EXPLORATION POTENTIAL

Drilling carried out on the Cerro del Gallo deposit to date has defined in most dimensions the limits of the central gold-rich zone.  The broader Cerro del Gallo system, particularly the silver-copper enriched zones that generally lie peripheral to the gold zone, remain open in several directions laterally, as well as down-dip.   Significant opportunities exist to enhance the economics of the deposit by further expanding these zones.

It has been known, since work by Kings Minerals commenced on the San Anton property in 2004, that the Cerro del Gallo 'footprint' is relatively small in comparison to the large alteration halo that surrounds it.  It has been surmised, and a principal Corporate objective is to test, the theory that the mineralized felsic intrusive that forms the core of the Cerro del Gallo deposit represents an apothesis to a much larger intrusive system underlying the broader area.  In this context, the exploration of the broader clay alteration halo (pyrophyllite, alunite, dickite) encompassing Cerro del Gallo, and in particular several strong coincident magnetic and IP anomalies nearby, are priorities.

On the wider San Anton property, more than twenty exploration targets besides Cerro del Gallo have been identified, representing potential porphyry/intrusion-related gold and epithermal vein-breccia deposit types.  These targets include the following:

The San Anton property contains extensive areas of clay alteration (pyrophyllite, alunite, dickite) suggestive of intense hydrothermal alteration possibly attributed to a granitoid and/or porphyry system at shallow depth.  In addition to Cerro del Gallo, three other possible porphyries have been identified at locations known as Garcia (5.7 sq. km in extent), Dolores (2.5 sq. km) and Atarjea (6.2 sq. km). These are potential bulk mineable precious and base metal targets.

Linear zones of clay alteration (pyrophyllite, alunite, dickite) on the San Anton property are suggestive of intense hydrothermal alteration along regional scale fracture systems with the clay minerals being indicative of the top of an epithermal precious metal systems at depth.  In addition to the historically mined Carmen-Providencia, Ave de Gracia and La Paz silver-gold epithermal vein systems, targets identified include the Tranquilino, Violeta, Rosa de Castilla, Lopez and Quinteros lineaments.

Significant potential exists along the high grade Carmen-Providencia epithermal gold-silver vein system, where an existing shaft at the past producing Dolores Mine provides ready underground access at the 90 metre level to both the Carmen-Providencia and Ave de Gracia epithermal vein systems.

Elsewhere on the Carmen-Providencia vein system, targets such as the old Violeta-Los Pachucos workings are believed to offer potential for wider zones of stockwork vein arrays that could represent bulk mining targets.

The Company believes a cluster of structurally controlled vein-breccia deposits with associated banded chalcedonic veining in the San Luis Rey area, along the extrapolated southern extension of the Carmen-Providencia epithermal vein system, is prospective.  There is a possible presence of high grade silver-gold targets, possibly amenable to either bulk mining or underground mining.

Isolated polymetallic mineral occurrences elsewhere on the Property containing gold, silver, copper, lead and zinc.  Six such occurrences include Diego de la Union, Fragua, Todos Santos, La Rampa, El Cubo and Puerto de Nieto. These are precious metal and base metal targets that may be amenable to either bulk mining or underground mining.