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090109 Durgin Cieneguita 43 101 Dec 08 Final


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090109 Durgin Cieneguita 43 101 Dec 08 Final

  1. 1. Delve Consultants, LLC. Mineral Exploration and Development TECHNICAL REPORT – RESOURCE UPDATE CIENEGUITA PROJECT CHIHUAHUA, MEXICO Prepared for MEXORO MINERALS LIMITED December 5, 2008 Dana Durgin CPG #10364 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 1
  2. 2. Delve Consultants, LLC. Mineral Exploration and Development TABLE OF CONTENTS Section Page 1.0 EXECUTIVE SUMMARY 1 1.1 Introduction 1 1.2 Geology and Mineralization 1 1.3 Exploration and Mining History 1 1.4 Drilling and Sampling 1 1.5 Metallurgical Testing 2 1.6 Mineral Resource Estimation 2 1.7 Interpretation and Conclusions 3 1.8 Recommendations 3 2.0 INTRODUCTION AND TERMS OF REFERENCE 5 3.0 RELIANCE ONOTHER EXPERTS 7 4.0 PROPERTY DESCRIPTION AND LOCATION 7 4.1. Location 7 4.2 Land Area 8 5.0 ACCESS; CLIMATE; LOCAL RESOURCES; INFRASTRUCTURE; AND 11 PHYSIOGRAPHY 6.0 HISTORY 11 6.1 Recent Exploration History 11 7.0 GEOLOGIC SETTING 11 7.1 Regional Geology 11 7.2 LocalGeology 11 7.2.1 Intrusive Breccia 13 8.0 DEPOSIT TYPES 14 8.1 Epithermal Systems 14 8.2 Porphyry Systems 15 8.3 Diatreme Breccia 15 9.0 MINERALIZATION 15 9.1 Quartz-biotite-orthoclase-adularia-calcite (Low Sulfidation) 16 9.2 Quartz-sericite-pyrite (High Sulfidation) 16 9.3 Hematite-goethite 16 9.4 Inter-caldera Megabreccia 16 9.6 Diatreme Breccia 17 10.0 EXPLORATION 18 11.0 DRILLING 18 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 ii
  3. 3. Delve Consultants, LLC. Mineral Exploration and Development 11.1 Drilling Summary 18 11.2 Core Drilling and Logging 22 12.0 SAMPLING METHOD AND APPROACH 22 12.1 Sampling Summary 22 12.2 Core Sampling 22 13.0 SAMPLE PREPARATION, ANALYSIS AND SECURITY 23 13.1 Sample Preparation 23 13.2 Analytical Procedures 23 14.0 DATA VERIFICATION 23 14.1 Quality control 23 14.2 Historic Drilling Data 24 15.0 ADJACENT PROPERTIES 24 16.0 MINERAL PROCESSING AND METALLURGICAL TESTING 24 17.0 MINERAL RESOURCE ESTIMATE 25 17.1 Definitions 26 17.2 Data 26 17.3 Deposit Geology Pertinent to Resource Estimation 26 17.4 Density 27 17.5 Resource Modeling 27 17.6 Cieneguita Inferred Resource 32 17.6.1 Metallurgical Considerations 33 17.6.2 Mining Considerations 33 17.6.3 Upgrading the Resource Classification 34 18.0 MINERAL RESERVE ESTIMATE 34 19.0 OTHER RELEVANT DATA AND INFORMATION 34 20.0 INTERPRETATIONS AND CONCLUSIONS 35 21.0 RECOMMENDATIONS 36 21.1 Cieneguita 37 21.2 Program and Budget 38 21.3 District Exploration 38 22.0 REFERENCES 39 23.0 DATE AND SIGNATURE PAGE 40 23.0 CERTIFICATE OF AUTHOR 41 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 iii
  4. 4. Delve Consultants, LLC. Mineral Exploration and Development LIST OF TABLES Table Page Table 4.1 Claim Information For the Cieneguita Property 8 Table 10.1 Cieneguita Drilll Hole Intercepts 19 Table 17.6 Results of May 2007 Cyanidation Study 25 Table 21.2 Cieneguita Project Exploration Budget 38 LIST OF FIGURES Figure Page Figure 4.1 Location Map 9 Figure 7.1 Cieneguita District Geology 12 Figure 7.2 Cieneguita Deposit Geology With Drill Holes 13 Figure 7.2.1 Cieneguita Longtitudinal Section 14 Figure 17.5.1 Cieneguita Cross Section Grid 28 Figure 17.5.2 Cieneguita Resource Blocks 29 Figure 17.5.3 Representative Cross Section – Eastern Resource Blocks 30 Figure 17.5.4 Representative Cross Section – Western Resource Blocks 31 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 iv
  5. 5. Delve Consultants, LLC. Mineral Exploration and Development 1.0 EXECUTIVE SUMMARY This technical report was prepared by Delve Consultants at the request of Mexoro Minerals Limited, a United States (Colorado) corporation, listed on the Over The Counter Bulletin Board as MXOM, in connection with its filings with British Columbia Securities Commission. The report was written in compliance with disclosure and reporting requirements set forth in the Canadian Securities Administrators’ National Instrument 43-101, Companion Policy 43-101CP, and Form 43-101F1. The resource estimate contained herein for the Cieneguita deposit was prepared by Dana Durgin in November 2008. No mineral reserves were estimated. Mr. Durgin (the author) is a qualified person under Canadian Securities Aministrators’ National Instrument 43-101. The author has independently investigated the data provided to him by Mexoro Minerals Limited to the extent deemed necessary in his professional judgment for him to be able to reasonably rely on this information. 1.1 Introduction The Cieneguita project is located southwestern Chihuahua in northern Mexico, and is 375 km by road from the state capital, Chihuahua City. The project is about 30 km south of the town of Cerocahui, adjacent to the village of Cienequita. It is part of the Sierra Madre Occidental silver- gold belt. The centre of the property is located at latitude 27 degrees 8 minutes North and longitude 108 degrees 12 minutes (WGS 1984, UTM zone 12, 3003848N, 795718E). 1.2 Geology and Mineralization At the Cieneguita project, disseminated gold-silver-lead-zinc mineralization is hosted by a diatreme breccia, which has the appearance of a coarse, poorly sorted, poorly consolidated felsic tuff. Disseminated pyrite, galena, sphalerite and chalcopyrite are spatially associated with widespread sericitic and argillic alteration. The diatreme body has the appearance of a flattened funnel, approximately 1000 meters long and 200 meters wide, and dips nearly vertically. Host rocks are andesitic volcanic rocks of lower Tertiary age. This is the first mineralized diatreme breccia described in the region. 1.3 Exploration and Mining History In general, the region has a mining history dating to the early Spanish colonial days. The church at nearby Cerocahui was built in 1620. There was no significant mining activity in the immediate area of Cieneguita until Cominco drilled 51 diamond drill holes (6700m) in 1981 and 1982. Glamis Gold completed drilling programs in 1994 and 1997. From 1995 to 1998, the Cieneguita deposit was a producing mine operated by Glamis. From 1995 to 1998, an indicated 197,993 metric tonnes of oxidized ore grading at 2.27 grams per tonne gold (g/t Au) was mined from the Cieneguita Property. Mexoro began its ongoing diamond drilling program in December 2007. 1.4 Drilling and Sampling 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 1
  6. 6. Delve Consultants, LLC. Mineral Exploration and Development The quality and technical specifications of sampling techniques and procedures of any drilling done prior to that of Mexoro are not well known. The precise hole locations of most of the earlier generations of drilling cannot be ascertained with certainty due to mining activity and time having erased much of the prior survey grid. Mexoro initiated the ongoing diamond drilling program in December 2008, using GDA Servicios Mineros, as the contractor. As of late September 2008, at total of 12,939 meters of HQ (2.5 inch core) drilling had been completed in 62 drill holes. Core recovery has been excellent. All of the core in each hole has been photographed, logged in detail, split, sampled, and assayed by Chemex Laboratory for silver and gold as well as a suite of trace elements. The drilling program has the goal of completing a total of 20,000 meters of core drilling by the end of 2008 using two drilling rigs. 1.5 Metallurgical Testing In May of 2007, a metallurgical report was released on a cyanidation study of gold and silver bearing samples of largely oxidized material taken from the Cieneguita Property by the Servicio Geologico Mexicano. There were a total of six samples that were subjected to the cyanidation process by using a bottle roll system and agitating the samples for 24, 48 and 72 hours respectively. Results for these samples ranged from 39.11 % up to 91.61 % dissolution for gold and 21.62 % to 56.44 % dissolution for silver (Servicio Geologico Mexicano, May 2007). Additional metallurgical testing is planned with a focus on sulfide mineral recoveries, most likely using flotation processes, which will be necessary in resource modeling, but has not yet been done. 1.6 Mineral Resource Estimation This Technical Report was prepared largely as a supplement to Mr. Besserer’s April, 2008 report to describe the process used in, and the results from, an inferred resource calculation done by the author. It was a cross section-based, manually done (not computer modeled) process. Via the construction of a set of orthogonal sections, with surface and drillhole geology and assays plotted on each section, a three-dimensional geologic model was compiled. Assays were composited using the sum of the dollar values for Au, Ag, Pb and Zn in each drill interval. Three-year trailing average prices used were: gold = $727.22 per ounce, silver = $13.66 per ounce, lead = $1.00 per pound, zinc = $1.36 per pound. A cutoff of $30 was applied and weighted averages calculated for each above-cutoff interval. These intervals were projected between drill holes and between sections to produce resource blocks, which were then compiled using weighted averages to produce a total tonnage and grade with a dollar value per ton. The total in-situ resource was calculated to be: 15.25 million tons at a dollar value of $61.37 per ton – or 2.62 grams gold- equivalent per ton. Individual metals grades were: Au = 0.67 g/t (328,638 oz), Ag = 56.45 g/t (27,675,709), Pb = 0.334% (110,862,184 lb), Zn = 0.475% (142,119,096 lb). This is an in-situ, inferred resource with no consideration for metallurgical recoveries since no flotation studies have been done at this time. Using the closely analogous Montana Tunnels deposit as a model and their historic metal recoveries of Au (81.9%), Ag (73.8%), Pb (86.5%) & Zn (85%), produces the following 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 2
  7. 7. Delve Consultants, LLC. Mineral Exploration and Development potentially recoverable resource: 15.25 million tons at Au = 0.549 g/t (269,155 oz Au), Ag = 41.66 g/t (20,424,671 oz Ag), Pb = 0.298% (88,110,790 lb), Zn = 0.396% (120,801,231 lb). Smelters commonly pay for 95% or more of the contained gold and silver, 60% of the zinc and 45% of the lead. After those deductions, the total recovered and payable resource is calculated to be: 15.25 million tons at Au = 0.522 g/t (255,697 ounces Au), Ag = 39.58 g/t (19,403,440 oz Ag), Pb = .0179% (52,866,474 lb), and Zn = 0.178% (54,360,554 lb). Of course these are estimates based on the assumptions that the deposit is metallurgically analogous to Montana Tunnels and that the three-year trailing average metal prices used are appropriate. 1.7 Interpretation and Conclusions From his review of data provided by Mexoro, the author believes that the data are generally an accurate and reasonable representation of the Cieneguita project. Mexoro’s ongoing exploration program has delineated a gold and silver resource with significant base metal values. These resources are classified as Inferred Resources, as defined by CIM. These have been estimated based on geological evidence and reasonably assumed, but not verified, geological grade and continuity. These resources may change to Indicated or Measured Resources as more data is obtained and more sophisticated methods of deposit modeling, statistical treatment of data, and improved data verification procedures are applied. It cannot be assumed that all such resources will be converted to Indicated and Measured Resources, however the author believes that such improvements will lead to definition of resources in higher categories for at least a significant portion of the deposit. In addition, the resources described remain open among and lateral to inferred resource blocks and in depth. The drilling program on which this resource calculation has been based was done at a nominal hole spacing of 80 meters. Additional drilling is clearly warranted both as infill of the known resource area and as step-out drilling peripheral to the known resource. This program is in progress. 1.8 Recommendations The ongoing infill and close step-out drilling is in progress with the goal of providing the necessary data to carry the resource forward into the Indicated and Measured categories. Completion of the drilling program on a 40-meter hole spacing will greatly increase the geologic and assay control necessary to refine the resource calculation and highlight areas that need additional drilling. In order to convert Inferred Resources into the Indicated and Measured categories it will be necessary to use and monitor a more complex data verification system including submitting additional standard and duplicate samples, twinning holes and doing check assays with other labs. A more sophisticated approach to deposit modeling will be needed. A computer generated model with integrated geology based on more closely spaced drilling will allow statistical treatment of the assay data, as well as provide more reliable and accurate resource estimates. 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 3
  8. 8. Delve Consultants, LLC. Mineral Exploration and Development Initial metallurgical testing which envisions processing the mineralized material by flotation techniques is highly recommended. This will also guide future more detailed work. Initial baseline studies of potential environmental and social issues should be begun in a proactive effort to prevent potential problems. The budget to accomplish these goals early in 2009 is estimated at $1.650,000. 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 4
  9. 9. Delve Consultants, LLC. Mineral Exploration and Development 2.0 INTRODUCTION AND TERMS OF REFERENCE Delve Consultants has prepared this technical report regarding the Cieneguita Project at the request of Mexoro Minerals Limited. It is written as a supplement to a Technical Report written by Dean Besserer of Apex Geoscience Ltd., dated April 28, 2008. Besserer’s report did not include a resource estimate. A recently completed resource estimate is the principal subject of this technical report. The sections in this report regarding project location, history, regional geology, property geology, drilling procedures, sampling procedures, analytical procedures and Qa/Qc are generally taken directly from Besserer’s report with his permission. Modifications were made to these sections only if there were procedural changes or more data available. The writing of this Technical Report was triggered by a press release describing the estimated resource, dated August 28, 2008 This will satisfy Mexoro’s obligation to file a technical report as public information in connection with this recent press release, as required under the policies of the British Columbia Securities Commission. This report is written in compliance with disclosure and reporting requirements set forth in the Canadian Securities Administrators’ National Instrument 43-101, Companion Policy 43-101CP and Form 43-101. An inferred resource estimation was completed by the author, Dana Durgin, in late November 2008, from data made available by Mexoro; no reserves were estimated. The author carried out such independent investigations of the data and of the property in the field as has been deemed necessary in the professional opinion of the author, so that he might reasonably rely on this information. The author reviewed pertinent technical reports and data provided by Mexoro relative to the regional and property geology, land status, history of the district and of the project, past and present exploration efforts and results, methodology, interpretations, and other data necessary to the understanding of the project, sufficient to produce this report. He accompanied Mr. Besserer at the time that he made his visit early in 2008, and critically reviewed Mr. Besserer’s report. He has also worked in the area for other clients and is familiar with the regional and local geology. The drilling assay and geologic data required to produce this report was generated during an ongoing diamond drilling program, which was begun by Mexoro in December, 2007. The author has relied on that data for the geologic modeling and resource estimation portion of this report. The conclusions made in this report were based on the author’s review of that data and limited additional data acquired independently, as well as two days spent at the project in the field. As mandated by NI 43-101 requirements, the observations, conclusions and recommendations of the author in this report are derived from the review of that data and a site inspection on January 12, 2008, and September 21, 2008. These site inspections included a review of available data at Mexoro’s office in Chihuahua City, an inspection of mineralization exposed in surface outcrops and workings, and in extensive trenching at the project. The author believes that the data presented to him by Mexoro Minerals Limited are generally a reasonable and accurate representation of the Cieneguita gold project. Units of measure, conversion factors and currency used in this report are as follows: 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 5
  10. 10. Delve Consultants, LLC. Mineral Exploration and Development Linear Measure 1 inch = 2.54 centimeters = 254 millimeters 1 foot = 0.3048 meter 1 yard = 0.9144 meter 1 mile = 1.6 kilometers Area Measure 1 acre = 0.4047 hectare 1 square mile = 640 acres, or 259 hectares Capacity Measure (liquid) 1 US gallon = 4 quart or 3.785 liters Weight 1 short ton = 2000 pounds = 0.907 tonne 1 pound = 16 oz = 0..454 kg = 14.5833 troy ounces Analytical Values 1% percent Grams per Troy ounces metric tonne per short ton 1% 1% 10,000 291.667 1 gm/tonne 0.0001% 1 0.0291667 1oz troy/ton 0.003429% 34.2857 1 100 ppb 0.0029 100 ppm 2.917 Commonly used abbreviations and acronyms AA atomic absorption spectrometry Ag silver Au gold CIM Canadian Institute of Mining, Metallurgical and Petroleum core diamond drilling method, producing a cylinder of rock FA-AA fire assay with an atomic absorption finish g grams g/t Ag grams of silver per metric tonne, equivalent to ppm g/t Au grams of gold per metric tonne, equivalent to ppm 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 6
  11. 11. Delve Consultants, LLC. Mineral Exploration and Development g/t AU-eq grams per metric ton expressed in gold-equivalent. A calculation based on the following metal prices: gold = $844 per ounce, silver = $15.60 per ounce, lead = $0.75 per pound, zinc = $0.90 per pound. Formula: g/t Au-eq = g/t Au($844) + g/t Ag( $15.60) + %Pb (20lb x $0.75) + %Zn (20lb x $0.90) / $844 has hectares m meters mm millimeters km kilometers NSR Net Smelter Return Pb lead RC reverse circulation drilling method t tonnes tpd tons per day Zn zinc 3.0 RELIANCE ON OTHER EXPERTS The author’s principal task was the development of a geologic model of the deposit and the calculation of a cross section based inferred resource. While he has reviewed and generally approved the April 2008 Technical Report by Besserer, he has not reviewed copies of agreements and other title documents for the properties making up the project, and can only assume them to be valid. Nearly all of the sections of this Technical Report not directly related to the resource estimation effort are excerpted directly from Besserer’s report or modified slightly for clarity, except where changes have occurred. Changes have been noted in the text in each section. Please see Mr. Besserer’s report for his “Reliance on Other Experts section” regarding the portions take directly from his report. The author has not investigated any environmental or social issues, which could conceivably affect the Cieneguita project. He does not consider himself to be qualified to assess these issues in Mexico. Conclusions regarding the estimated resource and the recommendations presented in this report are those of the author, based on his review of the data and extensive personal experience as a geologist in the mining industry, and do not necessarily reflect those of Mexoro Minerals Limited. 4.0 PROPERTY DESCRIPTION AND LOCATION 4.1 Location (taken directly from Besserer, 2008) The Cieneguita Property is composed of four concessions totaling 822 Hectares (Ha) located in the state of Chihuahua, Mexico (Figures 4.1 and 7.1; Table 4.11). More specifically, the Cieneguita Property is located 375 kilometres (km) from Chihuahua City in the Baja Tarahumara canyon area of southwest Chihuahua State. The centre of the Property is located at latitude 27 degrees 8 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 7
  12. 12. Delve Consultants, LLC. Mineral Exploration and Development minutes North and longitude 108 degrees 12 minutes West (WGS 1984, UTM zone 12, 3003848N, 795718E). Table 4.1: Claim Information for the Cieneguita Property Lot Name Title Area (Ha) Term of Validity (2) Royalties and Number Payments Aurifero 196356 492.00 7/16/1993 to (1) 7/15/2043 (2) Aurifero 196153 60.00 7/16/1993 to (1) Norte 7/15/2043 (2) La Maravilla 190479 222.00 4/29/1991 to (1) 4/24/2041 (2) Aquilon Uno 208339 48.00 9/23/1998 to (1) 9/22/2048 (2) 4.2 Land Ownership The Cieneguita Property is currently owned by Corporativo Minero. Sunburst de Mexico S.A. de C.V. (‘Sunburst’ or ‘Sunburst de Mexico’), has the option of purchasing the concessions under the payment plan discussed below: (1) The Cieneguita concessions are all under an option to purchase for $2,000,000 of which $590,000 has been paid. Sunburst paid $150,000 upon execution of the agreement with Corporativo Minero and two months later paid $200,000. Because the Cieneguita Property was not in production by May 6, 2006, Sunburst was required to pay $120,000 to Corporativo Minero to extend the contract. Through discussions with Sunburst, Corporativo Minero agreed to reduce the obligation to $60,000, of which $10,000 was paid in April 2006. Sunburst de Mexico was then required to pay the remaining $50,000 by May 6, 2006. Sunburst made this payment to Corporativo Minero and the contract has been extended. The Company renegotiated the payment due May 6, 2007, to $60,000 payable on November 6, 2007, which was paid and the balance of $60,000 was paid on December 20, 2007. Sunburst paid $60,000 on May 12, 2008 of the $120,000 due on May 6, 2008, and the balance was paid in May 2008. Sunburst is not in default on any payments. Sunburst has the obligation to pay a further $120,000 per year for the next 13 years and the balance of payments in the 14th year, until the total of $2,000,000 is paid. If the property is put into production, of which there is no assurance, then the contract calls for the remaining payments to be paid from the sale of gold, to avoid termination of the agreement. 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 8
  13. 13. Delve Consultants, LLC. Mineral Exploration and Development The payments, if the property should go into production, would be as follows: The remainder of the $2,000,000 payment will be paid out of production from the Cieneguita property at a rate of $20 dollars per ounce of gold sold. However, in the event that the price of gold is in excess of $400, then Sunburst is required to accelerate payments by an additional $0.10 per each ounce for every dollar of gold priced over $400. The total payment Sunburst is liable for is $2,000,000 US. Once that amount is paid, Sunburst has no further obligation to Corporativo Minero. Corporativo Minero has the obligation to pay, from the funds they receive from Sunburst, any royalties that may be outstanding on the properties from prior periods. Corporativo Minero has informed Sunburst that there were royalties up to 7 per cent Net Smelter Royalty (NSR) owned by various former owners of the Property. Corporativo Minero have informed Sunburst that the corporations holding those royalties have been dissolved and that there is no further legal requirement to make these royalty payments. Sunburst can make no assurances that they will not ultimately be responsible to pay all or some of the 7% NSR to these former royalty holders if the Property were ever put into production and Corporativo Minero did not make the payments to the royalty holders. However, Sunburst does not see this potential for additional royalty payments as a material risk. Figure 4.1 Location map (2) Amendments to the Mexican mining laws took effect with the publication on December 21, 2005, including certain amendments to the Ley Federal de Derechos, the act that sets forth the mining taxes' rates. Effective January 1, 2006, this legislation has converted all of the former exploration and exploitive concessions in Mexico, which carried maximum lives of six years, and 25 years, respectively, into general concessions with a 50 year life from their date of registration with the Mining Registry. The concessions are automatically registered as soon as the concession mining rights are paid and no further paper work is required. The Cieneguita concessions are currently in good standing and held by Sunburst de Mexico. There will be no special documents sent to Sunburst to reflect the change. In April 2006, Mexoro applied to the Mexican government for a change of use of land permit for 30 hectares of the La Maravilla concession. The La Maravilla is the concession of the Cieneguita Property that contains the mineralized rock that is the main interest of the exploration. The La Maravilla concession currently has no activity on it other than the Mexoro exploration program. The purpose of the change of use permit is to allow Mexoro, if necessary, to extract the rock from 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 9
  14. 14. Delve Consultants, LLC. Mineral Exploration and Development this concession for the purposes of processing to extract the precious metals that may be contained therein. Mexoro made the application in advance of any known reserves being discovered within the Cieneguita Property. Mexoro cannot assure that there will be sufficient ore reserves, if any, to commence extraction. This permit required negotiations with the government and municipality concerning such things as the removal of timber, building and maintaining roads and reclamation. In January 2007, the government agency issued the change of use permit, and Mexoro subsequently made the required payment of approximately $67,000 US (720,000 Mexican Pesos; not verified by author). In July 2006, Mexoro submitted an environmental impact study and a risk analysis study to the Mexican government for a permit to build a heap leach mining operation on the Aurifero concession of the Cieneguita Property. The purpose of this permit is to allow Mexoro to construct an ore processing facility through heap leach mining methods. At the time, Mexoro did not have any 43-101 compliant ore reserves or resources within the Cieneguita Property and applied for permits in advance of any conclusive results to partly limit the financial exposure searching for precious metals. In January 2007, the necessary permits to allow for the building and operation of a heap leach operation were granted to the Company (Mexoro Annual Report 2007; JJ Consultores (2006)). The permits discuss any environmental liabilities related to exploration and mining. All the environmental reports and permits are on file at APEX and Mexoro. The author has relied upon JJ Consultores specific to any environmental studies and liabilities which lie outside the author’s area of expertise. More specifically, the Cieneguita Project has all authorizations required from the Environmental Protection Agency (Environmental and Natural Resources Secretariat – SEMARNAT), for mining work on the surface, which allows the company to carry out any mining activity within such area, either for exploration or working purposes. On November 16, 2006, the authorization to Change the Use of Land was obtained by Official Letter No. SG.CU.08-2006/124 issued by SEMARNAT authorized for an area of 29-05-00 hectares, which includes the forested area within the Cieneguita Property. The term for this authorization will expire on December 31, 2011 and may be extended by written request from SUNBURST MINING DE MEXICO, S.A. DE C.V. The authorization of Environmental Impact and Environmental Risk Statement was received on January 26, 2007, by Official Letter S.G.P.A./DGIRA.DDT.2456.06, issued by SEMARNAT determining that the prevention and mitigation measures proposed in the analysis were feasible and in accordance with the type of affectation intended to prevent, mitigate, and/or compensate. The term for such authorization is ten years and may be extended by written request from SUNBURST MINING DE MEXICO, S.A. DE C.V. There is a lease agreement with Ejido Piedras Verdes and its annex Cieneguita to carry out mining activities, granted by means of the Minutes of the Ordinary Meeting of Common Land Owners, executed on February 19, 2006. This agreement also includes the use of excess water to be used in mining work and exploration at the Tascatosa and Palos Caidos area, located within the ejido (Cieneguita Property; JJ Consultores (2006)). The author has relied upon JJ Consultores specific to any environmental studies and liabilities which lie outside the author’s area of expertise. The Property has been legally surveyed. The Property is considered to be an advanced stage exploration property. During January the author has made no attempt to verify the legal status and ownership of the Cieneguita Property, nor is he qualified to do so. On January 14, 2008, a legal 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 10
  15. 15. Delve Consultants, LLC. Mineral Exploration and Development title opinion was completed with respect to the Cieneguita Property (and other Mexoro properties) on behalf of Sunburst by Molina, Hanff and Perez-Howlet, Chihuahua, Mexico. The report is on file at APEX and Mexoro and states that the Property is in good standing. The following is a translation from spanish of the conclusions of the report of Molina The resolution of the observations from the initial audit of these concessions has been largely completed. The only items pending are the completion of the registration of a few documents with the Public Mining Registry, the ratification by a notary of one document and the re-issue of a few titles [not on the Cieneguita property - DCD]. These items should be completed in a maximum of two months, and the documents will be in order for the Company. Mexoro has assured the author (Durgin) that this has been done. 5.0 ACCESS; CLIMATE; LOCAL RESOURCES; INFRASTRUCTURE; AND PHYSIOGRAPHY As the details of this section 5.0 are unchanged, they are omitted and the reader is referred to Mr. Besserer’s Technical Report dated April, 28 2008. 6.0 HISTORY As the details of this section 6.0 are unchanged, with the following exceptions in Section 6.1, they are omitted and the reader is referred to the Mr. Besserer’s Technical Report dated April 28, 2008. 6.1 Recent Exploration History As of September 24, 2008, Mexoro Minerals Limited has completed 62 diamond drill holes for a total of 12,939 meters in its ongoing exploration program at Cieneguita, which began in the late autumn of 2007. Each box of core has been photographed and logged in detail. Mr. Besserer’s report includes only the first six of the holes from the new CI series. This report updates the results of this drilling and the assay results from CI-1 to 48 and 52 (assays pending for the others) as well as geologic information from holes CI-1 to CI-57. 7.0 GEOLOGIC SETTING 7.1 Regional Geology As the details of this section 7.0 are unchanged with the exception of the new map below, they are omitted, and the reader is referred to Mr. Besserer’s Technical Report dated April 28, 2007. 7.2 Local Geology The local geology as described in Mr. Besserer’s Technical Report dated April 28, 2008 remains largely unchanged, with the significant exception detailed below in Section 7.2.1 and the geologic map below. Thus it is omitted here 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 11
  16. 16. Delve Consultants, LLC. Mineral Exploration and Development Figure 7.1 Cieneguita District Geology 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 12
  17. 17. Delve Consultants, LLC. Mineral Exploration and Development Figure 7.2.0 Cieneguita Deposit Geology with Drill Holes 7.2.1 Intrusive Breccia Jones (2006) described one of the intracaldera units at Cieneguita as “lithic rhyolite tuffs consisting of horizontally stratified pyroclastics which included “a variable heterogeneous lithic load of pre-existing volcanic rocks and megabreccia”. This interpretation was based largely on limited surface exposures and older shallow air-track drilling. The analysis of the 52 recent diamond drill holes, most of which cut this coarsely tuffaceous-textured unit, has produced a new interpretation of the origin of these tuffaceous rocks at Cieneguita. This drilling has revealed that the three dimensional geometry of the mineralized felsic unit, previously called “lithic tuff” at Cieneguita, resembles a 1000-meter long and 200 to 250-meter wide funnel, flattened in a north- south direction. In the eastern and best-known portion of the deposit, where most of the prior work was focused, the “tuff” has a clearly defined contact with the underlying andesites, dipping gently to the west-southwest at approximately 20 to 30 degrees. On the north and south margins, the tuff – andesite contact appears to be nearly vertical, from interpretation of the new drilling data. On the west side this contact dips to the east at approximately 60 degrees. Figure 7.2.1 displays the current understanding of the geometry of the Cieneguita Breccia. The significance of this re-interpretation is that, rather than being a thin, lower volume, sub-parallel lithologic unit in the intra-caldera sequence, the “lithic tuff” is a much larger, much higher volume 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 13
  18. 18. Delve Consultants, LLC. Mineral Exploration and Development body of mineralization, which is actually a diatreme breccia. It has been shown to extend to a depth of at least 300 meters in the west central portion of the deposit, immediately southeast of Pit #2, where the throat of the diatreme breccia appears to be located. The style of alteration and mineralization remains essentially unchanged, as does the distribution of other rock units lateral to the diatreme. It is the geometry and size of the mineralized body that has changed significantly. As the longtitudinal section below shows, the diatreme is cut by two varieties of post-mineral dikes. The Cienegita diatreme breccia is texturally nearly indistinguishable from a coarse, poorly sorted, felsic lithic tuff. It is the geometry which is distinctive. The alteration is as described in Mr. Besser’s report, pervasive, variably intense sericite-pyrite alteration grading laterally to argillic alteration. There is very little introduced quartz, neither as veinlets nor as silicification. Mineralization is superimposed on this high-porosity lithologic unit as widespread disseminations and sulfide veinlets. Its distribution is probably controlled by several cryptic structures, but they cannot be resolved at the current drill hole spacing. Figure 7.2.2 Cieneguita Longtitudinal Section 8.0 DEPOSIT TYPES 8.1 Eipthermal Systems Until recently, Cieneguita had been considered a variety of high sulfidation to medium sulfidation epithermal gold-silver deposit hosted by intracaldera volcanic rocks of andesitic to felsic composition. Such deposits are high-level hydrothermal systems which often display extensive 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 14
  19. 19. Delve Consultants, LLC. Mineral Exploration and Development bodies of argillic alteration, localized to extensive silicification and bleaching of host rocks. These deposits are generally associated with variable contents of gold, silver, lead, zinc and copper. The geometry of these deposits depends a great deal on the permeability of the host rocks, either due to the nature of the rocks themselves or the intensity of fracturing. Multiple phases of mineralization are common. Mineralization is often manifested as veins or vein-breccias of planar or perhaps complex shapes depending on the style of structural control. Generally there is no directly observable spatial or genetic relationship to larger intrusive bodies, although there are often felsic dikes closely spatially associated with mineralization. These deposits are commonly associated with subaerial volcanic centers. Most of the precious metal deposits in the Sierra Madre precious metals province are of this type. 8.2 Porphyry Systems A porphyry system association is also common in the Sierra Madre, although mineable porphyry- related deposits are less abundant than epithermal deposits. The immediate area of Cieneguita contains at least two known porphyry system centers with economically significant deposits – the Bolivar Cu-Zn skarn deposit of Diabras 7 km to the south and the Bahuerachi Cu-Zn-Mo skarn 15 kilometers to the southwest, being developed by Tyler Resources. Porphyry deposits are typically low grade and large tonnage deposits that are directly related both spatially and genetically to igneous intrusions. The intrusive rocks that host these deposits are generally found to be felsic to intermediate. Mineralization and alteration develop both in the intrusive and in the country rock. The core of the mineralizing system is dominated by a potassic alteration zone. Potassic alteration consists of potassium feldspar, biotite, and quartz. This grades out into the phyllic zone, in which the alteration is made up of quartz and sericite. This grades out into the argillic zone, where the principal alteration is quartz and a variety of clay minerals. The propylitic zone rinds the argillic zone and consists of chlorite, epidote, and carbonate. 8.3 Diatreme Breccia Recent drilling has shown Cieneguita to be related genetically and spatially to a diatreme breccia. Diatreme breccias are often the high level expression of porphyry systems, or at least volcanic/intrusive centers, at greater depths, thus showing a transition between deeper-seated higher temperature mineralization styles and higher level, lower temperature styles. The disseminated, sulfide-rich mineralization at Cieneguita has an epithermal high sulfidation mineralogy related to and superimposed on a porous intrusive diatreme breccia. The pervasive alteration is typical of a more traditionally porphyry-related setting with both pervasive and fracture-focused sericite (+/- quartz) alteration bordered by argillic alteration. Mexoro’s staff is in the process of exploring an area a kilometer to the south of Cieneguita called Piedras Blancas, which appears to have stronger porphyry system affiliations. 9.0 MINERALIZATION This section is taken directly from Mr. Besserer’s April 28, 2008 Technical Report, as it has remained essentially unchanged. One paragraph has been added at the end by this author. 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 15
  20. 20. Delve Consultants, LLC. Mineral Exploration and Development The gold mineralization identified to date at Cieneguita is localized exclusively within the intra- caldera rocks (megabreccias and infill tuffs). The mineralization is structurally controlled, occurring at the intersections of east-northeast structures and north-south extensional faults. Its spatial and temporal association with the felsic dykes suggests a genetic relationship between resurgent felsic magmatism (related to a younger nested caldera?) and gold mineralization. The three main gold-related alteration assemblages that have been observed at Cieneguita include: - Quartz +/- biotite +/- orthoclase +/- adularia +/- calcite - Quartz-sericite-pyrite - Hematite-goethite 9.1 Quartz-biotite-orthoclase-adularia-calcite (Low Sulphidation) This assemblage is a form of potassic alteration and is typically bordered by sericite-chlorite- epidote-alunite-clay alteration on the margins of quartz veins. With increased veining, the clay- sericite alteration merges into a more pervasive style of alteration. Associated sulphides are minimal. This variety of alteration is best observed in the andesite vitrophyre north of the project area. The quartz, along with other minerals, are present as veins and sometimes as vein selvedge alteration which in areas of intense alteration is observed as being pervasive. This alteration is not known to be associated with significant sulphide mineralization. 9.2 Quartz-sericite-pyrite (High Sulphidation) This alteration style occurs as a pervasive overprinting within and along structural and lithological breaks. The quartz-sericite-pyrite zones are commonly bordered by clay alteration. 9.3 Hematite-goethite This alteration style is found locally along reaction fronts, fractures, and at the leading edges of silica veins. It locally overprints the first two assemblages. It occurs as massive red to orange- brown zones that are inferred to represent the deposition of and conversion of earlier sulphides to hypogene iron oxides. Gold mineralization on the Cieneguita Property is most strongly associated with this alteration assemblage. As noted by Jones (2006) the alteration and mineralization styles on the Property differ with rock type and geological setting. The two principle ore hosts are intra-caldera megabreccia and intra- caldera rhyolite tuff as discussed below: 9.4 Intra-caldera Megabreccia The megabreccia unit is the primary lithological host to mineralization at Tajo 1. Severe fracturing, faulting and brecciation during caldera formation was enhanced by the rheological contrasts between the brittle andesite vitrophyre and upper rhyolite tuff. These structures were subsequently infilled/injected by the highly fluid tuff (diatreme breccia – Durgin note) which 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 16
  21. 21. Delve Consultants, LLC. Mineral Exploration and Development formed the matrix to the mega-breccia. It was these faulted and tuff-injected zones that became the preferred pathways for mineralizing fluids. Mineralization within the upper rhyolite tuff blocks of the megabreccia is typically accompanied by a strong quartz-sericite-pyrite alteration assemblage. It is described as having dark grey, highly siliceous, sulphide-rich, resistant bands that preserve relict bedding. Iron-oxide alteration crosscuts this alteration along fractures and is interpreted by Jones (2006) to represent a hypogene iron-oxide retrograde event. Quartz veins appear to be either paragenetically early and/or adjacent to the more intensely altered zones. Gold grades within this litho-alteration assemblage are consistently high (>>1 g/t) in these areas. Mineralization within the andesite vitrophyre blocks of the megabreccia is found in faulted and tuff injected fractures. The brittle nature of the andesite resulted in extensive internal deformation in part related to devitrification. These structures were easily exploited during landslide collapse giving rise to 3D forked voids which were immediately injected with tuff and subsequently used as preferred pathways for mineralizing fluids. These pathways contain strong quartz-sericite-pyrite alteration bordered by extensive and pervasive argillic (clay) zones. In contrast to the rhyolite, the quartz-sericite-pyrite zones in the andesite show only moderate elevations in gold (0.5-0.7 g/t). The leading edges of the stronger quartz-sericite-pyrite zones in the andesite are marked with intense iron-oxide fronts of heavy dark red to orange brown goethite-hematite. These iron-oxide fronts consistently carry higher (>2g/t) gold grades whilst adjacent quartz-sericite-pyrite zones are only weakly mineralized. 9.5 Intra-caldera Rhyolite Tuff In comparison to the megabreccia unit the rhyolite tuffs are only weakly to moderately consolidated. The repercussions of this are that there is little brittle deformation such that would allow for focused fluid flow. Instead, the highly permeable tuffs exhibit broad and diffuse zones of alteration and mineralization. Mineralization & alteration zones in the intra-caldera rhyolite tuffs are primarily controlled by east-northeast striking structures and, to a lesser degree, north-south structures. These zones are typically characterized by iron oxide concentrations along and bordering the associated structure. Mineralization and quartz-sericite-pyrite alteration can also be found bordering felsite dykes. Trenching at Tajo 2 has suggested a gold-copper association based on the presence of chrysocolla. Distal to the quartz-sericite-pyrite zones, the rhyolite tuff takes on a chalky white appearance related to pervasive but diffuse clay alteration. 9.6 Diatreme Breccia (contributed by D. C. Durgin) The great majority of the recent drilling was done in the more homogeneous material, which Besserer refers to intra-caldera rhyolite tuff, rather than in the megabreccia unit, which is found largely in the eastern portion of the deposit. The great majority of the mineralized body is in the intra-caldera rhyolite tuff as well – re-interpreted to be a diatreme breccia, of which the megabreccia may be a part. Within the diatreme breccia, the higher grade mineralization appears 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 17
  22. 22. Delve Consultants, LLC. Mineral Exploration and Development related to east-northeast structures as Besserer points out, and perhaps to others as yet poorly defined. However, the lower grade gold-silver-lead-zinc-copper mineralization is broadly disseminated in the diatreme breccia, rather than in smaller structures, with little silicification. A strongly analogous deposit with which the author is quite familiar is the Montana Tunnels Mine, also hosted in a diatreme breccia, approximately 20 miles south of Helena, Montana. While it is somewhat larger (100 to 300m wide and 350m to 600m long, 600m deep), it has alteration and mineralization which appear nearly identical to that at Cieneguita. A quote from their website ( says: “The ore minerals are sulfides and native gold and occur as disseminated grains or in veinlets up to one inch wide in the matrix of the hosting volcanic rock. The principal sulfide minerals are sphalerite (zinc sulfide) and galena (lead sulfide). The gold occurs as disseminated native metal or as inclusions in the ore sulfides and pyrite. The simple mineralogy of the ore lends to straightforward separation into a lead or zinc concentrate by floatation, and gold as a gravity concentrate.” That description could apply equally well to the Cieneguita diatreme. 10.0 EXPLORATION As the exploration section is essentially unchanged, with the exception of the following paragraph by this author, the reader is referred to Mr. Besserer’s Technical Report dated April 28, 2008 for detailed information from the period prior to the current and ongoing drilling program. Mexoro Minerals Limited began its current diamond drilling program in December of 2007. At the time of Mr. Besserer’s Technical Report, assays were available for only the first 6 of the holes, CI-1 to CI-6. Since the current program began, a total of 62 holes have been completed for a total of 12939 meters, with assay results available for the first 49 of these plus number 52, as of September 24, 2008. Exploration, in the form of mapping and sampling, is also in progress at the Piedras Blancas target area approximately one kilometer to the south of Cieneguita. 11.0 DRILLING 11.1 Drilling Summary The initial phase of the drilling program began in December of 007 and was planned for 5000 meters of core. Due to encouraging assay results from the first 15 holes, the program was expanded to a planned minimum of 10,000 meters of drilling. In August of 2008, it became apparent that additional infill and step-out drilling would be needed to both define the margins of the mineralized body and to reduce the drill hole spacing within the mineralized zone. The goal of the drilling program then became the preparation of a rigorous resource estimate from a pattern of holes drilled on roughly a 40-meter spacing, instead of the current irregular 80-meter spacing. A second drill rig was brought to the project in August. Drilling is expected to continue through the end of 2008 and probably beyond, with the goal of completing 20,000 meters by the end of 2008. The author reviewed the assay and geology data from holes CI-1 to 49 and 52 and geologic data from a few others for which assays were not yet available. Of the first 21 holes, 20 were angle holes drilled from north-northwest to south-southeast at approximately –50 degrees. Initially it 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 18
  23. 23. Delve Consultants, LLC. Mineral Exploration and Development was thought that mineralization was controlled by a series of northerly-dipping, north-northeast trending structures that were also occupied by a set of dikes, and that may be correct in the eastern part. When it became apparent that much of the mineralization, particularly in the western half of the deposit, was more disseminated and widespread, all holes after CI-21 were drilled vertically. The resource estimation discussed in Section 17.0 was based on the first 37 of these holes, as well as surface geologic data. Because the mineralization is for the most part disseminated, the mineralized intercept in each hole is considered a true thickness. All drill hole collars and elevations were surveyed. The following table lists the significant intercepts in the first 50 holes. These intercepts were used in the resource calculation described in Section 17.0, and differ from published intercepts because of the different cutoff grade used to define the intercept boundaries. The method of selecting the cutoff points is also described in Section 17.0. Table 11.1 Cieneguita Drill Hole Intercept Intercept From To Meters Au /gt Ag g/t Pb ppm Zn ppm AuEq $ ** CI-1a 0.00 10.45 10.45 0.751 41.92 805 1222 $41.42 b 21.50 26.90 5.40 1.582 4.29 40 313 $39.89 CI-2 94.10 105.50 11.40 3.563 2.56 48 147 $84.96 CI-3a 48.85 74.50 25.65 1.405 24.70 728 1483 $49.76 CI-3b 82.00 94.00 12.00 2.168 232.79 199 419 $62.83 CI-4 CI-5a 33.50 49.50 16.00 1.921 5.17 31 14 $47.29 b 62.90 82.50 19.60 1.707 5.19 60 10 $42.36 c 118.00 126.50 8.50 1.122 45.12 3225 4806 $67.56 d 146.00 164.00 18.00 0.437 62.83 5984 10440 $82.26 CI-6a 12.30 24.00 11.70 2.663 26.04 328 1157 $77.90 b 58.50 65.50 7.00 0.200 81.07 1218 3806 $54.40 c 76.00 98.50 22.50 0.365 148.37 861 2349 $81.23 d 155.50 164.50 9.00 0.599 55.22 1412 2157 $47.87 e 178.00 212.50 34.50 0.549 334.50 2291 3181 $83.96 f 221.50 235.00 13.50 0.234 73.12 4896 8525 $73.92 g 244.00 251.00 7.00 0.224 42.98 1507 4970 $42.34 CI-7 CI-8a 57.50 65.00 7.50 0.245 60.08 1766 3120 $45.38 b 89.00 141.25 52.25 0.471 49.81 6018 9430 $74.37 c 177.25 189.25 12.00 0.168 12.05 3894 6488 $37.20 d 209.80 216.25 6.45 0.131 13.55 5153 8168 $44.79 CI-9a 48.20 95.50 47.30 0.290 47.30 2867 4290 $49.48 b 102.20 109.70 7.50 0.249 39.08 4673 13122 $72.56 CI-10a 0.00 6.00 6.00 1.195 27.70 156 6 $40.49 b 61.00 100.00 39.00 0.640 67.61 4680 6518 $74.51 c 106.00 118.00 12.00 0.260 217.28 2493 3833 $118.63 CI-11 35.00 57.50 22.50 0.277 82.85 1368 2272 $52.74 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 19
  24. 24. Delve Consultants, LLC. Mineral Exploration and Development CI-12 79.50 88.50 9.00 0.727 9.68 1296 2887 $32.73 CI-13a 210.50 219.50 9.00 0.150 21.27 2846 4660 $33.06 b 281.00 293.00 12.00 0.193 35.98 5108 7578 $54.48 CI-14 CI-15 0.00 13.00 13.00 1.849 28.97 1510 799 $61.68 CI-16 7.30 19.30 12.00 2.167 37.00 811 1120 $72.11 CI-17 CI-18a 0.00 12.50 12.50 1.100 32.15 879 333 $42.79 b 81.50 93.50 12.00 0.244 67.09 524 1350 $40.42 c 105.55 123.50 17.95 0.436 67.55 864 1151 $45.25 d 129.50 143.00 13.50 0.598 78.39 927 963 $53.40 e 158.00 170.00 12.00 0.549 75.70 983 2070 $54.51 f 189.50 231.50 42.00 0.542 47.21 1609 2480 $44.41 g 258.50 275.00 16.50 0.154 19.77 6269 9510 $54.54 CI-19a 17.50 34.00 16.50 0.706 100.22 1135 28.74 $71.70 b 92.50 124.00 31.50 0.137 32.10 4359 64.13 $46.10 CI-20 89.05 95.45 6.40 0.325 28.72 1663 28.03 $32.28 CI-21a 42.50 133.00 90.50 1.454 117.12 4822 8079 $120.32 b 133.00 173.00 40.00 0.245 18.38 3798 5045 $37.27 c 180.50 204.50 24.00 0.164 19.14 5832 8583 $50.76 d 218.00 225.50 7.50 0.123 13.58 3265 9496 $44.44 e 233.00 243.50 10.50 0.059 14.37 5341 5419 $35.66 C!-22a 15.00 27.00 12.00 1.183 69.71 2167 4656 $77.02 b 39.00 59.50 20.50 0.513 61.32 1107 1643 $46.33 c 59.50 89.50 30.00 0.513 61.32 1107 1643 $46.33 C!-23a 143.00 161.95 18.95 0.147 28.22 4523 5468 $42.16 b 170.80 199.20 28.40 0.321 46.46 4176 5021 $52.16 CI-24 0.00 59.50 59.50 1.269 56.52 589 1582 $60.57 CI-25a 7.10 25.20 18.10 0.516 76.20 4637 78.23 $79.21 b 47.90 85.50 37.60 0.773 139.86 4471 73.17 $111.34 CI-26 CI-27a 44.10 84.60 40.50 0.760 61.56 1450 2189 $48.04 b 105.60 126.60 21.00 0.729 72.54 1808 2184 $52.93 CI-28a 44.00 70.00 26.00 0.407 73.67 1187 2190 $51.10 b 70.00 84.00 14.00 0.407 73.67 1187 2190 $51.10 c 104.00 158.00 54.00 0.749 72.02 824 1354 $55.06 CI-29a 5.00 62.00 57.00 0.476 51.96 3713 4839 $56.63 b 86.00 198.50 112.50 0.420 26.64 4420 64.32 $50.52 c 233.00 238.30 5.30 0.104 14.13 4107 7735 $40.84 CI-30a 0.00 104.50 104.50 1.084 74.37 7059 10870 $106.11 b 113.50 154.00 40.50 0.374 22.56 3867 5993 $45.12 c 182.50 193.00 10.50 0.185 13.11 3323 5659 $34.33 d 238.00 248.50 10.50 0.105 17.24 4871 7620 $43.55 CI-31 59.50 66.10 6.60 1.116 181.68 3941 7926 $138.41 CI-32 46.50 61.00 14.50 1.843 76.80 2113 2763 $89.80 CI-33 CI-34a 0.00 44.50 44.50 4.777 88.38 2464 2273 $162.80 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 20
  25. 25. Delve Consultants, LLC. Mineral Exploration and Development b 50.50 64.50 14.00 0.392 21.08 1797 3339 $32.38 c 71.50 83.50 12.00 0.219 36.38 3356 6569 $48.16 d 98.50 106.00 7.50 0.174 25.04 4143 6169 $42.66 e 113.50 119.50 6.00 0.091 14.23 2331 6750 $33.70 f 128.50 221.50 93.00 0.101 15.81 5467 8502 $46.78 g 233.50 239.50 6.00 0.110 13.48 3848 8600 $42.69 CI-35a 0.00 103.00 103.00 0.747 63.44 3865 5324 $69.80 b 142.00 151.00 9.00 0.138 23.40 4217 6815 $43.18 c 166.00 175.00 9.00 0.133 32.43 2939 4392 $36.99 d 199.00 209.50 10.50 0.162 14.77 4442 5619 $36.86 e 224.50 232.50 8.00 0.108 20.73 6065 7992 $48.91 CI-36a 16.00 31.00 15.00 0.551 87.86 202 785 $54.34 b 73.00 80.50 7.50 0.607 67.78 164 949 $47.21 CI-37a 13.50 24.00 10.50 0.341 58.21 603 1072 $38.11 b 202.50 213.10 10.60 0.183 27.02 5852 7632 $51.88 CI-38a 17.50 35.50 18.00 0.554 46.09 498 1163 $37.80 b 77.50 89.50 12.00 0.751 8.43 449 3306 $32.15 c 147.25 165.00 17.75 0.257 47.22 8036 14514 $87.88 CI-39 CI-40 CI-41 46.00 66.00 20.00 0.546 79.07 1092 1506 $54.46 CI-42a 14.00 22.00 8.00 0.290 19.54 1603 3940 $30.69 b 28.00 40.00 12.00 0.201 43.39 1920 3069 $37.20 c 48.50 69.50 21.00 0.166 42.89 7389 11830 $74.39 d 107.50 115.00 7.50 0.119 31.50 12392 11956 $79.69 CI-43a 22.50 30.00 7.50 0.230 92.96 896 1540 $52.86 b 96.00 103.50 7.50 0.093 26.28 1524 4325 $30.02 CI-44a 18.50 28.35 9.85 0.516 29.27 922 1911 $32.69 b 47.10 64.00 16.90 1.108 31.44 222 82 $40.48 c 71.00 77.00 6.00 0.195 61.68 1010 3323 $43.87 d 101.50 110.50 9.00 0.123 13.67 3365 9350 $44.27 e 153.00 196.85 43.85 0.207 23.67 6254 8250 $53.71 CI-45a 0.00 23.50 23.50 0.551 43.32 3400 4003 $51.40 b 32.50 44.50 12.00 0.507 40.24 5180 8364 $65.98 d 105.50 148.50 43.00 0.101 17.09 5238 8658 $47.32 e 159.00 166.50 7.50 0.112 25.88 6023 7808 $50.61 f 177.00 208.50 31.50 0.175 22.89 6078 9129 $54.86 CI-46a 0.00 27.50 27.50 7.908 56.06 1035 1922 $217.58 b 59.00 89.50 30.50 0.184 49.47 1808 2669 $41.84 c 115.00 126.70 11.70 0.128 37.43 3270 5025 $41.69 d 161.40 165.70 4.30 0.148 19.85 3483 7014 $40.85 e 195.30 225.10 29.80 0.117 11.41 3713 6835 $36.38 CI-47a 0.00 48.80 48.80 0.908 166.86 5169 11056 $139.10 b 57.90 65.70 7.80 0.517 97.53 4051 5605 $80.68 CI-52a 96.30 103.8 7.50 0.132 22.24 2957 4835 $33.84 b 145.80 171.2 25.40 0.296 14.75 3159 5104 $35.63 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 21
  26. 26. Delve Consultants, LLC. Mineral Exploration and Development ** AuEq $ is the sum of dollar values of each metal – see Section 17.0 for details of calculation and metal prices used. Compiled by the author. 11.2 Core Drilling and Logging The diamond core drilling program is being carried out by GDA Servicios Mineros, a Chilean company using two Longyear LF-70 wheel-mounted core drilling rigs. Mr. Besserer describes the first one in his April 2008 technical report. HQ (2.5”) diameter core was drilled exclusively, except were drilling conditions forced reducing to NQ. Mexoro has a core shack on site at the Cieneguita Property. All drill core is washed, re-aligned and digitally photographed prior to logging and sampling. All of the core is logged for geology, clearly displaying mineralized zones and lithologic changes, and for geotechnical characteristics. Drill core is sawed in half with one half the core sampled for geochemical analysis. All halved drill core is stored in a secure facility for future analytical verification/reference. Mexoro has a regimented quality control/ quality assurance program in place. Mexoro inserts duplicates and certified standards into each shipment to the laboratory. Qa/Qc procedures are described more fully in Section 14.0 12.0 SAMPLING METHOD AND APPROACH 12.1 Sampling Summary The sampling described in this section is related only to diamond drilling in the ongoing CI series program. The reader is referred to Mr. Beserer’s 2008 Technical Report for details of surface sampling done by himself or by Mexoro and any other drilling in the past. 12.2 Core Sampling Core is retrieved from the drill string using standard wireline methods. Upon retrieval, the core is removed from the tube and placed into core boxes. The drillers are very careful to place the core pieces in the box in the order in which they were drilled. A core shed was established in the nearby village of Cieneguita. Core was washed and pieced together as close as practicable to its natural position. Wetted core was then photographed with a digital camera. After logging, a line was marked along the centerline of the core. The core was then split with a diamond bladed saw, or halved manually as well as possible if the material was soft or crushed. The sample interval was generally 1.5 meters due to the disseminated nature of the mineralization. Locally the sample interval varied according to changes in lithology, alteration and mineralization. Such sample breaks were made at significant changes, such as vein or breccia margins, which sometimes produced intervals less than 1 meter. The maximum sample width rarely exceeded 1.5 meters. 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 22
  27. 27. Delve Consultants, LLC. Mineral Exploration and Development 13.0 SAMPLE PREPARATION, ANALYSIS AND SECURITY 13.1 Sample Preparation Core and core samples were stored in a locked building in Cieneguita. On a regular basis samples were taken by truck to the ALS Chemex sample preparation facility in Chihuahua City, Chihuahua, by Mexoro personnel to retain a proper chain of custody. Sample preparation consisted of conventional drying, crushing, splitting and pulverizing. After oven drying, the sample was passed through a primary crusher producing material of 60% passing a 2mm (Tyler 9 mesh) screen. A 300-gram sub-sample was split using a stainless steel riffle splitter. This split was ground to 90% passing 106 microns ((Tyler 150 mesh) using a ring and puck pulverizer. Pulps were then shipped to the Chemex analytical lab in Vancouver, Canada. The author is very familiar with the sample preparation procedures used by Chemex. He feels that these procedures meet or exceed industry standards. The security of the core and other samples is also adequate. In the tiny village of Cieneguita, there was no indication of any problem of sample security. 13.2 Analytical Procedures Each drill and surface sample was initially analyzed by ALS Chemex’s ICP-41 procedure for 34 individual trace elements, including silver, which has a 0.2 ppm lower detection limit. Any samples with silver contents exceeding 100 ppm were re-analyzed by fire assay with a gravimetric finish using 30-gram samples. In addition, each sample was analyzed for gold using 30-gram samples and a fire assay with a gravimetric finish, with a lower detection limit for gold of 0.05 ppm. Chemex uses a fire assay method with rigorous impurity corrections, and internal standards and replicates are included in the analytical sequence. The assay results from samples, synthetic standards and replicate data were reviewed by Chemex before approval. If discrepancies were noted, appropriate re-analyses were carried out. Chemex has ISO 9002 laboratory accreditation and ISO:9001:2000 for North America. The author is confident that the procedures used by Chemex meet or exceed industry standards. 14.0 DATA VERIFICATION 14.1 Quality Control As part of their in house quality assurance/quality control (QA/QC) program, ALS Chemex Laboratories inserts blank and standard samples in addition to repeat sample analysis, in each sample batch. ALS Chemex Laboratories uses in house quality assurance staff to control monthly inter-laboratory test programs. The quality assurance group selects and circulates samples to be analyzed and then evaluates the performance of each laboratory via statistical analysis. As well, Mexoro routinely inserts duplicates and certified standards into each shipment (~8%) to the laboratory. Mexoro is currently using certified standards purchased at ROCKLABS Ltd., Auckland, New Zealand (Reference Material OXH52=1.29 g/t Au; OXJ47= 2.38 g/t Au; and SG14=0.98g/t Au and 11.12 g/t Ag). Any batches which fall within a 5% deviation of the 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 23
  28. 28. Delve Consultants, LLC. Mineral Exploration and Development standards are requested to be re-analyzed. Mexoro began in the past few months sending 5% of returned assay pulps to Acme Laboratories for check assays. All halved drill core, sample pulps and coarse rejects is stored in a secure facility for future analytical verification/reference. 14.2 Historic drilling Data As documented in Mr. Besser’s 2008 Technical Report, there were many historic holes drilled by Glamis Gold and others. The reader is referred to Mr. Besserer’s report for the details of these prior drilling campaigns. The data from these holes was not used in the author’s resource calculations, in part because their locations could not be verified. As Mr. Besserer stated regarding the locations of these holes: “A field examination indicates the drill grid no longer exists and permanent drill hole collar locations are not present. As a result, the accuracy and integrity of the historic drill hole collar locations as reported cannot be verified. At least 2 local permanent monuments are present which reference an old local grid system which may be the same grid control for the historic drill grid allowing the re-establishment of the old drill grid and all drill hole collar locations. Since the historic drill grid and all previous drill collar locations can not be accurately relocated and verified, the historic data may need to be re- validated with an extensive drill campaign.” 15.0 ADJACENT PROPERTIES The author is unaware of any geologically analogous deposits in the immediate area of the Cieneguita project. The closest gold mine of significant size is Goldcorp’s El Sauzal, an epithermal high sulfidization quartz-alunite deposit, 15 kilometers to the south. Diabras is operating its Bolivar mine, an underground high-grade copper-zinc skarn deposit, seven kilometers to the south. Tyler Resources is developing the Bahuerachi porphyry-related copper-zinc- molybdenum skarn deposit located 15 km to the southwest. All of these deposits are hosted by Cretaceous or older volcanic rocks and sediments. All except El Sauzal are closely related to granitic intrusive bodies. Exploration programs are underway in the Urique silver-gold district 15 km to the southeast. Paramount Gold has a large active exploration concession adjacent to the Cienequita property to the north and west 16.0 MINERAL PROCESSING AND METALLURGICAL TESTING This section is taken directly from Mr. Besserer’s report dated April 28, 2008 since there has been no additional metallurgical testing since that time. There has been no floatation testing, which will be relevant to nearly all of the sulfide resource discussed in this report. In May of 2007, a metallurgical report was released on a cyanidation study of gold and silver bearing samples taken from the Cieneguita Property by the Servicio Geologico Mexicano (Table 16.0). Gold cyanidation is a metallurgical technique used for extracting gold from ore. The gold is removed by converting it to water-soluble aurocyanide metallic complex ions (Habashi, 1987). There were a total of six samples that were subjected to the cyanidation process by using a bottle roll system and agitating the samples for 24, 48 and 72 hours respectively. Composite, oxide, 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 24
  29. 29. Delve Consultants, LLC. Mineral Exploration and Development mixed oxide/sulphide, silicate and argillic altered samples of varying gold and silver grade were collected and samples were homogenized prior to testing. The samples were crushed to -10 mesh and agitated in solution (the 24 hour agitation yielded the best results as shown in Table 16.0). All of the samples showed acidic tendencies, with pH levels ranging from 2.86 to 6.01. All samples, with the exception of sample CMS-2, had acceptable gold solution results. Results for these samples ranged from 39.11 % up to 91.61 % dissolution for gold and 21.62 % to 56.44 % dissolution for silver (Servicio Geologico Mexicano, May 2007). Samples show that between 1.16 and 6.16 kg/t of cyanide would be consumed. The report is on file at APEX and Mexoro. Table 16.0: Results of the May 2007 Cyanidation Study Assay % Dissolution Consumption in kg/t Grade of (average - 24 pH reading (average) Sample Sample hours) (average) Au - Ag ppm NaCN Cal Au Ag Composite 1-5 2.599 - 18 (composite of all rock) 2.97 4.51 12.51 85.14 38.54 CMMX-1 3.2 - 23 (mixed oxide/sulphide) 2.86 6.16 12.36 90.1 48.06 CMS-2 0.9 - 7.6 (sulphide) 3.93 2.85 9.7 39.11 30.65 CMOX-3 3.4 - 12 (oxide) 5.35 2.19 2.03 91.61 56.44 CMSI-4 7.35 - 7 (silicate) 6.01 1.16 2.44 91.01 35 CMA-5 0.8 - 17 (mixed argillic) 4.6 2.05 3.03 87.86 21.62 *Summarized from Servicio Geologico Mexicano, May 2007 The author (Besserer) reviewed the data in the Servicio Geological Mexicano report (2007) and conducted meetings with Servicio Geological Mexicano while in Chihuahua city to review the procedures used to complete the cyanidation study conducted at the Property. As well, sample sites where metallurgical samples were collected were visited by the author. Although the author is not a metallurgist, the data was professionally developed and the author has no reason not to rely upon the expertise of Servicio Geologico Mexicano regarding the Mineral Processing and Metallurgical Testing. 17.0 MINERAL RESOURCE ESTIMATE The mineral resource estimation described in this technical report for the Cieneguita project follows the guidelines of Canadian National Instrument 43-101. This resource estimate was completed by Dana C. Durgin, who is considered a qualified person under this act. Such investigations as deemed necessary in the professional judgment of the author to be able to reasonably rely on the information provided by Mexoro have been carried out. The author is independent of Mexoro Minerals Limited by the definitions and criteria set forth in NI 43-101. 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 25
  30. 30. Delve Consultants, LLC. Mineral Exploration and Development There is no affiliation between the author and Mexoro other than that of an independent consultant/client relationship. There are no mineral reserves estimated for the Cieneguita project. 17.1 Definitions The resources stated in this report for the Cieneguita project conform to the definitions adopted by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), December 11, 2005, and meet the criteria of those definitions, where: “A Mineral Resource is a concentration or occurrence of diamonds, natural solid, inorganic material, or natural solid fossilized organic material including base and precious metals, coal and industrial minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated, or interpreted from specific geological evidence and knowledge. An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques for locations such as outcrops, trenches, pits, workings, and drill holes.” 17.2 Data The author has created a resource estimate at the Cieneguita project from data generated by and provided by Mexoro only. This data included surface geologic mapping and sampling, and geologic logs from 12,939 meters of diamond (core) drilling. Assays were available from the first 49 of these holes and from hole number 52. This data was compiled into a digital database, then plotted on plan maps and sections, which were then used to create a 3-dimensional interpretation of the controls, grades and continuity of mineralization at Cieneguita. In addition, the author reviewed reports by previous workers to enhance his understanding of the geology and distribution of mineralization. Grade and mineral distribution data generated by previous workers was not used directly to calculate this mineral resource, because the author was not able to verify that it was produced in a manner conforming to NI 343-101 standards. 17.3 Deposit Geology Pertinent to Resource Estimation Mineralization at Cieneguita is largely disseminated in a relatively permeable diatreme breccia host rock with the macroscopic appearance of a lithic tuff. Fragments from sand-sized to fist- sized, and locally much larger in the megabreccia area in the east end, are suspended in a fine- grained poorly consolidated matrix. Quartz veinlets to a few centimeters in width can be seen locally. Silicification is present locally but it is not pervasive. Thus the breccia was generally permeable to mineralizing solutions. This permeability resulted in broadly dispersed, roughly equant bodies of mineralization rather than strongly fracture controlled, more planar bodies. There 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 26
  31. 31. Delve Consultants, LLC. Mineral Exploration and Development probably is a cryptic ENE-WSW trending structural control to higher-grade portions of the deposit, but it cannot be resolved at the current drill spacing. In most areas the mineralization appears to have not penetrated any significant distance across the contact between the diatreme breccia and the surrounding andesitic wallrocks. Thus there is no strong preferred orientation to use in projecting resource blocks, and mineralization should not be projected into the andesites, unless drilling data shows that the andesites are mineralized at a given point. There is a series of northerly and easterly trending dikes which are post–mineral, thus they also serve as boundaries to the projection of resource blocks. With the exception of the upper few tens of meters at the surface, much of which was mined by Glamis Gold in the 1990’s, the Cieneguita resource is an un-oxidized, sulfide resource. However, there has been no separation of oxidized and sulfide material in this estimate. If it is eventually proven to be a mineable deposit, nearly all of it will most likely be mined as an open pit with metals recovered by a flotation process, and some of the surface oxide material may be processed on an existing heap leach pad. Thus the cutoff grade for the estimation process can be lower than a deposit to be mined in an underground mining scenario. 17.4 Density No measurements of specific gravity of the rocks at Cieneguita have been done. Such testing will be needed before any more rigorous resource estimations are carried out. The author chose to use a specific gravity of 2.5 tons per cubic meter for his calculations because in his experience it is a reasonable figure for this type of material, pending testing. Density measurements to be done in the near future may result in the use of a different figure at a later date. 17.5 Resource Modeling The drilling at Cieneguita has been concentrated in an area roughly 1200 by 300 meters in size. Drilling has been done at a grid spacing of roughly 80 meters, although not all of the grid points have been drilled. The abundance and spacing of drilling is insufficient at this time to produce a rigorous resource calculation. Recognizing this, the drilling program was expanded in August 2008 by adding a second drill rig, with the objective of completing the 80 meter spacing grid and infill drilling the more prospective areas to a 40 meter spacing. Assays are available for only 50 of the 62 drill holes which had been completed by the end of September 2008. All of these assay figures have been used in this resource estimate. Several additional holes have been completed for which assays are not yet available. It was the author’s intent for this resource estimation to serve as an interim effort, in the middle of a drilling program. One of the goals was to better define the distribution of mineralization to guide the ongoing drilling program in efficiently enlarging and better defining the resource. It was understood that a more rigorous, more statistically based resource estimate would be done upon completion of this phase of drilling near the end of 2008. 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 27
  32. 32. Delve Consultants, LLC. Mineral Exploration and Development Figure 17.5.1 Cieneguita Cross Section Grid One of the most important aspects of resource modeling is the understanding of the geometry of the mineralized bodies. Initially the Ceneguita deposit was considered to be disseminated and veinlet controlled mineralization in a felsic lithic tuff. This model limited the geometry and size of the body to a smallish, near-surface tabular zone within the volcanic stratigraphic package. The logging of 54 new drill holes in the past 10 months has lead to the current interpretation of the Cieneguita deposit as a diatreme breccia which cuts across the stratigraphy. This new understanding of its geometry as a laterally flattened, funnel-shaped body reveals this body to be much larger in lateral extent and in volume. Thus it has the potential to be a much larger resource than in the earlier interpretation. Because of the inadequate and irregular drill spacing, the lack of density measurements and the lack of metallurgical testing, this resource estimate must be considered as an inferred resource. However, a careful review of the available data using surface maps, drill hole logs and cross sections, provided the author with sufficient confidence in his projections of geologic and assay data between cross sections to calculate such an inferred mineral resource. Because of the limitations on lateral projection of resource blocks created by the projection process described below, there are many gaps between resource blocks in adjacent sections. Infill drilling in the ongoing drill program can reasonably be expected to convert many of these gaps to resource blocks. 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 28
  33. 33. Delve Consultants, LLC. Mineral Exploration and Development The resource blocks displayed on the figure below may be somewhat confusing because they represent three-dimensional objects projected to a single plane. For example, hole CI-06 on section L 28 + 80E is a minus 50 degree hole angled to the south along the section line. It represents a relatively thin wedge-shaped resource block at the top, while hole CI-28 on the same section is a vertical hole representing a much greater thickness of mineralization. A vertical hole at the CI-06 site and in the two proposed holes south along the section should add significantly to the resource above and below the trace of CI-06. Figure 17.5.2 Cieneguita Resource Blocks This resource estimation was done manually using 24 vertical cross sections drawn perpendicular to the long axis of the Cieneguita body. There were also four longtitudinal sections parallel to the long axis. On these sections geologic contacts were plotted for each hole and projected to adjacent sections to create a three dimensional understanding of the geology and limits of mineralization. Mineralization is polymetallic with gold, silver, lead and zinc contributing to the dollar value of the mineralization. There is also a smaller but possibly significant amount of copper present in some places, but it was not used in this estimate. The first step in the estimation process was to define mineralization boundaries for resource blocks in each drill hole by using 3-year trailing average metal prices through November 20, 2008, derived from the website. The 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 29
  34. 34. Delve Consultants, LLC. Mineral Exploration and Development prices used were: gold @ $727.22 per ounce ($23.38 per gram), silver @ $13.66 per ounce ($0.44 per gram), lead @ $1.00 per pound, Zn @ $1.36 per pound. Resource block boundaries were drawn at a $30 total value cut-off. This figure was chosen because an associate who is a mining engineer and a metallurgist advised that $30 is a reasonable cost for the larger scale open pit mining and processing by flotation of material similar to that at Cieneguita. The larger scale, but geologically analogous Montana Tunnels mine uses a $15.00 cutoff ( – thus $30 is probably a conservative figure. This provided a simply defined, consistent method to define these boundaries, although it may change as a result of future metallurgical and mine planning studies. This was done for all the above-cutoff intervals in all 50 holes. For each such interval, average grades were calculated for each metal, using a weighted average where assay interval widths were not equal. In each above-cutoff interval the dollar values for each metal were added to produce an average dollar value for that interval. See Table 10.1.1 for the tabulation of these metal grades and dollar values. These dollar values could later be expressed as an equivalent metal value – gold-equivalent, for example – if desired. The boundaries of these above-cutoff intervals were defined by adding together the dollar values of the four metals present for each assay interval. Often the boundary was obvious. Such sharp boundaries often represented a lithologic boundary. Where it was less obvious, below-cutoff assay intervals could be included in the above-cutoff zone only if values in adjacent assay intervals outside it were high enough to bring the average of the included lower grade material up to the Fig 17.5.3 Representative Cross Section – Eastern Resource Blocks 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 30
  35. 35. Delve Consultants, LLC. Mineral Exploration and Development cutoff value. In most cases, no more than four sub-cutoff intervals could be included near the margin of a mineralized zone. The second step was the projection of mineralization between sections and laterally from each drill hole. During the geologic modeling of the deposit, there appeared to be two areas with different controls of mineralization. In the part east of Section 29 + 60E, and east of the north-south trending dike, mineralization appears to be controlled by the same set ENE striking and WNW dipping faults or fractures along which a set of post-mineral andesite dikes was emplaced. In this area the resource blocks were drawn parallel to this trend (see Figure 17.5.3). To the west of the north-south trending dike, it became apparent that there was no readily defined preferred orientation of the mineralized zones, so projection horizontally away from the trace of the hole was as reasonable a choice as any other. There probably is a cryptic NNE-SSW trending structural control to higher-grade portions of the deposit, but it cannot be resolved at the current drill spacing. Fig 17.5.4 Representative Cross Section – Western Resource Blocks 2881 Fargo Way, Sparks, NV 89434 Tel/Fax 775-356-6121 31