m.c.r. m.c.r. /cusco-apurÍmac project -...

MIGHTIAM CUSCO RESOURCES S.A.C.-GRUPO M.C.R.

GRUPO M.C.R

M.C.R. /CUSCO-APURÍMAC

IRON ORE PROJECT

ECONOMIC PROPOSSAL FOR THE

EXPLORATION AND EXPLOITATION

APRIL 2010

M.C.R.

PROJECT


GRUPO M.C.R

ECONOMIC PROPOSSAL FOR THE ASSOCIATIONM.C.R. IRON PROJECT/

CUSCO - APURIMAC

GENERAL INFORMATION ON CONCESSIONS ANNEX N°1

PRE-EXPLORATORY OPERATION AND SCOPING ANNEX N°2

TOTAL EXPLORATION ANNEX N°3

EXPLOITATION OF 100 MILLIONS MT/YEAR ANNEX N°4

MANUFACTURE OF SPONGE IRON / 50 MILL MT / YEAR ANNEX N°5

TERMS AND CONDITIONS- CONCLUSIONS ANNEX N°6

ADITIONAL INFORMATION ANNEX N°7


GRUPO M.C.R

IRON PROJECT-CUSCO/APURÍMAC/GENERAL INFORMATION ANNEX N°1

NUMBER OF CONCESSIONS : 57 CONCESSIONS

CONCESSION GROUP NAMES : GIFTIAM, MIGHTIAM, COSMIAM,

OROMASIS GROUPS ANDOTHERS.

TOTAL EXTENSION : 33,475 HECTARES

TOTAL AREA OF THE 57 CONCESSIONS : 72 x 58 KM

CODES - MINISTRY OF ENERGY AND MINES : SEE ANNEX N° 6

OWNER OF THE 57 MINING RIGHTS : MIGHTIAM CUSCO RESOURCES S.A.C.

LOCATION OF CONCESSIONS : CUSCO/PROVINCES: ANTA, CUSCO,

CHUMBIVILCAS AND PARURO.

APURÍMAC/PROVINCES: ANDAHUAYLAS

AND COTABAMBAS.

DISTANCE FROM PACIFIC OCEAN : 290 KM IN STRAIGHT LINE (AVERAGE)

550 KM FOR ROADS.


GRUPO M.C.R

ANNEX N°1

BRIEF HISTORY OF THE ARE : THESE CONCESSIONS BELONG

TO FERROBAMBA FORMATION AND WERE

OWNED BY CERRO DE PASCO

CORPORATION (INCAS CONCESSIONS).

THEY MADE SEVERAL DIAMOND DRILLS

WHEN WERE LOOKING COPPER

PORPHYRY, HOWEVER, THEY ONLY

DETECTED ABUNDANT IRON ORE

EXISTING GEOLOGICAL STUDIES : EXIST SEVERAL GEOLOGICAL STUDIES

THAT PRESENTS THIS FERROBAMBA

FORMATION LIKE THE LARGEST IRON ORE

FORMATION OF PERU. THE MOST

IMPORTANT STUDIES ARE: "EL PERÚ

MINERO” (M. SAMAME), "HIERRO EN EL

PERÚ (BELLIDO BRAVO), "CERRO DE

PASCO CORP." AMONG OTHERS.


GRUPO M.C.R

ANNEX N°1

GEOLOGICAL STUDIES DONE : ALL THE AREA HAS BEEN STUDIED BY THE

FOLLOWING GEOLOGISTS CONTRACTED

BY MCR: FERNANDO CASTILLA B.,

GILBERTO RAMOS, ROLLY ALVA,

GUILLERMO PLASCENCIA, JUAN

HUAYCOCHEA, MOISES PACHI AND

ANTONIO CRUZ.

AERIAL GEOPHYSICAL DONE : DETECTION OF MAGNETIC ANOMALIES

OBTAINED OF THE MAGNETOMETRY AIR

STUDY WAS PRINCIPAL BASE FOR THE

FORMULATION OF CLAIMS OROMASIS

GROUP AND THE EXTENSIÓN OF THE

CLAIMS MIGHTIAM AND COSMIAM

GROUP.

GEOPHYSICAL TERRESTRIAL DONE : HAVE BEEN MADE BY QUANTEC

GEOSCIENCE OF PERU (CANADIAN CORP).


GRUPO M.C.R

ANNEX N°1

RESOURCES INFERRED BY GEOPHYSICAL : IN THE 57 CONCESSIONS IT IS

ESTIMATED 15,OOO MILLION TONS OF

IRON ORE.

TYPE OF MINERAL : HEMATITE (FE2O3) = 65/45%

MAGNETITE (Fe3O4) = 45/65%

CHEMICAL ANALYSIS/AVERAGE : Fe SiO2 Al2O3 CaO

63.5% 2.05% 0.93% 0.17%

P2O5 S Cu K TiO2

0.119% 016% 0.04% 0.05% 0.03%


GRUPO M.C.R

M.C.R.CUSCO/APURÍMAC PROJECT:

PRE-OPERATION EXPLORATORY AND SCOPING ANNEX N°2

OBJECTIVES

TO CARRY OUT A PRELIMINAR VERIFICATION OF TERRESTIAL GEOPHYSICAL AND

GEOLOGY OF THE POTENTIAL OF IRON ORE IN THE 33.475 HECTARES OF THE

IRON PROJECT M.C.R. CUSCO/APURÍMAC, IN ORDER TO PROGRAM THE FINAL

EXPLORATION OF THE CONCESSIONS.

TO CARRY OUT A SCOPING OF ALL THE INFRASTRUCTURE REQUIRED FOR THE

INSTALLATION OF PROCESSING PLANTS, ROUTES ATTEMPTS FOR THE RAIL

ROAD CONSTRUCTION AND ALTERNATIVE FOR THE CONSTRUCCION OF MINERAL

WHARF FOR CAPE – SIZE SHIPS.


GRUPO M.C.R

PRE-EXPLORATORY OPERATION STUDIES ANNEX N°2

THE STUDIES OF THIS STAGE WILL BE AS FOLLOWS:

1. TO CARRY OUT THE STRATEGY OF PROMOTION OF COMMUNITARIAN PERMISSIONS AND

DEVELOPMENT OF THE ENVIRONMENTAL IMPACT STUDIES.

2. TO CARRY OUT TERRESTRIAL GEOPHYSIC (MAGNETOMETRIC AND GRAVIMETRY) SURVEYS,

INTEGRAL FOR THE 37.475 HECTARES, WITHIN A PROGRAM, WHICH GRADUALLY ALLOW

TO COVER INITIALLY THE AREAS WITH GREATER PRIORITY AND IMPORTANCE, BY HIGH

VOLUME AND QUALITY VOLUME OF THE IRON ORE OUTCROPS.

3. ACCORDING TO THE GEOPHYSICAL STUDIES DONE, THE DRILLING WILL BE TO PROGRAM

OF 1 OR 2 DIAMANTINE DRILLS OF 100 MTS OF DEPTH, IN THE CENTER OF EACH

DETECTED MAGNETIC BODY. IF THE MAGNETIC BODY IS CONTINUED, IT IS NECESSARY TO

DRILLS 200 MTS. EACH, IN THE CENTRAL LINE.

THE DIAMOND DRILLS WILL ALSO ALLOW THE NONFERROUS MINERAL DETECTION OF CU, AU,

AG, PB, ZN, ETC., FOR WHICH WILL BE DESIRABLE TO EXTEND THE GEOPHYSICAL STUDIES IP

TYPE (INDUCTION POLARIZED) AND OTHERS.


GRUPO M.C.R

PRE-EXPLORATORY OPERATION BUDGET ANNEX N°2

1.1.1. COMMUNITY PERMISSIONS AND STUDIES OF ENVIRONMENTAL IMPACT

IT IS PROJECTED TO CARRY OUT A STRATEGY OF PROMOTION OF COMMUNITARIAN

PERMITS THAT INCLUIDES GEOPHYSICAL, DRILLING AND EXPLOITATION STAGES WITH THE

COMMUNITIES WHICH NO CONTRACT HAS BEEN CLOSED; TAKING CARE OF GIVE PRIORITY

TO THE AREAS OF GREATER VOLUME OF EXISTING RESOURCES INFERRED BY

GEOPHYSICAL.

REFERENCIAL BUDGET : US$ 4'000,000.-

REFERENCIAL TIME : 30 TO 240 DAYS

2.2.2. GEOPHYSICAL

TERRESTRIAL MAGNETOMETRIC SURVEYS SHOULD BE DEVELOPED OVER 5.500 KM

LINEAR APPROXIMATELY, WITH READING EACH 10 MTS AND 1500 POINTS MINIMUM

GRAVIMETRY, FOR AN EXTENSION OF 20.000 MINERALIZED HECTARES.


REFERENCIAL TIME : 60 TO 240 DAYS


GRUPO M.C.R

ANNEX N°2

3.3.3. DIAMOND - DRILLS

ACCORDING TO THE SUM OF MAGNETIC BODIES (ANOMALIES) AND PROGRAMMING OF

CENTRAL LINES WITH DISTANCES EACH 200 MTS BETWEEN DRILLS, IT IS ESTIMATED

THAT THE 57 CONCESSIONS WILL REQUIRE 400 DIAMOND-DRILLS ADAMANTINE,

EQUIVALENT TO 40.000 LINEAR METERS OF DRILLING APPROXIMATELY.


REFERENCIAL TIME : 6 TO 24 MONTHS

4.4.4. INFRASTRUCTURE

IT IS PROJECTED TO CARRY OUT A SCOPING TO OBTAIN THE SELECTION OF ATTEMPTED

FOR THE CONSTRUCTION OF A RAIL ROAD AND ALTERNATIVES FOR THE CONSTRUCTION

OF 04 MINERAL PIERS FOR CAPE-SIZES SHIPS, WITH SOME COMPANY OF INTERNATIONAL

PRESTIGE THAT HAS EXPERTISE IN THE MATTER.


REFERENCIAL TIME : 10 MONTHS

TOTAL ESTIMATED BUDGET : US$ 17'000,000.-


GRUPO M.C.R

M.C.R.: CUSCO – APURÍMAC PROJECT/EXPLORATION ANNEX N°3

IT IS PROJECTED TO OBTAIN COMMUNITARY PERMITS, DEVELOPMENT OF ENVIRONMENTAL

IMPACT STUDIES, GOVERNMENTAL PERMISSIONS, CONSTRUCTION OF DRILLING PLATFORMS

AND EXTENSIONS

THE OBJECTIVE IS TO DRILL ALL THE DETECTED MAGNETIC BODIES IN THE GEOPHYSICAL

STUDIES, UNTIL OBTAINING “JORC” INDICATED RESERVES IN THE 57 CONCESSIONS

TO OBTAIN THE INDICATED OBJECTIVE, THE FOLLOWING PARAMETERS SETTLE DOWN:

1. IS ESTIMATED THAT THE NUMBER OF DRILLS WILL HAVE TO BE NOT LESS THAN 1860

DIAMOND DRILLS FOR THE 57 CONCESSIONS; HOWEVER, WITH THE RESULTS OF THE

GEOPHYSICAL STUDIES CONSIDERATIONS WILL BE ABLE TO BE PROGRAMMED MORE

ACCURATELY.

2. THE DISTANCE BETWEEN DRILLS WILL HAVE TO BE NOT LESS THAN 250 MTS.

3. THE DEPTH AVERAGE OF THE DRILLS IS CONSIDERED AN AVERAGE OF 300 MTS. 4. IS ESTIMATED THAT THE TOTAL PROGRAM OF DIAMOND-DRILLS WILL HAVE TO COVER A

NON SMALLER AMOUNT OF 465.000 LINEAR METERS.

TOTAL BUDGET OF EXPLORATION : US$116'250,000.-

REFERENCIAL TIME : 06 TO 36 MONTHS


GRUPO M.C.R

M.C.R. CUSCO/APURIMAC PROJECT:EXPLOITATION 100MILL.TM/YEAR ANNEX N°4

ACCORDING TO THE GEOPHYSICAL STUDIES DONE IT IS PROJECTED AND EXPLOITATION-

EXPORTATION PROGRAM OF 04 IRON ORE OPERATIONS AS FOLLOWS:

UNIT N°01 : GIFTIAM PROJECT / 25 MILL-TM/YEAR OF PRODUCTION CAPACITY

UNIT N°02 : MIGHTIAM PROJECT / 25 MILL-TM/YEAR OF PRODUCTION CAPACITY

UNIT N°03 : COSMIAN PROJECT / 25 MILL-TM/ YEAR OF PRODUCTION CAPACITY

UNIT N°01 : OROMASIS PROJECT / 25 MILL-TM/ YEAR OF PRODUCTION CAPACITY

______________________________________________________________________________

TOTAL 04 OPERATIONS UNITS OF 100 MILL-MT/YEAR OF PRODUCTION CAPACITY

HAVING OBTAINED THE INITIAL DIAMOND-DRILLS RESULTS SIMULTANEOUSLY IN THE 04

DESCRIBED OPERATIONS UNITS AND HAVING EXTENDED THE AGREEMENTS IN COMMUNITIES,

SHOULD BE INITIATED THE FOLLOWING MAIN STUDIES:


GRUPO M.C.R

ANNEX N°4

A. MINING PLAN STUDIES, INSTALLATION OF PLANT AND ALL THE SERVICES REQUIRED FOR

EACH ONE OF THE 04 PRODUCTION UNITS.

REFERENCIAL BUDGET : USD 2'400,000.-

B. ENVIRONMENTAL IMPACT STUDIES AND GOVERNMENTAL PROCEEDINGS, UNTIL OBTAINING

THE PERMISSION OF OPERATION, DENOMINATED CERTIFICATE OF MINING OPERATION

(COM), FOR EACH ONE OF THE 04 DESCRIBED OPERATION UNITS.


C. STUDIES OF PRIVATED INITIATIVE FOR 02 RAIL ROADS WITH 50 MILLION METRIC TON OF

CAPACITY EACH, ON THE BASIS OF THE REALISED SCOPING.


D. STUDIES TO REALISE THE TECHNICAL PROPOSAL TO THE PERUVIAN HARBOR AUTHORITY

(APN), FOR THE CONSTRUCTION OF 04 HARBOR TERMINALS ON THE BASIS OF THE

REALISED SCOPING.

REFERENCIAL BUDGET : USD 950,000.-


GRUPO M.C.R

ANNEX N°4

E. DEFINITIVE STUDIES FOR THE CONSTRUCTION OF THE 02 RAIL ROADS FOR 50 MILLION

TM/AÑO OF CAPACITY EACH.


F. DEFINITIVE STUDIES FOR THE CONSTRUCTION OF THE 04 HARBOR TERMINALS (PIERS).


____________________________________________________________________________

TOTAL REFERENCIAL BUDGET : USD 28'400,000.-

TIME REFERENCIAL : 24 TO 30 MONTHS


GRUPO M.C.R

ANNEX N°4

THE INVESTMENT BUDGET FOR THE PRODUCTION OF 02 INITIAL OPERATIONS OF 25 MILLION

TM/YEAR OF CAPACITY OF PRODUCTION (TOTAL 50 MILLION TM/YEAR) OF IRON ORE, IS

CONSIDERED AS FOLLOW:

PRE-EXPLORATORY OPERATION USD 17'000,000.-

EXPLORATION USD 116'250,0000.-

STUDIES AND GENERALLY PERMISSIONS USD 28'400,000.-

MINE AND INFRASTRUCTURE USD 170'000,000.-

PROCESSING PLANT USD 780'000,000.-

VEHICLES AND DIVERSE EQUIPMENTS USD 162'000,000.-

CIVILIAN BUILDS AND RAILWAY EQUIPMENT USD 2'200,000,000.-

CIVILIAN BUILDS AND PIERS EQUIPMENT (2) USD 148'000,000.-

SERVICES AND DIVERSE FACILITIES USD 125'000,000.-

CONTINGENCY USD 70'000,000.- __________________________________________________________

USD 3,816'650,000.-

THE WORK CAPITAL FOR THE 3RD MONTHS OF OPERATION OF THE 02 UNITS IS

ESTIMATED IN USD 406'250,000.-


GRUPO M.C.R

ANNEX N°4

OPERATING BUDGET (EXPLOITATION, CRUSHING/CLASSIFICATION, TRANSPORTATION TO

PORT AND BOARDING), IS ESTIMATED AT USD 32.50 X TM.

THE INCOME/ EXPENSES FORECASTING FOR THE FIRST YEAR IS ESTIMATED AS FOLLOWS:

INCOME/FIRST YEAR

50'000,000.- MT X FOB USD 100.- X MT $5,000'000,000.-

EXPENSES/FIRST YEAR

50'000,000.-MT X FOB USD 32.50.- X MT $1,625'000,000.-

GROSS PROFITS/ FIRST YEAR : $ 3,375'000,000.-


GRUPO M.C.R

M.C.R.CUSCO/APURÍMAC PROJECT

SPONGE IRON MANUFACTURE /50 MILL.TM/YEAR ANNEX N°5

TAKING IN CONSIDERATION THE PRESENT WORLD FORECAST IN THE NEAR FUTURE, THE

CRUDE PETROLEUM AND INTERNAL LOADS AND SEA FREIGH PRICES, WILL BE EXCESSIVELY

HIGH, THE STEEL WILL BE THE MOST COMPETITIVE PRODUCT FOR CHINA MARKET.

PERU OWNS VERY HIGH RESERVES OF BOTH RESOURCES TO PRODUCE SPONGE IRON

(STEEL); THIS MEANS, THE IRON ORE AND THE ANTHRACITE COAL OF HIGH CALORIFIC

POWER. THE PRODUCTION COST OF STEEL (SPONGE IRON) IS VERY LOW IN PERU AND

PROPERLY IN THE DEPOSITS OF THE PRESENT PROJECT CUSCO-APURIMAC, WOULD BE

LOWER THAT OTHER PLACES, BECAUSE OF THE LOW COST OF THE IRON ORE OPERATION.

TO PRODUCE 1000 KG SPONGE IRON ARE REQUIRED 1600 KG OF IRON ORE, PLUS 600 KG

OF ANTHRACITE, THAT MAKE A TOTAL OF 2,200 KG OF RAW MATERIALS WHICH IS

CONSUMED IN THE OVEN 1,200 KG OF (CO), THAT DON´T NEED TO BE TRANSPORTED WITH

THE USE OF THE TUNNEL KILN TECHNOLOGY (CHINA PATENT), THAT PRESENTS REDUCED

MANUFACTURE COST AND A HIGH SAVING IN ELECTRICAL POWER.


GRUPO M.C.R

ANNEX N°5

THE VARIABLE PRODUCTION COSTS BY 1 METRIC TON OF IRON SPONGE IRON WOULD BE THE

FOLLOWING:

MINE, EXPLOITATION AND PULVERIZATION OF 1,600 KG IRON ORE USD 16.50.-

ACQUISITION AND MILLING OF 600 KG OF ANTHRACITE COAL USD 54.00.-

ACQUISITION AND PREPARATION OF LIMESTONE USD 0.40.-

CONSUMPTION OF ELECTRIC ENERGY/40 KWH X MT USD 5.00.-

NATURAL GAS CONSUMPTION USD 10.00.-

CONSUMABLE, REPAIRS AND MAINTENANCE USD 10.00.-

_______________

TOTAL SUB/BY TM USD 95.90.-


GRUPO M.C.R

ANNEX N°5

THE FIXED COSTS FOR ONE METRIC TON OF SPONGE IRON WILL BE THE FOLLOWING:

ADMINISTRATIVE EXPENSES : USD 10.00.-

SALARY AND WAGES : USD 10.00.-

COMMERCIAL EXPENSES : USD 5.00.-

-------------------------------

USD 25.00.-

SUB TOTAL/FIXED AND VARIABLE COST : USD 120.90.

IS ESTIMATED THAT THE FOB COST, OF ONE METRIC TON SPONGE IRON IN PRESSED

BRIQUETTE, WOULD BE AS FOLLOW:

VARIABLE AND FIXED COSTS : USD 120.90.

TRANSPORT TO PORT (RAIL WAY) : USD 15.00.-

EXPENSES OF STORAGE AND BOARDING : USD 9.00.-

TOTAL COST FOB/TM : USD 144.90.-


GRUPO M.C.R

ANNEX N°5

THE REFERENCE OF INVESTMENT BUDGET FORECASTING FOR A SET OF MODULES TURN

KEY PRODUCTION UNDER "TUNNEL KILN" CHINA PATENT, FOR 50 MILLION MT / YEAR, IS

ESTIMATED AS FOLLOWS:

MINE AND PLANT CRUSHING / SPRAYING : USD 780'000,000.-

TOTAL CIVIL BUILD /SPONGE IRON PLANT : USD 1,230'000,000.-

SPONGE IRON PLANT AND INSTALLATION : USD 1,650'000,000.-

IMPORT TAXES : USD 204'000,000.-

MACHINES, VEHICLES AND SMALLER EQUIPMENTS : USD 170'000,000.-

CONTINGENCY : USD 120'000,000.-

-----------------------------------------------------------------------------------------------

TOTAL : USD 4,157'000,000.-

THE WORK CAPITAL REQUIRED FOR THE 03 FIRST MONTHS IS ESTIMATED IN USD

1,812'699,000.-


GRUPO M.C.R

ANNEX N°5

A FORECAST OF INCOME/EXPENSE FOR THE FIRST YEAR IS ESTIMATED AS FOLLOWS:

INCOME/FIRST YEAR

50'000,000.- MT X FOB USD 280.- X MT $ 15,000'000,000.-

EXPENSES/FIRST YEAR

50'000,000.- MT X FOB USD 144.90.- X MT $ 7,245'000,000.-

GROSS PROFITS / FIRST YEAR $ 7,755'000,000.-


GRUPO M.C.R

TERMS AND CONTRACTUAL CONDITIONS ANNEX N°6

M.C.R. PROPOSES AN ASSOCIATION WITH THE INVESTOR GROUP, SELLING TO THEM A 75% OF

THE 57 MINING PROPERTIES SHARES INDICATED IN THE ANNEX N° 07, BY A SALE PRICE

WHICH INCLUDES THE FULFILLMENT OF EXPLORATORY PRE-OPERACIÓN AND SCOPING STAGE;

THE INTEGRAL EXPLORATION AND THE EXPLOITATION OF THE FIRST OPERATIONS OF 25

MILLION MT/YEAR, THE SPONGE IRON MANUFACTURE AND THE PAYMENT OF DOWNPAYMENTS

TO THE MINING GROUP, BY ALL THE RESOURCES AND RESERVES OF IRON ORE AND

NONFERROUS MINERALS THAT CAN BE DETECTED IN THE INITIAL AND FINAL EXPLORATION.

THE INVESTMENT BUDGET FORECASTING FOR THE PRE-EXPLORATORY OPERATION IS

ESTIMATED IN USD 17'000,000 AND ITS SCOPES AND DETAILS CAN BE FOUND IN THE ANNEX

N°2.

THIS STAGE WILL ALLOW TO MAINLY DEFINE A PRELIMINARY QUANTIFICATION OF IRON ORE

RESOURCES AND OF OTHER COMMERCIAL SUBSTANCES IN THE 57 MINING PROPERTIES, IN

ORDER TO REALISE THE PROGRAMMING OF A DIAMOND-DRILL MESH TO CARRY OUT AN

INTEGRAL EXPLORATION PLAN (ANNEX N° 3).


GRUPO M.C.R

ANNEX N°6

THE INTEGRAL EXPLORATION OF THE 57 CONCESIONES (ANNEX N° 03) HAVE THE OBJECTIVE

TO DEFINE THE INDICATED RESERVES, TO SELECT THE AREAS OF BETTER INITIAL CONDITIONS

OF EXPLOITATION AND ALSO ESTABLISH A PAYMENTS CHRONOGRAM TO THE MINING

GROUP,ACCORDING TO THE ADVANCE AND VALORATION OF THE QUANTIFIED RESOURCES AND

RESERVES.

FOR THE INITIAL STAGE OF EXPLOITATION OF 50 MILLION TM/YEAR OF IRON ORE, A

REFERENTIAL INVESTMENT BUDGET FORECASTING, WHICH COULD BE SIGNIFICANTLY REDUCED

IF THERE ARE MORE ECONOMIC OFFERS OF EQUIPMENTS, CIVIL WORKS AND SERVICES OF

HIGH QUALITY. ALSO IT IS NECESSARY TO INDICATED THAT WE HAVE RECEIVED THE

INVESTMENT BUDGET FORECASTING FROM A SUPPLIERS FROM INDIA, FOR THIS REASON THE

DIRECT NEGOTIATION WITH CHINESE MANUFACTURERS, WILL ALLOW A CONSIDERABLE

REDUCTION OF THE INDICATED BUDGET FORECASTING.

FOR THE STAGE OF MANUFACTURE OF 50 MILLION METRIC TON OF SPONGE IRON (STEEL), AS

FINAL GOAL IT SHOULD BE ESTABLISH AN INVESTMENT PROGRAM AND CRONOGRAM WITH

MODULAR PLANTS, OF WHICH FIRST PURCHASE ORDERS WILL BE OBTAINED AT THE END OF

THE EXPLORATORY PRE-OPERATION STAGE.


GRUPO M.C.R

ANNEX N°6

IT IS RECOMMENDED IN THE SPONGE IRON PLANT, TO USE THE "TUNNEL KILN” (CHINA

PATENT), WHICH WILL ALLOW HIGH SAVINGS OF ENERGY AND COMPLETE SUPPLY OF

REFRACTORIES MATERIALS BY THE PERUVIAN PRODUCTION.

IT IS REQUIRED TO CARRY OUT A CONTRACT WITH A FIDUCIARY SCHEME (ESCROW), WITH A

BANK OF INTERNATIONAL RECOGNIZED PRESTIGE, ACCEPTED BY THE INVESTOR GROUP THAT

WILL RECEIVE FROM THE MINING GROUP, THE 75% OF SHARES AND RIGHTS OF THE 57 MINING

PROPERTIES OF M.C.R. PROJECT AND ALSO, THE INVESTOR GROUP WILL HAVE TO COMPLY

STRICTLY WITH THE COMMITMENTS OF INVESTMENT AND THE DOWNPAYMENTS FOR THE

MINING GROUP, IN ORDER THAT AT THE END OF THE FULFILLMENTS, THE FIDUCIARY BANK,

TRANSFERS 75% OF SHARES AND RIGHTS OF THE 57 MINING PROPERTIES TO INVESTOR

GROUP.

THE STAGE OF INTEGRAL EXPLORATION (ANNEX N° 3), WILL HAVE TO BE ACCOMPLISHED BY

THE INVESTOR GROUP IN VARIOUS SUB-STEPS, WHICH WILL BE DEFINED IN A CRONOGRAM IN

THE CONTRACT OF ASSOCIATION.THE INVESTOR GROUP SHOULD PAY TO THE MINING GROUP

BY EACH METRIC TON OF THE DETECTED INDICATED RESERVES, ACCORDING TO THEIR

VALUATION.


GRUPO M.C.R

ANNEX N°6

FOR THE EFFECTS OF VALUATION PER EACH METRIC TON OF INDICATED RESERVES AND

RESOURCES DETERMINED IN THE EXPLORATION STUDIES, THIS ONE SETTLES DOWN A VALUE

EQUIVALENT TO THE 0,25% OF THE VALUE AVERAGE OF THE IRON ORE SPOT-FINES F.O.B (INDIA,

AUSTRALIA AND BRAZIL), ACCORDING WITH SPECIALIZED PUBLICATION CRU-MONITOR

IMMEDIATELY PREVIOUS TO THE DATE OF VALUATION.

WHEREARS IN SOME OF THE CONCESSIONS EXISTS ALTERED MINERAL WITH OTHER SUBSTANCES

LIKE GOLD, SILVER, COPPER OR ANOTHERS WITH COMMERCIAL VALUE, THEY WILL HAVE TO BE

EXPLORED AND PAID THE RESOURCES BY THE INVESTOR GROUP TO THE MINING GROUP, IN THE

SAME PROPORTIONS THAT THE APPLIED IN THE IRON ORE.

IT IS CONSIDERED THAT THE VALUATIONS OF IRON ORE AND THE NONFERROUS, CONSIDERED AS

RESERVES THAT WILL BE DISCOVERED DURING THE EXPLORATION STAGES, SHOULD BE AJUSTED

WITH VALUES OF THE MONTH PREVIOUS TO EACH INDICATED SUB-STAGE. ALSO THE MINING

GROUP IN EACH INDICATED SUB-STAGE MAY CHOOSE THE CURRENCY OR OTHER VALUE

ACCORDING TO THE QUOTE OF THE MONTH PREVIOUS TO EACH VALUATION AND RESPECTIVE

LIQUIDATION.


GRUPO M.C.R

ANNEX N°6

ALL THE TERMS AND CONDITIONS PRESENTED IN THIS CHAPTER ARE THE BASE OF THE

NEGOTIATIONS; NEVERTHELESS, IN COMMON AGREEMENT, COULD BE PERFECT, EXTENDED

CORRECTED AND DEFINED THE FIDUCIARY CONTRACT BETWEEN THE PARTS.

FINALLY, IT IS ESTIMATED THAT THE PRODUCTION OF IRON ORE OF 100 MILLIONS MT AND THE

MANUFACTURE OF SPONGE IRON BY 50 MILLION MT/ YEAR, WILL HAVE AN ANNUAL

CONSUMPTION OF 180 MILLION MT/ YEAR OF IRON ORE, WHICH THE 15.000 MILLION MT OF

POTENTIAL RESOURCES ESTIMATED, MAY ALLOW A NORMAL SUPPLY TO CHINA FOR ABOUT 80

YEARS, APPROXIMATELY.


GRUPO M.C.R

CONCLUSIONS ANNEX N°6

FERROBAMBA FORMATION, IN WHICH ARE INCLUDING THE 57 CONCESSIONS OF M.C.R. HAS

BEEN STUDIED BY CERRO DE PASCO CORPORATION, NORTH AMERICAN COMPANY THAT

WORKED UNTIL YEAR 1968, WHICH CARRIED OUT NUMEROUS DIAMOND-DRILLS IN SEARCH OF

COPPER PORPHYRY AND ONLY FOUND ABUNDANT IRON ORE RESOURCES.

IN ORDER TO DETERMINE THE POTENTIAL RESOURCES OF IRON ORE IN THE 57 CONCESSIONS

OF M.C.R., HAS BEEN USED THE FOLLOWING METHODOLOGY:

- THE RESULTING MAGNETIC ANOMALIES OF THE ANALYTICAL SIGNAL AND OBTAINED TOTAL

CAMP IN THE STUDY OF AIR MAGNETOMETRY MADE, IN WHICH THE 33.475 HECTARES OF

M.C.R ARE INCLUDED., PRESENT A 70% OF THE AREA COVERED BY MAGNETIC ANOMALIES,

WITH WHICH HAVE BEEN POSSIBLE TO VERIFY THE EXISTENCE OF MANY OUTCROPS OF

IRON ORE.

- GEOPHYSICAL STUDIES MADE BY EARTH, CONFIRM THAT A 20-25% OF TOTAL AREA OF THE

EVALUATED CONCESSIONS, ARE COVERS BY DEFINED MAGNETIC BODIES, WITH 500

TO 1.000 METERS OF DEPTH.


GRUPO M.C.R

ANNEX N° 6

- IN ORDER TO DETERMINE THE POTENTIAL RESOURCES OF THE 57 CONCESSIONS IS

CONSERVATIVELY ESTIMATED THAT 10% OF TOTAL AREA (3.347 HAS), IS

MINERALIZED MASSIVELY AND IN THE MATTER OF DEPTH, IS

CONSIDERED CONSERVATIVE ESTIMATED ONLY 100 MTS AS AVERAGE; THEREFORE ARE

CALCULATED 3.347 MILLION M3 MINERALIZED WHICH MULTIPLIED BY THE DENSITY 4.5,

ARE OBTAINED 15.000 MILLION MT OF POTENTIAL IRON ORE RESOURCE IN THE 33.470

HECTARES.

THE MOST PROMINENT IRON ORE OUTCROPS DESCRIBED IN THE AREA CORRESPOND TO

GIFTIAM CONCESSION, WITH 67 MILLION MT IN SIGHT, APPROXIMATELY; TO MIGHTIAM

CONCESSION WITH 52 MILLION MT IN SIGHT MT; TO COSMIAN CONCESSION WITH

49 MILLION MT IN SIGHT, APROXIMATELY AND MANY MINOR OUTCROPS.

THE GEOLOGIC SAMPLES AND GEOCHEMISTRY MADE IN THE EXISTING OUTCROPS OF THE

57 CONCESSIONS, SHOW THE NEXT AVERAGE VALUES:


GRUPO M.C.R

ANNEX N° 6

CHEMICAL ANALYSIS/AVERAGE : Fe SiO2 Al2O3 CaO

63.5% 2.05% 0.93% 0.17%

P2O5 S Cu K TiO2

0.119% 016% 0.04% 0.05% 0.03%

REGARDING THE CONCESSIONS OF M.C.R. (COSMIAM/APURÍMAC GROUP); THESE ARE

NEIGHBOURS TO THE NORTH OF LAS BAMBAS PROJECT OF XTRATA COMPANY AND

ACCORDING TO THE OBSERVATIONS REALISED BY OUR GEOLOGISTS, EXIST MANY

POLIMETALIC ALTERATIONS OF THE BAMBAS CONTAIN IN COSMIAM GROUP; THEREFORE, IT

WILL BE NECESSARY TO GIVE IMPORTANCE TO EXPLORATORY DEVELOPMENT IN

POLYMETALLIC SUBSTANCES LIKE Au, Cu, Ag, Pb, Zn AND OTHERS.

THE INVESTMENT BUDGET FORECASTING IN MINING EXPLOITATION THAT IS PRESENTED IN THIS

SUMMARY, HAS BEEN DONE WITH BASE TO REFERENCES OF DIVERSE EXISTING QUOTATIONS

IN MINING OPERATIONS OF IRON ORE IN BRAZIL AND THE INVESTMENT BUDGET FOR THE

MODULAR TURN KEY PLANTS OF SPONGE IRON HAS BEEN ELABORATED WITH BASE TWO


GRUPO M.C.R

ANNEX N° 6

INDIAN FIRMS SUPPLIERS THAT KNOW THE CHINESE MANUFACTURERS OF THE TECHNOLOGY

“TUNNEL KILN”; THEREFORE, IS ESTIMATED THAT BOTH DESCRIBED BUDGETS COULD BE

CONSIDERABLY REDUCED, HAVING DIRECT QUOTATIONS OF MANUFACTURERS FROM CHINA.

AT PRESENT M.C.R. HAS ONLY FOREIGN COMPANIES INTERESTED IN REALISING JOINT

VENTURE, IN INDEPENDENT PROJECTS LIKE GIFTIAM, MIGHTIAM OR COSMIAM; NEVERTHELESS,

IF THERE IS AN INVESTOR GROUP INTERESTED IN ALL THE 57 CONCESSIONS OF M.C.R. OUR

COMPANY WOULD BE VERY INTERESTED IN THIS INTEGRAL NEGOTIATION.

MIGHTIAM CUSCO RESOURCES

S.A.C.-GRUPO M.C.R.

GRUPO M.C.R

AERIAL GEOPHYSICAL MAP OF THE MINING PROPERTIES

OF M.C.R. IN CUSCO - APURÍMAC


S.A.C.-GRUPO M.C.R.

GRUPO M.C.R

MAP OF MINING PROPERTIES OF M.C.R. IN CUSCO

DEPARTMENT


GRUPO M.C.R

CUSCO

GIFTIAM PROJECT

GIFTIAM PROJECT INFRAESTRUCTURE AND ENERGY MAP


GRUPO M.C.R

GIFTIAM PROJECT

TOPOGRAPHYC MAP

(900 Hectaries)

8’436

8’437

8’439

UTM / COORD


GRUPO M.C.R


GRUPO M.C.R

GIFTIAM PROJECT

ORE BODY MODEL – 3D


GRUPO M.C.R

GEOCHEMICAL OF MOLLORCO ORE BODY – GIFTIAM PROJECT

Nº Sample Id East_UTM North_UTM Al2O3 % As % CaO % Co % Cr % Cu % Fe % K % MgO % MnO % Ni % P2O5 % Pb % S % SiO2 % TiO2 % Zn % Au

ppm

1 7000000 180532 8437428 1.1 0.02 0.11 0.014 0.005 0.064 62.0 0.05 0.15 0.09 0.003 0.26 0.02 0.23 2.15 0.05 0.06 0.011

2 7000001 180573 8437445 1.06 0.005 0.16 0.009 0.005 0.015 64.7 0.05 0.56 0.14 0.003 0.13 0.03 0.18 1.43 0.03 0.02 0.006

3 7000002 180656 8437431 0.76 0.01 0.12 0.009 0.005 0.05 64.6 0.05 0.68 0.13 0.003 0.15 0.01 0.21 1.61 0.03 0.02 0.008

4 7000003 180529 8437547 0.75 0.005 0.06 0.016 0.01 0.055 63.5 0.05 0.33 0.06 0.003 0.21 0.02 0.23 1.69 0.04 0.01 0.015

5 7000004 180410 8437576 0.7 0.005 0.13 0.015 0.005 0.043 65.8 0.05 0.44 0.09 0.003 0.18 0.02 0.24 1.19 0.03 0.01 0.007

7 7000006 180368 8437539 0.61 0.03 0.25 0.013 0.005 0.035 64.9 0.05 0.4 0.13 0.003 0.15 0.02 0.23 2.05 0.03 0.02

8 7000007 180439 8437248 0.47 0.005 0.14 0.007 0.005 0.032 63.8 0.05 1.09 0.15 0.003 0.14 0.01 0.16 1.58 0.02 0.03

44 7000043 180501 8437416 0.69 0.005 0.22 0.01 0.03 0.029 65.9 0.05 0.51 0.09 0.003 0.14 0.01 0.22 1.7 0.03 0.01

45 7000044 180480 8437528 1.03 0.005 0.21 0.009 0.03 0.052 62.8 0.05 0.24 0.07 0.003 0.16 0.01 0.25 2.76 0.05 0.01

46 7000045 180484 8437498 0.93 0.005 0.17 0.01 0.03 0.028 66.1 0.05 0.25 0.09 0.003 0.12 0.02 0.23 1.73 0.04 0.02

47 7000046 180509 8437498 1.4 0.005 0.24 0.007 0.04 0.045 65.1 0.05 0.38 0.12 0.017 0.16 0.01 0.32 2.7 0.08 0.01

48 7000047 180419 8437576 0.95 0.005 0.16 0.014 0.02 0.04 65.4 0.05 0.31 0.09 0.003 0.1 0.01 0.2 1.87 0.05 0.02

49 7000048 180430 8437582 1.46 0.34 0.1 0.01 0.01 0.125 60.6 0.05 0.13 0.09 0.003 0.32 0.07 0.3 4.33 0.02 0.05

50 7000049 180454 8437566 1.24 0.01 0.37 0.025 0.02 0.037 63.7 0.05 0.42 0.1 0.003 0.17 0.01 0.28 2.34 0.08 0.02

51 7000050 180510 8437468 0.92 0.005 0.15 0.016 0.03 0.023 65.9 0.05 0.36 0.07 0.003 0.08 0.02 0.08 1.92 0.04 0.01

52 7000051 180521 8437431 0.76 0.005 0.09 0.016 0.02 0.066 66.8 0.05 0.24 0.09 0.003 0.08 0.01 0.3 1.8 0.03 0.02

Average: 0.927 0.03 0.17 0 0 0 64.5 0.1 0.41 0.1 0 0.159 0. 0.23 2.053 0.041 0.02

Laboratory: Als Chemex 2009


GRUPO M.C.R

GIFTIAM PROJECT

PHOTOS

MOYOORCO HILL – VIEW TO THE NORTH FROM THE ROAD


GRUPO M.C.R

GIFTIAM PROJETC PHOTOS

MAGNETITE ORE – HIGH GRADE



GRUPO M.C.R

GIFTIAM PROJECT

PHOTOS



S.A.C.-GRUPO M.C.R.

GRUPO M.C.R

MINING TITLE


S.A.C.-GRUPO M.C.R.

GRUPO M.C.R


S.A.C.-GRUPO M.C.R.

GRUPO M.C.R

MAP OF MINING PROPERTIES OF M.C.R. IN CUSCO

DEPARTMENT


S.A.C.-GRUPO M.C.R.

GRUPO M.C.R

MINERALIZED BODIES / PERCANSENCCA - MAP


GRUPO M.C.R


GRUPO M.C.R

GEOCHEMICAL - ZONA C – PERCASENCCA - MIGHTIAM

Nro ID NORTE ESTE COTA % Fe % S % SiO % As % Ti2O5 % MnO % P2O5 % Al2O3 %Cu % Zinc % Pb % MgO Au (ppm) Ubicación

1 MCR07000331 8446905.00 822854.00 4034 66.10 0.09 4.77 <0.01 0.17 0.06 0.03 0.87 0.013 0.01 0.01 0.65 Zona C

2 MCR07000332 8446855.00 822866.00 4047 66.40 0.06 4.96 <0.01 0.05 0.06 0.09 1.13 0.012 0.01 0.01 0.43 Zona C

3 MCR07000351 8446827.00 822847.00 4065 58.50 0.28 6.92 <0.01 0.14 0.04 <0.02 1.74 0.028 0.01 0.01 0.97 0.013 Zona C

4 MCR07000352 8446845.00 822836.00 4061 59.00 0.13 5.16 <0.01 0.1 0.03 0.07 2.11 <0.005 0.01 0.01 0.48 Zona C

5 MCR07000353 8446851.00 822844.00 4059 60.90 0.08 7.63 <0.01 0.05 0.05 0.05 2.01 <0.005 0.01 0.01 0.32 Zona C

6 MCR07000354 8446841.00 822722.00 4016 55.90 0.07 2.72 <0.01 0.09 0.03 0.02 0.8 0.011 0.01 0.01 0.34 Zona C

7 MCR07000355 8446889.00 822754.00 3986 53.00 0.32 11.85 <0.01 0.13 0.04 0.05 2.77 0.022 0.01 0.01 2.27 Zona C

8 MCR07000356 8446852.00 822636.00 3978 64.10 0.18 3 0.01 0.1 0.02 0.07 0.53 0.037 0.01 0.01 0.26 Zona C

9 MCR07000357 8446812.00 822692.00 3990 64.10 0.15 2.18 <0.01 0.09 0.03 0.05 0.86 0.011 0.01 0.01 0.22 Zona C

10 MCR07000358 8446814.00 822549.00 3921 62.60 0.09 4.64 0.01 0.06 0.02 0.23 0.92 0.005 0.01 0.01 0.1 Zona C

11 MCR07000359 8446790.00 822510.00 3885 63.80 0.1 5.27 <0.01 0.07 0.04 0.1 0.93 0.027 0.01 0.01 0.49 0.02 Zona C

12 MCR07000360 8446800.00 822460.00 3850 63.30 0.07 3.04 <0.01 0.11 0.03 0.27 1.61 0.012 0.01 0.01 0.14 0.011 Zona C

13 MCR07000381 8446922.00 822848.00 4027 65.50 0.14 3.62 <0.01 0.04 0.04 0.05 1.03 0.025 0.01 0.01 0.52 Zona C

14 MCR07000382 8446982.00 822898.00 3989 61.00 0.25 7.87 <0.01 0.09 0.03 0.03 1.35 0.072 0.01 0.01 1.28 Zona C

15 MCR07000383 8447040.00 822901.00 3973 63.20 0.14 5.94 <0.01 0.06 0.04 0.04 1.16 0.009 0.01 0.01 0.35 Zona C

16 MCR07000384 8447012.00 822841.00 3992 63.40 0.11 6.5 <0.01 0.06 0.03 0.08 1.1 0.037 0.01 0.01 1.02 Zona C

17 MCR07000385 8447054.00 822997.00 3886 66.60 0.08 3.42 <0.01 0.06 0.03 0.11 0.7 0.017 0.01 0.01 0.39 Zona C

18 MCR07000386 8447122.00 822962.00 3904 65.60 0.09 3.66 <0.01 0.06 0.03 0.05 0.66 0.022 0.01 0.01 0.47 Zona C


S.A.C.-GRUPO M.C.R.

GRUPO M.C.R

MINERALIZED BODIES IN PERCASENCCA

MINERALIZED BODIES IN PERCASENCCA


S.A.C.-GRUPO M.C.R.

GRUPO M.C.R

MINING TITLE


S.A.C.-GRUPO M.C.R.

GRUPO M.C.R


S.A.C.-GRUPO M.C.R.

GRUPO M.C.R

PAYMENTS TO THE PERUVIAN GOVERNMENT


S.A.C.-GRUPO M.C.R.

GRUPO M.C.R

m.c.r. m.c.r. /cusco-apurÍmac project -...

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