tonalite Intrusive Gneiss and Porphyry mixed Porphyry (altered) Bond Work Index kWh/ short ton) 13.103 16.940 8.007 13.348 12.638 12.569 14.909 Bond Work Index (kWh/ metric tonne) 14.44 18.67 8.83 14.71 13.93 13.85 16.43

Minimum = 8.8; Maximum = 16.4; Average = 14.4 The results indicate a wide variability between the selected rock types.

18.3

Cyanidation Testwork
Cyanidation leach testwork conducted by Metcon included column leach tests and bottle roll leach tests, on selected individual vein samples or composites of these samples, as categorized in these three general ore types. Typically the material was sized at 19 mm for the column tests and 106 m or 75 m for the bottle roll tests. Column tests were conducted in 100 mm diameter x 2 m columns and 150 mm diameter x 3 m columns. A summary of cyanide dissolution of gold by ore type and particle sizing is presented below in Figure 18-1. As can be seen the gold extraction in the column tests for the oxide is in the range 69-96% at the 19 mm crush size and for the bottle roll tests, at a grind size P80 of 75 m, the range in extraction increases to 87.5 - 96.5%.

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The transition and sulphide ore types exhibit a wide range of extractions for the samples tested, at both crush/grind sizes, indicating a variable and refractory response to standard cyanidation leach tests. Transition ore type has extractions in the range 31 90% and the sulphide type 12 89%. Additional metallurgical testwork is required to better understand the variability before advancing the project.
Gold Extraction by Ore Type
100 90 80 70 % Extraction 60 50 40 30 20 10 0
19 m m m 19 m m ' 75 um 75 um 19 m 75 um

High Low Average

Tr an s

Tr an s

Ore Type & Sizing

Figure 18-1: Gold Extraction by Ore Type

18.3.1 Bottle Roll Cyanidation


Metcon performed direct cyanidation bottle roll leach tests on selected Angostura drill core samples listed in Table 18-2 below and again described generally as oxide, transition or sulphide ore types. Characterization of these core samples was done by Greystar geological staff and based on lithology and visual interpretation during core logging.

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Su lp h

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xi de

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Table 18-2: Bottle Roll Tests and Column Leach Tests


Bottle Roll Tests 19mm 106um BR-48 BR-22 BR-47 BR-19 BR-67 BR-75 BR-57 BR-43 BR-87 BR-85 BR-59 BR-61 BR-66 BR-74 Column Tests 19mm CL-17 CL-16 CL-19 CL-18 CL-27 CL-20 CL-21

Sample El Diamante Oxide Zone La Alta Oxide Zone La Perezosa Oxide Nueva Alta Oxide Silencio EW Oxide Silencio NE (Oxide) Veta de Barro Oxide AL-98-09 SI-97-13 La Alta Transition Silencio EW Transition Vein 24, 25, 26, 27 & 29 Vein 28, 52 & 62 Veta de Barro Transition Vein 54 Vein 62 Zona Veta de Barro El Diamante Sulfide El Diamante Sulfide 200 La Alta Sulfide 1 La Alta Sulfide 200 La Perezosa Sulfide Silencio EW (Sulfide 1) Silencio NE (Sulfide 1) Veta de Barro Sulfide 1 AL-98-15 AL-99-9 ES-96-01 Vein 12 Vein 354 Vein 21 & 22 Vein 28 Vein 52 Vein 363 Vein 350

Description Oxide Oxide Oxide Oxide Oxide Oxide Oxide Oxide Oxide Transition Transition Transition Transition Transition Transition Transition Sulfide Sulfide Sulfide Sulfide Sulfide Sulfide Sulfide Sulfide Sulfide Sulfide Sulfide Sulfide Sulfide Sulfide Sulfide Sulfide Sulfide Sulfide Sulfide

BR-52 BR-64 BR-50 BR-56

BR-23 BR-73 BR-10A BR-07 BR-37 BR-01 BR02 BR-08 BR-25 BR-89 BR-36 BR-91 BR-27 BR-72 BR-60 BR-38

CL-14 CL-23

CL-22

BR-44 BR-51 BR-92 BR-54 BR-93 BR-53 BR-65 BR-58 BR-55

CL-11

CL-26 CL-25

BR-45 BR-46 BR-49

BR-20 BR-21 BR-9A

CL-13 CL-15 CL-24

BR-03

The tests investigated the response to cyanide leaching at nominal particle sizes of 19 mm and 106 m. The results indicate that the gold extraction is dependent on the sulphide sulphur content and that there is an approximate 10-15% increase in gold dissolution at the finer particle size of 106 m. See Figure 18-2.

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Gold Recovery vs. S Head Grade, Bottle Roll Tests, Angostura Composites 100 90 80 Au Recovery, % 70 60 50 40 30 20 10 0 0 1 2 3
= y = -19.202Ln(x) + 64.416 R2 = 0.6189 y = -17.177Ln(x) + 77.301 R2 = 0.4225

4 S Head Grade, % 19mm 150um

Figure 18-2: Gold Recovery vs Sulphur Head Grade, Bottle Roll Tests, Angostura Composites In the samples tested the gold extraction was not significantly influenced by the gold head grade. See Figure 18-3.
Gold Recovery vs. Au Head Grade, Bottle Roll Tests, Angostura Composites 100 90 80 Au Recovery, % 70 60 50 40 30 20 10 0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Au Head Grade, g/mt ore 19mm 150um
y = -1.0827Ln(x) + 55.268 R2 = 0.0006 y = 4.6478Ln(x) + 71.47 R2 = 0.0126

Figure 18-3: Gold Recovery vs Gold Head Grade, Bottle Roll Tests, Angostura Composites The results indicate that there is a low correlation between silver dissolution and the sulphur grade as shown in Figure 18-4 below. Figure 18-5 shows the relation between silver dissolution and silver head grade for the bottle roll leach tests. Cyanide dissolution kinetics for silver are typically slower than that of gold under the same leach conditions (temperature, cyanide concentration and time).

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Silver Recovery vs. S= Head Grade, Bottle Roll Tests, Angostura Composites
100 90 80 70 60 50 40 30 20 10 0 0 1 2 3
=

Ag Recovery, %

y = -8.4914Ln(x) + 75.675 R2 = 0.1338

y = -6.822Ln(x) + 51.299 R2 = 0.2007

4 S Head Grade, % 19mm 150um

Figure 18-4: Silver Recovery vs. S Head Grade, Bottle Roll Tests, Angostura Composites
Silver Recovery vs. Ag Head Grade, Bottle Roll Tests, Angostura Composites
100 90 80 70 60 50 40 30 20 10 0 0.0 5.0 10.0 15.0 20.0 Ag Head Grade, g/mt ore 19mm 150um
y = 8.9953Ln(x) + 61.84 R2 = 0.2289

Ag Recovery, %

y = 2.3716Ln(x) + 43.978 R2 = 0.0122

25.0

30.0

35.0

Figure 18-5: Silver Recovery vs Ag Head Grade, Bottle Roll Tests, Angostura Composites

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18.3.2 Leach Residue Characterization


The mineral assemblage of the sulphide and transition ore type leach residues as reported by PMET indicates a predominance of the residual gold and silver occurring as very fine gold telluride and gold-silver telluride inclusions in pyrite mineral grains, thus explaining a refractory component of the various ore types of the Angostura deposit. Gold/silver tellurides are particularly refractory in nature having very poor metallurgical response to standard cyanidation leach techniques. This aspect of sulphide inclusions was not observed in the oxide samples tested under simulated high leaching conditions. (The tests were conducted in test columns of 4 diameter by 9 high.)

18.3.3 Column Leach Tests


Metcon Research Inc. conducted a series of 16 column leach tests to determine the amenability of the Angostura samples to heap leach cyanidation techniques under heap leaching conditions. The selected samples tested are listed in Table 18-2 above and represent varying degrees of oxidation. Details of the test procedure and individual test results are included in the Scoping Study. The particle size investigated in the column tests was a nominal 19mm, which is relatively coarse, potentially eliminating any agglomeration requirements for a proposed heap leach operation. This size is readily achievable with a conventional crushing plant using secondary and tertiary cone crushers. The test results showed a similar relationship between gold extraction and sulphur content as the bottle roll tests. See Figure 18-6. The leach column tests indicated gold dissolution generally >80% for samples of sulphur grades less than 1%. However gold dissolution drops to approximately 60% and lower for samples containing about 2% sulphur and higher.
Gold Recovery vs. S Head Grade, Column Leach Tests, Angostura Composites 100 90 80 Au Recovery, % 70 60 50 40 30 20 10 0 0 1 2 3
= =

y = -21.029Ln(x) + 72.839 R2 = 0.8321

4 S Head Grade, % 19mm

Figure 18-6: Gold Recovery vs Sulphur Head Grade, Column Leach Tests, Angostura Composites

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Silver Recovery vs. S Head Grade, Column Leach Tests, Angostura Composites 100 90 80 Ag Recovery, % 70 60 50 40 30 20 10 0 0 1 2 3
= y = -11.026Ln(x) + 52.574 R2 = 0.4902

4 S Head Grade, % 19mm

Figure 18-7: Silver Recovery vs. Sulphur Head Grade, Column Leach Tests, Angostura Composites Silver dissolution varied between 35% and 65% for the samples tested and indicated poor correlation with respect to sulphur grade, as shown in Figure 18-7. The average size distribution of the samples tested and the residue products in the heap leach programme is presented in Figure 18-8. Results indicate a low susceptibility of the samples to degradation in the column tests.

SCREEN SIZE ANALYSIS - ANGOSTURA PROJECT


100 90 80 70 60 50 40 30 20 10 0 1000 Weight Percentage Passing

10000 Particle Size (microns) AVG Feed AVG Residue

100000

Figure 18-8: Column Leach Tests Sizing Analysis Products

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The column leach testwork did not include an investigation of the effect of heap leach lift height and resultant loading on percolation, neither was a test work programme completed at alternative crush sizes. Further testwork is recommended.

18.4

Flotation Testwork
Mr. J. McPartland, Consulting Metallurgist of McClelland Laboratories, acting on behalf of Greystar, submitted three composite samples to G&T Metallurgical Laboratories (Kamloops, B.C.) for a preliminary assessment of their response to standard flotation techniques for the recovery of contained gold and silver in a bulk sulphide concentrate. This was to support a scoping level evaluation for flotation processing. The rougher flotation tests indicated that these three composite samples were readily amenable to standard flotation techniques for the recovery of the contained gold to a sulphide flotation concentrate. The flotation tests were done at the natural pH of the ore, in the range pH6 - pH7 and at grind sizes in the range 80-137 m. With rougher concentrate mass recoveries in the range of 10-14% of the feed mass, reported recoveries in the range 80 91% of the gold was recovered to the flotation concentrate. The sulphur grade of the rougher concentrates produced was 15-20% S. While the 85-90% recovery of gold can be considered acceptable, there would appear to be an opportunity to increase the overall gold recovery and metallurgical efficiency. The selected composite samples were also submitted for whole ore cyanidation testwork. The results, as reported by G & T Metallurgical Services Ltd., indicate the generally poor response to cyanide leaching of high sulphide and some transition ore types.

18.5

Flotation Concentrate Oxidation Testwork


A series of scoping tests were completed by G&T Metallurgical Laboratories in 2006 on flotation concentrate samples prepared from the series of rougher flotation tests to assess gold dissolution by standard cyanidation techniques after oxidizing the sulphide minerals. The results generally indicate a strong relationship between the degree of sulphur oxidation and gold dissolution. At approximately 100% sulphur oxidation, gold dissolution was 81.9% and at 87% sulphur oxidation the gold dissolution was 72.1%.

18.6

Bio-oxidation Test Work


Two samples of Angostura ore were submitted to Little Bear Laboratories for bioxidation testing and subsequent cyanidation of the residue product to assess the amenability of these ore types to a proposed sulphide oxidation-cyanidation process route. The aim of these tests was a preliminary evaluation of the lower grade sulphide ores for whole ore bioxidation. Testwork was conducted on whole ore samples as there was insufficient samples available of flotation concentrate products. It was believed that the test results could be extrapolated and good approximations made for the application of this process route to flotation concentrate products as proposed in the preliminary flowsheet developed.

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After 31 days of biox processing, the degree of oxidation of the sulphide minerals was reported to be approximately 90%. The cyanidation of this oxidation product indicated gold dissolution of approximately 90%. Cyanidation tests were conducted at various degrees of oxidation and the results as given in Figure 18-9 indicate a similar linear relationship between degree of oxidation and gold dissolution as was reported by G&T for the scoping tests using the nitric acid oxidation technique. Cyanidation tests were also conducted on unoxidised ore samples as a means of base-line comparison.

10 0 90 80 % Au extraction 70 60 50 40 30 20 10 0 0 20 40 60 80 1 00 % bi oo x id a ti on (su lfid e -S )


o re # 1 o re #2

Figure 18-9:

Gold Extraction versus Sulphide Oxidation Angostura Ore Samples

For both samples tested, and at approximately 90% sulphide oxidation, there was little additional gold dissolution indicated by extending the cyanide leach time beyond the 24-30 hour time period.

Table 18-3: Summary of Bioxidation and Cyanidation Test Results Gold g/t Silver g/t Sulphur % % Bioxidation at 31 Days Au Recovery at 96 Hours Ag Recovery at 96 Hours Sample #1 1.49 3.89 1.94 91.5 92.3 34.6 Sample #2 3.63 21.5 4.80 90.0 86.3 30.9

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18.7

Projected Gold Recoveries


The metallurgical testwork results received from the various laboratories that contributed to the overall test programmes have been reviewed in order to develop gold and silver recovery models which were then applied to the mine block model and mine optimization model. The mine model was developed using the sulphur grade data for the various ore types and grade categories identified.

18.7.1 Heap Leach


The heap leach gold recovery and sulphur grade relationship developed from the column leach test conducted by Metcon and presented in Figure 18-9 have been used to calculate the gold recovery for the proposed heap leach operation. The relationship is defined as: % gold recovery = -21.029 Ln (% S Grade) + 72.839
Gold Recovery vs. S Head Grade, Column Leach Tests, Angostura Composites 100 90 80 Au Recovery, % 70 60 50 40 30 20 10 0 0 1 2 3
= y = -21.029Ln(x) + 72.839 R2 = 0.8321 =

4 S Head Grade, % 19mm

Log. (19mm)

Figure 18-10:

Gold Recovery vs. S Head Grade

18.7.2 Mill/Flotation
Gold recovery to a sulphide flotation concentrate as reported by G & T Metallurgical Laboratories was generally in the range of 85-95% and did not vary with the gold in the feed or the grind sizes tested. G & T did report some potential to improve gold flotation recoveries. In order to develop a model for the proposed process flotation, a gold recovery estimate of 88% has been applied to the flotation process. Bioxidation testwork conducted by Little Bear Laboratories has been limited to two selected ore samples as insufficient flotation concentrate product was available. This testwork results indicated a gold dissolution of approximately 90% was achievable after near 100% oxidation. Thus the combined flotation and bioxidation process has been estimated to have an overall gold recovery of 79% (88% to flotation x 90% to biox/cyanidation). The total silver recovery has been estimated at 45% for this ore treatment process route. However, due to the very limited amount of techwork, this biological work can only be regarded as very preliminary.
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19.
19.1

Mineral Resource and Potentially Mineable Mineral Resource Estimates


Resource Estimate
The December 6, 2006 resource estimate used for the resource estimate by Hatch for the present study was undertaken by Greystar, using the updated exploration database shown in Table 12-1 but adhering to the estimation procedures and parameters described in the Strathcona August 1998 Report. Following are excerpts from Section 1.7 of the Strathcona August 1998 Report. As in the past, Greystar geological staff have undertaken a detailed interpretation of the vein system containing most of the gold at Angostura which has provided the geological framework for the current resource estimate. A five-metre minimum mining width was observed during the interpretation. Two bulk zones have been created where resolution of widespread mineralization in the Veta de Barro area into individual veins proved impossible. The assay database has for the first time been divided into low-grade and high-grade populations which were evaluated and treated separately. A distinction was also made between two main geographic areas, the main part of the deposit and the Veta de Barro area, with different gold grade distributions. Virtually no capping of outlier values was required for the two low-grade populations, while the highgrade populations required capping, more severely for the Veta de Barro area. After capping, the coefficients of variation for the different gold grade populations are now at or below 1.3, a reasonable level for gold deposits. A critical review has shown that the previous concept of attempting to physically model the high-grade mineralization by designing shoots around high-grade intersections was arbitrary since the detailed information required is not yet available for much of the deposit. The current estimate takes a different approach by estimating the probability of each block in the block model to contain high-grade mineralization. A number of trial runs were undertaken until a set of probability interpolation parameters was found that produced realistic results. This is a critical issue since it is estimated that the high-grade population of the deposit, which occupies less than 10% of the deposit volume, contains more than 50% of the contained gold. The interpolated probabilities were used to calculate high-grade and low-grade tonnages for each block. The variography for the deposit is not well documented because of the still relatively large spacing between data points. However, the values obtained for the low-grade and for the high-grade assay populations are comparable to those obtained during earlier studies and were used to determine the search distances for the gold grade interpolation. The grade interpolation of the high-grade assay population was mostly constrained to about one-half the distance allowed for the low-grade assay population, with local constraints even more severe. This reduces the influence of the high-grade assay intervals by limiting the distance over which they could be projected.

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The grade interpolation was completed in two passes, with the results of the initial pass using a shorter set of search distances, approximating one-half of the variography ranges. The blocks estimated during this pass were placed in the indicated category. Doubling of the search distances resulted in blocks being assigned the inferred category. Those blocks of the block model that did not receive a grade estimate during the second pass were not assigned any grade, or resource status. As were its predecessors, the current resource estimate is reported at two incremental cut-off gold grades, 0.4 g/t for the oxidized and 0.55 g/t for the fresh mineralization. The following table summarizes the December 2006 mineral resource estimate for the Angostura deposit and provides summary data for the previous estimate of June 2006.

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Table 19-1: Angostura Mineral Resource Estimate as of December 6, 2006 - Thousands of tonnes and of ounces Indicated Mineral Resources Tonnes Oxide Mineralization Veins Bulk Zones Disseminated Sub-total Oxides Sulphide Mineralization Veins Veta de Barro Main Area Bulk Zones Veta de Barro Disseminated Veta de Barro Main Area Sub-total Sulphides Total Mineralization Veins Bulk Zones Disseminated GRAND TOTAL Veta de Barro Main Area Veta de Barro Veta de Barro Main Area 10,146 148,751 14,481 0 0 173,378 1.1 1.3 1.7 0 0 1.3 363 6,289 767 0 0 7,419 7 6 7 0 0 6 0.02 0.04 0.02 0 0 0.04 2,750 55,989 3,985 3,343 14,792 80,859 2.9 1.8 2.6 0.7 0.7 1.6 256 3,227 335 75 322 4,215 17 7 10 3 4 7 0.04 0.05 0.04 0.01 0.02 0.04 7,172 114,019 10,109 0 0 131,301 1.2 1.4 1.9 0 0 1.4 271 5,000 623 0 0 5,893 7 6 7 0 0 6 0.02 0.05 0.03 0 0 0.04 2,385 50,450 3,206 2,557 8,919 67,518 2.8 1.8 2.8 0.8 0.7 1.7 217 2,835 291 62 213 3,619 18 7 11 2 3 7 0.04 0.05 0.05 0.01 0.03 0.05 Veta de Barro Main Area Veta de Barro Veta de Barro Main Area 2,974 34,732 4,372 0 0 42,078 1.0 1.2 1.0 0 0 1.1 92 1,290 144 0 0 1,526 6 7 5 0 0 7 0.01 0.02 0.01 0 0 0.02 365 5,539 778 786 5,873 13,341 3.3 2.2 1.7 0.5 0.6 1.4 39 392 43 13 109 596 12 9 7 5 5 7 0.01 0.04 0.01 0.014 0.02 0.02 Au (g/t) Au (oz) Ag (g/t) Cu(%) Inferred Mineral Resources Tonnes Au (g/t) Au (oz) Ag (g/t) Cu(%)

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Greystar built the geologic block model using Datamine software and a 5 x 5 x 5 meter block size with sub-blocks to accurately represent the wire frame volumes of the Angostura veins and shoots. This model was subsequently re-blocked using a 10 x 10 x 10 meter block size to incorporate dilution and ore loss provisions.

19.2

Potentially Mineable Mineral Resource Estimate


The mine design is based on an optimized pit produced by Hatch using Lerch-Grossman simulation software.

19.2.1 Lerch Grossman Mine Design Parameters

19.2.1.1

Potentially Mineable Mineral Resource Model

A mineral resource model using a 10m x 10m x 10m block size was provided by Greystar as discussed above. This model was used by Hatch as a basis to develop the mine Potentially Mineable Mineral Resources. Hatch accepted this model without a detailed review and checked only to confirm that the model was complete. The file is identified as 10s 107 (10 meter blocks, regularized) generated January 16, 2007. Hatch believes that the 10 x 10 x 10 resource model provides greater dilution and ore loss compared to the 5 x 5 x 5 model. It was therefore decided in the interest of being conservative to use the 10 x 10 x 10 model for this study.

19.2.1.2

Geotechnical Information

Greystar indicated that the eastern slopes of the pit should be at an inter-ramp angle of 45o and the western slopes at 50o. Based on these given slopes, the pit is double benched with an eight meter berm located every 20m in elevation. Face slopes are 59o and 66o respectively.

19.2.1.3

Input Design Parameters

The input parameters for the Lerch-Grossman optimization runs are as follows: Inter-ramp slope East walls 45o West Walls 50o Ore types High Sulfide Process High Sulfide Heap Leach Low Sulfide Heap Leach Oxide Heap Leach Recoveries

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Ag 40% Au

High Sulfide Process 79% Heap Leach : (21.029 x ln (%S) + 72.839) Costs (US$) Mining Ore & Waste: Process Plant: Heap Leach: G&A: $1.12/t $16.02/t $2.31/t $1.00/t

Revenue Gold Silver $500/oz $9/oz

After the first run using the above parameters a 30 m wide haul road with a 10% grade was superimposed on the pit walls. This lowered the high wall slope as follows: Table 19-2: Revised Lerch Grossman Pit Slopes
Azimuth From Azimuth To Elev. From Bottom To 3105 From 3105 To 3460 From 3460 To top 0 22 37 35 45 22 45 37 35 45 45 68 68 90 112 135 158 180 202 225 248 270 292 90 112 135 158 180 202 225 248 270 292 315 Ultimate Pit - Average pit slope (Deg.) including allowance for haul road 34 34 34 40 40 45 45 50 50 50 50 50 30 30 30 38 38 45 45 50 50 50 50 50 45 45 45 45 45 45 50 50 50 50 50 315 338 50 50 50 338 360 50 50 50

45

19.2.2 Lerch Grossman Potentially Mineable Mine Mineral Resources


The resources are classified as Potentially Mineable as this is a Scoping Study and the NI 43-101 guidelines state that as a minimum a Pre-Feasibility Study is required to determine Mine Reserves. It should be noted that mineral resources that are not reserves do not have demonstrated economic viability. A number of Lerch Grossman runs were produced and it became evident that the Potentially Mineable Mineral Resources are very sensitive to the gold price, mining and processing costs, assumed pit slopes, gold price and recovery. A small change in any parameter produced a large change in the shape of the pit and mineral resources. Often when laying back average pit slopes to allow for an access road, the main Lerch Grossman pit broke up into two pits with an area of waste between and it proved very difficult to produce a Lerch Grossman pit that would allow the inclusion of access roads in a detailed design without the addition of large volumes of waste.

Mineral Resource and Mineral Reserve Estimates


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The Lerch Grossman pit selected for this study with in-put parameters as described above produced the Potentially Mineable Mineral Resources shown in Table 19-2 below. Potentially Mineable Mineral Resources were calculated using a 0.5 g/t Au cutoff grade. This run was selected as being the most suitable to use as a basis for a detailed design that would include an access ramp without having to add large volumes of waste . Table 19-3: Lerch Grossman Potentially Mineable Mineral Resources Oxide (<0.8% S) Trans (0.8% to 2% S) Trans_HS (> 2% S) Total Oxide Sulphide To Leach Pad (< 2 % S) Sulphide To Heap (> 2% S) Total Sulphide to Leach Pad Sulphide To Mill (< 2 % S) Sulphide To Mill (> 2% S) Total Sulphide to Mill Total Ore (million tonnes) Total Contained gold - (g x million) - (oz. x million) Total Waste (million tonnes) Total Material (million tonnes) Au (g/t) 1.06 1.35 1.49 1.22 1.12 1.03 1.05 8.10 4.45 4.64 1.30 Ag (g/t) 6 7 8 7 5 5 5 22 13 14 5.9 S (%) 0.4 1.3 2.7 0.9 1.5 3.3 2.8 1.7 3.9 3.8 2.4 Density 2.44 2.45 2.47 2.45 2.57 2.59 2.59 2.69 2.68 2.69 2.55 (mt) 24 18 4 47 31 81 112 0.5 9 9 167 217 7 620 787

The figures in Table 19-2 are without ramps for open-pit access, and the final figures used for financial analysis include an additional 120 million tonnes of waste, as shown in Tables 25-20 and 3-2.

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20.

Other Relevant Data and Information


This report is based on the Hatch 2007 Scoping Study and all the associated references listed in Section 25 of this report.

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21.

Interpretation and Conclusions


The total capital cost of the project is estimated to be $665.4 million which includes $141.0 million sustaining capital for the waste crusher and conveyor installation in Year 1, conveyor extensions, extension of the heap leach pad in Year 5 and replacement of mine equipment. An amount of $143.9 million is included for capital leasing of mine fleet equipment. The intended level of accuracy of the capital cost estimate is +35% / -30%, with no allowance for either price escalation beyond the base date of the estimate (Q1 2007) or fluctuations in assumed currency exchange rates. Other relevant qualifications, assumptions and exclusions are set out in Section 25.6.1. Hatch has estimated the EPCM component of the cost for the project as US$ 38.4 million, and these are included in the capital cost estimate referred to above. Hatch has estimated the life of mine operating costs to be 7.57 US$/metric tonne of ore treated, based on Owner operated mining fleet. The potential for acid generation in the heap leach is a risk to the project which requires further investigation. The geotechnical study required for the pit stability analysis will be a key to future mine design and reserve calculations. This study should begin as soon as possible. The crushing and disposal of waste rock is one of the key issues for Angostura. Further evaluation is required during subsequent Engineering phases. Water Management, particularly with regard to any potential impacts on water quantity and quality downstream from the project site is also seen as a key issue. The process milling and flotation flowsheet developed for the treatment of the high grade ore type is conventional. Hatch believes that the application of a bioxidation process route for the oxidation of the flotation concentrate is a viable option, however further investigation and metallurgical testwork is required. A financial analysis indicated that, at the Base Case conditions, the net cash flow is calculated to be US$ 490.9 million, with an IRR of 14.2%. The payback at the Base Case is 6.4 years as calculated in the financial model. These cash flows exclude taxes, royalties, finance charges, working capital, inflation allowance and closure costs.

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22.
22.1

Recommendations
Mining
Develop an economic model to determine the optimum selection of process route, heap leach or grind/flotation, for mined ore. The waste crusher, conveyor, and waste stacking system must be constructed in the first year of operation and operational for Year 2 of the project.

22.2

Metallurgy
The testing programmes performed to date and reviewed for this Scoping Study are limited in extent and must be expanded before advancing the project to feasibility level. The key issue is to obtain a comprehensive understanding of the variability of gold extractions with respect to sulphide content, cyanide soluble gold and the potential influence of cyanide soluble copper minerals within any of the three general ore types tested. The column leach tests indicate a reasonable correlation between sulphur grade and gold extraction, however further testwork is required to improve the confidence of this correlation. The next phase of column leach tests should include duplicate columns on a larger scale with samples representing ore to be mined during the first 5 years of operation. Additional metallurgical testwork should also evaluate the potential to process a coarser crush size product, particularly during the early years of operation, with a view to advancing the heap leach and solution treatment facility construction schedule, thereby shortening the time-line to achieve first gold production. A key target for the next phase of metallurgical testing should be to better define the variability of the Angostura mineralization with respect to sulphide mineralization, cyanide soluble gold and the potential influence of cyanide soluble copper minerals. Percolation testwork is required to determine the effect of heap leach height and the effect of alternative crush sizes should also be investigated. It is preferable to maintain a crush size of sufficient coarseness to avoid the need for agglomeration. Humidity cell tests are recommended on representative samples to evaluate the potential for acid generation in the heap leach. Further grinding testwork on selected composite ore types representative of the proposed mining schedule of the high grade gold ore types. Cyanidation testwork and column leach tests to better understand the variability of gold dissolution of the various ore types. Column leach testwork to investigate effect of heap leach lift height and loading on percolation.

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Further flotation testwork should include locked cycle testwork on composite samples of sulphide and transition ore types. Test heap leaching of 5,000 to 10,000 t of bulk representative ore samples will provide increased confidence in predicted recoveries. The biox-oxidation process is applied to sulphide flotation concentrates produced from the Angostura ore requires further evaluation to determine the process economics and gold recovery relationship.

22.3

Geotechnical Investigations
A geotechnical study is required to assess the stability of the pit and waste dump slopes. This could lead to an opportunity to reduce the stripping ratio and/or increase mine reserves if the pit slopes can be steepened or a risk if it is necessary to reduce the slopes which would have the effect of increasing the stripping ratio and/or reducing mine reserves.

22.4

Water Management
Site investigations are recommended to provide data for definition of the groundwater flow system and to develop a water quality database, so that background groundwater quality under the waste dump footprint is known prior to mining activity. Implement flood management and sediment control scheme for the mine area including attenuation dams upstream, diversion channels around the pit. Groundwater monitoring downstream of the Angostura heap leach and tailings management area as part of a base-line study and also continued during life-of-mine operations. Groundwater monitoring downstream of the Angostura mine pit and waste dump area(s). Site specific climate data is required as part of a hydrological assessment of the mine site. A closure plan including cost estimate for the Angostura valley heap leach, tailings and waste rock storage facilities is required. Site geotechnical and hydrology investigations to determine suitable water sources and locations for water impoundment facilities.

22.5

Risks
Risks identified include: The waste dump design is relatively conservative but there is a risk that modifications may be required which could increase haul costs. Due to the steep terrain and limited minesite storage there is restricted area for stockpiling ore within the present property boundaries. Permitting may require more extensive ARD mitigation infrastructure for waste dumps then allowed for in this estimate.

Recommendations
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The sulphide grade of the ore raises the question of acid oxidation products in the heap. This has potential to adversely affect gold dissolution and increase the lime consumption. The estimated cyanide consumption for the heap leach process is based on limited testwork results. A significant volume of additional bottle mill tests are recommended to evaluate the cyanide consumption of representative samples, as cyanide represents the largest cost component of the heap leach operation. If extensive zones of poor rock mass quality or adverse structure are encountered on the benches supporting the in-pit roads, extensive remedial measures or redesign of the slope could be required. A geotechnical evaluation is required to confirm inter-ramp pit slopes. Recommendations to decrease the slope could result in increasing the strip ratio. Permitting restrictions may restrict groundwater usage. Waste rock characterization, including ABA and ARD investigation, is required as part of further engineering stages to quantify the ARD potential of the waste rock. There is potential that not all waste rock will require ARD mitigation.

Recommendations
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23.

References
Third Party Consultants Location Kamloops, BC, Canada New Brighton, PA, USA Golden, CO, USA Golden, CO, USA Sucson, AZ, USA Medellin, Colombia Sparks, Nevada, USA Contribution Metallurgical Testwork Flotation Testwork Leach Residue Characterization Cyanidation Leach Tests Bio-oxidation Testwork Cyanidation Leach Test, Columns and Bottle Rolls Bond Work Index Testing Review of Greystars Metallurgical Test Program

Company G. & T. Metallurgical Services Ltd. Pittsburg Mineral and Environmental Technology Inc. Phillips Enterprises, LLC Metallurgical Testing and Consulting Services Little Bear Laboratories, Inc. Metcon Research Inc. CIMEX Centro de Investigacion de Metalurgia Extractiva, Universidad Nacional, Mr J McPartland of McClelland Laboratories, Inc.

23.1

Other references:
Felder, F., Spat, A. & Silva, R., 2000 Angostura Project, A High Sulphidation Gold Silver Deposit located in the Santander Complex of North Eastern Colombia. Paper presented at Simposio de Oro, Lima, Per, May 2000 Strathcona Minerals Technical Report August 30, 2006

Recommendations
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24.
24.1

Letters of Qualification, Dates and Signatures


John Wells (Hatch)

Recommendations
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NI 43-101 Independent Technical Report STATEMENT OF QUALIFICATIONS I, John Wells, do hereby certify that: I. I am employed as Consultant, Mineral Processing by: HATCH LTD. Suite 400, Oceanic Plaza, 1066 West Hastings Street Vancouver, British Columbia, CANADA V6E 3X2 II. I graduated with a Bachelor of Science degree in Mineral Processing from The Royal School of Mines in 1967 and a Master of Business Administration degree from the University of Sheffield in 1970. I am a Fellow of the South Africa Institute of Mining and Metallurgy. I have worked as a mineral processing engineer continuously for a total of 38 years since my graduation from undergraduate university.. 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 to be a qualified person for the purposes of NI 43-101. I am responsible for the preparation of sections 3.1, 3.3, 3.6-3.13, 4, 5, 16.5, 18, 20, 21, 22, 23, 25.2-25.7 of this Technical Report titled Angostura Project NI 43-101 Independent Technical Report, as corrected, dated July 19, 2007. I have visited the site in January 2006 for three days. I am not aware of any material fact or material change with respect to the subject matter of the Technical Report that is not reflected in the Technical Report, the omission to disclose which makes the Technical Report misleading. I am independent of the issuer applying all the tests in section 1.5 of National Instrument 43-101. 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. I consent to the filing of the Technical Report with any stock exchange and other regulatory authority and any publication by them, including electronic publication in the public company files on their website accessible by the public, of the Technical Report.

III. IV. V.

VI.

VII.

VIII. IX. X.

Dated this 19th day of July 2007.

Signature of Qualified Person John Wells Print Name of Qualified Person

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NI 43-101 Independent Technical Report CONSENT OF AUTHOR

To:

British Columbia Securities Commission Alberta Securities Commission Ontario Securities Commission Toronto Stock Exchange

I, John Wells, F.S.A.I.M.M. do hereby consent to the public filing of the technical report titled Independent Technical Report, as corrected dated July 19, 2007.

Dated this 19th day of July 2007.

_________________________________ John Wells, F.S.A.I.M.M. Consultant Hatch Ltd.

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24.2

Keith Watson (Hatch)

Recommendations
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24.3

Brian Tough (Hatch)

Recommendations
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43-101 Independent Technical Report STATEMENT OF QUALIFICATIONS


I, Brian Tough, do hereby certify that: I. I was employed as a Mining Contractor by: Hatch Ltd. Suite 400, Oceanic Plaza 1066 West Hastings Street Vancouver, British Columbia CANADA V6E 3X2 II. III. IV. Education: Batchelor of Applied Science Mining, University of British Columbia, 1968

Professional Affiliations: Australian Institute of Mining and Metallurgy Member Canadian Institute of Mining and Metallurgy - Member I have worked as a mining engineer in both operations and consulting for 39 years since my graduation from undergraduate university and have been consulting to Hatch on a part time basis for the past year and one half. I began my career as Open Pit Foreman in 1968 with the Iron Ore Company of Canada in northern Quebec. I then moved to Cominco where I worked in Operations, Maintenance and Engineering Departments. In 1980 I moved to Shell Canada where I worked as a Lead Mining Engineer on the Alsands Oil Sand Project. This project was shelved in the following year and I began work as a consultant, first with Marston & Marston and then in the United States where I worked as a Senior Consultant with Fluor Daniel and later as a Manager, Mining with Mineral Resources Development, Inc. before moving back to Canada 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, membership with the Australian Institute of Mining and Metallurgy (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a qualified person for the purposes of NI 43-101. I am responsible for the preparation of sections 3.5, 19.2.1.3 and 25.1 of this Technical Report titled Angostura Project 43-101 Independent Technical Report, as corrected, dated July 19, 2007. These sections cover mine design, equipment selection, infrastructure and ancillary facilities, capital and operating costs. I have not visited the site. I am not aware of any material fact or material change with respect to the subject matter of the Technical Report that is not reflected in the Technical Report, the omission to disclose which makes the Technical Report misleading. I am independent of the issuer applying all the tests in section 1.5 of National Instrument 43-101. 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. I consent to the filing of the Technical Report with any stock exchange and other regulatory authority and any publication by them, including electronic publication in the public company files on their website accessible by the public, of the Technical Report.

V.

VI.

VII.

VIII. IX. X.

Dated this 19th day of July 2007.

Signature of Qualified Person Brian Tough Print Name of Qualified Person


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24.4

Henrik Thalenthorst (Strathcona Mineral Services Limited)

Recommendations
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NI 43-101 Independent Technical Report STATEMENT OF QUALIFICATIONS I, Henrik Thalenhorst, do hereby certify that: I. I am employed as Senior Geologist by: Strathcona Mineral Services Limited. 12th Floor, 20 Toronto Street Toronto, Ontario, M5C 2B8 II. III. IV. V. I graduated with a PhD in Economic Geology from Munich University, Germany, in 1968 I am a member of the Association of Professional Geoscientists of Ontario, Registration No. 0172

I have practised my profession as a geologist continuously since graduation in 1968, and with
Strathcona Mineral Services Limited since January 1986. 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 to be a qualified person for the purposes of NI 43-101. I have been involved in the Angostura project repeatedly since 2000, when I authored an unpublished report for Greystar. I also participated in the Angostura update resource estimates undertaken in 2004 and 2006, and have authored the corresponding technical reports in those two years. As part of these assignments, I have visited the Angostura project site twice (in March/April of 2004 and in January/February of 2006), and participated in the resource estimation in the Greystar Bucaramanga office on three different additional occasions, once in 2004 and twice in 2006 I am responsible for the preparation of sections 3.2, 3.4, 6 to 16.4, 17 and 19.1 of this Technical Report titled Angostura Project NI 43-101 Independent Technical Report, as corrected dated July 19, 2007. Most of these sections are direct quotes or summaries from our technical report of August, 2006, with updates where appropriate I am not aware of any material fact or material change with respect to the subject matter of the Technical Report that is not reflected in those sections of the Technical Report for which I accept responsibility, the omission to disclose would make the Technical Report misleading. I am independent of the issuer applying all the tests in section 1.5 of National Instrument 43-101. 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. I consent to the filing of the Technical Report with any stock exchange and other regulatory authority and any publication by them, including electronic publication in the public company files on their website accessible by the public, of the Technical Report. Dated this 19th day of July 2007.

VI.

VII.

VIII.

IX. X. XI.

Henrik Thalenhorst, P.Geo.


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NI 43-101 Independent Technical Report CONSENT OF AUTHOR

To:

British Columbia Securities Commission Alberta Securities Commission Ontario Securities Commission Toronto Stock Exchange

I, Henrik Thalenhorst, P. Geo. do hereby consent to the public filing of the technical report titled Angostura Project NI 43-101 Independent Technical Report as corrected dated July 19, 2007.

Dated this 19th day of July 2007.

_________________________________ Henrik Thalenhorst, P. Geo. Vice President Strathcona Mineral Services Limited

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24.5

Jack McPartland, Metallurgist/V.P. Operations of McClelland Laboratories Inc.

Recommendations
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25.

Additional Requirements
(For Technical Reports On Development Properties and Production Properties)

25.1

Mining
The Angostura deposit is located on the upper end of the Quebrada La Baja drainage basin above the town of California. The quebrada is steep and relatively rugged with the deposit located at elevations ranging from 2,600 to 3,400 meters. Average monthly temperatures range from 9 to 11o C, with little seasonal change. The average annual precipitation averages 740 mm with about 60% occurring in the wet seasons between September to November, and April to May. Less than 10% occurs in the dry season from December to February, and June to August and the annual evaporation rate is about 1,300 mm. The ore outcrops but because of the steep mountain side and a Hatch imposed limit of 18 benches mined in any one year, a total of 54.8 million tonnes of material must be moved before mine startup. During this period 4.9 million tonnes of heap leach ore grading 1.17 g/t Au, 0.75% S and 0.2 million tonnes of milling ore grading 3.88 g/t Au, 3.74% S will be mined. It is estimated that this pre-production period will take up to 15 months. The mine Potentially Mineable Mineral Resources consist of 167 million tonnes of ore grading 1.28 g/t Au, 5.82 g/t Ag and 2.3% sulphur. Total waste removal is 740 million tonnes which gives a strip ratio of 4.4:1. Two mining scenarios have been run; both using the same production schedule. The Base Case is a conventional truck/shovel operation supplemented with two pit rim crushers and conveying systems for ore and waste. An ore crusher/conveyor system is located on the North West pit rim with a conveyor leading via a transfer station to secondary and tertiary crushers located adjacent to the plant site. During the pre-production period and Year 1, waste will be hauled to the northern of the two proposed waste dumps. The waste crusher/conveyor system located on the North East rim will be constructed in Year 1 and commence operation in Year 2. This system leads to the Southern waste dumps. An Option A was run that retained the ore crusher/conveyor system but eliminated the waste crusher/conveyor. This option was dropped from consideration as truck requirements increased to a total of fifty 223-tonne units and capital and operating costs proved too high.

25.1.1 Summary

Mining
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It is proposed to utilize a contractor to mine the upper five benches of the pit and to construct a 30 m wide haul road to the north waste dump and run-of-mine ore crusher. This is because of the steepness of the mountainside which will result in small operating areas requiring the use of specialized equipment. It is estimated that a total of 14.2 million tonnes of waste will be moved by the contractor over an approximate two year pre-production period and 1.3 million tonnes of heap leach oxide ore grading 1.17 g/t Au, 7.03 g/t Ag containing 0.75% S will be placed on a temporary stockpile adjacent to the ROM crusher. During this pre-production period Greystar will move an additional 3.8 million tonnes of ore with the same average Au and Ag grades as above and another 49.6 million tonnes of waste. The Greystar mobile mining equipment fleet consists of five 270 mm rotary diesel powered drills, four 34 m3 hydraulic excavators supplemented with a 17m3 front-end loader and twenty 223 t haul trucks. The operation is supported by the standard complement of ancillary equipment including: road graders, tracked dozers equipped with single shank rippers, and rubber-tired dozers. The dry blast holes will be loaded with an ammonium nitrate fuel oil mixture (AN/FO) and any wet holes with bulk slurry explosive. The general arrangement of the Base Case mine site is shown in Figure 25-1. Option A is shown in Figure 25-2. The rugged terrain made the location of the mine facilities very difficult as the only relatively flat areas are above the ultimate pit rim which is located at the 3,510 m elevation. The proposed site for the process plant is at 3,700 m elevation and waste dumps are at 2,800 3,600 m elevation.

Mining
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25.1.2 Detailed Mine Design and Potentially Mineable Mineral Resource 25.1.2.1 General

The open-pit design is based the economic parameters and design criteria listed herein. There are two pits in the Lerch Grossman design and these have been joined by a haul road in the detailed plan. The upper benches of a small pit located just south and on the east rim of the main pit provide relatively low strip ratio ore in the first year of operation. The two pits combined contain 167 million tonnes of ore at an average grade of 1.28 g/t gold, 6 g/t silver with 2.3% sulphur. Waste totals 740 million tonnes giving an overall stripping ratio of 4.4:1 waste/t ore. The Potentially Mineable Mineral Resources before allowing for ramps are shown in Table 19-2. When compared to the Lerch Grossman pit, the ore tonnage is identical; the gold grade is reduced marginally by 0.01 g/t resulting in a 2% loss of contained gold; however the waste in this detailed design has increased from 620 million tonnes to 740 million tonnes, an increase of 20%. An increase in the strip ratio is usually expected, but in this case, the amount is larger than normal. Many Lerch Grossman pits were run in an attempt to decrease the tonnage difference, but because of the exceptionally large elevation difference between the pit bottom and the waste dump an elevation gain of 870 m and the need to place a 30 m wide access road on the highwall, it was not possible to decrease the difference in waste volumes any further. Every time the Lerch Grossman pit slopes were changed in an attempt to provide allowance for the haul road, there was a large change in the size of the pit. Consequently, a completely new haul road had to be designed which once again required the removal of additional waste. The mining method proposed for the Angostura Project is a conventional open pit truck/shovel operation using diesel powered equipment. Mining will commence in the small pit located in the north-east corner of the deposit and on the upper benches of the main pit. These main pit upper benches remove a relatively thin slice of material from the mountainside and because of the thinness of the cut the pit is taken back to the ultimate pit limit in only two phases. A 30 m wide haul road at a -10 percent grade is left on the highwall for access to the mine facilities located above the pit rim.

25.1.2.2

Pre-Production

Mine pre-production will involve two equipment fleets. A contractor utilizing small equipment will advance a 30 m wide haul road from the plant site to the ore crusher located at the 3,050 m elevation, construct another haul road to the North waste dump and pre-strip the upper five mine benches in advance of the mine fleet operation. He will begin operation at Year -2 and move 1.3 million tonnes of ore and 14.2 million tonnes of waste. The mine equipment fleet will begin operation in Month -15 and move an additional 3.8 million tonnes of ore and 49.6 million tonnes of waste.

Mining
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25.1.2.3

Production Schedule

The mine will be excavated from the top down in three phases. The first phase begins in Year 1 at the 3,500 m bench of the main pit and at the ultimate pit limit at the 3,520 m elevation of the small pit. The second phase is a 190 m push-back to the ultimate pit limit of the main pit and begins in Year 2. The third phase begins in Year 3 and advances the northern part of the main pit to the ultimate limit at the 3,000 m bench by the end of Year 4. The annual plans are shown in Figure 25-3 to Figure 25-11 and the detailed mine plan production schedule in Table 25-1. This production schedule has been conceptually modified as shown in Table 25-2 to take out the Year 5 stripping bulge. This has been achieved by increasing the material moved in Years 1 to 4 from about 80 million per year to 90 million in Year 1 and 94 million in Years 2 to 5. Only the waste stripping is changed, the ore flow remains as in the detailed mine design. This modification has been made on a spreadsheet and will have to be confirmed as being technically feasible in the next stage of a feasibility study. The increased stripping will allow the construction of the missing access roads in some of the mine phases. This modified production schedule is used to size mine production equipment and as input to the capital and operating cost estimates.

Mining
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Table 25-1: Annual Mine Production


Period Oxide Ore (<0.8% S) Tonnes (kt) Au (g/t) Ag (g/t) S (%) Transitional Ore (0.8%< S<2.0) Tonnes (kt) Au (g/t) Ag (g/t) S (%) Transitional Ore, High S (>2.0% S) Tonnes (kt) Au (g/t) Ag (g/t) S (%) Total Oxide & Transitional Ore Tonnes (kt) Au (g/t) Ag (g/t) S (%) Sulphide Ore to Leach Pad- Low S Tonnes (kt) Au (g/t) Ag (g/t) S (%) Sulphide Ore to Leach Pad- High S Tonnes (kt) Au (g/t) Ag (g/t) S (%) Road & PP 2,739 1.07 6 0.4 1,402.8 1.31 15 1.2 230.7 1.54 17.16 2.78 4,372.5 1.17 9.31 0.78 133.3 0.78 7.23 1.31 1,178 1.22 16.35 3.18 Year 1 6,789 1.00 4 0.4 4,554.6 1.56 5 1.2 474.2 1.71 6.26 2.48 11,817.8 1.24 4.91 0.80 2,098.2 1.05 5.54 1.54 475 1.06 4.25 2.74 Year 2 3,193 1.23 6 0.4 3,614.9 1.54 6 1.3 1,084.0 2.03 6.14 2.62 7,891.5 1.48 6.33 1.12 1,233.2 1.19 4.25 1.59 5,082 0.99 6.51 3.20 Year 3 3,442 1.05 7 0.5 3,659.2 1.25 7 1.2 556.8 1.54 7.11 2.28 7,657.8 1.18 6.82 1.00 1,160.7 1.36 4.56 1.72 5,201 1.07 4.89 3.41 Year 4 2,493 1.24 8 0.4 1,922.1 1.11 10 1.3 861.8 1.03 9.73 2.91 5,277.3 1.16 9.07 1.15 1,254.8 0.93 5.08 1.58 7,437 0.97 5.57 3.52 Year 5 1,285 1.00 5 0.5 580.6 1.12 5 1.1 27.8 1.05 2.84 2.34 1,893.5 1.04 4.87 0.69 3,693.6 1.18 6.05 1.50 8,188 0.97 3.89 3.42 Years 6 716 0.95 4 0.6 1,182.2 1.45 6 1.2 253.4 1.07 4.68 2.85 2,152.0 1.24 5.10 1.19 7,228.6 1.13 3.86 1.50 4,641 1.18 4.71 2.78 Year 7 1,421 1.06 4 0.4 220.8 1.09 6 1.4 94.1 1.13 4.65 2.68 1,735.7 1.07 4.60 0.63 4,441.3 1.17 4.19 1.47 7,682 1.05 4.82 3.06 Year 8 1,376 0.94 6 0.4 245.9 1.26 6 1.3 39.9 2.57 7.99 2.18 1,661.6 1.02 6.09 0.56 3,799.8 1.01 4.21 1.48 8,598 1.03 4.48 3.07 Years 9 - 12 646 0.94 12 0.5 1,112.7 0.85 12 1.3 388.1 0.96 13.95 2.76 2,147.3 0.89 12.44 1.32 5,497.3 1.01 5.29 1.39 32,697 1.00 4.55 3.44 Total 24,100 1.07 6 0.4 18,495.8 1.35 7 1.3 4,010.8 1.49 8.32 2.65 46,607.0 1.22 6.73 0.95 30,540.8 1.10 4.70 1.49 81,177 1.02 4.92 3.31

Mining
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Table 25-1: Annual Mine Production (contd)


Period Total Sulphide Ore on Leach Pad Tonnes (kt) Au (g/t) Ag (g/t) S (%) Sulphide Ore to Mill Low S Tonnes (kt) Au (g/t) Ag (g/t) S (%) Sulphide Ore to Mill High S Tonnes (kt) Au (g/t) Ag (g/t) S (%) Total Sulphide Ore to Mill Tonnes (kt) Au (g/t) Ag (g/t) S (%) Total Ore Tonnes (kt) Gold Contained (g x 1,000) Au (g/t) Ag (g/t) S (%) Waste Total (kt) Total Tonnes (kt) Road & PP 1,311.8 1.18 15.42 2.99 207 3.88 37.59 3.74 207 3.88 37.59 3.74 5,892 7,452 1.27 11.66 1.38 71,861 77,753 Year 1 2,572.9 1.06 5.31 1.76 25 6.85 9.20 1.79 156 5.70 10.97 3.97 181 5.86 10.73 3.67 14,572 18,434 1.27 5.06 1.01 67,326 81,899 Year 2 6,315.2 1.03 6.07 2.88 72 9.35 12.63 1.64 496 4.74 17.63 3.72 568 5.33 16.99 3.46 14,774 21,245 1.44 6.63 1.96 65,363 80,137 Year 3 6,361.5 1.13 4.83 3.10 38 5.73 9.77 1.88 523 3.93 7.52 3.79 561 4.05 7.67 3.66 14,581 18,495 1.27 5.98 2.02 64,927 79,508 Year 4 8,691.6 0.96 5.50 3.24 14 5.94 14.15 1.82 619 3.99 17.77 3.82 633 4.03 17.70 3.78 14,602 17,025 1.17 7.32 2.51 65,219 79,821 Year 5 11,881.8 1.04 4.56 2.82 55 7.99 22.54 1.61 658 4.20 11.79 3.74 713 4.49 12.61 3.57 14,488 17,487 1.21 5.00 2.58 124,897 139,385 Years 6 11,869.1 1.15 4.19 2.00 59 8.01 19.60 1.75 604 6.06 12.90 3.42 663 6.24 13.50 3.28 14,685 20,455 1.39 4.75 1.94 72,745 87,430 Year 7 12,123.6 1.09 4.59 2.48 119 9.69 39.00 1.65 666 4.81 17.69 3.34 785 5.55 20.91 3.08 14,644 19,477 1.33 5.46 2.29 63,671 78,315 Year 8 12,397.3 1.03 4.40 2.58 16 6.67 23.94 1.87 588 4.05 15.61 4.00 605 4.12 15.83 3.94 14,664 16,907 1.15 5.06 2.41 40,672 55,336 Years 9 - 12 38,194.0 1.00 4.65 3.15 47 6.19 15.36 1.85 3,676 4.29 9.85 4.05 3,723 4.31 9.92 4.02 44,064 56,137 1.27 5.48 3.13 103,652 147,716 Total 111,718.8 1.04 4.86 2.81 444 8.11 22.12 1.72 8,194 4.44 12.93 3.85 8,638 4.62 13.40 3.74 166,965 213,080 1.28 5.82 2.34 740,335 907,300

Mining
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Table 25-2: Smooth Annual Mine Production


Road Construction ITEM Mine Production Ore Heap Leach - Oxide (kt) Au (g/t) Ag (g/t) S (%) (kt) Au (g/t) Ag (g/t) S (%) (kt) Au (g/t) Ag (g/t) S (%) (kt) Au (g/t) Ag (g/t) S (%) Waste Overburden Rock Total Waste (kt) (kt) (kt) 1,324 1.17 7.03 0.75 1,324 1.17 7.03 0.75 745 1.17 7.03 0.75 745 1.17 7.03 0.75 2,303 11,818 7,892 1.17 1.24 1.48 7.03 4.91 6.33 0.75 0.80 1.12 1,312 2,573 6,315 1.18 1.06 1.03 15.42 5.31 6.07 2.99 1.76 2.88 207 181 568 3.88 5.86 5.33 37.59 10.73 16.99 3.74 3.67 3.46 7,658 1.18 6.82 1.00 6,362 1.13 4.83 3.10 561 4.05 7.67 3.66 5,277 1.16 9.07 1.15 8,692 0.96 5.50 3.24 633 4.03 17.70 3.78 1,894 1.04 4.87 0.69 11,882 1.04 4.56 2.82 713 4.49 12.61 3.57 14,488 1.21 5.00 2.58 2,152 1,736 1.24 1.07 5.10 4.60 1.19 0.63 11,869 12,124 1.15 1.09 4.19 4.59 2.00 2.48 663 785 6.24 5.55 13.50 20.91 3.28 3.08 14,684 14,644 1.39 1.33 4.75 5.46 1.94 2.29 1,662 1.02 6.09 0.56 12,397 1.03 4.40 2.58 605 4.12 15.83 3.94 14,664 1.15 5.06 2.41 2,147 0.89 12.44 1.32 38,194 1.00 4.65 3.15 3,723 4.31 9.92 4.02 44,064 1.27 5.48 3.13 46,607 1.22 6.73 0.95 111,719 1.04 4.86 2.81 8,638 4.62 13.40 3.74 166,964 1.28 5.82 2.34 Mine Pre- Production Year 5 Year 6 Year 7 Year 8 Year 9 - 12 Total Units Years -2 & -1 Year +3 -Year 1 -Year 1 Year 1 Year 2 Year 3 Year 4

Heap Leach - Sulphide

Mill/Flotation

Total Ore

3,822 14,572 14,774 14,581 14,601 1.32 1.27 1.44 1.27 1.17 11.57 5.06 6.63 5.98 7.32 1.68 1.01 1.96 2.02 2.51

14,228 14,228 15,552

8,003 8,003 8,748

7,242 7,242 7,242

42,388 75,428 78,009 78,202 78,182 42,388 75,428 78,009 78,202 78,182 46,210 90,000 92,783 92,783 92,783

78,295 78,295 92,783

72,364 63,671 72,364 63,671 87,048 78,315

40,673 40,673 55,336

103,652 103,652 147,716

740,336 740,336 907,300

Total Material (Ore + Waste) (tpd)

Mining
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25.1.2.4

Stockpile Options

Stockpiling has not been considered in this Scoping study; however, there is potential to increase cash flows and extend the mine life by varying the cut-off grade to follow fluctuations in the price of gold and silver. An internal cut-off of 0.35 g Au/t ore has been calculated using the following parameters: Gold Price Gold Recovery Heap Leach low grade Processing Cost G&A Cost The internal gold cut-off grade $US515/oz ($US16.557/g) 50% $1.93/t ore $1.00/t ore = (Additional cost of mining ore + Processing cost + G&A) (Au price - (royalty +refining Cost) * Process Recovery)

The internal gold cut-off grade =($0.0 + $1.93 + $1.00) / ($16.557 ($0.0 + $ 0.0) * 0.5) = 0.35 g Au/t ore (assuming no credit for Ag) The 0.5 g/t Au cut-off grade was selected after running a matrix of Potentially Mineable Mineral Resources against differing Au internal cut-off grades. A cut-off grade of 0.35 g /t Au produced a large amount of low-grade plant feed that produced little incremental revenue while requiring additional leach pad area. It is only when the cut-off grade is increased to about 0.5 g/t Au that incremental revenue increases to a reasonable amount. There is also very limited areas close to the mine that is available for pad expansion. However, there is another valley to the east of the current pad that could serve as a potential leach pad should the incremental cost associated with developing this area be offset by the additional revenue generated. The next planning stage should consider this possibility. In addition, there is potential for increasing the cut-off grade during the early mine life while stockpiling lower grade material for later processing. This may increase revenue during the mine startup period, if a suitable stockpiling area can be found.

25.1.2.5

Haul Road Design

The haul roads have been designed to minimize waste removal and overall haul distances while maintaining safety standards. The design is based on recommendations from The Health, Safety and Reclamation Code for Mines in BC Rule 6.8.1. This standard is very similar to the recommendations made by the US National Mine Health & Safety Academy. Maximum road gradient Road Camber Road super-elevation Road surface width Berm height Berm width Ditch width Total width 10% 2% 5% 22 m (3 x the width of the recommended haul truck 3 x 7.41) 2.6m ( x the diameter of the largest tire 3/4 x 3.5) 6.7 m (assumes the side slopes of the berm are at 38o) 1.0 m 30 m
Operating Cost Estimate
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25.1.2.6 Design

Waste Dumps

Normally waste dumps are located close to the pit-rim and as low as possible. The ideal location for the Angostura waste dump would be to the southwest in the Quebrada La Baja. However, this location has been ruled out, as the dump would extend beyond the property limit and in an area where there are a number of dwellings and small scale national Colombian mines sites. The only remaining locations are all adjacent to the pit rim. The dump locations shown in Figure 25-1 have been selected in an attempt to minimize both haul distances and elevation gain. However, these are unconventional dump locations and the north dump poses a risk of slides entering the south end of the mine. This has been mitigated by locating the majority of the waste in the south dump in a valley east of the mine. This south dump will be utilized while operations are underway in the south east end of the mine. Drawing A0-C-014 is a plan and section through the pit and north dump. To ensure dump stability, a detailed geotechnical analysis will be required in the feasibility study. These dumps have been designed to hold 359 million m3 of waste 740 million tonnes assuming a 2.5 t/m3 in situ density and 20% swell factor. The dump capacity is shown by elevation in Table 25-3 below. The dumps will be constructed from the bottom up with a 10% haul road on the outside edge providing access to the upper benches. At the end of the project the haul road will have to be removed so as to control surface water and not allow runoff to scour the sides of the waste dumps. The 50 m horizontal berms will be constructed to slope inward and rebuilt as required at the end of the project.

Operating Cost Estimate


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Table 25-3: Cumulative Dump Capacity (million tonnes) Elevation 2900 3000 3100 3200 3300 3400 3500 3600 South Dump -1.1 9.0 25.7 49.2 72.0 110.3 178.1 North Dump 32.8 89.8 142.4 220.3 309.5 399.1 487.0 572.2 Combined Dumps 32.8 90.9 151.4 246.0 358.7 471.1 597.3 750.3

Topsoil must be removed from all disturbed areas before any mining or construction is begun. It is believed that the only area with significant topsoil is the area under the proposed Heap Leach Storage. This material will be placed in a separate dump at the edge of the Heap Leach Pad as shown on Figure 25-1 and used as a top cover of reclaimed areas to promote re-vegetation.

25.1.2.7

Waste Rock Acid Generating Potential

The assessment of the acid generating potential (ARD) of the waste material has not been examined in detail and will have to be conducted in the next stage of work. Some ABA test work has been conducted on various ore type samples indicating some potential for ARD, however limited work has been done on waste rock samples (internal waste only). The footprints of the waste dumps result in large exposed surface areas during both operation and after closure. Depending on the results of ABA testwork, the design of the dumps, to reduce the surface area, requires investigation as part of an ARD management programme.

25.1.3 Pit Dewatering 25.1.3.1 General

Limited hydrogeological data has been provided to Hatch that can be used to produce a dewatering design. However, Technical Report produced by Strathcona Mineral Services Limited September 24, 2003 stated that based on climatalogical data from a number of nearby weather stations at comparable elevations, the average annual temperature is 8 to 9C, with little seasonal change. The average annual precipitation is 740 mm, while the average annual evaporation is 1,300 mm, which identifies the site as a net evaporation area. During the wet season from September to November, nearly one-half of the annual rainfall is recorded, while less that 10% of the annual precipitation falls during the dry season from December to February. Based on this assessment, dewatering costs should not be excessive but, in the next stage of work, additional information is required on storm events and frequency to size holding ponds and pump sizes. A small dewatering crew and two 36 l/sec. @ 122 m head sump pumps with diesel electric generators have been included in the mine capital cost estimates.

Operating Cost Estimate


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25.1.3.2

Water Quality

Water quality information, in particular, pH of the drainages on the property and the surrounding streams and rivers, has been collected since last year by PSI PROANALISIS LTDA, a Bucaramanga based environmental Analytical Laboratory certified by CDMB, the regional Environmental Agency, since 2006, and by CONTROL CALIDAD between 2004 and 2006, which information is available in Greystars Bucaramanga office. This information can be used to provide base line conditions as it is believed that the groundwater is already polluted from the many small mining operations located outside of Greystars property to the south west.

25.1.3.3

Pit Dewatering Details

There are two courses of action that must be taken to keep the working areas of the pit dewatered. Drainage ditches must be located to direct surface water away from the pits and mine facility area. Ditches along the in-pit haul roads will direct water to sumps located along the roads and in the pit bottom. The main pit sump will be located adjacent to the lowest active work face and be at least 5 m deep. Sump pumps will direct the water to the surface and away from the pits.

The pumped water from the pits will be directed to settling ponds and any acidity neutralized with lime and any heavy metals removed before the water is released into the local drainage waters.

25.1.4 Geotechnical Information


Pit slope design is an iterative process that applies additional data as the mine design progresses and as it is revealed during mining. The overall pit slopes used in this design was provided by Greystar. Inter-ramp slopes on the west walls have been designed at 50 and east walls at 45 as recommended by Greystar. While the west slope is relatively steep, Hatch accepted the recommended slopes as the west highwall is less than half the vertical height of the east highwall. It is vital that additional geotechnical studies be undertaken before pre-feasibility work commences, as this proposed pit has a significant highwall of 730 m with a total height of 820 m from the highest point of the pit to the lowest. If any additional drilling is to be undertaken, it is recommended that advice be sought for recommendations on the collection of data to be used in the geotechnical work.

25.1.5 Mining Equipment 25.1.5.1 Equipment Productivity and Sizing

The Angostura deposit will be mined by conventional open pit methods on ten-meter benches. The primary mobile production fleet will consist of diesel 270 mm rotary blast hole drills, 34 m3 hydraulic excavators, a 17 m3 front-end-loader and 223 tonne off-highway rear dump trucks. These will be complemented by support and maintenance equipment. All equipment should be specified to include optional high altitude packages and all diesel equipment should be fitted with Wiggins fast fuel and fast lubrication oil change systems for ease of maintenance. It is also assumed that a modern GPS based dispatch system will be used to maximize equipment productivity, produce reports and reduce supervisory and engineering requirements.

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It is assumed that a reduced production rate will be inevitable during the start-up period. Accordingly truck/shovel productivity has been cut to 4 percent of the maximum four-excavator production rate during the first 3 months of the pre-production period and 53 percent over the following year of preproduction. The rate is increased progressively and reaches 100% at the beginning of the first year of Production (Year 1). While this rate may appear excessively low, it is assumed that there will be a two month interval between the first and second excavator fleet with the third fleet starting up after one year and the fourth eight months later. This will allow a daylight only period for training crews and for the first month of pre-production when operating benches will be narrow. The production rate of the mine over the first year of operation is 90 million tonnes and 93 million in Years 2 to 5 inclusive. This is reduced in succeeding years to 87 million, 78 million 55 million and an average slightly under 40 million tonnes in Years 9 to 12.

25.1.5.2

Drilling & Blasting

Drilling and blasting requirements are dictated by a combination of rock fragmentation, pit wall stability and grade control. Pit wall stability is managed through careful monitoring and controlled blasting techniques. Grade control is based on careful blast hole sampling techniques. Blast holes are spaced to provide a balance between low operating costs, pit wall stability, required production rates and to provide information about ore grade and distribution. Tighter spacing and higher powder factors result in higher drilling and blasting cost, lower loading and crushing cost and higher production rates. Wall control and production blast holes are 270 mm in diameter and drilled in a staggered pattern. Blasting to a choked face is recommended to minimize ore losses/dilution that is caused by excessive displacement of the blasted material. However, blasts that form the final pit wall should shoot to a free face. A typical blast pattern for the 10 m bench height used to calculate drill requirements and operating cost is 7.3 m x 9.1 m with 2.4 m of sub-drill. An additional 5% of drill time is added for redrilled holes and another 2.5% for control blasting at the highwall. When calculating drill production rates, it is assumed that the amount of soil overburden is negligible and that all the material to be moved can be classed as a Medium Formation with a uniaxial compressive strength between 17 to 270 MPa. It is also assumed that ANFO is used as the blasting agent in all dry holes and water resistant slurry will be required in the 10% of holes which are assumed to be wet. The use of slurry will slightly decrease drilling cost, as the denser slurry will allow increased burden and spacing but this has not been taken into account. The recommended production blast hole drills are diesel-powered rotary rigs equipped with a high capacity 100 m3/min. @ 7.6 bar compressor. They are capable of 34,000 kg bit loading and single pass drilling for the ten-meter benches.

25.1.5.3

Pre-splitting

Pre-splitting may be required in the more massive and stronger formations but it is not included in this cost estimate.

Operating Cost Estimate


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25.1.5.4

Loading & Hauling

The proposed loader/hauler fleet consists of 34-m3 hydraulic excavators and a 17 m3 front-end-loader combined with a fleet of 223 tonne haul trucks. Typical examples are the O&K RH 340 excavator; the Caterpillar 994 loader and Caterpillar 793 haul truck. The following parameters were used to calculate fleet requirements: Operating days per year Observed Holidays Weather delays Shift Delays Shift Schedule Maximum Physical availability Maximum Use of availability 358 2 days 5 days 3.17 hours/shift 2 12-hour shifts per day (4 rotating crews) 85% 93%

Diesel powered hydraulic excavators have been selected because of their relatively low operating cost and high digging breakout forces when compared to front-end-loaders. Electric shovels were eliminated owing to the high cost of maintaining the power supply as the pit is deepened at a rate of up to 10 benches per year. The detailed production calculations and equipment details are shown in Appendix H. Using an O&K RH 340 as an example, the four excavators should have a front shovel configuration with a 34 m3 heavy duty rock bucket. Based on these assumptions the excavator fleet can move up to 98 million tonnes per year. The excavators will be backed up by a 17-m3 front-end-loader, which has been selected because of its mobility and ability to load a 233 t truck. The primary duty of the loader is to re-handle stockpiles and for road maintenance, but it will also back-up the excavator fleet when required. Normally the haul trucks will end dump ore into the pit rim run-of-mine crusher hopper, but there will also be a stockpile located adjacent to the crusher for blending and to cover short-term mine outages. The waste pit rim crushing/conveying system, consisting of two dump hoppers, a Superior mkII 60 x 110 gyratory crusher and two 2,100 mm wide conveyors, will be constructed in Year 1 and commence operation at the beginning of Year 2. During the pre-production period and in Year 1, the waste will be trucked directly to the northern of the two proposed waste dumps. Table 25-4: Waste Conveyors Conveyor Waste Conveyor #1 Waste Conveyor #2 Length 750 m 1,000 m Elevation Rise 72 m 250 m Estimated (Maximum) Power Consumption 3,300 kW 9,500 kW

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The 223 tonne haul truck size was selected to match the loading fleet and can be loaded by the excavators with 3 passes. The number of required haul trucks is based on the production schedule combined with haul cycles calculated using annual profiles obtained from the Year-End Mine Plans and the facility layout shown in Figure 25-1. The following parameters were input into Caterpillars Vehicle Simulation Program VEHSIM: Maximum Haul speed within 75 m of the loading unit & ROM crusher/stockpile area Maximum haul speed on an active mine bench Maximum speed on roads and 10% ramps Maximum speed on switchbacks Haul truck capacity (95% of rated capacity) 25 kph 30 kph 35 kph 20 kph 212 t

The Caterpillar VEHSIM truck simulation was used to calculate haul truck requirements on an annual basis for both options. The Base Case required eight trucks in the first year of pre-production rising to ten in the second year of pre-production and twenty by the beginning of Year 1. Twenty trucks are required through Year 6 before dropping to ten for the remaining mine life. The VEHSIM runs on Option A indicated that 10 haul trucks are required by the end of the preproduction period. This increased rapidly to 21 in Year 1, 39 in Year 2, 50 in Year 3, increasing to 67 by Year 5 and decreasing to 40 by Year 8. The peak requirements of 67 in Year 5 is clearly impracticable and when calculating capital cost, a total of 50 haul trucks are purchased by Year 3 as the 67-truck fleet was arbitrarily cut back with the assumption that further work on the detailed design will smooth out the truck requirements. However, the operating cost is based on the calculated truck requirements. The truck requirements for this Option resulted in prohibitively high capital and operating costs and Option A was dropped from consideration. The truck fleet will be equipped with automatic weighing systems and both trucks and loaders will be hooked into a GPS based dispatch system to monitor and regulate activities while producing production and maintenance records.

25.1.6 Equipment Requirements and Purchase Schedule


This schedule is based on Owner purchase of equipment and Owner mining.

25.1.6.1

Production Fleet

Table 25-5 details the major production fleet requirements and purchase schedule. Replacement of the production fleet is minimized because of the relatively short term mine life and because the annual production level drops from about 93 million tonnes over the first six years of operation to 76 million tonnes in Year 7, 55 million tonnes in Year 8 and an average of about 40 million tonnes in the last four years. Only three rotary drills are replaced in Year 5. Back up is included in the Appendix.

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Table 25-5: Production Fleet Purchase Schedule Item Rotary Drills Hydraulic Excavator Front End Loader Haul Trucks - Base Case Haul Trucks - Option A Note: * Pre-Production Size & Typical Model Atlas Copco PV 271 (270 mm) O&K RH 340 (34 m3) Caterpillar 994G (17 m3) Caterpillar 793D (223 t) PP* 5 3 1 8 31 Year 1 1 12 19 Year 5 3

25.1.6.2

Ancillary Equipment

Normally there will be two to three operating areas or benches at any one time with occasional periods when up to four areas may operate. Therefore, there must be sufficient ancillary equipment to cover a maximum of mine areas combined with their waste dumps and haul road networks. Total requirements are shown in Table 25-6. The tracked dozers will be equipped with universal U blades and adjustable single shank parallelogram rippers. Two dozers will be replaced in Year 5. A scraper with a struck capacity of 12 m3 is included to maintain and gravel roads and 90 tonne and 40 tonne mobile cranes are included to erect the mine and mill equipment and for occasional maintenance.

Operating Cost Estimate


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Table 25-6: Ancillary Equipment Requirements & Replacements Equipment Type Road Grader Track Dozer Wheel Dozer Motor Grader Water Truck Sand Truck/Scraper Tire Handler Backhoe 90 ton crane 40 ton crane Fuel/Lube Truck Fuel Truck Service/Welding Truck Maintenance Truck Hole Stemmer Fork Lift Light Plant Dewatering Pump Ambulance Fire Truck 15-Passenger Bus 9-Passenger Bus Pick-up/SUV 25.1.6.2.1.1 Typical Model Caterpillar 16 (24,800 kg) Caterpillar D-11 (228kw) Caterpillar 834G (47,000 kg) Caterpillar 16H (24,800 kg) Used Caterpillar 777 Water Truck (30,000 l conversion) Caterpillar 621 Cat 980 Cat. 345C (3 -5 t capacity) Grove Grove 52,000 GVW, triple axle chassis 6-378l tanks, 40 cfm compressor, pumps, reels etc. 52,000 GVW, triple axle chassis - 76,000 l capacity 3,900 kg crane, 33,000 gvr chassis Ford F550 Caterpillar IT28 2,268 kg 8 kwh diesel c/w 3-1,000 W lights 30l/sec, 122m head c/w 54 kwh diesel generator Kenworth T800 Chrysler Van 36-passenger for 15 day crew change ton 4x4 .1.6.2.1.2 No. Units Purchased PP Yr 1 Yr 3 Yr 5 Yr 8 1 1 1 4 1 1 2 1 1 1 1 1 `1 2 1 2 1` 1 8 1 1 2 4 31 1 1 1 2* 1* 2* 2* 1* 8* 1 2*

8*

12*

2* 4* 24*

12*

Note: * = replacement units.

25.2

Process Description
The proposed flowsheet to process the Angostura ore is a combination of a conventional valley fill heap leach operation and a grinding and flotation circuit followed by bio-oxidation of the flotation concentrate and cyanidation for gold and silver recovery. This flowsheet may be subject to change as the results of future testwork that has been recommended in the Study become available. The operation will treat up to 40,000 tpd 24 hours per day, 7 days per week. The ore crusher operation has been based on a 75% equipment availability and the mill/flotation operation on 92% equipment availability.

25.2.1 Summary

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The allocation of ore feedstock to either process is based on the gold and sulphur grades, estimated gold recovery as discussed in Section 18 and the operating costs allocated to that particular ore type as detailed in Section 19. This data was incorporated into the mine block model and the respective ore type tonnages determined, together with calculated gold, sulphur and silver grades. The economic parameters were applied including metal prices, gold and silver recoveries and operating costs in order to develop a preliminary mine pit model. Ore will be hauled from the open pit mine in 223 tonne trucks and delivered to the primary crusher installation consisting of a 54-75 gyratory crusher, located at the NW side of the pit perimeter. The primary crushed ore will then be transferred on a series of two conveyors to the secondary and tertiary crushing and screening operation (MP 1000 cone crushers). The heap leach ore feed, with a feed size of 80% passing 19 mm, will be transferred with a series of conveyors and stacker and mobile conveyors to the heap leach pad. A dozer will spread the material on the heap pad. A three stage crushing operation has been proposed to deliver a minus 19 mm product to the heap leach. The high grade gold and sulphur ore type will be mined selectively and crushed on a campaign basis in the same crusher facility and transferred to a crushed ore stockpile of approximately 10,000 t capacity ahead of the grinding and flotation circuits. The high grade gold and sulphur ore will be crushed in the same crusher installation, on a campaign basis, The crushed ore will be milled in a 2,500 tpd capacity mill to a particle size of P80 = 106 m. The bulk flotation concentrate produced will then pass to a bio-oxidation process, followed by a standard cyanidation leach stage and filtration to separate the gold bearing solution from residual solids. The gold/silver leach solutions from the heap leach operation and the flotation concentrate cyanidation leach will be processed in a Merrill Crowe zinc precipitation facility for gold and silver recovery, the final product being gold/silver dor. A schematic flowsheet is presented in Figure 25-12. The heap leach pad is located north east of the open pit. The pad covers an approximate area of 1.08 Mm2, based on a stacked height of 30 m. It has a capacity of approximately 160 million tonnes. The pad is located in a shallow sloping valley, with a prepared lining forming the base of the leach pad and a composite liner system to contain process solutions within the pad. The heap will be sprayed with a dilute cyanide solution (barren solution) by a network of pipe headers, distribution piping and drip emitters. Leach solution will gravitate to a lined pregnant solution pond, located at the lower elevation of the pad, at the ultimate heap toe line. The leachate (unclarified pregnant solution) from the heap is clarified and pumped to a clarified solution tank. The solution is then pumped through pressure leaf filters to remove any entrained solids and then to a de-aeration tower. This removes dissolved oxygen in the solution.

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The de-aerated pregnant solution is pumped to the zinc precipitate filter presses with zinc dust and lead nitrate being added to the inlet of the filter press feed pumps. Gold and silver are precipitated and collected as a sludge in the filter press. The filter press cake is removed periodically, dried and then fluxed before smelting in an induction furnace to produce dor. Barren solution from the filter presses is pumped back to the heap leach pad distribution piping after adjusting the cyanide concentration and pH with lime. Any excess barren solution will be bled from the circuit and treated processed in a cyanide detox facility. It is anticipated that acid rock drainage (ARD) from the waste rock dump and the open pit workings will be collected and directed to the water treatment plant prior to discharge. The water requirements for the process are taken from a freshwater reservoir, which collects clean run-off water. Possible location of this facility has not been determined. A potable water facility will supply drinking water to the offices and various locations around the site.

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Figure 25-12:

Schematic Flowsheet

Operating Cost Estimate


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25.2.2 Process Design Criteria


The detailed process design criteria is based on metallurgical testwork, information from Greystar, vendor information and reference to recent Hatch projects. A detailed description of the process facilities is presented.

25.2.3 Crusher Plant


The design capacity of the heap leach will be up to 40,000 dry tonnes of ore per day (14.6 million tonnes per annum) The crush size will be 80% passing 19 mm and the overall availability of the crushing and screening plant is estimated to be 75%. This is equivalent to a feed rate of 2,222 tph. The primary crusher will be a 1,370 mm by 1,900 mm gyratory crusher (Superior MK-11 54-75). Run-of-mine ore will be hauled from the open pit and direct dumped into the primary crusher. The dump pocket has a capacity of 600 tonnes. The crushed ore will be conveyed by two conveyors to a 3.0 m x 7.3 m double deck scalping screen with screen decks of 125 mm and 44 mm apertures. The minus 44 mm product stream will be directed to the tertiary crusher feed screens and the +44 mm and +125 mm fractions to a MP1000 standard cone crusher (secondary). The secondary crusher product will be conveyed to two 3.0 m x 7.3 m double deck scalping screens, operating in parallel, with screen decks of 44 mm and 22 mm apertures. The minus 22 mm product streams will be directed to the overland conveyor and the +22 mm and + 44 mm fractions to two MP1000 shorthead cone crushers operating in parallel and open circuit. The capacity of the circuit will be 2,672 tonnes per hour when delivering a product containing 80% passing 19 mm. Crushed ore will be transported to the heap leach facility by a series of conveyors, portable conveyors and radial stackers which will place the ore onto the pad.

25.2.4 Heap Leach


The heap leach pad will be a permanent facility employing a two part liner system of a compacted layer of low permeability soil with a 2 mm thick HPDE synthetic liner. The initial pad will have a capacity of approximately 29 million tonnes (two years operation) and sequential expansions to the pad in Year 3 and Year 5 will accommodate the total project tonnage. Irrigation of the heap will commence in the second month of pre-production and by the end of the first month of production, sufficient leaching will have taken place to allow the first gold to be poured. The leach cycle, based on testwork, is 90 days and the solution application rate will be equivalent to 1.6 m3/tonne of crushed ore. There will be two 3,000 m3 process ponds installed to contain the heap leach solution. The process ponds will have a double HDPE liner and a leak detection facility is probably essential. Excess solution will require cyanide detoxification to reduce the cyanide content of the solution to safe levels, (< 1 mg/l cyanide) in the event discharge becomes necessary.

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The gold/silver precipitation facility will be a standard Merrill Crowe circuit consisting of two parallel systems, each consisting of 3 clarifying filters, a de-aeration unit, zinc and lead nitrate addition and three standard plate and frame filters for gold/silver precipitate recovery. The precipitate will be dried prior to smelting in an induction furnace. The final product will be a gold/silver dor bar suitable for final processing to 99.9% purity in an off-site refinery.

25.2.5 Mill and Flotation Circuit


The proposed design capacity of the grinding and flotation circuit is 2,500 tonnes per day (850,000 tpa). The high sulphur/gold grade ore will be mined and stockpiled ahead of the primary crusher, being crushed on a campaign basis and stockpiled on a 10,000 t capacity stockpile ahead of the mill via a 1400 mm x 200 m conveyor. A series of two apron feeders will withdraw the ore from this stockpile and discharge on to a 900 mm x 87m conveyor feeding the Ball Mill at a design rate of 113 tph. The Ball Mill is sized at 4.26 m diameter x 6.7 m (14 x 22) with a 2,000 kW drive, operating in closed circuit with a hydro-cyclone to give a milled product sizing of P80 = 106 m. The mill cyclone overflow product stream will gravitate to a mechanically agitated conditioning tank 5 m diameter x 5.5 m, and then to a series of flotation cells consisting of 5 x 30 m 3 mechanically agitated cells in a typical rougher scavenger configuration followed by a 4 x 5 m 3 cleaner cells. All flotation separations will be conducted at the natural pH of the ore as indicated by flotation testwork. A flotation collector, PAX [potassium amyl xanthate] and a frother [MIBC methyl-isobutylcarbinol] will be added to the conditioning tank ahead of the rougher flotation stage. These are common reagents used in sulphide flotation circuits. The estimated reagent consumption, as based on the preliminary bench-scale testwork, is PAX at 80 g/t and MIBC at 30 g/t. The cleaner concentrate, at a slurry density of approximately 20-25% solids will be fed to the surge tank ahead of the bio-oxidation circuit. Design residence times are : Rougher flotation: Cleaner flotation: 30 minutes 20 minutes

For the purposes of sizing downstream process equipment for the concentrate biox and cyanidation process stages, it is assumed that the cleaner cells will operate in closed circuit. Further evaluation and process optimisation is required. The flotation tailings will be pumped to a thickener for dewatering prior to pumping to the tailings dam. The flotation concentrate will be pumped to a mechanically agitated tank, 5 m diameter x 5.5 m, for intermediate storage ahead of the bio-oxidation facility.

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25.2.6 Concentrate Oxidation - Introduction


Some preliminary metallurgical testwork suggests that the bulk sulphide/gold flotation concentrate produced from the Angostura ore is amenable to gold recovery by standard cyanidation leach techniques after an oxidation stage. Common oxidation processes for the treatment of refractory ores and sulphide concentrates include pressure oxidation, roasting and bio-oxidation techniques. Pressure oxidation and roasting installations typically incur high capital costs relative to plant capacity. In consideration of the capital constraints of the project, the remote site and the requirements for a mechanically simple and reliable process plant, the bio-oxidation process route has been selected. Biotechnologies such as biooxidation have been exploited since the 1950s but did not become a commercial process until the development of the first stirred tank process plant at the Fairview Mine, South Africa in 1985. A paper written outlining the usage of biohydrometallurgy in the mining industry is titled Present and Future Commercial Applications of Biohydrometallurgy by J.A. Brierley and C.L. Brierley, Hydrometallurgy, 59, 2001, pp. 233-239. The following is a brief outline of the contents related to bioxidation treatment of refractory gold ores. The use of biooxidation was pioneered for the treatment of refractory gold. Goldfields developed and installed the process for use at their Fairview Mine in South Africa in 1985. Since then there has been a fairly slow adoption of this technology, with larger refractory gold mine operators such as Newmont and Barrick choosing conventional process routes. However, as the industry matures it is likely that larger plants will develop with a more widespread usage of biooxidation. The following table from the Brierley paper outlines the refractory gold biooxidation plants that have been constructed. Table 25-7: Commercial Gold Bioleaching Plants
Plant/Location Size (tpd) Operator Fairview, South Africa 35 Avmin Sao Bento, Brazil 150 Eldorado Harbour Lights, Australia 40 Son of Gwalia Wiluna, Australia 115 Newmont Ashanti, Ghana 12001 Ashanti Goldfields Youanmi, Australia 120 Gold Mines of Australia Tamboraque, Peru 60 Minera Lizandro Beaconsfield, Australia 50 Becaonsfield Gold Tonkin Springs, USA 1300 US Gold Carlin, USA 50002 Newmont Agnes, South Africa 50 African Pioneer Mining 1 - currently treating ~500 tpd; 2 whole ore plant Years in Operation 1986, 1991 Present 1990-Present 1992-1994 1993 Present 1994 Present 1994 2000 1991 Present 1999 2001 1988 1991 On-Hold 2003

While the biox process is metallurgically proven, its application and the process economics are specific to any particular ore type or sulphur mineralisation. Preliminary testwork, as outlined in the Scoping Study, was encouraging in using this processing technique prior to a gold cyanidation stage.
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25.2.7 Flotation Concentrate Oxidation


The flotation cleaner concentrate will be pumped to a series of bio-oxidation reactor tanks. Three 8 m diam. X 8 m primary tanks will operate in parallel followed by three identical tanks in series as the secondary reactor tanks. This will allow for approximately 5 days residence time. Acidic residue will be recovered in a CCD thickener wash circuit. The oxidized slurry will be washed with fresh water and the final thickener underflow will be pumped to a mechanically agitated tank and conditioned with lime to a pH of 10.5. The conditioned slurry will then gravitate to a series of mechanically agitated cyanidation leach tanks. Acid solution from the first CCD thickener will be pumped to a series of mechanically agitated tanks for neutralization with lime. A large volume of the partially neutralized product is recycled to the first neutralizing tank to improve the settling characteristics of the precipitates formed. Air is injected into the agitated slurry to ensure complete oxidation of the ferrous iron to ferric iron.

25.2.8 Concentrate Cyanidation and Merrill-Crowe


After the CCD water wash and lime conditioning, the concentrate slurry will gravitate to a series of four, 3.5 m diameter x 4 m mechanically agitated leach tanks, providing a minimum contact time of 22 hours. The leached slurry will gravitate to a horizontal vacuum belt filter, where barren solution wash will be introduced, the filtrate being collected and pumped to the unclarified pregnant solution tank ahead of the Merrill Crowe facility. The filter cake will be repulped with barren solution and pumped to the cyanide detox section.

25.2.9 Cyanide Detox


The Inco SO2AIR process is applied to the treatment of cyanide slurries. Main advantages of the process are the removal of the total cyanide to levels of about 1 mg/l, in a single-stage continuous reactor with low operating costs.

25.2.10

Heap Leach Pad Loading

Crushed oxide ore with a P80 size of 19 mm will be conveyed to the heap leach pad at a rate of 2,222 t/h. The heap will be constructed using a conveyor stacking system:

Operating Cost Estimate


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The following is a general description of the equipment operating procedures. The stacking system is designed to handle the ore from the crushing plant by way of the overland conveyor and tripper conveyor delivering ore to the pad. The overland conveyor discharges onto the tripper conveyor which discharges on to the first portable on the pad. The ore then moves down the string of portables to the horizontal feed conveyor that feeds the horizontal conveyor and radial stacker. The feed conveyor is perpendicular to the string of portable conveyors. The horizontal conveyor receives material from the feed conveyor anywhere along its length and discharges the material at the radial stacker. Since the radial stacker is connected to the horizontal, the material is discharged to the receiving hopper at a set location.

25.2.11

Heap Leach Operating Cycle

The ore heap will be leached using a dilute solution of sodium cyanide to be applied by a system of drip emitters. The dilute cyanide leach solutions will percolate through the ore and collect on the liner at the base of the heap. Drainage pipes above the liner will transport the solution to the pregnant solution pond. Gold from the pregnant solution will be recovered in the Merrill-Crowe plant and the barren solution will be pumped back to the heap.

25.2.12

Heap Leach Solution Management

The process ponds will have a double HDPE liner and will be fitted with leak detection pumps. The pregnant solution will be collected in a network of 100 mm diameter HDPE slotted drainage pipes located above the HDPE liner. This solution will be collected into a 450 mm diameter HDPE piping system that will transport the solution out of the heap. A manual flow-splitting box with plug valves will direct the solution to either the pregnant solution pipe or the intermediate solution pipe. These two 450 mm diameter pipes will transport the solution to the pregnant and intermediate solution ponds respectively. The philosophy of the intermediate pond is to upgrade the head grade of the pregnant solution by recycling a portion of the flow back to the heap. In practice, during the initial start-up period, the gold grade will be low and this solution will be diverted to the intermediate pond. This intermediate solution will be pumped onto fresh ore and the resulting high grade solution will be directed to the pregnant pond. Environmental and permitting issues related to the use of cyanide have not been included in this study.

25.2.13

Merrill Crowe

The Merrill-Crowe recovery process removes gold and silver from the cyanide solution by zinc precipitation. Pregnant solution from the Heap Leach circuit and the High Grade cyanidation filter is pumped to the unclarified pregnant solution tank. The vacuum system removes oxygen from the solution in a packed tower. Solution is percolated through a packing bed while under a vacuum.
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Zinc and lead nitrate are added at controlled rates to the line between the deaeration tower and the precipitate feed pumps. Final filtration of the precious metals is accomplished with the precipitate filter feed pumps and filter presses. Precip filters are the plate and frame type. Filter cake is collected in the chambers between the plates and can be air blown to remove a substantial amount of water. At regular intervals during the operation, the operating zinc precipitate filter is taken off line and the solution is diverted to the stand by filter press.

25.2.14

Refinery

Smelting will take place in an electric induction tilting crucible furnace to produce dor. Hoods and exhaust fans will be provided above the drying oven and the furnace to collect dust particles in the off-gas. A conventional bag house will be installed to recover the precious metals laden dust where it will be recycled to the process.

25.3

Infrastructure and Ancillary Facilities


The infrastructure required to support the Angostura Project will include: Site Preparation. Minesite Access Roads and On-Site Access Road. Fresh Water Supply, Storage and Distribution. Sewage Collection and Treatment. Fuel Storage and Distribution. Cyanide Storage Building. Workshop and Warehouse. Administration Building (Offices). Assay Laboratory. Miscellaneous Site Buildings. Electrical Power Supply estimated requirement is approximately 40 MW.

25.4

Waste Rock Management


The conceptual rock disposal plan is based on preliminary quantities derived from the mine plan. Further investigations during subsequent engineering stage are required to define the waste rock ARD and mitigation requirements. The objective of a Metal Leaching and Acid Rock Drainage Programme (ML/ARD) is to provide sufficient information for informed decisions to be made with respect to management of the waste rock dump and mine pit.

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The draft BC Guidelines (1998) suggest ABA screening criteria presented in Table 25-8. Table 25-8: NP/AP Acid-Base Screening Criteria Recommended in Draft BC Guidelines Screening Criteria NP/AP < 1 1 <=NP/AP <2 2 <=NP/AP < 4 Pot. For ARD Comments Likely likely ARD generating unless sulphide minerals are nonreactive Possible possibly ARD generating if NP is sufficiently unreactive or is depleted at a faster rate than sulphides Low not potentially ARD generating unless significant preferential exposure of sulphides along fracture planes, or extremely reactive sulphides in combination with insufficiently reactive NP None

NP/AP <= 4

1: NP = neutralizing potential, AP = acid potential

Another commonly used set of ABA screening criteria is presented in Table 25-9 (SENES Consultants Ltd, 1994) Table 25-9: Commonly Used NNP Acid-Base Screening Criteria Screening Criteria NNP >= 20kg CaCO3/tonne NNP <= -20kg CaCO3/tonne NNP between 20 and 20 kg CaCO3/tonne
NNP = net neutralizing potential

Potential for ARD non acid generating potentially acid generating Uncertain

ABA testwork has been conducted on column leach test residue samples of various selected ore types. These test residue samples indicate that the material can be categorized as likely or possible when reviewing data with respect to Table 25-8, i.e. NP <=2 t CaCO3 /1,000 t ore. The same data indicates NNP <= -10 t CaCO3/1,000 t ore which indicates that the material is potentially acid generating or uncertain, see Table 25-9. The oxide samples La Alta Nueva, La Perezosa, Silencio NE and Veta de Barro had NNPs in the range of -10 to -18 t CaCO3/1,000 t ore, indicating uncertain. Table 25-10 details the ABA analyses of the column leach residue samples. Limited data is available of the ARD potential of the waste rock. Based on the assumption that the waste rock has a lower sulphide mineralization than the oxide ore type, the ARD potential is reviewed as being uncertain. Waste rock characterization, including ABA and ARD investigation is required during subsequent engineering stages.

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Table 25-10: Column Leach Residue Composite Sample Vein 12 La Alta Transition Vein 354 La Alta Oxide El Diamante Oxide La Alta Nueva Area La Perezosa Oxide Silencio NE (Oxide) Veta de Barro Oxide Veta de Barro Transition Silencio E.W Transition Vein 21 and 22 Silencio NE (Sulfide 1) Silencio E W Sulfide 1 Silencio E W Oxide Column Test No. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Assay No. 78596 78603 78610 78617 78626 79252 79259 79266 79273 79282 79289 81207 79296 79303 81214

ABA Analyses NNP t CaCO3/ 1000 t ore -182 -65 -86 -23 -20 -18 -10 -17 -17 -58 -30 -16 -219 -78 -170 NP tCaCO3/1000t ore 1 2 2 2 3 2 1 1 1 2 1 3 0 1 0 S % 5.45 1.8 2.48 0.54 0.44 0.41 0.23 0.35 0.44 1.81 0.87 0.46 6.9 2.45 5.14

MPA tCaCO3/1000t ore 183.1 67.2 88.4 24.7 22.5 20 10.9 18.1 17.5 60.3 31.3 18.8 219.1 79.4 169.7

25.5

Operating Cost Estimate


Operating costs are summarized in Table 25-11 below and are based on a total Life of Mine ore treatment of 167 million tonnes. Table 25-11: Operating Costs $/tonne ore 0.34 4.45 1.93 18.35 7.57

25.5.1 Summary

Area G&A Mining (Ore and Waste) Process (Heap Leach), 158.3 million tonnes Process (Mill/flot/biox), 8.6 million tonnes Total Life of Mine

25.5.2 General
The operating cost estimate includes all costs for labour, maintenance spares and consumables, reagents, freight, etc to operate all facilities as described in this study. In general, the detailed operating costs have been developed by applying vendor information, budget pricing for consumables. In preparing the operating cost estimate, it has been assumed that none of the events excluded from the capital cost estimate (Section 25.6), will occur. The occurrence of any of these events might have a material impact on operating costs.

Operating Cost Estimate


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25.5.2.1

Currency Exchange Rate

All costs are in 1st quarter 2007 US dollars. The currency exchange rates applied are summarized below. Colombian Peso : Canadian dollar : CP 2,179 = US $1.00 CDN $1.13 = US $1.00

25.5.2.2

Fuel Costs

Diesel fuel will be the major component of the mine operating costs. A diesel fuel price at mine site of US$0.70 per litre has been assumed. This is based on current fuel costs as reported by Greystar.

25.5.2.3

Power Costs

Electric power will be supplied to site by ISA and / or ESSA the local Colombian utility company. Greystar staff have reported an average power cost of US$0.06 per kWh will be applicable to the project. Published Colombian costs indicate 5.6 c/kWh is an industrial average.

25.5.3 Labour - General 25.5.3.1 Labour Requirements

The Angostura Project will employ an estimated 498 people. A summary of the staffing requirement is provided below in Table 25-12. Table 25-12: Operations Area Mining Processing General and Administrative Total Summary Staffing Requirement Employees 266 151 81 498

25.5.3.2

Labour Costs

Labour costs for the Angostura Project have been compiled using recent Colombian labour rates as supplied by Greystar staff, formulated into a typical hierarchy structure for medium to large scale mining operations. The burden factors include an allowance for annual leave, sick leave and other absences. It has been assumed that all mine supervision and hourly labour on the project will be supplied from local towns and villages near the project site. Manpower pay scale includes taxes, overheads and burdens. A listing of pay rates and burdens for various job categories is presented below.

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Table 25-13:

Wage Category and Labour Cost


Employee salary Company cost by Currency Burden factor 1.7 1.4 1.7 1.7 1.7 1.7 1.7 1.4 1.4 1.4 1.7 1.7 1.7 1.7 1.7 1.7 1.7

Position

Wage Category Col$/month Col$/y 4,896,000 63,648,000 14,400,000 18,000,000 24,000,000 30,000,000 42,000,000 63,648,000 84,000,000 120,000,000 9,792,000 14,688,000 19,200,000 30,000,000 US$/y 2,083 27,084 6,128 7,660 10,213 12,766 17,872 27,084 35,745 51,064 4,167 6,250 8,170 12,766 250,000 150,000 120,000

Col$/y 8,323,200 89,107,200 24,480,000 30,600,000 40,800,000 51,000,000 71,400,000 89,107,200 117,600,000 168,000,000 16,646,400 24,969,600 32,640,000 51,000,000 -

US$/y 3,542 37,918 10,417 13,021 17,362 21,702 30,383 37,918 50,043 71,489 7,084 10,625 13,889 21,702 425,000 255,000 204,000

Colombia minimum labor Colombia minimum integral salary Assistant without specialization Assistant, receptionist, secretary, security guard Technician Professionals Junior Supervisors Junior/sub-areas responsibles Area responsible Professional or Senior Supervisor Area Manager Labour1 Labour2 Labour3 Labour4 Expat1 Expat2 Expat3

408,000 5,304,000

1 2 3 4 5 6 7 8 9 10 11 12 20 21 22

1,200,000 1,500,000 2,000,000 2,500,000 3,500,000 5,304,000 7,000,000 10,000,000 816,000 1,224,000 1,600,000 2,500,000

25.5.4 Mine Operating Cost Estimate


Equipment operating cost is also quoted in US$ based on information from recent South American projects, recent North American cost information that has been modified to represent South American conditions and on information published in 2006 by Western Mine (A division of InfoMine). The Western Mine costs have been increased by 20% to represent 2007 South American costs. The estimated annual cost is given in Table 25-14. The labour requirement for the mining operations is 266 employees, based on life-of-mine average. Mine operating costs include the waste crushing and conveyor operational costs.

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Table 25-14:
Unit Cost Summary - US$/t material mined Units ($t) ($t) ($t) ($t) ($t) ($t) ($t) ($t) ($t) ($t) PP -1 1/2 0.16 0.05 0.13 0.12 0.31 0.20 0.00 0.01 0.02 1.00 PP -1 0.06 0.05 0.13 0.12 0.29 0.14 0.00 0.00 0.02 0.80

Annual Mine Unit Cost Summary US$/t material moved


Average PP to Yr 12 0.03 0.05 0.14 0.14 0.74 0.10 0.00 0.00 0.02 1.22

Overhead Drill Blast Load Haul Roads, Dumps & S/P Rehandle Dewatering Crane & Light Vehicle Costs Reclamation Mine Total

Year 1 0.03 0.05 0.12 0.14 0.32 0.07 0.00 0.00 0.02 0.75

Year 2 0.03 0.05 0.13 0.14 0.57 0.07 0.00 0.00 0.02 1.01

Year 3 0.03 0.05 0.13 0.14 0.73 0.08 0.00 0.00 0.02 1.17

Year 4 0.03 0.05 0.14 0.14 0.86 0.08 0.00 0.00 0.02 1.31

Year 5 0.03 0.05 0.15 0.14 0.98 0.08 0.00 0.00 0.02 1.44

Year 6 0.03 0.05 0.15 0.14 0.68 0.08 0.00 0.00 0.02 1.14

Year 7 0.03 0.05 0.15 0.14 0.67 0.09 0.00 0.00 0.02 1.15

Year 8 0.04 0.05 0.16 0.14 0.74 0.13 0.00 0.00 0.02 1.29

Year 9 - 12 0.02 0.05 0.16 0.15 1.11 0.18 0.01 0.00 0.02 1.70

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Yr 1 - 12 0.03 0.05 0.14 0.14 0.77 0.10 0.00 0.00 0.02 1.25

Angostura Project - Waste Conveyor Option A Unit Cost Summary - US$/t material min Overhead Drill Blast Load Haul Crushing/Conveying Waste Roads, Dumps & S/P Rehandle Dewatering Crane & Light Vehicle Costs Reclamation Mine Total PP average 82.5c/t Units ($t) ($t) ($t) ($t) ($t) ($t) ($t) ($t) ($t) ($t) ($t) PP -1 1/2 0.17 0.05 0.13 0.12 0.29 0.00 0.20 0.00 0.01 0.02 1.00 PP -1 0.06 0.05 0.13 0.12 0.28 0.00 0.14 0.00 0.00 0.02 0.80 Year 1 0.03 0.05 0.12 0.14 0.30 0.00 0.07 0.00 0.00 0.02 0.73 Year 2 0.03 0.05 0.13 0.14 0.17 0.06 0.07 0.00 0.00 0.02 0.66 Year 3 0.03 0.05 0.13 0.14 0.26 0.06 0.08 0.00 0.00 0.02 0.76 Year 4 0.03 0.05 0.14 0.14 0.36 0.06 0.08 0.00 0.00 0.02 0.87 Year 5 0.03 0.05 0.15 0.14 0.44 0.06 0.08 0.00 0.00 0.02 0.96 Year 6 0.03 0.05 0.15 0.14 0.30 0.06 0.08 0.00 0.00 0.02 0.82 Year 7 0.03 0.05 0.15 0.14 0.16 0.05 0.09 0.00 0.00 0.02 0.70 Year 8 0.05 0.05 0.16 0.14 0.22 0.05 0.11 0.01 0.00 0.02 0.80 Year 9 - 12 0.02 0.05 0.16 0.15 0.36 0.05 0.13 0.01 0.00 0.02 0.95 Average PP to Yr 12 Yr 1 - 12 0.03 0.03 0.05 0.05 0.14 0.14 0.14 0.14 0.29 0.30 0.04 0.05 0.09 0.09 0.00 0.00 0.00 0.00 0.02 0.02 0.82 0.82

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Operating Cost Estimate


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25.5.5 Heap Leach and Process Plant Operating Cost Estimate 25.5.5.1 Summary

The estimated annual tonnages of ore to the heap leach and ore to the mill and flotation section are 13,880,000 tonnes and 720,000 tonnes respectively. The process unit operations include crushing, screening, conveying and heap leaching for the heap leach operation and crushing, grinding, flotation, bio-oxidation and cyanide leaching and tailings disposal for the high grade sulphide ore. Common operations to both processes are water distribution, gold and silver recovery and metal refining. The process operating costs include the operating and maintenance labour, power, reagents, freight, spares and all associated consumables.

25.5.5.2

Labour

A work force of 151 people will be required to operate the combined heap leach and mill process facilities. In general, the operations and maintenance personnel will work two twelve hour shifts to provide 24 hour coverage. The following table presents the pay scales and costs for the anticipated process labour positions. Certain labour costs are shared between both operations, e.g., plant superintendent, laboratory staff, maintenance foremen, etc. For the purposes of this study, these costs have been allocated to the heap leach operation. The heap leach operation is viewed as a stand alone operation for this costing exercise, thus the costs pertaining to the mill/flotation operation are viewed as incremental costs.

Operating Cost Estimate


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Table 25-15:
Labour Allocations and Costs Oxide Process Plant Position Plant Superintendent Maintenance Superintendent Process Metallurgist Maintenance Foreman Maintenance Planner Electrician - Foreman Instrumentation/IT Electrician Electrician - Apprentice General Clerk Chief Assayer Laboratory Technician Sampler Assayer Crusher Operator Crusher helper Heap Leach Operator Heap Leach Helper Stacker Conveyor Operator Stacker Conveyor Heper Leach/Detox Operator Leach/Detox helper Mech. Welder Mech. Millwright Merrill Crowe and Refinery Technician Merrill Crowe and Refinery Operator Labourer Mill Operation General Foreman Maintenance Foreman Mill Ops. Foreman Mech. Millwright Foreman Electrician - Foreman Laboratory Technician Assayer Sampler Mech. Welder Flotation/Biox Operator Reagents Operator Mill Operators Mech. Millwright Mech. Millwright - Apprentice Mech. Welder Apprentice Mech. Maintenance Helper Labourer Category (see ' Labour-Rates worksheet') 21 8 7 7 6 12 10 10 9 6 3 3 10 3 10 10 10 10 10 10 10 10 10 10 3 10 9 7 7 6 12 12 3 3 10 10 10 10 10 10 9 9 9 9 1 4 4 4 4 4 4 4 4 4 4 4 4 4 7 7 4 1 1 4 1 1 4 4 4 4 8 4 8 4 4 2 4 4 Oxide/Sulphide Sulphide

Pay Scales and Costs


Oxide per capita US$/y 255,000 71,489 50,043 50,043 37,918 21,702 10,625 10,625 7,084 37,918 17,362 17,362 10,625 17,362 10,625 10,625 10,625 10,625 10,625 10,625 10,625 10,625 10,625 10,625 17,362 10,625 7,084 50,043 50,043 37,918 21,702 21,702 17,362 17,362 10,625 10,625 10,625 10,625 10,625 10,625 7,084 7,084 7,084 7,084 Total per year Total per month 848,015 70,668 798,162 66,513 17,362 69,447 42,501 69,447 42,501 42,501 42,501 42,501 42,501 42,501 42,501 42,501 42,501 42,501 121,532 74,378 28,334 50,043 50,043 151,672 21,702 21,702 69,447 69,447 42,501 42,501 85,003 42,501 85,003 42,501 28,334 14,167 28,334 28,334 844,902 70,409 per position US$/y Oxide/Sulphide per position US$/y 255,000 71,489 150,128 50,043 37,918 21,702 10,625 42,501 7,084 151,672 5/7days 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 5/7days 5/7days 6/1 days +Pivot 5/7days 5/7days 6/1 days +Pivot 5/7days 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot 6/1 days +Pivot Sulphide per position US$/y Oxide Shift Cycle Oxide/Sulphie Shift Cycle Sulphide Shift Cycle

Number

Number 1 1 3 1 1 1 1 4 1 4

Number

5/7days 5/7days 5/7days 5/7days 5/7days 5/7days 5/7days 6/1 days +Pivot 5/7days 6/1 days +Pivot

Operating Cost Estimate


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25.5.5.3

Consumables

The costs for cyanide and lime account for over approximately 63% of the heap leach process operating costs and 34% of the high grade ore process costs. Budget prices for these reagents were obtained from recent vendor quotations. The consumption rates for cyanide and lime are based on projections from metallurgical testwork conducted by Metcon and G&T. Consumption rates for other reagents are based on testwork, calculations or Hatch project data. Crusher liner and screen panel consumption is the second largest component of process operating costs. Crusher liner prices were obtained from vendors who estimated that the gyratory crusher will require two liner changes per year and the cone crushers, six liner changes each per year. Screen panel consumptions and prices were obtained from vendors and it is anticipated that average panel life will be eight weeks. Each screen will require approximately six deck replacements per year. Operating Supplies

Operating supplies are estimated at US$3.00 per man-day and are to cover costs of small tools, safety equipment and miscellaneous supplies. Maintenance supplies

The costs of daily maintenance supplies, spares parts replacement, special tools, lubricants etc are estimated at 3% of the purchased equipment capital cost. Heap Leach Piping

It has been assumed that none of the dripper piping will be re-used and sufficient pipe to cover the required leach area will be purchased on an on-going basis. Heap Leach Equipment.

The operation of the heap will require a D9 dozer. Reagents Sodium Cyanide

Cyanide consumption for the heap leach operation has been based on the average of testwork conducted by Metcon on the transition and oxide ore types. This was 0.5 kg/t NaCN Cyanide consumption for the flotation concentrate leach, after biox treatment was estimated to be 5.0 kg/tonne treated. Lime

Lime consumption for both the heap leach and cyanide leach operations was estimated to be 1.5 kg/t, based on a lime product of 80% available lime.

Operating Cost Estimate


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Lime consumption for the biox process is based on stoichometric calculations for neutralization of the sulphuric acid generated during the biox reaction. This calculates to 1.74kg CaO per 1 kg of sulphur oxidized. See calculation below, which is based on daily throughput and expected mass recoveries and sulphur grades as indicated by flotation testwork. The calculated lime consumption is 54.5 kg tonne flotation feed.

Flotation tonnage balance HG Mill feed Rougher conc. mass pull Rougher conc. Cleaner conc mass pull Cleaner conc. Conc. Grades Sulphur Lime consumption Basis: % 44 tpd % tpd % tpd 1973 15 296 50 148

kg/kg S oxidized % np in ore tpd lime kg lime/t flot. feed

1.74 5 107.6 54.5

Lime is used in the cyanide detox process. For the purposes of this costing exercise an average consumption of 0.7 kg / tonne has been applied. Gyratory Crusher Liners - operating costs based on 2 liner changes per year. Secondary Crusher Liners - operating costs based on 6 liner changes per year. Tertiary Crusher Liners - operating costs based on 6 liner changes per year. Screen Panels operating costs based on 6 screen deck changes per year per screen. Mill grinding media 0.8 kg/t. Mill liners 0.04 kg/t. Flotation collector 80 g/t. Flotation frother 30 g/t. Flocculent 10 g/t. Zinc dust for the Merrill Crowe precip is based on a consumption of 2 g/g metal (gold + silver) produced.

Operating Cost Estimate


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The consumption rate of refining fluxes is estimated to be 1 kg per kg of precipitate and costs are based on typical operating cost data from operating mines in Canada. Assay Supplies

An allowance for supply of assaying consumables is based on typical operating mines in Canada.

25.5.5.4

Electric Power

The process plant power consumption has been based on an assessment of connected load, factored for expected operating load. Overall energy consumption is anticipated to be approximately 40 MW when operating at 14.6 million tonnes per annum based on the waste conveyor discharging at the highest elevations. Unit power costs from the national utility company (ISA) are reported to be US$0.06 kWh.

25.5.6 General and Administrative Operating Costs 25.5.6.1 Summary

The General and administrative costs are estimated to be US$0.34 per tonne of ore over the life of the Project. These costs include the personnel costs for senior mine management, administrative support, security and site maintenance. Direct items such as insurance, property taxes, business travel, office expenses, transportation and catering are also included. G & A costs were prepared by Hatch and are reviewed as an estimate only.

25.5.6.2

Labour

The labour costs are estimated based on a total general and administrative manpower complement of 81 employees. Approximately 50% of this labour requirement is made up of security staff, canteen staff and transportation drivers. A total of three expatriate managers have been included. This is expected to reduce to one, as expatriates are replaced with trained Colombian staff. The remainder of the management and support staff will be Colombian nationals. In general the administrative staff will work dayshifts for a 40-hour week. Security and warehouse personnel will operate on a 12-hour shift basis to provide 24-hour coverage. The staff salaries for management are based on Colombian rates and expatriate managers salaries are based on competitive worldwide rates.

Operating Cost Estimate


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Table 25-16:

General and Administrative Personnel Costs (including burden)


14.6 mtpa

Position

Wage Category

Annual Cost per Employee

Number

Annual Cost per Position

Management General Manager Administration Manager Employee Relations Superintendent Mine Superintendent Process Superintendent Sub Total Administration and Finance Chief Warehouseman Information Systems Manager Senior Accountant Paymaster Accountants Warehousemen Receptionist Clerks Sub Total Community and Employee Relations Personnel Manager Training Officers Safety Officer Environmental Officers Clerks Canteen Staff Nurse Security Officer Security Guards SubTotal Maintenance Janitors Mobile equipment drivers Bus drivers Sub Total Total General and Administrative Manpower

20 22 7 21 21 4 7 5 5 4 3 2 3 7 5 5 5 3 1 5 5 4 9 10 10

425,000 204,000 50,043 255,000 255,000 21,702 50,043 30,383 30,383 21,702 17,362 13,021 17,362 50,043 30,383 30,383 30,383 17,362 10,417 30,383 30,383 21,702 7,084 10,625 10,625

1 1 1 1 1 5 1 1 1 1 3 3 1 3 14 1 4 4 2 4 12 2 2 15 46 4 6 6 16 81

425,000 204,000 50,043 255,000 255,000 $1,189,043 21,702 50,043 30,383 30,383 65,106 52,085 13,021 52,085 $314,809 50,043 121,532 121,532 60,766 69,447 125,004 60,766 60,766 325,532 $995,387 28,334 63,752 63,752 $155,839 $2,655,077

0.18 $/t ore

Operating Cost Estimate


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25.5.6.3

Fixed Administrative Expenses

The G & A direct costs to the Project are summarized in Table 25-17 below. Table 25-17: G&A Costs

Cost Area

Details

14.6 mtpa Annual Cost $US

Source

Property Interest Taxes Business Travel Road Maintenance Labour Catering Costs Small Vehicles Mobile Equipment Rentals Crew Transport Costs Office Supplies/Printing/computers Other equipment Safety Training Supplies First Aid Supplies Janitorial services Outside laboratories Communications Consultants fees Management/Directors fees Environmental Monitoring Regulatory compliance Legal fees Recruiting/Relocation Insurance Office Rental - Bucaramanga Community Relations and Donations Total G & A Direct Costs 12 International trips, 48 in Country $3.50/person/day for meals(250 persons) 10 vehicles at $7000

200,000 Estimate 96,000 Estimate 100,000 Estimate 318,500 Estimate 70,000 Estimate 60,000 Estimate 100,000 72,000 50,000 60,000 36,000 24,000 50,000 60,000 100,000 100,000 200,000 100,000 75,000 50,000 300,000 60,000 100,000 2,381,500 Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate Estimate

$6000/month $5,000 per month $3,000 per month $2,000 per month $5000/month

$5000/month

0.16 $/t ore

Operating Cost Estimate


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25.6

Capital Cost Estimate


The total capital cost of the project is estimated to be $665.4 million which includes $141.0 million sustaining capital for the waste crusher and conveyor installation in Year 1, conveyor extensions, extension of the heap leach pad in Year 5 and replacement of mine equipment. An amount of $143.9 million is included for capital leasing of mine fleet equipment. Capital costs are detailed in Table 25-18. The intended level of accuracy of the capital cost estimate is +35% / -30%, with no allowance for either price escalation beyond the base date of the estimate (Q1 2007) or fluctuations in assumed currency exchange rates. Other relevant qualifications, assumptions and exclusions are set out in Section 25.6.1.

Capital Cost Estimate


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Table 25-18:
Greystar Resources --- Angostura Gold Project
Order of Magnitude Capital Cost Estimate -- Rev. 00

Capital Cost Estimate


Ongoing/Sustaining Capital Cost Estimate Year 1
Estimated Total for Year1 X'000

Initial Capital Cost Estimate USD x'000 Material Equipmen x'000 t x'000 $5,100 Mining x'000 Other Total Initial Commodicapital cost ty Costs x'000 x'000 $5,100

Year 2
Estimated Total for Year 2 X'000

Year 4
Estimated Total for Year 4 X'000

Year 7
Estimated Total for Year 7 X'000

Item

Facility

Unit

Qty

Site Preparation - Clear, Strip, Rough Grade for Free drainage, Gravel Surface Roads & Parks & Final Grade. Using both contractor and own mining equipment Main Access Road - 14km following the 3500m Contour. 14 km @ $106,000/km Buried Services - Allow Primary Crusher - Eqmt cost x 2+Ramp Overland Conveying to Cone Crushing 2,222 tph: CV001& 2 = 750m & 72mV + Transfer House + CV002 = 1000 mL & 250mV Secondary/Tertiary Crusher Building Concentrator - 2500 tpd

Lot

2 3 4 5

Lot Lot Lot Lot

1 1 1 1

$1,484 $1,000 $5,305 $10,200 $9,973 $3,570

$1,484 $1,000 $15,278 $13,770

6 7 8

Lot Lot Lot Lot Lot

1 1 1 1 1

$16,394 $6,000 $5,460 $3,950 $12,375

$8,197 $9,000 $1,911 $1,383

$24,591 $15,000 $7,371 $5,333 $12,375 $3,200 $4,100 $9,788

Leach Pad Trunk Conveyor with Tripper - 1080 m Year 1 & 1000 m Year 5 9 Heap Leach Distribution Conveyors 10 Heap Leach Pad - Incl prep, pad layers, filters, liners, aggregates. (550,000m2 Init & 435,000m2 Yr 4) @ $22.5/m2 11 D9 Dozers with Blade - Heap Leach Ore Spreading - Leased part of OPEX 12 Liquor Collection Ponds - Pregnant & Barren 13 Pregnant & Barren Liquor Pumping & Piping Systems 14 15 16 17 18 19 20 Merrill-Crowe Precipitation Process Acid Water Treating - Allow Mine Pre-Production Mine Equipment Mine Haul Roads. 6,000,000 m3 @ $2.5/m3 Waste Crushing Facility Waste Conveying - CV001W @ 750mL & 70mV + CV002W @ 1000mL & 250mV + Transfer Point

Lot Lot Lot lot Lot Lot Lot Lot Lot Lot Lot

1 1 1 1 1 1 1

$1,000 $1,200 $5,230 $1,000 $40,945 $125,210 $15,000 $6,799 $2,000

$1,000 $1,200 $12,029 $3,000 $40,945 $125,210 $15,000

$9,700 $15,300 $35,400

$1,300 $10,500

$3,600

$4,500

21 Geology & Engineering (Included with item 33) 22 Mine Support Facilities - Repair & Maintenance, Mine Dry, Parts & Supplies Storage, Mine Office, Vehicle Park, Sanitary Facilities. 23 Sanitary Facilities- Mill - Allow 24 Administration Building - Mill - Allow 25 Gate Station & Security - Allow 26 Main Power Supply - Power line - 15 km @ $30,000/km, (Colombian Utility ISA) 27 Transformer and Primary Power Distribution (Colombian Utility ICA) 28 Warehousing Facilities - Allow 29 Tailings Disposal - Initial capex Allowance 30 Shop and Lab Equipment, allowance

1 1

$0 $10,000

$0 $10,000

Lot Lot Lot Lot

1 1 1 1

$1,000 $900 $100 $450

$1,000 $900 $100 $450

Lot Lot Lot Lot

1 1 1 1 $500 $3,000

$8,000

$8,000 $500 $3,000 $700

$500

$1,000

$1,000

$700

Total Direct Cost Indirect Field Costs


40 Engineering, Procurement, Construction Management - Plant Facilities 41 Engineering and Procurement - Mine 42 Temporary Construction Facilities & Services 43 Third Party Engineering (geotechnical/environmental/hydrogelogical,) 44 Vendor Representatives - Construction & Start-Up for Process Equipment 45 Travel Related Expenses 46 47 48 49 50 Spares, Process and Mining Equipment First Fills Freight & Transportation Camp and Accommodations Catering Lot Lot Lot Lot Lot Lot Lot Lot Lot Lot Lot 17% 4% 4% 1 2% 1 4% 1 1 1 1

$35,909 $64,439 $181,155

$42,833

$324,336
$24,341 $5,608 $5,727 $1,500 $1,289 $800 $7,586 $1,500 $19,569 $2,000 $1,600

$61,900
$6,100 $500 $600

$12,800
$0 $500 $100

$20,688
$1,700 $200 $1,200

$4,500
$0 $200 $0

$600 $100 $1,200 $0 $5,000

$100

$200

$0

$30 $0 $100

$200 $0 $1,700

$0 $0 $400

Total Indirect Cost Estimated Total Direct + Indirect Costs


51 Contingency Lot Lot 1 1 20.50%

$71,520 $395,856
$81,163

$14,100 $76,000
$11,400

$830 $13,630
$2,000

$5,200 $25,888
$3,900

$600 $5,100
$800

Estimated Total Direct + Indirect Costs+Contingency


52 Owner Costs

$477,019
$28,621

$87,400
$1,700

$15,630
$200

$29,788
$300

$5,900
$100

Total Estimated Capital Cost, US$ x'000 Total Capital Cost less Mine Fleet Capex, US$ x'000

$505,640 $380,430

$89,100

$15,830

$30,088

$6,000

Capital Cost Estimate


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25.6.1 Basis of Estimate


Costs are estimated at first quarter, 2007 pricing levels. All costs are expressed in United States of America currency. The following currency exchange rates were applied as needed. $1.00 USA = = = = = = 2,179 Colombian Pesos 540 Chilean Pesos 3,096 Argentinian Pesos 2.04 Brazilian Reals 0.747 Euros $1.13 Canadian Dollars

The estimate excludes any and every provision for pricing changes beyond 1Q 2007. All cost values are expressed in United States of America Currency units. Mine planning and mine equipment sizing and quantities remain subject to variation. Metallurgical plant costs are based on budget level quotes for crushers, screens, mill and the MerrillCrowe process equipment plus additions from in-house information for conveyors and other process and support equipment. The total facility cost for the process units is determined by applying a multiplier to cover, structural, architectural, piping and electrical costs. Auxiliary and support facility sizing costs are based on in-house information for similar installations. The indirect costs are based on representative percentages from experience on current projects. The contingency of 20.5% of total direct costs reflects the preliminary status of definition and the reliability of the in-house sources used. The owner costs are indicative only and may differ significantly once Greystar establishes their requirements. Costs related to the following are excluded from the capital cost estimate: Escalation in costs after the base date of the estimate. Land acquisition costs. Environmental assessment costs. Permitting and licensing costs. Costs incurred as a result of fluctuations in the currency exchange rates assumed for the purposes of this report. Scope changes (based on the scope of the Project, as defined in this report). Project financing costs, whether done by way of debt or equity and including any interest costs.

Capital Cost Estimate


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Any additional work that is required as a result of conditions, both subsurface conditions and conditions in and around the plant, that were not known as of the base date of the estimate. The work that has been recommended but which shall be conducted at the option of the Owner, as described in Section 22, Recommendations. Taxes and royalties. Fees or royalties relating to use of certain technologies or processes. Costs incurred to accelerate the work (e.g., overtime charges, expediting charges, etc.). Costs incurred in connection with the project prior to the commencement of the EPCM phase of the Project (e.g., costs associated with the preparation of this study and any prior studies, licensing and royalty charges already incurred). Working capital.

In addition, no allowance has been made in the capital cost estimate for any of the following risk factors: The project risk factors that would be expected to potentially impact any project such as this Project (e.g., adverse weather conditions, acts of god and other force majeure events, disputes with local residents, delays due to unforeseen factors such as late delivery or unavailability of equipment or materials or inability of labour resources, poor performance by EPCM contractors or construction contractors, disputes with local residents, etc.); The specific project risk factors identified in the study; or Political, legal or regulatory risk factors (e.g., changes to laws, changes in taxation or royalty regimes or non-issuance, cancellation, revocation or inability to obtain permits or licenses required to develop and operate the project).

Any costs that may be incurred as a result of the occurrence of any of these risk factors have not been included in the capital cost estimate.

25.6.2 Mine Capital Cost Estimate


Equipment capital cost is quoted in US$ based on recent South American quotes, recent North American quotes that have been modified to represent South American conditions and on information published in 2006 by Western Mine (a division of InfoMine based on year-end 2005 data). The Western Mine costs have been increased by 20% to represent 2007 South American costs, and current market availability. Total capital cost for the mine equipment by year is shown in Table 25-19. Pre-stripping and road construction is done in a contractual mining basis. A recent project completed by Hatch included a capital lease proposal by an equipment supplier to the respective owner for the major mining fleet equipment. This was based on a prime plus one percent (2007 Q1 equivalent to 7%) and a 48 month term.

Capital Cost Estimate


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Table 25-19:
Equipment Drills - 270 mm diesel rotary Hydraulic Loaders Front End Loader - Pit Front End Loaders - Roads/SP Haul Trucks Haul Trucks Graders Graders Tracked Dozers Tracked Dozers Rubber Tired Dozer Water Truck (Used) Scrapper - Standard (Rd. Mtce) Haul Truck - Rd. Mtce./SP Tire Handler Backhoe 90- ton crane 40-ton Crane Fuel/Lube Truck Fuel Truck Service/Welding Trucks Mtc. Truck Ford F550 Hole Stemmer Dewatering - Sump Pump Dewatering - Diesel Generator 95 kw Cat IT28 36 l/sec @ 122m head 93.2 kw 17 cu m 90 t 52/80-57 tire 5-7 t 34 cu m 17 cu m 15 cu m 223 t 90 t 16' Blade 12' Blade 634 kW/113,000kg 306kW/49,500 kg Capacity Typ. Model

Mine Equipment Capital Cost


Unit Cost (US$) 2,000 7,440 3,960 1,750 3,360 1,440 1,800 732 1,850 900 1,110 1,200 720 1,150 900 518 675 300 210 PP 10,000 22,320 3,960 1,750 67,200 732 7,400 1,800 1,110 2,400 720 900 518 675 300 420 170 264 100 270 Year 1 Fleet 7,440 0 732 264 100 270 Year 2 Fleet 0 Year 3 Fleet 732 35 58 Year 4 Fleet Year 5 Year 8 Life of Mine Fleet 6,000 0 0 0 0 0 264 100 270 35 58 Fleet 1,850 1,800 71 116 16,000 29,760 3,960 1,750 67,200 2,196 9,250 3,600 1,110 2,400 720 900 518 675 300 420 170 792 300 810 142 232

Atlas Copco PV 271 O&K 340E Cat 994 F Cat 992G Cat 793C Cat 777D Cat 24H Cat 16H Cat D11T Cat D9R 834H Cat 777D Cat 621G Cat 777D Cat 980H Cat 345

19,000 l capacity

170 132 50 270 35.4 58.1

Capital Cost Estimate


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Greystar Resources Ltd. - Angostura Project NI 43-101 Independent Technical Report Equipment Fork Lift - 5,000 lb. Light Plants Portable Welder Ambulance Fire Truck 15- Passenger Bus 9- Passenger Bus Pick-ups/SUV - 1/2 ton 4x4 Sub-Total Contractor - Mine Haul Road Construction Mobilization/Demobilization Material Movement Total Mine Haul Road Cost Geology & Engineering Software - Mine Planning Computers/Survey/Plotter Mine Radio, GPS Dispatch System Sub-Total 180 100 500 2,000 2,780 180 100 500 2,000 2,780 Unit Cost $2.50 0 0 0 1,000 15,552 16,552 300 8,748 9,048 1,300 24,300 25,600 Kenworth T800 Chysler Ford F-350 Ford F-150 Capacity Typ. Model Unit Cost (US$) 22.7 17 6 70 330 75 60 40 23 136 12 70 330 150 240 1,240 125,210 PP Year 1 Fleet 136 6 240 520 9,708 Year 2 Fleet 0 Year 3 Fleet 480 1,305 Year 4 Fleet Year 5 Year 8 Life of Mine Fleet 136 6 240 520 7,629 Fleet 136 480 4,453 23 544 24 70 330 150 720 3,240 148,306

Capital Cost Estimate


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25.6.3 Estimate Basis by Facility


The following itemized listing refers to Life of Mine Capital Cost detailed in Table 25-18. Item numbers refer to relevant line items in Table 25.18. 1. Site Preparation Site Preparation includes all clearing, grubbing, wetlands drainage topsoil stockpiling and rough grading. The cost per hectare of $300,000 is derived from a combination of recent studies and actual construction. 2. Main Access Road

Greystar provided the new road distance of ten kilometres (10km) and the estimate of 2,310 millions Colombian Pesos which translates to $106,000 per km (provided by the Corp. of Engineers in a 2006 proposal). Greystar also provided the upgrade distance of five kilometres (5km) and HATCH allowed a cost of eighty percent of the new road cost per kilometre for the existing road upgrade section. 3. Buried Services

Provides for water supply, distribution, sewage collection and other in-ground mechanical services required for plant operations. This allowance is based on estimated amounts for similar projects. 4. Primary Crusher

The estimate for the primary crusher facility is based on a budget level quote of $2,853,000 for a Superior MK-II 54-75 gyratory crusher plus in-house estimates for the discharge apron feeder, cranes and hoists, rock breaker, dust control, service equipment plus chute-work and dump pocket liners equals $5,305,000. The facility cost factor of 2.28 reflects an all-steel frame on concrete foundations with single skin siding and roofing plus ventilation, electrics, and process control and includes the cost of spreading and compacting mine overburden to provide an haul truck access ramp and day sized ROM stockpile. 5. Overland Conveyors to Cone Crushing

Two conveyors, 1,600 m and 1,200 m in length transfer the primary crushed ore to the secondary crushing facility. The conveyor cost, complete with structure above the anchor bolts and access walkway, was estimated in-house. The thirty-five percent (35%) multiplier adds the cost of associated foundation work and electric power supply and the installation and wiring of safety and control devices. 6. Secondary/Tertiary Cone Crushing Building

The estimate for the secondary and tertiary crushing facility is based on an equipment cost factored to a total facility cost. The secondary and two tertiary crushers were quoted at $9,696,000 including required options. The conveying equipment, feeders, dust collection, bins, chute-work and support equipment were identified, sized and costed in-house. The multiplier of 1.5 escalates the total equipment cost to a total facility cost. It is derived from similar in-house information and includes foundations, structures, enclosures, ventilation, piping and electrical service.
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7.

Concentrator 2,500 tpd

The concentrator cost is based on a factored, estimated total equipment list. The 14 ft x 24 ft ball mill cost is based on a budget quote of $2.6 million. This quote includes the 2700 HP motor. The balance of the equipment items and costs were derived from a preliminary flow diagram and inhouse pricing. The Factor of 2.5 to arrive a total facility cost reflects the most similar in-house experience. 8. CV008 Leach Pad Trunk Conveyor

The conveyor hardware and structure was estimated in-house and incremented by 35% for foundation work and electrics. 9. Leach Pad Tripper and Distribution Conveyors

These conveyors and structures were estimated in-house and incremented by 35% for installation. 10. Heap Leach Pad

The area of the leach pad is estimated at 985,000 square metres based on an average heap height of thirty metres. The unit cost of $22.50 per square metre is derived from a range of similar projects for which detailed costs are available. Capital cost was allocated 55% in Year -1 and 45% in Year 4. 11. D9 Dozer For Heap Construction

A D9 tracked dozer will be used along with the distribution conveyors for the purpose of heap pile construction. A lease cost has been included in the Operating Cost Estimate. 12. Pregnant and Barren Solution Collection Ponds

The estimate of $1.0 million is derived from similar projects as the leach pad. 13. Leachate Pumping & Piping System

The estimate is derived from similar projects as the leach pad. 14. Merrill-Crowe Zinc Cementation Process

Summit Valley Equipment & engineering Inc provided a lump sum budget level quote for a 1,300 m3/h equipment/piping/instrumentation package itemized as follows: De-aeration Equipment Precipitation Collection Body Feed / Pre-coat System Piping & Instrumentation Plant Engineering Service Equipment Total Quotation $2,272,000 $ 681,000 $ 396,000 $1,056,000 $ 225,000 $ 600,000 $5,230,000

An installation factor of 2.3 was applied to this equipment cost.


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15.

Acid Water Treating

The $1,000,000 equipment cost is based on an in-house model for a similar facility. Factored by 200% provides the total facility cost estimate of $3 million. 16. Mine Production

The pre-strip tonnage was derived from the mine plan and a mining cost of 82.5 c/t applied. 17. Mine Equipment

The mine equipment fleet was developed as part of the preliminary mine planning work. Pricing is based on a review of both in-house and published information. The mine fleet is purchased on a capital lease basis. 18. Mine Haul Roads

A unit cost of $2.50 / m3 was applied to 6 million m3 in the construction phase and 4.2 million m3 in Year 2. 19. Waste Crushing Facility

A single gyratory crusher was costed at $5.3 million and factored by 2.88 to give a total installed cost of $15.3 million, based on recent in-house project data. 20. Waste Conveyors

The waste conveying system was estimated at $35.4 million, based on recent in-house project data. 22. Mine Support Facilities The mine support facilities are estimated at $10 million. 23. Potable & Sanitary Facilities - Allowance

The estimate is based on in-house information for a similar size of work force. 24. Administration Building Allowance

The estimate is based on in-house information for a similar size of operation. 25. Gate Station & Security

This is an allowance of $100,000. 26. Main Power Supply - Switching, Transmission & Transforming - Allow

The fifteen kilometre distance and the unit price of $30,000 per kilometre to transmit power to the mine site were provided by the Colombian utility Company ISA.

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27.

Primary Power Distribution

This allowance item provides the main substation and distribution around site for all power requirements. The individual facilities include the incoming switchgear and distribution within the facility as part of the multiplying factor to arrive at total direct facility cost of $8 million. 28. Warehousing Facilities Allowance

This allowance item of $500,000 provides open and closed receiving, storage and issuing facilities for the crushing, milling, conveying and leach pad areas. 29. Tailing Disposal Allowance

An allowance of $3.0 million has been included for tailings disposal site and a further $2 million in years 1 and 2. 30. Shop and Laboratory Equipment Allowance

This is an allowance of $700,000. Indirect Costs 40. EPCM Plant Facilities

This is estimated at 17% of direct cost of plant facilities. 41. EPCM Mine Equipment

This is estimated at 4% of mine equipment and pre-production costs. 42. Temporary Construction Facilities and Services

This is estimated at 4% of total direct costs of plant facilities. 43. Third Party Engineering

An allowance of $1.5 million is included 44. Startup & Commissioning (Vendor Representatives)

This activity is estimated at 2% of total direct cost of plant equipment costs. 45. Travel Related Expenses

An allowance of $800,000. 46. Spares

Spares are estimated at 4% of total direct cost of plant and mine plant equipment. 47. First Fills

This item is an allowance.


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48.

Freight & Transportation

This function is estimated at 5% of total direct cost. 49. Camp and Accommodations

This item is an allowance of $2 million. 50. Catering

An allowance of $1.6 million 51. Contingency

Contingency is a cost element to cover unknown items that are expected to occur within the defined scope of the project but which cannot be properly defined at this stage of the project. It should be assumed that the contingency will be spent. The contingency allowance specifically excludes costs arising from scope changes, project risk factors and all other items that are excluded from the capital cost estimate/ The following contingencies have been applied: Materials and commodities Plant Equipment Mining Equipment and preconstruction costs Indirect Costs 30% 25% 13% 25%

Giving a total project contingency of 20.5% excluding on-going sustaining capital costs. 52. Owner Costs

The 6% is an allowance amount. Greystars calculations based on project and corporate specifics may alter this amount significantly.

25.7

Financial Analysis
This financial evaluation of the project has been undertaken on a discounted cash flow (DCF) basis for a 40,000 tpd processing rate. Mining of Potentially Mineable Mineral Resources will be complete after approximately 12 years. The cash flow model is presented in Table 25-20. The Project financial analysis has been prepared based, in part, on the capital and operating cost estimates set out in this study. Therefore, it should be assumed that the exclusions and assumptions that relate to the cost estimates also relate to the economic analysis (e.g., the occurrence of any of the project risk factors identified in this study might have a material impact on the accuracy of this financial analysis). Other input to the model include metal prices by year, provided by Greystar as well as those items listed in Section 16.5.
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The base case financial evaluation indicates life-of-mine capital costs of $665.4 million with net cash flow of $491 million and an IRR of 14.2%. This excludes taxation, royalties, finance charges, working capital and closure costs. An inflation allowance has not been included in this financial evaluation. Working capital elements would include: Some inventories of operating supplies. Inventory of and also delays in payment of metal sold. Leach process time.

The financial analysis does assume mine equipment, with a capital value of $125 million, is leased at a total cost of $143.0 million. The cash flow therefore includes estimated lease payments based on a four year amortization and 7% financing cost.

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Table 25-20:
ANGOSTURA GREYSTAR
Financial Model Cashflow METAL PRICES Gold Silver ORE TYPE 1 Oxide
0 - 0.8% S

Base Case Financial Model


Operation/Production 1 2 3 4 5 6 7

Pre-Production/Construction

VERSION Base Case


8 9 10 11

Mine Life

-2

-1

$/Oz $/Oz

521 9.00

550.00 9.00

550.00 9.00

525.00 9.00

515.00 9.00

515.00 9.00

515.00 9.00

515.00 9.00

515.00 9.00

515.00 9.00

515.00 9.00

515.00 9.00

515.00 9.00

Tonnes Mined per day Tonnes Mined per year Au Grade Ag Grade S Grade Tonnes Mined per day Tonnes Mined per year Au Grade Ag Grade S Grade Tonnes Mined per day Tonnes Mined per year Au Grade Ag Grade S Grade Tonnes Mined per day Tonnes Mined per year Au Grade Ag Grade S Grade Tonnes Mined per day Tonnes Mined per year Au Grade Ag Grade S Grade

'000 t '000 t g/t g/t % '000 t '000 t g/t g/t % '000 t '000 t g/t g/t % '000 t '000 t g/t g/t % '000 t '000 t g/t g/t %

5.50 2,008.3 1.066 5.902 0.431 1.97 719.86 4.624 13.400 3.743 0.92 334.2 1.494 8.319 2.652 4.22 1,541.3 1.353 7.471 1.256 25.51 9,309.9 1.042 4.856 2.811

7.50 2,739.0 1.07 5.51 0.389 0.57 207.20 3.876 37.586 3.741 0.63 230.7 1.542 17.155 2.779 3.84 1,402.8 1.308 15.43 1.208 3.59 1,311.8 1.179 15.419 2.991

18.60 6,788.9 0.996 4.439 0.402 0.50 181.40 5.855 10.727 3.668 1.30 474.2 1.71 6.259 2.483 12.48 4,554.6 1.555 5.483 1.23 7.05 2,572.9 1.056 5.305 1.759

8.75 3,192.5 1.234 6.406 0.408 1.55 567.50 5.325 16.993 3.457 2.97 1,084.0 2.029 6.143 2.624 9.90 3,614.9 1.54 6.312 1.304 17.30 6,315.2 1.032 6.068 2.881

9.43 3,441.7 1.047 7.117 0.543 1.54 561.30 4.05 7.668 3.662 1.53 556.8 1.538 7.108 2.284 10.03 3,659.2 1.246 6.501 1.243 17.43 6,361.5 1.126 4.826 3.102

6.83 2,493.4 1.237 8.229 0.425 1.73 632.50 4.034 17.695 3.781 2.36 861.8 1.03 9.733 2.911 5.27 1,922.1 1.11 9.85 1.301 23.81 8,691.6 0.963 5.499 3.237

3.52 1,285.0 1.004 4.818 0.47 1.95 712.70 4.486 12.61 3.573 0.08 27.8 1.054 2.839 2.335 1.59 580.6 1.124 5.074 1.108 32.55 11,881.8 1.036 4.56 2.822

1.96 716.3 0.95 3.927 0.546 1.82 663.30 6.235 13.5 3.276 0.69 253.4 1.074 4.68 2.845 3.24 1,182.2 1.448 5.895 1.224 32.52 11,869.1 1.151 4.193 2.001

3.89 1,420.6 1.059 4.369 0.374 2.15 785.00 5.545 20.912 3.082 0.26 94.1 1.13 4.646 2.682 0.60 220.8 1.091 6.039 1.403 33.22 12,123.6 1.094 4.588 2.477

3.77 1,375.7 0.935 6.029 0.373 1.66 604.80 4.124 15.831 3.944 0.11 39.9 2.573 7.991 2.184 6.83 245.9 1.257 6.115 1.32 33.97 12,397.3 1.026 4.395 2.583

0.59 215.5 0.936 12.422 0.506 3.40 1,240.87 4.313 9.924 4.019 0.35 129.4 0.955 13.949 2.755 10.30 370.9 0.845 11.932 1.297 34.88 12,731.3 0.999 4.654 3.148

0.59 215.5 0.936 12.422 0.506 3.40 1,240.87 4.313 9.924 4.019 0.35 129.4 0.955 13.949 2.755 10.30 370.9 0.845 11.932 1.297 34.88 12,731.3 0.999 4.654 3.148

0.59 215.5 0.936 12.422 0.506 3.40 1,240.87 4.313 9.924 4.019 0.35 129.4 0.955 13.949 2.755 10.30 370.9 0.845 11.932 1.297 34.88 12,731.3 0.999 4.654 3.148

2 Sulphide
>2% S & >2g/t Au

3 Intermediate
>2% S & <2g/t Au

4 Transition
0.8 - 2.0% S

5 Sulphide to HL

Total

ORE

Au Grade Ag Grade S Grade Total Ore Tonnes Mined Stockpiled Ore for Year 1 Waste Tonnes Mined Strip Ratio

g/t g/t g/t '000 t

1.276 5.822 2.340 166,963.2

1.268 11.662 1.375 5,891.5

1.265 5.056 1.009 14,572.0

1.438 6.626 1.964 14,774.1

1.266 5.984 2.022 14,580.5

1.166 7.316 2.506 14,601.4

1.206 4.996 2.581 14,487.9

1.393 4.746 1.940 14,684.3

1.329 5.464 2.291 14,644.1

1.153 5.059 2.410 14,663.6

1.274 5.479 3.133 14,687.9

1.274 5.479 3.133 14,687.9

1.274 5.479 3.133 14,687.9

WASTE

'000 t

740337 4.43 38.119 24 91% 60% 79% 45% 52% 40% 68% 50% 51% 40%

71861 12.20 16.141 0.568 93% 60% 79% 45% 51% 40% 69% 50% 50% 40%

75428 5.18 39.923 0.497 92% 60% 79% 45% 54% 40% 68% 50% 61% 40%

78009 5.28 40.477 1.555 92% 60% 79% 45% 53% 40% 67% 50% 51% 40%

78202 5.36 39.947 1.538 86% 60% 79% 45% 55% 40% 68% 50% 49% 40%

78182 5.35 40.004 1.733 91% 60% 79% 45% 50% 40% 67% 50% 48% 40%

78295 5.40 39.693 1.953 89% 60% 79% 45% 55% 40% 71% 50% 51% 40%

72364 4.93 40.231 1.817 86% 60% 79% 45% 51% 40% 69% 50% 58% 40%

63671 4.35 40.121 2.151 94% 60% 79% 45% 52% 40% 66% 50% 54% 40%

40673 2.77 40.2 1.66 94% 60% 79% 45% 56% 40% 67% 50% 53% 40%

34551 2.35 40.2 3.40 87% 60% 79% 45% 52% 40% 67% 50% 49% 40%

34551 2.35 40.2 3.40 87% 60% 79% 45% 52% 40% 67% 50% 49% 40%

34551 2.35 40.2 3.40 87% 60% 79% 45% 52% 40% 67% 50% 49% 40%

TOTAL

Tonnes Ore Mined per day '000 t Sulphide ore to mill per day '000 t % S Model % Est % Est % Est % S Model % Est % S Model % Est % S Model % Est

METAL RECOVERY 1 Au Recovery Oxide Ag Recovery 2 Sulphide 3 Intermediate 4 Transition 5 Sulphide to HL METAL REVENUE GOLD Total kgs recovered Total oz recovered Total oz payable Revenue ($,000) Average recovery SILVER Total kgs recovered Total oz recovered Total oz payable Revenue Percentage of total revenue Average recovery TOTAL METAL REVENUE Au Recovery Ag Recovery Au Recovery Ag Recovery Au Recovery Ag Recovery Au Recovery Ag Recovery

'000 t oz oz '000 $

135,010 4,340,734 4,297,327 $2,239,444 63.4% 436,863 14,045,683 12,641,115 $113,770 4.8% 44.9% $2,353,214

5,568 179,002 177,212 $97,467

14,002 450,194 445,692 $245,131

14,196 456,435 451,871 $237,232

11,983 385,270 381,418 $196,430

10,729 344,966 341,516 $175,881

10,428 335,285 331,932 $170,945

13,120 421,824 417,606 $215,067

12,190 391,933 388,014 $199,827

10,166 326,839 323,571 $166,639

10,876 349,662 346,165 $178,275

10,876 349,662 346,165 $178,275

10,876 349,662 346,165 $178,275

'000 t oz oz '000 $ % '000 $

33,056 1,062,791 956,512 $8,609

38,091 1,224,658 1,102,192 $9,920 2.7% $361,126

46,011 1,479,303 1,331,373 $11,982 4.8% $249,214

42,391 1,362,927 1,226,635 $11,040 5.3% $207,470

49,287 1,584,635 1,426,171 $12,836 6.8% $188,716

30,936 994,626 895,163 $8,056 4.5% $179,001

29,583 951,132 856,018 $7,704 3.5% $222,771

34,202 1,099,635 989,671 $8,907 4.3% $208,734

31,959 1,027,517 924,765 $8,323 4.8% $174,962

33,783 1,086,153 977,538 $8,798 4.7% $187,073

33,783 1,086,153 977,538 $8,798 4.7% $187,073

33,783 1,086,153 977,538 $8,798 4.7% $187,073

COSTS ($'000)

Initial Capital Costs Ongoing/Sustaining Capital Mine fleet equipment lease Operating Costs
Mining Costs Process Costs G&A Total
TOTAL CASH EXPENDITURE

'000 $ '000 $ '000 $

$ $ $

380,430 141,018 143,919

$ $

171,194 9,945

$ $

209,237 35,980 $ $

89,100 35,980

$ $

15,830 35,980

$ $

30,088 26,034

6,000

'000 $ '000 $ '000 $ '000 $


'000 $ $

$678,044 $464,080 $54,764 $1,196,888


1,862,255 $ 181,139 $ 245,217 $

$65,700 $45,875 $4,954

$61,237 $37,832 $5,023

$70,515 $37,357 $4,957

$80,722 $38,566 $4,964

$89,072 $39,664 $4,926

$71,380 $39,232 $4,993

$54,821 $41,153 $4,979

$44,269 $38,232 $4,986

$46,777 $48,723 $4,994

$46,777 $48,723 $4,994

$46,777 $48,723 $4,994

241,610

155,902

168,951

124,252

133,662

115,604

106,952

87,486

100,493

100,493

100,493

CASHFLOW ($'000) Cashflow Cumulative Cashflow ECONOMIC RESULTS IRR % PAYBACK (years) % yrs 14.2 6.4 Gold price: Year 1 = $550, Year 2 $525, Years 3- 11 $515 '000 $ '000 $ $490,958 ($181,139) ($181,139) ($245,217) ($426,355) $119,516 ($306,839) $93,312 ($213,527) $38,519 ($175,008) $64,464 ($110,544) $45,340 ($65,204) $107,167 $41,962 $101,782 $143,744 $87,475 $231,220 $86,580 $317,799 $86,580 $404,379 $86,580 $490,958

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25.7.1 Metal Price Estimates


The base case financial analysis uses the following metal prices; in US dollars per ounce (2007), as provided by Greystar: Gold Silver Year 1 550 9 Year 2 525 9 Years 3-11 515 9

25.7.2 Gold and Silver Production Estimate


Based on the life-of-mine Potentially Mineable Mineral Resources and metallurgical test results, gold and silver recovery models were developed as detailed in Section 7. Based on these calculations, the estimated metal mineral resource are 4.3 million ounces and 14.0 million ounces of silver.

25.7.3 Gold and Silver Payment Terms


Gold payment is based on 99% payable. Silver is based on 90% payable. The difference between metal shipped and payable metal allows for outside refining charges.

25.7.4 Contingencies
Contingencies have been applied giving a combined average of 20.5% of total capital costs, including the value of leased equipment.

25.7.5 Taxation and Royalties


No taxation or royalties have been included in the financial evaluation.

25.7.5.1

Depreciation

No allowance for depreciation has been included in the financial evaluation.

25.7.6 Sensitivity Analysis


A sensitivity analysis matrix is shown below, based on the project capital estimate and at the base case metal prices and also at constant life-of-mine gold prices of $515/oz, $530/oz and $545/oz. Table 25-21: Metal Prices Au US $/oz Ag US $/oz Sensitivity Analysis Base Case 550/525/515 9

515 9 464.6 13.1

530 9 529.1 14.7

545 9 593.6 16.3

Net Cash Flow Pre-tax IRR % Pre-tax

491.0 14.2

Based on the estimated gold and silver recoveries developed in this study, and the estimated capital and operating costs, the cash cost for gold production in the base case is as follows:

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Table 25-22: Operating Costs (Life of Mine) $000 Total Gold Production (ounces) Total Costs $/oz Au

Gold Production Base Case 1,196,888 4,340,734 276

Note: All costs have been expressed as 1st Quarter 2007. The gold production cost of $276/oz is determined from the life-of-mine operating costs developed in this study and the calculated gold production. The sensitivity analysis is shown graphically in Figure 25-13 with respect to project capital cost and gold price.

Sensitivity Analysis
30 25 20

IRR

15 10 5 0 -20%

-15%

-10%

-5%

0% base

5%

10%

15%

20%

Capex - Gold Price


%Capex Gold Price

Figure 25-13:

Capex and Gold Price Versus IRR

25.7.7 Comparison of Projected Gold Prices


While Hatch is not providing an opinion on the gold and silver price projections provided by Greystar, the following data is presented as perspective on this gold price versus published metal price outlooks. BMO Capital Markets published a summary of gold and silver metal prices forecast, April 12, 2007. This indicated a mean gold price for 2009 and beyond at $556 per ounce. The median gold price is reported as $550 per ounce. This was based on information from 18 international financial institutions. Silver price forecasts by 15 financial institutions was reported with a mean of $9.70 per ounce, and a median of $9.50 per ounce. A comparison of metal prices is given below: Greystar Base Case Gold $/ounce Silver $/ounce 550 (yr 1) 525 (yr 2) 515 (yrs 3-11) 9 Sensitivity Analysis 515 9 530 9 545 9 BMO Capital Markets, April 2007 556 9.70

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