Vallecillo, Chile

The 100% owned Vallecillo Project is located approximately 50 km northeast of Ovalle, south-east of La Serena, and some 25 kilometres north of the Mollacas Project. Following additional applications in 2011 tenements cover approximately 200km2.

The project area covers undulating topography at elevations of approximately 1800-2500 metres. Like Mollacas the project is relatively accessible and near existing infrastructure.

Vallecillo is a copper-gold porphyry.

Porphyry-related gold-zinc mineralisation (with associated silver and lead) in a breccia/vein system has been drilled at La Colorada, and a large as yet undrilled copper-gold porphyry target has beeb identified west of La Colorada.

Location of Vallecillo project, near La Serena (approx. 475km north of Santiago)

Metminco drilled 12 reverse circulation holes on the La Colorada deposit during 2006, totalling 2,170 metres. This generated an initial JORC compliant Inferred Mineral Resource of 8.5 million tonnes @ 1.42% zinc, 0.76 g/t gold, 8.1 g/t silver and 0.25% lead at a 0.5% Zn cut-off grade.

Following a second round of drilling in 2008 of 17 diamond holes totalling 5,782 metres, a revised resource estimation for the La Colorada Au-Zn-Ag-Pb deposit at La Colorada was completed by SRK Consulting, Chile. Contained metal increased by approximately 40% on the previous estimate. At a cut-off grade of 0.3g/t Au, total resources are estimated as 10.1 million tonnes, broken down into:

• Indicated Mineral Resources: 7.9 million tonnes @ 1.14g/tAu; 11.4g/tAg; 1.32% Zn; 0.29% Pb
• Inferred Mineral Resources: 2.2 million tonnes @ 0.78g/t Au; 8.2g/t Ag; 0.58% Zn; 0.26% Pb

Metallurgical test work carried out in Lima using Vallecillo core has demonstrated that excellent recoveries can be obtained for gold, zinc and lead, while silver recoveries are dependent on production of a lead concentrate.

Gold recoveries above 90% can be achieved through the cyanidation of a gravity concentrate and the zinc concentrate, with bullion produced on site. Some gold reports into the lead concentrate which will be payable by smelters.

The second issue crucial to potential economic exploitation of the La Colorada resource is the ability to produce saleable concentrate grades for both zinc and lead. The test work has confirmed that excellent recoveries of both metals will be achievable into commercial grade concentrates.

Metminco has undertaken detailed mapping and surface sampling across most of the 54 km2 of tenement licences held at Vallecillo (since expanded to approx. 200km2), suggesting:

• the presence of a number of high priority exploration targets including three well defined lead (Pb) surface geochemical targets similar to the La Colorada target and immediately north of the resource outlined at La Colorada, and
• a Cu and Au surface geochemical porphyry target at Vallecillo.

The Company plans to resume exploration drilling at Vallecillo in 2011, in particular to test the copper-gold porphyry target.

Vallecillo. Part (54km2) of tenements (now totalling approx. 200km2), showing results of geochemical sampling. Target V1 is La Colarada. V2 to V4 are La Colorada type targets. V6 & V7 cover a copper-gold porphyey target. >2km (north south)