Los Calatos, Peru

The 100% owned Los Calatos Project is located in southern Peru, in the Moquegua district, geographically approximately 70km south-east of the regional city of Arequipa. It occurs in dry desert topography near the coast, at an elevation of approximately 2,900 metres.

Los Calatos is well positioned for potential development. It occurs near established infrastructure in an existing important mining region.



At Los Calatos Metminco holds tenements totalling 214 km2:

• 186km2 are held through a wholly owned subsidiary, Metminco Peru,
• 28km2 are held through North Hill, a wholly owned subsidiary of Metminco.

The Los Calatos project lies within the major northwest-southeast trending Paleocene / early Eocene copper-molybdenum porphyry belt (mineralization approximately 55 million years old) in far south Peru, adjacent to the coast. The major Incapquio Fault is a structural feature of the belt:

• The Cuajone and Toquepala deposits to the south east host large existing mines, owned by Southern Copper Corporation, which also owns smelting and refining operations near the port of nearby Ilo, approximately 160 km (by road) to the southwest of Los Calatos.
• Southern Copper is also seeking to develop the Tia Maria copper leach-SXEW project, to the northwest.
• The Quellaveco deposit, now seeking permitting for development, is owned 81.6% by Anglo American) and occurs to the southeast,
• Cerro Verde to the northwest is a large existing mine, owned 53.6% by Freeport McMoran, close to and SW of Arequipa. Freeport has canvassed major expansion at Cerro Verde, which is the largest mine in the belt, currently producing approximately 300,000 tpa of copper.

1. Cerro Verde. Tonnes. 10K Annual Report for Freeport McMoran, 2010. Production in 2010 was 668m lb (303kt) Cu, and 7m lb Mo. Production started 1976. Current operations comprise a leach circuit (~ 200m lb pa Cu) and a flotation plant treating 120,000 tpd ore, following expansion in 2010. In 2010 the highest bench elevation was 2,900m above sea level and the ultimate pit bottom is expected to be 2,000m above sea level.

2. Toquepala & Cuajone. 10K Annual Report for Southern Copper Corporation, 2009. Prod'n in 2010: Cuajone 165k tons Cu and 5.3 tons Mo, and Toquepala 131.5k tons Cu and 4.8 tons Mo. Operations at end 2010 comprised Cuajone open pit mine, capacity 87,000 tons pd treated, Toquepala open pit mine, capacity 60,000 tons pd treated, and Toquepala SXEW plant, capacity refined 56,000 tons pa Cu. Expansion of the Toquepala flotation plant is underway, originally planned as 40,000 tons pd but now 60,000 tons pd is being "evaluted", to be completed by H1 2013. Cuajone is being expanded to 105,000 tons pd by end 2011.

3. Toquepala & Cuajone. Production started Toquepala in 1960, at Cuajone in 1976. At end 2010 the Toquepala and Cuajone pits were ~ 825 metres and 800 metres deep, respectively. Under the current mine planning configurations both pits will reach ultimate depths of ~ 1,200 metres.

Metminco's management is developing an understanding of the most likely geological model applying to the main Los Calatos area. The model, illustrated in two figures below, suggest the presence of a not untypical multi-phase porphyry system. The main Los Calatos geology and mineralising events can be described as follows;

1. The earliest porphyry was regional in extent and was not mineralised.

2. The second phase of porphyry injection ¨stoped out¨ most of the original porphyry and was accompanied by a low grade copper mineralising event (0.1 to 0.3% Cu and less than 100ppm Mo).

3. The third phase of porphyry injection resulted in significant brecciation of the earlier porphyry and was accompanied by high grade copper and molybdenum mineralisation (>0.4% Cu and >200ppm Mo)

4. The fourth phase of porphyry injection was accompanied by brecciation of previous phases and introduced a molybdenum mineralising phase with or without copper present. Upgrading of the phase 3 event with pervasive molybdenum veining may have occurred.

5. The fifth and final phase is seen as porphyry dykes cutting through the entire system. The dykes are generally vertical, limited in width and are generally barren.

Following the phase 2 drilling program the Los Calatos Project now carries JORC compliant mineral resources as follows:Mineral Resource Statement for the Los Calatos Project Peru, June 2010

Notes: Refer to the Mineral Resource Statement in the Metminco ASX Announcements [http://www.metminco.com.au/index.cfm/page/Announcements/]

At the 0.2% Cu cut-off grade, the drilling to date defines a mineralized porphyry body with a drill tested strike length of 900m (previously 600m), a maximum drill tested width of 500m (previously 300m), and a drill tested vertical depth of 1100m (previously 800m). Hence the considerable increase in the previous resource estimate.

The cut-off grade of 0.2% Cu is broadly consistent with a development concept of large scale open pit mining.

Mineralization drilled to date occurs within a major NW-SE oriented alteration zone over 10 km long, outlined by a systematic and ongoing surface exploration program.

Following completion of the phase 2 drilling program at Los Calatos, Metminco announced a major resources upgrade to 926 million tonnes, an increase of approximately 350% compared to the previously released June 2009 resources estimation, using a cut-off grade of 0.2% Cu.

The phase 2 drilling campaign consisted of 10 core holes totalling 9,516m from November 2009 to March 2010, supplementing 13 cored holes previously drilled by Metminco (phase 1, totalling 6,387m), and 39 cored and reverse circulation holes drilled previously by Phelps Dodge and Barrick. Total metres drilled on the Los Calatos Project to June 2010 are 21,261m, of which 20,393 was considered in the revised June 2010 resource estimate.

Phase 3 of drilling commenced in December 2010 and will comprise approximately 50,000 metres of core holes. Four rigs were deployed as of May 2011.

Exploration of the Los Calatos project is at an early stage.

At Los Calatos Metminco continues to undertake a comprehensive surface geological mapping and sampling program, focused on a major northwest-southeast trending zone of alteration that includes the mineralized zone being drilled and which parallels the regional structural trend.

The tenements figure above shows the Los Calatos tenements held by Metminco and also surface alteration and geochemical anomalies identified to date.

It shows zones of prospective exploration interest, in addition to the area of current drilling. These areas will be followed up in due course, seeking to define additional drilling targets.

Note that volcanic ash from geologically recent eruptions is obscuring underlying geology across significant tracts of the tenements.

In late 2010 Metminco commissioned a major ground geophysics program at Los Calatos, across the main alteration system, testing electrical and magnetic properties. The results are being used to help guide the current Phase 3 drilling program.

Preliminary flotation testing on composite samples from drill core has returned favourable results.

In December 2010 Metminco commenced a 50,000 metre phase 3 drilling program at Los Calatos, seeking to extend current resources. As of May 2011 four drill rigs are being deployed.

Exploration drilling has resumed at the Los Calatos Project, seeking to extend JORC resources announced July 2010. Currently four drill rigs are deployed on a planned 50,000 metre program.