urumalqui report 43101

MQes

TECHNICAL REPORT URUMALQUI PROPERTY

JULCÁN DISTRICT, DEPARTMENT OF LA LIBERTAD, PERU

LATITUDE 8O 05’ SOUTH BY LONGITUDE 78O 29’ WEST

Prepared by

Mine and Quarry Engineering Services, Inc.

For

ANDEANGOLD LTD. and

GITENNES EXPLORATION, INC.

December 22, 2011

MQes

IMPORTANT NOTICE This report was prepared as a National Instrument 43-101 Technical Report for AndeanGold Ltd. and Gitennes Exploration, Inc. by Mine and Quarry Engineering Services, Inc. (MQes). The quality of information, conclusions and estimates contained herein is consistent with the level of effort involved in MQes’ services, based on: i) information available at the time of preparation, ii) data supplied by outside sources, and iii) the assumptions, conditions and qualifications set forth in this report. This report is intended to be used by AndeanGold Ltd. and Gitennes Exploration, Inc., subject to the terms and conditions of its contract with MQes. This contract permits AndeanGold Ltd. and Gitennes Exploration, Inc. to file this report as a Technical Report with Canadian Securities Regulatory Authorities pursuant to National Instrument 43-101, Standards of Disclosure for Mineral Projects. Except for the purposes legislated under provincial securities law, any other use of this report by any third party is at that party’s sole risk.

MQes

DATE and SIGNATURE PAGE

The undersigned prepared this Technical Report titled ‘Technical Report on the Urumalqui Property, Department of La Libertad, Peru’ and dated December 22, 2011, in support of the public disclosure of technical aspects for the Urumalqui Property by AndeanGold Ltd. and Gitennes Exploration Inc. The format and content of the report are intended to conform to Form 43-101F1 of National Instrument 43-101 of the Canadian Securities Administrators. Effective Date: November 8, 2011 Signed on December 22, 2011 by, (Signed by C. Kaye) (Signed by J. A. McCrea) (signed copy on file) (signed and sealed copy on file) ____________________________________ ____________________________________ Chris Kaye, FAusIMM, B. Eng Chemical James A. McCrea, P. Geo. Principal Process Engineer Consulting Geologist (Signed by J. Douglas Blanchflower) (signed and sealed copy on file) ____________________________________ J. Douglas Blanchflower, P. Geo. Consulting Geologist

MQes

CERTIFICATE OF QUALIFIED PERSON Christopher Kaye, FAusIMM

1730 S. Amphlett Blvd., Suite 200, San Mateo, CA 94402

I, Christopher Edward Kaye am a Principal Process Engineer, with the firm of Mine and Quarry Engineering Services, Inc. (MQes) of 1730 S. Amphlett Blvd. Suite 200, San Mateo, CA 94402, USA. I carried out this assignment for MQes;

This certificate applies to the technical report entitled “Technical Report on the Urumalqui Property, Julcan District, Department of La Libertad, Peru” dated 22 December, 2011;

I am a Fellow of Australasian Institute of Mining and Metallurgy in Australia. I graduated from the University of Queensland, Australia, with a B. Eng. in Chemical Engineering in 1984;

I have worked as a process engineer in the minerals industry for over 25 years. I have been directly involved in the mining, exploration and evaluation of mineral properties internationally for precious and base metals;

I have not visited the Urumalqui Property site; I am responsible for the preparation of Sections 1.3.2, 1.4.3, 1.4.4, 13, 25.3 and 25.4.3 of

the “Technical Report on the Urumalqui Property, Julcan District, Department of La Libertad, Peru” dated 22 December, 2011;

I am independent of AndeanGold Ltd. and Gitennes Exploration, Inc. as independence is described by Section 1.5 of NI 43-101. I have not received, nor do I expect to receive, any interest, directly or indirectly, in AndeanGold Ltd. and Gitennes Exploration, Inc.;

MQes was retained by AndeanGold Ltd. and Gitennes Exploration, Inc. to prepare a resource estimate on the Urumalqui Property, Department of La Libertad, Peru in accordance with National Instrument 43-101. The report is based on our review of project files and information provided by AndeanGold Ltd. and Gitennes Exploration, Inc. and discussions with company personnel;

I have read National Instrument 43-101 and Form 43-101F1 and, by reason of education and past relevant work experience, I fulfill the requirements to be a “Qualified Person” for the purposes of NI 43-101. This technical report has been prepared in compliance with National Instrument 43-101 and Form 43-101F1;

As of the date of this certificate, to the best of my knowledge, information and belief, the technical report contains all scientific and technical information that is required to be disclosed to make the technical report not misleading.

Signed by Christopher Kaye _______________________ Christopher Edward Kaye, FAusIMM Dated: 22 December, 2011

MQes

CERTIFICATE OF QUALIFIED PERSON James Albert McCrea, B.Sc, P.Geo (License # 21450)

306 – 10743 139 Street, Surrey, British Columbia, Canada

I, James Albert McCrea am a Professional Geoscientist. I carried out this assignment for Mine and Quarry Engineering Services, Inc. (MQes);


I am a Registered Professional Geoscientist (P. Geo.), Practising, with the Association of Professional Engineers and Geoscientists of British Columbia. (Licence # 21450). I graduated from the University of Alberta, Canada, with a B. Sc. in Geology in 1988;

I have worked as a geoscientist in the minerals industry for over 22 years. I have been directly involved in the mining, exploration and evaluation of mineral properties internationally for precious and base metals;

I visited the Urumalqui Property site from August 3, 2011 to August 4, 2011; I am responsible for the preparation of Sections 4,5,6,7,8,9,10 and 11 of the “Technical

Report on the Urumalqui Property, Julcan District, Department of La Libertad, Peru” dated 22 December, 2011;





Signed By James A. McCrea _______________________ James A. McCrea, B. Sc., P. Geo. Licence # 21450 Dated: 22 December, 2011

MQes

CERTIFICATE OF QUALIFIED PERSON Douglas Blanchflower, P. Geo.

25856 – 28th Avenue, Aldergrove, British Columbia, V4W 2Z8

I, Douglas Blanchflower am a Consulting Geologist and President, with the firm of Minorex Consulting Ltd. of 25856 – 28th Avenue, Aldergrove, British Columbia, V4W 2Z8. I carried out this assignment for MQes;


I am a Registered Professional Geoscientist in good standing with the Association of Professional Engineers and Geoscientists of British Columbia (No. 19086) and the Association of Professional Geoscientists of Ontario (No. 1913). I graduated from the University of British Columbia, Canada, with a B. Sc. in Geology in 1971;

I have worked as a Geologist in the minerals industry for over 40 years. I have been directly involved in the mining, exploration and evaluation of mineral properties internationally for precious and base metals;

I have not visited the Urumalqui Property site; I am responsible for the preparation of all or portions of Sections 1 to 12 and 14 to 27 of

the “Technical Report on the Urumalqui Property, Julcan District, Department of La Libertad, Peru” dated 22 December, 2011;





Signed By J. Douglas Blanchflower _______________________ J. Douglas Blanchflower, P. Geo. Consulting Geologist Dated: 22 December, 2011

TABLE OF CONTENTS

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SECTION PAGE 1.0 SUMMARY .................................................................................................................... 1-1

1.1 Introduction and Background ...................................................................................... 1-1 1.1.1 Property Description and Ownership ....................................................................... 1-1 1.1.2 Accessibility and Local Conditions ......................................................................... 1-2 1.1.3 History ...................................................................................................................... 1-3

1.2 Deposit Summary ........................................................................................................ 1-3 1.2.1 Geology and Mineralization .................................................................................... 1-3 1.2.2 Exploration Status .................................................................................................... 1-4 1.2.3 Mineral Processing and Metallurgical Testing ........................................................ 1-4 1.2.4 Mineral Resource Estimate ...................................................................................... 1-5 1.2.5 Environmental and Permitting ................................................................................. 1-7

1.3 Conclusions and Recommendations ............................................................................ 1-7 1.3.1 Mineral Resource Estimate ...................................................................................... 1-7 1.3.2 Mineral Processing and Metallurgical Testing ........................................................ 1-8

1.4 Risks and Opportunities ............................................................................................... 1-9 1.4.1 Mineral Resource Estimate Risks ............................................................................ 1-9 1.4.2 Mineral Resource Estimate Opportunities ............................................................... 1-9 1.4.3 Mineral Processing and Metallurgical Testing – Risks ......................................... 1-10 1.4.4 Mineral Processing and Metallurgical Testing - Opportunities ............................. 1-10

1.5 Proposed Exploration Budget .................................................................................... 1-10 2.0 INTRODUCTION.......................................................................................................... 2-1

2.1 Project and Issuer ......................................................................................................... 2-1 2.2 Site Visit ...................................................................................................................... 2-1 2.3 Principal Sources of Information ................................................................................. 2-1 2.4 Standard Terms and Abbreviations .............................................................................. 2-2 2.5 Acknowledgements ...................................................................................................... 2-4

3.0 RELIANCE ON OTHER EXPERTS .......................................................................... 3-1 4.0 PROPERTY DESCRIPTION AND LOCATION ...................................................... 4-1

4.1 Project Location and Description ................................................................................ 4-1 4.2 Property Ownership ..................................................................................................... 4-1 4.3 Mineral Rights in Peru ................................................................................................. 4-3 4.4 Surface and Water Rights ............................................................................................ 4-5 4.5 Environmental Regulations, Liabilities and Permitting Issues .................................... 4-5

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ......................................................................................................... 5-1

5.1 Accessibility ................................................................................................................. 5-1 5.2 Climate and Vegetation ............................................................................................... 5-1 5.3 Local Resources and Infrastructure ............................................................................. 5-1 5.4 Physiography ............................................................................................................... 5-1

6.0 HISTORY ....................................................................................................................... 6-1 6.1 Regional Mining History ............................................................................................. 6-1 6.2 Property Exploration and Mining History ................................................................... 6-1

7.0 GEOLOGICAL SETTING AND MINERALIZATION ............................................ 7-1 7.1 Regional Geology ........................................................................................................ 7-1

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7.2 Property Geology ......................................................................................................... 7-2 7.2.1 Lithology .................................................................................................................. 7-2 7.2.2 Structure ................................................................................................................... 7-7 7.2.3 Alteration ................................................................................................................. 7-7

7.3 Mineralization .............................................................................................................. 7-7 8.0 DEPOSIT TYPES .......................................................................................................... 8-1 9.0 EXPLORATION ............................................................................................................ 9-1

9.1 Pre-2002 Exploration Work ......................................................................................... 9-1 9.2 2002 to 2009 Exploration Work .................................................................................. 9-1 9.3 2010 and 2011 Exploration Work ................................................................................ 9-3

9.3.1 Summary of 2011 Exploration Results .................................................................... 9-4 10.0 DRILLING ................................................................................................................... 10-1

10.1 Drilling 2003 - 2009 .................................................................................................. 10-1 10.2 Diamond Drilling 2011 .............................................................................................. 10-3 10.3 Drilling Conclusions and Recommendations ............................................................ 10-4 10.4 Risks and Opportunities ............................................................................................. 10-4

11.0 SAMPLE PREPARATION, ANALYSES AND SECURITY .................................. 11-1 11.1 2003 – 2009 Exploration Work ................................................................................. 11-1

11.1.1 2003 – 2009 Sample Preparation ....................................................................... 11-1 11.1.2 2003 – 2009 Sample Analyses and Assays ........................................................ 11-1 11.1.3 2003 – 2009 Sample Security ............................................................................ 11-2

11.2 2011 Diamond Drilling Program ............................................................................... 11-2 11.2.1 2011 Sample Preparation ................................................................................... 11-2 11.2.2 2011 Sample Analyses and Assays .................................................................... 11-3 11.2.3 2011 Sample Security ........................................................................................ 11-3

12.0 DATA VERIFICATION ............................................................................................. 12-1 12.1 Electronic Database Verification ............................................................................... 12-1 12.2 Quality Assurance/Quality Control Procedures and Results ..................................... 12-1

12.2.1 2011 Standard Reference Material ..................................................................... 12-1 12.2.2 2011 Blank Material .......................................................................................... 12-5 12.2.3 2011 Field Duplicates ........................................................................................ 12-6 12.2.4 2011 Check Assays .......................................................................................... 12-10 12.2.5 2003 and 2004 Drilling Programs by Gitennes Exploration ............................ 12-11 12.2.6 2008 Drilling Program by Gitennes Exploration ............................................. 12-18

12.3 2011 Drilling Program by AndeanGold ................................................................... 12-24 12.4 Independent Site Visit and Verification Sampling .................................................. 12-28 12.5 Conclusions and Recommendations ........................................................................ 12-29

13.0 MINERAL PROCESSING AND METALLURGICAL TESTING........................ 13-1 13.1 Introduction ................................................................................................................ 13-1 13.2 Metallurgical Testing ................................................................................................. 13-1

13.2.1 Test Work ASA 2661 – Alex Stewart [Assayers] del Perú S.R.L. .................... 13-1 13.2.2 Test Work ASA 3467 – Alex Stewart [Assayers] del Perú S.R.L. .................... 13-3 13.2.3 Test Work ASA 4425 – Alex Stewart [Assayers] del Perú S.R.L. .................... 13-3 13.2.4 Memo – Prueba de Flotacion – Alex Jaramillo Rosales .................................... 13-4 13.2.5 Test Work No. 7188 – Labotatorio Plenge ........................................................ 13-4

13.3 Mineral Processing .................................................................................................... 13-4

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14.0 MINERAL RESOURCE ESTIMATES ..................................................................... 14-1 14.1 Introduction ................................................................................................................ 14-1 14.2 Drilling and Assay Database ...................................................................................... 14-1 14.3 Sample Compositing .................................................................................................. 14-2 14.4 Grade Shell Calculations ........................................................................................... 14-2 14.5 Rock Code Determination ......................................................................................... 14-4 14.6 Three Dimensional Solid Modelling .......................................................................... 14-4 14.7 Topographic Control .................................................................................................. 14-6 14.8 Bulk Density Estimation ............................................................................................ 14-6 14.9 Grade Capping ........................................................................................................... 14-7 14.10 Semi-Variogram Analysis ...................................................................................... 14-9 14.11 Block Model ........................................................................................................... 14-9 14.12 Interpolation ......................................................................................................... 14-10 14.13 Interpolation Validation ....................................................................................... 14-12 14.14 Mineral Resource Classification .......................................................................... 14-12 14.15 Mineral Resource Estimate .................................................................................. 14-13 14.16 Mineral Resource Estimate Validation ................................................................ 14-14

23.0 ADJACENT PROPERTIES ....................................................................................... 23-1 24.0 OTHER RELEVANT DATA AND INFORMATION ............................................. 24-1 25.0 INTERPRETATIONS AND CONCLUSIONS ......................................................... 25-1

25.1 Geology ...................................................................................................................... 25-1 25.2 Mineral Resource Estimate ........................................................................................ 25-1 25.3 Mineral Processing and Metallurgical Testing .......................................................... 25-2 25.4 Risks and Opportunities ............................................................................................. 25-3

25.4.1 Data Collection and QA/QC Procedures ........................................................... 25-3 25.4.2 Mineral Resource Estimate - Risks .................................................................... 25-3 25.4.3 Mineral Resource Estimate - Opportunities ....................................................... 25-4 25.4.4 Mineral Processing and Metallurgical Testing - Risks ...................................... 25-4 25.4.5 Mineral Processing and Metallurgical Testing - Opportunities ......................... 25-4 25.4.6 Environmental Impact and Permitting ............................................................... 25-5

26.0 RECOMMENDATIONS ............................................................................................. 26-1 26.1 Proposed Exploration Budget .................................................................................... 26-1

27.0 REFERENCES ............................................................................................................. 27-1 Appendix 1 – Mineral Concession Documents Appendix 2 – Sample Preparation and Analytical Procedures

LIST OF TABLES

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TABLE PAGE Table 1-1: Inferred Mineral Resource Estimate ........................................................................... 1-6 Table 1-2: Proposed 2012 Exploration Budget .......................................................................... 1-11 Table 2-1: Standard Terms and Abbreviations ............................................................................ 2-2 Table 4-1: Mineral Concession Information (after Blackwell, 2009) ......................................... 4-1 Table 10-1: 2003 to 2009 Diamond Drilling Data (after Blackwell, 2009) ............................... 10-2 Table 10-2: 2011 Diamond Drilling Data .................................................................................. 10-3 Table 12-1: 2011 SRM Samples ................................................................................................ 12-2 Table 13-1: Assay Head Grades – Composites (A) and (B) ...................................................... 13-2 Table 13-2: Material Used in Preparation of Composite A ....................................................... 13-2 Table 13-3: Material Used in Preparation of Composite B ....................................................... 13-2 Table 13-4: Material Used in Preparation of Composite (B) Roca Caja ................................... 13-3 Table 14-1: Assay Sample Data for AgEQ60 Assay Domain Solid .......................................... 14-7 Table 14-2: Block Model Parameters ........................................................................................ 14-9 Table 14-3: Interpolation Data for Three Assay Domain Solids ............................................. 14-11 Table 14-4: Summary of ‘One Out’ Cross Validation Results ................................................ 14-12 Table 14-5: Inferred Mineral Resource Estimate ..................................................................... 14-13 Table 25-1: Inferred Mineral Resources Estimated at Various Silver Cut-off Grades .............. 25-1 Table 26-1: Proposed 2012 Exploration Budget ........................................................................ 26-2

LIST OF FIGURES

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FIGURE PAGE Figure 4-1: Location Map ............................................................................................................ 4-2 Figure 4-2: Mineral Concession Map .......................................................................................... 4-4 Figure 7-1: Regional Geology Map (After Servicio de Geologia Y Mineria, 1980) ................... 7-2 Figure 7-2: Sample 1243, 52.25 to 53.80 m, PGUR-06 .............................................................. 7-4 Figure 7-3: Sample 1253, 74.50 to 75.05 m, PGUR-06 .............................................................. 7-4 Figure 7-4: Sample 1258, 80.35 to 80.55 m, PGUR-06 .............................................................. 7-5 Figure 7-5: Property Geology Map .............................................................................................. 7-6 Figure 7-6: View of the Urumalqui Vein on Surface Looking Northwestward. ......................... 7-8 Figure 7-7: Collecting Verification Sample from the Urumalqui Vein ..................................... 7-13 Figure 7-8: View of the Urumalqui Vein Structure #1 .............................................................. 7-13 Figure 7-9: View of Urumalqui Vein Structure #2 .................................................................... 7-14 Figure 8-1: Schematic Cross-Section of the Epithermal Deposit Model ..................................... 8-2 Figure 9-1: DE710 Sandvik Diamond Drilling Rig and Drilling Personnel ................................ 9-4 Figure 9-2: View of the Cemented Collar for DDH URU 03-02. ............................................... 9-5 Figure 9-3: View of the Cemented Collar for DDH PGUR 30 and 31 ........................................ 9-5 Figure 9-4: Drill Core Storage Building for the Urumalqui Project ............................................ 9-6 Figure 10-1: Diamond Drill Hole Plan – Urumalqui Vein Structure......................................... 10-5 Figure 10-2: Vertical Cross Section 1250 NW .......................................................................... 10-6 Figure 10-3: Vertical Cross Section 1550 NW .......................................................................... 10-7 Figure 10-4: Vertical Cross Section 2000 NW .......................................................................... 10-8 Figure 12-1: Standard PM436 – Au ppm Assay Results .......................................................... 12-3 Figure 12-2: Standard PM1129 – Au ppm Assay Results ........................................................ 12-3 Figure 12-3: Standard PM1129 – Ag ppm Assay Results ........................................................ 12-4 Figure 12-4: Standard PM1138 – Au ppm Assay Results ........................................................ 12-4 Figure 12-5: Standard PM1138 – Ag ppm Assay Results ........................................................ 12-5 Figure 12-6: Blank Materials – Au ppm Assay Results ........................................................... 12-5 Figure 12-7: Blank Materials – Ag ppm Assay Results ........................................................... 12-6 Figure 12-8: Field Duplicate Samples – Au ppm Scatter Plot ................................................... 12-7 Figure 12-9: Field Duplicate Samples – Ag ppm Scatter Plot ................................................... 12-7 Figure 12-10: Field Duplicate Samples – Au ppm Difference Chart ........................................ 12-8 Figure 12-11: Field Duplicate Samples – Ag ppm Difference Chart ........................................ 12-8 Figure 12-12: Thompson-Howarth Precision for Field Duplicates - Au ppm ........................... 12-9 Figure 12-13: Thompson-Howarth Precision for Field Duplicates - Ag ppm ........................... 12-9 Figure 12-14: Thompson-Howarth Duplicate Analysis for Field Duplicates - Au ppm ......... 12-10 Figure 12-15: Thompson-Howarth Duplicate Analysis for Field Duplicates - Ag ppm ......... 12-10 Figure 12-16: 2003/04 Pulp Duplicates ALS vs. CIMM – Au ppm Scatter Plot .................... 12-11 Figure 12-17: 2003/04 Pulp Duplicates ALS vs. CIMM – Ag ppm Scatter Plot .................... 12-11 Figure 12-18: 2003/04 Pulp Duplicates ALS vs. SGS – Au ppm Scatter Plot ........................ 12-12 Figure 12-19: 2003/04 Pulp Duplicates ALS vs. SGS – Ag ppm Scatter Plot ........................ 12-12 Figure 12-20: 2003/04 Pulp Duplicates ALS vs. CIMM – Au ppm Difference Chart ............ 12-13 Figure 12-21: 2003/04 Pulp Duplicates ALS vs. CIMM – Ag ppm Difference Chart ............ 12-13 Figure 12-22: 2003/04 Pulp Duplicates ALS vs. SGS – Au ppm Difference Chart ................ 12-14 Figure 12-23: 2003/04 Pulp Duplicates ALS vs. SGS – Ag ppm Difference Chart ................ 12-14 Figure 12-24: T-H Precision for 2003/04 Pulp Duplicates ALS vs. CIMM - Au ppm ........... 12-15

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Figure 12-25: T-H Precision for 2003/04 Pulp Duplicates ALS vs. CIMM - Ag ppm ........... 12-15 Figure 12-26: T-H Precision for 2003/04 Pulp Duplicates ALS vs. SGS - Au ppm ............... 12-16 Figure 12-27: T-H Precision for 2003/04 Pulp Duplicates ALS vs. SGS - Ag ppm ............... 12-16 Figure 12-28: T-H Duplicate Analysis for 2003/04 Pulp Duplicates ALS vs. CIMM – Au ppm12-17 Figure 12-29: T-H Duplicate Analysis for 2003/04 Pulp Duplicates ALS vs. CIMM - Ag ppm 12-17 Figure 12-30: T-H Duplicate Analysis for 2003/04 Pulp Duplicates ALS vs. SGS - Au ppm 12-18 Figure 12-31: T-H Duplicate Analysis for 2003/04 Pulp Duplicates ALS vs. SGS - Ag ppm 12-18 Figure 12-32: Scatter Plot for 2008 Pulp Duplicates ALS vs. CIMM – Au ppm .................... 12-19 Figure 12-33: Scatter Plot for 2008 Pulp Duplicates ALS vs. CIMM – Ag ppm .................... 12-19 Figure 12-34: Scatter Plot for 2008 Pulp Duplicates ALS vs. SGS – Au ppm ....................... 12-20 Figure 12-35: Scatter plot for 2008 Pulp Duplicates ALS vs. SGS – Ag ppm ........................ 12-20 Figure 12-36: Difference Chart for 2008 Pulp Duplicates ALS vs. CIMM – Au ppm ........... 12-21 Figure 12-37: Difference Chart for 2008 Pulp Duplicates ALS vs. CIMM – Ag ppm ........... 12-21 Figure 12-38: Difference Chart for 2008 Pulp Duplicates ALS vs. SGS – Au ppm ............... 12-22 Figure 12-39: Difference Chart for 2008 Pulp Duplicates ALS vs. SGS – Ag ppm ............... 12-22 Figure 12-40: T-H Precision for 2008 Pulp Duplicates ALS vs. SGS - Au ppm .................... 12-23 Figure 12-41: T-H Precision for 2008 Pulp Duplicates ALS vs. SGS - Ag ppm .................... 12-23 Figure 12-42: T-H Duplicate Analysis for 2008 Pulp Duplicates ALS vs. SGS - Au ppm .... 12-24 Figure 12-43: Thompson-Howarth Duplicate Analysis for 2008 Pulp Duplicates ALS vs. SGS - Ag ppm..................................................................................................................................... 12-24 Figure 12-44: Scatter Plot of 2011 Pulp Duplicates Inspectorate vs. ALS – Au ppm ............. 12-25 Figure 12-45: Scatter Plot of 2011 Pulp Duplicates Inspectorate vs. ALS – Ag ppm ............. 12-25 Figure 12-46: Difference Chart for 2011 Pulp Duplicates Inspectorate vs. ALS – Au ppm ... 12-26 Figure 12-47: Difference Chart for 2011 Pulp Duplicates Inspectorate vs. ALS – Ag ppm ... 12-26 Figure 12-48: T-H Precision for 2011 Pulp Duplicates Inspectorate vs. ALS SGS - Au ppm 12-27 Figure 12-49: T-H Precision for 2011 Pulp Duplicates Inspectorate vs. ALS SGS - Ag ppm 12-27 Figure 12-50: T-H Duplicate Analysis for 2011 Pulp Duplicates Inspectorate vs. ALS SGS – Au ppm .......................................................................................................................................... 12-28 Figure 12-51: T-H Duplicate Analysis for 2011 Pulp Duplicates Inspectorate vs. ALS SGS – Ag ppm .......................................................................................................................................... 12-28 Figure 14-1: Histogram of 475 Uncapped Silver Assays In AgEQ60 Assay Domain Solid ..... 14-3 Figure 14-2: Histogram of 475 Uncapped Gold Assays In AgEQ60 Assay Domain Solid ...... 14-3 Figure 14-3: View of AgEQ60 Assay Domain Solid Looking Northward ............................... 14-5 Figure 14-4: View of AgEQ60 Assay Domain Looking Northwestward .................................. 14-5 Figure 14-5: Cumulative Probability Plot of Silver Values Within Assay Domain Solid ......... 14-8 Figure 14-6: Cumulative Probability of Gold Values Within Assay Domain Solid .................. 14-8 Figure 14-7: Histogram Plot of Capped Silver Composites .................................................... 14-10 Figure 14-8: Cumulative Probability Plot of Capped Silver Composites ................................ 14-11 Figure 14-9: Plot of Silver Composite Grade, Silver Block Grade and Tonnage .................... 14-15 Figure 14-10: Plot of Number of Silver Composite Samples Versus Tonnage ....................... 14-15 Figure 14-11: Plot of Tonnage Versus Resource Classification .............................................. 14-16 Figure 14-12: Plot of Silver Composite Grade, Silver Block Grade and Tonnage .................. 14-17 Figure 14-13: Plot of Number of Silver Composite Samples Versus Tonnage ....................... 14-18 Figure 14-14: Plot of Tonnage Versus Resource Classification .............................................. 14-18

SECTION 1 SUMMARY

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1.0 SUMMARY 1.1 Introduction and Background The Urumalqui property (the ‘Property’) is situated in the District of Julcán, Department of Libertad in northcentral Peru. It is comprised of four contiguous mineral concessions that are currently owned by Minera Corimalqui S.A. (‘Corimalqui’), an indirect Peruvian subsidiary of Gitennes Exploration Inc. (‘Gitennes’) which is a TSX Venture Exchange reporting public company. On April 22, 2010, AndeanGold Ltd. (‘AndeanGold’), a TSX Venture Exchange reporting public company, entered into an Option Agreement with Gitennes whereby AndeanGold has the right to acquire a 60% joint venture interest in the Property. PeruGold Resources S.A.C. ("PeruGold"), an indirect Peruvian subsidiary of AndeanGold, has carried out the exploration work on behalf of AndeanGold since April 2010. The Urumalqui vein is the principal vein of eight known veins currently identified on the Property. It crops out in a northwesterly direction for approximately 1,500 metres. Exploration drilling on the Urumalqui vein has been carried out on relatively widely-spaced sections, from 45 to over 100 metres apart, concentrating on the central and southeastern segments of the Urumalqui vein, which cover 1,000 metres of the 1,500 metres vein outcrop. Between March and July, 2011 AndeanGold completed a 31-hole (5,071 metres) infill drilling program to a depth of 200 metres so as to provide a drill spacing of approximately 50 metres along the central and southeastern segments. Drill core logging, analyses and drill site reclamation work were later finalized in August 2011. Following this work, Mine and Quarry Engineering Services, Inc. was retained by AndeanGold and Gitennes to prepare a NI 43-101 compliant estimate of the mineral resources within the drill-tested portion Urumalqui vein structure. This report documents the mineral resource estimate and supporting technical data. This Technical Report has been prepared by Mr. C. Kaye, FAusIMM, B. Eng Chemical, of Mine and Quarry Engineering Services, Inc (‘MQes’), Mr. James A. McCrea, P. Geo. And Mr. J. Douglas Blanchflower, P. Geo., of Minorex Consulting Ltd. (‘Minorex’), for AndeanGold and Gitennes in compliance with the disclosure requirements of the Canadian National Instrument 43-101. 1.1.1 Property Description and Ownership The Urumalqui property is located about 70 kilometres by road east of the coastal city of Trujillo within the District of Julcán, Department of La Libertad, Peru. The approximate geographic centre of the P r op e r t y is at 8° 05’ South latitude, 78° 29’ West longitude, or UTM PSAD56, Datum 17S at 777500 m East by 9105150 m North. The Property is comprised of four mineral concessions, namely: Aurea Elisa 13, Morochas, Patientia and Philtrum, that cover a total of 2,700 hectares or 6,672 acres. The Property is owned by Minera Corimalqui S.A. On April 22, 2010 AndeanGold entered into an Option Agreement with Gitennes that provides AndeanGold the right to acquire a 60% joint venture interest in the Property. In order to earn its 60% interest, AndeanGold must:

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Ensure that PeruGold expends CDN$3 million of qualifying expenditures on the Project over a four (4) year term (the ‘Term’), commencing July 8, 2010;

Ensure that PeruGold completes 3,000 metres of drilling by the end of the second year of the Term and 7,000 metres of cumulative drilling by the end of the third year of the Term; and

Issue Gitennes 20,000 common shares of AndeanGold as well as 20,000 common shares on each of the first, second and third year anniversaries of the agreements. Except for the first payment, Gitennes may elect to receive cash in lieu of shares, with the cash amounts not to exceed CDN$25,000, CDN$50,000 and CDN$100,000, respectively, with respect to the first, second and third year anniversary date payments. If the market value of the shares on the respective payment date exceeds the maximum cash payment amount on such date, the difference will be satisfied by the issuance of equivalent shares.

Upon AndeanGold exercising its Option, Corimalqui will transfer the titles to the subject mineral concessions to Newco, a joint venture Peruvian company to be owned by PeruGold (60% shareholder interest) and Corimalqui (40% shareholder interest). PeruGold would be the operator of the joint venture. PeruGold has agreements in place with individual land owners to provide access to the lands for drilling purposes in exchange for a modest fee. Most of these agreements also include a clause whereby PeruGold would have the option to purchase the land in question after a certain period of time has elapsed. Adequate surface water is available for exploration purposes but advanced development work would require negotiations with the affected land owners, the discovery of additional adequate water resources and permitting from governmental agencies. 1.1.2 Accessibility and Local Conditions The Property is readily accessible by vehicle from the coastal city of Turjillo, the nearest urban and major commercial centre to the Property. Trujillo has regular daily 1-hour commercial flights from the capital city of Lima which is 480 kilometres to the south. A paved and hard-packed gravel road joins Trujillo with the village of Julcán to the east and hence by unimproved gravel roads to the Property. The total driving time is approximately 2 to 3 hours. The Property is situated within the Pacific Ocean watershed of the Cordillera Occidental, part of the Andes Mountains. Elevations within the Property range from 3,400 to 3,700 metres A.M.S.L. with locally moderate relief. The climate is typical of the western portion of the Andes Mountains with a rainy season from November to March and a dry season from April to October. Mineral exploration may be carried out year-round but best done during the dry season. There is an electrical transmission line to Julcán and the local villages adjacent to the Property receive both electricity and cellular telephone service. Furthermore, labour and supplies for exploration work are readily available from both Trujillo and the local villages that have long mining histories.

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Except for eucalyptus plantations, there is little standing timber. Most trees have been cleared centuries ago for sheep and cattle grazing and/or various potato, tuber and grain farming by individual land owners. 1.1.3 History The original exploration of the Urumalqui property area, including old adits and pits, may date back to the late 1800th century when mineralization was first reported at the nearby Quiruvilca mine site in 1789. During the 1980’s an exploration shaft was sunk on the central portion of the Urumalqui vein and drifting was carried out on the 28-metre level, with a 250-metre drift on the 50-metre level and a winze to the 80 metre level. In 1996, Cambior del Peru S.A. completed five widely-spaced drill holes on four vein structures within the Property. During the period of 2003 to 2008 Oromalqui Gold Corp, a company that was indirectly owned equally by Meridian Gold Corp and Gitennes and later Corimalqui, on behalf of Gitennes, carried out various exploration programs that included: preparing topographic base maps, detailed geological mapping of the vein structures, property-wide geological mapping, establishing a picketed survey control grid, B-horizon soil geochemical sampling, two ground induced polarization and magnetics geophysical surveys, three differential GPS surveys of the grid and drill pads, rock geochemical sampling, three diamond drilling campaigns totalling 47 holes, limited rehabilitation of the old exploration shaft, metallurgical testing of drill core and rock samples, and environmental, archaeological and socioeconomic studies. 1.2 Deposit Summary 1.2.1 Geology and Mineralization The local stratigraphy is dominated by rocks of the Cretaceous- to Tertiary-age Calipuy Group. This major stratigraphic unit overlies the pre-Cretaceous basement rocks as a relatively flat-lying, unconformable plate up to 1,500 metres in thickness that caps landforms in excess of 3,200 metres. The group is comprised of subaerial andesitic flows, breccia and pyroclastic tuffs, with subordinate dacite and rhyodacite. These rocks are broadly warped and often transected by northerly, northeasterly and easterly fault structures. Within the Property there is a possible volcanic source that may be one of the youngest in the region at 16.7 Ma. Volcanic rocks of the Calipuy Group underlie the Property. These rocks include green to maroon, variably magnetic, porphyritic andesitic flows with plagioclase phenocrysts, volcanic glass and hornblende, interbedded with volcaniclastic rocks and brecciated andesitic lavas. These rocks are cut by a series of northwest-southeast, northeast-southwest and east-west trending, normal faults showing evidence of sinistral strike-slip movement within a major, regional northerly trending lineament (Blackwell, 2009). The precious metal-bearing mineralization is typical of a ‘low sulphidation’ epithermal style mineral deposit. There are two common vein orientations, a northwest-southeast set including the Urumalqui, La Mariscala West, La Mariscala South, and Penélope veins, and an east-west set including the La Mariscala East, Candual East, Candual West and Candual veins.

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The Urumalqui vein has received most of the exploration work. In plan, it has a shallow arcuate shape, convex to the west, with a northwesterly trend (approximately 305o). In addition, the vein dips sub-vertically to -70o southwesterly; is up to 20 metres wide; is comprised one or two crustiform-banded quartz veins ranging from 0.5 to 11 metres in aggregate thickness; and crops out over a strike length of 1,500 metres. There are a number of intersecting, perhaps conjugate, faults that have locally displaced the vein into segments ranging in length from 40 to 400 metres. The vein mineralogy includes crustiform and chalcedonic quartz with minor adularia. Native gold, electrum and silver-bearing argentite are genetically and spatially associated with fine-grained pyrite (Blackwell, 2009). 1.2.2 Exploration Status The Property has received detailed and property-wide geological mapping, soil and rock geochemical sampling, two ground induced polarization and magnetics geophysical surveys and a variety of differential GPS surveys of topographic and drill hole collars. In addition, 78 diamond drill holes, totalling 12,578.69 metres, have now tested the known vein mineralization of which 66 holes, totalling 10,906 metres, have been completed along the main Urumalqui vein structure. Exploration results to date indicate that the Urumalqui vein appears to be the dominant vein structure of the eight known veins on the Property. The Urumalqui vein has now been tested by NQ- and HQ-size diamond drilling along a strike length of approximately 1,500 metres. Most of this drilling has intersected the vein between 70 and 150 metres downdip from its surface exposure but a few holes have penetrated the vein more than 200 metres vertically. There is still good vein continuity both in width and grade in the deepest vein intercepts. All of this drilling has been carried out on relatively widely-spaced sections 45 to 100 metres apart. Detailed in-fill drilling along the central and southeastern segment, the higher grade portion of the vein structure, would improve the interpretation of its local variance in tenor and intermittent displacements due to intersecting normal faulting. Drilling results indicate that the Urumalqui vein is open for extension both northwesterly and especially southeasterly. Furthermore, its strong continuity at depth coupled with the textural features of the vein mineralogy indicates that it may have significant untested depth potential. 1.2.3 Mineral Processing and Metallurgical Testing Metallurgical development of the Urumalqui project to date has been conducted by Gitennes; prior to 2009. AndeanGold did not conduct any metallurgical tests in connection with its 2011 infill drill program. The metallurgical development has involved preliminary test work assessing:

Flotation. Flotation plus cyanidation of concentrate. Gravity separation. Gravity Separation followed by flotation of gravity tails.

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Gravity separation followed by cyanidation of gravity tails. The results to date indicate that material from Urumalqui is likely to be amenable to treatment by either flotation or cyanidation. Gravity concentration appears to improve recoveries of both silver and gold. Further metallurgical testwork is required to determine metallurgical processing criteria and subsequently identify the economic processing route. Sample selection for metallurgical test work to date is not well documented and the representation of samples to the entire deposit is not known. It is recommended QA/QC is improved for future preparation of metallurgical composites. Sample collection for future metallurgical test work needs to consider rock type, lithology, grade variations and spatial distribution. A metallurgical sampling program needs to be developed with the objective of developing a geo-metallurgical model for the project. Ongoing metallurgical test work should include mineralogical analysis in order to give direction to grinding requirements, expected recoveries and preferred processing route. Comminution test work such as Bond Work index, crusher index and abrasion index should also be included in future test work programs. Tests results using gravity concentration and then cyanidation of the gravity tails indicates higher recoveries for silver and gold than gravity concentration followed by flotation. Cyanide consumption, however, was high. It is recommended metallurgical investigations are pursued that include the optimization of the processing route using gravity concentration followed by cyanidation of the gravity tailings. 1.2.4 Mineral Resource Estimate The Urumalqui vein structure has been explored by 66 of the 78 diamond drill holes of which 35 holes were drilled by Corimalqui and 31 holes by PeruGold. This work has resulted in a drilling and assay database that includes multi-element analyses for 3,556 drill hole samples situated along a 1,500-metre section of the Urumalqui vein structure. A silver equivalent (‘AgEQ’) grade was only used when modelling the assay domains such that they incorporated both silver and gold values encountered within the Urumalqui Vein structure. The silver equivalent grade for each drill hole sample was a calculated combination of its gold value at a 3-year trailing average price of US$1,300/troy oz and 85% metallurgical recovery rate, and its silver value at a 3-year trailing average price of US$26/troy oz and 65% metallurgical recovery rate. Once the silver equivalent grades had been calculated one metre, equal length assay composites were calculated from the collar to the terminus of each drill hole intersecting the Urumalqui vein structure. Polylines were plotted on SW-NE oriented vertical sections (parallel to the bearing of most of the exploration drill holes) spaced at 50-metre intervals to define the greater than or equal to 60 gpt AgEQ assay boundary for the vein mineralization while maintaining zonal continuity along strike and downdip. One geometric solid was formed reflecting the three dimensional boundaries of an assay grade domain called ‘AgEQ60’.

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Using the constructed AgEQ60 domain solid as a constraint, statistical analyses were carried out on the assay samples and grade capping levels were determined at 8.60 gpt for gold and 850 gpt for silver. Once the raw assay data had been capped accordingly, 1 metre composites were re-calculated for block model grade interpolation. Following a preliminary interpolation run the one AgEQ60 assay domain was subdivided into three distinct structurally unique parts to more accurately reflect the vein mineralization that has a southeast-northwest trending, convex westward ‘bow’ shape in plan. Thus, the single assay domain solid was subdivided into: a southeastern portion (Domain 1, Rock Code 15) that extends from vertical section 1000NW to 1500NW with an average apparent strike of 318o and apparent dip of -90o; a central portion (Domain 2, Rock Code 25) that extends from vertical section 1500NW to 2050NW with an average apparent strike of 325o and apparent dip of -75o SE; and a northwestern portion (Domain 3, Rock Code 35) that extends from vertical section 2050NW to 2650NW with an average apparent strike of 338o and apparent dip of -90o. The Urumalqui block model was created with 5 metre by 5 metre by 5 metre blocks for 400 columns, 350 rows and 90 levels, it was not rotated, and it was coded to partial blocks with a 1% threshold. An Inverse Distance Squared procedure was used to interpolate grades for gold and silver, and a bulk density of 2.37 tonnes/m3 was used for tonnage calculations of all mineralized vein material. Mineral resources were estimated individually for each part of the Urumalqui assay domain and then combined for tonnage and grades estimates at various cut-off grades. The reporting cut-off grade of 90gpt silver was based upon reported incremental cut-off grades for similar gold-silver vein deposits in Peru. All of the mineral resources have been classified as ‘Inferred’. This classification may be upgraded with the results of future in-fill drilling, detailed surface channel sampling, resolution of outstanding QA/QC issues, and a thorough geological and structural analysis of all exploration results to date. The estimated undiluted and inferred mineral resources of the Urumalqui vein structure at various silver cut-off grades are shown in Table 1-1.

Table 1-1: Inferred Mineral Resource Estimate

Cut-Off Ag (gpt)

Tonnes (000’s)

Gold Grade (gpt)

Gold (000’s oz)

Silver Grade (gpt)

Silver (000’s oz)

180.00 809 1.60 41.6 227.31 5,915

120.00 1,535 1.513 74.7 188.47 9,299

90.00 1,945 1.378 86.2 171.01 10,692

60.00 2,147 1.340 92.5 162.15 11,192

30.00 2,215 1.319 93.9 158.49 11,285

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1. 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 from locations such as outcrops, trenches, pits, workings and drill holes. Due to the uncertainty that may be attached to Inferred Mineral Resources, it cannot be assumed that all or any part of an Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource as a result of continued exploration. 2. Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, socio-political, marketing, or other relevant issues. There is no guarantee that AndeanGold or Gitennes will be successful in obtaining any or all of the requisite consents, permits or approvals, regulatory or otherwise for the project or that the project will be placed into production.

1.2.5 Environmental and Permitting During its 2002 to 2010 operatorship, Corimalqui held Category C exploration permits that required two environmental evaluations. In addition, Corimalqui committed to reclamation and re-vegetation of all surface disturbances, safe disposal of all dangerous waste generated during their exploration work and maintaining good community relations. Since assuming operatorship of the project PeruGold and AndeanGold have secured all necessary permits to continue advanced exploration work and retained a community relations consultant, Mr. Roberto Condezo of SCA Consultores to maintain regular contact with the local landowners, address any of their concerns and advise the companies on continued good community relations. 1.3 Conclusions and Recommendations Conclusions and recommendations for the Urumalqui resource estimate presented in this report include the following. 1.3.1 Mineral Resource Estimate It is estimated that the currently explored portion of the Urumalqui vein structure hosts undiluted and inferred mineral resources of 1.945 million tonnes grading 1.378 gpt gold and 171.01 gpt silver at a cut-off grade of 90 gpt silver. It is recommended that:

Detailed infill drilling should be carried out midway between drill sections that are currently spaced 45 to 100 metres apart. Such infill drilling would provide necessary geological and structural information to better interpret the vein geometry and grade continuity.

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Detailed surface bedrock channel samples should be collected at 25 metres intervals along the exposed sections of the vein structure. These samples should be well surveyed, documented and of similar volumes to be of equivalent quality to diamond drilling samples. The geological and grade information from such detailed sampling work may then be used to confirm the near-surface vein geometry and grade continuity for more definitive mineral resource classification.

Re-sampling and/or re-assaying of unresolved QA/QC samples must be undertaken to confirm the grades of drill samples that were batch assayed with standard reference material returning suspiciously erratic grades. Future sampling work, be it drilling, surface or underground sampling, should be conducted in conjunction with an industry standard, closely supervised and monitored QA/QC program with frequent, third-party check assaying.

A complete and thorough re-interpretation of the geological and structural setting of the Urumalqui vein structure should be undertaken to better understand the vein geometry within sections of apparent structural displacements.

1.3.2 Mineral Processing and Metallurgical Testing Metallurgical test work performed to date on the Urumalqui project is preliminary. Additional metallurgical test work is required to better define the preferred processing flowsheet and subsequently optimize the criteria for this flowsheet. The representativity of samples used in metallurgical test work performed to date is not identified. It is recommended sample collection for future metallurgical test work considers rock type, lithology, grade variations and spatial distribution. A metallurgical sampling program needs to be developed with the objective of developing a geo-metallurgical model for the project. It is recommended a QA/QC program is included as part of this sampling program. No mineralogical analysis relevant to optimizing metallurgical treatment has been performed to date. This analysis can give direction to grinding requirements, expected recoveries and preferred processing route. It is recommended mineralogical analyses are performed on representative samples. Communition test work such as Bond Work index, crusher index and abrasion index has not been addressed to date. It is recommended this is included in future metallurgical test work programs. Flotation test work results indicate gold and silver can be recovered to a concentrate. Evaluation of primary grind size, reagent scheme and assessment of regrinding needs performing to optimize metallurgical responses. Bottle roll tests on material with crush sizes of 1/2 inch, 1/4 inch and 1/8 inch indicate that after 72 hours of leaching, good gold recoveries but modest silver recoveries are realized. Cyanide consumptions were reasonable. Optimization of crush size and leach time may improve silver recoveries, however, test work assessing crushing/grinding followed by downstream processing are recommended in preference to assessing a heap leach processing route.

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Test results on cyanidation of concentrates have resulted in high recoveries of gold and silver. Tests results using gravity concentration and then cyanidation of the gravity tails indicates higher recoveries for silver and gold than gravity concentration followed by flotation. Cyanide consumption, however, was high. It is recommended metallurgical investigations are pursued to optimize the processing route using gravity concentration followed by cyanidation of the gravity tailings. 1.4 Risks and Opportunities Risks and Opportunities associated with the Urumalqui project presented in this report include the following. 1.4.1 Mineral Resource Estimate Risks

Drilling is widely-spaced for such a long and relatively narrow vein deposit. Current surface chip samples are not of comparable volume and quality with existing

diamond drill samples to be considered for inclusion in the mineral resource estimation. Drilling and surface geological mapping results indicate a number of intersecting and

sub-parallel faults and shears that may or may not have influenced the apparent vein continuity and tenor along its known strike length.

Geological logs did not fully describe the oxidation state of the precious metal-bearing mineralization to quantify oxide, transitional and sulphide hosted mineralization for individual mineral resource estimation.

Some unresolved QA/QC results may or may not impact the grades of isolated drill core sample assay batches.

MQes is not aware of any known environmental, permitting, legal, title, taxation, socio-economic, marketing, political or other relevant factors that could materially affect the estimate of the stated mineral resources.

1.4.2 Mineral Resource Estimate Opportunities

Most of the exploration drilling has focused on evaluating the Urumalqui vein structure at vertical depths less than 200m. A combination of in-fill drilling with both near surface and deeper drilling intercepts should improve the interpretation of the vein geometry and tenor, as well as identify any significant structural displacements that might influence inferred projections of mineralization.

A combination of high quality surface channel sampling, increased sample density from in-fill drilling and resolution of any QA/QC issues should lead to a classification upgrade of future estimated mineral resources.

Detailed identification and interpretation of the oxidation state of the mineralization to quantify mineralization for various recovery processes may positively influence the cut-off grades for future mineral resource estimates.

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The exploration potential of the Urumalqui vein is good. Exploration results show that the known vein mineralization may continue along its trend in both strike directions and to depth along its entire known length.

This project is still in the advanced exploration stage requiring significant additional work to better define the geometry and tenor of the vein deposit, and evaluate available mining and processing methods.

1.4.3 Mineral Processing and Metallurgical Testing – Risks

Samples used in metallurgical test work to date are insufficient in number, may not be representative and it is possible certain mineral assemblages have not been identified and tested.

Successful treatment of material from the Urumalqui project will be dependent on developing an economic processing route. The metallurgical and processing parameters required to determine an economic processing route are not yet fully developed. Further metallurgical test work is required to determine these parameters, perform engineering evaluations and assess project economics.

1.4.4 Mineral Processing and Metallurgical Testing - Opportunities

Metallurgical criteria such as primary grind size, reagent scheme, regrinding, etc are currently not optimized. Optimization of these criteria may improve recoveries of silver and gold.

1.5 Proposed Exploration Budget The proposed 12 month exploration budget for the Urumalqui project is estimated at US$1.2 million. Details of these costs are presented in Table 1-2.

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Table 1-2: Proposed 2012 Exploration Budget

Description Estimated Cost

(US $) Exploration Manager – Project Management and Supervision ($7,000/month) 84,000 Senior Geologists – Field Supervision, Mapping, Trenching, Logging (1X11 Months and 1X6 Months @ $4,500/Month, each) 76,500 Junior Geologists – Field Assistance, Trenching (2 @ $2,500/Month) 60,000 Project Assistant ($650/Month) 7,800 Field Workers (6X6 Months ad 12X6 Months @ $300/Month, each) 32,400 Field Office and Accommodations ($1,000/Month) 12,000 Food ($600/Month) 7,200 Truck Rental – 2 Trucks ($75/Month, each) 1,800 Transportation ($5,000/Month) 60,000 Field Camp Supplies, Fuel and General Expenses ($5,000/Month) 60,000 Airfare – Peru ($1,000/Month) 12,000 Offsite Lodging/Board (4 Days/Month @ $100/Day) 4,800 Permitting – Phase II Drilling Program 50,000 Community Relations – Consultants ($2,500/Month) 30,000 Community Relations – Projects ($3,000/Month) 36,000 Metallurgical Testwork on Urumalqui Vein Mineralization and Reporting 150,000 Surveying – DDH Collar and Roads and Channel Sampling Site Surveying 11,000 Diamond Drilling – 2,000 metres @ $150/metre Direct Drilling Costs 300,000 Analyses – Core and Surface Samples (2,000 Samples @ $35/Sample) 70,000 Drilling QA/QC and Check Assaying (200 Samples @ $35/Sample) 7,000 Check Assaying of Select 2011 Samples (200 @$35/Sample) 7,000 Data Plotting, Reporting and Documentation – Summary Report with Recommendations 15,000 Contingency (~10%) 105,500 Total Estimated Costs of Recommended 2012 Exploration Work $1,200,000

SECTION 2 INTRODUCTION

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2.0 INTRODUCTION 2.1 Project and Issuer The Urumalqui property (the ‘Property’) is situated in the District of Julcán, Department of Libertad in northcentral Peru; approximately 70 kilometres by road east of the city of Trujillo. It is comprised of four contiguous mineral concessions covering 2,700 hectares or 6,672 acres. The mineral holdings are currently owned by Minera Corimalqui S.A. (‘Corimalqui’), an indirect Peruvian subsidiary of Gitennes Exploration Inc. (‘Gitennes’) which is a TSX Venture Exchange reporting public company. On April 22, 2010, AndeanGold Ltd. (‘AndeanGold’), a TSX Venture Exchange reporting public company, entered into an Option Agreement with Gitennes whereby AndeanGold has the right to acquire a 60% joint venture interest in the Property. AndeanGold established PeruGold Resources S.A.C. (‘PeruGold’) in July, 2008 to administer its Peruvian interests. This Technical Report has been prepared by Mr. C. Kaye, FAusIMM, B. Eng Chemical, of Mine and Quarry Engineering Services, Inc (‘MQes’), Mr. James A. McCrea, P. Geo., and Mr. J. Douglas Blanchflower, P. Geo., of Minorex Consulting Ltd. (‘Minorex’), for AndeanGold and Gitennes in compliance with the disclosure requirements of the Canadian National Instrument 43-101. The authors were retained by AndeanGold in August 2011 to qualify historic and current exploration data and estimate the mineral resources of the Urumalqui vein structure. The authors have reviewed available exploration results and prepared this independent technical report (the ‘Report’) in accordance with the formatting requirements of National Instrument 43-101 (‘NI 43-101’) and Form 43-101F1 (Standards of Disclosure for Mineral Properties) to be a comprehensive review of the exploration activities and documentation of the mineral resource estimate. It is intended to be read in its entirety. 2.2 Site Visit Mr. J. McCrea, an independent qualified person according to NI 43-101, visited the Property on August 3, 2011 during which time he examined and collected four (4) samples from the stored core of four different diamond drill holes, and examined and collected four (4) samples of the mineralization from outcrops of the Urumalqui vein structure. He also reviewed all aspects of the previous exploration work and that conducted since 2010 on behalf of AndeanGold including: diamond drilling; geological mapping; sampling, security and shipping procedures; surveying methods and documentation procedures. 2.3 Principal Sources of Information AndeanGold and Gitennes provided the authors with all available exploration drilling, sampling, and assay and analytical results; plus maps, company reports and other public and private information pertaining to the Property. In addition, AndeanGold provided geological plans identifying lithological units, alteration facies and zones of mineralization, plus cross-sectional interpretations of drilling results. This information appears to be of good quality and the authors have no reason to believe that any of the information is inaccurate.

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Several published references on the regional geology and mineral deposits of Peru and specifically the Department of La Libertad were reviewed by the authors, and additional information was also obtained from several Internet sources. The authors have assumed that all of the referenced information and technical documents are accurate and complete in all material aspects. Technical reports and other documents used in the preparation of this report are listed in Section 27 of this report. Documents pertaining to the subject mineral concessions were obtained from AndeanGold (2011) and Gitennes (2011). The authors has relied upon these documents for the verification of title for all of the subject mineral concessions and rights. 2.4 Standard Terms and Abbreviations Units of measurement used in this report conform to the SI (metric) system unless otherwise noted. All currency units are US dollars (US$) unless otherwise noted. Standard terms and abbreviations are as follows:

Table 2-1: Standard Terms and Abbreviations

Terms Description Terms Description

AMSL above mean sea level µm micrometers (10-6m)

A ampere um micron

atm atmosphere (29.92in Hg, 760mm Hg, 101.3 kPa)

mph miles per hour

AA atomic absorption mg milligram (10-3g)

Az azimuth mm millimetre (10-3m)

b.y. billion years mm Hg millimetres mercury

Wi Bond work index Mt million tonnes

cal calorie Moz million troy ounces

CAD$ Canadian dollar m.y. million years

CIL carbon-in leach Ma million years ago

CIP carbon-in-pulp moz milliounces (Troy) per short ton

cm centimetre min minute

cm3 cubic centimetre mol mole

ft3 cubic feet NI 43-101 National Instrument 43-101

cfm cubic feet per minute N newton

m3 cubic metre oz ounce (Troy)

mm3 cubic millimetre opT ounces per short ton

Hz cycles per second (Hertz) ppb parts per billion

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Terms Description Terms Description

d day ppm parts per million (by weight)

°C degree Celsius Pa pascal

°F degree Fahrenheit % per cent

° degree of arc lb pound (avoirdupois)

deg degrees (angular) psi pounds per square inch

dia diameter QA Quality Assurance

DDH diamond drill hole QC Quality Control

dmt dry metric tonne RC reverse circulation drilling

ft feet rpm revolutions per minute

gal gallon (US) RQD rock quality description

gpm gallons per minute ROM run-of-mine

GPS Global Positioning System s, sec second

Au gold st short ton (2,000 pounds)

AuEq gold equivalent grade Ag silver

g gram SG specific gravity

gpt grams per tonne cm2 square centimetre

ha hectare ft2 square feet

hp horsepower km2 square kilometre

h hour m2 square metre

in inch mm2 square millimetre

in Hg inches mercury scfm standard cubic feet per minute

ICP induced coupled plasma scmh standard cubic meters per hour

J joule t tonne (1,000 kg or 2,204.6 lbs)

kg kilogram TDS total dissolved solids

km kilometre oz troy ounce (31.1035 grams)

kVA kilovolt-ampere US$ United States dollar

kW kilowatt vvh vessel volumes per hour

LOM life-of-mine V volt

l,L litre vol volume

mesh meshes (screen wires) per linear inch (Tyler series, unless noted)

vol % volume percent

m metre W watt

µ micro (10-6) wt % weight %

µg microgram(10-6g) y year

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2.5 Acknowledgements The authors wish to thank office and field personnel of AndeanGold and Gitennes for their help with this study. Mr. John Bolaños, former GM Latin America Exploration for AndeanGold, escorted Mr. McCrea during his property examination and was especially helpful with project and exploration overviews, and data acquisition.

SECTION 3 RELIANCE ON OTHER EXPERTS

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3.0 RELIANCE ON OTHER EXPERTS The authors were not involved in any exploration work on the subject property, and therefore this report has made extensive reference to the works undertaken by other qualified geologists and professional field personnel. Other non-project specific reports by qualified personnel have been referenced whenever possible. The information, conclusions, opinions and recommendations are based upon:

Information available to the authors at the time of the preparation of this report; Assumptions, conditions and qualifications as set forth in this report; and Data, reports and other information provided by AndeanGold and Gitennes, and other

third party sources. The authors have not carried out any independent exploration work, drilled any holes nor carried out any sampling and assaying. Mr. John Bolaños, former GM Latin America Exploration for AndeanGold, accompanied Mr. McCrea during his property examination and provided information on all aspects of Property’s historical and recent exploration work. The authors have reviewed the comprehensive reports and data on the Property’s exploration history. This exploration information is of reasonable to good quality, and there is no reason to believe that any of the information is inaccurate. Mr. Anthony F. Ciali, President, CEO and Director of AndeanGold, provided the authors with summaries of the corporate and legal documents pertaining to the acquisition of the Property for AndeanGold. Documents pertaining to the location, recording and current status of mineral concessions were provided by AndeanGold (2011) and Gitennes (2011). The authors have relied upon the legal due diligence or title opinion conducted by the legal counsel for AndeanGold and these documents have not been investigated or confirmed by the authors. The description of the property, and ownership thereof, as set out in this report, is provided for general information purposes only. Gitennes provided the authors with the results of their 2008 preliminary metallurgical testwork carried out in Peru at Laboratorio Plenge & CIA S.A. and Alex Stewart (Assayers) del Perú S.R.L. The information in these reports appears to be of reliable quality. This report has been prepared for use by AndeanGold Ltd. and Gitennes Exploration Inc. It is intended to be read as a whole, and sections or parts thereof should therefore not be read or relied upon out of context. The authors are pleased to acknowledge the helpful cooperation of AndeanGold and Gitennes management and staff, all of whom made any and all data requested available and responded openly and helpfully to all questions, queries and requests for material.

SECTION 4 PROPERTY DESCRIPTION AND LOCATION

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4.0 PROPERTY DESCRIPTION AND LOCATION 4.1 Project Location and Description The Urumalqui property is located within the District of Julcán, Department of La Libertad, Peru; about 70 kilometres by road east of the coastal city of Trujillo (Figure 4 -1). The approximate geographic centre of the Property is at 8° 05’ South latitude, 78° 29’ West longitude, or UTM PSAD56, Datum 17S at 777500 metres East by 9105150 metres North. The Property is comprised of four mineral concessions, namely: Aurea Elisa 13, Morochas, Patientia and Philtrum, that cover a total of 2,700 hectares or 6,672 acres. Table 4-1 documents the pertinent mineral concession information.

Table 4-1: Mineral Concession Information (after Blackwell, 2009)

Concession Ownership Codigo Status Area (ha) AUREA ELISA 13 Minera Corimalqui S.A 01-01513-02 Claim granted 1,000 MOROCHAS Minera Corimalqui S.A 01-02012-02 Claim granted 700 PATIENTIA Minera Corimalqui S.A 01-00746-03 Claim granted 600 PHILTRUM Minera Corimalqui S.A 01-01584-02 Claim granted 400 Area (Ha) 2,700

Figure 4-1 and 4-2 of this report illustrate the location and configuration of the various mineral holdings comprising the Property. 4.2 Property Ownership The Urumalqui property was first acquired in 2002, and explored initially as a joint venture between Peruvian companies affiliated with Gitennes and Meridian Gold Inc. (‘Meridian’), but on June 17, 2005 the companies terminated their agreement and Gitennes assumed full ownership (100%) of the project. The property is owned by Minera Corimalqui S.A., now an indirect Peruvian subsidiary of Gitennes. AndeanGold entered into an Option Agreement with Gitennes, dated April 22 2010, whereby AndeanGold has the right to acquire a 60% joint venture interest in the Property. In order to earn its 60% interest, AndeanGold must:

Ensure that PeruGold expends CDN$3 million of qualifying expenditures on the Project

over a four (4) year term (the ‘Term’), commencing July 8, 2010; Ensure that PeruGold completes 3,000 metres of drilling by the end of the second year of

the Term and 7,000 metres of cumulative drilling by the end of the third year of the Term; and

Issue Gitennes 20,000 common shares of AndeanGold as well as 20,000 common shares on each of the first, second and third year anniversaries of the agreements. Except for the first payment, Gitennes may elect to receive cash in lieu of shares, with the cash amounts not to exceed CDN$25,000, CDN$50,000 and CDN$100,000, respectively, with respect to the first, second and third year anniversary date payments. If the market value of the

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shares on the respective payment date exceeds the maximum cash payment amount on such date, the difference will be satisfied by the issuance of equivalent shares.

Upon AndeanGold exercising its Option, Corimalqui will transfer the titles to the subject mineral concessions to Newco, a joint venture Peruvian company to be owned by PeruGold (60% shareholder interest) and Corimalqui (40% shareholder interest). PeruGold would be the operator of the joint venture.

Figure 4-1: Location Map

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4.3 Mineral Rights in Peru The ‘General Mining Law of Peru’ defines and regulates different categories of mining activities, ranging from sampling and prospecting to development, mining, and processing. Mining concessions are granted using UTM coordinates to define areas generally ranging from 100ha to 1,000ha in size. Mining titles are irrevocable and perpetual, as long as the titleholder maintains payment of the “Derecho Vigencia” fees up to date to the Ministry of Energy and Mines. A holder must pay a “vigencia” (annual maintenance fee) of US$3/ha (for metallic mineral concessions) for each concession actually acquired, or for a pending application (petitorio or claim), at the time of acquisition and then by June 30th of each subsequent year to maintain the concession. The concession holder must sustain a minimum level of annual commercial production of greater than US$100/ha in gross sales before the end of the sixth year of the granting of a concession; or, if the concession has not been put into production within that period (by the first semester of the seventh year), the annual rental increases to US $9/ha (US$3 for vigencia plus a US$6 penalty) until the minimum production level is met. If by the start of the twelfth year the minimum production level has still not been achieved then the annual rental increases to US $23/ha thereafter (US$3 for vigencia plus a US$20 penalty). The concession holder can be exonerated from paying the penalty if he can demonstrate that during the previous year he has “invested” an equivalent of no less than ten times the penalty for the total concession. This investment must be documented along with the copy of the “declaración jurada de impuesto a la renta” (annual tax statement) and the payment of the annual “Derecho Vigencia” fees. The concession will terminate if the annual rental is not paid for three years in total or for two consecutive years. The term of a concession is indefinite provided it is properly maintained by payment of rental fees. A Peruvian mining concession is a property-related right, distinct and independent from the ownership of land on which it is located, even when both belong to the same person. The rights granted by a mining concession are defensible against third parties, are transferable and chargeable, and, in general, may be the subject of any transaction or contract. See: http://www.minera.gob.pe/mineria/legislacion/data/D.S.N_014-92-LSM.doc. To be enforceable, any and all transactions and contracts pertaining to a mining concession must be entered into a public deed and registered with the Public Mining Registry (Registro Publico de Mineria). Conversely, the holder of a mining concession must develop and operate his/her concession in a progressive manner, in compliance with applicable safety and environmental regulations and with all necessary steps to avoid third-party damages. The concession holder must permit access to those mining authorities responsible for assessing that the concession holder is meeting all obligations.

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Figure 4-2: Mineral Concession Map

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4.4 Surface and Water Rights PeruGold has agreements with individual that provide access to the land and permission to establish drill pads in exchange for a modest fee. Most of these agreements also include a clause whereby PeruGold has the option to purchase the land in question (Ciali 2011). The rights of title to the mineral concessions do not carry water rights which are available for exploration purposes but would have to be negotiated with the land owners and various governmental agencies prior to any advanced development or mining operation on the Property. 4.5 Environmental Regulations, Liabilities and Permitting Issues According to Blackwell (2009), “Two environmental evaluations (Evaluación Ambiental de Exploración) have been submitted by Corimalqui to the Ministerio de Energia y Minas of the Republic of Perú in order to obtain Category C drilling permits. These reports describe environmental, archaeological and socio-economic conditions in the study area and state that the owner will return the land to its original condition and not affect the environment. Permits were granted in both instances, as well as an earlier category B permit that did not require an environmental evaluation. These permits are referenced in the Ministry files as Resoluciones Directorales Numbers 006-2003-MEM/AAM, 409-2004-MEM/AAM and 183-2007- MEM/AAM. Commitments made by Corimalqui as part of the permitting process included re-vegetation, safe disposal of dangerous waste and maintaining good community relations. Copies of all related agreements, from minutes of community meetings to stakeholder approvals to the agreement with the municipality of Julcán to use its waste disposal systems (i.e. garbage dump) were attached to the applications.” According to Ciali (2011), the 2011 diamond drilling program was carried out subject to an Environmental Impact Declaration permit which allowed the drilling from up to 20 drill pads within a 5-hectare area. Future infill drilling along the central 1,000 metre portion of the Urumalqui vein structure may be undertaken using any of the 20 existing pads which can be moved up to 50 metres from their permitted locations. Any other drilling outside of the 1,000 metre central section of the vein, whether along the Urumalqui vein or on the other veins identified to date on the property, will require PeruGold to file an Environmental Impact Statement which PeruGold is presently preparing. No bonding is required for an Environmental Impact Declaration permit. PeruGold reclaimed all drill site access roads, drill pads and settling ponds immediately following completion of each drill hole. A thorough report documenting this work has been prepared by John Bolaños and Percy Espejo Rodríguez for PeruGold. Pending a site visit by the PeruGold environmental consultant, a final report will be prepared and submitted to the governmental authorities.

SECTION 5 ACCESIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND

PHYSIOGRAPHY

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5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

5.1 Accessibility The Property is vehicle accessible by the coastal city of Turjillo in the Department of La Libertad. Trujillo with a population of 800,000 is the nearest urban and major commercial centre to the Property. It has regular daily 1-hour commercial flights from the capital city of Lima which 480 kilometres to the south (see Figure 4-1). A paved and hard-packed gravel road joins Trujillo with the village of Julcán to the east and then there are unimproved gravel roads to the Property. The driving time is approximately 2 to 3 hours. 5.2 Climate and Vegetation The climate is typical of the western portion of the Andes Mountains. There is a rainy season with cool day and night time temperatures lasting from November to March. The dry season from April to October has relatively hot sunny days with cool night time temperatures. Exploration of the Property may be carried out year-round but best done during the dry season. 5.3 Local Resources and Infrastructure According to Blackwell (2009), the Quiruvilca Mine, operated by Pan American Silver Corp., is nearest industrial site, situated 20 kilometres east-northeast of the Property. It has an ore processing plant capable of milling 50,000 tonnes per month of zinc-lead-copper-silver ores. E l s e w h e r e at Salpo and Machacala, all within 45 minute drives from Urumalqui, t h e r e a r e a n u m b e r o f s mall polymetallic vein mines that operate intermittently during periods of high metal prices. There is an electrical transmission line to Julcán and the Urumalqui area receives both local electricity and cellular telephone service. Labour and supplies for any future exploration work on the Property is readily available from both Trujillo and the local villages that have long mining histories. 5.4 Physiography The Property is situated within the Pacific Ocean watershed of the Cordillera Occidental, part of the Andes Mountains. Elevations within the property range from 3,400 to 3,700 metres A.M.S.L. with local moderate relief. Except for eucalyptus plantations, there is little standing timber. Most has been cleared for sheep and cattle grazing and/or various potato, tuber and grain farming by individual land owners.

SECTION 6 HISTORY

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6.0 HISTORY 6.1 Regional Mining History Peru is one of Latin America’s larger gold producer, largely a result of revised mining laws instituted in the 1990’s and the subsequent exploration attention by several international mining companies. Newmont Mining Corporation’s Minera Yanacocha, Latin America’s largest gold mining operation, commenced production in the early 1990’s and is now producing over 2 million ounces of gold annually. In 1998, Barrick Gold Corporation’s Pierina mine started production and now yields approximately 900,000 ounces of gold annually, and more recently Barrick has put their Laguna Norte mine into production with reported reserves in excess of 10 million ounces of gold. Base metal exploration also increased in the 1990’s with the privatization of the Antamina copper-zinc skarn deposit in north central Peru resulting in over US $ 2 billion of investment. In addition, the Tintaya copper mine, one of the largest copper producers in Peru was privatized in late 1994 and later purchased by Switzerland-based Xstrata. Figure 4-1 of this report shows the location of several gold-silver and base metal mines and prospects in the vicinity of the subject property. 6.2 Property Exploration and Mining History The original exploration of the Urumalqui property area, including old adits and pits, may date back to the late 1800th century when mineralization was first reported at the nearby Quiruvilca mine site in 1789. According to Tumialán (1982), during the 1980’s an exploration shaft was sunk and drifting was carried out on the 28-metre level, with a 250 metre drift on the 50 metre level and a winze to the 80 metre level. According to Blackwell (2009), “The area of the property was acquired in 1993 by Minera Andina de Exploraciones, an affiliate of SIMSA Group. In 1996 the property was optioned and explored by Minera Cambior del Peru S.A., whom completed five widely-spaced drill holes on 5 different targets. This work appears to be the only drilling done before Gitennes’ acquisition of the project. The results of Cambior’s work at Urumalqui were not available to Corimalqui until 2007. Andina’s concessions lapsed in 2001 and were open to staking in 2002. Gitennes acquired the property jointly with Meridian Gold Ltd. in 2002 and formed a joint venture company, Corimalqui to explore the property.” Between 2003 and early 2010 Corimalqui explored the Property until AndeaGold acquired operatorship in April, 2010. Since then PeruGold, on behalf of AndeanGold, has been carrying out the exploration work. The following text summarizes the exploration work carried out by Corimalqui and Gitennes prior to the Gitennes-AndeanGold option agreement, as reported by Blackwell (2009).

2003 – Work includes: commissioning a topographic map from air photographs (replaced in 2008 by an IKONOS satellite image and topographic map), geological

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mapping of the veins and property, establishing a picketed survey control grid (1,000 by 2,000 metres), B-horizon soil sampling, geophysical surveying by Val d’Or IP (on 200 metres lines) and magnetics (100 metres lines), differential GPS surveying of the survey control grid area, rock geochemical sampling, and drilling 17 core holes totalling 2,282.6 metres.

2004 – Survey control grid extended with its southwestern portion covered by 3D – IP and magnetometer surveying (Fugro and SJV Geophysics), and some additional soil and rock sampling. Followed by drilling 18 core holes totalling 2,619.4 metres.

2005 – Meridian Gold relinquishes interest. Some geological mapping. 2006 – Little activity, some geological mapping. 2007 – Corimalqui commissioned a detailed project review and report by Valdivia. 2008 – Diamond drilling program including 12 core holes totalling 2,262.4 metres,

metallurgical testing, IKONOS–based topographic mapping, mineralogy studies and completion of the Valdivia report. The shaft was cleaned and underground workings examined.

SECTION 7 GEOLOGICAL SETTING AND MINERALIZATION

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7.0 GEOLOGICAL SETTING AND MINERALIZATION The following descriptions of the country-wide, regional and property geological settings are based largely upon recent geological works by Bolaños (2011) and Blackwell (2009) 7.1 Regional Geology The following description of the regional geological setting is quoted from the technical report by Blackwell (2009).

“The regional geology has been mapped by Cossio and Jaen (1967) and described by Cossio (1964). The project is on the edge of recent investigations of Cenozoic volcanic rocks by Navarro and Rivera (2006). The oldest exposed rocks in the region are Upper Jurassic Chicama Formation mudstones overlain by Lower Cretaceous sedimentary rocks of the Goyllarisquizga Group (Chimu, Santa-Carhuaz and Farrat Formations). These shallow marine units are exposed 22 km north and east of the property, in the Otuzco and Quiruvilca areas. Lower to Middle Cretaceous submarine andesite to rhyodacite flows and pyroclastic tuffs, belonging to the Casma Group occur at lower elevations, 25 to 30 km west of the property. The Mesozoic stratigraphy has been folded about northwest to west-verging isoclinal axes and has been intruded by late Cretaceous to Oligocene granodiorite and diorite (Coast Batholith) with outcrops at lower elevations 35 to 40 kilometres west of Urumalqui. The Cenozoic (Eocene to Miocene) Calipuy Group forms a relatively flat-lying, unconformable plate on pre-Calipuy basement that caps elevations in the region above 3,200 metres. The group is dominated by subaerial andesite flows, breccia and pyroclastic tuff, volcaniclastic conglomerate and grit, dacite domes. The Calipuy Group is of highly variable thickness, ranging up to 1500 metres, and is broadly warped and faulted. Navarro and Rivera (2006) document at least five irruptive centres in the region ranging in age from 30.2 million years down to 16.7 Ma. The Calipuy Group is the rock unit that hosts mineralization at Urumalqui, and the property is located on the southern flank of the youngest volcanic centre in the region (Uromalqui) near its overlap onto an older centre (Paccha-Uromalqui). The Company has completed one vertical hole (URU04-31) to a depth of 351 metres that provides a good stratigraphic section.”

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Figure 7-1: Regional Geology Map (After Servicio de Geologia Y Mineria, 1980)

7.2 Property Geology 7.2.1 Lithology Volcanic rocks of the Eocene to Miocene-age Calipuy Group predominantly underlie the entire Property. These rocks include green to maroon, variably magnetic, porphyritic andesitic flows with plagioclase phenocrysts, volcanic glass and hornblende, interbedded with volcaniclastic rocks and brecciated andesitic lavas (Blackwell, 2009). The following description of the property geological setting is quoted from the technical report by Blackwell (2009).

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“The oldest rocks on the property (Figure 3) are likely light-coloured dacite tuff, breccia and minor mudstone exposed along the flank of Cerro Paccha (“Cerro” in Spanish means “hill”) in the extreme western portion of the property. These units are

variably faulted and tilted to the southeast at 20 to 35o, attitudes which probably reflect the angle of repose on the flanks of the ancient strato volcano. All but a few isolated dome-like outcrops of massive magnetic dacite are variably altered to quartz-alunite- kaolinite, probably due to steam heating and fumarolic or vapour-related alteration. Hole URU04-31 was collared 4,500 metres east of Cerro Paccha and 200 metres lower in elevation. At 250 metres depth a relatively flat-lying sequence of dacite tuff, rhyodacite welded tuff, laminated waterlain tuff, grit and mudstone was entered. This sequence is probably equivalent to similar light- coloured tuffs found further west in the valley bottoms of Quebradas Aquila and Corrapalday (“Quebrada” in Peruvian Spanish means a “ravine”). This sequence may be a distal equivalent to the rocks at Cerro Paccha, or maybe part of the younger Uromalqui volcanic complex. The upper 250-metre portion of Hole URU04-31 is a monotonous sequence of variably magnetic hornblende and feldspar-phyric andesite flows with minor intervals of flow breccia and lailli tuff. This is the sequence that hosts the veins at Urumalqui, the nearest outcroppings of which are 200 metres southwest (Mariscala East) and 700 metres northeast (the Urumalqui or main vein). It is essentially flat-lying. Breccias are frequently encountered during drilling and are found in outcrop through the southeastern end of the vein through the village of Urumalqui. Fragment size is highly variable, some appear bedded, others dyke-like, and alteration can include strong silicification and locally sericite or illite. These breccias are frequently pyritic and are anomalous in gold, silver, arsenic and mercury. They are most frequently encountered within 100 metres of mineralized vein structures and are most likely hydrothermal in origin. Scattered outcrops of siliceous sinter are found along the western side of Quebrada Aquila at an elevation of 3250 metres. The sinter is likely related to hot spring activity and will be Pliocene or younger. The area was glaciated, with movement from south to north.”

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Figure 7-2: Sample 1243, 52.25 to 53.80 m, PGUR-06

Brecciated and porphyritic Andesitic Crystal Tuff with white phenocrysts of plagioclase (≤ 3%) and pervasive K-feldspar (adularia). Disseminated, fine-grained pyrite (5% to 7%) and pyrite bordering K-feldspar in matrix. Sporadic veinlets and micro-fracture fillings by fine sulphides (2 to 5%).


Pervasive K-feldspar (adularia) with phenocrysts of plagioclase and disseminated pyrite (3%). Disseminated pyrite in clots and patches (5%) with grey quartz associated with fine sulphides. Pervasive jarositic alteration after pyrite.

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Manganese oxides and pyrolusite as infillings along micro fractures fillings associated with quartz-carbonate veinlets.

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Figure 7-5: Property Geology Map

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7.2.2 Structure The following description of the structural setting on the Property is quoted from the technical report by Blackwell (2009).

“The region is traversed by numerous linear breaks that are probably vertical faults. Northwest trending lineaments are coincident with the grain of the underlying folded Goyllarisquizga Group and may reflect adjustments along older structures. Northeast to north-striking faults tend to be locally prominent and may prove to be important features. One such feature extends south from Urumalqui in Quebrada Chuan. Though evident on satellite photos to the south, by the point it intersects the 3,500- metre elevation contour this probable fault disappears against the zone of altered Calipuy volcanic rocks that envelope the Urumalqui vein system. The northwest and east-trending vein structures as well as several satellite photo lineaments are seen to occur within several kilometres of the extended trace of the Chuan fault. Vein offsets at Urumalqui strike north, are vertical and relatively minor in displacement. Finally, satellite photos reveal a strong east-trending linear that also appears to be covered by the younger, altered andesite sequence at Urumalqui over 5 kilometres of its length. The writer’s impression is that the intersection of this old, partially buried east-striking linear and the north- striking Chuan fault was a site of late volcanic eruption and focused hydrothermal fluid flow that resulted in the Urumalqui vein system.”

7.2.3 Alteration According to Blackwell (2009) and Bolaños (2011), the volcanic host rocks in the immediate vicinity of the known vein are hydrothermally altered with varying amounts of silica (i.e. commonly chalcedony), adularia, clay minerals (i.e. illite, kaolinite), barite and gypsum. On a regional scale the country rocks are variably altered depending upon their location relative to major faulting and fracturing and more local intrusions, such as dykes and intrusive breccias. The volcanic country rocks in the vicinity of such intrusive bodies are often hydrothermally altered with silica, alunite and kaolinite and are frequently pyritized. 7.3 Mineralization Gold and silver bearing mineralization within the Property is hosted by andesitic volcanic units of the Miocene-age Calipuy Group. The Calipuy Group and its equivalent age and compositionally similar lithologies host numerous low, intermediate and high sulphidation epithermal gold-silver deposits in Peru, including the world class high sulphidation epithermal gold-silver deposits of Yanacocha and Pierina. According to Bolaños (2011), “Vein minerals at Urumalqui are dominantly fine-grained crystalline and chalcedonic quartz with manganese and iron oxides (respectively after rhodochrosite/rhodonite and pyrite). Fine-grained pyrite and dark blue, metallic silver sulphides and/or sulphosalts were noted in drill core. Alteration is mostly light green coloured illite affecting andesite volcanic country rocks close to the veins.

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Vein quartz textures are mostly crustiform-colloform and fine-grained crystalline/drusy. Radiating needles (after adularia) and vein breccia textures also occur. Breccias are sometimes associated with concentrated disseminated silver minerals and higher gold and silver grades.”

Figure 7-6: View of the Urumalqui Vein on Surface Looking Northwestward.

Blackwell (2009) described the vein mineralization on the Property as follows. “Two main vein orientations have been mapped on the property (Figures 4 & 5). A northwest to southeast (“NW-SE”) trend includes the Urumalqui Vein, La Mariscala West Vein, La Mariscala South Vein, and the Penélope Vein. An east-west (“E-W”) trend includes La Mariscala East Vein, Candual East Vein, the Candual West Vein zone, and the Candual Vein. These veins are developed south of the Urumalqui Vein. All “veins” are hosted by andesite and all are associated with hydrothermal breccias, varying amounts of illite and silica

alteration, and disseminated pyrite. Most veins dip southerly at 72o to near vertical. A “vein” in Spanish is “Veta”, hence Veta Urumalqui, Veta Candual etc.

Three distinct styles of epithermal mineralization have been recognized from surface mapping and drilling on the property:

1. Crustiform - The main Urumalqui vein is an open-space-filling, quartz-adularia

structure, characterized by sharp vein boundaries, multi-stage quartz mineralization as banded crustiform and colloform-textured veins, with gold and silver mineralization. Also present are vugs and cockade, bladed, pelletal (moss) and breccia textures.

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Gold and silver are the analytical elements of interest, with little or no geochemically anomalous arsenic, antimony, mercury, lead, zinc or copper. Silver minerals include argentite and electrum, while gold reports to electrum. Another vein on the property with significant amounts of similar banded, pelletal and crustiform textures is the western portion of La Mariscala Vein.

2. Breccia veins – typically a linear breccia with diffuse contacts that in places looks like a

zone of replacement while elsewhere may be very vein or dyke-like. The breccias are very silica (quartz) rich with fine-grained, grey to black chalcedonic quartz, that are mineralized with gold and silver. Grades and metal ratios are similar to, but generally lower than in the Crustiform style of mineralization. These silicified breccia zones appear to be oriented steeply in a vein-like fashion. Mineralization is distinctly anomalous in arsenic and mercury, with erratic but anomalous lead, zinc and antimony. Penélope Vein, the central and eastern portions of La Mariscala Vein, and veins in the Candual area are of this style.

3. Envelope - A broad zone of bleaching and argillic alteration exists that is roughly

symmetrical about the Urumalqui and Mariscala Veins. The alteration “envelope” is locally silicified and sericite – altered, contains veinlets and patches of fine-grained pyrite, and has elevated and highly anomalous gold and silver values (the “Envelope”). Pyrite content is 1 to 4%. Gold and silver values in excess of 100 ppb and 20 ppm respectively are common.

Urumalqui Vein The principal target on the property is referred to as the “Urumalqui Vein”. The Urumalqui Vein is a generally steeply dipping zone, up to 20 metres wide, comprising a core of one or two banded quartz veins ranging from 0.5 to 11 metres aggregate thickness, and intervening oxidized vein breccias or altered volcanic rocks. Crustiform and colloform banding in the veins consists of millimetre- to centimetre-scale quartz and lesser adularia with occasional darker grey bands that have fine-grained pyrite and silver-gold minerals. Bands within the veins can be brecciated but re-cemented by later chalcedonic quartz (distinctly milky-white to light grey in colour, very fine-grained and not banded in appearance), attesting to multiple episodes of fluid flow and deposition and to movement while vein formation was in progress. These areas of chalcedonic quartz are probably the product of very late hydrothermal fluid flow,

below 180oC, below boiling and below the temperatures favourable to gold mineralization. The vein is exposed over a strike length of 1500 metres. Vein dips vary between 70 to 85 degrees to the SW. Average strike is 125° N throughout much of this length. Throughout its exposed length the vein shows several breaks and northeast-stepping offsets. There are eight vein segments between offsets, ranging in length from 40 metres to 400 metres. For the most part, vein outcrop is continuous along each segment. At least one of the offsets (at L4+00N) is due to an 090°-trending fault seen in outcrop, elsewhere

faults appear to be more 175o N. Elsewhere other significant breaks coincide with

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overburden-filled depressions and zones of breccia. The Urumalqui vein adjacent to several of these off-setting structures can be flooded with chalcedonic silica suggesting that they may have served as fluid relays between vein segments, and the faulting is in part contemporaneous with mineralization. At several locations near breaks minor

folding can be seen in the vein, which plunges 60 to 75o northwest. Drill holes generally intersected the vein at their projected depths, based on the dips observed on surface. However, some drill holes (e.g. URU04-18) found the vein at shallower depths than expected. The writer believes this is due to both un-mapped normal faults or to the existence of additional veins that do not outcrop. This is particularly possible at the northwest (lines 4+00 to 6+00 N) and southeast (lines 7+00 to 9+00 S) ends of the vein, where vein mineralization was encountered “out-of-position” relative to adjacent sections and surface mapping, or more than one vein was encountered where surface mapping suggest only one should be present. Distinctive quartz textures are evident in outcrop and core that suggest the Urumalqui Vein tested thus far remains within the zone of boiling. Foremost are “moss” textures, where pellet-shaped bodies (1 to 3 mm across) of finely banded quartz occur within the vein, often between crustiform layers. This texture reflects the original nucleation of silica gel around foreign particles (Morrison et al, 1995) and occurs at relatively high temperatures and high silica super saturation. It is regarded as being indicative of “the boiling zone”, and is therefore indicative that conditions are right for gold and silver to be present. Most drill holes into the Urumalqui vein have encountered moss-textured quartz, suggesting the mineralized vein has potential to continue deeper. Thin section and x-ray diffraction studies have identified argentite (Ag2S) and pyrite (FeS2) as the principal sulphide mineral species, and possible arsenopyrite (FeAsS). Grain sizes are usually much less than 100 microns. Gold reports to native gold (Au) and electrum (Ag – Au). Gangue minerals are principally quartz and adularia, with minor to trace amounts of barite, calcite, illite, kaolinite and gypsum. The vein was chip-channel sampled from edge to edge during 2002-2003. Analytical results were highly variable, ranging from 0.1 to 10.3 g/t gold and 5.0 to 413 g/t silver. Based upon 29 chip-channel samples collected from vein outcrops between grid lines 5+00N and 6+00S the average grade of the vein appeared to be 3.9 g/t gold and 129 g/t silver over an average width of 3.2 metres. The vein has now been drilled to depths of over 200 metres and over a strike length of 1,500 metres, results of which are summarized in Section 11.0. La Mariscala West Vein The Mariscala West Vein runs sub-parallel to the main Urumalqui Vein, approximately 800 metres to the south. It strikes in the same NW-SE orientation as Urumalqui has been traced over a strike length of 500 metres with width from 0.1 to 2 metres. La Mariscala West has two major splays: one at its south-eastern end striking at 113°, and one at its north-western end striking E-W (Figure 6). Shallow, overgrown pits

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are present on the veins, and there are some small pre-Colonial rock walls to the northwest of the main showing. Corimalqui has sampled the site and drilled two holes, but has otherwise avoided further work here until a rigorous archaeological assessment is done. La Mariscala West comprises mostly milky quartz infilling a fracture or fault. Locally the vein displays a crustiform appearance with chalcedonic and dark grey bands possibly carrying primary sulphides, and moss texture. The lapilli tuff host rock is strongly altered with moderate to strong silicification and argillic alteration seen along the length of the vein. The lateral extent of this alteration halo has not been yet determined. Kaolinite and illite have been identified in PIMA samples taken from La Mariscala West. Thin hairline quartz veinlets are present in close proximity to the vein. A total of 48 rock samples were taken on the vein in December 2003. All but five of these samples were rock chips collected across the vein and into altered host rock. Gold numbers were generally low, mostly ranging between 100-300 ppb. The highest gold grades are found in the intersection of the vein and the south-eastern splay (2,340 ppb) and in the area of the old workings and chalcedonic banding (up to 5,920 ppb). Altered wall rock also shows anomalous gold numbers up to 300 ppb. This suggests the presence of a mineralized gold envelope around La Mariscala West similar to that observed during drilling of the Urumalqui Vein. The average gold grade for all the samples taken was 456 ppb. Silver values are erratic; the highest silver grades coincide with the highest gold grades, but some high silver values are also found in sections of the vein where gold is low. Average silver grade in the vein is 43 ppm based upon surface samples. La Mariscala East La Mariscala Este (Figure 7) is an east-striking steeply north-dipping vein. It is vaguely banded and contains angular rock clasts. A blue-green micaceous mineral, possibly smectite, is found here, Very fine, disseminated pyrite occurs in dark grey quartz and along fractures. The vein itself rarely exceeds a metre or two in thickness, although its easternmost exposure comprises several individual veins and strongly silicified host rock over a width of seven metres. Twenty-two rock chip samples have been collected to date, averaging 476 ppb gold and 75 g/t silver. Three drill holes have been collared on this structure. This segment of the vein has been traced in outcrop for 240 metres, and may extend another 300 metres west to La Mariscala Centro Vein. The latter is exposed over a strike length of 30 metres before it is lost in the gorge of Quebrada Chuan. Only one chip sample has been collected here, returning 154 ppb gold and 6.3 ppm silver. It has not been drilled. The La Mariscala West is further on strike, 600 m northwest, suggesting that these three portions may be part of one larger, multi- vein splaying structure that is 2200 metres-long, Much of this large target length is overburden-covered at its northwest end f(or 550 m) and similarly over 600 m along the southeast end. The intervening 1050 metres are marked by a strong IP anomaly and intermittent high gold-in-soil anomalies that are strongest toward the Este end of the zone. None of this has been drilled.

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La Mariscala Sur Another vein structure, Mariscala Sur (Figure 7), extends southeast for 330 m into the hanging wall of Mariscala. Fifteen rock chip samples returned an average 466 ppb gold and 30 g/t silver across sample widths of 1 to 14 m. The main Sur segment usually occurs as a single northwest-trending vein with a thickness of 1-2 metres. Gold tenor ranges from 33 to 1520 ppb, with only one sample exceeding 1 g/t gold. It has not been drilled. La Candual Veins The Candual area (Figure 7) is divided by Quebrada Chuan into east and west segments. East of the creek, Candual Este consists of two recognizable west-trending near-vertical veins or zones of silicification 3 to 6 metres thick. One of these veins was sampled over a strike length of 160 metres. West of the creek, Candual West features a number of west-trending near-vertical parallel veins occurring over a horizontal distance of at least 140 metres. The veins are usually 0.5 to 6 metres thick. Locally, they may have come together in the wider sample intervals, and it is uncertain whether the current sampling followed a single continuous vein or several parallel or sub parallel veins in close proximity to one another. Candual Oeste was sampled over a strike length in excess of 450 metres, and remains open to the west. The Candual target is a 1500 m-long zone of fracturing, veining and silicified rock. Forty-two rock- chip samples have been collected thus far and average 588 ppb gold and 19.4 g/t silver. Sampling is weighted to the eastern end of the zone where gold values range from 314 to 2520 ppb. Corimalqui has drilled two holes at Candual West. Penelope Vein Another vein, Penelope (not shown), was sampled in 2003. It strikes Northwest-southeast, extending at least 250 m into the hanging wall of Candual. Only five samples were collected here, 4 of vein material. All are relatively low in silver, 0.6 up to 47.9 ppm, but of interesting gold tenor, 146 to 1125 ppb. Penelope has not been drilled.”

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Figure 7-7: Collecting Verification Sample from the Urumalqui Vein

Figure 7-8: View of the Urumalqui Vein Structure #1

View of the Urumalqui vein structure exhibiting banded and crustiform quartz-adularia vein textures typical of low-sulphidation epithermal deposition.

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Figure 7-9: View of Urumalqui Vein Structure #2

View of bleached and siliceous banded and crustiform quartz-adularia vein material from the Urumalqui vein structure

SECTION 8 DEPOSIT TYPES

8-1 MQes

8.0 DEPOSIT TYPES The Urumalqui property hosts gold and silver bearing mineralization with metallogenic characteristics commonly associated with a low sulphidation (adularia-sericite) epithermal mineralizing system. Epithermal or high level hydrothermal systems generally occur from depths of less than 2km to surficial hot spring settings and are hosted by a variety of geological environments but usually by Tertiary-age volcanic rocks associated with subduction zones at plate boundaries (Panteleyev, 1996). Volcanic rocks of calc-alkaline andesitic composition are the most common host rocks, usually in areas with bimodal volcanism and extensive subaerial ash flow deposits and less commonly associated with alkalic intrusive rocks, shoshonitic volcanics, or clastic and epiclastic sediments in intra-volcanic basins (Panteleyev, 1996). Epithermal systems can be of any age, usually related to their host volcanic rocks but invariably slightly younger in age (0.5 to 1 Ma, more or less). Older epithermal deposits are less common due to the effects of erosion or metamorphism (Sillitoe, 1993). Regional tectonic settings for epithermal systems comprise volcanic island and continent margin magmatic arcs or continental volcanic fields with extensional structures. Regional scale fracture systems are common structural controls related to grabens, resurgent calderas, flow dome complexes and, rarely, maar diatremes. Extensional structures in volcanic fields (normal faults, fault splays, ladder veins, cymoid loops, etc.) are common, as are local graben or caldera fill clastic rocks. High level (subvolcanic) stocks and/or dykes and pebble breccia diatremes may be present in the deposition environment, in addition to locally resurgent or domal structures related to underlying intrusions (Panteleyev, 1996). Low sulphidation epithermal mineral deposits form in both subaerial, predominantly felsic, volcanic fields in extensional and strike slip structural regimes and island arc or continental andesitic stratovolcanoes above active subduction zones. Near surface hydrothermal systems are localized by structurally and permeability focused fluid flow zones where there are relatively dilute and cool mixtures of magmatic and meteoric fluids with temperatures between 200°C and 300°C (Sillitoe, 1993). Mineral deposition occurs as the fluids undergo cooling and degassing by fluid mixing, boiling and decompression (Panteleyev, 1996). Mineralization is typically localized in structures but may occur in permeable lithologies. Upward flaring mineralized zones centred on structurally controlled hydrothermal conduits are common. Large (> 1m wide and hundreds of metres in strike length) to small veins and stockworks are common with lesser disseminations and replacements. Vein systems can be laterally extensive but ore shoots have relatively restricted vertical extent. Higher grade mineralization is commonly found in dilational zones in faults at flexures and splays (Panteleyev, 1996). Quartz veins, stockworks and silicified tectonic breccias commonly host gold, silver, electrum, argentite and pyrite with lesser and variable amounts of sphalerite, chalcopyrite, galena, rare tetrahedrite and sulphosalt minerals. The mineralization commonly exhibits open space filling textures and is associated with volcanic-related hydrothermal to geothermal systems. Mineral

8-2 MQes

deposits are commonly zoned vertically over 250 to 350 metres from a base metal poor, gold and silver rich top to a relatively silver rich base metal zone and an underlying base metal rich zone grading at depth into a sparse base metal, pyritic zone. Open space filling, symmetrical and other layering, crustification, comb structure, colloform banding and multiple brecciation are common vein textures. Repetitive generations of quartz and chalcedony are commonly accompanied by adularia and calcite, and pervasive silicification in vein envelopes is usually flanked by sericite-illite-kaolinite assemblages. Intermediate argillic alteration (kaolinite-illite-montmorillonite + smectite) may form adjacent to veining and advanced argillic alteration (kaolinite) may form along the tops of mineralized zones. Propylitic alteration dominates at depth and peripherally. Weathered bedrock exposures are often characterized by resistant quartz 'ledges' and extensive flanking bleached, clay-altered zones with jarosite and other limonite minerals (Panteleyev, 1996). There are many documented examples of low sulphidation epithermal type mineral deposits. Since the early 1980’s exploration for these types of deposits has focused along the Cordillera and Andean tectonic belt from Alaska to southern Chile. There are a number of international examples of low-sulphidation epithermal mineral deposits including: Toodoggone district deposits in British Columbia, Canada; Comstock and Aurora deposits in Nevada, USA; El Bronce, Chile; Guanajuato, Mexico; Colqui, Peru; and Ladolam in Lihir, Papua- New Guinea.

Figure 8-1: Schematic Cross-Section of the Epithermal Deposit Model

After Berger and Eimon, 1983

SECTION 9 EXPLORATION

9-1 MQes

9.0 EXPLORATION The historic exploration work and the 2003 to 2009 exploration programs by Corumalqui and Gitennes are well documented by Blackwell et al. (2003), Foster et al. (2004 and 2005) and Blackwell (2009). The following text regarding this exploration period is quoted directly from these reports and has also been summarized in the ‘History’ section of this report. Recent exploration work by PeruGold and AndeanGold has been documented by Bolaños (2011) and by various exploration maps and data provided by AndeanGold (2011). It is the opinion of the authors that the aforementioned documents are of reasonable to good quality, and there is no reason to believe that any of the information is inaccurate. 9.1 Pre-2002 Exploration Work Historic exploration of the Property probably dates back to Colonial time but the only obvious evidence of such work are the old workings, including short adits, pits and a production shaft that was sunk to a vertical depth of 50 metres below surface. According to Blackwell (2009, after Tumialán, 1982), there was limited development on the -20m level, with a 300m drift and winze on the -50m level. An underground gallery mined extracted mineralization between - 80m and -50m, with some extraction likely below the -80m level using buckets and ropes. The mineralization was reportedly trucked to the village of Salpo for processing (Foster et al., 2003). Minera Andina de Exploraciones, a subsidiary of the SIMSA Group, acquired the Property in 1993, and added to the mineral holdings with additional concessions in 1995. Minera Andina later optioned the property to Compañía Minera Cambior S.A. in 1996. According to Foster et al. (2003), in 1998 Cambior drilled six wide spaced holes directed at geological and geophysical targets but the drilling results are not available. Minera Andina failed to pay its taxes on its mineral concessions and they were subsequently declared open for re-application in 2002. Various companies, including Cambior, Meridian Gold Peru SAC and Compañía Minera Seis Ríos S.A., a Peruvian subsidiary of Gitennes, acquired mineral concessions to the area now covered by the Property. Later, Meridian Gold and Compañía Minera Seis Ríos agreed to a joint venture arrangement and pooled their respective holdings and resources forming a joint venture company, Minera Corimalqui SA. 9.2 2002 to 2009 Exploration Work The following summary of exploration activities by, firstly, the Meridian-Gitennes (Compañía Minera Seis) joint venture and later by Corumalqui and Gitennes has been well documented by Blackwell (2009). Exploration of the Property during this period has been summarized by Blackwell (2009) as follows.

2003 – Work includes: commissioning a topographic map from air photographs (replaced in 2008 by an IKONOS satellite image and topographic map), geological mapping of the veins and property, establishing a picketed survey control grid (1000 by 2000m), B-horizon soil sampling, geophysical surveying by Val d’Or IP (on 200m lines) and

9-2 MQes

magnetics (100m lines), differential GPS surveying of the survey control grid area, rock geochemical sampling, and drilling 17 core holes totalling 2,282.6 metres.

2004 – S u r v e y c o n t r o l g rid extended with i t s southwestern portion covered by 3D – IP and magnetometer surveying (Fugro and SJV Geophysics), and some additional soil and rock sampling. Followed by drilling 18 core holes totalling 2,619.4 metres.

2005 – Meridian Gold relinquishes interest. Some geological mapping. 2006 – Little activity, some geological mapping. 2007 – Corimalqui commissioned a detailed project review and report by Valdivia. 2008-2009 – Diamond drilling program including 12 core holes totalling 2,262.4

metres, metallurgical testing, IKONOS–based topographic mapping, mineralogy studies and completion of the Valdivia report. The shaft was cleaned and underground workings examined.

The results of the 2002 to 2009 exploration work were summarized by Blackwell (2009) as follows.

“Mineralization at Urumalqui is known as “quartz – adularia” or “low sulphidation” epithermal type mineralization. Two main vein orientations have been mapped on the property. A NW-SE trend includes the Urumalqui Vein, La Mariscala West Vein, La Mariscala South Vein, and the Penélope Vein. An east-west trend includes La Mariscala East Vein, Candual East Vein, the Candual West vein zone, and the Candual Vein. These other veins are found south of the Urumalqui Vein. Three distinct styles of epithermal mineralization have been recognized from surface mapping and drilling on the property: crustiform, breccia and envelope. The Urumalqui Vein is a near-vertical zone, up to 20 metres wide, comprising a core of one or two crustiform-banded quartz veins ranging from 0.5 to 11 metres aggregate thickness. The vein is exposed at surface over a strike length of 1,500 metres. Average strike is 125° throughout much of this length. The vein shows a number of minor, northeast-stepping offsets that separate the vein into eight segments, ranging in length from 40 metres to 400 metres. The Urumalqui vein is mineralogically simple, being crustiform quartz with minor adularia and chalcedonic quartz. Gold occurs as grains of native gold and electrum, while silver occurs in electrum and argentite, and both are associated with fine-grained pyrite. Gitennes’ exploration drilling at Urumalqui has been done on relatively widely-spaced centres, from 45 to over 100 metres apart, and has concentrated upon the 1,000 metre-long, south-eastern and central portion of the main Urumalqui vein. Despite having drilled the vein to depths exceeding 200 metres below surface, the vein structure remains strong and mineralized. All holes are in the “boiling zone”, based upon vein textures, and the potential for good mineralization at deeper levels than those tested thus far is considered to be good. Recent drill results also suggest that further drilling on the 400 to 500 metre-long north-western segment of the same vein structure is necessary, where 2003-2004 drilling may have been too shallow.

9-3 MQes

Metallurgical tests suggest that a combination of crushing and milling, followed by gravimetric separation then cyanide leaching may be used to treat the Urumalqui Vein. Flotation is another possibility, followed by cyanide extraction. This methodology and approach is consistent with that used at numerous other mining sites in Peru that have similar styles of mineralization. The metallurgical tests are very early-stage. Not enough is known about the zones of mineralization to safely apply the results to larger areas. It is also not known at this time whether higher yields will be achieved and it is possible that other metallurgical methods may prove more attractive.”

There was no exploration field work during the period between the conclusion of the 2009 diamond drilling campaign in March, 2009 and the option agreement between Gitennes and AndeanGold in April 2010. 9.3 2010 and 2011 Exploration Work Following the signing and approval of the Gitennes–AndeanGold option agreement PeruGold, on behalf of AndeanGold focused their exploration efforts on establishing detailed topographic control with surveying of several topographic and geodetic benchmarks. This work was followed shortly after by detailed surface geological mapping of the various known vein structures and their mineralized alteration envelopes. The geological mapping was carried out in November 2010 by John Bolaños and Juan Miranda, both experienced geologists (Bolaños, 2011). Between November and December, 2010 John Bolaños and Juan Miranda re-logged the stored drill cores from the 2003 to 2009 drilling programs undertaken by Corimalqui. This work was conducted with the cataloguing and moving all the drill core to a new core storage building. The results of this work were collated with those of the surface geological mapping work and a property-wide geological setting was compiled. During the 2010 exploration program, Mr. Roberto Condezo of SCA Consultores was hired to investigate local community concerns with the exploration work and maintain the good relations with the local land owners (Bolaños, 2011) On March 28th, 2011 PeruGold commenced the 2011 diamond drilling campaign to confirm and infill the previous drilling along the central and southeastern segments of the Urumalqui vein structure, down to a depth of 200 metres so as to provide drill spacing of approximately 50 metres. Explomin del Peru S.A. of Lima, Peru was contracted by PeruGold to provide a DE710 Sandvik diamond drilling rig, drilling equipment and personnel capable of carrying out approximately 5,000 metres of HQ-size core drilling. On July 27th, 2011 PeruGold had completed 31 holes totalling 5,071 metres of diamond drilling. Subsequent drill core logging, sampling and reclamation work on the disturbed drill site access roads and pads extended the field work into August 2011 (Bolaños, 2011).

9-4 MQes

Figure 9-1: DE710 Sandvik Diamond Drilling Rig and Drilling Personnel

9.3.1 Summary of 2011 Exploration Results The 2011 exploration program was largely focused on confirming and delineating the gold and silver bearing mineralization along the Urumalqui vein structure. All of the drill holes were collared to test the vein structure between the surface and the earlier Corimalqui drill holes. They filled in the widely spaced drill sections within the central and southeastern segments to a depth of 200 metres. The 2011 drilling results confirmed the geometry and tenor of the Urumalqui vein indicated by the previous drilling results, and showed that the vein structure has been locally displaced by intersecting conjugate faults and fractures along its known strike length. In addition, the style of mineralization and continuity of the vein structure at depths of 200m vertically indicate that the vein structure may have considerable untested depth potential. A detailed discussion of the 2002 to 2011 drilling campaigns is presented in Section 10.

9-5 MQes

Figure 9-2: View of the Cemented Collar for DDH URU 03-02.

View of the cemented collar for DDH URU 03-02 reclaimed during the Gitennes-Meridian joint venture

Figure 9-3: View of the Cemented Collar for DDH PGUR 30 and 31

View of the cemented collar for DDH PGUR 30 and 31 reclaimed by PeruGold/AndeanGold

9-6 MQes

Figure 9-4: Drill Core Storage Building for the Urumalqui Project

SECTION 10 DRILLING

10-1 MQes

10.0 DRILLING The following description of the 2003 to 2009 diamond drilling programs has been quoted directly from the technical report by Blackwell (2009). Bolaños (2011) has provided the authors with the following description of the 2011 diamond drilling program. 10.1 Drilling 2003 - 2009 According to Blackwell (2009),

“Seventeen holes totalling 2,282.6 metres were drilled on the Urumalqui Property from October 15 to December 15, 2003. Bradley MDH S.A. provided a “Buggy Rig”, a Longyear 44 modified so as to replace the skids with a two-wheeled frame that could be pulled by a front-end loader for drill moves. The rig was excellent as no new roads were required between drill sites, drill moves were very fast and there was minimal surface disturbance. Upon completion, drill holes were marked with concrete monuments. Core size was HQ (3 1/8 – inch diameter) for all holes. Core was placed in wooden core trays, and transported to a core logging site in the village of Oromalqui for logging and splitting. Eighteen holes totalling 2,619.4 metres were drilled on the Urumalqui Property from September 11 to November 30 2004. Sonda Sur Contratistas Generales S.A. provided a Longyear 38 skid-mounted drill and a Volvo water truck for drill moves. Sondasur provided a second skid-mounted rig, a Longyear 44, to drill a deeper, vertical hole (URU04-31). Towards the end of the programme, both rigs were used to finish drilling the remaining holes on the Urumalqui Vein. Only minor roadwork was required for set-ups; surface disturbance was negligible. All drill cores were transported to a logging site in the village of Oromalqui, and remain there in storage. A further twelve holes totalling 2,262.4 metres were drilled on the Urumalqui vein from January 28 to March 7, 2009 by Bradley-MDH del Peru SAC. A “Buggy Rig” similar to the 2003 programme was used, but this time with a LF-70 core machine. All drill cores were transported to a logging site in the village of Oromalqui, and remain there in storage. Drill hole collars have been cemented-in and marked with monuments. Following completion of each phase of the drilling all drill pads were reclaimed. Core recovery is generally good, except at the vein contacts where the bit grinds against the harder rocks on its way into the vein, and then grinds and bends on its way out. Recovered vein material can be very good over short intervals, but turn to sand and gravel-sized rubble for several metres. It is preferable to intersect the vein as perpendicular to its contacts as possible so that the drill bit bites into the harder quartz vein “squarely” and does not turn or bind, which result in broken core and poor recovery. As the vein dips south-easterly at 720 to 890 this means that the drill pads have to be situated considerable distances from the outcrop trace of the vein for deep

10-2 MQes

holes, which makes for increasingly long (and expensive) holes as the vein is tested deeper.”

Table 10-1: 2003 to 2009 Diamond Drilling Data (after Blackwell, 2009)

Drill Hole

No. UTM (m) Easting

UTM (m) Northing

Elevation (m)

Length (m)

Azim (deg)

Dip (deg)

Year

Target

URU03-01 776024.59 9107638.83 3647.30 75.00 35.00 -45.00 2003 UrumalquiURU03-02 776083.96 9107556.88 3653.15 100.75 35.00 -40.00 2003 UrumalquiURU03-03 776157.10 9107481.10 3662.18 133.25 35.00 -45.00 2003 UrumalquiURU03-04 776268.63 9107455.67 3677.23 71.35 35.00 -45.00 2003 UrumalquiURU03-05 776659.20 9107153.68 3652.38 91.85 35.00 -45.00 2003 UrumalquiURU03-06 776736.09 9107084.06 3647.66 100.25 35.00 -45.00 2003 UrumalquiURU03-07 776298.00 9107341.91 3685.05 177.10 35.00 -65.00 2003 UrumalquiURU03-08 776387.90 9107295.47 3681.12 189.10 35.00 -70.00 2003 UrumalquiURU03-09 776467.97 9107234.07 3670.58 158.20 35.00 -65.00 2003 UrumalquiURU03-10 775435.03 9107862.22 3546.67 169.95 35.00 -45.00 2003 IP OffsetURU03-11 775573.81 9107714.45 3561.94 150.05 35.00 -60.00 2003 IP OffsetURU03-12 775839.92 9107408.58 3624.11 141.45 10.00 -45.00 2003 IP Au GCURU03-13 776723.87 9107063.71 3641.53 140.85 35.00 -45.00 2003 UrumalquiURU03-14 776575.45 9107215.04 3655.29 150.15 35.00 -75.00 2003 UrumalquiURU03-15 776467.97 9107234.07 3670.58 208.35 35.00 -72.00 2003 UrumalquiURU03-16 776815.82 9107028.46 3633.57 119.15 35.00 -45.00 2003 UrumalquiURU03-17 775953.48 9107719.13 3626.26 105.80 35.00 -76.00 2003 UrumalquiURU04-18 775868.85 9107769.74 3611.60 55.80 35.00 -45.00 2004 UrumalquiURU04-19 775931.65 9107685.15 3627.97 116.95 35.00 -55.00 2004 UrumalquiURU04-20 776280.43 9107317.76 3682.96 245.00 35.00 -65.00 2004 UrumalquiURU04-21 775767.17 9106822.56 3677.80 125.10 35.00 -45.00 2004 Mariscala WURU04-22 775994.45 9106784.39 3639.82 126.00 215.00 -60.00 2004 Mariscala WURU04-23 776127.32 9106612.09 3572.15 67.00 35.00 -46.00 2004 Mariscala WURU04-24 776706.33 9106143.08 3498.21 180.00 180.00 -45.00 2004 CandualURU04-25 776847.08 9106179.17 3485.08 140.00 140.00 -45.00 2004 CandualURU04-26 777436.53 9106436.82 3529.95 68.75 180.00 -45.00 2004 Mariscala EURU04-27 777381.35 9106474.91 3524.55 45.15 180.00 -55.00 2004 CandualURU04-28 777381.35 9106474.91 3524.55 108.50 180.00 -55.00 2004 CandualURU04-29 777040.72 9106912.89 3572.39 165.80 35.00 -45.00 2004 UrumalquiURU04-30 776785.11 9106988.80 3626.05 183.05 35.00 -45.00 2004 UrumalquiURU04-31 777736.40 9106579.22 3535.08 350.85 0.00 -90.00 2004 UrumalquiURU04-32 776625.62 9107113.25 3645.94 163.50 35.00 -45.00 2004 UrumalquiURU04-33 776547.74 9107174.19 3655.12 231.45 35.00 -75.00 2004 UrumalquiURU04-34 776404.67 9107234.93 3672.98 234.00 35.00 -70.00 2004 UrumalquiURU04-35 776273.15 9107390.85 3679.25 131.60 35.00 -45.00 2004 UrumalquiURU08-36 777013.61 9106964.79 3586.88 73.40 20.00 -45.00 2008 UrumalquiURU08-37 776938.46 9106949.99 3596.51 195.30 20.00 -55.00 2008 UrumalquiURU08-38 776924.01 9106987.73 3612.44 115.50 20.00 -50.00 2008 UrumalquiURU08-39 776739.45 9106946.52 3615.24 295.60 23.00 -45.00 2008 UrumalquiURU08-40 776704.10 9107035.69 3634.70 205.30 35.00 -50.00 2008 UrumalquiURU08-41 776647.62 9107060.17 3636.74 265.00 35.00 -60.00 2008 UrumalquiURU08-42 776625.62 9107113.25 3645.94 205.00 35.00 -60.00 2008 UrumalquiURU08-43 776547.74 9107174.19 3655.12 222.50 35.00 -65.00 2008 UrumalquiURU08-44 776410.33 9107157.31 3663.93 299.00 35.00 -60.00 2008 UrumalquiURU08-45 776311.23 9107219.91 3669.95 250.00 35.00 -49.00 2008 Urumalqui

10-3 MQes

URU08-46 776240.44 9107420.26 3674.90 160.00 35.00 -50.00 2008 UrumalquiURU08-47 777101.78 9106892.15 3559.57 200.00 29.60 -43.83 2008 Urumalqui

10.2 Diamond Drilling 2011 Thirty-one core holes, totalling 5,071 metres, were drilled on the Property from March 28 to July 27, 2011. A DE710 Sandvik drilling rig, support equipment and personnel of Explomin del Peru S.A., based in Lima, Peru, were contracted to complete the drilling contract. HQ-size (3 1/8 – inch diameter) drill cores from all of the drill holes were placed in wooden core trays, and transported to a core logging building in the village of Oromalqui for logging, sampling, and later storage (see Figure 9-4). Downhole surveying was carried out using a Reflex Ez-Trac downhole device and the drill collars were located based on a detailed topographic survey done by Proyectistas Tecknicos, based in Lima, Peru. Drill hole collars were cemented-in and marked with monuments, and all surface disturbances were reclaimed and vegetated during and after the drilling program. The HQ-core recovery was reportedly good (Bolaños, 2011).

Table 10-2: 2011 Diamond Drilling Data Drill Hole

No. UTM (m) Easting

UTM (m) Northing

Elevation (m)

Length (m)

Azim (deg)

Dip (deg)

Year

Target

PGUR-01 776311.89 9107357.77 3685.00 149.00 35.00 -51.60 2011 Urumalqui PGUR-02 776344.27 9107318.00 3688.92 192.80 35.00 -70.00 2011 Urumalqui PGUR-03 776405.53 9107236.15 3672.98 182.70 35.00 -61.49 2011 Urumalqui PGUR-04 776508.89 9107203.86 3662.96 202.00 35.00 -66.45 2011 Urumalqui PGUR-05 776508.89 9107203.86 3662.96 218.20 35.00 -75.46 2011 Urumalqui PGUR-06 776610.80 9107171.87 3650.36 134.00 35.00 -49.14 2011 Urumalqui PGUR-07 776587.51 9107142.19 3649.13 148.84 33.50 -52.25 2011 Urumalqui PGUR-08 776587.51 9107142.19 3649.13 243.60 35.00 -64.19 2011 Urumalqui PGUR-09 776697.27 9107120.12 3656.10 166.10 32.50 -47.49 2011 Urumalqui PGUR-10 776697.27 9107120.12 3656.10 196.40 35.00 -64.45 2011 Urumalqui PGUR-11 776647.60 9107060.20 3636.70 233.30 35.00 -47.94 2011 Urumalqui PGUR-12 776786.49 9107071.88 3647.25 95.10 35.00 -45.00 2011 Urumalqui PGUR-13 776786.49 9107071.88 3647.25 147.50 35.00 -64.10 2011 Urumalqui PGUR-14 776747.95 9107016.84 3631.50 230.60 35.00 -49.11 2011 Urumalqui PGUR-15 776840.10 9107059.30 3641.92 100.90 35.00 -51.14 2011 Urumalqui PGUR-16 776861.03 9107004.87 3624.81 127.50 35.00 -46.51 2011 Urumalqui PGUR-17 776861.03 9107004.87 3624.81 190.90 35.00 -60.50 2011 Urumalqui PGUR-18 776927.07 9106981.85 3610.49 164.20 20.00 -60.00 2011 Urumalqui PGUR-19 776984.56 9106983.26 3599.32 95.60 20.00 -47.00 2011 Urumalqui PGUR-20 776984.56 9106983.26 3599.32 115.60 20.00 -66.60 2011 Urumalqui PGUR-21 777017.96 9106933.03 3580.93 131.10 20.00 -50.20 2011 Urumalqui PGUR-22 777091.30 9106960.39 3574.07 70.15 20.00 -50.51 2011 Urumalqui PGUR-23 777134.57 9106928.93 3562.95 100.80 20.00 -46.34 2011 Urumalqui PGUR-24 776344.27 9107318.00 3688.92 161.90 35.00 -51.28 2011 Urumalqui PGUR-25 776344.27 9107318.00 3688.92 151.90 70.88 -46.19 2011 Urumalqui PGUR-26 776508.89 9107203.86 3662.96 136.30 35.00 -51.74 2011 Urumalqui

10-4 MQes

Drill Hole No.

UTM (m) Easting

UTM (m) Northing

Elevation (m)

Length (m)

Azim (deg)

Dip (deg)

Year

Target

PGUR-27 776463.94 9107139.66 3657.02 269.10 35.00 -60.00 2011 Urumalqui PGUR-28 776557.62 9107099.35 3644.61 260.10 35.00 -60.00 2011 Urumalqui PGUR-29 776861.03 9107004.87 3624.81 258.50 35.00 -67.70 2011 Urumalqui PGUR-30 776427.34 9107305.08 3681.46 97.00 2.65 -45.00 2011 Urumalqui PGUR-31 776427.34 9107305.08 3681.46 99.30 66.97 -45.00 2011 Urumalqui

10.3 Drilling Conclusions and Recommendations The vein mineralization on the Property has now been tested by 78 diamond drill holes, totalling 12,578.69m, of which 67 holes, totalling 11,256.74m, have been completed along the main Urumalqui vein structure. Exploration results indicate that the Urumalqui vein is the dominant vein structure of the eight veins now known on the Property. The Urumalqui vein has now been tested by NQ and HQsize diamond drilling along a strike length of approximately 1,500m. Most of this drilling has intersected the vein between 70 and 150m downdip from its surface exposure but a few holes have penetrated the vein more than 200 metres vertically. There is still good vein continuity both in width and grade in the deepest vein intercepts. All of this drilling has been carried out on relatively widely-spaced sections 45 to 100 metres apart. Drilling results indicate that the Urumalqui vein is open for extension both northwesterly and especially southeasterly. Furthermore, its strong continuity at depth coupled with the textural features of the vein mineralogy indicates that it may have significant untested depth potential. Detailed in-fill drilling, especially along the central and southeastern segments, higher grade portion of the Urumalqui vein structure, is recommended to improve interpretations of its geometry and tenor for sections where the vein has been displaced by intersecting normal faulting. 10.4 Risks and Opportunities Both Blackwell (2009) and Bolanos (2011) report that drill core recoveries were quite good with the possible exception of along host rock - vein contacts where the drill bit tends to grind the core. Future drilling should continue trying different drill bit configurations and drilling media to improve core recoveries, especially within the vein envelopes where there may be significant disseminated mineralization. Future drilling might be conducted with drilling equipment capable of recovering NQ2 or better HQ size core to minimize any core loses on the face of the core and along fractures with infillings of friable mineralization.

10-5 MQes

Figure 10-1: Diamond Drill Hole Plan – Urumalqui Vein Structure

10-6 MQes

Figure 10-2: Vertical Cross Section 1250 NW

10-7 MQes


10-8 MQes


SECTION 11 SAMPLE PREPARATION, ANALYSES AND SECURITY

11-1 MQes

11.0 SAMPLE PREPARATION, ANALYSES AND SECURITY 11.1 2003 – 2009 Exploration Work The following sample preparation, analytical procedures and security measures were conducted by Gitennes during their 2003, 2004 and 2009 exploration programs and documented in the technical report by Blackwell (2009). 11.1.1 2003 – 2009 Sample Preparation According to Blackwell (2009), “No sample preparation was carried out in the field. All rock, soil and core samples were shipped by ground transportation or submitted directly to the ALS Chemex Laboratory in Lima (ISO 9001:2000 accredited) for sample preparation and analyses.” 11.1.2 2003 – 2009 Sample Analyses and Assays According to Blackwell (2009), “Initially surface samples and some cores were analysed for gold and silver plus a suite of trace elements. Unfortunately budget constraints limited this, particularly for drill core samples.

All were analysed for gold using the AA24 preparation protocol, employing a 25 or 50-gram nominal sample weight with gold analysis by fire assay and an AAS (atomic absorption spectroscopy) finish. Other elements are determined using the ME-ICP41 method, which utilizes a 10-gram sample, aqua regia digestion and an ICP-MS (Inductively Coupled Plasma Mass Spectrometry) determination. Silver values over 100 g/t was then analysed using the AA46 method. Using the Ag-AA46 analytical procedure, higher grades (up to 1,500ppm (50 oz/t)) of silver can be digested with aqua regia. This method is suitable for most silver ores, and it is less expensive and quicker than fire assay procedures but equally accurate. For soil samples, the -80 mesh fraction was analysed by the AA24 and ME-ICP41 protocol. Check analyses were performed at SGS del Peru S.A.C. (“SGS”) and CIMM Peru S.A. (a division of Centro de Investigación Minera y Metalúrgica de Chile) (“CIMM”). Both labs are ISO 9001:2000 certified. Analytical techniques are similar to those at ALS Chemex. Some metallurgy-related tests were done at Alex Stewart (Assayers) del Peru (a division of Stewart Group) and at the CH Plenge & Cia. SA., both in Lima. These are highly-regarded independent facilities. The writer is not certain of their accreditation status. All analytical data is received directly as electronic files that are sent from ALS Chemex, CIMM or SGS to Gitennes and Corimalqui. All the data is reviewed by geologists working for the companies, and by the writer. An exhaustive review and audit was performed by Valdivia (2008). In order to confirm the reproducibility of the drill assay results the company periodically submits sample pulps and sample rejects (which are re-homogenized and pulverized into new pulps) from drill core and surface sample to SGS and/or CIMM.”

11-2 MQes

11.1.3 2003 – 2009 Sample Security According to Blackwell (2009), “No extraordinary security measures were put in place for any sample shipments.” 11.2 2011 Diamond Drilling Program The following text applies to the procedures utilized during the 2011 drilling program for the sample preparation, analyses and security, based upon information provided to the authors by Bolanos (2011). No aspect of the sample preparation or analysis was reportedly conducted by an employee, officer, director or associate of PeruGold or AndeanGold. 11.2.1 2011 Sample Preparation The 2011 drilling program carried out by PeruGold utilized drill core handling, logging, sampling, QA/QC, security and storage procedures compliant with current industry-standard practises and within NI 43-101 guidelines. The drill core was collected in secured wooden boxes at each drill site and transported by either the drillers or the supervising geologist to PeruGold’s core logging facility in the village of Oromalqui. There, the core boxes were opened, the core was gently washed clean of drilling fluids, and the drill core was accurately measured to determine the core recoveries. After core recovery measurements and geotechnical logging the drill core was geologically logged for its lithology, structure, alteration and mineralization. These observations were recorded as written notes on pre-prepared log sheets. During the geological logging, the geologist marked the intervals of drill core that should be sampled while respecting lithological contacts and structural features. The drill core was cut in half lengthwise using a diamond rock saw for those sections deemed worthy of sampling and analysis. One half of the sawn drill core was placed in a 6-mil sample bag and the other half of the drill core was returned to its correct position in the core box. A unique sample assay tag was placed in each core sample bag before the bag was securely sealed. The drill hole number, drilling interval, sample assay tag number were recorded for later transcribing to Chain of Custody documents that accompanied the samples to the assay laboratory. Quality control standard, blank and duplicate samples were inserted into the sample sequence at a rate of 1 standard, 1 blank and 1 duplicate per 30 drill core samples, representing approximately five percent of the total samples. After the drill core had been properly logged and sampled, the hand written observations were entered into a matrix style spreadsheet for data entry. The core boxes were labelled and securely stored in core racks within the logging and storage building.

11-3 MQes

Sealed and documented drill core samples were later placed in larger ‘rice’ bags which were securely sealed and stored in a locked room within the PeruGold project offices prior to their transportation to the assay laboratory. 11.2.2 2011 Sample Analyses and Assays All of the drill core and inserted QA/QC samples were shipped to Inspectorate Services Peru S.A.C. (‘Inspectorate’) in Lima, Peru for sample preparation and analysis or assay. These samples were securely sealed and accompanied with shipping documents. There were no reported discrepancies between the sealed samples and those received and reported by Inspectorate. Inspectorate Services Peru, S.A.C. is a member of the Bureau Veritas Group of Companies and has the global infrastructure and expertise to service the exploration, mine assaying and metallurgical testing projects. According to its website (www.inspectorate.com/peru), its current accreditation is ISO 9001:2008 No. 39041. Drill core samples were weighed, and dried prior to crushing to 70% less the ¼ inch diameter. The primary crushed material was then further crushed in roll crushers to 90% less than 10 mesh. A 150 to 180 gram portion of the crushed material from each sample was extracted using a Jones riffle. The remaining ‘reject’ crushed rock was returned to its original plastic sample bag and packed in containers for return to PeruGold at periodic intervals. The split sample portion was then pulverized by a ring and puck pulverizer to 95% less than 140 mesh, and a 50 gram portion was extracted to use as a sample aliquot. The drill core samples were analysed using Inspectorate procedures ISP-138, ISP-330 and ISP-143 for silver, gold and 32 trace elements respectfully. The gold assays were conducted using Inspectorate ISP-330 procedures including four-acid digestion, standard fire assay fusion and atomic absorption finish procedures. If a sample returned a gold value greater than 5 gpt then the sample pulp was re-assayed using fire assay fusion and gravimetric finish procedures. The silver and 32 trace elements were analysed following Inspectorate ISP-138 and -143 procedures respectively. These procedures included four acid digestion, and Induced Coupled Plasma (‘ICP’) finish procedures. Any silver values in excess of 100 gpt were re-analysed using standard fire assay fusion and atomic absorption finish procedures. Inspectorate routinely performs its own quality assurance/quality control (‘QA/QC’) procedures on approximately five per cent of the total samples submitted for analysis. Appendix II of this report contains the sample preparation and analytical procedures utilized by Inspectorate on the drill core and QA/QC samples. 11.2.3 2011 Sample Security All of the 2011 drill core samples were stored in a locked holding room prior to shipping them to the assay laboratory. Furthermore, all of the samples were securely sealed and Chain of Custody documents accompanied all shipments. The analytical results from these samples were received

11-4 MQes

by authorized PeruGold personnel using secure digital transfer transmissions, and these results were restricted to qualified PeruGold and AndeanGold personnel prior to their publication.

SECTION 12 DATA VERIFICATION

12-1 MQes

12.0 DATA VERIFICATION 12.1 Electronic Database Verification The authors performed a review of the drill hole data by comparing certified gold and silver analytical and assay results with values entered into the PeruGold electronic database. The authors did not completely check all of the 2003 to 2009 drill hole data because this historical drilling data has been documented and qualified by Blackwell (2009). Entry errors were identified in the 2011 drilling data and corrected with the certified analytical or assay results. When there were a number of analytical procedures performed to check over-limit analytical results, the most accurate procedure was considered the ‘final’ value (i.e. Fire Assay/Gravimetrics superseded Fire Assay/Atomic Absorption which superseded ICP values). All ‘below detection limit’ analytical values were assigned one-half the lower detection limit value for the purposes this mineral resource estimate. 12.2 Quality Assurance/Quality Control Procedures and Results Mr. James McCrea analysed the quality assurance and quality control (‘QA/QC’) data from the 2011 drill program, and reviewed the QA/QC data from Gitennes’ 2003, 2004 and 2008 drill programs. Gitennes did not implement a QA/QC program for any of their drilling campaigns but later submitted check assay samples to two other laboratories. Scatter plots of the 2003 and 2004 external laboratory check assays were included the non-independent 43-101 technical report by Blackwell (2008). No other analysis or review of this data was reported. The primary assay laboratory used by Gitennes Exploration was ALS Chemex and the check assay laboratories were CIMM Peru and SGS Peru. AndeanGold used Inspectorate as the primary assay laboratory and ALS Chemex as the check assay laboratory. 12.2.1 2011 Standard Reference Material AndeanGold used three different standard reference material (‘SRM’) with certified values for gold (3) and silver (2). Table 12-1 contains a list of the SRM samples used and their corresponding grade ranges. The SRM samples were manufactured by WCM Minerals of Burnaby, BC. and delivered in 60 gram tin-top pouches. Inspectorate Laboratories of Lima, Peru was the primary assay laboratory for the 2011 drill core and SRM preparation and assaying. The samples were analyzed using a fire assay digestion method with an atomic absorption finish and over limit samples were re-assayed using a gravimetric finishing method for gold. Silver was analysed using ICP and Atomic Absorption analytical procedures. The SRM results are charted in Figures 12-1 to 12-5. AndeanGold submitted 62 SRM samples for analysis with the drill core. The SRM samples were analyzed for gold and silver. The average failure rate for the gold standards analyzed was 21.0 percent, based on a 3 standard deviations limit and this increases to 37.1%, based on a 2 standard deviations limit. Failure rates for individual standards analyzed gold ranged from 9% (PM1129)

12-2 MQes

to 61.9% (PM1138) using 2 standard deviations. All the silver standards, however, had only one SRM failure and this looks like a sample mix up based on the grade difference. The gold SRM PM129 had 2 failures and they also look like sample mix ups.

Table 12-1: 2011 SRM Samples

Gold SRM ID

Value (Au ppm) 1*SD 2*SD 3*SD No. Analyzed

Low High Low High PM436 0.39 0.018 0.354 0.426 0.335 0.445 19 PM1129 3.46 0.169 3.122 3.798 2.953 3.967 22 PM1138 1.45 0.064 1.321 1.579 1.257 1.643 21

Silver SRM ID

Value (Ag ppm) 1*SD 2*SD 3*SD No. Analyzed

Low High Low High PM436 No Certified value PM1129 34 1.68 30.64 37.36 28.96 39.04 21 PM1138 104 4.24 95.53 112.47 91.29 116.71 22

This failure rate is very high and no corrective measures were taken by the company. Further action needs to be taken to remedy these problems and confirm the assay values reported for this part of the drill program. Recommendations to correct the high rate of SRM failures would be to prepare a site specific standard. The current assay protocol has the standards submitted to the lab as pulp bags with bags of split drill core. This is a non-blind submission and any possible bias created by this type of non-blind submission has yet to be assessed. Pulp Duplicates (5%) sent back to the primary lab with the included standards and new standards would check for a possible bias from the submission of pulp bag standards. The charted results from a totally blind submission would show any bias if pulp bags had been treated differently. WMC Minerals of Burnaby, BC fabricated the 3 SRM samples used by AndeanGold. The standards were all certified for gold and 2 for silver as well as base metals. WMC Minerals sells a variety of SRM’s for gold, silver, copper, PGE and base metal projects. The following graphs of the SRM’s show the certified value with +/- 2 SD and 3SD. Certified values in blue, 2SD in red and 3SD in yellow.

12-3 MQes

Figure 12-1: Standard PM436 – Au ppm Assay Results

PM436 shows 3 failures over 3 standard deviations and only one result above the certified value.


PM1129 Gold shows 2 failures over 3 standard deviations and no samples reporting above the certified value.

Urumalqui Standard PM436 Gold

0.250.270.290.310.330.350.370.390.410.430.45

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12-4 MQes

Figure 12-3: Standard PM1129 – Ag ppm Assay Results

PM1129 Silver shows one sample failure.


PM1138 Gold shows 7 failures over 3 standard deviations and no sample reporting above the certified value.

Urumalqui Standard PM1129 Silver

25.027.029.031.033.035.037.039.041.043.045.0

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12-5 MQes

Figure 12-5: Standard PM1138 – Ag ppm Assay Results

PM1138 Silver shows no failures. 12.2.2 2011 Blank Material AndeanGold Staff have been using barren sections of Urumalqui drill core as blank material for the QA/QC program. During the drilling program 63 blanks were analysed. The blanks are inserted on a 1:10 to 1:20 basis. The assay results of the blank material show that there is some minor gold and silver contamination of the blank material in one part of the drill program. The results of the analysis of the blanks are in Figures 12-6 and 12-7.

Figure 12-6: Blank Materials – Au ppm Assay Results

Urumalqui Standard PM1138 Silver

95.097.099.0

101.0103.0

105.0107.0109.0111.0113.0

0 5 10 15 20 25

Number of Samples

Sil

ver

Gra

de

(pp

m)

Urumalqui Blanks Gold (ppm)

0.000.020.040.060.08

0.100.120.140.160.18

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Number of Samples

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12-6 MQes

Figure 12-7: Blank Materials – Ag ppm Assay Results

12.2.3 2011 Field Duplicates Andean Gold submitted quartered drill core as duplicate samples for assaying during the 2011 drilling program. Sixty-three field duplicates were inserted into the drilling sample sequence. These samples were assayed in a similar manner as the other drill core samples using Fire Assay digestion procedures with an atomic absorption or gravimetric finish for gold, and ICP procedures or atomic absorption techniques for silver. Figures 12-8 and 12-9 are the scatter plots of the original samples verses the duplicate samples for gold and silver. The blue line is an ideal 1:1 reference. The dashed red line is the trend line of the data. The gold graph shows some higher grade scatter above and below the 1:1 line with the trend line near 1:1. Silver shows more scatter with the original samples reporting higher than the duplicates and this is reflected by the trend line. The drop of the trend line appears to be mainly caused by two high grade samples reporting higher than the duplicates.

Urumalqui Blanks Silver (ppm)

0.02.04.0

6.08.0

10.012.0

14.016.018.0

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ver

Gra

de

(pp

m)

12-7 MQes

Figure 12-8: Field Duplicate Samples – Au ppm Scatter Plot

Figure 12-9: Field Duplicate Samples – Ag ppm Scatter Plot

Figures 12-10 and 12-11 are plots of the mean of the duplicate pairs plotted against the Absolute Difference. The gold chart shows a small range of low grade variation with some mid and high grade scatter. The silver chart has a tighter distribution with similar mid and high grade scatter.

Urumalqui Gold Field Duplicates

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Urumalqui Silver Field Duplicates

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12-8 MQes

Figure 12-10: Field Duplicate Samples – Au ppm Difference Chart

Figure 12-11: Field Duplicate Samples – Ag ppm Difference Chart

The duplicate data was analysed by methods described by Thompson and Howarth (1976). The results are shown as Precision Charts for gold and silver in Figures 12-12 and 12-13. The precision charts are derived from the slope and y-intercept of the Thompson-Howarth Duplicate Analysis charts shown in Figures 12-14 and 12-15. These plots are used to check laboratory precision. The field duplicate samples show good precision.

Difference vs. Mean of Duplicates - Gold

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Difference vs. Mean of Duplicates - Silver

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12-9 MQes

Figure 12-12: Thompson-Howarth Precision for Field Duplicates - Au ppm

Figure 12-13: Thompson-Howarth Precision for Field Duplicates - Ag ppm

Thompson-Howarth Precision vs Concentration Gold

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Thompson-Howarth Precision vs Concentration Silver

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12-10 MQes

Figure 12-14: Thompson-Howarth Duplicate Analysis for Field Duplicates - Au ppm

Figure 12-15: Thompson-Howarth Duplicate Analysis for Field Duplicates - Ag ppm

12.2.4 2011 Check Assays Check assay samples were submitted to outside laboratories during the 2003, 2004, 2008 and 2011 drill programs. The scatter plots for the 2003 and 2004 drill programs were included in Blackwell, 2009. The following scatter plots are included for documentation.

Thompson-Howarth Plot, Duplicate Analysis, Gold

y = 0.7061x + 0.0085

0.000.050.100.150.200.250.300.350.400.450.50

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Mean of Gps of Duplicates - Gold (ppm)

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Thompson-Howarth Plot, Duplicated Anlysis, Silver

y = 0.8858x - 0.1564

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12-11 MQes

12.2.5 2003 and 2004 Drilling Programs by Gitennes Exploration The gold and silver pulp duplicate scatter plots for the 2003 and 2004 drilling programs are shown in Figures 12-16 to 12-19. The assay results from the two check assay laboratories, CIMM Peru and SGS Peru, have been combined in the following plots. All of the scatter plots show a moderate to fair degree of scatter with the most on the scatter plot for gold between ALS Chemex and CIMM Peru. The blue line is an ideal 1:1 reference, and the dashed red line is the trend line of the data. Add in Reference to Figure 7-7

Figure 12-16: 2003/04 Pulp Duplicates ALS vs. CIMM – Au ppm Scatter Plot

Figure 12-17: 2003/04 Pulp Duplicates ALS vs. CIMM – Ag ppm Scatter Plot

Urumalqui ALS Chemex vs CIMM Peru Gold

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Urumalqui ALS Chemex vs CIMM Peru Silver

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12-12 MQes

Figure 12-18: 2003/04 Pulp Duplicates ALS vs. SGS – Au ppm Scatter Plot

Figure 12-19: 2003/04 Pulp Duplicates ALS vs. SGS – Ag ppm Scatter Plot

Figures 12-20 to 12-23 are plots of the mean of the duplicate pairs plotted against the Absolute Difference for 2003 and 2004 drill programs to two assay laboratories. The gold chart shows a small range of low grade variation with some mid grade scatter. The silver chart shows some low to high grade scatter.

Urumalqui ALS Chemex vs SGS Peru, Gold

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12-13 MQes

Figure 12-20: 2003/04 Pulp Duplicates ALS vs. CIMM – Au ppm Difference Chart

Figure 12-21: 2003/04 Pulp Duplicates ALS vs. CIMM – Ag ppm Difference Chart

Difference vs Mean of Duplicates ALS Chemex vs CIMM Peru, Gold

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Difference vs Mean of Duplicates ALS Chemex vs CIMM Peru, Silver

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Figure 12-22: 2003/04 Pulp Duplicates ALS vs. SGS – Au ppm Difference Chart

Figure 12-23: 2003/04 Pulp Duplicates ALS vs. SGS – Ag ppm Difference Chart

The pulp duplicate data was analysed by methods described by Thompson and Howarth (1976). The results are shown as Precision Charts for gold and silver in Figures 12-24 to 12-27. The precision charts are derived from the slope and y-intercept of the Thompson-Howarth Duplicate Analysis charts shown in Figures 12-28 to 12-31. These plots are used to check laboratory precision. The pulp duplicate samples show good precision.

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Figure 12-24: T-H Precision for 2003/04 Pulp Duplicates ALS vs. CIMM - Au ppm

Figure 12-25: T-H Precision for 2003/04 Pulp Duplicates ALS vs. CIMM - Ag ppm


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Figure 12-26: T-H Precision for 2003/04 Pulp Duplicates ALS vs. SGS - Au ppm

Figure 12-27: T-H Precision for 2003/04 Pulp Duplicates ALS vs. SGS - Ag ppm


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Figure 12-28: T-H Duplicate Analysis for 2003/04 Pulp Duplicates ALS vs. CIMM – Au ppm

Figure 12-29: T-H Duplicate Analysis for 2003/04 Pulp Duplicates ALS vs. CIMM - Ag ppm


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Figure 12-30: T-H Duplicate Analysis for 2003/04 Pulp Duplicates ALS vs. SGS - Au ppm

Figure 12-31: T-H Duplicate Analysis for 2003/04 Pulp Duplicates ALS vs. SGS - Ag ppm

12.2.6 2008 Drilling Program by Gitennes Exploration The gold and silver scatter plots for pulp duplicates from the 2008 drilling program are shown in Figures 12-32 to 12-35. CIMM Peru and SGS Peru were both used for assaying during this drilling program. The scatter plots all show a small degree of high grade scatter and the occasional outlier. The blue line is an ideal 1:1 reference, and the dashed red line is the trend line of the data.


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Figure 12-32: Scatter Plot for 2008 Pulp Duplicates ALS vs. CIMM – Au ppm

Figure 12-33: Scatter Plot for 2008 Pulp Duplicates ALS vs. CIMM – Ag ppm

Urumalqui ALS Chemex vs CIMM Peru, Gold

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Figure 12-34: Scatter Plot for 2008 Pulp Duplicates ALS vs. SGS – Au ppm

Figure 12-35: Scatter plot for 2008 Pulp Duplicates ALS vs. SGS – Ag ppm

Figures 12-36 to 12-39 are plots of the mean of the pulp duplicate pairs plotted versus the Absolute Difference for the assay results received the two laboratories used during 2008 drilling program.

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Figure 12-36: Difference Chart for 2008 Pulp Duplicates ALS vs. CIMM – Au ppm

Figure 12-37: Difference Chart for 2008 Pulp Duplicates ALS vs. CIMM – Ag ppm

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Figure 12-38: Difference Chart for 2008 Pulp Duplicates ALS vs. SGS – Au ppm

Figure 12-39: Difference Chart for 2008 Pulp Duplicates ALS vs. SGS – Ag ppm

The pulp duplicate data was analysed by methods described by Thompson and Howarth (1976). Precision Charts for gold and silver are in Figures 12-40 and 12-41. No precision charts were produced for the 2008 samples that were sent to CIMM Peru because the data set was too small to produce a reliable duplicate analyses chart. The Thompson-Howarth Duplicate Analysis charts are shown in Figures 12-42 and 12-43. The pulp duplicate samples show good precision.

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Figure 12-40: T-H Precision for 2008 Pulp Duplicates ALS vs. SGS - Au ppm

Figure 12-41: T-H Precision for 2008 Pulp Duplicates ALS vs. SGS - Ag ppm


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Figure 12-42: T-H Duplicate Analysis for 2008 Pulp Duplicates ALS vs. SGS - Au ppm

Figure 12-43: Thompson-Howarth Duplicate Analysis for 2008 Pulp Duplicates ALS vs. SGS - Ag ppm

12.3 2011 Drilling Program by AndeanGold The gold and silver scatter plots for 2011 pulp duplicates are shown in Figures 12-44 and 12-45. The ALS Chemex assay laboratory was utilized for the check assays. The gold scatter plot shows a small amount of high grade scatter, and the silver plot shows one outlier that appears to affect the trend line but may be a sample mix-up. The blue line is an ideal 1:1 reference, and the dashed red line is the trend line of the data.


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Figure 12-44: Scatter Plot of 2011 Pulp Duplicates Inspectorate vs. ALS – Au ppm

Figure 12-45: Scatter Plot of 2011 Pulp Duplicates Inspectorate vs. ALS – Ag ppm

Figures 12-46 and 12-47 are plots of the mean of the duplicate pairs plotted against the Absolute Difference for 2011 drilling program. The gold chart shows a small amount of scatter, and the silver chart shows slightly more scatter the gold.

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Figure 12-46: Difference Chart for 2011 Pulp Duplicates Inspectorate vs. ALS – Au ppm

Figure 12-47: Difference Chart for 2011 Pulp Duplicates Inspectorate vs. ALS – Ag ppm

The pulp duplicate data was analysed by methods described by Thompson and Howarth (1976). Precision Charts for gold and silver are in Figures 12-48 and 12-49. The Thompson-Howarth Duplicate Analysis charts are shown in Figures 12-50 and 12-51. The pulp duplicate samples show good precision.

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Figure 12-48: T-H Precision for 2011 Pulp Duplicates Inspectorate vs. ALS SGS - Au ppm

Figure 12-49: T-H Precision for 2011 Pulp Duplicates Inspectorate vs. ALS SGS - Ag ppm


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Figure 12-50: T-H Duplicate Analysis for 2011 Pulp Duplicates Inspectorate vs. ALS SGS – Au ppm

Figure 12-51: T-H Duplicate Analysis for 2011 Pulp Duplicates Inspectorate vs. ALS SGS – Ag ppm

12.4 Independent Site Visit and Verification Sampling Mr. J. McCrea, P. Geo., visited the Property on August 3, 2011 during which time he examined and collected four (4) samples from the stored core of four different diamond drill holes, and examined and collected four (4) samples of the mineralization from outcrops of the Urumalqui vein structure (See Figure 7-7). He also reviewed all aspects of the historical exploration work including: diamond drilling; geological mapping; sampling, security and shipping procedures; surveying methods and documentation procedures.


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The verification samples were properly bagged, labelled, described and delivered by the Mr. J. McCrea, P.Geo. to Inspectorate Services Peru, S.A.C. in Lima, Peru. Inspectorate Services Peru, S.A.C. is a member of the Bureau Veritas Group of Companies and has the global infrastructure and expertise to service the exploration, mine assaying and metallurgical testing projects. According to its website (www.inspectorate.com/peru), its current accreditation is ISO 9001:2008 No. 39041. There the samples were dried, weighed and then crushed and pulverized to 95% of the material less than 140 mesh. The pulverized material was then split and a 30-gram portion was bagged for analysis. The eight verification samples were initially analysed for gold plus 32 other elements, including: silver, aluminum, arsenic, barium, bismuth, calcium, cadmium, cobalt, chrome, copper, iron, mercury, potassium, lanthanum, magnesium, manganese, molybdenum, sodium, nickel, phosphorus, lead, sulphur, antimony, selenium, tin, strontium, tellurium, titanium, thallium, vanadium, tungsten, and zinc. Initial gold values were determined by analysing a 30 gram sample split using hot Aqua Regia digestion, fire assay fusion and atomic absorption finishing procedures. This gold analytical procedure has lower and upper detection limits of 0.003 and 10 ppm respectively. The other 35 elements were determined with four acid digestion and ICP emission spectrometry measuring procedures. Three of the verification samples, samples 15586, 2737 and U-001, returned over-limit silver ICP values (greater than 100gpt Ag) and were re-assayed using four-acid digestion (50g), fire assay fusion and atomic absorption finishing procedures. All of the analytical procedures and results for the verification samples accompany this report in Appendix I1. The analytical differences between the 2003 and 2011 drill core samples (Samples 2737, 2858, 15586 and 15623) and the drill core verification samples across the same intervals are probably due to inequal amounts of precious metal-bearing mineralization between the two portions of drill core and the usual ‘nugget’ effects of such mineralization. The results from sampling outcrops and near-surface exposures of the Urumalqui vein structure returned silver values ranging from 69.5 to 255.1 gpt and gold values ranging from 0.344 to 1.748 gpt. There were no reported samples collected in the immediate vicinity of these verification samples to compare the returned silver and gold values. 12.5 Conclusions and Recommendations It is the authors’ opinion that the PeruGold electronic database is adequate for the estimation of the mineral resources in this report. This is based on the authors own independent comparison of certified assays and the drilling and assay database. It is the opinion of Mr. McCrea that the QA/QC sampling supports the drill results from this latest exploration program and an inferred mineral resource classification for the Urumalqui

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vein. Future drill drilling and trenching should institute strict industry-standard QA/QC procedures during the work, the resultant analytical results should be subject to QA/QC review prior to any public disclosure, and a thorough QA/QC review and report should be undertaken after each drilling campaign and at least annually. It is the authors’ opinion that the drill core verification sample results compare reasonably well with those reported by PeruGold, and the near-surface sample results confirm the precious metal-mineralization reported by Gitennes for the Urumalqui vein structure.

SECTION 13 MINERAL PROCESSING AND METALLURGICAL TESTING

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13.0 MINERAL PROCESSING AND METALLURGICAL TESTING 13.1 Introduction Metallurgical investigations of the Urumalqui project thus far have been conducted by Gitennes prior to 2009. AndeanGold did not conduct any metallurgical tests in connection with its 2011 infill drill program. Metallurgical test work performed on material from the Urumalqui project to date has investigated the metallurgical response of mineralized material with respect to:

Flotation. Flotation plus cyanidation of concentrate. Gravity separation. Gravity Separation followed by flotation of gravity tails. Gravity separation followed by cyanidation of gravity tails.

All the tests are preliminary and should be considered as “scouting” tests. The test work has been performed in Peru and mostly at Laboratorio Plenge & CIA S.A. and Alex Stewart [Assayers] del Perú S.R.L. Description of the test work and results are presented below. 13.2 Metallurgical Testing Metallurgical test work performed to date is presented in the following reports:

Investigacion Metalurgica ASA 2661; Alex Stewart [Assayers] del Perú S.R.L., May 29, 2008.

Investigacion Metalurgica ASA 3467; Alex Stewart [Assayers] del Perú S.R.L.., July 17, 2008.

Investigacion Metalurgica ASA 4425; Alex Stewart [Assayers] del Perú S.R.L., September 4, 2008.

Prueba de Flotacion – Mineral del Proyecto Urumalqui; Memo to Ing. Teodoro Mallqui Quispe from Ing. Alex Jaramillo Rosales, December 24, 2008.

Investigacion Metalurgica No. 7188; Laboratorio Plenge & CIA S.A., January 15, 2009. Summaries of the test work and results in these reports are presented below. 13.2.1 Test Work ASA 2661 – Alex Stewart [Assayers] del Perú S.R.L. This test work program assessed the metallurgical response for producing a flotation concentrate followed by cyanide leaching of the concentrate. Two composites samples were prepared for the test work. They were identified as Composite (A) Veta – ASA 1521 and Composite (B) Roca Caja - ASA 1522. No tests were reported as being performed using Composite (B) material in this program. Assay head grades for the composites are shown in Table 13-1.

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Table 13-1: Assay Head Grades – Composites (A) and (B)

Composite Assay Head Grade

Silver (g/t) Gold (g/t) Composite (A) Veta – ASA 1521 156 0.91 Composite (B) Roca Caja - ASA 1522 31.88 0.65

Material used in preparing the composites A and B are shown in Table 13-2 and 13-3 respectively.

Table 13-2: Material Used in Preparation of Composite A

Sample DDH From To Length Bags Weight

Note Grade (g/t)

(m)* No. (Kg)** Ag Au 28076 URU08-37 173 179 6 2 8.75 Vein 135 0.52 28077 URU08-40 181 190 9 2 10.3 Vein 169 0.29 28078 URU08-40 190 194 4 1 5.5 Vein/Env 53 1.15 28079 URU08-42 157.3 162.5 4.8 1 7.2 Vein 190 3.26 28080 URU08-45 211.9 220.5 8.6 2 10.2 Vein 229 2.38 28084 URU08-39 254.9 257.5 2.6 1 2.7 Vein 131 1.53

* = Unit assumed to be meters ** = Weight assumed to be Kg

Table 13-3: Material Used in Preparation of Composite B


Note Grade (g/t)

(m)* No. (Kg)** Ag Au 28081 URU08-39 283.4 295.6 12.2 3 18.9 Envelope 30 0.32 28082 URU08-39 272 275 3 1 4.5 Envelope 14 0.56 28083 URU08-39 258.5 270 21.5 2 14.6 Envelope 21 0.21

* = Unit assumed to be meters ** = Weight assumed to be Kg Three flotation tests performed on Composite A material. The primary grind size for each test was P80 = 200 mesh. Tests 1 and 2 produced a rougher concentrate. Test 3 investigated one stage of cleaning. Results indicate that Ag recovery to the rougher concentrate ranged from 77.26% to 81.17% while Au recovery ranged from 47.28% to 76.32%. One stage of cleaning produced a concentrate assaying approximately 11,123 g/t Ag and 69 g/t Au. The recovery of Ag and Au to the cleaner concentrate was 68.39% and 41.65% respectively. The gold recoveries for tests 2 and 3 are suspect as the calculated head grades are higher than the assayed head grade for the composite (>35% for test 2 and >60% for test 3). Three bottle roll tests were also performed on Composite A material. The tests assessed metallurgical response at crush sizes of 0.5 inch, 0.25 inch and 1/8 inch. After 72 hours leaching tests 1 and 2 showed gold recoveries of approximately 90% and silver recoveries ranging from 14% to 24%. The gold recovery for test 3 is suspect as recovery was greater than 100%. Silver recovery was reported as 33%. Reported cyanide consumptions ranged from 1.7 kg/t to 2.2 kg/t.

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13.2.2 Test Work ASA 3467 – Alex Stewart [Assayers] del Perú S.R.L. This program investigated flotation to produce a rougher concentrate and then cyanidation of rougher concentrates (using bottle roll tests). The primary grind size for flotation was P80 = 200 mesh. The rougher concentrate produced assayed 1,868 g/t Ag and 13.10 g/t Au. Reported recoveries were 81.5% and 46.3% for Ag and Au respectively. It is understood that samples used in this test were from the same composite used in test program ASA 2661 (presumably Composite A). If so, the above gold results are suspect. The calculated head for gold (1.81 g/t) is twice the assayed head grade. Cyanidation of the rougher concentrate for 48 hours indicated recoveries of approximately 99% for both Ag and Au; based on Ag and Au in the concentrate. The overall recovery of Ag and Au is little changed from flotation. NaCN consumption was 18kg/t concentrate. 13.2.3 Test Work ASA 4425 – Alex Stewart [Assayers] del Perú S.R.L. The sample used in this test program was indicated to be Composite (B) Roca Caja. The material indicated to have been used in the preparation of this composite is indicated in Table 13-4. The assayed head for the composite is reported to be 30.7 g/t Ag and 0.92 g/t Au.

Table 13-4: Material Used in Preparation of Composite (B) Roca Caja


Note Grade (g/t)

(m)* No. (Kg)** Ag Au 28081 URU08-39 283.4 295.6 12.2 3 18.9 Envelope 30 0.32 28082 URU08-39 272 275 3 1 4.5 Envelope 14 0.56 * = Unit assumed to be meters ** = Weight assumed to be Kg The same sample ID’s were reported to be included in the preparation of Composite B for test work program ASA 2661. Direction from Gitennes (discussion with J. Blackwell on November 4, 2011) indicates the Composite (B) Roca Caja reported in program ASA 2661 and in this program is the same composite. J. Blackwell further indicates that the samples identified in Table 13-4 above are the correct samples used in preparing Composite (B) Roca Caja and those reported in program ASA 2661 are incorrect. MQes is unable to verify this. It is noted, however, that no tests were reported to have been performed on Composite (B) Roca Caja in program ASA 2661. This objective of program ASA 4425 was to assess the metallurgical response of material ground to P75 = 200 mesh followed by flotation and then cyanidation of the rougher concentrate. The reported results indicate a rougher concentrate was produced that had a grade of 298 g/t Ag and 10.83 g/t Au. Silver and gold recoveries to the rougher concentrate were 45.41% and 54.38% respectively. Cyanidation of the rougher concentrate dissolved over 90% of the silver and 97% of the gold in the concentrate. Cyanide consumption was around 36 kg/t concentrate and lime consumption was reported to be 71.25 kg/t concentrate (incorrectly reported in conclusions section of report ASA 4425).

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13.2.4 Memo – Prueba de Flotacion – Alex Jaramillo Rosales This memo presents the results of flotation tests performed to recover silver. Different flotation reagents were evaluated to assess the effect on silver recovery. Details on the makeup, representivity, chain of custody, methodologies and samples used in this program are unknown (per J. Blackwell “GITENNES_Database_Notes_for_mqes-103111.doc”). Although silver recoveries were in line with flotation test results in other programs, information contained in this report is not supportable and as such the results are not considered material to the metallurgical development of the project. 13.2.5 Test Work No. 7188 – Labotatorio Plenge A 50kg sample of material was supplied to perform the testwork described in this program. The sample is identified in the NI 43-101 report titled “TECHNICAL REPORT TO MARCH 30, 2009 on the URUMALQUI PROPERTY by Jerry D. Blackwell, P.Geo.” as being “collected from the face of level 28, underground”. The head assay of the sample was 4.45g/t Au; 9.45oz/t Ag and S total = 0.19%. This test work program investigated:

Gravity Concentration. Flotation of gravity tailings Cyanidation of gravity tailings.

Material was ground to P80 = 65 Mesh. Gravity separation was performed on the ground material. Recoveries of silver and gold to the concentrate were reported as 15.9% and 20% respectively. The gravity tailings was reground to P80 = 200 mesh. A flotation test on a portion of the reground tailings produced a concentrate with a grade of 131.25 oz Ag/t concentrate and 45.8 g Au/t concentrate. The total recovery of silver and gold from gravity concentration followed by flotation of the gravity tailings was approximately 55% Ag and 50% Au. Cyanidation tests were performed on portions of the reground gravity tailings. Total silver and gold recoveries from gravity concentration followed by cyanidation of the gravity tailings was approximately 70% Ag and 94% Au. Cyanide consumption was 4.6 kg/t and lime consumption was 1.9 kg/t. As reported in the March 2009 NI 43-101 report (Jerry D. Blackwell, P.Geo.), “The Plenge results are favourable, however it is dangerous to extrapolate these results to the entire Urumalqui Vein. It is possible that the underground sample from the 28 level is not representative, as it’s grade is higher than that most often encountered when drilling”. 13.3 Mineral Processing Metallurgical test results to date indicate that material from the Urumalqui is likely to be amenable to treatment by either flotation or cyanidation. Gravity concentration appears to improve recoveries of both silver and gold. Potential flowsheets for these processing routes may involve:

Crushing, grinding, gravity concentration and flotation of gravity tailings.

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Crushing, grinding, gravity concentration and cyanidation of gravity tailings. Further testwork is required to determine metallurgical parameters (recoveries, grind size, reagents, residence times, regrinding, etc.) for these alternatives. These parameters can then be used as the basis for performing engineering evaluations into assessing the economics of the processing routes.

SECTION 14 MINERAL RESOURCE ESTIMATES

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14.0 MINERAL RESOURCE ESTIMATES 14.1 Introduction This mineral resource estimate has been prepared following the guidelines of NI 43-101 and is restricted to only the drill tested portion of the Urumalqui vein structure. It does not explicitly or implicitly refer to resources contained in any of the other mineralized zones within the Urumalqui property. The modeling and estimate of the mineral resources were carried out by Mr. J. Douglas Blanchflower, P. Geo., and Mr. James A McCrea, P. Geo., both qualified persons with respect to mineral resource estimation under NI 43‐101. Both Messrs. Blanchflower and McCrea are independent of AndeanGold and PeruGold by the definitions and criteria set forth in NI 43‐101, and there is no affiliation between these men and the companies except that of an independent consultant-client relationship. The Urumalqui mineral resources are not materially affected by any known environmental, permitting, and legal, title, taxation, socio‐economic, political or other relevant issues. The estimate of the mineral resource may be materially affected with further exploration along its known length. The effective date of this mineral resource estimate is November 8, 2011. 14.2 Drilling and Assay Database The drilling and assay data were provided by PeruGold in the form of Microsoft Excel spreadsheet files, pdf files of drill logs and scanned original assay certificates. PeruGold also provided nineteen drill cross sections created on a local mine grid dominantly oriented 035o at a 50-metre spacing and named from 0+00S to 900+00S. Excel spreadsheet files contained location, survey, lithology, structure, oxidation and analytical data for all 78 diamond drill holes collared within the Property. However, only 66 of these drill holes were collared to test the Urumalqui vein structure and only the data from these drill holes were utilized in the mineral resource estimate. The data from the 12 other drill holes not located along the Urumalqui vein structure were not modelled nor used for the mineral resource estimate. The drilling and assay data provided by PeruGold appears to be adequate for the purposes of this preliminary mineral resource estimate and the authors have no reason to believe that any of the information is inaccurate. The database was validated in Gemcom with corrections required. The assay database for those drill holes situated along the Urumalqui vein structure contains 3,556 samples that were analysed for gold and silver. When there were several different analytical procedures performed on individual samples, often as a result of the measured silver and/or gold grades exceeding the limits of precision for a particular analytical technique, the assay result from the most accurate procedure was considered the ‘final’ value (i.e. Fire Assay/Gravimetrics superseded Fire Assay/Atomic Absorption which superseded ICP values). All ‘below detection limit’ analytical values were assigned one-half the lower detection limit value for the purposes of this resource estimate. All data are expressed in metric units and grid coordinates are in the UTM PSAD56 Datum reference system.

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Verification of assay data entries was performed on the 2011 drilling samples which represented 1,699 samples or 43% of the total 3,985 assay samples for gold and silver. The assays for the remaining 2003, 2004 and 2008 drill samples were verified and qualified by Blackwell (2009). Data entry errors for the 2011 assay samples were observed and corrected. The sample analyses and any subsequent over limit or check-assay results were verified with digital assay lab certificates from Inspectorate Services Peru S.A.C. of Lima, Peru. 14.3 Sample Compositing Equal length one-metre assay sample composites were calculated from assayed gold and silver values for all drill holes. These 1 metre composites were generated from each drill hole collar to its terminus. Any unassayed intervals were assigned a ‘Not Entered’ (‘NE’) designation which excluded it from any composite calculation, and any composites less than 0.5m in length were discarded so as to not introduce a short sample bias in the interpolation process. 14.4 Grade Shell Calculations For grade domain modelling purposes only, a silver equivalent (‘AgEQ’) grade was calculated to incorporate both the gold and silver values hosted by the Urumalqui vein. The silver equivalent grade was a calculated combination of its ‘final’ gold value at a 3 year trailing average price of US$1,300/troy oz and 85% metallurgical recovery rate, and its ‘final’ silver value at a 3 year trailing average price of US$26/troy oz and 65% metallurgical recovery rate. Trailing average prices were determined graphically, effective August 26, 2011. Thus, a modelling cut-off grade of 60gpt AgEQ was utilized only for the grade domain modelling. Histograms for uncapped silver and gold assays within the 60gpt AgEQ assay domain solid are shown in Figures 14-1 and 14-2.

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Figure 14-1: Histogram of 475 Uncapped Silver Assays In AgEQ60 Assay Domain Solid

Figure 14-2: Histogram of 475 Uncapped Gold Assays In AgEQ60 Assay Domain Solid

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14.5 Rock Code Determination Rock codes used for the mineral resource model were based upon one mineralized domain solid, coded ‘AgEQ60’, that was later subdivided into three structurally-distinct sections, plus surrounding air and waste rock as follows.

Rock Code Description 0 Air 1 Waste/Background 10 AgEQ60 15 AgEQ60 Southeastern Portion (Domain 1) 25 AgEQ60 Central Portion (Domain 2) 35 AgEQ60 Northwestern Portion (Domain 3)

14.6 Three Dimensional Solid Modelling Grade domain boundaries were determined from a visual inspection of the computerized host-rock lithology, local structural features and AgEQ grades on vertical drill hole cross-sections spaced 50 metres apart. The domain boundaries were influenced by the selection of mineralized material grading greater than 60gpt AgEQ that demonstrated zonal continuity along strike and down dip. In some cases, mineralization grading between 55 and 60gpt AgEQ was included to maintain zonal continuity. Polyline smoothing removed obvious jogs and dips in the domain. Vertical cross-sections oriented at 035o and spaced equally 50 metres apart were generated by Gemcom along the entire drill-tested length of the Urumalqui vein structure, a distance of approximately 1,600 metres. These cross sections were arbitrarily designated 1000NW to 2600NW with cross section 2000NW corresponding to the PeruGold cross section 0+00S. Polyline interpretations of the greater than 60gpt AgEQ mineralization were plotted on each vertical cross section from the mapped surface exposure of the Urumalqui vein through each of its drill hole intercepts and projected an average of 75 metres beyond the deepest drill hole intercept depending upon the vein width, continuity and local structural features. Minimum constrained true width for interpretation was approximately 2 metres. The interpreted polylines from each section were “wire-framed” in Gemcom into a 3 dimensional assay domain model. Four hundred and thirteen composite assay samples from 475 original assay samples occur within the AgEQ60 assay domain solid. The resulting solid (domain) was then used for initial statistical analysis, grade interpolation, rock coding and resource reporting purposes. Following a preliminary interpolation test run the one AgEQ60 assay domain solid was subdivided into three distinct structurally unique parts to more accurately interpolate the vein mineralization that has a southeast-northwest trending ‘bow’ shape in plan (see Figure 14-4). Thus, the whole assay domain solid was subdivided into: a southeastern portion (Domain 1, Rock Code 15) that extends from vertical section 1000NW to 1500NW with an average apparent strike of 318o and apparent dip of -90o; a central portion (Domain 2, Rock Code 25) that extends

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from vertical section 1500NW to 2050NW with an average apparent strike of 325o and apparent dip of -75o SE; and a northwestern portion (Domain 3, Rock Code 35) that extends from vertical section 2050NW to 2650NW with an average apparent strike of 338o and apparent dip of -90o. Figures 14-3 and 14-4 show the 60 gpt silver equivalent assay domain solid looking northward and northwestward respectively.

Figure 14-3: View of AgEQ60 Assay Domain Solid Looking Northward

Figure 14-4: View of AgEQ60 Assay Domain Looking Northwestward

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14.7 Topographic Control PeruGold provided two digital topographic surface files for the Urumalqui property, one covering most of the property with 5 metre contours and another covering a smaller, trimmed area with 1 metre contours. Unfortunately, the available trimmed 1 metre contour topographic file did not cover the entire drill tested length of the Urumalqui vein so sectional work at the extreme northwestern and southwestern ends of the vein structure used surface traces generated from the 5 metre contour topographic plan. During later interpolation work the area of 1 metre topographic control was extended to the northwest and southeast by combining the trimmed 1 metre contour topography with the 5 metre contour topographic control. The authors are not aware when the two available topographic plans were prepared. It was later reported that 1 metre topographic control was available for the entire known length of the Urumalqui vein structure and much of the property but, due to the very large original file size, only the smaller, trimmed area had been made available for the mineral resource study. It is recommended that the large, original 1 metre topographic file be professionally subdivided into useable portions for use during future exploration work and mineral resource studies. 14.8 Bulk Density Estimation The choice of a bulk density determination method for a particular deposit depends on the physical characteristics of the lithologies present and the types of sample available. Porous materials are more difficult to measure accurately using a water displacement method, and wax sealing methods are routinely used in these circumstances. Waxing also assists in the handling of weak or friable materials. The use of two methods is often recommended to demonstrate that consistent results can be obtained. Bulk density data used for the resource estimate was derived from specific gravity data provided by PeruGold. A total of 374, 10 centimetre long drill core samples were analysed for their bulk density, including 273 samples from the vein material, 86 samples from the altered host rock within the vein envelope and 15 samples from the fresh country rock. The bulk density samples were selected from drill intercepts in eleven different 2011 drill holes with one half tested in the field by the water displacement method and the other half tested in the laboratory by Inspectorate Services Peru S.A.C. of Lima, Peru using the wax method. The water displacement method will produce a density for the respective lithology in its natural state, and does not account for the effects of porosity and fracturing which will reduce the rock density. Subsequent laboratory density measurements using the paraffin wax method is often used as a reliable density estimate for mineral resource estimation and mine planning purposes. Whole core should be used for density measurements before it has been split for sampling for all lithologies present (including oxides). Breccias by their nature contain variable clast compositions and contents and may inherently show variation in density, so the establishment of a large database of breccia density readings is essential. The results of the PeruGold bulk density testing program show that the hanging wall altered and silicified host rocks within the Urumalqui vein envelope have an average bulk density of 2.03

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tonnes/m3. The altered and silicified footwall vein envelope rocks have an average bulk density of 2.18 tonnes/m3. The average bulk density of the mineralized quartz vein material hosting the dominant portion of the mineral resources is 2.37 tonnes/m3. The bulk density data provided by PeruGold appears to be adequate for this preliminary mineral resource estimate and the authors have no reason to believe that any of the information is inaccurate. 14.9 Grade Capping The authors used cumulative probability plots to identify high grade outliers for both silver and gold assays contained within the three-dimension AgEQ60 assay domain solid. Figures 14-5 and 14-6 show cumulative probability plots using the cumulative normal distribution function for uncapped silver and gold assay values, respectively. Based upon the graphical results, raw silver assays were capped at 850gpt representing 98.53% of the 475 raw silver assays. Seven silver values exceeding the cap level were each reduced to 850gpt. The raw gold assay probability plot indicated a capping level at 8.6gpt representing 98.32% of the total 475 gold assay values. The eight gold assays exceeding the 8.6gpt cap level were each reduced to 8.6gpt. Once the grade capping levels had been determined, erratically high values for the silver and gold values in the raw assay database were capped accordingly, and 1 metre composites were re- calculated using the capped assay data. A summary of the resultant capped composites which were utilized during interpolation and estimation of the mineral resources is presented in Table 14-1.

Table 14-1: Assay Sample Data for AgEQ60 Assay Domain Solid

Type of Assay Data

No. Max

Value Mean (gpt)

Median (gpt)

Std. Dev. Coef. Of

Var.

Raw Assay Data

Silver 475 1,829.00 176.43 116.90 188.86 1.07

Gold 475 24.90 1.34 0.55 2.41 1.79

Uncapped 1-metre Composite Data

Silver 413 1,295.81 167.52 118.09 162.30 0.97

Gold 413 24.90 1.26 0.62 1.97 1.57

Capped 1-metre Composite Data

Silver 413 850.00 164.61 118.09 148.71 0.90

Gold 413 8.60 1.18 0.62 1.48 1.25

Sample compositing produced a total of 5,806 one metre composites within the entire Urumalqui zone which were transferred to other Gemcom tables for geomodelling.

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Figure 14-5: Cumulative Probability Plot of Silver Values Within Assay Domain Solid

Figure 14-6: Cumulative Probability of Gold Values Within Assay Domain Solid

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14.10 Semi-Variogram Analysis The Sage2001 variography software was utilized to evaluate the spatial continuity of the silver and gold mineralization using the capped 1 metre composite data within the constrained AgEQ60 assay domain. Conventional correlogram variography was used to model the grade continuity. Nugget effects were estimated from true downhole semi-variograms. The major, semi-major and minor axes for grade continuity were determined using oriented semi-variogram fans. The variograms were used to model search ellipses that were then defined for resource estimation utilizing the Gemcom Z-Y-Z rotation convention. Correlations between grade-elements within the domain were also investigated with semi-variograms by comparing search ellipses and with correlation coefficients. Search ellipses were produced for each grade-element after multiple experimental semi-variograms had been generated at 30 degree intervals for strike and 15 degree intervals for dip. Modelling of both the silver and gold continuity produced moderate to poor quality experimental semivariograms. The semivariogram models produced were lacking data density and the bowed shape of the Urumalqui vein produced variograms with orientations that did not conform well to local vein orientations. The solution for this, as described above, was to subdivide the vein into 3 domains and rotate the search ellipses into the plane of the vein for each of the 3 domains. 14.11 Block Model An unrotated, three dimensional block model was created in Gemcom to completely cover the drill tested portion of the Urumalqui vein structure. The Block Model parameters are presented in Table 14-2.

Table 14-2: Block Model Parameters

Axis Direction

Actual Orientation

Axis Axis

Nomenclature Origin

Coordinate Block

Size (m) No. of Blocks

Easting 090o X Column 775500 5 400

Northing 000o Y Row 9106500 5 350

Elevation Vertical Z Level 3750 5 90

Separate block models were created for Rock Type, Density, Percent, Class, Gold and Silver. In addition, several special models were created including; Distance (to the Closest Sample for first pass), Number of Samples (used in block estimation), Domain (used to control the interpolation within the three separate domain subdivisions), and various interpolation and classification verification models (i.e. Nearest Neighbour Ag and Au). The percent (partial) block model was created to accurately represent the volume and subsequent tonnage that was occupied by each block inside the constraining Urumalqui assay domain solid. The block model was coded for air (i.e. above topography), waste (i.e. outside assay solid) and the assay domain by coding blocks with a greater than one percent (1%) threshold. Blocks with

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more than 1% of the block inside the domain were given the code of the domain. Thus, the domain boundaries were properly represented by the percent model with the ability to measure infinitely variable inclusion percentages within the domain. 14.12 Interpolation Based upon the modelled search ellipses, silver and gold grades were estimated for each block in the block model using capped grade composites with an ‘Inverse Distance Squared’ interpolation. Histogram and cumulative probability plots of capped silver composite samples are shown in Figures 14-7 and 14-8 respectively.

Figure 14-7: Histogram Plot of Capped Silver Composites

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Figure 14-8: Cumulative Probability Plot of Capped Silver Composites

Grade interpolation was carried out in one interpolative pass. The interpolation estimated grade in the assay domain requiring a minimum of 1 sample and maximum of 15 samples to estimate a block for silver and a minimum of 1 sample and a maximum of 9 samples to estimate a block for gold within the search ranges. During interpolation the number of samples used for each grade element interpolation and the closest distance to an actual composite sample were written to the ‘Number of Samples’ and ‘Distance’ block models respectively. Table 14-3 provides a summary of the interpolation parameters.

Table 14-3: Interpolation Data for Three Assay Domain Solids

Element

Rotation Range Min # Max #

Z Y Z X Y Z Samples Samples

Domain 1

Silver 48 90 0 60.0 90.0 30.0 1 15

Gold 48 90 0 60.0 90.0 30.0 1 9

Domain 2

Silver 55 -75 0 60.0 90.0 30.0 1 15

Gold 55 -75 0 60.0 90.0 30.0 1 9

Domain 3

Silver 68 90 0 60.0 90.0 30.0 1 15

Gold 68 90 0 60.0 90.0 30.0 1 9

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14.13 Interpolation Validation The validation of the Urumalqui block model included visual inspections of the block grades versus composite data values, whole vein composites and ‘one out’ cross-validation. A preliminary Inverse Distance Squared interpolation run was conducted to provide a visual check on the interpolation parameters. Visual inspections of the silver and gold block models showed that the interpolation had extrapolated grades with reasonable values and distribution throughout the modelled domain. The ‘one out’ cross-validation routine is used for validating kriged and inverse distance weighted models. It is a discretionary sub-routine within the Gemcom interpolation profile that involves the removal of a single point from the data set and the estimation of a temporary block at that point using the remaining data. Values are then estimated for all the data points in the data set. The original values and the estimated values for all the data points in the data set can then be statistically analysed and graphed. The scatter plots are used to examine the relationship of the original values to the estimated values by plotting the original values vs. estimated values, the difference vs. the estimated values. To check if the interpolation is under or over estimating, the percent difference of the means of the original and estimated values is calculated. The ‘one out’ cross-validation was used to ‘fine tune’ the number of samples used for interpolation. The cross-validation graphs were produced for a range of interpolation profiles for each element with a different maximum number of samples used in the interpolation. The graphs were used to check on the effects of more data or averaging during interpolation, thus, optimizing the interpolation parameters. The final interpolation profiles were revised to maximize the number of samples for each metal that produced the best cross-validation results. The results of the ‘one out’ cross-validation are used to calculate the difference between the mean of the estimated grades from interpolation and the mean of the actual grades from the composite dataset as a percentage of the mean of the actual composite grades. The difference between the mean estimated grades and mean actual composite grades for the one interpolation pass for the silver grade-element was 0.55%. The difference for the gold grade-element was higher at 8.91% due to an apparent ‘nugget’ effect in the style of vein mineralization. Table 14-4 contains a summary of the ‘one out’ cross validation results.

Table 14-4: Summary of ‘One Out’ Cross Validation Results

Element Unit Estimated

Grade Mean Actual

Grade Mean Difference

(%)

Silver g/t 165.51 164.61 0.55

Gold g/t 1.28 1.18 8.91

14.14 Mineral Resource Classification The mineral resources of the drill-tested portion of the Urumalqui vein structure were classified as ‘Inferred’ based upon true distance from a block to the nearest capped grade composite. Only

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blocks inside the three-dimensional mineral domain were classified; all other blocks were not interpolated or classified. The distance classification of ‘Inferred’ resources was coded in one pass. The ‘Distance’ model was used to classify all interpolated blocks within true distances of 0.01 to 70.0 metres as ‘Inferred’, and these blocks were coded as ‘Inferred’ in the ‘Class’ block model. All of the mineral resources have been classified as ‘Inferred’. This classification may be upgraded with the results of future in-fill drilling and detailed surface channel sampling, plus the resolution of outstanding QA/QC issues and a thorough geological and structural analysis of all exploration results to date. 14.15 Mineral Resource Estimate The mineral resource estimate was derived from applying a silver cut-off grade to the block model and reporting the resulting tonnes and grades for potentially economic areas. The rationale supporting the estimation of the silver cut-off grades was based largely upon reported cut-off grades for similar proposed and operating underground mining operations with gravity and cyanide recovery facilities in Peru and elsewhere in South America, and on estimations of mining, recovery and general and administrative expenses for such operations using 3-year trailing average silver prices. A mining cut-off grade of 90gpt silver was used to estimate the resources of the undifferentiated oxide, transitional and sulphide mineralization. The following mineral resource estimate does not differentiate between the various oxidation facies of the mineralization. With future detailed exploration the degree and distribution of wholly and partially oxidized mineralization may be distinguished from more sulphide-rich facies. Such a differentiation may result in different cut-off grades for potentially more expensive treatments of the precious metal-bearing sulphide mineralization. The undiluted and inferred mineral resource estimate of the Urumalqui precious metal mineralization at various silver cut-off grades has been summarized in Table 14-5.

Table 14-5: Inferred Mineral Resource Estimate

Cut-Off Ag (gpt)

Tonnes (000’s)

Gold Grade (gpt)

Gold (000’s oz)

Silver Grade (gpt)

Silver (000’s oz)

180.00 809 1.60 41.6 227.31 5,915

120.00 1,535 1.513 74.7 188.47 9,299

90.00 1,945 1.378 86.2 171.01 10,692

60.00 2,147 1.340 92.5 162.15 11,192

30.00 2,215 1.319 93.9 158.49 11,285

1. 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

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techniques from locations such as outcrops, trenches, pits, workings and drill holes. Due to the uncertainty that may be attached to Inferred Mineral Resources, it cannot be assumed that all or any part of an Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource as a result of continued exploration. 2. Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, socio-political, marketing, or other relevant issues. There is no guarantee that AndeanGold or PeruGold will be successful in obtaining any or all of the requisite consents, permits or approvals, regulatory or otherwise for the project or that the project will be placed into production. 3. The mineral resources in this study were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (‘CIM’), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the Standing Committee on Reserve Definitions and adopted by the CIM Council on December 11, 2005.

14.16 Mineral Resource Estimate Validation The east-west (X), north-south (Y) and elevation (Z) trends of the interpolated grades in the block model and their classification were plotted graphically for gold and silver, including: sample grades versus block grades and tonnage, number of samples versus tonnage, and classification versus tonnage. The graphs illustrate slices of the deposit at 15 metre intervals for each of the three directions, and show the block grades, number of samples, sample grades and tonnages for each interval. Thus, the three-dimensional trends of the mineralization can be graphically represented from which any interpolation or classification irregularities or anomalies can be readily detected. Figures 14-9 through 14-14 show examples of the east-west (X) and elevation (Z) graphs for silver.

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Figure 14-9: Plot of Silver Composite Grade, Silver Block Grade and Tonnage

Figure 14-9 illustrates how silver grades and interpolated silver blocks generate tonnage laterally from the western to eastern ends of the assay domain. The effect of widely-spaced drilling on 50 metre sections is clearly illustrated by the highly variable tonnage plot across the deposit

Figure 14-10: Plot of Number of Silver Composite Samples Versus Tonnage

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Figure 14-10 illustrates the effect of how widely-spaced and shallow drilling affects a tonnage estimate. The jagged, highly variable ‘Number of Silver Composite Samples’ reflects drilling on 50 metre spaced sections.

Figure 14-11: Plot of Tonnage Versus Resource Classification

Figure 14-11 again illustrates the effect of widely-spaced drilling. The plot shows that there are a number of sections across the interpolated silver grade block model with composite samples separated by more than 70 metres, beyond the maximum search distance for classification as ‘Inferred’ resources. These sections are mostly related to the 100 metre spaced drill sections in the northwestern section of the vein structure

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Figure 14-12: Plot of Silver Composite Grade, Silver Block Grade and Tonnage

Figure 14-12 shows that most of the silver grade and silver composites are generating the majority of the incremental tonnage, and there are no spurious sections with high silver grades not generating tonnage. The grade of the blocks plotted against the sample grades shows a smoothing of the block grades compared to the input sample grades indicating the model is conservative. The apparent diminishing tonnage east and west of the central section of the graph is a function of decreased drilling density

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Figure 14-13: Plot of Number of Silver Composite Samples Versus Tonnage

Figure 14-13 shows that the largest numbers of samples are generating the largest portion of tonnage. The jagged nature of the ‘Number of Samples’ plot shows the abundance of drill samples according to elevation and at which elevation more vein intersections may be required.

Figure 14-14: Plot of Tonnage Versus Resource Classification

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Figure 14-14 shows that a small number of cells within the ‘Classification’ block model, between elevations 3,548 metres and 3,682 metres, are not classified because they occur beyond the 70 metre search distance for classification as ‘Inferred’ resources. In summary, the validation graphs for gold and silver did not show any obvious interpolation or classification irregularities

SECTION 23 ADJACENT PROPERTIES

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23.0 ADJACENT PROPERTIES There is no noteworthy adjacent property within 10 km that meets the criteria defined in NI 43-101, Section 1.1.

SECTION 24 OTHER RELEVANT DATA AND INFORMATION

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24.0 OTHER RELEVANT DATA AND INFORMATION To the authors’ best knowledge, all relevant data and information have been provided in the preceding text.

SECTION 25 INTERPRETATIONS AND CONCLUSIONS

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25.0 INTERPRETATIONS AND CONCLUSIONS 25.1 Geology The Property is predominantly underlain by volcanic rocks belonging to the Eocene- to Miocene-age Calipuy Group, including: green to maroon, variably magnetic, porphyritic andesitic flows with plagioclase phenocrysts, volcanic glass and hornblende, interbedded with volcaniclastic rocks and brecciated andesitic lavas. These rocks are cut by a series of northwest-southeast, northeast-southwest and east-west trending, normal faults showing evidence of sinistral strike-slip movement within a major, regional northerly trending lineament. The precious metal-bearing mineralization is typical of a ‘low sulphidation’ epithermal style mineral deposit. There are eight known vein structures on the Property with two common vein orientations, a northwest-southeast set including the Urumalqui, La Mariscala West, La Mariscala South, and Penélope veins, and an east-west set including the La Mariscala East, Candual East, Candual West and Candual veins. The Urumalqui vein has received most of the exploration work. In plan, it has a shallow arcuate shape, convex to the west, with a northwesterly trend (approximately 305o). The vein dips sub-vertically to -70o southwesterly; is up to 20 metres wide; is comprised one or two crustiform-banded quartz veins ranging from 0.5 to 11 metres in aggregate thickness; and crops out over a strike length of 1,500 metres. There are a number of intersecting, perhaps conjugate, faults that have locally displaced the vein into segments ranging in length from 40 to 400 metres. The vein mineralogy includes crustiform and chalcedonic quartz with minor adularia. Native gold, electrum and silver-bearing argentite are genetically and spatially associated with fine-grained pyrite. 25.2 Mineral Resource Estimate It is estimated that the drill-tested portion of the Urumalqui vein structure hosts undiluted and inferred mineral resources of 1.945 million tonnes grading 1.378gpt gold and 171.01gpt silver at a cut-off grade of 90gpt silver. A sensitivity table of the estimated undiluted and inferred mineral resources at various silver cut-off grades is shown in Table 25-1.

Table 25-1: Inferred Mineral Resources Estimated at Various Silver Cut-off Grades

Cut-Off Ag (gpt)

Tonnes (000’s)

Gold Grade (gpt)

Gold (000’s oz)

Silver Grade (gpt)

Silver (000’s oz)

180.00 809 1.600 41.6 227.31 5,915

120.00 1,535 1.513 74.7 188.47 9,299

90.00 1,945 1.378 86.2 171.01 10,692

60.00 2,147 1.340 92.5 162.15 11,192

30.00 2,215 1.319 93.9 158.49 11,285

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1. Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, socio-political, marketing, or other relevant issues. 2. The quantity and grade of reported Inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred resources as an Indicated or Measured mineral resource. 3. The above tonnage and contained gold and silver ounces are rounded to reflect the accuracy of the estimation.

25.3 Mineral Processing and Metallurgical Testing Metallurgical test work performed to date on the Urumalqui project is very preliminary. Additional metallurgical test work is required to better define the preferred processing flowsheet and subsequently optimize the criteria for this flowsheet. The representativity of samples used in metallurgical test work performed to date is not identified. It is recommended sample collection for future metallurgical test work considers rock type, lithology, grade variations and spatial distribution. A metallurgical sampling program needs to be developed with the objective of developing a geo-metallurgical model for the project. It is recommended a QA/QC program is included as part of this sampling program. No mineralogical analysis relevant to optimizing metallurgical treatment has been performed to date. This analysis can give direction to grinding requirements, expected recoveries and preferred processing route. It is recommended mineralogical analyses are performed on representative samples. Communition test work such as Bond Work index, crusher index and abrasion index has not been addressed to date. It is recommended this is included in future metallurgical test work programs. Flotation test work results indicate gold and silver can be recovered to a concentrate. Evaluation of primary grind size, reagent scheme and assessment of regrinding needs performing to optimize metallurgical responses. Bottle roll tests on material with crush sizes of 0.5 inch, 0.25 inch and 1/8 inch indicate that after 72 hours of leaching, good gold recoveries but modest silver recoveries are realized. Cyanide consumptions were reasonable. Optimization of crush size and leach time may improve silver recoveries, however, test work assessing crushing/grinding followed by downstream processing are recommended in preference to assessing a heap leach processing route. Test results on cyanidation of concentrates have resulted in high recoveries of gold and silver.

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Tests results using gravity concentration and then cyanidation of the gravity tails indicates higher recoveries for silver and gold than gravity concentration followed by flotation. Cyanide consumption, however, was high. It is recommended metallurgical investigations are pursued to optimize the processing route using gravity concentration followed by cyanidation of the gravity tailings. 25.4 Risks and Opportunities 25.4.1 Data Collection and QA/QC Procedures The documentation of the drill core appears quite good. Future core logging should include a detailed assessment of the oxidation state of the mineralization so that the oxide, transitional and sulphide facies could be subdivided during future mineral resource studies. A number of data entry errors were encountered in the PeruGold assay database that apparently resulted from the hand-entry of analytical results from Certificates of Assay. These errors were corrected by re-entering the digital analytical data directly from the digital Certificates of Assay. This failure rate for the Standard Reference Material inserted into the drill core sample sequence was very high and no corrective measures were taken by the company. Re-sampling and/or re-assaying of unresolved QA/QC samples must be undertaken to confirm the grades of drill samples that were batch assayed with standard reference material returning suspiciously erratic grades. Future sampling work, be it drilling, surface or underground sampling, should be conducted in conjunction with an industry standard, closely supervised and monitored QA/QC program with frequent, third-party check assaying and preparation of a site specific standard reference material. The current assay protocol has the standards submitted to the lab as pulp bags with bags of split drill core. This is a non-blind submission and any possible bias created by this type of non-blind submission has yet to be assessed. Pulp Duplicates (5%) sent back to the primary lab with the included standards and new standards would check for a possible bias from the submission of pulp bag standards. The charted results from a totally blind submission would show any bias if pulp bags had been treated differently. 25.4.2 Mineral Resource Estimate - Risks

Drilling is widely-spaced for such a long and relatively narrow vein deposit. Current surface chip samples are not of comparable volume and quality with existing

diamond drill samples to be considered for inclusion in the mineral resource estimation. Drilling and surface geological mapping results indicate a number of intersecting and

sub-parallel faults and shears that may or may not have influenced the apparent vein continuity and tenor along its known strike length.

Geological logs did not fully describe the oxidation state of the precious metal-bearing mineralization to quantify oxide, transitional and sulphide hosted mineralization for individual mineral resource estimation.

25-4 MQes

Some unresolved QA/QC results may or may not impact the grades of isolated drill core sample assay batches.

MQes is not aware of any known environmental, permitting, legal, title, taxation, socio-economic, marketing, political or other relevant factors that could materially affect the estimate of the stated mineral resources.

25.4.3 Mineral Resource Estimate - Opportunities

Most of the exploration drilling has focused on evaluating the Urumalqui vein structure at vertical depths less than 200m. A combination of in-fill drilling with both near surface and deeper drilling intercepts should improve the interpretation of the vein geometry and tenor, as well as identify any significant structural displacements that might influence inferred projections of mineralization.

A combination of high quality surface channel sampling, increased sample density from in-fill drilling and resolution of any QA/QC issues should lead to a classification upgrade of future estimated mineral resources.

Detailed identification and interpretation of the oxidation state of the mineralization to quantify mineralization for various recovery processes may positively influence the cut-off grades for future mineral resource estimates.

The exploration potential of the Urumalqui vein is good. Exploration results show that the known vein mineralization may continue along its trend in both strike directions and to depth along its entire known length.

This project is still in the advanced exploration stage requiring significant additional work to better define the geometry and tenor of the vein deposit, and evaluate available mining and processing methods.

25.4.4 Mineral Processing and Metallurgical Testing - Risks

Samples used in metallurgical test work to date are insufficient in number, may not be representative and it is possible certain mineral assemblages have not been identified and tested.

Successful treatment of material from the Urumalqui project will be dependent on developing an economic processing route. The metallurgical and processing parameters required to determine an economic processing route are not yet fully developed. Further metallurgical test work is required to determine these parameters, perform engineering evaluations and assess project economics.

25.4.5 Mineral Processing and Metallurgical Testing - Opportunities

Metallurgical criteria such as primary grind size, reagent scheme, regrinding, etc are currently not optimized. Optimization of these criteria may improve recoveries of silver and gold.

25-5 MQes

25.4.6 Environmental Impact and Permitting The 2011 diamond drilling program was carried out subject to an Environmental Impact Declaration permit which allowed the drilling from up to 20 drill pads within a 5 hectare area. Future infill drilling along the central 1,000 metre portion of the Urumalqui vein structure may be undertaken using any of the 20 existing pads which can be moved up to 50 metres from their permitted locations. Any other drilling outside of the 1,000 metre central vein section, whether along the Urumalqui vein or on the other veins identified to date on the Property, would require PeruGold to file an Environmental Impact Statement which PeruGold is presently preparing.

SECTION 26 RECOMMENDATIONS

26-1 MQes

26.0 RECOMMENDATIONS It is recommended that:

Detailed infill drilling should be carried out midway between drill sections that are currently spaced 45 to 100 metres apart. Such infill drilling would provide necessary geological and structural information to better interpret the vein geometry and grade continuity.

Detailed surface bedrock channel samples should be collected at 25 metre intervals along the exposed sections of the vein structure. These samples should be well surveyed, documented and of similar volumes to be of equivalent quality to diamond drilling samples. The geological and grade information from such detailed sampling work may then be used to confirm the near-surface vein geometry and grade continuity for more definitive mineral resource classification.

Re-sampling and/or re-assaying of unresolved QA/QC samples must be undertaken to confirm the grades of drill samples that were batch assayed with standard reference material returning suspiciously erratic grades. Future sampling work, be it drilling, surface or underground sampling, should be conducted in conjunction with an industry standard, closely supervised and monitored QA/QC program with frequent, third-party check assaying.

A complete and thorough re-interpretation of the geological and structural setting of the Urumalqui vein structure should be undertaken to better understand the vein geometry within sections of apparent lateral displacements.

26.1 Proposed Exploration Budget The following proposed exploration budget is for a 12 month term during which time PeruGold would begin fulfilling the above recommendations, as well as initiating exploration programs on the other veins identified to date on the Urumalqui property. The proposed drilling in the following cost estimate has been limited to 2,000 metres which might be accomplished from existing drill sites utilizing the current exploration permit. Further drilling will be required to complete the in-fill drilling recommendation but such work will require submittal and approval of an Environmental Impact Statement which PeruGold is presently preparing and approval of another exploration permit from the appropriate governmental agencies. Check assaying of suspect 2011 SRM samples plus any re-sampling and assaying of samples within the suspect sample batches should be carried out in the near term before the main in-fill drilling program commences. The documentation of the channel samples should ideally include the easting, northing and elevation coordinates for the start and end of each sample, plus a detailed description of each sample material, width and depth of the channel, and method of collection. The work could be conducted prior to and during the proposed drilling program. It is anticipated that the review of the geological and structural aspects of the Urumalqui vein structure would be carried out concurrently with the in-fill drilling which should initially target

26-2 MQes

the displaced segments of the vein. In addition, those areas with inferred vein projection such as down depth and to the southeast should be test drilled at this time. The proposed budget in Table 26-1 also includes a preliminary metallurgical study to assess the best methods of processing and recovering gold and silver from the Urumalqui vein material at various stages of oxidation.

Table 26-1: Proposed 2012 Exploration Budget

Description Estimated Cost

(US $) Exploration Manager – Project Management and Supervision ($7,000/month) 84,000 Senior Geologists – Field Supervision, Mapping, Trenching, Logging (1X11 Months and 1X6 Months @ $4,500/Month, each) 76,500 Junior Geologists – Field Assistance, Trenching (2 @ $2,500/Month) 60,000 Project Assistant ($650/Month) 7,800 Field Workers (6X6 Months ad 12X6 Months @ $300/Month, each) 32,400 Field Office and Accommodations ($1,000/Month) 12,000 Food ($600/Month) 7,200 Truck Rental – 2 Trucks ($75/Month, each) 1,800 Transportation ($5,000/Month) 60,000 Field Camp Supplies, Fuel and General Expenses ($5,000/Month) 60,000 Airfare – Peru ($1,000/Month) 12,000 Offsite Lodging/Board (4 Days/Month @ $100/Day) 4,800 Permitting – Phase II Drilling Program 50,000 Community Relations – Consultants ($2,500/Month) 30,000 Community Relations – Projects ($3,000/Month) 36,000 Metallurgical Testwork on Urumalqui Vein Mineralization and Reporting 150,000 Surveying – DDH Collar and Roads and Channel Sampling Site Surveying 11,000 Diamond Drilling – 2,000 metres @ $150/metre Direct Drilling Costs 300,000 Analyses – Core and Surface Samples (2,000 Samples @ $35/Sample) 70,000 Drilling QA/QC and Check Assaying (200 Samples @ $35/Sample) 7,000 Check Assaying of Select 2011 Samples (200 @$35/Sample) 7,000 Data Plotting, Reporting and Documentation – Summary Report with Recommendations 15,000 Contingency (~10%) 105,500 Total Estimated Costs of Recommended 2012 Exploration Work $1,200,000

SECTION 27 REFERENCES

27-1 MQes

27.0 REFERENCES AndeanGold Ltd., 2011: Various exploration reports, data and maps pertaining to the Urumalqui

property, and documents describing the Gitennes-AndeanGold option agreement. Berger, B. R. and Eimon, P, 1983: Conceptual models of epithermal precious metal deposits,

Shanks, W. L., editor, Volume on Unconventional Mineral Deposits, American Institute of Mining, Metallurgical and Petroleum Engineers, Inc. (1983), pp. 191 - 205.

Blackwell, J., 2011: Personal communications. Blackwell, J. D., 2009: Technical Report to March 30, 2009 on the Urumalqui Property,

Department of La Libertad, Peru; Non-independent 43-101 technical report prepared for Gitennes Exploration Inc., pp. 56.

Blackwell, J. D., Fernández-Baca, A. and Foster, J. R., 2003: Progress Report to July 1 2003 on

the Urumalqui Property, Department of La Libertad, Perú, Cuadrángulos 17-f (Salaverry) & 17-g (Santiago de Chuco); company report for Minera Corimalqui S. A., pp. 45.

Bolaños, J. E., 2011: Personal communications and short private report documenting additional

information on the geology of the Urumalqui vein structure and its exploration, pp. 8. Ciali, A., 2011: Personal communications. Cossio N. A., 1964: Geología de los Cuadrángulos de Santiago de Chuco y Santa Rosa

(Hojas 17-g y 18-g); Boletín No. 9, Comisión de la Carta Geológica Nacional Perú. Cossio N. A. and Jaen, H., 1967: Geología de los Cuadrángulos de Puemape, Chocope, Otuzco,

Trujillo, Salaverry, y Santa (Hojas 16-d, 16-e, 16-f, 17-e, 17-f y 18-f); Boletín No. 17, Servicio de Geología y Minería Perú.

Espinoza, S., 2004: Geophysical Report – 3D Induced Polarization Survey on the Urumalqui

Project for Gitennes Exploration Ltd.; private report for Gitennes Exploration Inc. Foster, J. R. and Fernández-Baca, A., 2004: Progress Report to December 31 2003 on the

Urumalqui Property, Department of La Libertad, Perú, Cuadrángulos 17-f (Salaverry) & 17-g (Santiago de Chuco); company report for Minera Corimalqui S.A., pp. 87.

Foster, J. R., Fernández-Baca, A. And Blackwell, J. D. 2005: PROGRESS REPORT TO

DECEMBER 31 2004 Progress Report to December 31 2004 on the Urumalqui Prpoerty, Department of La Libertad, Perú, Cuadrángulos 17-f (Salaverry) & 17-g (Santiago de Chuco); company report for Minera Corimalqui S.A., pp. 82.

27-2 MQes

Gitennes Exploration Inc., 2011: Various exploration reports, data and maps pertaining to the Urumalqui property, and documents describing the mineral concessions and ownership.

Morrison, G. W., Jaireth, S and Guoyi, D 1995: Textural zoning in epithermal quartz veins,

published by Klondike Exploration Services, Townsville, Queensland, Australia.(Originally produced in 1990 for the Gold Research Group at James Cook University as part of AMIRA Project P247, epithermal gold deposits in Queensland).

Navarro, P. and Rivera, M., 2008: Stratigraphy of the synorogenic Cenozoic volcanic rocks of

Cajamarca and Santiago de Chuco, northern Peru; 7th International Symposium on Andean Geodynamics (ISAG 2008, Nice), Extended Abstracts: 369-372.

Panteleyev, A., 1991: Gold in the Canadian Cordillera - A Focus on Epithermal and Deeper

Deposits; in Ore Deposits, Tectonic and Metallogeny in the Canadian Cordillera, B.C. Ministry of Energy, Mines and Petroleum Resources, Paper 1991-4, pp. 163 - 212.

Panteleyev, A., 1996: Epithermal Au-Ag: Low Sulphidation, in Selected British Columbia

Mineral Deposit Profiles, Volume 2 - Metallic Deposits, Lefebure, D. V. and Hõy, T, Editors, British Columbia Ministry of Employment and Investment, Open File 1996-13, pp. 41 - 44.

Pineault, R., 2003: Induced Polarization/Resistivity and Magnetic Surveys, Urumalqui

Project; private report for Gitennes Exploraciones Perú S. A. Sánchez, C., 2003: Informe sobre actividades de exploración, muestreo y mapeo a escala 1:5,000

en la propiedad de Urumalqui, La Libertad, Perú Servicio de Geologia Y Minerio, 1980: Geological Map of Salavarry, Map-Sheets 17e and 17f;

Scale 1:1 000 000. Sinclair, A. J. and Blackwell, G. H., 2002: Applied Mineral Inventory Estimation. Cambridge

University Press, pp. 111-113 Sillitoe, R. H., 1993: Epithermal Models: Genetic Types, Geometrical Controls and Shallow

Features; in Mineral Deposit Modeling, Kirkham, R. V., Sinclair, W. D., Thorpe, R.I. and Duke, J. M., Editors, Geological Association of Canada, Special Paper 40, pp. 403 - 417.

Thompson, M. and Howarth, R. J., 1976: Duplicate Analysis in Geochemical Practice. Part 1,

Theoretical Approach and Estimation of Analytical Reproducibility, Analyst, vol. 101, pp. 690-698

Tumialán, P. H., 1982: Prospecto Urumalqui; in Jueves Mineros: Mineralización del

Yacimiento de Salpo; Universidad Nacional de Ingeniería, Departamento de Geología, Lima, Perú.

27-3 MQes

White, N. C. and Hedenquist, J. W., 1990: Epithermal Environments and Styles of Mineralization; Variations and their Causes and Guidelines for Exploration; in Epithermal Gold Mineralization of the Circum-Pacific; Geology, Geochemistry, Origin and Exploration, II; Hedenquist, J. W., White, N.C. and Siddeley, G., Editors, Journal of Geochemical Exploration, Volume 36, pp. 445 - 474.

Valdivia, J. 2008: Reporte Geologico del Proyecto Urumalqui, Region La Libertad, Peru a

diciembre del 2007, prepared for Minera Corimalqui S.A.

Appendix 1 – Mineral Concession Documents

Appendix 2 – Sample Preparation and Analytical Procedures

PE MM OPE 7.5.1

Geochemical Sample Preparation Procedures l PGE

O-001 Rev. 06-09 MSW ESP

1. Objetive.

Establish standard procedures in the preparation of geochemical samples (rock, core, debris, soil, sediment, etc.). From samples reception to be sent as a pulp in our laboratories, respectively

2. Procedure Description. - The preparation has the following steps:

2.1. - Sample Reception

Upon receipt of each batch of samples, the samples are checked, sorted and are recorded in the format FGEO-002 Entry sample sheet to laboratory. At each stage of the encoding process is reviewed for each sample set, verifying that follows a straight ascending order.

2.2 For samples such as: rock, debris, cores

2.2.1 Weighing, recording and ordering of samples:

After entry of the samples is necessary to sample the batch record, customer, date, sample number in the format FGEO-002 Entry sheet samples to the laboratory

Then the samples are sorted and placed in numbered trays holding the initial order to be subsequently entered into the oven.

2.2.2 Drying.

The ordered sample is entered in steel trays to the drying oven. The entry of baked samples is recorded in the format registry FGEO010 input and output samples at the stove

The drying temperature is 105 ° C ± 5 ° C, depending on the chemical element by which the sample will be analyzed (S, Hg., Sb, As require a drying temperature of about 50 ° C to prevent evaporation in the sample during the drying process).

The drying time varies from 8 to 10 hours, depending mainly on sample type and moisture.

Then proceed to remove the sample from the oven and cool to normal conditions for 15 minutes.

Finally the samples are weighed; the dry weight is recorded in the format Sample Control Heavy FGEO-002.

The flow diagram of this stage is in Annex A.

PE MM OPE 7.5.1



1. Drying Oven 2. Income wet samples in the oven

2.2.3 Crushing Process: Primary Crusing:

The primary crushing process, is the first stage of the reduction in sample size for this purpose we have a jaw crusher prior to the crushing of the samples is the cleaning of the jaws by barren quartz. To ensure the preparation of samples free of contamination the insertion of blanks be performed before starting the crushing of the batch and the remaining 3% of the lot also inserting blanks at the supervisor`s discretion This will be recorded in the format control FGEO 053 insertion of blanks. SeeInstructions for quality control of sample preparation

The entry of the samples by crushing stage is recorded in the format FGEO-008Entry-Exit Registration of samples at the crusher..

To ensure that the sample size obtained in this step is the proper, granulometric test is performed or particle size control using the corresponding screen.

Such particle size control is performed at the first sample and the remaining 3% of the lot,because the use can loosen the jaws, but this percentage may vary according to customer specifications. Samples must reach a percentage equal to or greater intern 70% to mesh 1/4 "ASTM.The number of controls may be increased according to the needs.

The particle size control is recorded in the format Granulometric FGEO052 Controlthe Primary Crushing.

The cleaning of the jaws from sample to sample, is performed using sterile quartz (which will be discarded), steel brushes and airflow. See Instructions for quality control. The flow diagram of this stage is in Annex A.

.

PE MM OPE 7.5.1



1. Jaw Crusher 2. Sample Access to crusher

Secondary Crushing:

The sample coming from the primary crushing Mesh 1 / 4 " has to pass through the secondary crusher roller type, prior to crushing of the samples is the necessary cleaning roller with barren quartz which will be discarded.

To ensure the samples preparation free of contamination the insertion of blanks has to be performed before starting the crushing of the batch and the remaining 3% of the lot also inserting blank at the supervisor iscretion following the same pattern of primary crushing. Control FGEO-053 insertion of blanks.

See Instructions for quality control of sample preparation. The entry of the samples bycrushing stage is recorded in the format FGEO008 Entry-Exit Registration of samples at the crusher.

To ensure that the sample size obtained in this step is the proper test is performed particle size or particle size control using the corresponding screen.

This particle size control is performed at the first sample and the remaining 3% of the lot, because due to the use of rollers can loosen, but this percentage can vary according to customer instructions. In granulometric test samples it must reach a percentage equal to or greater intern 90% to 10 mesh ASTM. The number of controls may be increased according to need. The particle size control is recorded in the format Granulometric FGEO006 Controlof secondary crushing.

The cleaning process of the rollers from sample to sample, is performed using sterile quartz (which will be discarded), steel brushes and airflow. See Instructions for quality control. The flow diagram of this stage is in Annex A.

PE MM OPE 7.5.1


O-001 Rey. 06-09 MSW ESP

Note: The insertion of internal control samples will be coordinated from the drying

2.2.4 Homogenized and quartered. a. Homogeneized:

‐ The sample reduced to 90% from the grinding process is entered into the Jones Riffle splitter, where you get two equal parts.

‐ These are poured simultaneously over the channel of the splitter. The halves are obtained again discharged, this operation is repeated 3 times to ensure complete homogenization and avoid the phenomenon of segregation. ‐ Then it is quartered.

b. Quartering:

‐ Alsothe Jones Riffle equipment is used. The quartering precedes pouring gutters shown on obtaining two halves, one half is again divided, and this operation is repeated to reducethe sample to a weight of 150 or 180 gr as customer instruction.

‐ The 150 grams or 180 grams of sample to pass to the next stage of the preparation process (spray) in their plastic wrappers. -The equipment iscleaned betweensamples by compressed air flows bristlebrush. The remaining material becomes part of the rejection, which will be placed in plastic wrap which will be sealed and properly identified in polypropylene pouches, identified with their respective GEO No. and stored for a period of 3 months or according to customeragreement which is registered in the Registry format -011FGEO Registry entry for pulps and rejects storing . Once a month will be held on cracking control of sample preparation, for it rejects an analysis of the above mentioned-. This will be recorded in the format FGEO-054 Quartering

PE MM OPE 7.5.1



Control in the preparation of samples. See Instruction quality control. The flow diagram of thisstage is in Annex A.

4. Quarte Jones Riffle type

2.2.5 Powderized.

Before starting with the first sample (150 - 180 g) powderizing was performed on a sample of powdered cleaning (silica sand) which will be discarded,

To ensure the preparation of samples free of contamination the insertion of blanks will be performed before starting the batch powder and 3% of the remaining lot also targets were inserted at the supervisors’ discretion. Insertion of blanks control FGEO-053 . See Instructions for quality control sample preparation. The entry of the samples at the stage

of powderizing is registered in the format FGEO-009EntryExit Registration of samples to the spray.

To ensure that the sample size obtained in this step the particle size

or particle size control proper test is performed using the corresponding screen.

This particle size control is performed at the first sample and the remaining 3% of the lot, but this can vary according to client instructions. Samples must reach a percentage equal to or greater intern 95% to 140 mesh ASTM. The number of controls may be increased according to need.

The particle size control is recorded in the format FGEO007 Powdering Control Samplegranulometric.

The cleaning of the plate and rings, from sample to sample is done by compressed air flows will be used silica sand (which will be discarded). The flow diagram of thisstage is in Annex A.

PE MM OPE 7.5.1



5. Powderizer

2.2.6 Homogenized, weighed and tagged.

At th is stage the th in pulp (105 microns approx.) Powder f ract ion (150- 180 g) is homogenized by the method of ro le-p lay ing in a b lanket Kraf f paper 50cm x 50cmapprox. ( the ro le wi l l be d iscarded af ter use for each sample) . Once the sample has been homogenized separating proceeds from the same sample, each one is enveloped in polyethylene bags respectively to be finally sealed, avoiding where possible the presence of air. From this it produces a fine sample of 150 to 180 g and a thin remnant, which will be stored as counter sample. Samples will be sent to the respective tests are ordered from lowest to highest and each is attached on the respective bar code. Finally they are sent to the area of the sample preparation laboratory where the sample bags will be cut and ready for the respective analysis. 2.3 For Samples Type: Soil, sediment 2.3.1 Drying.

For this type of drying samples is the same as item 2.1.1.

2.3.2 Disgregation

Disgregate dry sample using a roller.

2.3.3 Preparation:

For this type of sample preparation is done by sieving. It has the following preparation steps: After the sample has been weighed in the previous process. Screen is selected according to the instruct ion of the cl ient , usual ly mesh 80.100. The sample is pumped into the mesh screen 80 or 100, as applicable. You can get three types of weight in this process:

PE MM OPE 7.5.1



1. If you obtained after sieving is in excess, mix and quartered the required weight,passing the sample to the spray, to get an intern from 95% to 140-mesh ASTM 2. If you what obtained after sieving is in default, pass the entire sample

to the pulverizer for a short time, disintegrated and sieved again using 80 mesh, 100, pulverize the fraction to obtain a passing for a 95% to 140-mesh ASTM

3. If you obtained the required weight, passing the sample to dust to get an intern from 95% to 140-mesh ASTM 4. From each batch of samples to the first and 3% the batch test is

performed to sieve grain powder to ensure the sample (95% - 140 mesh ASTM).

5. This is recorded in the format of Spray Control Sample Granulometric. 6. Colocar la muestra en sobres plásticos, y selladas al calor.

3. Storage of pulp and rejects The coarse rejects resulting of the process of preparing product samples will be stored in bags or plastic bags and numbered identification code for a period of 3 months without charge, at the end of this period will contact the customer to decide their waste or additional charge to maintain custody of the rejection. The remaining fine pulps are stored in cardboard boxes numbered, and an identification code for a period of 1 month without charge, at the end of this period the same way as the above was communicated to the client to determine their waste or additional charge to maintain custody of the rejections. The income of both coarse and fine rejects the sample store is recorded in the format-011 FGEO delivery control pulp and rejections.

PE MM OPE 7.5.1



PE MM OPE 7.5.1



4. CONTROL REGISTERS: The records used throughout the sample preparation stage are as follows:

FGEO-002 Sample Sheet lab entry.

FGEO-010 Samples Record Entry and Output to the stove. FGEO-008 Samples Record Entry and Output from Crusher FGEO-006 Secondary Crushing Granulometric Control FGEO-052 Primary Crushing Granulometric Control. FGEO-009 Record Entry and Exit from the duster FGEO-007 Dusting granulometric Control Sample FGEO-011 Entry Register of the pulps and rejects store. FGEO-053 Control insertion of blanks.

FGEO-054 Quartering Control in the sample preparation.

PE MM OPE 7.5.1



Anexo A

DIAGRAMA DE FLUJO DEL PROCESO DE PREPARACIÓN DE

MUESTRAS 1. SECADO:

rmat and exit

les for

ht of dry .format

1. Objective

Establishing a test method for determining total number of elements by atomic absorption spectroscopy.

ELEMENT METHOD LIMITE

MIN

MAX

LIMIT

Ag AA (ISP-140) 0.2ppm 300ppm

2. Application Limit

This method is applicable for determining the total content of Ag, Cu, Pb, Zn,in geochemical exploration samples by atomic absorption spectroscopy.

ELEMENT METHOD LIMITE MIN MAX

LIMIT

Ag AA (ISP‐140) 0.2ppm 300ppm

3. Principle

The method is based on the ability of dissolution of minerals by a total sample digestion with a mixture of 4 acids. The final determination of the elements is performed by Atomic Absorption Spectroscopy.

The elements are quantified according to the absorption of radiant energy from ground state atoms.

4. Reagents

Reagents will be used recognized analytical grade and deionized and / or purified water.

4.1 Nitric Acid (67% ‐ 70% P.A.)

4.2 Hydrochloric acid (36% ‐ 38% P.A.)

4.3 Hydrofluoric acid (48% ‐ 51% P.A)

4.4 Perchloric acid (69% ‐ 72% Q P)

4.5 Aluminum nitrate nonahydrate (98‐99% Q. P.)

4.6 Lanthanum oxide (98% ‐ 100% Q P.)

4.7 Solution of Al (NO3) 3 (3.5% Q P)

4.8 La2O3 solution (1% Q. P.)

5. Materials and Equipment

5.1 Analytical balance, accuracy 0.1 mg

5.2 Atomic Absorption Spectrophotometer

5.3 250 mL Teflon cups.

5.4 Spatula, brush, spray bottle

5.5 Acid test tube or dispenser.

5.6 25 mL test tubes

5.7 Baguette

5.8 Parafilm.

6. Process Diagram

7.

HNO3 (4.1)

7 5 mLHCL (4.2)

7 5 mL HF ( 4.3 )

HCLO4 (4.4)

Cool

HCL (4.2) al 10% del Volumen de la fiola o

tubo

Transfer

Cool

Weighing

0.2-2.0 g

DIGESTION

Afores

Pasty State

The transfer is deionized water. Mo is transferred to aluminum nitra

te (4.5)

Shake

Stopper the tubes or fiol

DECANT

Reading

ENVIAR

MUESTRA

1. Objective Establishing a test method for determining total of Multi‐elements by Inductively Coupled Plasma ‐ Optical Emission Spectrophotometer (ICP‐OES). 2. Application Limit This method is applicable for the determination of 51 elements including: Ag, Al, As,B, Ba, Be, Bi, Ca, Cd, Ce, Co, Cr, Cu, Dy, Fe, Ga, Ge, Hf, Hg , In, K, La, Li, Mg, Mn, Mo, Na, Nb, Nd, Ni, P, Pb, Rb, Re, S, Sb, Sc, Se, Sm, Sn, Sr, Te, Th, Ti , Tl, U, V, W, Y, Zn and Zr in geochemical exploration samples. Distributed packet (32, 33.35,40.44 items) 3. Principle The method is based on the ability of dissolution of minerals by a total sampledigestion with a mixture of 4 acids. The final determination of the elements is performed by Inductively Coupled Plasma Spectroscopy ‐ Optical Emission Spectrophotometer(ICP‐OES). The elements are quantified according to the emission of radiant energy emitted by atoms in the ground state. 4. Reagents Use of recognized analytical grade reagents and deionized water and / or purified. 4.1 Nitric acid (67% ‐ 70% P.A.) 4.2 Hydrochloric acid (36% ‐ 38% P.A.) 4.3 Flourhydric Acid (48% – 51% P.A) 4.4 Perchloric acid (69% ‐ 72% Q P) 5. Materials and Equipment 5.1 Analytical balance, accuracy 0.1 mg. 5.2 ICP‐OES (Inductively Coupled Plasma ‐ Optical Emission Spectrophotometer). 5.3 Hot plate 5.4 250 mL Teflon vessels 5.5 Spatula, brush, spray bottle 5.6 Acid test tube or dispenser. 5.7 25 mL test tubes. 5.8 Baguette 5.9 Parafilm

Process Diagram

Sample

Weigh

0 25 g

Digester to DRY

First Phase 3 ml HF (4.4) T=160° C

7.5 ml HNO3 (4.1)

7.5 ml HCl (4.2) T= 180° C

2 mL HCLO4 (4.4)

Transfer

Afores Vol = 25 ml

Agitate

AGUA DESIONIZADA

5 ml HCl (4.2)

Transfer Plastic Tube

Reading By ICP-OES

AGUA DESIONIZADA

Cool

Resume

Digester to Dryeness

First Phase

PE MM LAB 7.5.1 Au Determination

exploration samplesISP-330

Rev. 03-08 MSW ESP

Página 1 de 4

1. Objetive

Applying the analytical procedure to determine Gold in geochemical exploration samples.

2. Application Limit

This method is applicable for the determination of gold in geochemical explorationsamples..

ORO BY FIRE ASSAY

Elemento Descripción

Limits

ppm

Au Au by Fusión and AAS 30g Sample weight 0.005-5

50g Sample weight 0.005-5

ANALISIS DE ORO FIRE ASSAY / GRAVIMETRIC

Element Description

Limits ppm

Au

Au by Fusión and finalized by Gravimetry 30g Sample Weight >5 50g Sample Weight >5

3. Reagnts

During the analysis, use only reagents of recognized analytical grade. Deionized

water should be used at all times.

4.1. Nitric Acid

4.2. Hydrochloric Acid

4.3. Bórax

4.4. Nitric Acid



Rev. 03-08 MSW ESP

Página 2 de 4

4.5. Geochemical flux prepared.

4.6. Potassium nitrate

4.7. Flour

4.9 parafilm paper

4.10 Ammonia solution .



Rev. 03-08 MSW ESP

Página 3 de 4



Rev. 03-08 MSW ESP

Página 4 de 4

urumalqui report 43101

Documents

technical information

mqes services

important noticethis

national instrument

independent of andeangold

andgitennes exploration

urumalqui property site

consulting geologist