REPORTON EXPLORATION POTENTIAL MULUNCAYEPITHERMAL GOLD PROJECT PORTOVELO-ZARUMA-AYAPAMBAAREA PROVINCEOF EL ORO, ECUADOR Latitude336' 30 South, Longitude79 40' West WrittenFor:MineraDelPacifico,S.A.

Gold values from these samples range up to 10.40 g/T. Numerous samples taken by the author in other workings within the concession (# 483029 to 438050) show values of up to 58.6 g/T gold, up to 209 g/T silver, up to 4.86% copper and up to 16.85% zinc.

Although modern diamond drilling has been carried out on the IAMGOLD claims, the author does not currently have access to the positions or logs of those holes. Therefore he has no knowledge of drilling done within the Muluncay concession. Minera Nevada has conducted no drilling on the concession to this date.

As this was a preliminary investigation of the entire district, with no specific focus at the time of the visits on the Muluncay concession, the only intent of these assay results was to confirm assay values presented by other groups. The width of the vein (as well as could be seen) at each of these sample points was measured and recorded. The average width of these veins is 1.0 m, although the width can range up to 4 m.

The samples were bagged and sealed on the property by the author. They, along with several other samples from the district, were delivered by the author to the office of Minera Nevada S.A., based in Machala. From that office they were transported to the ALS-Chemex lab in Quito, Ecuador for sample preparation and analysis. The samples were collected by the author and by Mr. Al Beaton, P.Eng. The samples weighed approximately 1 to 2 kg each. No blanks and standards were submitted by the author with the sample for Quality Control purposes.

For the multi-element analysis of 35 elements, Induced Coupled Plasma Mass Spectrometry (ICP- MS) was used. Au and Ag content was determined by Fire Assay-Atomic Absorption method from 30 g pulps. Pulps and rejects will be stored by the lab for a minimum of 90 days.

Samples were dried at 110-120°C and then crushed with either an oscillating jaw crusher or a roll crusher. The lab Quality Control (QC) specification for crushed material is that >70% of the sample must pass a 2 mm (10 mesh) screen. The entire sample is crushed, but typically 250 g to 1 kg, is subdivided from the main sample by use of a riffle splitter. If splitting is required, a substantial part of the sample (the "reject" or “spare”) remains. A whole or split portion derived from the crushing process is pulverized using a ring mill. QC specification for final pulverizing is that >85% of the sample be less than 75 microns.

In plasma mass spectroscopy, the inductively coupled argon plasma (ICP) is used as an excitation source for the elements of interest. The plasma in ICP-MS is used to generate ions that are then introduced to the mass spectrometer. These ions are then separated and collected according to their mass to charge ratios. The constituents of an unknown sample can then be identified and measured. ICP-MS offers extremely high sensitivity to a wide range of elements. It is a multielement analytical technique capable of determining an extremely wide range of elements to very low detection limits (typically sub ppb).

Gravimetric methods involve the use of balances to weigh the element of interest, either in its pure elemental form or as a chemical compound. One of the most common gravimetric determinations is that of gold and silver following a fire assay fusion and cupellation. The precious metal bead that remains following cupellation is an alloy of silver and gold. Weighing this bead will give the total weight of silver and gold. If the bead is then treated with dilute nitric acid, it is possible to remove the silver quantitatively. The residual mass consists of pure gold which can then be weighed separately, thus allowing the silver to be determined by the difference. The balances used for this purpose are microbalances capable of weighing to the nearest microgram (one millionth of a gram). The fire assay procedure is universally accepted as the definitive method for the analysis of gold. When an atomic absorption spectroscopy finish is selected, the upper reporting limit is set at 10 g/T (0.3 oz/ton) and samples higher than this must be re-analyzed using additional silver in the firing process and a larger dilution factor. Alternatively, gravimetric finish can be used.

No blanks or samples with known values were added to the total samples delivered to the lab. No check samples were submitted to other labs for confirmation of values. For any sample preparation activities the lab maintains sample sequence logs.  These logs detail which samples have been prepared in what order and are very helpful for investigative purposes.

Although positions of many of the samples taken by earlier workers on the Project are known, because this was a preliminary assessment of the Project to simply confirm values, data verification is only on a very general basis.

The Muluncay Project lies surrounded by of the IAMGOLD concessions (Figure 3). Current activities by IAMGOLD can be found in their news releases on SEDAR. Minera Nevada also holds the Grand Shaft, of Casa Negra concession. It lies south of Muluncay, and although veins at Casa Negra may not extend continuously to Muluncay, the general trend of mineralized veins does. North of Muluncay this trend swings NW and continues through the Maria Olivia concession.

Note that neither the “reserve” nor the “resource” estimates referred to in this report comply with the current definition of such reserves as stated in National Instrument 43-101 F1 or in the CIM Standards on Mineral Resources and Reserves. Also note that commodity prices used to estimate ore cutoff grades by previous operators have changed significantly from those used by SADCO. Like so many veins in the district which have been exploited for centuries, the near-surface easily accessible high-grade gold mineralization is being exhausted. It is currently extracting ore in the range of 3-7 g/T gold. It is the author’s opinion that new investment and detailed exploration will show that there is continuity of historical high-grade mineralization both along strike and at depth. The old SADCO operations generally (with the exception of the Grand Mine) only extended to a depth of approximately 200m below surface. The Grand Mine contains a gold-mineralized zone which extended to a depth of at least 660 m below surface. It was collared at an elevation 700 m below mine workings in the Muluncay concession area. This indicates that there is significant additional potential at depth of up to 1500 m for most of the concessions in the district, including those veins contained within the Muluncay concession. A preliminary estimate of the resource is made by the author on the Muluncay Concession, from the two currently active veins (Jena and Cristina) with an estimated strike length of 1 km, an average width of 1.0 m and an average depth of 1000 m. Using the SADCO cut-off grade of 14.6 g/T as the average grade below current workings, this would produce an estimated tonnage of 400,000 T for each vein, or a total current resource of 800,000 T, for a total of 11,680,000 g (365,000 oz) gold. Should additional veins be found during exploration (known but not presently developed) then that tonnage estimate would increase significantly. Secondary veins, stringers, breccia and disseminated mineralization in the wallrocks have never been exploited, or even properly assessed. It is the author’s opinion that with improved, more economic mining and milling methods this resource can be taken advantage of, so that it is probable that a resource of greater than 1.6 million tonnes, with a somewhat lower grade in the order of 12 g/T (due to dilution by secondary veins and disseminations) could produce 19,200,000 g (600,000 oz) Au. No estimate of the value derived from silver or sulphide concentrate has been made, but it would add a significant amount to the value of this resource. The history of the Zaruma mining operations indicates that there is a significant opportunity to apply modern mining methods to a major resource which has had only limited exploitation in the past.