Peru Gold Exploration

In 2008, Peru produced 179 tonnes of gold, ranking it number 5 for world gold producing countries. This is up 29% since 2001. For comparison, Australia ranks number 4 and produced 225 tonnes of gold in 2008.

Most of the production in Peru (2008) comes from three mines: Yanacocha (Newmont/Buenaventura) - 1.8Mozs produced at a cash cost $244/oz; Lagunas Norte (Barrick) - 1.2Mozs at a cash cost of $125/oz and Pierina (Barrick) - 0.4 Mozs produced at a cash cost of $284/oz.

There are many gold mines in Peru, but the largest and lowest cost deposits are the 'acid-sulfate' or 'high sulfidation' deposits of the Tertiary volcanic rocks in the high cordillera (3800 - 5,200 meters). There are at least ten, volcanic-hosted, acid-sulfate or other gold deposits in the cordillera that are in production.

Acid sulfate gold deposits in the Andes are especially attractive due to the deep oxidation normally present, caused by the extreme uplifting of the Andes, which ultimately changes the original sulfidic 'refractory' nature (requiring crushing, milling, and concentrating at great capital and processing costs) of the deposits into oxidized, porous rock with free gold grains that can easily be recovered by cyanide heap leaching. Due to the natural high porosity, the ore commonly does not need crushing (greatly reducing costs) and the ore is mined and transported directly to a leach pad ('run of mine'). After the cyanide leaching cycle on the leach pad, the recovery of gold from the 'pregnant solution' is most commonly accomplished by a simple process utilizing zinc powder (Merrill Crowe). Cash operating costs of these mines range from US$120 to 300/ounce. Typical gold grades are 0.7 to 2.0 g/t. There are at least 12 deposits of this type in Peru in the lower to mid size resource range that have recently been put into production or are anticipated to be put into production over the next 1 to 3 years.

There are other styles of gold deposits in Peru that represent exploration and development opportunities for the Company as well: 'Orogenic' gold veins (e.g. Yilgarn) on the eastern side of the cordillera are a principal target. These veins are related to both metamorphism and hydrothermal processes - they tend to form veins that continue to great depths. Peru has one large gold camp of this type - Pataz. These deposits have only recently been recognized as orogenic in Peru and exploration is picking up for this deposit style - IRL (Corihuarmi) has a very large orogenic vein project in southeastern Peru, Oleachea.