Peru

2009 Condestable Mine Operating Results

Operations at the Condestable Mine remain in a steady state.  Production for 2009 was slightly below plan, with 3% lower contained copper production, resulting from lower copper grade (2% under plan) and lower throughput (1% under plan).

The following are the highlights for the Condestable Mine operation for the period October 1, 2009 to December 31, 2009 (3 months), with total 2009 year figures:

• Revenues were approximately US$ 26.0 million (2009 year US$ 103.4 million). 
• Production was:

• An average head grade of approximately 1.21% Cu, and a recovery rate of 90% (1.22% and 91%, respectively, for 2009 year).  
• Operating costs for Q4 (C1 and C3) were US$ 0.94 and US$ 1.38 per payable pound of copper.
• Operating costs for 2009 year (C1 and C3) were US$ 0.90 and US$ 1.24 per payable pound of copper.

During the quarter, all 2009 planned projects and mine investments were completed.  A new motor for ball mill No. 5 has been received and will replace the existing motor during a planned maintenance shutdown in Q2 2010.  The Karina vein has been opened up and developed on the -215 level; it is expected that by the end of Q1 development will reach the -255 level. Stoping from the higher grade Karina vein will start in March 2010, ahead of plan.  A second tailings pipeline at the higher 260 elevation has been installed and will be in operation in February, 2010. The pipeline at this elevation allows the tailings area to operate for the life of mine.

The proposed purchase of the Raul lease and royalty, as previously announced, is proceeding on plan.  The Company is currently considering various options for financing the acquisition which is due to close at the end of March, 2010.

For 2010 CAPEX and exploration at the Condestable Mine, the following budgets have been approved, with exploration of US$ 1.7 million to generally consist of surface sampling, geophysics and contracted surface diamond drilling at Condestable 10 and San Marcos.  

 
In addition, the Company reports that it has approved an additional capex project for 2010 relating to improvement in secondary crushing at a cost of US$ 3.3 million, the bulk of which will be financed by leasing and otherwise from cash flow.