Lithocaps

The Corporation’s strategy in the central-southern part of Peru is to discover economic gold porphyry systems and associated epithermal mineralization. Up to date, most of the work conducted has been in Huancavelica, a region located in the southeastern part from Lima. As of 2012, the Corporation has staked 25,090 ha and has also optioned two projects: Lithocaps (595 ha) and Terciopelo (4,200 ha). From the areas that were staked, two new projects were identified: Purisima and Retazos.

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Figure 1: Location of the Lithocaps Projects.

Arcopunco

On August 2, 2012 two transfer options and mining assignment agreements were signed to acquire 100% of the Lithocaps prospect in Huancavelica, which is located in the southeastern part of Peru; one corresponds to “Las Animas” and “Tres Mosqueteros” mining concessions, and the other for “Trabante” mining concession. In order to acquire 100% of the mining concessions, the Corporation will have to pay US$5,360,000. The Corporation also has the option at its own discretion to only acquire 80%, which requires the payment of US$2,360,000. This amount has the following payment structure:

(a) US$60,000 upon signing the agreement (US$40,000 for “Las Animas” and “Tres Mosqueteros” mining concessions; and US$20,000 for the “Trabante” mining concession);

(b) US$100,000 12 months from the date of signing the agreement (US$66,666.66 for “Las Animas” and “Tres Mosqueteros” mining concessions; and US$33,333.34 for the “Trabante” mining concession);

(c) US$200,000 24 months from the date of signing the agreement (US$133,333.32 for “Las Animas” and “Tres Mosqueteros” mining concessions; and US$66,666.68 for the “Trabante” mining concession); and

(d) US$2,000,000 36 months from the date of signing the agreement (US$1,333,333.34 for “Las Animas” and “Tres Mosqueteros” mining concessions; and US$666,666.66 for the “Trabante” mining concession).

The remaining 20% requires a payment of US$3,000,000 (US$2,000,000 for “Las Animas” and “Tres Mosqueteros” mining concessions; and US$1,000,000 for the “Trabante” mining concession). After the final payment, a NSR royalty of 1.5% for each agreement is automatically activated, and the Corporation can repurchase the NSRs for the following amounts: US$10,000,000 for “Las Animas” and “Tres Mosqueteros” mining concessions, and US$5,000,000 for the “Trabante” mining concession.

The Lithocaps prospect is located in Huancavelica within the Huachocolpa District, a very well-known mineralized region in the southern part of Peru. This region contains intermediate sulfidation systems and base metal rich skarns.

Detailed mapping has been carried out in Lithocaps in order to understand the system better and to create a plan for future drilling.

Terciopelo

The Terciopelo project is a mining assignment and option agreement with Compania de Minas Buenaventura S.A.A (BVN: NYSE). This is a project located north of Lithocaps, and has the potential to discover a gold porphyry system at depth.

The agreement with BVN was signed on September 12, 2012, and consists of completing a 5,000m diamond drilling campaign, within the next three years, in which the first 1,000m diamond drillings should be done within the first 18 months. The remaining 4,000m should be completed between the 18 months and the 3-yeared term. Additionally, if the Corporation decides to exercise the transfer option, a payment of US$25,000 shall be made to Minas Buenaventura S.A.A. after the drilling campaign finishes within a 60-day term. If the Corporation exercises this transfer option, a NSR royalty of 1.5% to Minas Buenaventura S.A.A. is activated automatically, and the Corporation may repurchase the NSR for a total amount of US$5,000,000. However, Minas Buenaventura S.A.A. may, within one year, exercise a return option, whereby this NSR shall be rendered null and void, and thus the mining concessions will become property of a new company in which Minas Buenaventura S.A.A. may acquire a 70% interest. In order to do so, Minas Buenaventura S.A.A. shall have to pay 2.5 times the value of the qualified expenses incurred by the Corporation in the Terciopelo project since the agreement was executed.

Extensive work has been done by Minas Buenaventura S.A.A. in the area, and between 2009 and 2010, US$1.8 million has been invested in the property. The work consisted of geochemical sampling on surface (1,028 samples), with results varying from 0.1-0.6g/t Au. Minas Buenaventura S.A.A. also conducted magnetometry and IP, surveys and finally drilled 2,647m. None of the holes drilled exceeded 200m vertically.

Retazos

The Retazos prospect is located 45 km southeast from the city of Huancavelica, at an elevation of 4,700 masl. Between January 12 and February 14, 2012, a 50-day field reconnaissance program was completed by the Corporation. Further work in the area was put on standby due to inclement weather conditions and an unusually heavy rainy season which has extended to early April. The Retazos property consists of the following mineral titles:

Geologically, the area is underlain by the late Miocene Huachinga Formation discordantly overlain by the Pliocene Astobamba formation. Both formations consist of volcanic sequences. The Huachinga formation is composed of andesitic flows intercalated with pyroclastic horizons, whereas the Astobamba formation is composed of basaltic and andesitic flows intercalated with sporadic andesitic volcanic breccias. Sporadic out crops in Retazos 11 (South), Retazos 10 and Retazos 23 (North and South) are affected by silica–chalcedonic alteration (900 x 50 m). It is also possible to observe moderate advanced argillic alteration, and its relationship with the Terciopelo prospect alteration corridor. In the vicinity of Retazos 4, next to the Lithocaps area, it is possible to observe advanced argillic alteration and strong silicification, including some sectors with vuggy and massive gray silica. Rock sampling in this area has produced anomalous arsenic (As) and mercury (Hg) values. Along the contacts between the Huachinga, Astobamba and Casapalca Formations, and within the structural corridor of the Chonta fault, narrow polymetalic veins were sampled, producing values of up to 593 ppm silver (Ag), 99.82 ppm molybdenum (Mo), 17% lead (Pb) and 1.6 % zinc (Zn).

Purisima

Initial reconnaissance work at the Purisima lithocap prospect has identified a 500 x 100m hydrothermal alteration zone in the northern sector of the property and another zone of 300x100m in the southern limit of the property. The northern sector presents hydrothermal breccias with silica-sericite-clay alteration. The southern sector contains silicification and vuggy silica with occasional alunite surrounded by argillic and prophylitic alteration. The mineralization is predominantly hosted by E-W and N-E structures, and is associated with gray quartz, pyrite and traces of other base metal sulphides. Geochemical results from 89 rock samples suggest an upper level epithermal signature, probably of intermediate to low sulphidation affinity, represented by the alteration described above and Au- Ag-Pb (Zn) and As-Mo-Sb-Te anomalies. Rock samples analysis reported six samples with values of Au between 0.073 and 0.195ppm; 16 samples with 1 to 6.8ppm Ag; 18 samples with 501ppm to 4,730 ppm Pb; and 18 samples with 105ppm to 1,890ppm Zn