Mexico 1

MQes
Technical Report
Pre-Feasibility Study
Los Verdes Project
Sonora, Mexico
Prepared by: The Mines Group, Inc.

Chlumsky, Armbrust & Meyer, LLC
Mine and Quarry Engineering Services, Inc.
For
Virgin Metals, Inc.
Authors:
Christopher Kaye, MAusIMM, B,Eng. (Chemical)
Anthony J. Brown, B. Met, M. Met, MIMM, C. Eng.
Howard Steidtmann, MAusIMM, B. Sc. Mining Engineering
Robert L. Sandefur, P.E.
Fred Barnard, Ph.D.
Anthony E. W. Crews, P.E.
Effective Date: 28th July, 2008

Report Date: 3rd September, 2008
IMPORTANT NOTICE
This report was prepared as a National Instrument 43-101 Technical Report for Virgin Metals Inc. (the "Company") by Mine and
Quarry Engineering Services, Inc. (“MQes”), Chlumsky, Armbrust & Meyer, LLC (“CAM”), and The Mines Group, Inc.. The
quality of information, conclusions, and estimates contained herein is consistent with the level of effort involved in Mine and Quarry
Engineering Services, Inc. (“MQes”), Chlumsky, Armbrust & Meyer, LLC (“CAM”), and The Mines Group, Inc., service’s, based on:
i) information available at the time of preparation, ii) data supplied by outside sources, and iii) the assumptions, conditions, and
qualifications set forth in this report. This report is intended for use by the Company subject to the terms and conditions
of their contracts with Mine and Quarry Engineering Services, Inc. (“MQes”), Chlumsky, Armbrust & Meyer, LLC (“CAM”), and
The Mines Group, Inc. This contract permits the Companies to file this report as a Technical Report with Canadian Securities
Regulatory Authorities pursuant to National Instrument 43-101, Standards of Disclosure for Mineral Projects. Except for the
purposes legislated under provincial securities law, any other uses of this report by any third party is at that party’s sole risk.
MQes
TABLE OF CONTENTS
SECTION PAGE
1.0 SUMMARY ...............................................................................................................................1-1

1.1 Background........................................................................................................................1-1
1.2 Property Description and Ownership.................................................................................1-1
1.3 Location, Infrastructure, and Physiography.......................................................................1-2
1.4 Geology and Mineralization ..............................................................................................1-2
1.4.1 Geology ....................................................................................................................1-2
1.4.2 Mineralization...........................................................................................................1-2
1.5 Exploration and Data Compilation ....................................................................................1-3
1.5.1 Exploration ...............................................................................................................1-3
1.5.2 Data Compilation and Verification...........................................................................1-4
1.5.3 Bulk Density (Specific Gravity) of Mineralization...................................................1-4
1.6 Resource Estimation ..........................................................................................................1-4
1.6.1 Resource Tabulation .................................................................................................1-5
1.6.2 Re-Blocking..............................................................................................................1-6
1.7 Mineral Reserves ...............................................................................................................1-7
1.8 Mineral Processing and Metallurgical Testing ..................................................................1-7
1.9 Mining Operations .............................................................................................................1-8
1.10 Mine Plan...........................................................................................................................1-9
1.11 Geotechnical ......................................................................................................................1-9
1.12 Tailings Disposal ...............................................................................................................1-9
1.13 Hydrology ........................................................................................................................1-10
1.14 Water Management..........................................................................................................1-10
1.15 Hydrogeology ..................................................................................................................1-10
1.16 Infrastructure....................................................................................................................1-11
1.17 Project Execution Plan.....................................................................................................1-11
1.18 Operations Plan................................................................................................................1-11
1.19 Marketing.........................................................................................................................1-12
1.20 Environmental, Health and Safety ...................................................................................1-12
1.21 Social and Community.....................................................................................................1-12
1.22 Project Economics ...........................................................................................................1-12
1.22.1 Operating Costs..................................................................................................1-12
1.22.2 Capital Costs ......................................................................................................1-13
1.22.3 Sensitivity Analyses ...........................................................................................1-13
1.23 Conclusions and Recommendations ................................................................................1-13
1.23.1 Conclusions ........................................................................................................1-13
1.23.2 Recommendations ..............................................................................................1-16
2.0 INTRODUCTION AND TERMS OF REFERENCE............................................................2-1
2.1 Sponsorship and Use..........................................................................................................2-1
2.2 Qualified Persons...............................................................................................................2-1
2.3 Sources of Information ......................................................................................................2-1
2.4 Conventions .......................................................................................................................2-1
3.0 RELIANCE ON OTHER EXPERTS......................................................................................3-1
4.0 PROPERTY DESCRIPTION AND LOCATION..................................................................4-1
4.1 Ownership..........................................................................................................................4-1
4.2 Mineral Properties..............................................................................................................4-1
4.3 Environmental Issues.........................................................................................................4-4
5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE and
PHYSIOGRAPHY ....................................................................................................................5-1
5.1 Access, Physiography, and Climate...................................................................................5-1
i
MQes
5.2 Local Resources and Infrastructure ...................................................................................5-1
6.0 HISTORY ..................................................................................................................................6-1
6.1 Prior Exploration, Development, and Production ..............................................................6-1
6.1.1 Cominco Exploration................................................................................................6-2
6.1.2 1996-2005 Exploration .............................................................................................6-2
6.1.3 Virgin Metals Exploration ........................................................................................6-2
6.2 Historical Mineral Resources.............................................................................................6-2
7.0 GEOLOGICAL SETTING ......................................................................................................7-1
7.1 Regional Geology ..............................................................................................................7-1
7.2 Local Geology....................................................................................................................7-2
7.3 Property Geology...............................................................................................................7-3
7.3.1 Granitic Intrusives ....................................................................................................7-3
7.3.2 Breccias ....................................................................................................................7-4
7.3.3 Dikes.........................................................................................................................7-5
7.3.4 Structure....................................................................................................................7-6
7.3.5 Alteration ..................................................................................................................7-6
8.0 DEPOSIT TYPES .....................................................................................................................8-1
9.0 MINERALIZATION ................................................................................................................9-1
9.1 Style of Mineralization ......................................................................................................9-1
9.1.1 Hypogene mineralization (Sulfide Zone)..................................................................9-2
9.1.2 Secondarily-enriched Sulfides ..................................................................................9-2
9.1.3 Oxide mineralization (Oxide Zone) ..........................................................................9-2
9.2 Mineralogy.........................................................................................................................9-2
9.3 Morphology of Mineralization...........................................................................................9-6
10.0 EXPLORATION.....................................................................................................................10-1
10.1 General.............................................................................................................................10-1
10.2 Exploration Work ............................................................................................................10-1
11.0 DRILLING ..............................................................................................................................11-1
11.1 Summary of Drilling........................................................................................................11-1
11.2 Cominco-Peñoles Drilling Program, 1971-1979 .............................................................11-2
11.3 Virgin Metals Drilling Programs .....................................................................................11-2
11.3.1 2007 Reverse Circulation Drill Program............................................................11-3
11.3.2 2007 Diamond Core Drilling Program...............................................................11-3
12.0 SAMPLING METHOD and APPROACH ...........................................................................12-1
12.1 Cominco-Peñoles Sampling.............................................................................................12-1
12.2 Virgin Metals Sampling...................................................................................................12-1
12.3 Bulk Density (Specific Gravity) of Mineralized Material ...............................................12-1
12.3.1 Bulk Density Measurements ..............................................................................12-1
12.3.2 Analysis of Bulk Density Data...........................................................................12-2
12.3.3 Discussion of Bulk Density................................................................................12-3
13.0 SAMPLE PREPARATION, ANALYSES and SECURITY................................................13-1
13.1 Cominco Exploration.......................................................................................................13-1
13.2 Virgin Metals Exploration ...............................................................................................13-1
13.2.1 Sample Preparation ............................................................................................13-1
13.2.2 Sample Analysis.................................................................................................13-1
13.2.3 QA/QC (Quality Assurance/Quality Control)....................................................13-2
13.3 Adequacy of Procedures ..................................................................................................13-3
14.0 DATA VERIFICATION ........................................................................................................14-1
14.1 Peñoles-COMINCO Data ................................................................................................14-1
14.1.1 Database .............................................................................................................14-1
14.1.2 Collar Surveys....................................................................................................14-2
14.1.3 Assays ................................................................................................................14-2
14.1.4 Comparison of Cominco and Virgin Metal’s Drilling .......................................14-2
ii
MQes
14.1.5 Suitability of the Cominco Database..................................................................14-3
14.2 Virgin Metal’s 2006 Drilling ...........................................................................................14-3
14.3 Virgin Metal’s 2007 Drilling ...........................................................................................14-3
14.3.1 Initial Data Checks.............................................................................................14-3
14.3.2 Downhole Surveys .............................................................................................14-5
14.4 Final Database Used for Resource Estimation.................................................................14-5
15.0 ADJACENT PROPERTIES ..................................................................................................15-1
16.0 MINERAL PROCESSING and METALLURGICAL TESTWORK................................16-1
16.1 Metallurgical Testwork....................................................................................................16-1
16.2 Plant Design.....................................................................................................................16-3
16.3 Concentrate Specifications...............................................................................................16-3
17.0 MINERAL RESOURCE and MINERAL RESERVE ESTIMATES ................................17-1
17.1 Geological Modeling .......................................................................................................17-1
17.1.1 Block-Model Construction.................................................................................17-1
17.1.2 Block-Model Validation.....................................................................................17-2
17.1.3 Contact Profiles..................................................................................................17-2
17.2 Surface Topography and Block Model Limits.................................................................17-4
17.3 Desurvey ..........................................................................................................................17-4
17.4 Statistics and Geostatistics...............................................................................................17-4
17.4.1 Compositing and Composite Statistics...............................................................17-4
17.4.2 High-Grade Restriction ......................................................................................17-5
17.4.3 Geostatistics .......................................................................................................17-7
17.4.4 Resource Estimation...........................................................................................17-7
17.4.5 Resource Classification ......................................................................................17-7
17.4.6 Resource Tabulation...........................................................................................17-9
17.4.7 Re-Blocking .....................................................................................................17-10
17.5 Mineral Reserves ...........................................................................................................17-12
18.0 OTHER RELEVANT DATA and INFORMATION...........................................................18-1
19.0 ADDITIONAL REQUIREMENTS for TECHNICAL REPORTS on DEVELOPMENT
PROPERTIES and PRODUCTION PROPERTIES ...........................................................19-1
19.1 Geotechnical ....................................................................................................................19-1
19.2 Proposed Mining Operations ...........................................................................................19-1
19.2.1 Mining Method and Equipment .........................................................................19-2
19.2.2 Open Pit Design .................................................................................................19-2
19.2.3 Waste Dump Design ..........................................................................................19-3
19.2.4 Grade Control.....................................................................................................19-3
19.2.5 Production Schedules and Blending...................................................................19-4
19.3 Tailings Disposal .............................................................................................................19-6
19.3.1 Tailings Dam and Impoundment........................................................................19-6
19.3.2 Environmental Control Dam ..............................................................................19-7
19.4 Hydrology ........................................................................................................................19-7
19.5 Water Management..........................................................................................................19-7
19.6 Hydrogeology ..................................................................................................................19-8
19.7 Infrastructure....................................................................................................................19-8
19.8 Project Execution Plan.....................................................................................................19-9
19.9 Operations Plan................................................................................................................19-9
19.10 Marketing.......................................................................................................................19-10
19.11 Environmental................................................................................................................19-11
19.12 Social and Community...................................................................................................19-12
19.13 Project Economics .........................................................................................................19-12
19.13.1 Capital Cost Estimate .......................................................................................19-13
19.13.2 Operating Cost Estimate ..................................................................................19-15
19.13.3 Project Cashflow ..............................................................................................19-15
iii
MQes
19.13.4 Sensitivity Analysis..........................................................................................19-17
19.14 Risk Analysis .................................................................................................................19-17
19.14.1 Investment Risks ..............................................................................................19-17
19.14.2 Geologic Risk...................................................................................................19-18
19.14.3 Project Investment Risk ...................................................................................19-18
19.14.4 Market Risk......................................................................................................19-18
19.14.5 Exchange Rate Risk .........................................................................................19-18
19.14.6 Country Risk ....................................................................................................19-18
19.14.7 Labor Skills ......................................................................................................19-18
19.14.8 VGM Experience .............................................................................................19-19
19.14.9 Business Risks..................................................................................................19-19
19.14.10 Project Risks ................................................................................................19-19
20.0 INTERPRETATIONS AND CONCLUSIONS ....................................................................20-1
21.0 RECOMMENDATIONS........................................................................................................21-1
22.0 REFERENCES........................................................................................................................22-1
23.0 DATE and SIGNATURE PAGE ...........................................................................................23-1
iv
MQes
LIST OF TABLES
TABLE PAGE
Table 1-1: Mineral Resource Estimates at a Cutoff Grade of 0.03% Mo Eq.......................................1-6

Table 1-2: Re-Blocked Non-Oxide Mineral Resource ($0/tonne Economic Cutoff)...........................1-7
Table 1-3: Reserve/Resource Summary...............................................................................................1-9
Table 1-4: Recommended Los Verdes Work Program ......................................................................1-20
Table 4-1: Mineral Concessions Comprising the Los Verdes Deposit and Surrounding Lands ..........4-2
Table 6-1: History of Los Verdes Area................................................................................................6-1
Table 6-2: Resources at a 0.04 percent Mo Cutoff and/or a 0.32 percent Cu Cutoff (CAM, 2007) ....6-3
Table 6-3: Resources at a 0.04 Percent Mo Cutoff and/or a 0.32 Percent Cu Cutoff (CAM, 2008)....6-4
Table 7-1: Lithologic Codes ................................................................................................................7-4
Table 9-1: Selected Minerals of Interest, Los Verdes Deposit.............................................................9-4
Table 9-2: Mineralization Codes..........................................................................................................9-7
Table 10-1: Los Verdes Project Expenditures....................................................................................10-1
Table 11-1: Summary of Drilling.......................................................................................................11-1
Table 12-1: Bulk Density Statistics by Mineral Zone........................................................................12-3
Table 13-1: Metal Contents of Commercial Standards ......................................................................13-2
Table 13-2: Anomalies in QA/QC Checks.........................................................................................13-3
Table 14-1: Comparison of Samples within 7.5 meters .....................................................................14-3
Table 14-2: Drilling Statistics from Assay Database .........................................................................14-5
Table 16-1: Mineralogical Analysis of Feed Sample.........................................................................16-2
Table 16-2: Composition of Selected Copper-Molybdenum Separation Products ............................16-4
Table 17-1: Model Geometric Parameters .........................................................................................17-4
Table 17-2: Statistics for 5-meter Composite Samples ......................................................................17-5
Table 17-3: Mineral Resource Estimates .........................................................................................17-10
Table 17-4: Re-Blocked Non-Oxide Mineral Resource 0.03% Mo Equivalent Cutoff ...................17-11
Table 17-5: Re-Blocked Non-Oxide Mineral Resource $0/tonne Economic Cutoff .......................17-12
Table 17-6: Resource/Reserve Summary.........................................................................................17-13
Table 19-1: List of Major Mining Equipment....................................................................................19-2
Table 19-2: Mine Production Schedule..............................................................................................19-5
Table 19-3: Estimated Initial Capital Cost – Los Verdes Project ....................................................19-14
Table 19-4: Estimated Mine Operating Costs – Summary...............................................................19-15
Table 19-5: Estimated Process Operating Costs – Summary...........................................................19-15
Table 19-6: Estimated General and Administration Costs - Summary ............................................19-15
Table 19-7: Base Case Cashflow Summary – Los Verdes Project ..................................................19-16
Table 21-1: Recommended Los Verdes Work Program for 2008......................................................21-4
MQes
LIST OF FIGURES
FIGURE PAGE
Figure 4-1: Molibdeno Los Verdes Alamos Concessions - Los Verdes ..............................................4-3
Figure 5-1: Location of Los Verdes Property ......................................................................................5-2
Figure 7-1: Regional Geologic Setting – Los Verdes ..........................................................................7-1
Figure 7-2: Geology of Los Verdes and Surroundings ........................................................................7-3
Figure 9-1: Surface Projection of Hypogene Mineralization, VGM Drill Holes .................................9-8
Figure 9-2: Cross Section through the Mineralized Lens, West of the Center.....................................9-9
Figure 9-3: Cross Section through the Mineralized Lens, East of the Center ......................................9-9
Figure 11-1: Drillhole Locations at Los Verdes.................................................................................11-2
Figure 12-1: SG Data Cumulative Frequency....................................................................................12-2
Figure 17-1: Box Plot for Mo vs. Distance from Contact ..................................................................17-3
Figure 17-2: Box Plot for Cu vs. Distance from Contact...................................................................17-3
Figure 17-3: Log Cumulative Frequency Plot (Mo ppm) ..................................................................17-6
Figure 17-4: Log Cumulative Frequency Plot (Cu ppm) ...................................................................17-6
Figure 17-5: Omnidirectional Relative Variogram Mo (from log) Secondarily Enriched Sulfide ....17-8
Figure 17-6: Omnidirectional Relataive Variogram Mo (from log) for Oxides ................................17-8
Figure 19-1: Detailed Ultimate Pit and Mine General Layout...........................................................19-3
Figure 19-2: Organization Chart ......................................................................................................19-10
Figure 19-3: Sensitivity Analysis – NPV at 8% Discount ...............................................................19-17
Figure 19-4: Sensitivity Analysis – IRR ..........................................................................................19-17
vi
MQes
SECTION 1
SUMMARY
1.0 SUMMARY
1.1 Background
Chlumsky, Armbrust and Meyer, LLC (herein “CAM”) has been engaged several times by Virgin
Metals, Inc. (herein “VGM”) of Toronto, a TSX-listed company, to prepare portions of a Technical
Report as an independent review of the geology, methodologies, and mineral Resources at the Los
Verdes copper-molybdenum-tungsten project of VGM in Sonora, Mexico, in a manner consistent with
Canadian National Instrument Form 43-101F1.
CAM had previously prepared two NI 43-101-compliant Technical Reports, one dated 23 January
2007 and filed on SEDAR on 29 January 2007, and another dated 29 February 2008 and filed on
SEDAR on 28 March 2008.
The present report contains revised mineral Resource estimates by CAM, utilizing new lithologic and
mineralization definitions, and a re-blocked model. This report also incorporates a summary of the
Prefeasibility study undertaken by Mine and Quarry Engineering Services, Inc. (“MQes”), The Mines
Group, Inc. (“The Mines Group”), Heurística Ambiental Consultoria, S.C. (“Heurística Ambiental”)
and Hidrolab Consultores, S.C. (“Hidrolab”) and dated July, 2008. No additional (since 2007) drilling
data has been used in this report.
This report was prepared by several Qualified Persons, as listed in Section 23. Dr. Fred Barnard of
CAM visited the Los Verdes project site on October 29 and 30, 2006, and the Hermosillo office of
VGM on October 28 and 31, 2006. During April 1-3, 2008, Robert Sandefur, P.E. of CAM, visited
the Hermosillo Offices of VGM to review database source documents. He also visited the Los Verdes
deposit to review core and surface geology as well as to verify collar locations, collar azimuth and dip.
During this visit Robert also visited VGM’s Hermosillo warehouse to examine sample storage.
Christopher Kaye and Anthony Brown of MQes visited the Los Verdes project site on June 5, 2007.
Anthony Crews of The Mines Group also visited the Los Verdes site on June 5, 2007.
All references to dollars ($) in this report are in US dollars unless otherwise noted. Distances, areas,
volumes, and masses are expressed in the metric system unless indicated otherwise.
1.2 Property Description and Ownership
Virgin Metals Inc. is the 100 percent owner of Minera Alamos de Sonora, S.A. de C.V. (MAS) and
Molibdeno Los Verdes S.A. de C.V. (MLV), both Mexican companies. MLV has been assigned 100
percent of the title to the mineral properties at Los Verdes from MAS, which is carrying out the
exploration. The mineral rights controlled by MLV total 15 contiguous titled exploration concessions,
covering 5,559.1 hectares. Neither MAS nor MLV currently owns any surface rights in the area.
In this report, the abbreviation “VGM” refers to Virgin Metals Inc., and either or both of the above-
mentioned Mexican subsidiaries.
VGM’s concessions cover the entire mineralized area discussed in this report, there being no
competitor concessions within a kilometer of the mineralized area.
1-1
MQes
1.3 Location, Infrastructure, and Physiography
The Los Verdes Property is located in the municipality of Santa Ana de Yecora, State of Sonora,
Mexico, about 200 kilometers east-southeast of Hermosillo. The longitude is 109O 10' W, latitude 28O
24' N. The Los Verdes property can be reached via paved Mexico Federal Highway 16, thence on a
dirt road of about 9 kilometers length.
The Property lies in ruggedly corrugated mountains of the Sierra Madre Occidental, 740 to 1200
meters above sea level. The climate is subtropical, with no extremes of climate which would impair
year-round mining operations. The vegetation is scrubby thorn forest.
Yecora, 40 kilometers east of Santa Ana, is a ranching town with a population of about 5,000, with
basic services such as telephone, internet, motels, restaurants, a health clinic, hardware stores,
gasoline, etc. Santa Ana, 2 kilometers from the drilled Resource, has a population of perhaps 300
people and almost no services except basic groceries. There are very few outlying residences, and
none within the VGM drilling program and Resource area.
1.4 Geology and Mineralization
1.4.1 Geology
Los Verdes lies within what could be considered the southerly extension of the Basin and Range
province of the southwestern USA, near the boundary with the Sierra Madre Occidental province.
The units in southeastern Sonora of principal interest to Los Verdes are the Laramide (Late Cretaceous
to Early Tertiary) plutonic, subvolcanic, and volcanic rocks, especially the felsic units.
The Los Verdes deposit is within a sub-circular granitic pluton exposed over some 150 square
kilometers in the vicinity of Santa Ana. The intrusive has several facies, mainly weakly porphyritic
monzonite, with some exposures classed as granodiorite and quartz diorite. Lesser areas of K-spar
porphyry also occur.
The Los Verdes properties cover one-third of the Laramide intrusive. About 20 percent of the area is
underlain by alteration zones, including a large north-south ellipse of alteration extending northward
from Santa Ana. Several large patches of breccia occupy the central part of the property, within a
granodiorite pluton. The Moly Pit occurs within one of these, a quartz-tourmaline breccia. The
granodiorite locally shows potassic, phyllic, or argillic alteration.
1.4.2 Mineralization
Los Verdes contains molybdenum-copper-(tungsten) mineralization in stockworked granodiorite and

in associated quartz-tourmaline breccias. It is a porphyry copper-molybdenum system with a related
molybdenum-bearing breccia pipe. At depth, the stockwork veinlets and breccias contain
molybdenite, chalcopyrite, lesser amounts of bornite, tungsten and base-metals minerals, and pyrite
and quartz. At higher levels these primary sulfide minerals may be overprinted or replaced by
secondary minerals: chalcocite, malachite, azurite, and ferrimolybdite. The surficial oxide zone of the
deposit is characterized by ferrimolybdite with very low copper values.
Related Mo-Cu-(W) deposits occur at many localities in the American Cordillera, especially in
Arizona, Sonora, and Chile. Examples in Sonora include the La Colorado pipe (Cu-Mo) at Cananea,
the Pilares pipe (Cu-Mo) at Nacozari, the San Judas, Cobre Rico, Washington, and El Transval
breccias (Cu-Mo-W) at Cumobabi, and the El Creston breccia (Mo-Cu-W) at Opodepe.
1-2
MQes
The deposit forms a sub-circular, subhorizontal, lens-shaped body about 200 by 300 meters across,
and up to 200 meters thick. It underlies the ridge west of the Moly Pit. The Buena Vista Fault forms
a partial boundary of mineralization, although some lesser mineralization extends east of the fault.
Vertical zonation in the deposit, as confirmed by VGM drilling, is as follows:
1. An upper part of the Oxide Zone, 0 to 20 meters thick and sub-parallel to the surface, with
very low Cu values (<500 ppm), and low Mo and W values.
2. An Oxide Zone with secondary minerals (copper carbonates, chalcocite, ferrimolybdite, and
probably ferritungstite), 10 to 50 meters thick, and conforming loosely to the current
topography. Essentially all the Mo in the oxide zone is soluble Mo (i.e. ferrimolybdite),
whereas almost all the Mo below the Oxide Zone is in molybdenite.
3. Supergene mineralization with secondary enrichment of chalcocite as well as hypogene
molybdenite, wolframite, and pyrite. Beneath the ridgecrest, this mineralization may be over
100 meters thick. Supergene--enriched sulfides makes up the bulk of the Resource at Los
Verdes.
4. The lowest mineralized zone is hypogene protore, referred to as Sulfide Zone. It carries
pyrite, chalcopyrite, molybdenite, and sparse scheelite. Within the breccia, molybdenite
forms coarse-grained euhedral rosette penetrating into voids, whereas in the granodiorite
molybdenite is mostly fine-grained, and is related to veinlets.
The supergene sulfides and hypogene protore together make up secondarily-enriched mineralization,
which carry the higher-grade mineralization at Los Verdes.
1.5 Exploration and Data Compilation
1.5.1 Exploration
Further to the VGM exploration drilling reported in the 2007 Technical Report, during 2007 VGM
drilled 21 diamond core holes of HQ diameter, totaling 2,628.2 meters, and 40 reverse-circulation
holes, totaling 3,537.7 meters. Core recovery was greater than 95 percent.
QA/QC for VGM’s 2007 drilling program was specifically designed to meet NI-43-101 guidelines.
No sample preparation or assaying of samples was carried out by any employee, officer, director, or
associate of Virgin Metals or affiliates.
The RC samples, each representing 1.52 linear meters (5 feet), were riffle-split at the drill.
Approximately 1/8 of the recovered material (5 to 10kg) was placed in a plastic bag and immediately
fastened with a security tag. Where moisture was present, a sampling cyclone was utilized with drill
cuttings collected in buckets, then placed in a large porous bag and immediately fastened with a
security tag. Reject material for all samples have also been secured and stored on-site for future use.
Diamond core was sent whole to the assay laboratory, after being logged and photographed. VGM
inserted on-site one blank sample for every 20 drill samples, and a field duplicate sample was inserted
for every 20 RC drill samples.
Sample preparation was performed at the ALS Chemex laboratory in Hermosillo, and all assaying was
carried out at the ALS Chemex laboratory in Vancouver, BC. ALS is certified ISO 9001:2000 and
ISO 17025:2005 at all its facilities, including Hermosillo and Vancouver. The method used for the
analyses was ALS’ ME-ICP61 package for 27 elements, comprising four-acid digestion followed by
ICP analysis of the solute. Samples showing more than 10,000ppm Cu by ICP analysis were
additionally analyzed by three-acid (hydrofluoric, nitric, perchloric) digestion, followed by
hydrochloric acid leach, and atomic-absorption analysis of the leachate.
1-3
MQes
In addition to the routine quality control work carried out by ALS Chemex, Virgin Metals established
a quality-control protocol consisting of the routine use of sample duplicates, blank samples, and
certified assay standards for copper and molybdenum. The certified standards were obtained from
WCM Sales Ltd., Burnaby B.C., and for tungsten, obtained from Shea Clarke Smith in Reno, Nevada.
All of the QA/QC data for the Virgin drilling were reviewed by a CAM using various geostatistical
parameters.
CAM believes that the sampling, sample preparation and assaying were carried out according to a
high standard and with a sufficient level of security, that the integrity of samples and the quality of
results are assured.
1.5.2 Data Compilation and Verification
During 2007, VGM acquired drill logs and assays from a Peñoles-COMINCO drilling campaign from
1971-1979, which had previously been unavailable. There were 63 holes totaling more than 12,000
meters within the Los Verdes mineralized area in this data (a few holes had incomplete data). No
samples or geological reports were available from this period. CAM reviewed the historical
COMINCO data in detail, and performed a number of tests to validate this database. On the basis of
this review, and the comparison of the Cominco data to VGM drilling data, CAM believe the
COMINCO database as verified, is suitable for the calculation of a 43-101-compliant Resource.
CAM checked a sample of the VGM drilling data, and also applied numerous well-known
geostatistical tests to the VGM data, and to the combined COMINCO-VGM database. CAM is of the
opinion that the combined database is suitable for mineral Resource and Reserve estimation, and for
use in prefeasibility studies.
1.5.3 Bulk Density (Specific Gravity) of Mineralization
In 2007, VGM developed a protocol for determining bulk densities on new core samples, and made
1302 bulk-density determinations on core. The mean bulk densities (specific gravities as g/cm3)
determined were 2.406 for Sulfides, 2.239 for Oxide, and 2.426 for material outside the defined
volumes. These results are lower than those used in the previous Resource estimation (CAM, 2007),
but are based on much better information from a dedicated bulk-density measurement program.
1.6 Resource Estimation
The database used for Resource estimation contained 171 drillholes (including 2 adit segments
considered as drillholes), totaling 20,514 meters, and 11,930 Mo assays, as well as assays for Cu, W,
and Ag. The holes are listed in Appendix A of CAM, 2008,and are not repeated in the present report.
Cross-sections were prepared, showing drillholes and interpreted mineral zones, trending both
northwest and northeast. Any differences between the computerized drillhole database and the
drillholes shown on these sections were resolved, so that the revised mineralized shapes match the
computerized database. The sections were then resolved to a series of level plans.
Blocks associated within each 10m plan-interpreted level were assigned to secondarily-enriched
sulfides. Any blocks above the highest secondarily-enriched sulfides were assigned to Oxide. Two
smaller zones below the main secondarily-enriched sulfides which contained good- grade mineral
were also interpreted. These two zones contained only a small number of composites, and have been
categorized as Inferred Resources.
Because molybdenum is the primary economic element, accounting for approximately two-thirds of
the deposit value a single secondarily-enriched sulfides volume was used for purposes of resource
1-4
MQes
estimation, rather than separate volumes for molybdenum and copper. Within this volume it appears
that molybdenum grade is quite homogeneous and is characterized by hard boundaries. Because of
uncertainty in the location of the secondarily-enriched sulfides contact for molybdenum due to some
downhole-survey anomalies, it is not yet possible to precisely calculate the volume of secondarily-
enriched sulfides.
The assay database was composited to 5-meter length composites (2.5 meters minimum length) and a
mineral zone code assigned from the mineral zone model based on the 5 by 5 by 5-meter block within
which the centroid of the composite fell. Analysis of cumulative frequency plots for Mo and Cu
composites shows that there is no need to cap composite grades prior to Resource estimation.
Resource estimation was done by ordinary kriging, using the relative variograms with hard boundaries
separating mineralization groups. The search radius was 100 meter, with a maximum of eight and a
minimum of three composites required for estimation for secondarily-enriched sulfides, Oxide and the
two smaller zones. Outside of these interpreted zones a sector search was used, the sectors
corresponding to the face of a cube, with a maximum of two composites per sector.
1.6.1 Resource Tabulation
CAM classified blocks in the Sulfide and Oxide volumes as measured if within half of the range of the
variogram, and if interior to drilling in the interpreted shape for secondarily-enriched sulfides and
Oxide. Blocks not interior to the drilling, or between 0.5 and 1 times the variogram range from the
nearest sample point, were classified as Indicated. The remaining blocks were classed as Inferred if
they were within 30 meters of the nearest sample point and if the block was estimated by least 4 drill
holes. Within the secondarily-enriched sulfides and Oxide there is considerable drilling and no
Inferred blocks.
Definitions used in this section are consistent with those adopted by the Canadian Institute of Mining,
Metallurgy and Petroleum ("CIM") Council in December 2005, as amended, and prescribed by the
Canadian Securities Administrators' National Instrument 43-101 and Form 43-101F1, Standards of
Disclosure for Mineral Projects.
Mineral Resources which are not mineral Reserves do not have demonstrated economic viability. The
estimate of mineral Resources may be materially affected by environmental, permitting, legal, title,
taxation, socio-political, marketing, or other relevant issues.
The quantity and grade of reported Inferred Resources in this estimation are conceptual in nature and
it is uncertain if further exploration will result in conversion of Inferred to Indicated or Measured
mineral Resource on the property.
Resources were originally tabulated at various cutoff grades using the densities of 2.406 for Sulfides,
2.239 for oxide, and 2.426 for material outside the defined volumes. Table 1-1 presents the Resource
as calculated by the ordinary kriging method, at a cutoff grade of 0.03 percent molybdenum
equivalent, with copper valued at 1/10 molybdenum.
1-5
MQes
Table 1-1: Mineral Resource Estimates at a Cutoff Grade of 0.03% Mo Eq.
Contained Contained
Tonnes % Mo % Cu
lbs Mo lbs Cu
Non-Oxide Mineralization
Measured
4,396,000 0.133 0.684 12,897,000 66,277,000
Resources
Indicated
4,269,000 0.128 0.516 12,015,000 48,529,000
Resources
Total 8,665,000 0.130 0.601 24,912,000 114,806,000
Oxide Mineralization
Measured
2,692,000 0.071 0.089 4,206,000 5,280,000
Resources
Indicated
1,717,000 0.087 0.099 3,300,000 3,759,000
Resources
Total 4,409,000 0.077 0.093 7,506,000 9,038,000
Oxide and Non Oxide Mineralization
Total Measured
7,088,000 0.110 0.458 17,103,000 71,556,000
Resources
Total Indicated
5,986,000 0.116 0.396 15,315,000 52,288,000
Resources
Total Measured
and Indicated 13,074,000 0.113 0.430 32,418,000 123,844,000
Resources
Total Inferred
4,392,000 0.063 0.073 6,062,000 7,058,000
Resources
Derived values in the table have been rounded
1.6.2 Re-Blocking
The 5 x 5 x 5-meter resource block model originally developed by CAM was too fine for the mining
equipment and method proposed in the pre-feasibility study. Hence, the model was re-blocked to 10 x
10 x 5m. Inferred Resources were assigned a grade of zero in the re-blocking. Additionally, lithology
and mineralization information based on sections 30 m apart was included in this model. Unlike the 5
x 5 x 5 meter sulfide zone model, the lithology and mineralization models were not resolved to plan or
adjusted for consistency to the interpreted sulfide zone. The sectional model showed oxide
mineralization and barren in the sulfide which was excluded from the resource and potential sulfide
material in the oxide which was not included in the resource. Oxide resources were not re-tabulated.
To convert a mineral Resource to a Reserve, it is necessary to apply actual economic and

metallurgical parameters instead of using a simple equivalent Mo grade factor. Table 1-2 shows
resources using the $0 per ton cutoff and economic parameters used in the mining section of this
report. At the time Table 1-2 was being prepared, there was the possibility of minor revisions in
the parameters, so the formula used to calculate net value is given at the bottom of Table 1-2.
1-6
MQes
Table 1-2: Re-Blocked Non-Oxide Mineral Resource ($0/tonne Economic Cutoff)
Cutoff, %
Class mineral code Mo Eq Tonnes % Mo % Cu Mo lbs Cu lbs
Measured 71 0 1390284 0.1122 0.3012 3438914 9232988
Measured 74 0 2889830 0.1471 0.9138 9369337 58217668
Measured 77 0 260388 0.1016 0.1921 583248 1102968
Measured 78 0 17877 0.1427 0.1957 56256 77147
Measured 79 0 115513 0.0814 0.4423 207254 1126253
Measured total 0 4673894 0.1325 0.6770 13655011 69757026
total, excl .
Measured 77,78,79 0 4280114 0.1357 0.7148 12808252 67450656
Indicated
71 0 1542799 0.1229 0.3262 4181171 11095578
Indicated
74 0 1700664 0.1356 0.7095 5082858 26599990
Indicated
77 0 171655 0.0875 0.2829 331060 1070440
Indicated
78 0 37240 0.1225 0.2543 100541 208789
Indicated
79 0 600825 0.0941 0.3469 1246328 4595040
Indicated
total 0 4053185 0.1225 0.4876 10941960 43569839
Indicated total, excl .
77,78,79 0 3243463 0.1296 0.5272 9264029 37695569
Measured +
Indicated 71 0 2933084 0.1178 0.3144 7620086 20328567
Measured +
Indicated 74 0 4590494 0.1428 0.8381 14452195 84817658
Measured +
Indicated 77 0 432043 0.0960 0.2282 914308 2173409
Measured +
Indicated 78 0 55118 0.1290 0.2353 156798 285937
Measured +
Indicated 79 0 716338 0.0920 0.3623 1453582 5721293
total 0 8727079 0.1278 0.5890 24596971 113326866
total, excl .
77,78,79 0 7523578 0.1331 0.6339 22072281 105146226
Net Value = (Mo*7.1.49.6035) + (Cu*9.2*0.91042*5.2338) - 16.67 - 27.7778*Mo*7.1/570 - 152.7778*Cu*9.2/230
Moly Revenue Copper Revenue Process Moly Con Transport Copper Con Transport
CAM are of the opinion that the Resource estimates presented above are fully compliant with NI 43-
101, and are suitable for use in pre-feasibility studies to define mineral Reserves.
1.7 Mineral Reserves
Mineral Reserves as defined by the pre-feasibility study are summarized below in Section 1.10.
1.8 Mineral Processing and Metallurgical Testing
Metallurgical testing at Los Verdes dates back to 1976. Mineralization is generally characterized as
oxide or non oxide, the latter can be subdivided into the categories of hypogene and enriched.
Hypogene contains variable grades of molybdenum as molybdenite and relatively lower grade copper
1-7
MQes
mineralization, typically as chalcopyrite. Enriched zones of elevated copper grade contain various
secondary copper minerals together with variable amounts of molybdenite.
Most recently, testing was performed by G&T Metallurgical Services Ltd. in Kamloops, British
Columbia, Canada (“G&T”). Although no formal geologic model was available at the time of sample
selection, the testwork was carried out on composites considered by VGM and MQes to be generally
representative of non-oxide material based on visual inspection of the drill core intervals selected.
Certain mineral assemblages may not have been identified or tested to date. Future testwork will be
required to focus on differences in metallurgical response of materials from the hypogene and
enriched zones.
Metallurgical recoveries and concentrate grades used as the basis for project economic evaluation
were established as follows, based on the testwork at G&T.
• Molybdenum concentrate: Recovery 71%, Grade 57%.

• Copper concentrate: Recovery 92%, Grade 23%.
Since these results are based on incomplete metallurgical testing they have not been adjusted to
account for the effects of either locked cycle testing or plant scale up. Final design parameters can
only be defined after the completion of additional testing.
Recognizing the preliminary nature of the testwork, it was decided to include substantial flexibility
into the plant design. The preliminary flowsheets developed by MQes for the purposes of equipment
sizing, layout development and initial capital and operating cost estimating include:
• Primary, secondary and tertiary crushing followed by single stage ball mill for primary
grinding.
• Bulk roughing, concentrate regrinding and three stages of cleaning followed by scavenging of
first stage cleaner tailings.
• Single stage copper-molybdenum separation, molybdenum rougher concentrate regrinding
and five stages of cleaning. Space has been provided in the plant layout for the future
inclusion of equipment to upgrade copper molybdenum separation tails (copper concentrate)
with reverse flotation to remove residual molybdenum and gangue.
• Molybdenum concentrates will be thickened, filtered and dried to nominally 5% moisture,
sampled and shipped offsite in drums.
• Copper concentrates will be thickened, filtered and dried to nominally 10% moisture, sampled
and trucked offsite.
• Final tailings will be discharged to a conventional tailings dam.
Insufficient sample was available for locked cycle cleaner testing of molybdenite and copper
concentrates in all testwork performed on behalf of VGM. However, analyses of the open circuit
cleaner molybdenum concentrate and the molybdenum rougher tail (which approximates copper
concentrate) indicate that results are in line with VGM’s expectations for final concentrate grades.
1.9 Mining Operations
The mining method chosen to develop the mineral Reserve consists of conventional truck-shovel
mining technology, with ore and waste mined on 5m and 10m high benches respectively. Blasting
will be performed using bulk ANFO (ammonium nitrate fuel oil). Primary loading equipment will be
4.5m3 capacity hydraulic excavators operating in backhoe configuration paired with 36t capacity
articulated haul trucks. The waste storage area will be located approximately 1/2km northeast of the
open pit. Topsoil from disturbed areas will be stockpiled nearby and subsequently used for surface
reclamation activities.
1-8
MQes
1.10 Mine Plan
A detailed design of the ultimate pit was prepared using the optimized pit shell obtained from the Pit
Optimization Package (POP!) software, which is developed and maintained by the Mine Planning
Group of Stateline, Nevada. Detailed designs of two intermediate mining phases were subsequently
made and scheduled using a variable monetary cutoff.
The mine production schedule defines the mineral Reserve. As such, a summary of the mine
production schedule was prepared which tabulated ore based on its resource classification. This
tabulation used a variable monetary cutoff to define ore, with Measured and Indicated resources
directly converted into Proven and Probable Reserves. This summary is presented in Table 1-3.
Table 1-3: Reserve/Resource Summary
Tonnes Average Mo Average Cu

Category (1000’s) Grade (%) Grade (%)
mineral Reserve
Proven 3,974 0.141 0.748
Probable 3,076 0.133 0.539
Total 7,050 0.137 0.657
mineral Resource (not included in the mineral Reserve)
Oxide Stockpile (Measured & Indicated) 3,292 0.103 0.102
Ex-pit (Measured & Indicated) NONE n/a n/a
The Oxide Stockpile Resource was tabulated using a 0.050% Mo cutoff applied to oxide and mixed materials.
Metal prices of US$25.00/lb Mo and US$2.50/lb Cu were used to define ore
The mineral Reserves as set out in the table above have been estimated by Howard Steidtmann of MQes, who is a
Qualified Person under NI 43-101.
1.11 Geotechnical
Seismic risk is low and an appropriate design acceleration coefficient for the project is 0.05g. Design
spectral response acceleration curves for building structure design have been developed. Pit slope
design is controlled by geologic structure and proposed interramp slopes are 41° to 52° for the
granodiorite lithology and 40°to 46° for the quartz-tourmaline breccia lithology. Waste rock dumps
will consist of multiple angle of repose lifts separated by benches that produce an overall slope of
2.5:1 to 3:1. Foundation conditions are characterized by stiff residual and colluvial soil underlain by
shallow rock providing high allowable bearing stress and low compressibility/settlement concerns.
The presence of steep slopes and near surface rock may create problems associated with access and
difficulty in excavation.
Additional site-specific sampling using drill holes and test pits are required to be completed along
with appropriate laboratory testing prior to completion of the final facility design. All outside sources
and on-site borrow areas for required soil materials should be identified and characterized. Pit slope
design should include development of a rock quality/rock mass strength model of the pit area, and
updating of the pit slope stability report based on rock mass strength and limit equilibrium stability
analysis. All major facility sites and major road and pipeline alignments should be field checked for
geologic hazards.
1.12 Tailings Disposal
The tailings dam will be an unlined facility and has been designed to contain 10 million tonnes of
material. The Los Verdes project is located in a fairly low risk seismic area and subsequently an
“Upstream” construction technique for the tailings embankment has been adopted.
1-9
MQes
A starter embankment will be constructed from locally borrowed fill material to a crest elevation of
900m. The blanket and underdrain will control the phreatic surface in the starter embankment and
ensure stability. Tailings deposition will continue using an upstream technique for raising the
embankment crest to the expected 935m elevation at the end of the expected mine life (approximately
8 years). The tailings supernatant pool will be maintained at the back of the impoundment.
During operations, runon for the 100-year, 24-hour storm event will be diverted around the tailings
area. Diversion ditches will be graded at 0.5% slope and constructed above the final tailings elevation
of 935m. They will discharge to the ECD.
The ECD will collect seepage from the tailings dam and water from the surrounding watershed. The
embankment will have a maximum constructed height on the order of 19m. A barge mounted pump
will transfer water from the ECD facility to the process plant. A pipe spillway has also been included
to allow for rapid drawdown of the ECD if necessary in an emergency situation. The ECD also
includes an emergency spillway for the 24-hour PMP storm event.
1.13 Hydrology
Information from 24 surrounding communities were analyzed and used in predicting the Los Verdes
site precipitation and evaporation. The site was determined to have a mean annual precipitation on the
order of 925mm per year. The site has a well defined dry season and wet season. The driest month is
April with a mean monthly precipitation of 7.9mm. The wettest month is July with a mean monthly
precipitation of 287.7mm. Extreme event analyses have predicted design 24-hour storm events for
various return intervals. The 24-hour Probable Maximum Precipitation event was estimated at
430mm. Using data from the region and monitoring data from surrounding communities, the mean
annual lake evaporation loss was estimated to be 1,650mm per year.
1.14 Water Management
An operational water balance model has been developed for the tailings dam and mill facility. A
deterministic water balance model at a point in time five years into the mine life was used to evaluate
process plant and tailings disposal performance and makeup water requirements. Outside makeup
water demand falls to its lowest values during the wet summer months of July and August and peaks
during the driest months of April and May. Modeling showed a peak water demand on the order of
41.7l/s and a mean annual usage rate on the order of 16.5l/s. The peak demand occurs during startup
as the system is initially charged with water. Excluding the initial startup condition, the peak annual
water demand is on the order of 30.5l/s.
Tailings will be transported from the plant to a tailings impoundment facility via an above ground
HDPE pipeline. Water will be recycled from the tailings dam to the process plant. Fresh water will
be supplied from wells.
1.15 Hydrogeology
A site reconnaissance of the climatology, geology and hydrology in the immediate area of the mine
indicates that groundwater from local, fractured aquifers can meet the required water volumes.
Surface water runoff occurs in direct response to high intensity, short duration rainfall events normally
occurring during June to September. Groundwater flow in the study area is controlled by fractures
which are related to the overall geologic structure. Porous flow is very limited due to low hydraulic
conductivity. The potentiometric surface is controlled by the topography with recharge occurring at
higher elevations and discharge occurring at springs.
1-10
MQes
Surface and groundwater samples analyzed for field parameters (pH, specific conductance,
temperature as well as a suite of other parameters including trace metals) indicate that the waters at
most locations contain metal concentrations from the local geological environment and possibly due to
old mining activities. Many of the constituents do not meet NOM-127 standards. Samples taken in
the Santa Ana basin were the best quality.
Periods of drought and flooding can have a profound affect on both surface and ground water supply.
Surface water runoff appears to be abundant during the wet season and substantial storage and water
supply is possible if dams were built to store runoff during this period. However, water rights may be
difficult to obtain for surface water. Groundwater is less plentiful but withdrawal is not restricted.
Based on the results of a geophysical survey, four potential sites were located for project water supply.
Results of the aquifer test estimate the wells located in these areas could produce as high as 5 to 12l/s.
Confirmation of this is required by drilling and testing exploration wells.
1.16 Infrastructure
The infrastructure required for the development of the project will include:
• Upgrade of the local access road to Santa Ana.

• Access road to the truckshop/Warehouse.
• Mining haul roads.
• Truckshop/Warehouse lay down yard.
• Fuel storage.
• Power Generation station.
• Operations camp.
• Security and first aid building.
• Administration building.
• Laboratory.
• Plant services building.
• Water supply.
• Waste management.
1.17 Project Execution Plan
Allowing for concurrent and multiple activities the total project development period is estimated to be
39 months from the date of issuing this prefeasibility study. VGM is investigating opportunities to
improve on the overall schedule.
1.18 Operations Plan
The mine and associated facilities will be operated primarily under management drawn from the
Mexican mining industry. The operations will be integrated to the extent possible with local economy
while making every effort to minimize adverse effects of the operation on local communities.
The mine will operate on a 12 hour per day basis in order to minimize noise and dust impact on the
village of Santa Ana. The mill, which will be much further from the village and the other side of the
ridge, will operate on a 24 hours per day basis.
The mine site will be supported by an office in Hermosillo which will provide marketing, vendor
contact and accounting support.
1-11
MQes
1.19 Marketing
VGM engaged Mr. Dennis Battrum, a well known expert in molybdenum markets, to provide an
assessment of issues relating to marketing of molybdenum concentrates. Copper concentrate
marketing data is drawn from published data and project specific discussions with Asarco.
1.20 Environmental, Health and Safety
VGM has completed a number of environmental technical studies and an EIS for the project pursuant
to the laws and requirements in Mexico. VGM is also continuing several of these studies and
performing ongoing baseline surface and groundwater quality monitoring. The EIS and other
supporting documents necessary for obtaining the applicable environmental permits are anticipated to
be submitted to the relevant agency (SEMARNAT) in August 2008.
An initial environmental management plan has been prepared to describe the actions needed to protect
the environment, achieve environmental compliance and meet applicable environmental performance
standards. It identifies the environmental aspects of the project components. Updates and revisions of
this plan will be ongoing, as the project is developed.
Additional work is needed to develop the environmental management plan in more detail.
1.21 Social and Community
The community of Santa Ana is located about 1.5 km south of and several hundred metres lower in
elevation than the proposed operation. The village was once the site of a mining operation and the
villagers are familiar with and supportive of resuming mining operations.
The community may expect to benefit economically from the development but there may also be
negative impacts. VGM intends that the former will be maximized and the latter minimized.
VGM has given community support to an appropriate extent during its field operations and expects
community support activities to increase as the project is developed.
Negative impacts will include noise, dust and increased population. VGM will mitigate the former by
operating the mine (as opposed to the mill) on a twelve hour per day basis and to conduct mining
operations wherever possible from the north side of the ridge. All haul roads and materials handling
facilities will use dust suppression by water sprays and surfactants.
VGM will draw its labor force to the extent possible from local sources and to give priority to local
inhabitants for training to semi-skilled and skilled levels.
1.22 Project Economics
The cashflow model generated a pre-tax NPV at an 8% discount rate of US$96.9 million on a 100%
equity constant dollar basis. The corresponding pre-tax IRR is 23% and the project has a payback
period of 3.3 years. Sensitvity evaluations were performed on metal prices, capital cost and operating
cost. The project economics are more sensitive to metal prices and production than costs.
1.22.1 Operating Costs
The estimated operating costs for mining, processing and general and administration are US$1.85/t
ore, US$13.81/t ore and US$3.70/t ore respectively. Total average life of mine, mine site cash
operating costs are estimated at US$22.71/t ore. All costs are reported in 2008 Q1 US$.
1-12
MQes
1.22.2 Capital Costs
The initial capital cost for the Los Verdes project is estimated at $138.8 million. All costs are
expressed in first quarter 2008 US dollars, with no allowance for interest, taxes, import duties or
escalation. Consideration has been given to the following issues in developing the capital cost
estimate:
• Availability of local in-country labor.

• Adequate experienced expatriate supervision during construction.
• Degree of difficulty of the area in which the plant is to be constructed.
• Affect of climatic conditions.
• In-country methods of construction.
• Productivity of the labor force.
• Resources within Mexico for material and equipment supply.
• Local availability of suitable contractors with heavy industrial construction experience.
• Transportation logistics.
1.22.3 Sensitivity Analyses
For NPV’s and IRR’s the project is more sensitive to molydenum prices than copper prices or costs.
In the case of NPV’s Copper price sensitivities are similar to those of costs.
Capital costs have a larger effect on IRR’s than Molydenum prices.
1.23 Conclusions and Recommendations
1.23.1 Conclusions
1. Mineralization at Los Verdes is hosted in a granodiorite cut by veins, stockworks, and

tourmaline-bearing breccias, similar to other copper-molybdenum systems in Sonora.
2. The geology and overall geometry of the deposit are well-understood, but potential exists for
additional mineralization.
3. The drilling program carried out during 2006 and 2007 was successful in meeting the original
objective of defining a Resource of Mo-Cu-(W) mineralization of considerable economic
interest, and in confirming the validity of historic 1970’s drilling.
4. The sampling database is of sufficient quality and quantity to define NI 43-101-compliant
mineral Resources, although there is room for improvement in the database handling
procedures.
5. Metallurgical tests indicate that conventional flotation of sulfide mineralization can
potentially produce marketable concentrates of molybdenum and copper.
6. A considerable Resource of oxide molybdenum (ferrimolybdite) mineralization exists which
needs metallurgical evaluation.
7. The Los Verdes prefeasibility study property shows economic potential, and warrants the
completion of a detailed Feasibility Study.
8. Based on testwork to date the recommended flowsheet includes:
• Primary grinding to a P80 of 150μm.

• Bulk flotation of rougher concentrate.
• Bulk concentrate regrind to P80 of 30μm.
• Cleaning of bulk concentrate.
1-13
MQes
• Copper molybdenum separation with NaHS.
• Molybdenum rougher concentrate regrind to a P80 of 20μm.
• Cleaning of molybdenum rougher concentrate.
9. The metallurgical recoveries and concentrate grades used as the basis for project economic
evaluation are as follows:

10. The process plant design is based on incomplete metallurgical testwork but has reached
prefeasibility standards. The unit operations incorporated in the plant design are all
commercially proven. Final design parameters can only be defined after the completion of
the following additional work:
• Geologic modeling to establish distribution and proportion of significant ore

types.
• Variability testing of the samples to determine the importance and influence of
lithology, alteration, head grade and other factors.
• Geo-metallurgical mapping.
• Completion of flotation testwork including locked cycle testing to finalize the
flowsheet and define concentrate grades and recoveries plus deleterious
elements.
• Optimized grind size analysis.
• Solid/liquid separation testwork on intermediate and final flotation products.
11. Seismic risk is low and an appropriate design acceleration coefficient is 0.05g. Design
spectral response acceleration curves for building structure design are available.
12. Pit slope design is controlled by geologic structure and proposed interramp slopes are
moderately steep (41° to 52° for the granodiorite lithology and 40°to 46° for the quartz-
tourmaline breccia lithology).
13. Waste rock dumps will consist of multiple angle of repose lifts separated by benches that
produce an overall slope of 2.5:1 to 3:1.
14. Foundation conditions are characterized by stiff residual and colluvial soil underlain by
shallow rock providing high allowable bearing stress and low compressibility/settlement
concerns.
15. Sufficient data is available to adequately characterize the expected meteorologic conditions
for the Los Verdes site.
16. An operational water balance model has been developed for the tailings dam and mill facility.
In general, outside makeup water demand falls to its lowest values during the wet summer
months and peaks during the driest months of April and May.
17. Modeling showed a peak water demand on the order of 41.7l/s and a mean annual usage rate
on the order of 16.5l/s. The peak demand occurs during startup. During subsequent years, the
peak annual water demand is on the order of 30.5 l/s.
18. The tailing impoundment will be unlined and constructed using an upstream type of
embankment configuration with underdrains and a seepage collection structure (ECD).
19. The tailing dam embankment is designed to store the 1000-yr 24-hr rainfall event and will
have no emergency spillway.
20. The ECD embankment will contain an emergency spillway designed to safely pass the full
PMF storm event.
21. Diversion channels will intercept unimpacted water from that portion of the watershed above
935m elevation and divert it around the tailing impoundment area.
1-14
MQes
22. The location of the tailings disposal facilities is well suited to the geological environment
which will provide stable foundation conditions with low permeability and little risk of
ground water contamination.
23. The presence of steep slopes and near surface rock may create problems associated with
access and difficulty in excavation in constructing the tailings and ECD facilities.
24. Suitable materials are expected be available locally for construction of the tailings
embankment.
spectral response acceleration curves for building structure design are presented in the
geotechnical section of this report.
concerns. The presence of steep slopes and near surface rock may create problems associated
with access and difficulty in excavation.
28. The tailings facility is located in a suitable valley within the VGM concessions not in view of
the town of Santa Ana.
29. The tailings facility has a capacity of 10million tones and can be increased to 15 million
tones.
31. The tailing dam embankment is designed to store the 1,000-yr 24-hr rainfall event and will
PMF storm event.
ground water contamination. The presence of steep slopes and near surface rock may create
problems associated with access and difficulty in excavation. Suitable materials should be
available locally for construction of the tailings embankment. There is sufficient area for
expanding the tailings facility should additional mineable reserves be determined.
35. Sufficient data is available to adequately characterize the expected meteorologic conditions at
site. It is recommended the existing hydrologic information is used to advance the design of
the project.
36. The proposed mine area is drained by two main rivers, the El Moro and Santa Ana.
37. The average total runoff for these drainages is estimated at 98.5 million cubic meters per year.
38. Groundwater flow is mainly governed by secondary permeability (fracture flow) of andesite
and other igneous rocks. Limited water is available in alluvial material.
39. Significant amounts of water can be found in fractured bedrock underlying stream beds.
Preliminary tests indicated that the mine could be supplied with water from wells completed
in fractured bedrock.
40. Four locations have been identified for groundwater explorations. These sites were identified
using geophysical surveys and are numbered SEV-1, SEV-6, SEV-11, and SEV-15.
41. Water quality in surface and ground waters is quite variable throughout the region.
42. Water in the upper part of the Los Chinos Valley in and near the old mine workings is
degraded.
43. Based on these results, there are no reason in terms of water supply issues that the mine
should not proceed to a feasibility and design study.
44. An operational water balance model has been developed for the tailings dam and plant. For
the pre-feasibility level study, a simple deterministic water balance model at a point in time
1-15
MQes
five years into the mine life was used. Modeling showed a peak water demand on the order
of 41.7l/s and a mean annual usage rate on the order of 16.5l/s. The peak demand occurs
during startup. Excluding the initial startup condition, the peak annual water demand is on the
order of 30.5l/s.
45. VGM has developed and will implement a comprehensive sustainability policy on
environmental, health and safety which has been approved by the Board of Directors.
46. Environmental, health and safety aspects of the project have reached prefeasibility standards.
47. VGM has completed a number of environmental technical studies and an EIS for the project
pursuant to the laws and requirements in Mexico.
48. VGM is continuing to perform baseline surface and groundwater quality monitoring to further
develop appropriate environmental control measures.
49. An initial environmental management action plan (“EMAP”) has been prepared to describe
the actions needed to protect the environment.
50. VGM holds good and marketable title to the mineral rights for the area in which the mining
operation will be conducted. VGM does not yet hold surface rights or ownership of the land
on which the operations will be conducted. The process through which VGM is working to
obtain surface rights is somewhat slow and bureaucratic but is appropriate under Mexican
law.
51. Allowing for concurrent and multiple activities the total project development period is
estimated to be 39 months from the date of issuing this prefeasibility study.
52. Total overall life of mine, site cash operating costs are estimated at US$22.71/t ore.
Operating costs are considered adequate for preliminary feasibility study purposes.
53. The capital cost for the Los Verdes project is estimated at $138.8 million expressed in first
quarter 2008 US dollars.
54. The process plant design is based on a preliminary but incomplete technical design data.
Upon receipt of final technical design data there may be some re-sizing of equipment which
may impact the capital cost estimate for the process plant.
55. Social and community aspects of the project have been assessed to prefeasibility study
standards.
56. A cashflow model was developed which is suitable for prefeasibility study purposes. The
model generated a pre-tax NPV at an 8% discount rate of US$96.9 million on a 100% equity
constant dollar basis. The corresponding pre-tax IRR is 23% and the project has a payback
period of 3.3 years.
57. Based on the deposit’s size, orientation and relationship with the surface topography, it is
most suitably developed using conventional open pit mining technology.
58. The mineable reserve is estimated to be 7,050kt at 0.137% Mo and 0.657% Cu. The strip
ratio is estimated at 1.7 tonnes of waste per tonne of ore. Approximately 3,292kt of oxide
material with a grade of 0.103% Mo and 0.102% Cu will be stockpiled.
59. The average life of mine mining cost is estimated at US$1.85/t material mined.
60. The mine capital cost (excluding prestripping) is estimated at US$13.474 million.
1.23.2 Recommendations
1. Continued work at Los Verdes is recommended to complete a detailed Feasibility Study for
production of the sulfide copper-molybdenum Resource at Los Verdes. The recommended
work is described in the Work Program in Table 21-1, below, to be carried out during the last
3 quarters of 2008.
2. Investigation of the groundwater supply should continue with detailed aquifer testing
including long-term pumping (7 days) of test wells.
3. An Environmental Impact Statement should be completed, and the process of applying for
Operating permits should commence.
4. Some anomalies in downhole surveys preclude defining the exact margins of the secondarily
enriched sulfides, and hence the ultimate pit limits. Before a final pit design is done it will be
1-16
MQes
necessary to drill several holes (CAM estimates from 10 to 15) and survey these using
gyroscopic methods of demonstrated reproducibility to define the final non-mineral mineral
contact. Angle drilling should be done perpendicular to cross-section lines, to confirm
continuity between sections.
5. Metallurgical testing is needed to improve existing data on copper and molybdenum
recoveries and production of marketable concentrates. Additional drilling should be carried
out to obtain samples for testing and for geometallurgical mapping. Upon completion of the
recommended testwork program the material balance should be reconfigured and equipment
sizing finalized.
6. A considerable tonnage of oxide mineralization contains molybdenum oxide (ferrimolybdite)
at a potential value at current prices in excess of $50 dollars per tonne, and probably not
amenable to flotation. CAM recommends that alternative metal recovery technology for this
material be examined. The oxide material would have to be mined in any case, in order to
access the underlying Mixed and Sulfide mineralization.
7. Additional core samples are needed to obtain added molybdenum-oxide mineralization for
metallurgical tests.
8. Sample preparation for the field duplicates be reviewed to see if a finer crush or larger sample
size can reduce the number of anomalous values found in QA/QC checks.
9. Two of the drill holes with precise downhole surveys be twinned by either RC or diamond to
determine if the bias observed in RC versus diamond holes actually exists.
10. The deposit contains silver and tungsten at grades that may be of economic interest as
byproducts. As far as is known Cominco did not assay for silver and the Cominco assays for
tungsten were expressed as WO3. Because of time constraints, tungsten and silver were not
included in this Resource estimate. CAM recommends that both tungsten and silver be
included in future Resource estimates.
11. A coherent and uniform electronic database, probably in Microsoft access, should be
compiled for use in future Resource estimation work. This compilation is largely a
clerical/technical job, but needs proper geological supervision. Future Resource estimation
should be enhanced by a number of incremental improvements in the raw data and in
estimation methodology. These include the use of Access, with links to source documents;
reducing the model size to cover just the area of the open pit, plus a small perimeter; rotating
the model to be parallel to sections; wireframing the sulfide boundary.
12. Further definition of lithologic and mineralization units should be obtained.
13. All of the metallurgical test work to date has been on composites, so a single volume
containing mixed and sulfide within the secondarily enriched sulfides is consistent with
current data. However, if additional metallurgical testing indicates differences between
mixed sulfides (i.e. with chalcocite) and hypogene sulfides (i.e. chalcopyrite and bornite), an
interpretation of the differences between these two mineral types may be required. CAM
recommends additional interpretation as warranted, as the project proceeds.
14. Additional site-specific sampling using drill holes and test pits need to be completed along
with appropriate laboratory testing prior to completion of the final Feasibility Study. Further,
all outside sources and on-site borrow areas for required soil materials should be identified
and characterized. Pit slope design should include development of a rock quality/rock mass
strength model of the pit area, and updating of the pit slope stability report based on rock
mass strength and limit equilibrium stability analysis. All major facility sites and major road
and pipeline alignments should be field checked for geologic hazards.
15. The current water balance model should be updated to account for changes over the full mine
life and a stochastic model should be prepared.
with appropriate laboratory testing prior to completion of tailings and ECD facility designs.
Outside sources and on-site borrow areas for required soil materials should be identified and
characterized.
17. The proposed tailings and ECD locations should be field checked for geologic hazards.
1-17
MQes
18. Condemnation Drilling should be completed for all facilities.
19. It is recommended that additional site-specific sampling using drill holes and test pits be
completed along with appropriate laboratory testing prior to completion of final facility
design.
20. All outside sources and on-site borrow areas for required soil materials should be identified
and characterized.
21. Pit slope design should include development of a rock quality/rock mass strength model of
the pit area, and updating of the pit slope stability report based on rock mass strength and
limit equilibrium stability analysis.
22. All major facility sites and major road and pipeline alignments should be field checked for
geologic hazards.
23. Additional site-specific sampling using drill holes and test pits should be completed along
with appropriate laboratory testing prior to completion of final facility design.
24. Tailings should be properly characterized for final design.
and characterized.
26. The existing hydrologic information is used to advance the design of the project.
27. A meteorological station should be setup and site specific data collection started to verify
regional data used.
life and a stochastic model should also be prepared.
29. Surface water rights should be obtained.
30. Investigation of the groundwater supply should continue with a detailed aquifer testing
pumping including long-term pumping (7 days) of test wells.
31. A site water balance should be developed.
32. The effects of water extraction on down stream users should be determined.
33. Alternatives for closure and stability of tailings should be further developed.
34. Incorporate onsite testing of tailings in the planned nursery program when operations begin.
35. Use of post-mining land uses should be commenced in collaboration with the appropriate
local and regional stakeholders to facilitate conversion of mining facilities to other uses.
36. The EMAP should be updated and commenced in accordance with the work program.
37. Strong relations should be maintained with the community and VGM should continue to
assist in community development.
38. The process toward obtaining surface rights should be continued; the State of Sonora should
be asked to assist in the progressing this process if it becomes appropriate.
39. Although the project execution plan for the project has reached prefeasibility standards, it is
recommended that VGM commences the work program immediately and evaluates reducing
equipment order delivery times and assessing contract strategies.
40. Operating costs should be updated and refined to reflect additional detail developed in the
final feasibility study.
41. Considerable escalation is presently occurring in equipment costs as well as construction
costs for mining projects. It is recommended that the basis for this estimate is monitored
closely through vendor quotations, etc and updated as necessary.
42. A treatment capacity study should be performed to confirm that the 1.0Mt/y production rate is
optimal for the deposit.
43. An evaluation should be performed evaluating the use of smaller haul trucks (20 to 25t
range).
44. Mining phases should be improved to decrease preproduction period waste stripping. A
fourth mining phase is one possibility worth considering.
45. Detailed term sheets for treating concentrates should be obtained.
46. VGM should continue to enhance the project’s economic model for purposes of discussions
with sources of financing.
1-18
MQes
47. Resolve the average LOM mining cost into fixed and variable components for pit
optimization. This will increase the accuracy of mining costs associated with ore and waste
movement. Thus material mined near the pit rim would be assigned a lower mining cost than
material mined from the highest or lowest benches.
48. Design the oxide stockpile separately from the waste storage area. Prepare annual build up
plans for both facilities.
49. Take a closer look at blasthole drills, especially the following:
a. Drill penetration rates (need testing, may be able to correlate with exploration
drilling rates)
b. Required powder factors for adequate fragmentation of ore and waste
c. Drill bit life (need abrasion testing)
50. Develop owner/operator maintenance costs for the mining fleet.
51. Perform haul cycle analyses to more accurately estimate haul truck productivity.
52. Improve the design ultimate pit to reduce the overall stripping ratio. This will require
working with the geotechnical engineer to refine the slope design criteria.
53. Consider blending possibilities for copper as well as molybdenum when performing
production scheduling.
54. Improve the mining phases to delay starting the final pushback. A fourth mining phase is one
possibility worth considering.
55. The work program shown in Table 1-4 needs to be funded.
A Work Program encompassing the above recommendations, and others, is set forth below in Table 1-
4.
1-19
MQes
Table 1-4: Recommended Los Verdes Work Program
Estimated
Category Activity Objective Amount Unit Cost
Cost, $US
Surface rights surface purchase or
Property $ 1,500,000
acquisition lease from ejido
Mapping/ Determine district
Geology 60 sq km $500/sq km $30,000
Prospecting potential
Core Drilling Refine pit limits 600 m $ 100/m $ 60,000
Drilling Core Drilling Metallurgical samples 400 m $ 100/m $ 40,000
Geologist Drill geology 2 months $ 3000/mo $ 6,000
Geological Constrain grade $7,000/ labor
4 months $28,000
Model Update Modeling month
Resource Update
Update Grade $27,000/
Model for Feasibility 1 month $27,000
Model labor Month
Update Mine
Mining Finalize for Feasibility $90,000
Planning
Laboratory Measure recovery from
Metallurgy $250,000
tests sulfide and oxide ores
Engineering and Feasibility Determine project
$750,000
design Study economics
Design & Geotech Drilling;
Geotechnical Geotech Borrow sources $340,000 estimate $340,000
Investigation investigation; design
Waste Rock
Waste Mgmt Mgmt. Plan & $115,000 estimate $115,000
Design
Drill test & Develop
Hydrology Water drilling contractor estimate $ 310,000
wells
Infrastructure* $0
PEP/POP $175,000
Cost Estimat’n* $0
Marketing* $0
EIS Continue EIS contractor n/a $ 20,000
Environmental Submit permit

Permitting contractor n/a $ 310,000
applications
Tests Monitoring contractor n/a $100,000
Social &
$50,000
Community
Economics* $0
TOTAL: 4,201,000
* = Costs included in Feasibility Study
1-20
MQes
SECTION 2
INTRODUCTION AND TERMS OF REFERENCE
2.0 INTRODUCTION AND TERMS OF REFERENCE
2.1 Sponsorship and Use
Chlumsky, Armbrust and Meyer LLC (herein “CAM”) was engaged by Virgin Metals, Inc. (herein
“VGM”) of Toronto to prepare a Technical Report, as an independent review of the geology,
methodologies, and mineral Resources at the Los Verdes copper-molybdenum-tungsten project of
VGM, in a manner consistent with Canadian National Instrument Form 43-101 F1 standards. Some
recommendations are also included. The Los Verdes property in Sonora, Mexico is controlled by
VGM’s wholly-owned Mexican subsidiary, Minera Alamos de Sonora, S.A. de C.V. (herein “MAS”).
CAM had prepared NI-43-101-compliant Technical Reports in January 2007 and in February 2008
(CAM 2007, CAM 2008). This report also incorporates a summary of the Prefeasibility study
undertaken by Mine and Quarry Engineering Services, Inc. (“MQes”), The Mines Group, Inc. (“The
Mines Group”), Heurística Ambiental Consultoria, S.C. (“Heurística Ambiental”) and Hidrolab
Consultores, S.C. (“Hidrolab”) and dated July, 2008. No additional (since 2007) drilling data has
been used in this report.
The report may be used in conjunction with listings of securities by Virgin Metals on Canadian
exchanges.
2.2 Qualified Persons
This report was prepared by several Qualified Persons, as listed in Section 23. Dr. Fred Barnard of
CAM visited the Los Verdes project site on October 29 and 30, 2006, and the Hermosillo office of
VGM on October 28 and 31, 2006. During April 1-3, 2008, Robert Sandefur, P.E. of CAM, visited
the Hermosillo Offices of VGM to review database source documents. He also visited the Los Verdes
deposit to review core and surface geology as well as to verify collar locations, collar azimuth and dip.
During this visit Robert also visited VGM’s Hermosillo warehouse to examine sample storage.
Christopher Kaye and Anthony Brown of MQes visited the Los Verdes project site on June 5, 2007.
Anthony Crews, P.E. of The Mines Group also visited the Los Verdes site on June 5, 2007.
2.3 Sources of Information
Information for this report was obtained from 1) a Technical Report prepared in 2005 by Sears, Barry
documents; 2) two Technical Reports prepared in 2007 and 2008 by CAM; 3) reference to published
literature; 4) data provided by VGM personnel; 5) the Prefeasibility Study dated July, 2008, by MQes,
The Mines Group, Heurística Ambiental and Hidrolab; and 6) observations made on-site by the
several Qualified Persons who visited the site. Major report sources are listed in Section 23,
References.
2.4 Conventions
All references to dollars ($) in this report are in US dollars unless otherwise noted. Distances, areas,
volumes, and masses are expressed in the metric system unless indicated otherwise.
2-1
MQes
SECTION 3
RELIANCE ON OTHER EXPERTS
3.0 RELIANCE ON OTHER EXPERTS
Other persons beside the undersigned provided data for this report. These include Gary Lohman, who
was at the time Virgin Metals’ Chief Geologist and a registered Professional Geologist and Qualified
Person (QP) as defined by NI 43-101 of the Canadian Securities Administrators, Mr. Keith Brogoitti,
at the time VGM’s Operations Manager and Mr. Renee Mladosich, currently VGM’s Operations
Manager. These three people provided much of the drilling data database. CAM verified the database
(see Section 14.0), utilizing among other the services of Linda Hadley, a qualified geoscientist who
specializes in verifying of legacy drilling databases.
In addition, discussions were held in Mexico and electronically with VGM personnel including Chris
Davie, CEO of VGM, Javier Castano, VGM Project Geologist; Macario Mendoza, VGM Geologist;
Alonso Daco, consulting geologist, and others. On October 31, 2006, Dr. Barnard visited the sample-
preparation facility of ALS Laboratorios de Mexico, to review the samples-preparation procedures
with Mr. Marco Gammon of ALS.
MQes, CAM and The Mines Group have reviewed and analysed some data provided directly by
VGM. MQes, CAM and The Mines Group have exercised reasonable diligence in checking and
confirming data provided directly by VGM, augmented by direct field examination, and have drawn
their own conclusions therefrom.
MQes, CAM and The Mines Group were provided with a list of tenements by VGM’s independent
legal counsel (Tapia, Robles y Cabrera S.C. dated March 3, 2008) and MQes, CAM and The Mines
Group have relied upon the legal due diligence and title opinion by their independent legal counsel
(Tapia, Robles y Cabrera S.C. dated March 31, 2008) to confirm the validity of the mineral title
claimed by VGM. The Mines Group has relied on information supplied by independent consultants
Heurística Ambíental S.C. to form their opinion on environmental issues (Estudio de Impacto
Ambiental ,Modalidad Particular, Proyecto 'Los Verdes'; Estudio Tecnico Justificativo, Proyecto 'Los
Verdes'; Estudio de Riesgo Ambiental, Nivel 2, Proyecto 'Los Verdes', Agosto, 2008) and on a report
by Hidrolab Consultores S.C. (Estudio Geohidrologico Regional, Proyecto Minero 'Los Verdes',
Febrero 2008) to form their opinion on project water sources. MQes has relied upon information
provided by VGM from an independent marketing consultant (Mr. Dennis Battrum – Draft report
March 25, 2008) for aspects related to marketing.
The metallurgical, geological, mineralization, exploration technique and certain procedural

descriptions, figures and tables used in this report are taken from reports prepared by VGM and its
consultants.
Mineral Resource definitions used in this report are consistent with those adopted by the Canadian
Institute of Mining, Metallurgy and Petroleum ("CIM") Council in December 2005, as amended, and
prescribed by the Canadian Securities Administrators' National Instrument 43-101 and Form 43-
101F1, Standards of Disclosure for Mineral Projects.
3-1
MQes
SECTION 4
PROPERTY DESCRIPTION AND LOCATION
4.0 PROPERTY DESCRIPTION AND LOCATION
4.1 Ownership
Virgin Metals Inc. is the 100 percent owner of Minera Alamos de Sonora, S.A. de C.V. (MAS) and
Molibdeno Los Verdes S.A. de C.V. (MLV), both Mexican companies. MLV has been assigned 100
percent of the title to the mineral properties at Los Verdes from MAS, MAS being the operating
company which is carrying out the exploration.
4.2 Mineral Properties
The mineral rights controlled by MLV total 15 contiguous titled exploration concessions, covering
5559.1 hectares. Neither MAS nor MLV currently own any surface rights in the area.
The mineral rights controlled by MAS are enumerated in Table 4-1, and shown in Figure 4-1 and
Figure 7-2 government-published Santa Rosa topographic sheet H12D76. These are fifteen titled
exploration concessions totaling 5,559.1 hectares. All properties are in Yecora Mining Registry
District, State of Sonora, Mexico. All are valid for all metallic minerals, and all are 100 percent
owned by MAS. Excepting the Bacanora concession (see next paragraph) no royalties are payable to
other parties.
All concessions have been legally surveyed. MAS acquired the Hilda 33 to 40 concessions by
purchase during 2005 from previous owners, while Hilda Fraccion 1, 2, and 3 were new application
made by MAS during 2006.
On 31 January 2007, MAS purchased the Bacanora concession from Minera Teck Cominco, S.A. de
C.V. (MTC), a Mexican corporation which is wholly-owned by Teck Cominco of Canada. Terms of
the acquisition included transfer of VGM shares to MTC and a 2 percent Net Smelter Returns royalty
on metal production from the Bacanora property. There are no minimum royalty payments in lieu of
actual production. The exploration data relating to the Bacanora and surrounding claims was included
in the purchase of properties at Los Verdes from MAS, MAS being the operating company which is
carrying out the exploration.
4-1
MQes
Table 4-1: Mineral Concessions Comprising the Los Verdes Deposit and Surrounding Lands
2007 Work
Title
Name Title Date File no. Hectares Expiry Date Commitment
no.
(pesos)
Hilda 33 217359 02 Jul 2002 082/27941 189.1993 02 Jul 2052 38,074.15
Hilda 34 220144 06 Jun 2003 082/28415 121.7320 6 Jun 2053 24,740.03
Hilda 36 220444 25 Jul 2003 082/28548 41.2423 25 Jul 2053 4,118.10
Hilda 37 223879 03 Mar 2005 082/29171 276.2343 3 Mar 2055 27,976.90
Hilda 37 Fraccion
223911 08 Mar 2005 082/29317 1.2955 8 Mar 2055 65.36
1
Hilda 37 Fraccion
223912 08 Mar 2005 082/29317 1.4622 8 Mar 2055 65.36
2
Hilda 38 223836 23 Feb 2005 082/29055 20.5762 23 Feb 2055 686.28
Hilda 39 224958 28 Jun 2005 082/28552 1100.7171 28 Jun 2055 103,860.18
Hilda 40 230282 03 Aug 2007 082/31327 197.6725 03 Aug 2057 7,287.69
Hilda Fraccion 1 228545 08 Dec 2006 082/30631 2277.3319 08 Dec 2056 79,973.79
Hilda Fraccion 5 228549 08 Dec 2006 082/30631 3.806 08 Dec 2056 40.85
Bacanora 214665 26 Oct 2001 2/2 4/02260 55.0 26 Oct 2051 5,392.75
TOTALS -- -- -- 5559.1068 -- 341,327.76
Each concession has an annual minimum work commitment, based on its surface area and age. The
work may be performed on one or more concessions, for the benefit of all concessions in a contiguous
group. The commitment due for the year 2007 for the entire group of VGM concessions is estimated
at approximately $US35,000, an amount exceeded many times over by qualifying work (e.g. drilling)
done on the property (see Table 10-1). The work commitments for 2008 are similar in amount, and
should be readily surpassed by work actually carried out.
The security and marketability of title for the concessions on Table 4-1 was the subject of a Title
Opinion by Mexican lawyer Eduardo Robles, dated 3 March 2008, based on review of documents in
government files as of mid-February 2008. Mr. Robles’ opinion was that, subject to the qualifications
he stated, the properties were in good standing, free of encumbrances, and marketable from a legal
viewpoint, at that time.
Figure 4-1 depicts the Molibdeno Los Verdes Alamos Concessions. The green outline is the exterior
boundary of the VGM concession block. The Grid on the main map is 1 kilometer.
4-2
MQes
Figure 4-1: Molibdeno Los Verdes Alamos Concessions - Los Verdes
The Buena Vista Moly Pit is on Hilda 36, and the Bacanora concession, immediately west of Hilda 36,
underlies part of the mineral Resource described in this report. The town of Santa Ana is on the
portion of Hilda 39 which is south of Hilda 36. The relation of the property boundaries with respect to
geology is shown on Figure 7-2.
The Mexican mineral concession system as explained in Sears, Barry (2005) is reproduced here in
slightly modified wording. There have been no material changes in the system since 2005.
A concession is staked by erecting or utilizing existing surveyed monuments from which the corners
of the concession are defined by written descriptions. Once staked, it is registered with the Mines
Division of the Mexican Government (Secretaria de Economía, Coordinación General de Minería,
Dirección General de Minas) and a secure title is granted (Titulo Concesión Minera de Exploración).
Three types of concession are granted in Mexico. These include:
1. Exploration Concessions, carrying the right to undertake exploration including extracting a

small amount of minerals (valid for up to six years); an annual tax and an annual work
commitment are required to maintain an exploration license;
2. Exploitation Concessions, which gives the owner the right to mine (valid for up to 50 years
and renewable for another 50); and
3. Beneficiation Plant Concession which allows a party to occupy property to operate a mill
and/or smelter.
4-3
MQes
Mineral exploration and development by foreign companies is welcomed and encouraged by the
government of Mexico.
4.3 Environmental Issues
According to information from VGM, surficial exploration can be carried out on a titled exploration
concession without additional permits. If drilling is planned and the drill-sites are confirmed, an
application must be submitted to the Secretaria del Medio Ambiente y Recursos Naturales
(SEMARNAT) prior to issuing an environmental drilling permit (Informe Preventivo).
At Los Verdes, the areas drilled in 2006 and those anticipated for 2007 have been cleared previously,
and have access roads. Therefore, no permitting problems are anticipated for the work program
proposed in this report.
To the author’s knowledge, the principal potential environmental concerns at the Los Verdes project
would relate to land use, especially valley lands suitable for agriculture, and the supply and quality of
water. Because the local population density is low, and because VGM have good relations with the
ejido, these issues are not expected to be unusually contentious.
Several thousand tonnes of tailings from the 1960’s mining and milling of the Moly Pit remain west of
the town of Santa Ana. Erosion of these tailing has washed some into the Santa Ana River. The
concessions which covered the mining and milling operations at that time were subsequently
abandoned, and were later re-staked by an unrelated party; therefore, no environmental liability is
expected to remain with the current owner (i.e. VGM).
4-4
MQes
SECTION 5
ACESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE and
PHYSIOGRAPHY
5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE and

PHYSIOGRAPHY
5.1 Access, Physiography, and Climate
The Los Verdes Property is located in the municipality of Santa Ana de Yecora, State of Sonora,
Mexico (Figure 5-1). It lies about 200 kilometers east-southeast of Hermosillo, and 190 kilometers
northeast of Ciudad Obregón, on the government-published topographic sheet Santa Rosa, H12D76.
UTM coordinates near the center of the property are 681,500 E, 3,143,000 N (NAD 27). The
longitude is 109 degrees, 10 minutes W, latitude 28 degrees, 24 minutes N. Elevation on the property
ranges from 740 meters to 1200 meters. The Los Verdes property can be reached from Hermosillo or
from Chihuahua City via the paved Mexico Federal Highway 16, which connects those two state
capitals (Figure 5-1). The turnoff to the property is located 242 kilometers east of Hermosillo and 40
kilometers west of Yecora. From the Highway 16 turnoff, the small town of Santa Ana lies seven
kilometers southwest via a gravel road. The open pit on the Los Verdes property is 1.5 kilometers
north of Santa Ana, via a steep dirt road. Four-wheel drive is recommended, especially in wet
weather.
The region around the Property consists of ruggedly corrugated mountains of the Sierra Madre
Occidental. Local relief in the mountains typically approaches 1000 meters near major river valleys,
and 500 meters elsewhere. There is very little flat ground near the Property.
The climate is subtropical, with a summer rainy season. Frosts are unknown. Vegetation is scrubby
thorn forest, with some oaks and scattered pines. Annual rainfall is about 1000 millimeters, but
evapotranspiration is normally higher than this. There are no extremes of climate which would impair
year-round mining operations, but exploration is slightly more efficient during the dry season
(October to May).
5.2 Local Resources and Infrastructure
Yecora, 40 kilometers east of the Santa Ana turnoff, is a ranching town with a population of about
5,000. It has basic services such as telephone, internet, motels, restaurants, a health clinic, hardware
stores, gasoline, etc. A serviceable airstrip lies adjacent to the town.
Santa Ana has a population of perhaps 300 people, with a school but almost no services except basic
groceries. A power line to the town is under construction, with completion expected early in 2008.
There are very few outlying residences, and none within the VGM drilling program and Resource
area. The flat valley lands are cultivated, whereas the slopes which underlie 90 percent of the surface
are used only for grazing. There is sufficient land available locally to eventually contain mine dumps,
mill, tailings, and office facilities.
5-1
MQes
Figure 5-1: Location of Los Verdes Property
VGM does not currently own any surface rights in the area. The surface rights over much or all of the
VGM mineral rights are used by the residents of Santa Ana. Recent investigations byVGM have
revealed that title to the surface rights are not clearly vested in an ejido (an agricultural cooperative
peculiar to Mexico), as was formerly believed. The local residents and the Mexican government are
working to resolve the title issues, so that VGM can negotiate with a clear title-holder. The process of
5-2
MQes
clearing title is expected to be completed during 2008. Mexican law give right of eminent domain to
mineral-rights holders, but it is still customary and even necessary for miners to purchase or lease the
surface rights in an operating area.
The Los Verdes property is in the basin of the Rio Yaqui, which drains to the Gulf of California.
Water flows year-round in the Rio Santa Ana, a tributary of the Rio Yaqui, but most other streams are
dry for much of the year.
5-3
MQes
SECTION 6
HISTORY
6.0 HISTORY
The Los Verdes property and its surrounds have undergone many years of intermittent exploration and
minor production, as reported in Sears, Barry (2005). Table 6-1, adapted in part from Sears, Barry,
refers to the Los Verdes area in general, since the current concessions date only from the post-2000
period.
Table 6-1: History of Los Verdes Area
Period Owner or Lessee Work Undertaken Location

50 tpd Mo production from
1956 small miners a.k.a. Moly Pit
Buena Vista Pit
eastern area, including Moly
Minera Galivaz, Minera Tres Piedras exploration, mainly at Tres
1963-68 Pit, and Tres Piedras, 9 km
(Getty Oil) Piedras
NE
1650 m of drilling, regional
geology and geochemical
Newmont option from Alonso
1967-69 sampling. Yielded “potential western area
Farnsworth
resources” of 15 million short
tons at 0.13 percent Mo
1968-69 John Alexander, optioned to Homestake 45 m drilling eastern area, incl. Moly Pit
1969 John Alexander Sold to Cominco eastern area, incl. Moly Pit
Minera El Campanero (Wahl, Cook,
estimated 35 million short
1969-70 Wynn and Samores) acquired the western area
tons 0.15 percent Mo
Newmont property from Farnsworth.
Minera El Campanero purchased by 9 core holes, 28 RC holes on
1971-72 Moly Pit and breccia areas
Cominco Cu-Mo area
57 diamond core holes, C-1
to C34 and DPC-35 to DPC-
Peñoles acquired 60 percent of El 57. Two adits from Moly Pit;
Campanero, Cominco 40 percent one for 283 meters W into
1972-79 partner. Joint company was Cia. Mo-Cu deposit, one 85 Moly Pit and west
Minera Coronado, S.A. de C.V. meters to E. Metallurgical
testing on a bulk sample;
resource estimate and
economic evaluation.
Minera Montoro (Fisher-Watt), pre-feasibility study on
1996-97 breccia and nearby ?
optioned from Cominco copper zone
late 1990’s no activity most concessions lapsed
2003-2005 various individuals staked new concessions entire area except Bacanora
purchased concessions from
2005-2006 Virgin Metals local owners, applied for entire area except Bacanora
Hilda 1-2-3 areas.
41 RC holes in 2006 in Moly Pit and breccia, also to
2006 Virgin Metals
breccia, Moly Pit, and to east. east, not Bacanora
drilled 21 core holes, 40
reverse-circulation holes,
2007 Virgin Metal entire mineralized area
metallurgical tests, acquired
Bacanora concession & data
2008 Virgin Metal continuing geology, drilling, entire mineralized area
6.1 Prior Exploration, Development, and Production
As noted in Table 6-1, the prospect area has been drilled in 1967-69, 1971-72, 1972-79, and again in
2006. The only production was in 1956, when several thousand tonnes of probably high-grade
6-1
MQes
molybdenum mineralization was mined by local people. No details are available about this
production, which was from the Moly Pit, known at that time as the Buena Vista Mine.
There are several other named prospects within the property. None of them had significant
production, and little is known about them.
6.1.1 Cominco Exploration
Cominco, in partnership with Peñoles, explored at Los Verdes from 1972 until 1979, under the name
Cia. Minera Coronado, S.A. de C.V. This joint venture undertook geologic mapping and surface
sampling, drilled 57 diamond core holes, drove two adits from the Moly Pit, sponsored metallurgical
testing on a bulk sample, and undertook resource estimation and economic evaluation.
6.1.2 1996-2005 Exploration
During this period, only desultory work was performed at Los Verdes, and apparently no actual
exploration was undertaken.
6.1.3 Virgin Metals Exploration
Beginning in 2005, Virgin Metals acquired properties in the camp, culminating in early 2007 in
acquisition of the Bacanora concession, previously held by COMINCO. VGM has since carried out a
vigorous and continuous program of field work and economic evaluation. This work is summarized in
Table 6-1 and in Sections 10 to 17 below, and in CAM (2007 and 2008).
6.2 Historical Mineral Resources
Several resource calculations were made prior to 1980, none of them 43-101-compliant. They are
reported in Sears, Barry (except #4 below), based on reports reviewed by Sears, Barry.
1. 1967 - 1969, Newmont: “potential resources” of 15 million short tons of 0.13 percent Mo.
2. 1969 - 1970, Cominco: “potential” of 35 million short of 0.15 percent Mo.
3. 1979, Peñoles: "ore bodies" -
a) tungsten zone, 1,060,221 tonnes of 0.066 percent Cu, 0.052 percent Mo and
0.412 percent WO3.
b) mixed zone, 2,178,090 tonnes of 0.12 percent Cu, 0.065 percent Mo and 0.177
percent WO3.
c) Cu-Mo zone, 6,387,415 tonnes of 0.94 percent Cu, 0.174 percent Mo and 0.134
percent WO3.
4. 1979, Peñoles: proven and probable reserves, with 10 percent dilution – 7,100,000 tonnes of
0.86 percent Cu, 0.16 percent Mo, and 0.135 percent WO3.
It should be noted that the preceding resource estimates are historical in nature and as such are based
on prior data and reports prepared by previous operators. The work necessary to verify the
classification of the mineral resource estimates has not been completed and the resource estimates
therefore, cannot be treated as NI 43-101 defined Resources verified by a qualified person. The
historical estimates should not be relied upon and there can be no assurance that any of the Resources,
in whole or in part, will ever become economically viable.
In 2007, CAM produced a mineral Resource estimate, compliant with NI 43-101 (CAM, 2007).
Resources were tabulated at various cutoff grades using a bulk density of 2.55 tonnes per cubic meter.
Table 6-2, reproduced from Table 17-3 of CAM (2007), presents the Resource as calculated by the
6-2
MQes
kriging method at a cut off grade of either 0.04 percent molybdenum and/or its approximate economic
equivalent, 0.32 percent copper. The tungsten values calculated are contained tungsten, using the
reported molybdenum or copper cutoff; no tungsten cutoff was applied to blocks. It should be noted
that this estimation excluded mineralization on the Bacanora concession, which at the beginning of
2007 was not controlled by VGM.
Table 6-2: Resources at a 0.04 percent Mo Cutoff and/or a 0.32 percent Cu Cutoff (CAM, 2007)
Contained
Resource Molybdenum Copper Tungsten Contained
Tonnes Molybdenum
Category % Mo % Cu %W Copper (lb)
(lb)
Measured
4,641,000 0.129 0.49 0.088 13,158,000 50,575,000
Resources
Indicated
5,861,000 0.120 0.43 0.083 15,480,000 54,917,000
Resources
Total
Measured & 10,502,000 0.124 0.46 0.085 28,638,000 105,492,000
Indicated
Inferred
1,089,500 0.120 0.16 0.024 2,880,000 3,898,000
Resources
Derived values in the above table have been rounded.
Excludes Bacanora concession.
It should be noted that the stoichiometric conversion factor for WO3 to W is 0.793.
In 2008, CAM produced a new mineral Resource estimate, compliant with NI 43-101 (CAM, 2008).
Resources were tabulated at various cutoff grades using a bulk density of 2.55 tonnes per cubic meter.
Table 6-3, reproduced from Table 17-3 of CAM (2008), presents the Resource as calculated by the
kriging method at a cut off grade of either 0.04 percent molybdenum and/or its approximate economic
equivalent, 0.32 percent copper. The tungsten values calculated are contained tungsten, using the
reported molybdenum or copper cutoff; no tungsten cutoff was applied to blocks.
6-3
MQes
Table 6-3: Resources at a 0.04 Percent Mo Cutoff and/or a 0.32 Percent Cu Cutoff (CAM, 2008)
Contained Contained
Tonnes % Mo % Cu
lbs Mo lbs Cu
Non-Oxide Mineralization
Measured
4,396,000 0.133 0.684 12,897,000 66,277,000
Resources
Indicated
4,269,000 0.128 0.516 12,015,000 48,529,000
Resources
Total 8,665,000 0.130 0.601 24,912,000 114,806,000
Measured
2,692,000 0.071 0.089 4,206,000 5,280,000
Resources
Indicated
1,717,000 0.087 0.099 3,300,000 3,759,000
Resources
Total 4,409,000 0.077 0.093 7,506,000 9,038,000
Oxide and Non Oxide Mineralization
Total Measured
7,088,000 0.110 0.458 17,103,000 71,556,000
Resources
Total Indicated
5,986,000 0.116 0.396 15,315,000 52,288,000
Resources
Total Measured
and Indicated 13,074,000 0.113 0.430 32,418,000 123,844,000
Resources
Total Inferred
4,392,000 0.063 0.073 6,062,000 7,058,000
Resources
6-4
MQes
SECTION 7
GEOLOGICAL SETTING
7.0 GEOLOGICAL SETTING
7.1 Regional Geology
Los Verdes lies within what could be considered the southerly extension of the Basin and Range
province of the southwestern USA, near the boundary with the Sierra Madre Occidental province
(Figure 7-1).
Figure 7-1: Regional Geologic Setting – Los Verdes
Legend and Notes:

• Figure is modified from CRM,
1994.
• Ruled pattern indicates
Tertiary volcanic rocks.
• Blue circles indicate
molybdenum-bearing
breccias.
• Yellow squares are
porphyry-copper systems.
7-1
MQes
The Sierra Madre Occidental is underlain mainly by bimodal Tertiary volcanic rocks which are
divisible into two series: the Upper and Lower Volcanic Series (Serie Inferior and Serie Superior).
The Lower Series is on average more mafic and is often tilted or weakly folded, with dips usually less
than 20 degrees, although steeper structures do occur, especially around sub-volcanic intrusives. The
Upper Series is usually horizontal or weakly tilted. Most mineral deposits occur in the Lower Series;
however, the boundary between Upper and Lower Series is not always clear.
In contrast, the Basin and Range province (or "ranges and parallel valleys" of CRM, 1994) in southern
Sonora contains a wide variety of igneous, sedimentary, and metamorphic rocks of Paleozoic to
Holocene age, with a strong north-northwesterly tectonic fabric. The structures are largely tensional,
dominated by normal faults and sub-circular intrusive and volcanic structures.
The units in southeastern Sonora are shown and described by Sears, Barry (2005, Figure 5). Those of
principal interest to Los Verdes are the Laramide (Late Cretaceous to Early Tertiary) plutonic,
subvolcanic, and volcanic rocks, especially the felsic units.
7.2 Local Geology
Geology of the Los Verdes area is depicted on Figure 7-2, adapted from Peñoles’ 1979 map. The
deposit is within a sub-circular granitic pluton exposed over some 150 square kilometers in the
vicinity of Santa Ana. The intrusive has several facies, mainly weakly porphyritic monzonite, with
some exposures classed as granodiorite and quartz diorite. Lesser areas of K-spar porphyry also
occur. Based on regional considerations, the intrusive is probably Laramide (earliest Tertiary) in age.
According to Peñoles’ (1979) mapping, the pluton is ringed by Cretaceous (pre-intrusive) andesitic
and dacitic volcanics, and is overlain by Tertiary (post-intrusive) volcanic tuffs. It is not
inconceivable that the two series of volcanics are equivalent to the Upper and Lower Volcanic Series
of the Sierra Madre Occidental, both of which are of Tertiary age. The map pattern suggests than the
pluton domed the older volcanics, and was later covered by the sub-horizontal Tertiary tuffs. It is not
certain whether mineralization is older than, or coeval with, the Tertiary tuffs. The fact that several
mafic to intermediate dikes cut the mineralization suggests that the younger volcanics are post-
mineral.
A linear series of exposures of breccias traverses the pluton at a trend of N 45 E. The Moly Pit occurs
within one of these breccias, just south of the center of the exposed pluton. In addition, the Peñoles
map shows other breccias scattered around the margins of the intrusive. It is not clear as to which of
these quartz-tourmaline breccias are, and which could possibly be of Tertiary volcanic origin, rather
than of hydrothermal origin.
Peñoles has mapped a number of faults of diverse orientations cutting the pluton, with a prominent
northerly set traversing the center of the pluton, and passing near the Moly Pit.
Peñoles’ map also shows a number of areas of “hydrothermal alteration” and “deuteric alteration”
scattered around the older volcanics, the Laramide pluton and the breccias. The alteration does not
appear to affect the younger volcanics. Alteration assemblage minerals are not described in the report
available to CAM, and on Figure 7-2 the alteration is not differentiated. The altered zones are to some
degree parallel to the longer faults.
7-2
MQes
Figure 7-2: Geology of Los Verdes and Surroundings
7.3 Property Geology
The geology, along with the lithologic coding used to log drill samples, are described below.
Throughout the history of the project, various modifications of the names used here have been
employed in logging. These definitions reported here are those used by VGM in 2008 to rationalize
the historic database. The lithologic codes are based on rock type plus mineralization type.
The overall concession limit is underlain mainly by intrusive, with lesser areas of older volcanics.
About 20 percent of the area is underlain by alteration zones, including a large north-south ellipse of
alteration extending northward from the village of Santa Ana. Several large patches of breccia occupy
the central part of the property – whether all of these are of hydrothermal versus volcanic origin is not
yet confirmed.
VGM have not yet undertaken mapping and prospecting of the other breccia areas on the property, nor
of the alteration zones. There is no detailed geologic map available, only the map in Peñoles (1979),
modified in Figure 7-2.
7.3.1 Granitic Intrusives
The original rock type hosting most of the mineralization is a medium-grained granitic intrusive,
usually referred to as “granodiorite”. Varying intensities of potassic alteration have resulted in the
growth of K-feldspar and biotite at the expense of other primary minerals; therefore, it is difficult to
7-3
MQes
rigorously name the granitic facies originally present (granodiorite, monzonite, etc). Cominco drill
logs often mention “pegmatite” within the granodiorite; these occurrences may in fact be zones of
abundant secondary K-spar and biotite, rather than true pegmatite.
The lithologic codes are based on visible alteration, but disregarding mineralization. The recognized
alteration types are argillic (clays), phyllitic (sericite), potassic (secondary K-spar, biotite), and silicic
(silica flooding, not veins). For purposes of this classification, chloritic/propylitic alteration is lumped
with potassic, as both are usually but not always at depth. Silicic alteration is ignored, as it is
widespread and spotty, and may represent a late event.
The intrusive is often noted in drill core to be fractured, with the degree of fracturing varying from
occasional fractures to crackle-breccia, to mega-breccia. If large amounts of quartz and tourmaline
occur in the breccia matrix, the rock is then classified as breccia, not as granitic intrusive.
Granitic intrusive makes up approximately 90% of host to mineralization at Los Verdes. Most of the
remaining mineralization is in quartz-tourmaline breccia, which is especially common at the east end
of the deposit.
Table 7-1: Lithologic Codes
Code Name Characteristics Comments

granitic
GA argillic alteration common
intrusive
granitic
GH phyllic alteration common
intrusive
granitic
GM argillic + phyllic alteration common
intrusive
granitic
GK potassic and local propylitic alteration mainly at depth
intrusive
granitic mainly at depth,
GU no alteration
intrusive scarce
quartz-
altered granitic clasts, high to low Mo in adit and
BT tourmaline
grades elsewhere
breccia
less than 1% of
quartz-pyrite
BP altered granitic clasts, low-grade Mo volume, rarely
breccia
mineralized
less than 1% of
DK dikes felsic and mafic dikes volume, rarely
mineralized
BF fault breccia rare, clasts of wallrocks small volume
small volume,
TL rubble talus, surficial rubble, oxidized
rarely mineralized
7.3.2 Breccias
There are two abundant types of obvious, smaller-scale breccias in and near the mineralized zone.
Quartz-tourmaline breccia (Unit BT) occurs where abundant quartz and tourmaline occur in the matrix
of a breccia with definable clasts, the rock is then classified as such, not as granitic intrusive.
The Quartz-Pyrite Breccia (Unit BP) underlies much of the Moly Pit and the adit portal. It has a
matrix of coarse, euhedral milky quartz crystals and coarse pyrite, with little of the tourmaline-
7-4
MQes
molybdenite-chalcopyrite suite. Breccia clasts are granodiorite, usually showing phyllic alteration
(sericite).
The quartz-tourmaline breccia hosts much of the mineralization in the COMINCO adit area. It is made
up largely of granodiorite clasts several centimeters to one meter in diameter, with a matrix filling of
black schorlite (iron-rich tourmaline) forming silky, radiating aggregates of needle-like crystals up to
several centimeters long. Dark chlorite is admixed with the tourmaline, and may be difficult to
distinguish in the field. The tourmaline is overlain by coarse, radiating rosettes of molybdenite, with
some clots of chalcopyrite/chalcocite. Black chalcocite can be a substantial component of the quartz-
tourmaline breccia, and can be difficult to identify as such. Granodiorite clasts locally shows sericitic
or argillic alteration. Although spectacular due to the abundant molybdenite, quartz-tourmaline breccia
appears to be limited to perhaps < 5 % of the overall mineralized material.
A variation of this breccia also forms a large portion of the dominant ridge that defines the Los Verdes
deposit. Its true character and extent at depth is difficult to ascertain since distinguishing breccia from
intrusive is difficult when logging reverse-circulation chips.
Outside of the main occurrence within the Moly Pit, quartz-pyrite breccia has been identified in RC
drill holes LVRC2706, LVRC2906 and LVRC3206. The key mineralogy in all cases is the presence
of massive to euhedral pyrite and quartz, generally accompanied by minor molybdenite. The quartz-
pyrite breccia appears to be at least in part post-mineral. Overall it makes up less than 1% of
mineralized intervals
In addition to the two types of breccia described above, fault breccias (Unit BF) were occasionally
encountered in drillholes. These tend to be thin, of variable clast makeup, and often oxidized.
7.3.3 Dikes
Drilling occasionally encountered dikes ranging in composition from andesite to quartz-feldspar

porpyhry. The dikes are typically not mineralized, although some mineralization has been noted.
The andesite dikes are grey-green in color and are fine grained to porphyritic in texture. In the case of
the latter, the porphyritic texture is due to the presence of phenocrysts of plagioclase and hornblende.
Widths vary from 3 to 5 meters but can be locally thicker. Andesite dikes may be cut by numerous
calcite-anhydrite veinlets. Rare outcrops of andesite occur within the granodiorite.
Felsic dikes are less common, generally thinner, and highly variable in texture and composition. One
exposure of a quartz-feldspar porphyry dike, one meter wide, occurs in a road cut on the south side of
the bufa ridge, about 300 m southwest of the Moly Pit.
In aggregate the dikes appear to make up about 1% of the rock mass, although it is possible that some
dikes were not recognized in reverse-circulation cutting. Due to their limited extent and general lack
of mineralization, they have all been classified as Unit DK.
Drilling occasionally encountered dikes of andesite (Unit 20), felsite or aplite (Unit 21). Dikes are
typically not mineralized, although some mineralization has been noted.
The andesite dikes are grey-green in color and are fine grained to porphyritic in texture. In the case of
the latter, the porphyritic texture is due to the presence of phenocrysts of plagioclase and hornblende.
Widths vary from 3 to 5 meters, locally thicker. Andesite dikes may be cut by numerous calcite-
anhydrite veinlets. Rare outcrops of andesite occur within the granodiorite.
7-5
MQes
Felsic dikes are less common, generally thinner, and highly variable in texture and composition. One
exposure of a quartz-feldspar porphyry dike, one meter wide, occurs in a road cut on the south side of
the bufa ridge, about 300 m southwest of the Moly Pit.
7.3.4 Structure
An important north-trending fault on the property is the Buena Vista Fault, which passes along the
west side of the Moly Pit, near the eastern limit of the breccia zone underlying the ridge to the east.
The fault dips 40-45 degrees to the west, and has a rubbly fault breccia containing mineralized
fragments. The fault appears to be post- or late-mineral, but the sense of movement is not clear. It
could possibly be a feeder for the mineralization, since Cu-Mo-W mineralization occurs on both sides,
although mainly to the west.
7.3.5 Alteration
Three different styles of alteration typical of porphyry-related systems have been identified at Los
Verdes. These include phyllic, argillic and potassic alteration. In addition, propylitic alteration is
widespread on the property, but has not generally mapped. The alteration assemblages occur both
individually or more commonly, overprinting each other as seen in numerous drill holes and in
outcrop.
Phyllic alteration is defined by the presence of sericite, quartz (silica), and pyrite. This is the most
extensive alteration type at Los Verdes, extending along the south flank of the main ridge and
peripheral to the Moly Pit. The intensity is generally moderate to strong. The sericite occurs
replacing primary feldspars and along small shears, fractures, and veinlets. Where intense in fresh
rock, a distinct apple-green color is noted. Elsewhere, it can have a bluish hue and in the upper oxide
zone, the intense sericitization leaves the rock bleached and greasy to the touch.
Like the K-spar alteration, the phyllic alteration is associated with some of the better mineralization at
Los Verdes.
Argillic alteration is defined by the presence of kaolinite. At surface the alteration is observed
primarily west of the Moly Pit. Surface mapping indicates the alteration to be moderate in intensity
with local patches of included K-spar and propylitic alteration. Oxidation is common and both
hematite and limonite are noted, the former being the dominant mineralogy.
Argillic alteration can occur as pervasive destruction of feldspars, or as intense local zones related to
shearing, faulting and fracturing. The latter occurrences are common and generally observed as a
secondary feature overprinting other alteration patterns. In the reverse circulation drilling program
where kaolinite was intersected, the zones were interpreted as faults or shears. In diamond drill core,
the delineation of fault and shear zones is complicated by the presence of abundant fracturing and
rubblized zones within the core.
Potassic alteration is usually identified by distinctive secondary pink potassium feldspar (K-spar).
Secondary biotite and tourmaline also occur locally. Potassic alteration is generally associated with
strong disseminated molybdenite mineralization, especially in the southern portion and toward the
base of the mineralized lens.
Secondary K-spar often occurs as abundant secondary crystals and matrix growths. In the lower
portions of the mineralized zone, K-spar is found associated with late stage quartz veins and as
veinlets in unmineralized granodiorite. Cominco drill logs often mention “pegmatite” within the
Granodiorite; these occurrences may in fact be zones of K-spar alteration instead of true pegmatite.
7-6
MQes
SECTION 8
DEPOSIT TYPES
8.0 DEPOSIT TYPES
Los Verdes contains molybdenum-copper-(tungsten) mineralization in stockworks and breccias

related to felsic intrusive rocks, principally granodiorite. A number of features of the deposit clearly
place it in the category of a porphyry copper-molybdenum system with a molybdenum breccia-pipe
component. The indicative features are post-intrusive stockworks and breccias with interstices partly
filled by fine-grained tourmaline, molybdenite, copper and varying amounts of tungsten and base-
metals minerals, and late quartz-pyrite. Los Verdes clearly meets the definition of this type of deposit.
The copper-molybdenum-bearing breccias are included within USGS deposit-type classification (Cox
and Singer, 1993) type #21a, Porphyry Cu-Mo.
Related Cu-Mo-(W) deposits occur at many localities in the American Cordillera, especially in
Arizona, Sonora, and Chile. Examples in Sonora include Cananea with the La Colorado pipe (Cu-
Mo); the Pilares Cu-Mo system at Nacozari, the San Judas, Cobre Rico, Washington, and El Transval
breccias (Cu-Mo-W) at Cumobabi, and the El Creston breccia (Mo-Cu-W) at Opodepe (Figure 7-1).
Los Verdes lies in the south part of a belt of molybdenum-bearing breccias and porphyry Cu or Cu-
Mo deposits which extend southeasterly across eastern Sonora, just to the west of the volcanic plateau
of the Sierra Madre Occidental
8-1
MQes
SECTION 9
MINERALIZATION
9.0 MINERALIZATION
9.1 Style of Mineralization
The mineralization at Los Verdes is of magmatic-hydrothermal origin, consisting originally of sulfide

minerals, principally chalcopyrite, pyrite, and molybdenite, and apparently related to the granodiorite.
Weathering near the surface has converted some of the mineralization to an oxide facies (principally
ferromolybdite plus iron oxides). Some of the metals liberated by oxidation of sulfides have
percolated downward, and have re-precipitated as secondary sulfides, mainly chalcocite, in the
vicinity of hypogene sulfide minerals.
Each of the three mineral zones is discussed in turn below. Most of the non-oxide mineralization is
buried, and the descriptions below are largely from drill core. The numbered units mentioned were
used by VGM in core logging.
The mineralized unit is typically the granodiorite, with perhaps 10% in quartz-tourmaline breccia.
Other units make up and insignificant portion of the mineralized tonnage.
Plan and cross-section views of the mineralized zone are shown in Figure 9-1, Figure 9-2 and Figure
9-3.
The mineralized zone on the Los Verdes property is about 300 meters northeast-southwest, and 200
meters northwest-southeast. Its eastern edge is at the Moly Pit, where it is cut off by the Buena Vista
Fault. The mineralized zone is centered beneath the ridge extending southwest from the Moly Pit.
As it expected in deposits related to a porphyry system, Los Verdes shows several different types of
lateral variation, relating to both hypogene processes (e.g. thermal gradient) and supergene processes
(oxidation).
The vertical zonation, as confirmed by VGM drilling, can be described as follows (see Figure 9-2 and
Figure 9-3):
1. The uppermost zone is a copper-leached cap 0 to 20 meters thick and sub-parallel to the
surface, with very low Cu values (<500 ppm), and low Mo and W values.
2. An Oxide Zone with secondary minerals (copper carbonates, chalcocite, ferrimolybdite, and
probably ferritungstite), 10 to 50 meters thick, and also conforming loosely to the current
topography. According to a limited suite of assays for soluble molybdenum commissioned
by VGM, essentially all the Mo in the oxide zone reports as soluble Mo (i.e. ferrimolybdite),
whereas almost none of the Mo below the oxide zone reports as soluble.
3. Supergene mineralization with secondary enrichment of chalcocite as well as hypogene
molybdenite, wolframite, and pyrite, referred to as secondarily-enriched sulfides (formerly
called the Sulfide and Mixed Zone, or SAM). Beneath the ridge crest, this mineralization
may be 100 to 200 meters thick. Supergene-enriched sulfides makes up the bulk of the
Resource at Los Verdes.
4. The lowest zone is hypogene protore, which is normally granodiorite, carrying pyrite,
chalcopyrite, molybdenite, and sparse scheelite. Within the breccia, molybdenite forms
coarse-grained euhedral rosette penetrating into voids, whereas in the granodiorite
molybdenite is mostly fine-grained, and is related to veinlets.
9-1
MQes
According to Peñoles’ 1979 report, the mineralization shows apparent lateral zonation, with three
overlapping zones:
1. tungsten zone on the west end (mainly on the Bacanora concession)

2. copper-tungsten- molybdenum zone in the middle
3. molybdenum zone on the east.
VGM exploration drilling was mainly restricted to the area east of the high-tungsten zone, and these
zones were not further quantified.
9.1.1 Hypogene mineralization (Sulfide Zone)
The Los Verdes mineralization is centered on a lens-shaped body of veining and stockworking within
the granodiorite. The lower levels of the drilled portion of the granodiorite may be barren of
mineralization but are typically cut by veins and veinlets of quartz with pyrite. This level is referred
to a “hypogene granodiorite” (Unit 5).
At higher levels, the veining and brecciation become abruptly greater, with introduction of copper
sulfides and molybdenite. Brecciation and filling of voids by tourmaline and chlorite becomes more
abundant upwardly. The contact between barren “hypogene” granodiorite and mineralized
granodiorite above, defines a bowl-shaped surface as depicted in Figure 9-2 and Figure 9-3.
9.1.2 Secondarily-enriched Sulfides
A distinct supergene zone is present at Los Verdes, overlying the hypogene mineralization. It is
readily defined by Cu values much greater than the oxide zone, often over 1% Cu. Mo and W may be
elevated compared to the oxide zone, but less notably. Copper-oxide minerals (notably malachite and
azurite) often occur at the top of the zone. The contact with the overlying oxide zone is rather sharp,
usually definable within a meter by the sudden transition into molybdenite, from ferrimolybdite above.
Within the supergene blanket there is a distinct Cu zone, extending along and to the south of the main
Moly Pit adit. This is expressed primarily in drill holes LVRC0106, LVRC0206, LVRC0306,
LVRC0606, LVRC1906 and LVRC4106.
9.1.3 Oxide mineralization (Oxide Zone)
The surface of the mineralized zone at Los Verdes is generally underlain by a near-surface oxide zone
(Unit 2a or 2-1), typically carrying about 0.1% Mo, mainly as ferrimolybdite, and up to 0.2% Cu,
largely as traces of malachite and azurite. While the same copper minerals may occur in both the
oxide and the secondarily-enriched zone, the transition of molybdenum minerals is quite abrupt:
ferrimolybdite above, and molybdenite below. Jarosite, and ferritungstite also occur, in addition to
limonite. These minerals occur as disseminations and in weakly-defined veinlets in granodiorite.
The oxide zone tends to be somewhat rubbly at surface, with staining by iron minerals.
9.2 Mineralogy
Molybdenum-copper-tungsten mineralization at Los Verdes has been described in the various reports
listed in Section 22, References. Most of these reports discuss only the megascopic mineralogy as
reported from hand specimen or drill samples. The principal petrographic and X-ray studies of the
mineralogy, as far as CAM are aware, were by RDI (2008), who discussed mainly sulfide minerals.
9-2
MQes
The principal minerals of economic interest reported to date are shown in Table 9-1. Molybdenite,
chalcopyrite, and chalcocite are the dominant minerals of interest, with oxidized products of these also
locally abundant.
The tungsten minerals are of secondary economic importance, and are not as well known. The RDI
report mentions scheelite-powellite as the tungsten mineral in the supplied sample, whereas the
Cominco reports show wolframite (i.e. ferberite-hubnerite). Ferritungstite is reported in the oxide
zone.
9-3
MQes
Table 9-1: Selected Minerals of Interest, Los Verdes Deposit
Mineral Type Formula Metal Content Origin Documentation

Anhydrite sulfate CaSO4 -- hypogene drilling
Azurite carbonate Cu2(CO3) 2 (OH)2 45 percent Cu supergene sparse at Moly Pit
Bornite sulfide Cu5FeS4 63.3 percent Cu hypogene drilling
Calcite carbonate CaCO3 -- alteration veins in mafic dikes
chalcocite sulfide Cu2S 80 percent Cu supergene widely reported
magmatic-
chalcopyrite sulfide CuFeS2 34.6 percent Cu seen at Moly Pit
hydrothermal
approx (Fe,Mg) 5 (Al,Si) 4O10
chlorite group silicate, mica -- alteration reported in drilling
(OH)8
(Cu,Al) 2H2Si2O5 33.9 percent Cu,
Chrysocolla hydrated silicate supergene Moly Pit, drilling
(OH)4·n(H2O) varies
supergene, can be
Covellite sulfide CuS 66.6 percent Cu drilling
hypogene
feldspar, potassium silicate KAlSi3O8 -- magmatic visual, RDI report
reported by Peñoles and
ferrimolybdite oxide Fe2(MoO4)3·8(H2O) 40 percent Mo weathering
Sears, Barry
(K,Ca,Na)(W,Fe3)2
65.8 percent W reported by Peñoles and
Ferritungstite oxide (O,OH)6· (H2O) weathering
83 percent WO3 Sears, Barry
or (W,Fe3) (O,OH)3
Gypsum sulfate CaSO4.6H2O -- weathering seen at Moly Pit
Hematite oxide Fe2O3 -- weathering RDI (2008), see limonite
weathering, esp.
Jarosite sulfate KFe33(SO4)2 (OH)6 -- seen at Moly Pit
of pyrite
hydrothermal,
Kaolinite silicate, clay Al2Si2O5(OH)4 -- Moly Pit, drilling
weathering
fine-grained mixtures of
oxide-hydroxide goethite FeO.OH,
limonite -- weathering seen at Moly Pit
mixture lepidocrocite FeO.OH,
hematite Fe2O3; others
Malachite carbonate Cu2(CO3)(OH)2 57.5 percent Cu supergene seen at Moly Pit
9-4
MQes
Mineral Type Formula Metal Content Origin Documentation
magmatic-
Molybdenite sulfide MoS2 59.9 percent Mo Moly Pit, drilling
hydrothermal
47 percent Fe, 53
pyrite sulfide FeS2 hypogene Moly Pit, drilling
percent S
scheelite 80.5% sch: hypogene
scheelite-powellite series tungstate-molybdate Ca(WO4) and Ca(MoO4) WO3 pow: hypogene or identified by RDI (2008)
powellite 48.0% Mo supergene
approx K(Al,Mg,Fe) 2
sericite, illite silicate, mica -- alteration Moly Pit, drilling
(Si,Al)4O10(OH)2
magmatic-
tourmaline (var. schorl) silicate NaFe23Al6(BO3)3Si6O18(OH)4 -- Moly Pit, drilling
hydrothermal
60.5 percent W
wolframite (see series FeWO4 ferberite MnWO4 (ferb.) magmatic- reported by Sears, Barry,
tungstate
ferberite-hubnerite) hubnerite 60.7 percent W hydrothermal not by RDI
(hubn.)
9-5
MQes
9.3 Morphology of Mineralization
The mineralized zone on the Los Verdes property is about 300 meters northeast-southwest, and 200
meters northwest-southeast. Its eastern edge is at the Moly Pit, where it is cut off by the Buena Vista
Fault. The mineralized zone underlies the ridge (“bufa”, mound) west of the Moly Pit.
Mineralization consists of stockworks, disseminated sulfide patches, vug fillings, grains and veinlets
within the altered granodiorite and the quartz-tourmaline breccia. The deposit forms a sub-circular,
subhorizontal, top-shaped body. The Buena Vista Fault forms a partial boundary of mineralization.
To date, no mineralization of economic importance has been located east of the Moly Pit.
In order to discriminate zones of varying geotechnical and metallurgical behavior for mining and
metallurgical input, the mineralogy was coded and cross sections created throughout the length of the
deposit. This coding differs slightly from that used in the February 2008 Resource estimation, which
refers to “sulfide and mixed” (“SAM”) mineralization. In fact the boundary between oxide and
sulfide molybdenum mineralization was found, with a few minor exceptions, to be very sharp.
The codes for mineralization were based on mineralogy, and are entirely independent of the lithologic
codes.
The mineralization scheme accounts for:
1) The presence of Mo as either sulfide (molybdenite) or oxide (ferrimolybdite), or both
2) The proportion of the copper minerals chalcocite and covellite of the total copper sulfides
(chalcopyrite + chalcocite + covellite).
The classification procedure is as follows:
A) Consider the molybdenum mineralization
1) if moly oxide, classify as 77

2) if mixed moly oxide and moly sulfide, classify as 78
3) if moly sulfide -
a) if below 0.03% Mo, classify as 79. If above 0.3% Cu, go to b).
b) if above 0.03% Mo, go to copper classification B).
B) Then consider the copper mineralization, calculating the proportions of copper sulfides:
(cc+cv)/(cp+cc+cv):
1 ) if (cc+cv) essentially absent, classify as 71.

2 ) if (cc+cv) is 1 to 30% of total copper sulfides, classify as 72.
3 ) if (cc+cv) is 31 to 60% of total copper sulfides, classify as 73.
4 ) if (cc+cv) is over 60% of total copper sulfides, classify as 74.
The above scheme was intended to simplify the mineralogical classification, by ignoring or
generalizing some uncommon situations, each of which occurs in probably less than 2% of the logged
meterage. For example, the rare zones with mixed moly oxides and moly sulfide are classed as such,
regardless of copper content. Bornite is present to extent of less than 5% of copper sulfides, possibly
less than 1%, and is ignored for purposes of this classification. Tungsten and silver assay, where
available, are also ignored. The resulting scheme has seven mineralization codes, as shown above and
in Table 9-2.
9-6
MQes
There is no consideration in the classification scheme to account for the absolute abundance of
molybdenite. Very high-grade molybdenite intercepts are known, and may possibly require
consideration for blending with lower-molybdenite intercepts in any eventual mining/milling plan.
However, the spotty nature of the high-grade intercepts scheme and the sparcity of drilling at this
stage, render it impractical to account for high-grade molybdenite in the classification scheme at this
stage.
Table 9-2: Mineralization Codes
cc = chalcocite cv = covellite cp = chalcopyrite

Mineralogy Ratio
CODE NAME
(cc+cv as % of cc+cv+cp)
71 hypogene sulfides 0%
72 weakly enriched 1-30%
73 moderately enriched 30-60%
74 strongly enriched > 60%
77 moly oxide Mo oxide*
78 mixed moly mixed Mo oxide + Mo sulfide*
79 not mineralized Mo < 0.03%*
Note: In order to simplify the mineralogic cross sections, units 71 and 72 were combined to better
represent the hypogene / weakly enriched mineralization. Units 73 and 74 were also combined and
represent the supergene zone.
Figures 9-2 and 9-3 below show the general characteristics of the mineral zoning throughout the Los
Verdes deposit.
9-7
MQes
Figure 9-1: Surface Projection of Hypogene Mineralization, VGM Drill Holes
Figure 9-1 and Figure 9-3 show the mineralized zone in cross-section. The sections are oriented
approximately N 30 W, at right angles to the long axis of the mineralized lens.
9-8
MQes
Figure 9-2: Cross Section through the Mineralized Lens, West of the Center
Figure 9-3: Cross Section through the Mineralized Lens, East of the Center
According to Peñoles’ 1979 report, the mineralization shows apparent lateral zonation, with three
overlapping zones:
1. Tungsten zone on the west end (mainly on the Bacanora concession)

2. Copper-tungsten- molybdenum zone in the middle
9-9
MQes
3. Molybdenum-copper zone on the east.
VGM exploration drilling was mainly restricted to the area east of the high-tungsten zone, and these
zones were not further quantified.
9-10
MQes
SECTION 10
EXPLORATION
10.0 EXPLORATION
10.1 General
As indicated above in Section 6, a number of groups have explored Los Verdes in the past. Records
of the earliest work are fragmentary, and are best summarized by Sears, Barry (2005). VGM have
been guided mainly by the Peñoles report from 1979. This report, however, is very general and lack
details of the drilling results. Although VGM in 2007 acquired drill and assay data from Peñoles-
COMINCO work on the Bacanora concession, the written reports of that work were not obtained.
Most of VGM’s field activities were carried out by contractors. The drilling was performed by Layne
Christensen de Mexico, based in Hermosillo. Stabilization of the westerly-trending adit was
undertaken by Minera Stronghold de México, S.A. de C.V. of Hermosillo. The legal survey of
concessions was performed by a licensed surveyor from Hermosillo. In 2006-2007, VGM had a staff
of three contract geologists, overseen by Mr. Gary Lohman, Qualified Person for the project. Sample
preparation and assaying was performed by ALS Laboratorios de Mexico in Hermosillo. VGM’s
Hermosillo office is also staffed by several other full-time employees.
VGM’s drilling during 2006 and 2007 investigated the known mineralization, mainly through drilling.
VGM have undertaken only limited geologic mapping, geophysics, or geochemistry. The presence of
a porphyry-related Mo-Cu-(W) system of interesting grade on the Los Verdes property has been
confirmed.
Drilling, sampling, and assaying are described and discussed in the following sections.
10.2 Exploration Work
Work expenditures by VGM during 2007 are shown in Table 10-1, which reflects when the work was
done, not the payment date.
Table 10-1: Los Verdes Project Expenditures
Category Activities Amount, $US

Property holding costs and Bacanora acquisition 360,000
Drilling & Geology Site prep & roads, core & RC drilling, assaying, density, mapping 1,261,000
Tunneling tunneling not resumed in 2007 due to unstable ground 0
Metallurgy Sampling (bulk & other) 88,000
Design & Feasibility Engineering and design 1,227,000
Environmental Baseline studies 3,000
Infrastructure Camp Construction & living costs, water, road work 266,000
Overhead & Travel Hermosillo office, travel (LV project only) 390,000
TOTAL 3,595,000
Excludes amortization.
10-1
MQes
SECTION 11
DRILLING
11.0 DRILLING
No surface samples were used in Resource estimation. The Cominco adit was treated as two low-
angle drillholes, due to a deliberate bend in the adit.
11.1 Summary of Drilling
The database available to VGM and CAM on the property consists of data from to the Peñoles-
Cominco program during 1971-1979, and later VGM work. Data from any earlier drilling and
sampling are not in VGM’s possession and are not represented.
Table 11-1 show the drilling since 1971, all of which was available for use in the current Resource
estimation, except those few holes (as indicated) which were drilled far from the mineralized area for
exploration, condemnation, or geotechnical purposes.
Figure 11-1 shows the locations of all the drillholes used in the Resource estimation. The Moly Pit
adit, which was treated as two subhorizontal drillholes in Resource calculations, is collared 10 m
southwest of hole LVRC1506, and trends southwesterly towards holes LVRC0106 and LVRC0206
with the first leg terminating at C-20. From C-20, the adit trends northwesterly beneath holes DPC-42
and DPC-50.
Table 11-1: Summary of Drilling
Dates Company Drilling and Adit Area

Minera El Campanero purchased 9 core holes, 28 RC Moly Pit and breccia
1971-72
by Cominco holes on Cu-Mo area areas
57 diamond core holes,
C-1 to C34 and DPC-35
to DPC-57. Two adits
Peñoles acquired 51 percent of from Moly Pit; one for
El Campanero, Cominco 49 283 meters W into Mo-
1972-79 percent partner in Coronado Cu deposit, one 85 Moly Pit and west
Resources. meters to E.
Metallurgical testing on
a bulk sample; resource
estimate and economic
evaluation.
Moly Pit and elsewhere
2006 Virgin Metals 41 RC
east of Bacanora
confirmation on
LVDD - 21 diamond
Bacanora mainly, some
2007 Virgin Metals core
others incl exploration to
LVRC - 40 reverse circ.
east
11-1
MQes
Figure 11-1: Drillhole Locations at Los Verdes
The cross-section traces in Figures 9-2 and 9-3 are shown
11.2 Cominco-Peñoles Drilling Program, 1971-1979
This core and reverse-circulation drilling were summarized in Appendix A of CAM, 2008. The
samples themselves have been lost, but geological and assay data was available to VGM and CAM for
Resource estimation. QA/QC for this drilling is discussed in Sections 14 and 17. The hole locations
are shown on Figure 11-1, a summary of collar data is in Table A-1 of Appendix A, in CAM, 2008,
and mineralized intercepts are summarized on Table A-2 in Appendix A of CAM, 2008.
11.3 Virgin Metals Drilling Programs
The drilling campaign by VGM in 2006 was designed to confirm results of the Peñoles/Cominco
drilling of the 1970’s. The locations of the 2006 holes are shown on Figure 11-1. CAM’s previous
Technical Report (CAM, 2007, Table 11-1) details the locations, orientations, and summary results of
the 2006 drilling.
The 2007 drilling program was intended to better-define the shape and extent of mineralization.
Results of the 2007 drilling are displayed in Appendix A of CAM, 2008.
QA/QC for VGM’s 2007 drilling program was specifically designed to meet NI-43-101 guidelines.
QA/QC procedures are described in Section 13.2.3 of this report.
11-2
MQes
11.3.1 2007 Reverse Circulation Drill Program
Drilling was performed by Layne Christensen de Mexico, based in Hermosillo. The drill was a DSI
Model MPD-1000, manufactured in 1989, and track-mounted. The drill pipe was 3.5-inch outer
diameter, while the center sample-return has a 2.0-inch inner diameter. All drilling was performed
dry, except in a very few cases where the water table was encountered near the bottom of a hole.
During the RC drilling program, samples were collected in 5 foot interval. The geologist on site
selected material for review. In the process of logging, the geologist washed the chips in a coarse
screen in order to obtain a clean surface for examination. The fine material was also screened over
water to detect any fine sulphide dust in the sample. This process worked well as many sections
defined in the drill logs as “fine moly” did correspond to elevated assays for Mo. Pyrite was also
commonly seen in the surface scum. While logging the material, notes were taken of rock type,
alteration, mineralogy and structural features, the latter defined by the presence of mud,
ground/sheared chips and locally intense argillic alteration. Additional comments were made and
described any feature that the geologist deemed pertinent. Upon completion of reviewing the sample
section, a representative sample was retained in standard chip tray for viewing at a later date. The
complete set of chip trays is stored in a locked facility in Santa Ana.
As part of the logging procedure, the daily worksheets were scanned and data was sent every night or
as time and internet availability permitted. Upon receipt of the data, geologist Gary Lohman (a
Qualified Person) compiled the material and highlighted any items that required further discussion.
With all data verified and validated, GL compiled the final logs and assays.
Once the twinned RC holes were completed, the RC chips were reviewed and compared to the
geology present in core from the twinned hole. Notes were taken and a consensus regarding rock
types was agreed upon by the geologic staff on the project. From these discussions and work, the
basic coding scheme was developed. Following the initial review, a complete review of all RC drill
holes was conducted and the material coded in a similar fashion as the diamond core. This data,
including the working field logs, is stored in the office in Hermosillo.
11.3.2 2007 Diamond Core Drilling Program
Diamond drilling was also performed by Layne Christensen de Mexico utilizing a JKS Boyles B20
underground rig. All drill core was HQ in size, providing core that was 2.5 inches in diameter. Core
recovery was generally greater than 95% with local exceptions.
The diamond core was reviewed by geologists Gary Lohman, Doug Hartzell and Ivan Yanez (of
VGM), and agreement was made on the rock types and the process by which the core was to be
logged. That process included the measuring of the RQD data first followed by a review of the core
outlining the lithology, alteration, mineralization and structure. All core was photographed for
reference and images are available for review. Drill holes LVDD0107, LVDDC23 and LVDD6307
are stored in a locked building in Santa Ana and they have been retained for reference since whole
core sampling was conducted.
Prior to commencing core drilling, the RQD data sheet was reviewed and validated by the
geotechnical engineers representing MQES.
Gary Lohman and Doug Hartzell conducted a review of the entire DDH core suite and in the process;
a summary log for each drill hole was created. In compiling the final data for the geologic model, this
data, the drill logs, drill core photos and all other material available were utilized while coding the
lithology, alteration, mineralogy and structure. As directed by Doug Hartzell, the VGM geological
11-3
MQes
data takes precedence over historical materials. This does not mean that the previous work is
dismissed, in fact, the Cominco geological data is used to back-check the VGM data. Furthermore,
the Cominco drill holes used in creating the Resource model were back-coded for geology in a similar
manner as the VGM holes, to retain consistency. In creating the final geological model, both datasets
will be utilized in a consistent manner.
Since whole-core assay was used, a summary document titled “Los Verdes Geology / Coding” was
created. This document includes a summary of the rock units, a summary log and details for each
diamond core hole. The document also includes a summary of the changes made through the process.
Photos highlighting many of the important features in the drill holes are also included
Documentation used throughout the compilation and verification stages includes the following:
original VGM drill logs (RC and DDH), RQD sheets, notes from observations, original Cominco data,
petrologic data, assay data, and drill core photos. Once compiled the data was verified by GL and the
staff member who recorded the original dataset. The final data set was then validated by comparing to
original documentation. Data that appeared doubtful was discarded. All original data including logs,
sample sheets, lab submittal sheets through assay certificates and finalized data sheets are available in
the HMO office in either paper or electronic form.
11-4
MQes
SECTION 12
SAMPLING METHOD and APPROACH
12.0 SAMPLING METHOD and APPROACH
12.1 Cominco-Peñoles Sampling
Little is known about the practices used, as no written geological or procedural reports are available.
However, CAM did validate the assays, as discussed in Section 14.1.
12.2 Virgin Metals Sampling
The RC samples, each representing 1.52 linear meters (5 feet), were riffle-split at the drill.
Approximately 1/8 of the recovered material (5 to 10 kg.) placed in a plastic bag and immediately
fastened with a security tag. Little moisture has been encountered in drill holes to date, resulting in
the free flowing of all size fractions. Where moisture was present, a sampling cyclone was utilized
with drill cuttings collected in buckets, then placed in a large porous bag and immediately fastened
with a security tag. Reject material for all samples have also been secured and stored on-site for
future use. Samples weighed at the ALS laboratory in Hermosillo typically were in the range 3 to 9
kilograms, as-received. Sample preparation and analysis are discussed in Section 15.
Diamond core was sent whole for assay, as described above.
12.3 Bulk Density (Specific Gravity) of Mineralized Material
Mineralization of economically-interesting grades at Los Verdes is exposed only at the Moly Pit and
the adit. The mineralization exposed there is principally of breccia type, which is characteristic of
only a small part of the deposit. Therefore, in 2007, VGM developed a protocol for determining bulk
densities on new core samples, and made 1302 bulk-density determinations on core.
12.3.1 Bulk Density Measurements
VGM carried out bulk-density measurements on the 17 core holes drilled during 2007. The
procedures followed a written protocol developed in 2007 by Gary Lohman of VGM, as outlined
below.
a) Responsibility. Measurements were carried out by the drill geologist with the aid of a
sampler, at the drill site. Drill geologists were previously instructed by Gary Lohman, Senior
Geologist, who participated in the initial measurements with the field staff.
b) Sample selection. Measurements were made on one core segment from each 1.5-meter or
3.0-meter sample interval from the top of the hole, even where not mineralized, continually to
the visual bottom of significant mineralization. The samples for measurement were selected
from core as the holes were being drilled. Sound pieces of core at least 15 cm long were
selected wherever possible; if not, several larger pieces of shattered core were selected for
measurement together.
c) Measurement. A suitable stick of coherent core (15cm +/-) was selected from the drill run for
analysis. The Hole ID, From, To and Sample # information was recorded on a form. The
sample was weighed in air utilizing an electronic scale. The sample was wrapped tightly in
plastic film, and placed in a basket which was suspended by a wire from the base of the scale.
The basket was lowered into a bucket of water and the weight in water was recorded. The
sample was then unwrapped and placed back into the core tray. From this point, it was
12-1
MQes
treated as were all core samples selected for assay. The sample number and security-tag
number were recorded on the density logging form.
d) Data management. Following measurement, the original sample sheets were scanned. The
data were then entered into an Excel spreadsheet. The data was then converted to a text file,
and the data entry was verified by utilizing original documents and TextAloudTM software.
(TextAloudTM software reads data aloud to a reviewer who checks the entries against
original documents). Any discrepancies were investigated and resolved.
12.3.2 Analysis of Bulk Density Data
A total of 1,302 density measurements were available. A cumulative frequency plot of all these data
is shown in Figure 12-1.
Figure 12-1: SG Data Cumulative Frequency
This cumulative frequency plot shows a few low-density values which are consistent with the voids
observed in the deposit (e.g. breccias), and a high-grade tail which is consistent with some of the
massive-sulfide intervals observed. CAM made a number of box and cumulative-frequency plots by
rock type, alteration elevation, and depth as well as mineral zone. The mineral-zones were used
because rock type and alteration were not modeled, and the depth and elevation models contained a
number of outliers. Basic statistics by mineral zone are given in Table 12-1.
12-2
MQes
Table 12-1: Bulk Density Statistics by Mineral Zone
Outside
Mineral zone Sulfides Oxide ALL
Shell
Mean 2.406 2.239 2.426 2.381
Count 455 262 584 1301
Standard Deviation 0.2078 0.232 0.277 0.256
~95 Confidence Limits as % 2.0% 2.3% 2.7% 0.6%
12.3.3 Discussion of Bulk Density
These results are lower than the numbers used in the previous Resource estimation (CAM, 2007). The
current results are based on much better information from a dedicated bulk-density measurement
program.
CAM believes it is still possible to make some improvements in the specific gravity model by
including depth rock type and alteration. However, the overall statistical uncertainty is less than plus
or minus 3 percent for each individual mineral zone and less than 1 percent in toto. This is sufficient
for use in a Feasibility Study.
12-3
MQes
SECTION 13
SAMPLE PREPARATION, ANALYSIS and SECURITY
13.0 SAMPLE PREPARATION, ANALYSES and SECURITY
13.1 Cominco Exploration
VGM does not have written descriptions of the Cominco procedures.
13.2 Virgin Metals Exploration
13.2.1 Sample Preparation
Drill samples were stored at the VGM sample house in the village of Santa Ana. VGM prepared on-
site one blank sample for every 20 drill samples. The blanks, prepared from barren gravels from a site
many kilometers away, were inserted into the sample stream and submitted as blind blanks. In
addition, a field duplicate sample was prepared for every 20 drill samples, from the splitter at the drill
site.
Periodically, ALS personnel transported the samples to the ALS facility in Hermosillo, where they
were prepared for later assay. The sample-preparation scheme for the VGM samples followed
standard ALS protocols:
• assign bar codes to samples as received

• dry at 80-100 degrees C
• crush to 70 percent < 10 mesh
• pulverize to 85 percent < 200 mesh
• riffle-split to 50-gram sample (would have been 120 grams for precious metals)
• prepare a second pulp sample on every 25th sample.
• a VGM-provided standard pulp is inserted with every 20 drill-sample pulps
• samples are shipped by UPS ground to Tucson (Arizona), thence by UPS air to ALS in
Vancouver
CAM made an unannounced visit to ALS’s Hermosillo laboratory on October 31, 2006 and found it to
be organized, clean, and well-staffed. Compressed air is used to clean equipment between usages.
13.2.2 Sample Analysis
All assaying was carried out at the ALS Chemex laboratory in Vancouver, BC. ALS is certified ISO
9001:2000 and ISO 17025:2005 at all its facilities, including Hermosillo and Vancouver. The method
used for the analyses was ALS’ ME-ICP61 package for 27 elements, comprising four-acid digestion
followed by ICP analysis of the solute. Samples showing more than 10,000 ppm Cu by ICP analysis
were additionally analyzed by three-acid (hydrofluoric, nitric, perchloric) digestion, followed by
hydrochloric acid leach, and atomic-absorption analysis of the leachate. Silver (Ag) was additionally
determined, on samples showing more than 300 ppm Ag by ICP, by a similar process as for copper.
The 27 elements determined by ICP were Ag, Al, As, Ba, Be, Bi, Ca, Cd, Co, Cr, Cu, Fe, K, Mg, Mn,
Mo, Na, Ni, P, Pb, S, Sb, Sr, Ti, V, W, and Zn.
Skyline Laboratories also performed oxide-Mo determinations for the oxide zone and approximately
30 feet of the sulfide zones in holes VMRC0106 to VRRC0306. This was for the purpose of
13-1
MQes
differentiating between Mo occurring as molybdenite (molybdenum sulfide) and Mo occurring as
ferrimolybdenite (hydrated ferrour molybdate), or other oxide compounds.
13.2.3 QA/QC (Quality Assurance/Quality Control)
In addition to the routine quality control work carried out by ALS Chemex, Virgin Metals established
a quality-control protocol consisting of the routine use of sample duplicates, blank samples, and
certified assay standards for copper and molybdenum, obtained from WCM Sales Ltd., Burnaby B.C.,
and for tungsten, obtained from Shea Clarke Smith in Reno, Nevada.
CAM received on 28 January 2008 a description of the standards from Mr. Lloyd Twaites of WCM
Minerals of Vancouver. According to WCM, the Cu standards are prepared to 100% minus 200 mesh,
then homogenized in a V-blender. Normally a blend of 2 or 3 ores is included in each standard,
permitting variations in the Cu, Mo, Ag, and Au contents in a specific standard.
The Cu-Mo standards are made of ores from porphyry-copper-molybdenum ores from Highland
Valley and Endako, (British Columbia. Cu standards 110, 111, and 119 contain chalcopyrite, bornite,
molybdenite, and tetrahedrite in a silicate gangue matrix. Cu standards 130, 131, and 132 contain
chalcopyrite, bornite, and molybdenite, with low gold values in calc-silicate (skarn) gangue.
VGM identified the standards by designations # 1 to 4 and # A to C, to ensure double-blindness of the

standards. Metals contents of the standards are shown in Table 13-1.
Table 13-1: Metal Contents of Commercial Standards
Standard Copper Molybdenum Silver Gold

Number % % g/t g/t
CU110
0.90 0.371 5 No value
(#A or #1)
CU111
0.83 0.115 105 No value
(#B)
CU119
0.51 0.068 158 No value
(#C)
CU130
0.44 0.074 36 0.93
(#3)
CU131
1.36 0.052 38 1.04
(#2)
CU132
0.17 0.046 27 0.17
(#4)
Each standard is assayed on behalf of WCM Minerals at a number of labs, which from time to time
can include: ALS Chemex, Acme Analytical, Assayers Canada, Eco-Tech, Global Discovery Lab
(Teck/ Cominco), OMAC, Highland Valley Copper Mine Lab, Endako Mine Lab, and SGS.
All of the QA/QC data for the Virgin drilling were reviewed by a CAM using cumulative frequency
plots and scatter plots (including log-log) for standards and blanks. Scatter plots, both transformed
and log-log, were used to review duplicate sample results. CAM noted the number of anomalous
values on these plots for both copper and molybdenum as tabulated in the table below. In some cases
it was not entirely clear that some values weren't actually anomalous; these were noted as “suspect”.
13-2
MQes
Additionally, CAM requested Skyline Cu analyses of 25 additional samples (selected by VGM to
represent a broad variety of grades and matrix types), using a 1-grram pulp sample for digestion,
instead of the standard 0.2 grams. The results showed no significant differences from the 0.2-gram
aliquots. Results are in Table 13-2.
Table 13-2: Anomalies in QA/QC Checks
Number Anomalous Percent Anomalous

Number anom +
QA/QC type
Samples Mo Mo Cu Mo susp Cu
Mo*
ALS Skyline dups 262 0 0 2 0 0 1
ALS Skyline dups 2-5 188 0 0 0 0 0 0
Field blanks 239 1 2 1 0.4 1.3 0
Field duplicates 237 4 5 3 1.7 3.8 1
Pulp duplicates 173 0 0 0 0 0 0
Standard 2 35 1 0 1 2.9 2.9 3
Standard 3 37 1 0 1 2.7 2.7 3
Standard 4 33 0 0 0 0 0 0
Standard A 66 1 0 1 1.5 1.5 2
Standard B 33 0 0 0 0 0 0
Standard C 33 0 0 0 0 0 0
1 gram Skyline 25 1 0 1 4 4 4
Total QA/QC Samples 1361 9 7 10 0.7 1.2 1
When evaluating QA/QC data CAM uses the following criteria for the frequency of anomalies:
• less than 1% Excellent;
• 1 to 2% Good;
• 2 to 3% Acceptable; and
• Over 5% Unacceptable.
Anomalous percentages between 3% and 5% fall in a gray area for a decision on acceptability is made
on a number of anomalous samples as well as a percentage (these the higher the number of anomalous
values the less acceptable).
Except for the “Field duplicates” all of the QA/QC checks are at least acceptable. The 1 g checks fall
in the gray area but CAM does not regard this as significant because only one anomalous sample was
found. On the basis of this review CAM believes that the VGM data is suitable for use in preparation
of a grade model suitable use in for feasibility and financial decisions. CAM recommends that sample
preparation for the field duplicates be reviewed to see if a finer crush or larger sample size can reduce
the number of anomalous values.
13.3 Adequacy of Procedures
CAM believes that no preparation or assaying of samples were carried out by any employee, officer,
director, or associate of Virgin Metals or affiliates.
CAM believes that the sample preparation and assaying were carried according to a high standard and
with a sufficient level of security, that the integrity of samples and the quality of results are assured.
13-3
MQes
SECTION 14
DATA VERIFICATION
14.0 DATA VERIFICATION
14.1 Peñoles-COMINCO Data
14.1.1 Database
The database used for Resource estimation was assembled by CAM using data provided by Virgin
Metals. It consisted of drilling data from VGM’s 2006 and 2007 campaigns, and COMINCO’s 1970’s
campaigns. In 2007, VGM acquired the Bacanora concession, and the data (but not actual samples)
from the Peñoles-COMINCO drilling on the Bacanora concession. No geological or other reports
were obtained. The COMINCO exploration data database consisted of information on drillhole
collars, downhole surveys, assays and geological logs. Geological descriptions are discussed in the
geology section of this report. Collars, downhole surveys and assay information are discussed in this
section.
While there was no reason to doubt the validity of the COMINCO database, core and pulps have been
lost during the past 30 years, so any checks must consist of verification of the paper trail and
comparison with current drilling.
Scanned images of COMINCO drillhole logs and assays were compared to the spreadsheet database
provided by VGM. It was determined that there were missing drill logs and assays for entries in the
database, and some scanned images for holes which did not appear in the database. An average of
about 6 intervals per hole were checked for the holes which had scanned logs and which also appeared
in the database. Generally each interval was checked for from/to, Cu%, Mo% and WO3%. In some
instances, duplicate assays were also present. A total of 41 holes were checked, with a total of 1255
individual values. In all cases, the values questioned by CAM because they appeared anomalous had
been correctly entered from the original source documents. Four errors were encountered. One
appeared to be a typographical error and the other three were either missing or out-of-sequence
intervals. Thus, the database accurately reflected the source documents.
There were two general problems observed in the database. The primary problem involves assays for
Mo% which had been reported to a precision of 3 decimals on the drillhole/assay sheets, but was
truncated to two decimals in the database. This issue was corrected by Virgin in the final database
provided to CAM. The second problem involved averaging where two assays were reported on the
drillhole/assay sheets. This would be acceptable, except that it was not always done and sometimes
only the first value was used.
Other issues included some confusion regarding the WO3 assay units (W versus WO3) and WO3
assays not being entered into the database. Missing WO3 assays appeared to be widespread.
In a couple of instances, the bottom 30 meters or so of a hole were not included in the database. In
addition, some holes were not in the database, presumably because of low assay values or distance
from the main area of mineralization.
The procedures described below in Section 14.3.1 for the VGM drilling, were also applied to the
COMINCO database.
14-1
MQes
14.1.2 Collar Surveys
The VGM collars were surveyed using modern GPS methods in the WGS 84 coordinate system, while
the 1970’s COMINCO collars were surveyed in a local coordinate system. VGM re-occupied a
number of collar locations and monuments from the Cominco campaign, and CAM conducted a
statistical analysis to derive a transform from the old Cominco coordinate system to the current
system. CAM has done this for a number of projects, and normally uses a linear regression for new X
or Y and old X and Y. There were a total of 19 common points which had coordinates in both the
WGS 84 system and the old Cominco coordinate system.
As is almost always the case, some of the points were statistically anomalous, and by eliminating three
of these points, CAM was able to reduce the standard error of regression to 2.87 in Northing and 1.41
in Easting. This transformation with the three points eliminated was used to convert all Cominco
points to WGS 84 points.
14.1.3 Assays
The COMINCO data indicate that the following assay labs were used for various batches of surface
and drill samples, and for checks during the period 1971-1979:
• Oficina de Ensaye de Minerales, Hermosillo, Sonora

• Ensayadores Químicos del Noroeste, SA de CV, Hermosillo, Sonora
• Technical Services Laboratories, Toronto, ON, Canada
• Rocky Mountain Geochemical, Midvale, Utah
• Southwestern Assayers, Tucson, AZ
• Hawley & Hawley, Inc., Tucson, AZ
Since the 1970’s, the above-listed labs have been acquired by others or have otherwise gone out of
business as independent entities. Therefore, limited information is available about procedures and
certification. During the 1970’s, the four laboratories in Ontario, Utah, and Arizona had reputations
for high-quality procedures and results.
14.1.4 Comparison of Cominco and Virgin Metal’s Drilling
As noted above, it is not possible to directly check the Cominco analyses. Any validation of the
Cominco assays must be done on a statistical basis, by comparing the new version results to the old
Cominco results. The standard method of doing this comparison is to used twin holes or other
samples that are very close to each other.
The comparison is complicated for Los Verdes, because of the uncertainty in downhole surveys. The
XYZ location of all samples was calculated and groups of interest within a specified distance of each
other were compared. The comparison distance chosen was a 7.5-meter radius. CAM used a standard
statistical t-test, along with scatter and qqplots (plots of one group of data against another in with both
in increasing order) for this comparison.
Results of this comparison are summarized in Table 14-1, showing Cominco versus VGM drilling and
VGM diamond drill holes versus RC holes.
14-2
MQes
Table 14-1: Comparison of Samples within 7.5 meters
Hole sets Metal Number First Second Probability*

Cominco vs VGM Cu 1198 0.432 0.437 0.7789
Cominco vs VGM Mo 1173 0.1061 0.1027 0.7042
VGM DDH vs RC Cu 800 0.226 0.270 0.0159
VGM DDH vs RC Mo 800 0.1048 0.0944 0.2079
*probability that first set is statistically equal to second set
With the exception of Cu for the VGM core holes versus the VGM RC holes the comparison is
excellent. CAM is not greatly concerned about the apparent high bias of VGM RC against VGM
diamond drill holes because of the uncertainty in hole location, the fact that the difference is just
barely statistically significant and the fact that copper is responsible for only about one-third of the
revenue stream. CAM does recommend twinning of diamond hole versus RC holes through the
secondarily-enriched sulfides.
14.1.5 Suitability of the Cominco Database
On the basis of this review, and the comparison of the Cominco data to VGM data, CAM believes the
database including the Cominco data is suitable for the calculation of a 43-101 compliant Resource.
The final data on Cominco and VGM holes was provided to CAM as separate CSV files. While this is
acceptable, the best practice is a single database with a clear pedigree for all data, CAM recommends
that VGM prepare a single database for the project, probably in Microsoft Access, with appropriate
links to either the assay certificates for the VGM holes or the scanned documents for the Cominco
data. During the assembly of this database, Cominco WO3 analyses should be entered and checked.
The VGM analyses indicate that silver may provide some additional revenue. As far as is known
Cominco data does not include any silver analyses. It is recommended that silver and tungsten be
included in any future modeling runs.
14.2 Virgin Metal’s 2006 Drilling
Results from the 45 reverse-circulation holes drilled by VGM were analyzed by CAM in the previous
43-101 Technical Reports (CAM, 2007, 2008). Some were exploration holes far to the east, and only
30 holes were within the mineralized zone, but outside the Bacanora concession, which was not at that
time controlled by VGM. These 30 holes defined the mineral Resources estimated by CAM in 2007.
Verification of the data from these holes is discussed in CAM (2007).
14.3 Virgin Metal’s 2007 Drilling
14.3.1 Initial Data Checks
CAM spot-checked the database against assay certificates against the database for the VGM drilling
and found no errors which indicate the VM assays have been correctly entered.
In order to assure consistency and minimize errors and costs, CAM uses automated data processing
procedures as much as possible in constructing and auditing geologic databases. These procedures
depend heavily on consistent and non-duplicated field labels and drillhole IDs. While many of the
issues flagged by these automated procedures are obvious, CAM requires a clean and consistent
database before proceeding with geological modeling. Common inconsistencies include:
14-3
MQes
• Misspellings.
• Confusion of 0 (zero) and O or o.
• Inconsistent use of upper and lower case.
• Inconsistent usage or space _ and -.
• Trailing, leading or internal blanks. (CAM routinely changes all blanks to _ to positively
identify this problem)
• Inconsistent use of leading zeros in hole IDs.
• Inconsistent analytical units (e.g. PPM, PPB, opt %)
• Inconsistent coordinate systems and units (e.g. NAD27 and state plane and mine grid: ft and
m).
For manually generated databases, CAM generally regards an error rate of less than one in 500 as
good, an error rate of less than one in 100 as acceptable and an error rate greater than two in 100 as
unacceptable. The acceptability or unacceptability of the database also depends heavily on the impact
of the errors. Hence the values for acceptability in unacceptability may easily change by an order of
magnitude depending on the nature of the errors. For example a dropped decimal point in a value of
37 for an actual value is 0.37 is much more serious than the entry of a 0.36 for a 0.37. For computer-
generated databases, any errors may be indicative of problems in data processing procedures and these
require resolution of the source of the problem.
CAM also reviews the procedures used to prepare the database and is particularly critical of the
common practice of cutting and pasting to obtain the database.
Different companies and even geologists within the same company have different methods for
drilling, sampling, sample prep and analysis and record-keeping. In some cases it may be necessary to
de-weight the results of certain drilling campaigns or types of drilling.
Over the years CAM personnel have developed a procedure for mathematical and statistically
validating exploration databases. This check procedure includes:
• Check for duplicate collars.

• Check for twin holes.
• Check of surface collared holes against surface topography
• Check for statistically anomalous downhole surveys.
• Check for overlapping assays
• Check for 0 length assays
• Review of assay statistics by grade class.
• Review of assay statistics by length class.
• Checks for holes bottomed in ore
• Check for assay values successively the same.
• Check for assay spikes.
• Check for downhole contamination by decay analysis.
• Check of total grade thickness in total and by mineral zone
CAM uses values flagged by these automated procedures as a starting point for database review.
Experience has shown that if the error rates in the statistically anomalous values are acceptable, then
the entire database is generally acceptable.
A few anomalies were noted, and forwarded to VGM for resolution, but the number and type of
anomalies, with the exception of downhole surveys, were within industry norms for databases of this
size, and even if the anomalies turn out to be errors, they would have no effect on the overall Resource
estimate.
14-4
MQes
On the basis of these statistical checks, and the checks of data entry discussed previously, CAM
believes that the exploration database has been prepared according to industry norms and is suitable
for the development of geological and grade models.
14.3.2 Downhole Surveys
A number of the 2007 and 2006 VGM drillholes showed significant deviations between the azimuth at
the collar and the first downhole survey point. A few of these had been noted in CAM's previous
review but were not believed to have a substantive effect on the overall Resource estimate in terms of
tonnage or metal quantity. CAM requested that VGM review these collars. Several were field-
checked and the as-drilled collar azimuths were found to be correct.
To assess the effect of these downhole surveys anomalies, CAM calculated the difference in the
location of the hole, by first assuming that the hole deviated at the survey measurement point, and by
then assuming the hole deviated at the previous survey point. Of the holes with downhole surveys, 14
show deviations of more than 5 m, nine show deviations of more than 10 m and four show deviations
of more than 20 m depending on the desurvey assumptions. For a relatively small orebody, deviations
of this amount are significant. While CAM believes that the Resource estimate is acceptable for use
in feasibility decisions for determining tonnes and grade, additional drilling is required before the pit
limits can be finalized.
Experience with other drilling programs shows that hole deviations are generally consistent. CAM
therefore believes the Los Verdes database is suitable for calculation of the grade and tonnage, but that
there may be uncertainties, locally up to 30 meters, in the location of Resource-grade material.
CAM recommends that gyroscopic methods be used to precisely define the location of the contact of
secondary enriched sulfides with barren material in additional drilling, before final pit design is done.
It is not possible to define how many additional holes are necessary until preliminary pit is available,
but CAM believes that 10 to 15 additional holes will probably be sufficient. Some of these holes
should be vertical and the first two and every fifth hole thereafter should be downhole-surveyed twice.
14.4 Final Database Used for Resource Estimation
Basic statistics on the final assay database used for Resource estimation at Los Verdes are given in
Table 14-2.
Table 14-2: Drilling Statistics from Assay Database
Item Number Length (m)

Holes 171 20514.1
Holes with non-collar downhole surveys 34 4322.6
Non-collar survey records 53 3839.0
Downhole surveys up 1 0.0
Downhole surveys down 223 3839.0
Assay intervals (Mo) 12027 29710.7
Assayed intervals (Mo) 11930 27485.5
CAM opines that the Los Verdes database, including the Cominco data, is suitable for the estimation
of a 43-101 compliant Resource.
14-5
MQes
SECTION 15
ADJACENT PROPERTIES
15.0 ADJACENT PROPERTIES
The mineral Resources estimated in this report do not extend outside properties totally controlled by
VGM. No exploration results were used from outside the VGM properties.
15-1
MQes
SECTION 16
MINERAL PROCESSING and METALLURGICAL TESTWORK
16.0 MINERAL PROCESSING and METALLURGICAL TESTWORK
16.1 Metallurgical Testwork
Information provided by VGM indicates that metallurgical testing by previous owners of the Los
Verdes project dates back to 1976. VGM acquired the property in 2005 and in mid 2007 retained
Resource Development Inc. in Denver, Colorado, USA (“RDi”) to perform preliminary testwork in
flotation and grinding using composites compiled from reverse circulation drill chips. Additional
testing was subsequently performed by G&T Metallurgical Services Ltd. in Kamloops, British
Columbia, Canada (“G&T”) using composites compiled under MQes’ direction from selected lengths
of core. A pilot plant program planned for execution at SGS Lakefield Laboratories in Lakefield,
Ontario, Canada (“SGS”) was abandoned since the bulk sample provided by VGM, comprised of
stockpiled material recovered during adit excavation, was found to be an order of magnitude higher in
molybdenum than the anticipated life of mine mill head grade. The material also displayed an
unacceptably high level of surface oxidation.
Mineralization is generally characterized as oxide or non oxide. Oxides are generally depleted in
copper and contain varying amounts of molybdenum which is reported by CAM as ferrimolybdate.
Non oxides can generally be subdivided into hypogene and enriched categories. Hypogene contains
variable grades of molybdenum as molybdenite and relatively lower grade copper mineralization,
typically as chalcopyrite. Enriched zones of elevated copper grade contain various secondary copper
minerals together with variable amounts of molybdenite. The enriched zones can be further classified
as to the occurence of secondary copper minerals, notably chalcocite and covellite. The oxide/non
oxide transition is generally very distinct; however there are limited pockets of mixed material.
Although no formal geologic model was available at the time of sample selection, testwork was
carried out at G&T on composites considered by VGM and MQes to be generally representative of
non-oxide material based on visual inspection of the intervals selected. Certain mineral assemblages
may not have been identified or tested to date. Future testwork will be required to focus on
differences in metallurgical response of materials from the hypogene and enriched zones.
Table 16-1 presents the mineralogy of the Composite 1 tested by G&T as determined by optical
microscopy. Quantitative data of major elements are also shown in the table. A summary of the
mineralogical characteristics of the sample includes:
• Copper sulphides in order of higher to lower abundance are: chalcopyrite, chalcocite and
bornite, molybdenum is present as molybdenite.
• The sample contained 5.5% pyrite by weight which was almost 4 times that of the copper
sulphide content.
• Precious metals (i.e. gold and silver) were present in low values.
• The sample contained around 117g/t of Sb, 0.01% As and 17g/t of Bi.
16-1
MQes
Table 16-1: Mineralogical Analysis of Feed Sample
Elements/ Minerals Units Value

Chalcopyrite % 0.8
Bornite % 0.2
Chalcocite % 0.4
Molybdenite % 0.2
Pyrite % 5.5
Gangue % 92.9
Copper % 0.72
Iron % 3.3
Molybdenum % 0.14
Sulphur % 2.8
Gold g/t 0.05
Silver g/t 5
Arsenic % 0.01
Bismuth g/t 17
Antimony g/t 117
Source: G&T Table 1 (Test program KM2044)
Insufficient sample was available for locked cycle final cleaner testing of molybdenite and copper
concentrates in all testwork performed on behalf of VGM.
Based on testwork to date at G&T the recommended flowsheet includes:

The metallurgical recoveries and concentrate grades used as the basis for project economic evaluation
were established as follows:

Since these results are based on incomplete metallurgical testing they have not been adjusted to
account for the effects of either locked cycle testing or plant scale up. Final design parameters can
only be defined after the completion of the following additional work:
• Variability testing (impact of lithology, alteration, head grade and spatial distribution within
the deposit).
• Geometallurgical mapping.
• Completion of flotation testwork including locked cycle testing to finalize the flowsheet and
define concentrate grades and recoveries plus deleterious elements.
16-2
MQes
16.2 Plant Design
The preliminary flowsheets developed by MQes for the purposes of equipment sizing, layout
development and initial capital and operating cost estimating were based on the concepts outlined
above. Recognizing the preliminary nature of the testwork, it was decided to include substantial
flexibility into the plant design in order to accommodate possible variations from the criteria
established in the preliminary testwork. The original intent was that these concepts would be
modified to reflect results from additional testing including a pilot plant campaign at SGS in
Lakefield, Ontario. The pilot plant program was subsequently cancelled since the sample provided by
VGM was discovered to be extremely high grade and highly oxidized. However the flowsheets,
equipment selection and cost estimates have been updated as follows to reflect results from G&T:
• Adequate liberation is achievable at a primary grind (P80) of 150µm.

• The average work index reported by G&T was 16.6 kWh/tonne.
• Bulk rougher concentrate should be reground to a P80 of 30µm before cleaning
• Flotation concentrate from the separation step (molybdenum concentrate) should be reground
to a P80 of 20µm before recleaning.
• Flotation times and cell configurations have been modified.
• The reagent scheme has been modified.
• The best “final” concentrate grades attained were 57% molybdenum and 23% copper. The
recoveries for molybdenum and copper concentrates were 71% and 92% respectively.
For purposes of this study the process flowsheet focuses on production of molybdenum and copper
concentrate only. Space has been left in the plant layout for the possible inclusion of a future tungsten
recovery circuit. The flowsheet is comprised of:
• Primary, secondary and tertiary crushing followed by single stage ball mill for primary
grinding.
• Bulk roughing, concentrate regrinding and three stages of cleaning followed by scavenging of
first stage cleaner tailings.
• Single stage copper-molybdenum separation, molybdenum rougher concentrate regrinding
and five stages of cleaning. Space has been provided in the plant layout for the future
inclusion of equipment to upgrade copper molybdenum separation tails (copper concentrate)
with reverse flotation to remove residual molybdenum and gangue.
• Molybdenum concentrates will be thickened, filtered and dried to nominally 5% moisture,
sampled and shipped offsite in drums.
• Copper concentrates will be thickened, filtered and dried to nominally 10% moisture, sampled
and trucked offsite.
• Final tailings will be discharged to a conventional tailings dam.
16.3 Concentrate Specifications
Insufficient sample was available for locked cycle final cleaner testing of molybdenite and copper
concentrates in all testwork performed on behalf of VGM. However, analytical results of the final
(open circuit cleaner) molybdenum concentrate and the molybdenum rougher tail (which
approximates copper concentrate) from G&T test 13 (which form the basis for cleaner circuit design)
are summarized in Table 16-2.
16-3
MQes
Table 16-2: Composition of Selected Copper-Molybdenum Separation Products
Test KM2147-13
Element Symbol Units
Mo Concentrate Mo Rougher Tail
Copper Cu % 0.66 23.1
Molybdenum Mo % 56.8 0.14
Gold Au g/t 0.3 1.4
Silver Ag g/t 8 118
Iron Fe % 0.6 30.2
Sulphur S % 36.3 37.1
Carbon C % 0.7 0.09
Antimony Sb g/t 274 5560
Arsenic As g/t 385 1754
Bismuth Bi g/t 78 74
Cadmium Cd g/t 6 42
Cobalt Co g/t 28 78
Fluorine F g/t <10 47
Lead Pb % 0.027 0.142
Mercury Hg g/t 0.2 1.2
Nickel Ni g/t 30 60
Phosphorus P g/t 0.01 0.35
Selenium Se g/t 107 <10
Silica SiO2 % 0.25 0.54
Zinc Zn % 0.02 0.39
Calcium Oxide CaO % 0.19 0.33
Aluminum Oxide Al2O3 % 1.05 0.29
Magnesium Oxide MgO % 0.03 0.06
Manganese Oxide MnO % 0.003 0.007
While these results will approximate final molybdenum and copper concentrates they do not account
for the effects of internal recycle in the molybdenum cleaning circuit.
The molybdenum concentrate grade of 57% Mo exceeds the 50% Mo target established by VGM at
the outset of this study. Its copper content of 0.66% Cu exceeds the 0.5% limit commonly accepted
for marketing purposes. However, 0.41% Cu was also achieved in a concentrate containing 55.7%
Mo (G&T Test 12) which suggests that acceptable copper levels will be achievable.
The molybdenum rougher tail (which approximates final copper concentrate) contains 23% Cu,
marginally less than the 24% Cu targeted by VGM. The presence of Arsenic (1,754ppm) and
Antimony (5,560ppm) indicate that penalties will probably be incurred in marketing copper
concentrate.
16-4
MQes
SECTION 17
MINERAL RESOURCE and MINERAL RESERVE ESTIMATES
17.0 MINERAL RESOURCE and MINERAL RESERVE ESTIMATES
Definitions used in this section are consistent with those adopted by the Canadian Institute of Mining,
Metallurgy and Petroleum ("CIM") Council in December 2005, as amended, and prescribed by the
Canadian Securities Administrators' National Instrument 43-101 and Form 43-101F1, Standards of
Disclosure for Mineral Projects.
17.1 Geological Modeling
As indicated previously in this report, the mineralization which is amenable to concentration by

conventional flotation is a lens consisting of secondarily-enriched sulfides (i.e. chalcocite-enriched
hypogene chalcopyrite, bornite, and molybdenite) on the top, with non-enriched hypogene sulfides
below. This lens of mineralization is referred to as non-oxide mineralization Visually examination
of assays on a hole-by-hole basis indicates molybdenum and copper grades within the non oxide are
fairly homogeneous and average about 10 times the grade outside of this volume. Directly above the
non oxide there is non-sulfide mineralization characterized by relatively high molybdenum grades in
ferrimolybdite, with low grades of oxide copper.
Cross-sections showing interpreted mineral zones, trending both northwest and northeast, were
prepared by the Los Verdes staff and transmitted to CAM as AutoCAD DXF files. These sections
showed the drillholes and interpreted mineral zones. Any differences between the computerized
drillhole database and the drillholes shown on these sections were resolved by reference to original
drill data, such that the revised mineralized shapes match the computerized database. CAM then
prepared a mineral zone model using these sections with the northwest-trending (cross) sections taking
precedence over the northeast-trending (long) sections. The four northwest-trending sections were not
exactly parallel and this resulted in an additional data processing step. The cross-sections were then
resolved to level plans spaced at 10-meter elevation intervals.
As a refinement to the initial model showing oxides above the highest enriched-sulfide intercepts, new
models for mineralization and lithology were constructed for use in the pre-feasibility study. Whereas
the initial model had been resolved in three dimensions, the lithology and mineralization models were
based on sectional information only. The new models were generally consistent with the initial model,
although there are local differences.
Prior to a final feasibility study, it is recommended that downhole survey issues be resolved, and that a
consistent model of mineralization should be developed which will incorporates the known deposit
morphology.
17.1.1 Block-Model Construction
Blocks associated within each 10m plan-interpreted level were assigned value 1, for the “sulfide and
mixed zone”, or SAM (which is now referred to as “secondarily-enriched sulfides”). Any blocks
above the highest secondarily-enriched sulfides were assigned value 2, indicating oxide. This
interpretation of oxide is somewhat conservative, since oxide material with significant mineralized
intercepts can be found around the periphery of the oxide zone as defined by this method. If a viable
process for recovery for molybdenum from oxide can be demonstrated, additional geological
interpretation would be required to define the geometry of this oxide material.
17-1
MQes
Two smaller zones below the main secondarily-enriched sulfides which contained ore grade mineral
were also interpreted. These two zones contained only a small number of composites, and have been
categorized as Inferred Resources.
17.1.2 Block-Model Validation
After the secondarily-enriched sulfides and oxide models were constructed they were visually
reviewed along each row, column and bench for visual consistency. To test for the possibility of a
geometric bias relative to the data used to construct the model, CAM assigned all composites inside
the secondarily-enriched sulfides a value of 1, all composites inside oxide of value 2, and all other
composites a default value of 9. These composites were then used to construct a nearest-neighbor
model with a search of 150 x 150 x 5 meters. The count of blocks for the nearest-neighbor
secondarily-enriched sulfides model was 111% of that of the interpreted model, while the count of
blocks for oxide were 109% of the interpreted model. This difference of about 10% indicates that on
average the boundaries of the interpreted secondarily-enriched sulfides and oxide model are
geometrically conservative. Because of the uncertainty in drillhole XYZ coordinates, CAM believes
this conservatism is reasonable.
17.1.3 Contact Profiles
Visual examination of the drillholes and the adit indicated that there were relatively long runs of
molybdenum in excess of 0.10 transitioning into barren rock where the molybdenum grade was below
0.02. To confirm the existence of this phenomenon and define it relative to the interpreted
secondarily-enriched sulfides shape, molybdenum grade profiles were plotted using “box plots”
relative to the secondarily-enriched sulfides contact for 5m composites. The nature of box plots is
explained in CAM, 2007. The box plots of the contact profile are based on 64 drillholes which cross
the secondarily-enriched sulfides contact, 24 of which are Cominco holes. Figures 17-1 and 17-2 are
box plots of Mo and Cu, respectively, showing distance from the contact of the secondarily-enriched
sulfides.
17-2
MQes
Figure 17-1: Box Plot for Mo vs. Distance from Contact
The box plots showed that, except for composites within 5m of the secondarily-enriched sulfides
contact, the mean grade within secondarily-enriched sulfides appears to be above 0.1, while outside
secondarily-enriched sulfides the mean grade appears to be below 0.02.
Figure 17-2: Box Plot for Cu vs. Distance from Contact
A similar trend is observed in the copper contact plot (Figure 17-2), except copper grades increase
with distance from the contact. Possibly this is due to the observed fact that copper has been leached
out of the oxide zone above the secondarily-enriched sulfides, and re-deposited (as chalcocite) within
the secondarily-enriched sulfides. It also suggests that instead of a single secondarily-enriched
17-3
MQes
sulfides volume as used for the molybdenum model, it could be desirable to distinguish between
mixed and primary copper mineralization.
Because molybdenum is the primary economic element, accounting for approximately two-thirds of
the deposit value, it was decided to use a single secondarily-enriched sulfides volume for purposes of
Resource estimation. Within this volume it appears that molybdenum grade is quite homogeneous and
is characterized by hard boundaries. Because of uncertainty in the location of the secondarily-
enriched sulfides contact for molybdenum due to a downhole survey issues (see below), it is not yet
possible to precisely define the volume of secondarily-enriched sulfides.
17.2 Surface Topography and Block Model Limits
Surface topography data with 5-meter contours were provided to CAM as an AutoCAD DWG file.
CAM extracted the contour lines as a series of XYZ points to use in preparing a surface topography
model. Based on the extent of the drilling, and the possibility that some scoping-level mine designs
(including dump layout) might be done using this model, CAM selected the geometric limits given in
Table 17-1 for the Resource model.
Table 17-1: Model Geometric Parameters
Origin (Meters) Number of Block Size (Meters)

Northing 41000.00 Rows 400 Row 5.00
Easting 80500.00 Columns 400 Column 5.00
Elevation 500.00 Benches 150 Bench 5.00
Rotation Angle (0.00)
The model limits are much larger than needed to define the secondarily-enriched sulfide zone and any
possible open pit. These large limits were selected in anticipation that the Cominco drilling could
include additional ore zones which might be included in the model. It is recommended that the
number of rows or columns and benches be reduced in future modeling runs. Maps showing drillhole
collars and traces of the secondarily-enriched sulfide area of mineralization are shown in Figure 9-1
and Figure 11-1.
17.3 Desurvey
Desurveying is how the data on depth, azimuth and dip is converted to X, Y, Z locations in space. A
significant source of differences in Resource estimates done in different software systems is how the
holes are desurveyed. All of the interpretive work was done by VGM and CAM using sections and
plans produced in the MicroMine software system, whereas the Resource modeling was done with
MicroMODEL software. The MICROMINE software system desurveys the holes by splining
between survey points, while the MicroMODEL software system assumes the hole is straight from
survey point to survey point. There are several different spline algorithms, so CAM converted these
to azimuth and dip for use in MicroMODEL. A check of the coordinate values calculated in
MicroMODEL and those supplied in MICROMINE were all within 0.1 meter, indicating that hole
location is consistent between the two software systems.
17.4 Statistics and Geostatistics
17.4.1 Compositing and Composite Statistics
17-4
MQes
The assay database was composited to 5 m length composites (2.5 m minimum length) and a mineral
zone code assigned from the mineral zone model based on the 5 x 5 x 5 m block within which the
centroid of the composite fell. Basic composite statistics for each mineralized zone are given in the
Table 17-2.
Table 17-2: Statistics for 5-meter Composite Samples
COMPOSITE COUNT UNTRANSFORMED STATISTICS (% Mo)

Mineralization Rock Below Above Inside Std.
Missing Min. Max. Mean
Name Code Limits Limits Limits Dev.
Sulfide 1 25 0 0 1370 0.0000 1.9758 0.1415 0.0328
Oxide 2 37 0 0 524 0.0000 1.4521 0.0849 0.0114
MZ3 3 0 0 0 60 0.0003 0.3617 0.0515 0.0044
MZ4 4 0 0 0 21 0.0007 0.2126 0.0804 0.0057
OUTSIDE 9 231 0 0 2194 0.0000 1.0660 0.0109 0.0020
OUTSIDE
9999 0 0 0 62 0.0005 0.0263 0.0026 0.0000
MODEL
ALL 293 0 0 4231 0 1.9758 0.0631 0.0166
ALL 293 0 0 4231 0 1.9758 0.0631 0.0166
These geostatistical rock codes are different than the field logging codes discussed elsewhere in this report
17.4.2 High-Grade Restriction
In many metals deposits, there are some very high-grade analyses which may not be recovered in
actual mining. The high-grade values may actually be representative of the deposit, but an
unacceptable risk of grade over-estimation may occur by not restricting their influence, because of the
very small number of high-grade samples and their high variability. For this reason, high-grade values
are often restricted by limiting the distance that high-grade values are projected (outlier restriction), or
by reducing high-grade values to a defined maximum (“capping”), or by eliminating the values
altogether.
The cumulative-frequency plot is one of the most common methods of determining whether high-
grade restriction is required. Log cumulative frequency plots of all Mo and Cu Composites are shown
in Figure 17-3 and Figure 17-4.
These cumulative frequency plots show that all Mo and Cu composites can be modeled by a mixture
of 3 or 4 lognormal distributions and that there is no need to cap composites prior to estimation. The
cumulative frequency plots of all elements (molybdenum, copper, tungsten and silver), both in toto
and by mineralization group, appeared to be log-normal with no need for capping. Hence, no cap
grades were applied to the Resource estimate. Even though the composite cumulative frequency
shown no need for capping, there is some risk that, due to the geometry of the samples, statistically
anomalous high-grade blocks will occur. To test for this possibility CAM also constructed cumulative
frequency plots for copper and molybdenum for the secondarily enriched sulfide blocks. These plots
are not included in this report but no anomalous values were found.
17-5
MQes
Figure 17-3: Log Cumulative Frequency Plot (Mo ppm)
Figure 17-4: Log Cumulative Frequency Plot (Cu ppm)
17-6
MQes
17.4.3 Geostatistics
Ominidirectional log variograms were constructed for Mo and Cu, both in total and by mineralization
group, transformed to relative and interpreted. This technique is a standard geostatistical practice for
data with a log-normal distribution. The variograms all showed a relatively high nugget and all could
be modeled by two nested spherical structures. Variograms for composites for Mo for secondarily-
enriched sulfide and oxide are shown in Figure 17-5 and Figure 17-6 respectively.
CAM briefly reviewed directional variograms for evidence of anisotropy but there were insufficient
data to allow any anisotropy to be definitely interpreted.
17.4.4 Resource Estimation
Resource estimation was done by ordinary kriging, using the relative variograms with hard boundaries
by mineralization group. Because of the statistically significant difference in average grades among
the mineralized zones, hard boundaries were used during interpolation. The search radius was 100 m,
with a maximum of eight and a minimum of three composites required for estimation for secondarily-
enriched sulfide, oxide and the two smaller zones. Outside of these interpreted zones a sector search
was used, the sectors corresponding to the face of a cube, with a maximum of two composites per
sector. This type of search is preferred outside constrained volumes because it ameliorates the
tendency of densely-drilled, high-grade areas from influencing sparsely-drilled, low-grade areas.
17.4.5 Resource Classification
There are no precise definitions of Measured, Indicated and Inferred Resources: the definitions that
are provided are non-quantitative since each mineral deposit is different. Only Measured and
Indicated Resources may be used in a feasibility study, while Inferred Resources have sufficient
uncertainty that they cannot be totaled with Measured and Indicated Resources.
Since the usual standard of accuracy of a feasibility study is ±15%, CAM believe that Resources
classified as Measured and Indicated should contain not less than 85% of the predicted tonnes, and
should contain metal at the 95% level of confidence for volumes corresponding to annual and total in-
mine tonnages. Additionally, CAM believes that Measured Resources should support detailed mine
design without additional drilling except as required for breakage and ore control, while additional
drilling may be required prior to mining for Indicated Resources.
17-7
MQes
Figure 17-5: Omnidirectional Relative Variogram Mo (from log) Secondarily Enriched Sulfide
Figure 17-6: Omnidirectional Relataive Variogram Mo (from log) for Oxides
CAM generally uses the criteria that, within interpreted geological shapes, Resources may be
classified as Measured and Indicated out to the range of the variogram.
17-8
MQes
Outside of interpreted geological shapes, Resources may be classified as Measured or Indicated out to
0.707 times the range of the variogram. The block must be within an area drilled at a spacing equal to
or less than the range of the variogram. CAM adjusts these criteria depending on the deposit and the
ratio of the nugget to sill.
For Los Verdes, CAM classified blocks in secondarily-enriched sulfide and oxide as Measured if
within half of the range of the variogram, and if interior to drilling in the interpreted shape for
secondarily-enriched sulfide and oxide. Blocks not interior to the drilling, or between 0.5 and 1 times
the variogram range from the nearest sample point, were classified as Indicated.
CAM believes these criteria are justifiable, and that tonnes within secondarily-enriched sulfide have a
reasonable expectation of being mined. However, additional drilling is required along the boundary of
the secondarily-enriched sulfide to precisely define the contact, due to the issues with downhole
surveys discussed earlier. Within the oxide in Sam there is considerable drilling and no Inferred
blocks. Outside of the two interpreted volumes there are a number of ore grade intercepts which do
not necessarily form coherent mineable units.
CAM classified a block as Inferred if it was within 30 m of the nearest sample point and the block was
estimated by least 4 drill holes.
17.4.6 Resource Tabulation
Mineral Resources which are not mineral Reserves do not have demonstrated economic viability. The
estimate of mineral Resources may be materially affected by environmental, permitting, legal, title,
taxation, socio-political, marketing, or other relevant issues.
The quantity and grade of reported Inferred Resources in this estimation are conceptual in nature and
it is uncertain if further exploration will result in conversion of Inferred to Indicated or Measured
mineral Resource.
Resources were tabulated at various cutoff grades using the densities of 2.406 for sulfides, 2.239 for
oxide, and 2.426 as discussed in Section 12.3 of this report. Table 17-3 presents the Resource as
calculated by the kriging method, at an equivalent cutoff grade of 0.03 percent molybdenum
equivalent with copper valued at 1/10 molybdenum.
17-9
MQes
Table 17-3: Mineral Resource Estimates
Contained Contained
Tonnes % Mo % Cu
lbs Mo lbs Cu
Non Oxide
Mineralization
Measured Resources 4,396,000 0.133 0.684 12,897,000 66,277,000
Indicated Resources 4,269,000 0.128 0.516 12,015,000 48,529,000
Total 8,665,000 0.130 0.601 24,912,000 114,806,000
Measured Resources 2,692,000 0.071 0.089 4,206,000 5,280,000
Indicated Resources 1,717,000 0.087 0.099 3,300,000 3,759,000
Total 4,409,000 0.077 0.093 7,506,000 9,038,000
Oxide and Non

Oxide
Mineralization
Total Measured 7,088,000 0.110 0.458 17,103,000 71,556,000
Total Indicated 5,986,000 0.116 0.396 15,315,000 52,288,000
Total Measured and
13,074,000 0.113 0.430 32,418,000 123,844,000
Indicated
Total Inferred 4,392,000 0.063 0.073 6,062,000 7,058,000

Derived values in the table have been rounded.
17.4.7 Re-Blocking
The 5 x 5 x 5-meter Resource model developed by CAM was too fine for the proposed mining
equipment and method. Hence the model was re-blocked to 10 x 10 x 5m. Additionally, lithology
and mineralization information based on sections 30m apart was included in this model. Unlike
the 5 x 5 x 5-meter sulfide zone model, the lithology and mineralization models were not resolved
to plan or adjusted for consistency to the interpreted sulfide zone. The sectional model showed
oxide mineralization and barren in the sulfide which was excluded from the Resource and
potential sulfide material in the oxide which was not included in the Resource.
Two different re-blocked models were developed, one for oxide and one for sulfide. For the
calculation of grades in each model, the grade of oxide in the sulfide model and the grade of
sulfide in the oxide model were assumed to be zero, additionally any inferred blocks were
assumed to be zero grade. Lithology, mineralogy and resource class were assigned by majority
rules and in the case of ties the first blocks included in the re-blocking process determined
lithology, mineralogy and resource class.
The effect of re-blocking on the Resource estimate is shown in Tables 17-4 and 17-5. Only non-
oxide mineralization is includable in the Resource which is convertible to a reserve.
Additionally, mineralogy code 77 (oxide) was excluded from the non-oxide mineralization while
some of the sulfide which was interpreted in the oxide was not included. This inconsistency is
due to the fact that the sections used to interpret the mineralogy sections were not resolved in plan
17-10
MQes
like the non-oxide mineralization boundary. While this is conservative, and CAM believes
acceptable for a pre-feasibility study, it needs to be resolved prior to project feasibility.
As would be expected, Table 17-4 shows a decrease in grade because of the dilution caused by
quadrupling the block size. There is also a loss of tonnage particularly in Indicated because of the
addition of zero grade blocks along the periphery of the interpreted non oxide mineralization.
To convert a mineral resource to a Reserve, it is necessary to apply actual economic and

metallurgical parameters instead of using a simple equivalent factor as used in Tables 17-3 and
17-4. Table 17-5 shows resources using the $0 per ton cutoff and economic parameters used in
the mining section of this report, which excluded Mineral Codes 77, 78 and 79. At the time Table
17- 5 was being prepared, there was the possibility of minor revisions in the parameters, so the
formula used to calculate net value is given at the bottom of Table 17-5. Table 17-5 is not directly
comparable with the Reserves because of the variable cutoff used to optimize the mine schedule.
Table 17-4: Re-Blocked Non-Oxide Mineral Resource 0.03% Mo Equivalent Cutoff
Cutoff,%
Measured
71 0.03 1434023 0.1098 0.2946 3470324 9313440
Measured
74 0.03 2902901 0.1465 0.9107 9374345 58281577
Measured
77 0.03 311211 0.0899 0.1745 616864 1197550
Measured
78 0.03 17877 0.1427 0.1957 56256 77147
Measured
79 0.03 129949 0.0750 0.4086 214934 1170494
Measured
total 0.03 4795963 0.1299 0.6624 13732724 70040211
Indicated
71 0.03 1630653 0.1176 0.3157 4228516 11348063
Indicated
74 0.03 1747605 0.1325 0.6946 5104622 26762177
Indicated
77 0.03 196146 0.0802 0.2601 346641 1124905
Indicated
78 0.03 40775 0.1146 0.2386 103058 214483
Indicated
79 0.03 734673 0.0813 0.3083 1317576 4993048
Indicated
total 0.03 4349855 0.1158 0.4634 11100416 44442679
Measured +
Indicated 71 0.03 3064676 0.1139 0.3058 7698841 20661504
Measured +
Indicated 74 0.03 4650507 0.1412 0.8295 14478968 85043755
Measured +
Indicated 77 0.03 507358 0.0861 0.2076 963506 2322456
Measured +
Indicated 78 0.03 58653 0.1232 0.2255 159314 291631
Measured +
Indicated 79 0.03 864622 0.0804 0.3233 1532510 6163543
Measured +
Indicated total 0.03 9145819 0.1232 0.5678 24833141 114482890
17-11
MQes
Table 17-5: Re-Blocked Non-Oxide Mineral Resource $0/tonne Economic Cutoff
Cutoff , %
Measured 71 0 1390284 0.1122 0.3012 3438914 9232988
Measured 74 0 2889830 0.1471 0.9138 9369337 58217668
Measured 77 0 260388 0.1016 0.1921 583248 1102968
Measured 78 0 17877 0.1427 0.1957 56256 77147
Measured 79 0 115513 0.0814 0.4423 207254 1126253
Measured total 0 4673894 0.1325 0.6770 13655011 69757026
total, excl .
Measured 77,78,79 0 4280114 0.1357 0.7148 12808252 67450656
Indicated
71 0 1542799 0.1229 0.3262 4181171 11095578
Indicated
74 0 1700664 0.1356 0.7095 5082858 26599990
Indicated
77 0 171655 0.0875 0.2829 331060 1070440
Indicated
78 0 37240 0.1225 0.2543 100541 208789
Indicated
79 0 600825 0.0941 0.3469 1246328 4595040
Indicated
total 0 4053185 0.1225 0.4876 10941960 43569839
Indicated total, excl .
77,78,79 0 3243463 0.1296 0.5272 9264029 37695569
Measured +
Indicated 71 0 2933084 0.1178 0.3144 7620086 20328567
Measured +
Indicated 74 0 4590494 0.1428 0.8381 14452195 84817658
Measured +
Indicated 77 0 432043 0.0960 0.2282 914308 2173409
Measured +
Indicated 78 0 55118 0.1290 0.2353 156798 285937
Measured +
Indicated 79 0 716338 0.0920 0.3623 1453582 5721293
total 0 8727079 0.1278 0.5890 24596971 113326866
total, excl .
77,78,79 0 7523578 0.1331 0.6339 22072281 105146226
Net Value = (Mo*7.1*49.6035) + (Cu*9.2*0.91042*5.2338) - 16.67 - 27.7778*Mo*7.1/570 - 152.7778*Cu*9.2/230
Moly Revenue Copper Revenue Process Moly Con Transport Copper Con Transport
CAM are of the opinion that the Resource estimates presented above are fully compliant with NI 43-
10, and are suitable for use in pre-feasibility studies to define mineral Reserves.
17.5 Mineral Reserves
MQes believes the mine production schedule defines the mineral Reserve. As such, a summary of the
mine production schedule was prepared which tabulated ore based on its resource classification. This
tabulation used a variable monetary cutoff to define ore, with Measured and Indicated resources
directly converted into Proven and Probable Reserves. This summary is presented in Table 17-6.
Discussions on their development are presented in section 19.
17-12
MQes
Table 17-6: Resource/Reserve Summary
Tonnes Average Mo Average Cu

Category (1000’s) Grade (%) Grade (%)
mineral Reserve
Proven 3,974 0.141 0.748
Probable 3,076 0.133 0.539
Total 7,050 0.137 0.657
mineral Resource (not included in the mineral Reserve)
Oxide Stockpile (Measured & Indicated) 3,292 0.103 0.102
Ex-pit (Measured & Indicated) NONE n/a n/a
The Oxide Stockpile Resource was tabulated using a 0.050% Mo cutoff applied to oxide and mixed materials.
Metal prices of US$25.00/lb Mo and US$2.50/lb Cu were used to define ore.
Inferred resources were not re-blocked model and hence are not part of the above summary.
The mineral Reserves as set out in the table above have been estimated by Howard Steidtmann of MQes, who is a
Qualified Person under NI 43-101.
17-13
MQes
SECTION 18
OTHER RELEVANT DATA and INFORMATION
18.0 OTHER RELEVANT DATA and INFORMATION
The undersigned are not aware of any further information, the exclusion of which would make
this report misleading.
18-1
MQes
SECTION 19
ADDITIONAL REQUIREMENTS for TECHNICAL REPORTS on DEVELOPMENT
PROPERTIES and PRODUCTION PROPERTIES
19.0 ADDITIONAL REQUIREMENTS for TECHNICAL REPORTS on DEVELOPMENT

PROPERTIES and PRODUCTION PROPERTIES
19.1 Geotechnical
Geotechnical conditions at the Los Verdes Site are dominated by the presence of shallow rock covered
by stiff residual or colluvial soil. This produces a high strength, low compressibility profile with
generally good foundation conditions, but also creates some difficulty with respect to excavation and
increases earthworks costs. The dominant terrain conditions are steep, narrow valleys presenting
some access difficulties.
Pit slope stability is controlled by rock structure (faults and fractures) and varies as a function of rock
type. In the granodiorite material, recommended design interramp angles vary from 41° to 52°
depending on pit slope orientation, averaging 46°. In the quartz-tourmaline breccia material,
recommended design interramp angles vary from 40° to 46° depending on pit slope orientation,
averaging about 42°. The dominant failure mechanism will be structurally controlled wedge failures.
Raveling/rockfall and small wedge failures will be controlled using catch benches left at a vertical
spacing on the order of 20m.
Waste rock dumps will be located on the slopes immediately above and to the east of the proposed
tailing reservoir facility. The waste rock will be placed in multiple angle of repose lifts, with setbacks
(benches) producing a final overall slope on the order of 2.5 to 3 horizontal to 1 vertical.
Foundation conditions for constructed facilities (buildings, machinery, pipelines, roads, etc.) are
expected to be good with shallow foundations dominating (spread footings, mat foundations, etc.) and
high allowable bearing capacities common. Settlement risk is generally low with the exception of
foundations on uncompacted fill.
Seismicity of the area is characterized by two seismic source zones:
• A local random source expected to have a Maximum Credible Earthquake magnitude on the
order of 5.5.
• A well defined linear seismic source (the pacific coastal plate boundary) some 230km distant
with a Maximum Credible Earthquake magnitude of 8.0.
The local source is expected to produce peak design spectral accelerations for small (3 stories or less)
structures while the distant source will control the design of larger, long natural period structures. The
design pseudostatic acceleration coefficient for large slopes and embankments will be 0.05g.
19.2 Proposed Mining Operations
Conventional truck-shovel open pit mining technology will be used to develop the mine, with the open
pit operating 12 hours per day, 365 days per year. A twelve day allowance has been included for bad
weather and major holidays. Ore will be drilled and blasted on 5m high benches using a staggered
blast hole pattern consisting of 171mm (6¾ inch) diameter holes drilled 3.8 meters apart. Waste will
be drilled on 10m high benches using the same pattern and hole diameter, but with holes drilled 6.1
meters apart. Blasting will be performed using bulk ANFO (ammonium nitrate fuel oil) at powder
19-1
MQes
factors of 0.277kg/t and 0.162kg/t for ore and waste, respectively. Primary loading equipment will be
4.5m3 capacity hydraulic excavators operating in backhoe configuration paired with 36t capacity
articulated haul trucks. The waste storage area will be located approximately 1/2km northeast of the
open pit, with the southern third of the upper two lifts dedicated to stockpile higher grade oxide
material. Topsoil from the disturbed areas will be stockpiled nearby and subsequently used for
surface reclamation activities.
19.2.1 Mining Method and Equipment
The mining method chosen to develop the mineral Reserve consists of conventional truck-shovel
mining technology, with ore and waste mined on 5m and 10m high benches respectively. The major
mining equipment and quantities that will comprise the mining fleet are shown in Table19-1.
Table 19-1: List of Major Mining Equipment
Mine Major Equipment Quantity

Atlas Copco DM25-SP HP Drill 2
KM PC800SE-8 Excavator w/4.5m3 HD Bucket 2
KM WA470-6 Wheel Loader w/3.6m3 Bucket 1
KM HM400-2 36 tonne Articulated Haul Truck 11
KM WD500 Wheel Dozer 1
KM D155AX-6 Track Dozer w/U Blade/Multi Shank Rpr 2
KM D65EX-15E0 Track Dozer w/Semi U Blade 2
KM GD555-3C Motorgrader 2
20,000 liter Water Truck 2
19.2.2 Open Pit Design
Pit optimization was performed using the Pit Optimization Package (POP!), which is developed and
maintained by the Mine Planning Group of Stateline, Nevada. POP! generates a series of pit shells at
declining cutoffs which it then subjects to a discounted cash flow analysis using phased/un-phased
scheduling scenarios. The pit shells are subsequently ranked by economic performance, using either
Net Present Value (NPV) or Internal Rate of Return (IRR), with the best performing pit shell typically
indicating the ultimate pit limit.
A detailed design of the ultimate pit was subsequently created using the optimized pit as a guide.
Figure 19-1 shows the detailed design ultimate pit and the surrounding mine facilities. Two
intermediate mining phases were designed within the ultimate pit to facilitate mine production
scheduling. These phases targeted higher value material and minimized waste stripping as much as
practical.
19-2
MQes
Figure 19-1: Detailed Ultimate Pit and Mine General Layout
19.2.3 Waste Dump Design
A single, combined waste storage and oxide stockpile area will be constructed during the mine’s life.
Figure 19-1 shows the location and size of this area. Based on an average placed bulk density of
1.6t/m3, the capacity of the area is 15.0Mt which will contain 3.3Mt of oxide stockpile material and
11.7Mt of waste.
The waste portion of the area will be constructed in 20 meter high lifts with a 1 meter rise per 2 meter
run slope (26.6 degrees). A ten meter horizontal offset (catch bench) will be constructed between
each 20 meter lift. This resulting overall slope will be 1 meter rise per 2.5 meter run (21.8 degrees).
Reclamation of the exposed slope faces will be an on-going process with stockpiled soil being spread
over the face of each lift followed by hydro-seeding with native grasses and planting with native trees
and shrubs.
19.2.4 Grade Control
A 5m bench height will be used in areas identified by the resource model as potentially being ore.
Areas identified by the resource model and confirmed through in-pit surface mapping as being waste
will be drilled and blasted on a 10m bench height. As a cost saving measure, blasthole sampling and
assaying will not be performed on waste holes.
Due to the deposit’s porphyry style mineralization, mining dilution is not perceived to be a significant
issue. Metal grades typically diminish gradually as distance increases from higher grade areas of the
deposit, however areas of high value ore do occasionally abut barren or sub-economic areas. A
suitable blasthole sampling technique and ore control protocol will need to be established prior to start
up. The ore control procedure should give precedence to ore recovery in areas where high value ore
abuts waste.
19-3
MQes
19.2.5 Production Schedules and Blending
Ore delivery to the primary crusher was specified to be 100kt during the first quarter, 150kt in the
second quarter, 250kt in the third and fourth quarters and 1.0Mt annually thereafter. Variable
monetary cutoffs, generally declining with time, were applied to distinguish ore from waste. The
resulting production schedule was examined and the average Mo grade delivered to the primary
crusher compared year-to-year. Grade fluctuations were reduced by raising/lowering the cutoff values
to achieve more consistent feed to the primary crusher. Additionally, during some periods it was
possible to relax the cutoff value and blend lower value ore from one phase with higher value ore from
another phase, thus improving resource utilization. Multiple production schedules were prepared and
examined, with the final production schedule shown in Table 19-2.
The Project’s average annual sinking rate is approximately 4 benches per year. The maximum sinking
rate was identified as being 7 benches per year while mining phase one during the preproduction
period
19-4
MQes
Table 19-2: Mine Production Schedule
Los Verdes Project; CAM 22 May 2008 Resource Model (10x10x5); Proven & Probable
100% VGM
Direct Process Ore Oxide Stockpile Sulfide Oxide Undif
Ending Ore Average Grade Concentrate Metal in Conc Average Grade Waste Waste Waste
Time Tonnes Mo Cu Mo Cu Mo Cu Tonnes Mo Cu Tonnes Tonnes Tonnes
Period (kt) (%) (%) (t) (t) (t) (t) (kt) (%) (%) (kt) (kt) (kt)
Pre 0 0.000 0.000 0 0 0 0 277 0.071 0.039 50 333 25
Q1 6 0.063 0.251 5 58 3 13 197 0.103 0.102 0 88 0
Q2 57 0.097 0.404 68 918 39 211 349 0.139 0.153 44 20 0
Q3 179 0.145 0.645 324 4,629 184 1,065 432 0.124 0.121 10 6 10
Y1 152 0.176 0.719 333 4,364 190 1,004 162 0.100 0.113 2 9 2
Y2 579 0.158 0.748 1,142 17,320 651 3,984 198 0.101 0.153 3 242 115
Y3 493 0.118 0.875 724 17,264 412 3,971 12 0.081 0.622 45 15 20
Y4 548 0.140 0.913 954 20,012 543 4,603 76 0.083 0.429 53 332 199
Y5 459 0.130 0.833 743 15,294 424 3,518 89 0.123 0.186 178 183 647
Y6 817 0.144 0.556 1,465 18,162 835 4,177 10 0.135 0.081 125 60 365
Y7 857 0.155 0.558 1,659 19,126 946 4,399 0 0.000 0.000 130 0 542
Y8 286 0.194 0.460 690 5,261 393 1,210 0 0.000 0.000 40 0 166
Total 4,433 0.147 0.690 8,106 122,407 4,620 28,154 1,802 0.110 0.135 680 1,287 2,092
Bacanora
Pre 0 0.000 0.000 0 0 0 0 745 0.072 0.049 6 1,513 1,107
Q1 94 0.135 0.092 159 348 91 80 177 0.089 0.048 15 2 16
Q2 92 0.139 0.145 160 535 91 123 166 0.110 0.047 21 7 117
Q3 73 0.128 0.173 116 502 66 116 82 0.132 0.056 6 79 107
Y1 97 0.092 0.240 111 935 63 215 65 0.123 0.119 1 12 100
Y2 421 0.076 0.346 396 5,821 226 1,339 100 0.117 0.116 60 265 497
Y3 506 0.127 0.750 802 15,181 457 3,492 63 0.141 0.093 117 274 721
Y4 450 0.132 0.875 739 15,747 421 3,622 90 0.161 0.116 124 346 766
Y5 538 0.130 0.704 872 15,170 497 3,489 0 0.000 0.000 139 52 548
Y6 187 0.093 0.527 215 3,931 123 904 0 0.000 0.000 48 2 284
Y7 144 0.199 0.761 358 4,393 204 1,010 0 0.000 0.000 21 0 267
Y8 13 0.103 0.301 17 162 10 37 0 0.000 0.000 5 0 13
Total 2,617 0.121 0.599 3,946 62,723 2,249 14,426 1,490 0.095 0.063 564 2,551 4,544
Total
Pre 0 0.000 0.000 0 0 0 0 1,022 0.071 0.046 56 1,846 1,132
Q1 100 0.131 0.101 163 405 93 93 374 0.097 0.076 15 90 16
Q2 149 0.123 0.243 229 1,453 130 334 516 0.130 0.119 65 26 117
Q3 252 0.140 0.509 439 5,131 250 1,180 514 0.125 0.110 16 85 117
Y1 249 0.143 0.532 444 5,299 253 1,219 228 0.106 0.115 3 21 103
Y2 1,000 0.124 0.579 1,539 23,141 877 5,322 298 0.107 0.141 63 506 612
Y3 1,000 0.123 0.811 1,526 32,444 870 7,462 76 0.131 0.179 162 288 741
Y4 998 0.136 0.896 1,692 35,759 965 8,225 165 0.125 0.259 177 678 965
Y5 998 0.130 0.763 1,615 30,464 921 7,007 89 0.123 0.186 317 235 1,196
Y6 1,003 0.134 0.550 1,681 22,093 958 5,081 10 0.135 0.081 173 62 648
Y7 1,001 0.162 0.587 2,017 23,518 1,150 5,409 0 0.000 0.000 151 0 809
Y8 300 0.189 0.452 707 5,423 403 1,247 0 0.000 0.000 46 0 180
Total 7,050 0.137 0.657 12,052 185,130 6,870 42,580 3,292 0.103 0.102 1,243 3,838 6,636
19-5
MQes
19.3 Tailings Disposal
19.3.1 Tailings Dam and Impoundment
The mill and molybdenum ore extraction process will be running at 3,030 tonnes per day when
optimum ore production is reached. Tailings dam and impoundment area have been designed to
contain 10 million tonnes of material at a density of 1.3t/m3. The Los Verdes project is located in a
fairly low risk seismic area and subsequently an “Upstream” construction technique for the tailings
embankment was adopted, a low cost efficient method of tailings disposal.
Initial testing of the tailings samples indicated a neutral acid base accounting with minimum risk of
contamination of ground and surface water with metals and salts. This information was presented to
the Mexican permitting agency (SEMARNAT) by consultants, Heuristica Ambiental. VGM indicates
the regulatory agency was satisfied that lining of the tailings facility was not necessary.
A starter embankment to a crest elevation of 900m will be constructed to provide 2 years of tailings
storage at an in place density of 1.3t/m3. The initial rates of rise of the tailings material will decrease
to approximately 10m/y after year 2. The starter embankment will be constructed of locally borrowed
fill material or from pre-stripping of the open pit overburden material. The starter embankment will
also incorporate an upstream drainage blanket which will tie into an underdrain extending along the
base of the starter embankment fill. Seepage collected in the blanket and under drain will report to the
ECD facility. The blanket and underdrain will control the phreatic surface in the starter embankment
and ensure stability. Tailings deposition will continue using an upstream technique for raising the
embankment crest to the expected 935m elevation at the end of the expected mine life (approximately
8 years).
Using the upstream technique for the embankment construction requires that the supernatant pool be
kept as far away from the embankment crest as possible. Tailings will be deposited from the crest
with the coarse sand/silt material being deposited adjacent to the crest to form a permeable and
drained embankment. Initial deposition of tailings will be subaquaeous until enough of a beach has
been developed to alternate tailings deposition to various areas along the crest of the embankment.
When sufficient beach area has been developed, the tailings should be deposited in even thin lifts of
approximately 0.15 to 0.3m depth along the crest of the embankment to maintain an almost level crest.
The tailings supernatant pool will be pushed to the back of the tailings impoundment opposite and
away from the crest to the east side. The tailings solution will be pumped back to the process plant
using a barge mounted pump.
During operations, runon for the 100-year, 24-hour storm event will be diverted around the tailings
area. The drainage diversion ditches on both the north and south sides of the tailings impoundment
area will be capable of handling the resulting peak flows of 19m3/sec. The drainage diversion ditches
will be cut into the steep hillsides and will probably require mostly drill and blasting. They will be
graded at 0.5% slope and will be constructed above the final tailings elevation of 935m. These
diversion ditches will discharge to local drainage courses that don’t impact the tailings embankment
but will discharge to the ECD for which a spillway is proposed to handle the 24-hour PMP storm
event. For reclamation and closure of the tailings facility, CONAGUA has indicated that they will not
permit the construction of an emergency spillway for the tailings facility and will require diversion
ditches to divert runoff for peak flows from the 1000-year, 24-hour storm event. Hence for final
reclamation and closure of the tailings facility, these diversion ditches will be reconfigured to handle
peak discharge flows from the 1000-year, 24-hour storm event.
19-6
MQes
19.3.2 Environmental Control Dam
The Environmental Control Dam (“ECD”) facility is to be used for seepage collection at the toe of the
tailings dam, fresh water collection from the surrounding watershed, and storage of makeup water.
The embankment is designed for the use of one of two potential alternatives depending on the
availability of clay borrow material (to be determined in future investigations). These alternatives are:
1. An earthen core flanked by filter zones with an upstream and downstream rockfill shell.
2. An upstream liner consisting of two layers of textured 1.5mm HDPE geomembrane separated
by a layer of Geosynthetic Clay Liner (“GCL”).
The embankment has a maximum constructed height on the order of 19m. Both embankment shell
slopes are at 2.5 horizontal to 1 vertical. A barge mounted pump will transfer water from the ECD
facility to the process plant. However, a pipe spillway has also been designed to allow rapid
drawdown of the ECD if necessary in an emergency situation. The emergency spillway is designed as
a simple, unregulated broad crested weir and is sited in a natural ridge on the northeast abutment of
the dam to discharge into a natural drainage that will carry flows well away from the dam
embankment. It is sized to pass the 24-hour PMP storm event with more than 0.5m of freeboard. A
low flow channel is included in the emergency spillway design to facilitate passage of normal flows
and moderate floods without utilizing the larger emergency spillway excavation. Seepage through the
dam core is collected in a filter zone and seepage through the foundation is collected in a downstream
blanket drain. This seepage is transferred to a 0.30m diameter perforated HDPE pipe for final
discharge beyond the toe of the embankment.
19.4 Hydrology
Data from surrounding weather monitoring sites were used to characterize climatic site conditions.
Information from 24 surrounding communities were analyzed and used in the prediction of Los
Verdes site precipitation and evaporation, with the closest community being Yecora, Sonora. Based
on these analyses, the Los Verdes site was determined to have a mean annual precipitation on the
order of 925mm per year. The site has a well defined dry season (April and May) and wet season
(July through September). Precipitation is intermittent between October and March. The driest month
is April with a mean monthly precipitation of 7.9mm. The wettest month is July with a mean monthly
precipitation of 287.7mm. Extreme event analyses have predicted design 24-hour storm events for
various return intervals including the 10-year 24-hour event at 105mm, the 25-year 24-hour event at
112mm, the 50-year 24-hour event at 118mm, and the 100-year 24-hour event at 123mm. For
purposes of emergency spillway design for the environmental control dam facility, the 24-hour
Probable Maximum Precipitation event was estimated at 430mm.
Similarly an evaluation of evaporation data was made to predict the Los Verdes site monthly
evaporation for water balance analyses. Using data from the region and monitoring data from
surrounding communities, the mean annual lake evaporation loss was estimated to be 1,650mm per
year.
19.5 Water Management
An operational water balance model has been developed for the tailings dam and mill facility. A
deterministic water balance model at a point in time five years into the mine life was used to evaluate
process plant and tailings disposal performance and makeup water requirements. Outside makeup
water demand falls to its lowest values during the wet summer months of July and August and peaks
during the driest months of April and May. The transition from a low outside makeup water
requirement to a higher demand typically occurs during the months of October, November, or
December, depending on the total precipitation in any given summer period and the available water in
19-7
MQes
storage. Modeling showed a peak water demand on the order of 41.7l/s and a mean annual usage rate
on the order of 16.5l/s. The peak demand occurs during startup as the system is initially charged with
water. Excluding the initial startup condition, the peak annual water demand is on the order of 30.5l/s.
Tailings will be transported from the plant to a tailings impoundment facility via an above ground
HDPE pipeline. Water will be reclaimed from the tailings impoundment by means of barge-mounted
submersible pumps and pumped to a surge tank. Booster pumps and an above-ground pipeline will
transport the reclaimed water back to the process water tank.
Fresh (raw) water for potable, gland seal and process make-up will be supplied from wells. Water will
be pumped on an as-required basis to the plant Raw Water Tank. The startup water will also be
provided by wells and pumped directly into the tailings impoundment from where it will be reclaimed
and pumped to the process plant.
19.6 Hydrogeology
To determine the existence of sufficient water resources for the Los Verdes project, a site
reconnaissance of the climatology, geology and hydrology in the immediate area of the mine was
performed. The results indicate that groundwater from local, fractured aquifers can meet the required
water volumes.
Surface water runoff occurs in direct response to high intensity, short duration rainfall events normally
occurring during June to September. The area of study is located within the Sonora Southern
Hydrological Region “RH9” and belongs to the “B” basin of the Yaqui River and the sub-basin “I”
“Rio Chico.” The “Rio Chico” sub basin of El Moro to the northwest and Santa Ana sub basin to the
southwest drain most of the site. The average total runoff for the El Moro and Santa Ana sub-basins is
about 98.5 million cubic meters a year with most flow occurring during the months of July and
August.
Groundwater flow in the study area is controlled by fractures which are related to the overall geologic
structure. Porous flow is very limited due to low hydraulic conductivity. The potentiometric surface
is controlled by the topography with recharge occurring at higher elevations and discharge occurring
at springs. Simple aquifer tests in wells near the mine indicate that the yield per meter of drawdown
ranges between 1.6 l/s per meter to 43.9 l/s per meter.
Surface and groundwater samples analyzed for field parameters (pH, specific conductance,
temperature as well as a suite of other parameters including trace metals) indicate that the waters at
most locations contain metal concentrations from the local geological environment and possibly due to
old mining activities. Many of the constituents do not meet NOM-127 standards. Samples taken in
the Santa Ana basin were the best quality.
Periods of drought and flooding can have a profound affect on both surface and ground water supply.
Surface water runoff appears to be abundant during the wet season and substantial storage and water
supply is possible if dams were built to store runoff during this period. However, water rights may be
difficult to obtain for surface water. Groundwater is less plentiful but withdrawal is not restricted.
Based on the results of a geophysical survey, four potential sites were located for project water supply.
Results of the aquifer test estimate the wells located in these areas could produce as high as 5 to 12l/s.
Confirmation of this is required by drilling and testing exploration wells.
19.7 Infrastructure
The Los Verdes site is a greenfield site without any existing infrastructure with the exception of the
local access road to the nearby village of Santa Ana. The proposed infrastructure will support both
19-8
MQes
mining and plant operations. Camp accommodation will be provided for mining and plant site
operations personnel. The main infrastructure required for the development of the project will be:
• Upgrade of the local access road to Santa Ana.

• Access road to the truckshop/Warehouse.
• Mining haul roads.
• Truckshop/Warehouse lay down yard.
• Fuel storage.
• Power Generation station.
• Operations camp.
• Security and first aid building.
• Administration building.
• Laboratory.
• Plant services building.
• Water supply.
• Waste management.
19.8 Project Execution Plan
The overall project execution plan comprises of the following activities:
• Work program and feasibility study 13 months.

• Complete Basic and detailed engineering 12 months
• Pre-stripping 18 months
• Project construction 13 months
• Plant commissioning and ramp up 3 months
Allowing for concurrent and multiple activities the total project development period is estimated to be
39 months from the date of issuing this prefeasibility study. VGM is investigating opportunities to
improve on the overall schedule.
19.9 Operations Plan
The mine and associated facilities will be operated primarily under management drawn from the
Mexican mining industry. The operations will be integrated to the extent possible with local economy
while making every effort to minimize adverse effects of the operation on local communities.
The anticipated formal organization chart is shown in Figure 19-2.
19-9
MQes
Figure 19-2: Organization Chart
General Manager Controller
Accounting and
Purchasing
Mine Manager Process Manager Administration Manager
Minesite Accounting
Laboratory Shift Human Resources
Mine Engineer Manager Foreman Community Relations
Health Safety
Mine General Mill Environmental
Foreman Maintenance Security
Geologists Training
Foreman
Surveyors
Shift Maintenance
Foreman Foreman
The mine will operate on a 12 hour per day basis in order to minimize noise and dust impact on the
village of Santa Ana. The mill, which will be much further from the village and the other side of the
ridge, will operate on a 24 hours per day basis.
The mine site will be supported by an office in Hermosillo which will provide marketing, vendor
contact and accounting support.
19.10 Marketing
VGM engaged Mr Dennis Battrum, a well known expert in molybdenum markets, to provide an
assessment of issues relating to marketing of molybdenum concentrates. Copper concentrate
marketing data is drawn from published data and project specific discussions with Asarco.
Mr Battrum’s conclusions are summarized as follows:
• Molybdenum consumption is increasing approximately in parallel with general steel

consumption at a rate of approximately 8% per year
• Molybdenum consumption is independent of consumption of general stainless steel which
does not use molybdenum.
• New uses for molybdenum are being introduced, such as high strength low weight alloys for
car frames and military applications while traditional applications in pipelines, oil drilling,
nuclear plants and chemicals continue to increase.
19-10
MQes
• Traditional sources of mine supply such as by product from copper mining are starting to
decline.
• Production from China is now curtailed by export quotas
• Production from new primary sources is required in the future as supply from by product
producers declines from 76% of world production to possibly less than 60%
• Shortage of roasting capacity in the past is being relieved by new capacity coming on stream,
leading to lower roasting costs than have recently been imposed.
• A roasting cost of between $1 and $1.50 per lb of molybdic oxide is appropriate for budgeting
purposes, together with a 1% roasting loss ($1.25 per lb molybdic oxide converts to $2.19 per
lb of contained molybdenum.).
• Molybdenum price is seen as declining slightly between 2009 and 2112 from its current levels
of $33/lb and then increasing strongly after 2112. For determination of project economics, a
price of $25/lb Mo has been used.
Supplies of copper concentrates continue to be low relative to the world smelting capacity and will
remain so for at least for the next three to five years until the next major mines come on stream.
• The most optimistic analysts are forecasting a high range, between US$ 4.00/lb Cu and US$
5.50/lb Cu, for the next few years. VGM considers that an appropriate pricing structure to
use for base case project economics is a fixed price of US$ 2.50/lb since it preserves the 1:10
ratio with the molybdenum prices and is generally a reasonable value for financial evaluation
purposes.
• Transportation costs are estimated to be US$ 40-80/WMT of concentrate and as result a value
of US$ 60/WMT of concentrate has been used.
• Copper: Deduct the larger of 1 unit (10kg/t)/DMT or 5% of the contained copper. Settlement
quotation, as published in Metal Bulletin, averaged over the quotational period.
• Silver: Deduct the larger of 50 grams/DMT or 5% of the contained silver.
• Gold: Deduct the larger of 1 gram/DMT or 5% of the contained gold.
• Copper Treatment Charge- current rates are US$ 45/DMT with quotes and long term rates
ranging from US$ 125 to 80 per DMT; As a result it was decided to use US$ 100/DMT.
• Copper Refining Charge – current rates are US cents 4.5/lb with quotes and long term rates
varying from US cents 12.5 to 8.0/lb of payable copper; As a result it was decided to use 10
c/lb.
• Gold Refining Charge - US$ 6/troy ounce.
• Sliver Refining Charge - US$ 0.35/troy ounce.
• Arsenic and Antimony – 0.4% free, excess charged at a rate of US$2.24/DMT for each 0.1%
above 0.4% (proportioned on fractions).
19.11 Environmental
VGM recognizes that maintenance of safety, health, and environmental quality is vital to VGM’s
existence, progress, and continued development.
VGM will aim to follow all applicable standards in each country it operates in and will strive to
achieve and maintain International Finance Corporation, (“IFC”) Performance Standards within the
confines of technical and economic feasibility.
VGM will take positive action to protect the safety of its workers, conserve natural resources, and
minimize the impact of its activities on the environment through diligent application of appropriate
technology and responsible conduct at all stages of exploration, mine development, mining, mineral
processing, decommissioning, and reclamation.
19-11
MQes
The purpose of VGM’s Environmental Policy is to provide a measurable framework for the
performance of VGM’s activities in an environmentally responsible manner, ensuring compliance by
VGM and its employees with all applicable environmental regulations and commitments. VGM
considers that its policy is aligned with and respects the provisions of LEEGPA.
VGM has completed a number of environmental technical studies and an EIS for the project pursuant
to the laws and requirements in Mexico. VGM is also continuing several of these studies and
performing ongoing baseline surface and groundwater quality monitoring. The EIS and other
supporting documents necessary for obtaining the applicable environmental permits are anticipated to
be submitted to the relevant agency (SEMARNAT) in August 2008.
An initial environmental management plan has been prepared to describe the actions needed to protect
the environment, achieve environmental compliance and meet applicable environmental performance
standards. It identifies the environmental aspects of the project components. Updates and revisions of
this plan will be ongoing, as the project is developed.
Additional work is needed to develop the environmental management plan in more detail.
19.12 Social and Community
The future of VGM and its subsidiaries is dependent on its ability to find, explore and further develop
projects consistent with a commitment to sustainable development, protection of human life, health,
the environment, and to adding value to the communities in which we operate.
To achieve this VGM has developed and will implement a comprehensive sustainability policy which
has been approved by the Board of Directors.
We understand the actions and conduct of every Virgin Metals, Inc. employee and contractor are the
basis upon which our stakeholders will evaluate our commitment to achieving the highest standards of
social responsibility.
The community of Santa Ana is located about 1.5 km south of and several hundred metres lower in
elevation than the proposed operation. The village was once the site of a mining operation and the
villagers are familiar with and supportive of resuming mining operations.
The community may expect to benefit economically from the development but there may also be
negative impacts. VGM intends that the former will be maximized and the latter minimized.
VGM has given community support to an appropriate extent during its field operations and expects
community support activities to increase as the project is developed.
Negative impacts will include noise, dust and increased population. VGM will mitigate the former by
operating the mine (as opposed to the mill) on a twelve hour per day basis and to conduct mining
operations wherever possible from the north side of the ridge. All haul roads and materials handling
facilities will use dust suppression by water sprays and surfactants.
VGM will draw its labor force to the extent possible from local sources and to give priority to local
inhabitants for training to semi-skilled and skilled levels.
19.13 Project Economics
The Los Verdes economic assessment has been prepared by VGM with input from MQes and
consultants. VGM prepared a 100% equity pro-forma cashflow on a first quarter 2008, constant dollar
19-12
MQes
pre-tax basis. The model uses discounted cashflow to determine project economics. Net Present
Values (“NPV”) at a discount rate of 8% and the projects’ Internal Rate of Return (“IRR”) have been
used in assessing the project economics. The cashflow model has been reviewed by MQes and meets
prefeasibility standards.
In evaluating the project economics a base case cashflow was established. Sensitivities were then
performed on the following variables to determine their effects on project economics:
• Molybdenum price
• Copper price.
• Total operating costs.
• Total initial capital costs.
19.13.1 Capital Cost Estimate
The initial capital cost for the Los Verdes project is estimated at $138.8 million. A breakdown of the
costs is shown in Table 19-3.
19-13
MQes
Table 19-3: Estimated Initial Capital Cost – Los Verdes Project
Area Description Cost (US$ 000’s)

000 General Site 21,120
100 Mine 1,972
200 Crushing and Screening 11,957
300 Grinding and Classification 16,407
400 Bulk Flotation/Mo-Cu Separation 2,453
500 Mo cleaner Flotation 1,198
600 Gravity Concentrate 0
700 Mo-Cu Thickening & Filtration 4,415
800 Tailings Disposal & Water Systems 6,777
850 Tailings Impoundment & ECD Structure 3,115
900 Reagents 1,756
Freight, Ocean Freight 3,618
Freight, Mexico, Inland 1,721
Customs Clearance Fee 329
IVA/VAT 0
Spare Parts 1,404
Vendor Representatives 525
Total Direct Field Costs 78,766
Total Field Indirect Costs 19,183
Total Field Costs 97,950
Contingency 14,692
Total Process Plant & Ancillaries 112,642
Mining 13,474
Prestripping 5,026
Owners Costs 7,658
TOTAL PROJECT COSTS 138,800
All costs are expressed in first quarter 2008 US dollars, with no allowance for interest, taxes, import
duties or escalation. Consideration has been given to the following issues in developing the capital
cost estimate:
• Availability of local in-country labor.

• Adequate experienced expatriate supervision during construction.
• Degree of difficulty of the area in which the plant is to be constructed.
• Affect of climatic conditions.
• In-country methods of construction.
• Productivity of the labor force.
• Resources within Mexico for material and equipment supply.
• Local availability of suitable contractors with heavy industrial construction experience.
• Transportation logistics.
19-14
MQes
19.13.2 Operating Cost Estimate
Estimated operating costs broken down into the primary categories of mining, process and G&A are
summarized in Tables 19-4, 19-5 and 19-6. All costs are reported in 2008 Q1 US$.
Table 19-4: Estimated Mine Operating Costs – Summary
Unit
Cost*
Cost Component ($/t mined)
Diesel Fuel $0.31
Labor $0.40
MARC $0.71
Consumables $0.13
Explosives $0.30
Total $1.85
* Costs are Estimated in 1st Quarter 2008 US Dollars
Table 19-5: Estimated Process Operating Costs – Summary
Category Annual Cost US$ US$/tonne of Ore

Operating Labor 1,107,216 1.11
Maintenance Labor 643,632 0.64
Power 5,023,695 5.02
Reagents and Consumables 3,452,877 3.45
Maintenance Spares 3,517,000 3.52
ROM Pad Rehandling 62,500 0.06
TOTALS 13,807,000 13.81
Table 19-6: Estimated General and Administration Costs - Summary
Annual Equivalent US$/tonne

Category
Cost US$ of Ore at 1Mtpa
Staff Labor 1,497,276 1.50
Maintenance 350,000 0.35
General Expenses 1,854,300 1.85
Totals 3,701,576 3.70
Total average life of mine, mine site cash operating costs are estimated at US$22.71/t ore.
19.13.3 Project Cashflow
The life of mine cashflow is summarized in Table 19-7. It indicates that for “base case” conditions,
the project has a Net Present Value (“NPV”) at an 8% discount of US$96.9 million. The Internal Rate
of Return (“IRR”) is 23%. The payback period is approximately 3.3 years.
19-15
MQes
Table 19-7: Base Case Cashflow Summary – Los Verdes Project
Virgin Metals
Economic Analysis – Los Verdes Project
28-July-08
Year – 2 Year -1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Total
Production
Tonnes - Ore 750,000 1,000,00 1,000,000 998,000 998,000 1,003,000 1,001,000 300,000 7,050,000
-Oxide Stockpile 341,000 681,000 1,632,000 298,000 76,000 165,000 89,000 10,000 - - 3,292,000
-Waste 1,011,000 2,023,000 674,000 1,181,000 1,191,000 1,820,000 1,748,000 883,000 960,000 226,000 11,717,000
Total Material 1,352,000 2,704,000 3,056,000 2,479,000 2,267,000 2,983,000 2,835,000 1,896,000 1,961,000 526,000 22,059,000
Strip Ratio NA NA 3.07 1.48 1.27 1.99 1.84 0.89 0.96 0.75 2.13
Molybdenum Grade 0.124% 0.123% 0.136% 0.130% 0.134% 0.162% 0.189%
Molybdenum Recovery % 71% 71% 71% 71% 71% 71% 71%
Copper Grade 0.579% 0.811% 0.896% 0.763% 0.550% 0.587% 0.452%
Copper Recovery % 92% 92% 92% 92% 92% 92% 92%
Molybdenum lbs saleable 1,585,486 1,921,539 1,906,042 2,103,279 2,010,487 2,082,730 2,512,907 878,639 15,001,109
Molybdenum Price $US/lb $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00
Copper, lbs. saleable 5,916,221 11,156,391 15,626,655 17,229,938 14,672,369 10,629,401 11,321,849 2,612,793 89,165,617
Copper Price $US/lb $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50
Revenue
Molybdenum 39,637,150 48,038,475 47,651,050 52,581,975 50,262,175 52,068,250 62,822,675 21,965,975 375,027,725
Copper 14,790,553 27,890,978 39,066,638 43,074,845 36,680,923 26,573,503 28,304,623 6,531,983 222,914,046
Gross Revenue 54,427,703 75,929,453 86,717,688 95,656,820 86,943,098 78,641,753 91,127,298 28,497,958 597,941,771
TCRC/Transportation (5,906,387) (8,759,044) (10,519,685) (11,602,717) (10,369,033) (8,906,354) (10,142,413) (3,121,876) (69,327,509)
Net Smelter Returns 48,521,316 67,170,409 76,198,003 84,054,103 76,574,065 69,735,399 80,984,885 25,376,082 528,614,262
Royalties (358,043) (349,822) (778,136) (754,415) (817,556) (206,633) (295,534) (12,711) (3,572,850)
Net Revenue 48,163,273 66,820,587 75,419,867 83,299,688 75,756,509 69,528,766 80,689,351 25,363,371 525,041,412
Expenses
Mining 4,688,000 5,439,000 4,930,000 4,849,000 5,379,000 4,432,000 4,730,000 1,287,000 35,734,000
Power Plant 3,768,000 5,024,000 5,024,000 5,013,952 5,013,952 5,039,072 5,029,024 1,507,200 35,419,200
Processing Plant 6,588,000 8,784,000 8,784,000 8,766,432 8,766,432 8,810,352 8,792,784 2,635,200 61,927,200
Site Admin & General 3,701,000 3,701,000 3,701,000 3,701,000 3,701,000 3,701,000 3,701,000 1,110,300 27,017,300
Cash Costs 18,745,000 22,948,000 22,439,000 22,330,384 22,860,384 21,982,424 22,252,808 6,539,700 160,097,700
Operating Cash Flow - - 29,418,273 43,872,587 52,980,867 60,969,304 52,896,125 47,546,342 58,436,543 18,823,671 364,943,712
Non-Operating Expenditures
Pre-Production Strip (1,658,580) (3,367,420) (5,026,000)
Mining & Support Fleet (13,474,000) - (65,000) (65,000) (305,000) (65,000) (65,000) (305,000) (65,000) - (14,409,000)
Plant & Ancillary (32,359,300) (46,407,005) - - - - - - - - (78,766,305)
EPCM & Contingency (13,678,274) (20,197,619) - - - - - - - - (33,875,893)
Owner’s Costs (5,018,000) (2,640,000) - - - - - - - - (7,658,000)
Working Capital - - (3,200,000) - - - - - - 3,200,000 -
Reclamation Set-Aside - - (225,000) (300,000) (300,000) (299,400) (299,400) (300,900) (300,300) (90,000) (2,115,000)
Closure Expenditures - - - - - - - - - (2,540,000) (2,540,000)
Net Cash Flow, pre-tax (66,188,154) (72,612,044) 25,928,273 43,507.587 52,375,867 60,604,904 52,531,725 46,940,442 58,071,243 19,393,671 220,553,514
Cumulative Cash Flow (66,188,154) (138,800,198) (99,153,530) (69,364,338) (16,988,471) 43,616,433 96,148,158 143,088.600 201,159,843 220,553,514
19-16
MQes
19.13.4 Sensitivity Analysis
The results of the sensitivity analysis are presented graphically in Figures 19-3 and 19-4.
Figure 19-3: Sensitivity Analysis – NPV at 8% Discount
Sensitivity Analysis - NPV @ 8%
180,000,000
160,000,000
140,000,000 Molybdenum - $/lb

120,000,000 Copper - $/lb
100,000,000 Total Operating Cost
80,000,000 Total Capital
60,000,000
40,000,000
%
%
5%
0%
5%
0%
0%
5%
%
10
15
20
25
-5
-2
-2
-1
-1
Sensit i vi t y %
Figure 19-4: Sensitivity Analysis – IRR
Sensitivity Analysis - IRR
35.0%
30.0%
M olybdenum - $/ lb
Copper - $/lb
25.0% Tot al Operating Cost

Tot al Capit al
20.0%
15.0%
-25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25%
Sensit i vi t y %
19.14 Risk Analysis
19.14.1 Investment Risks
Mining projects face a number of risks ranging from the natural variability of mineralization that is
being exploited to market risk to political risk. Principal risks are defined below.
19-17
MQes
19.14.2 Geologic Risk
Geologic risk at Los Verdes is considered to be largely mitigated by the depth of geologic knowledge
created by extensive drilling. The limits of mineralization are well understood and project economics
do not depend on any assumptions as to unproven continuity of mineralization. Metal grades have
been estimated by well established statistical methods, however some variability is inevitable.
Potential rewards include the additional values in tungsten which are known to exist but are currently
unquantified.
19.14.3 Project Investment Risk
Completion of the project depends on numerous interdependent factors including but not limited to
financing, permitting, surface land acquisition, recruitment of suitable staff and good community
relations.
19.14.4 Market Risk
Metal markets are typically cyclical with fluctuations between high and low points. Mineral producers
are of necessity price takers – they have no control over the value or price of their product. In the case
of copper, price is determined on a terminal market, which provides opportunities for protection from
price fluctuations by hedging but also limits any upside price potential. Molybdenum is not terminally
traded and agreements for product purchase will be necessary prior to project inception. The market
for molybdenum is likely to be affected during the project life both by increased demand for the metal
and by new production capability coming on line to satisfy that demand. Price risk is mitigated to a
certain extent by determining project economics at lower than current prices.
19.14.5 Exchange Rate Risk
The project will be operated in the local currency, the Mexican Peso. Large variations in exchange
rate between the Peso, the Canadian dollar and the US dollar could affect project economics, both
favorably and adversely. The greatest risk is probably of revaluation of the Peso relative to the US
dollar, but this may be counteracted by potential devaluation if the Mexican economy were to
deteriorate. A balancing effect will be maintained by the fact that many major elements of cost such as
reagents, consumables and spare parts will be denominated in dollars while product prices will also be
denominated in dollars.
19.14.6 Country Risk
Mexico is a stable democracy which actively encourages the exploitation of minerals. The law relating
to mineral title is clear and security of title may be considered to be assured. The Mexican and North
American economies are linked by NAFTA which gives assurance as to security of investment and
repatriation of funds. Major risks to the project lie at the local level in community relations, the
obscurity of laws relating to surface land rights, which are typically communal in nature, and in
Mexican labor laws which are strict and potentially punitive.
19.14.7 Labor Skills
Skilled labor is typically not available in remote areas such as that of the project and securing skilled
labor will be of paramount importance. However, the Mexican mining industry is well established and
has a large pool of competent middle and senior level managers from which to draw for the project’s
needs. Risks will be mitigated by the company’s plan to train as many local people as possible to semi
skilled and skilled levels and by the company’s knowledge of and current contacts with potential
senior management within the the Mexican mining industry.
19-18
MQes
19.14.8 VGM Experience
VGM as an entity has not previously placed a mining project into production. However, individual
members of VGM’s management team and expected recruits to that management team have extensive
experience of such projects.
19.14.9 Business Risks
19.14.9.1 Financing
Mining projects are highly capital intensive and project financing is a highly specialized field. Current
contacts within the project finance community suggest that the project will qualify for project debt
provided a substantial tranche of financing is provided in the form of equity. Contacts with metal
traders indicate that offtake agreements and possibly project financing could be obtained. Current
liquidity constraints within capital markets could play a significant role. Providers of debt often
require values to be locked in the form of a hedge; for molybdenum projects this is frequently a
problem as molybdenum is not terminally traded. In the case of this project, the copper component is a
major advantage in that it can, if necessary, be hedged or sold forward on a terminal market.
19.14.9.2 Hedging
Hedging is frequently a requirement of project debt financing; it serves to prevent adverse effects of
future lower prices but at the same time limits the effects of future price increases. For that latter
reason it is disliked by equity investors. It is believed that hedging of the copper component of the
project combined with exposure to molybdenum price upside will satisfy both debt and equity
providers to this project.
19.14.9.3 Product Quality
The quality of concentrates generated in the laboratory during testwork may or may not be indicative
of quality produced at an industrial level. While testwork indicates saleable concentrate grades, small
variations in deleterious elements may affect the marketability and treatment cost of concentrates.
19.14.9.4 Project Business Risk
The project economics depend on the throughput rates, recoveries and concentrate characteristics
indicated in this study. Substantial flexibility and conservatism in design rates has been included in the
plant design to ensure that these are met, but unforeseen circumstances may limit any of these factors
19.14.10 Project Risks
19.14.10.1 Land Status, Mineral and Water rights
There is always potential for social activists in Mexico to disrupt the process of obtaining surface
rights, but it is not believed that this risk is high.
The land will be returned to the community after mining operations and closure activities at no cost to
them.
19-19
MQes
19.14.10.2 Geology, Exploration and Resource Modeling
The geological risk is minor, as the sulfide mineralization is of well-known type, and myriad examples
exist of successful exploitation with proper engineering. The oxide mineralization, while not typically
exploited in this type of deposit, does not figure in the financial analysis at Los Verdes.
Upside potential exists in the addition of tungsten and silver values to the exploitable sulfide resource,
the potential exploitation of oxide molybdenum mineralization, tungsten mineralization adjacent to the
current resource and the discovery of additional deposits on the property controlled by VGM.
There is also upside potential for actual mining results based on the current resource estimate. CAM's
estimate was based on the interpretation of the ore zone as a single mineralized volume, using 5 x 5 x
5-meter blocks. Resources within the mineralized volume were estimated by kriging, which typically
overestimates tonnage and underestimates grade. During actual mining, it may be possible to
selectively exclude some barren units, based on blasthole sampling. This could result in fewer tonnes
to the mill, at a higher grade.
In addition, the boundaries of the mineralized volume were conservatively drawn, and there may be
the potential for some extra tonnage.
A downside risk exists due to some intervals of oxide mineralization lying below sulfides. Inclusion of
these intervals in the mill feed may result in slightly lower recovery. In addition, some of the initial
metallurgical samples of fairly large tonnages were over 10 times the mean grade of the deposit. If a
significant tonnage of this higher grade material is fed to the mill during actual operations, recoveries
may be reduced. Fortunately, high-grade molybdenite zones in this deposit are readily visible, and
with careful grade control, CAM believes that both of these risks are minimal.
19.14.10.3 Mining
Risks associated with mining can affect mine production and/or the mineral Reserves.
Risks associated with mine production are considered to be minimal due to the conservative design
principles used; reasonable sinking rates, large contiguous working benches, a large preproduction
stripping effort, operating only one twelve hour shift per day, and an allowance of five bad weather
days per year. This conservatism has the potential to result in achieving higher mining rates.
Project risks associated with the mineral Reserve include the suitability of the resource model,
metallurgical data, mining dilution and mining recovery. Risks associated with mining dilution and
mining recovery have been addressed. Metallurgical recoveries are an area of risk. The current
mineral Reserve considers fixed recoveries for molybdenum and copper; independent of head grades,
rock types and geological domains. Additional metallurgical testwork is planned to better define the
metallurgical response associated with these variables. If these tests result in lower recoveries, the
minerals Reserve may be negatively impacted. The resource model is also an area of risk. Areas that
should be addressed to increase confidence include geologic explanation for the following:
• The large number of waste drill intervals that are scattered throughout the mineralized
envelope.
• The existence of sharp grade changes and considerable grade variability within the
mineralized envelope.
• The presence of oxide material beneath non-oxide
• The location of the supergene enrichment zone at the bottom of the mineralized envelope.
19-20
MQes
During the visit, a mine portal in the mineral Reserve area was observed. From information provided
by VGM, it appears the underground workings associated with this portal were for exploration
purposes and not production oriented. VGM attempted to rehabilitate these workings, but due to
difficult ground conditions a portion could not be accessed. As such, risk exists that a portion of the
mineral Reserve has previously been extracted via this portal.
19.14.10.4 Metallurgy
At this stage of the project development insufficient metallurgical testing has been completed to
define concentrate recoveries and grades. Metallurgical risks are as follows:
• Effect of secondary copper mineralization on concentrate grades and recoveries.

• Impact of head grade variation on recoveries.
• Impact of higher Cu:Mo ratio in feed.
• Inclusion of a fixed gold and silver grade reporting to concentrates based on limited testing.
• Marketability of molybdenum concentrate. Compliance with maximum copper content has
yet to be consistently achieved. VGM has supplied an example of a molybdenum concentrate
specification. A definitive concentrate specification with terms and conditions for treatment
is being pursued by VGM.
• Marketability of copper concentrate. The best copper concentrate grade from G&T testwork
is 23% Cu compared to more traditional range of 25% to 30% Cu quoted on by smelters.
• Arsenic and antimony content are at penalty levels.
Potential metallurgical upside potential for the project is considered to be:
• Improved concentrate grades and recoveries with higher head grades. There is evidence of
areas of significantly high grades of molybdenum (adit sample, RDI sample, observations
reported by CAM).
• Potential to recover tungsten.
• Gold and silver credits from copper smelting.
• Potential to investigate reduced levels of Arsenic and Antimony
19.14.10.5 Process Plant Design
Process plant design risks are as follows:
• Final testwork and material balance may impact equipment sizing, particularly flotation and
associated pumping systems, solid/liquid separation and concentrate filtration.
Process plant design upside potential for the project is considered to be:-
• Conservative design allowances have been incorporated which may result in capital cost
savings or higher throughputs when treating softer ore.
19.14.10.6 Geotechnical
At this stage of the project development, no site-specific geotechnical drilling, sampling or testing has
been performed at proposed facility sites.
Geotechnical risks are as follows:
19-21
MQes
• Limited exposures of rock in outcrops and existing excavations limit the amount of structural
data available for kinematic modeling.
• Lack of rock strength testing data precludes the detailed modeling of pit slopes using a rock
mass strength approach.
• The final pit configuration remains unknown.
• There is a lack of piezometric data in the pit area.
• Local site conditions may not be as seismically quiescent as it appears due to limited data
collection and a short record length.
• Borrow materials for construction of tailings starter dam and ECD are unknown
Geotechnical upside potential for the project is considered to be:
• Proposed pit slope heights are quite low.

• The pit is in a dry narrow “ridge” type location where little groundwater would be expected.
• There would appear to be limited visible alteration in the pit wall rock, so large areas of weak
rock mass strength would not be expected.
• Known high seismic source areas (coastal tectonic plate boundaries) are more than 230km
distant.
• Shallow rock and well drained, stiff residual and colluvial soil should not be susceptible to
liquefaction risk.
• Near surface bedrock and stiff soils reduce seismic acceleration response.
• Foundation conditions for the waste rock dump, tailings, and ECD facilities are not expected
to present significant geotechnical problems.
19.14.10.7 Tailings Disposal
At this stage of the project development, a final design of the Tailings Dam Facility has not been
completed.
Tailings Dam design risks are:
• Potential construction cost impacts from steep slopes and access problems.
• The presence of shallow rock may increase construction costs due to drilling and blasting
requirements.
• There has been no geotechnical drilling to confirm soil and rock characteristics.
• There has been no condemnation drilling.
• Without an emergency spillway, diversion ditches could breach and impact tailings
impoundment freeboard requirements and subject embankment to overtopping.
• Tailings deposition and water management will require ‘hands on’ management during
operations
• Potential for tailings become acid generating and contaminate local ground water
Potential Tailings Dam design upside potential is considered to be:
• The near surface rock provides a strong, stable foundation.

• Tailings are located in a low seismic risk zone.
• The potential for good cutoff/seepage control is high.
• Initial Starter Embankment construction materials are expected to be obtained from open pit
pre-stripping.
• Upstream embankment construction is a very efficient method for reducing construction.
19-22
MQes
• Reclamation of tailings downstream embankment slope can be done concurrently during
tailings deposition.
• Construction of diversion ditches during initial starter embankment construction eliminates
need for continually having to construct emergency spillways during mine life operations as
the embankment is raised.
At this stage of the project development, a final design of the Environmental Control Dam (“ECD”)
has not been completed.
ECD design risks are:
• Potential limitations based on borrow material availability for embankment construction.

• Potential access problems caused by the close proximity to the Ejido boundary.
• Potential construction cost impacts from steep slopes and access problems.
• The presence of shallow rock may increase construction costs due to drilling and blasting
requirements.
• The site location limits the storage capacity and makes water management difficult.
• There has been no geotechnical drilling to confirm soil and rock characteristics.
• There has been no condemnation drilling.
Potential ECD design upside potential is considered to be:
• The near surface rock provides a strong, stable foundation.

• The potential for good cutoff/seepage control is high.
• Expect to encounter sound rock in a nearby ridge for construction of the emergency spillway
reducing the spillway lining requirements and costs.
19.14.10.8 Hydrology
Hydrology risks are as follows:
• No site-specific weather data currently exists (it is recommended that a site-specific weather
monitoring station be set up on-site going forward).
• No extensive hydrometeorological reports have been prepared for this region of Mexico for
estimation of the Probable Maximum Precipitation (“PMP”). Therefore, our estimate of the
PMP is based on very limited information.
• No gaging station (stream flow) data currently exists for calibration purposes.
Potential hydrologic upside potential for the project is considered to be:
• The closest monitoring station to the site is Yecora which has good quality data (including
evaporation) and an adequate record length.
19.14.10.9 Water Management Plan
Water management risks are as follows:
• No site-specific data is currently available for either precipitation or evaporation.

• No existing project performance history of water demand is available for calibration.
• The current waterbalance model is prepared as a snapshot in time (year 5) and does not reflect
the variability in project conditions from startup through closure.
19-23
MQes
• The current waterbalance model is deterministic only and therefore it is not possible to
quantify risks.
• There is currently an insufficient characterization of the water supply source.
Water management upside potential for the site is considered to be:
• The site exhibits a clear wet season and dry season providing more opportunity for the
management of water storage.
19.14.10.10 Hydrogeology
Risks associated with the hydrogeology are considered to include:
• Sole Reliance on ground water well supply

• Loss of wells located in drainages due to flooding
• Permits for ground and surface water abstraction may be difficult to acquire
• Unsuitable water supply from a geochemical standpoint of view
• Extended drought periods that affect ground water replenishment
• Treatment of existing mine and process water for use in metallurgical processing
• Extended ground water pumping may impact local nearby drinking water supply wells.
• Reliance on limited ground water data collected over a short period of time for long-term
water supply.
• Long-term treatment of degraded water from waste rock and tailings dam facilities
Potential upsides associated with the hydrogeology are considered to include:
• Ground water supply identified to date indicate sufficient resource capacity

• Water storage facilities do not need to be constructed for mine process water supply
• Wells can be turned over to local authorities for post closure beneficial use
• Degraded surface and ground water can be collected and used during operations
19.14.10.11 Project Execution Plan
Risks associated with the project execution plan include:
• Availability of qualified personnel to manage the project as well as to provide technical input.
• Delays in developing the technical information required to complete the feasibility study.
• Inability to advance seamlessly through the phases.
• Delivery times of equipment and construction materials.
• Delays in obtaining permit.
• Delays in financing.
Potential upside for the project execution plan includes:
• Reduction in order-delivery times for long lead time or critical items during the feasibility
study stage by investigating Chinese and other suppliers.
• Early identification and purchase of suitable used equipment.
19.14.10.12 Operations Plan
The risks associated with the operations plan are considered to include:
19-24
MQes
• Difficulty in locating and hiring qualified personnel for the project
• Longer training and development phase to reach target KPI’s.
• Not implementing the changes generated from the hazard and operability study (HAZOP
Study).
• Not taking into account the results of the business risk analysis.
The rewards associated with the operations plan are considered to include:
• The establishment of an efficient, highly productive workforce and corporate work ethic
which will reduce costs and improve QAQC whist abiding by laws and regulations.
19.14.10.13 Operating Cost Estimate
Risks associated with operating cost estimate are considered to include:
• Diesel Price – The diesel price in Mexico is regulated by the Mexican government. Although
the world price of oil has increased significantly recently the price in Mexico has been stable.
Any change will be directly reflected in the unit cost of power generation and mining cost.
• Reagent consumptions must be confirmed by results from additional testwork.
• Consumables prices are based on budget quotations from vendors. These may vary when
final contracts are developed.
• Escalation in costs for reagents, consumables, labor and associated supplies.
• Water consumption is preliminary. A complete stochastic model is required to better define
water requirements.
• Costs for explosives.
Potential upside for the project associated with operating cost estimate is considered to include:
• Reduction in reagent consumption following ongoing metallurgical optimization testwork.

• Utilization of alternative (less expensive) reagent schemes. These need to be confirmed with
metallurgical testwork.
• Changing from full MARC contracts to a combination of owners maintenance and component
exchange.
19.14.10.14 Capital Cost Estimate
Risks associated with capital cost estimate are considered to include:
• Increase in equipment and material costs.

• Increase in construction consumable costs.
• Increase in construction labor costs.
Potential upside for the project associated with capital costs is considered to include:
• Resizing of equipment following receipt of final design data may result in reductions in
equipment costs.
• Cost redictions from sourcing equipment from non-traditional suppliers and utilizing used
equipment.
• Subcontracting to assist in certain activities e.g. pre-mine stripping peak
19-25
MQes
19.14.10.15 Marketing
The risks associated with the marketing aspects of the project include:
• Term sheets need to be agreed with Roasters and Smelters.

• Molybdenum and copper prices may be affected by a general economic downturn.
• The negotiations on copper transportation is a key aspect to sell to smelters in the region.
• The quality of the copper concentrate is marketable but improvements in quality and quantity
would assist in placing the production.
Potential upside for the project associated with marketing is considered to include
• The molybdenum price used in this study is $8/lb less than the current price; increased
demand could, in fact, cause this price to increase sharply over the period in which it is
expected that the project will operate.
• Continuing demand for oil drilling equipment, pipelines and nuclear plants is likely to be
independent of any economic downturn.
• The by-product value derived from projected copper concentrate sales results in considerably
reducing the net cost of producing molybdenum.
19.14.10.16 Environmental Considerations and Permitting Status
The risks associated with the environmental aspects of the project include:
• Time to obtain the permits could longer than the anticipated 4 to 6 months.
• The terms and conditions of the permits could add costs to the project.
• Environmental liability associated with poor water quality on portions of the site from past
mining activities.
• Potential shortage of sufficient, suitable cover for closure of the terrero and tailings.
Potential upsides associated with environmental aspects of the project include:
• VGM has done a significant amount of technical analysis associated with environmental
aspects of the project which can lead to a very robust environmental design and management
plan.
• The work performed by VGM to date provides an opportunity to further develop trust and a
positive working relationship with the appropriate authorities that should facilitate timely
acquisition of permits. This can also be helpful to achieve reasonable standards for achieving
long term stabilization of the site.
• The proposed mining operation in the Los Chinos valley could improve the water quality in
that basin.
• Conversion of certain facilities to acceptable post mining uses could reduce the costs for
decommissioning and closure.
19.14.10.17 Social and Community
The community is currently actively supportive of the mining operation; there is a risk of that support
is eroded unless community relations are very carefully handled.
The community will benefit economically from the operation both in employment and through an
initiative to support small businesses to support the operation.
19-26
MQes
19.14.10.18 Economics
Economic risks associated with the project include:
• Delay in permitting and/or construction.

• Commissioning and ramp up issues.
• Capital cost over runs.
• Lower metal prices.
• Insufficient roasting and smelting capacity (which would result in increased smelting and
refining charges).
• Availability of suitably qualified employees.
• Lower processing throughputs and metallurgical recoveries.
• Operating cost over runs.
• Land status
• Lower mine production output.
• Lower ore head grades.
• Project Financing.
Upside rewards associated with the project include:
• Early completion in permitting and/or construction.

• Reduced time taken for commissioning and ramp up.
• Capital cost under runs.
• Higher metal prices.
• Higher workforce productivities.
• Higher processing throughputs and metallurgical recoveries.
• Operating cost under runs.
• Higher ore head grades.
19-27
MQes
SECTION 20
INTERPRETATIONS AND CONCLUSIONS
20.0 INTERPRETATIONS AND CONCLUSIONS
1. Mineralization at Los Verdes is hosted in a granodiorite cut by veins, stockworks, and

tourmaline-bearing breccias, similar to other copper-molybdenum systems in Sonora.
2. The geology and overall geometry of the deposit are well-understood, but potential exists for
additional mineralization.
3. The drilling program carried out during 2006 and 2007 was successful in meeting the original
objective of defining a Resource of Mo-Cu-(W) mineralization of considerable economic
interest, and in confirming the validity of historic 1970’s drilling.
4. The sampling database is of sufficient quality and quantity to define NI 43-101-compliant
mineral Resources, although there is room for improvement in the database handling
procedures.
5. Metallurgical tests indicate that conventional flotation of sulfide mineralization can
potentially produce marketable concentrates of molybdenum and copper.
6. A considerable Resource of oxide molybdenum (ferrimolybdite) mineralization exists which
needs metallurgical evaluation.
7. The Los Verdes prefeasibility study property shows economic potential, and warrants the
completion of a detailed Feasibility Study.
8. Based on testwork to date the recommended flowsheet includes:

9. The metallurgical recoveries and concentrate grades used as the basis for project economic
evaluation are as follows:

10. The process plant design is based on incomplete metallurgical testwork but has reached
prefeasibility standards. The unit operations incorporated in the plant design are all
commercially proven. Final design parameters can only be defined after the completion of
the following additional work:
• Geologic modeling to establish distribution and proportion of significant ore

types.
• Variability testing of the samples to determine the importance and influence of
lithology, alteration, head grade and other factors.
• Geo-metallurgical mapping.
• Completion of flotation testwork including locked cycle testing to finalize the
flowsheet and define concentrate grades and recoveries plus deleterious
elements.
20-1
MQes
spectral response acceleration curves for building structure design are available.
12. Pit slope design is controlled by geologic structure and proposed interramp slopes are
moderately steep (41° to 52° for the granodiorite lithology and 40°to 46° for the quartz-
tourmaline breccia lithology).
concerns.
15. Sufficient data is available to adequately characterize the expected meteorologic conditions
for the Los Verdes site.
16. An operational water balance model has been developed for the tailings dam and mill facility.
In general, outside makeup water demand falls to its lowest values during the wet summer
months and peaks during the driest months of April and May.
17. Modeling showed a peak water demand on the order of 41.7l/s and a mean annual usage rate
on the order of 16.5l/s. The peak demand occurs during startup. During subsequent years, the
peak annual water demand is on the order of 30.5 l/s.
19. The tailing dam embankment is designed to store the 1000-yr 24-hr rainfall event and will
PMF storm event.
ground water contamination.
23. The presence of steep slopes and near surface rock may create problems associated with
access and difficulty in excavation in constructing the tailings and ECD facilities.
24. Suitable materials are expected be available locally for construction of the tailings
embankment.
spectral response acceleration curves for building structure design are presented in the
geotechnical section of this report.
26. The tailings facility is located in a suitable valley within the VGM concessions not in view of
the town of Santa Ana.
27. The tailings facility has a capacity of 10million tones and can be increased to 15 million
tones.
29. The tailing dam embankment is designed to store the 1,000-yr 24-hr rainfall event and will
PMF storm event.
20-2
MQes
ground water contamination. The presence of steep slopes and near surface rock may create
problems associated with access and difficulty in excavation. Suitable materials should be
available locally for construction of the tailings embankment. There is sufficient area for
expanding the tailings facility should additional mineable reserves be determined.
33. Sufficient data is available to adequately characterize the expected meteorologic conditions at
site. It is recommended the existing hydrologic information is used to advance the design of
the project.
34. The proposed mine area is drained by two main rivers, the El Moro and Santa Ana.
35. The average total runoff for these drainages is estimated at 98.5 million cubic meters per year.
36. Groundwater flow is mainly governed by secondary permeability (fracture flow) of andesite
and other igneous rocks. Limited water is available in alluvial material.
37. Significant amounts of water can be found in fractured bedrock underlying stream beds.
Preliminary tests indicated that the mine could be supplied with water from wells completed
in fractured bedrock.
38. Four locations have been identified for groundwater explorations. These sites were identified
using geophysical surveys and are numbered SEV-1, SEV-6, SEV-11, and SEV-15.
39. Water quality in surface and ground waters is quite variable throughout the region.
40. Water in the upper part of the Los Chinos Valley in and near the old mine workings is
degraded.
41. Based on these results, there are no reason in terms of water supply issues that the mine
should not proceed to a feasibility and design study.
42. An operational water balance model has been developed for the tailings dam and plant. For
the pre-feasibility level study, a simple deterministic water balance model at a point in time
five years into the mine life was used. Modeling showed a peak water demand on the order
of 41.7l/s and a mean annual usage rate on the order of 16.5l/s. The peak demand occurs
during startup. Excluding the initial startup condition, the peak annual water demand is on the
order of 30.5l/s.
43. VGM has developed and will implement a comprehensive sustainability policy on
environmental, health and safety which has been approved by the Board of Directors.
44. Environmental, health and safety aspects of the project have reached prefeasibility standards.
45. VGM has completed a number of environmental technical studies and an EIS for the project
pursuant to the laws and requirements in Mexico.
46. VGM is continuing to perform baseline surface and groundwater quality monitoring to further
develop appropriate environmental control measures.
47. An initial environmental management action plan (“EMAP”) has been prepared to describe
the actions needed to protect the environment.
48. VGM holds good and marketable title to the mineral rights for the area in which the mining
operation will be conducted. VGM does not yet hold surface rights or ownership of the land
on which the operations will be conducted. The process through which VGM is working to
obtain surface rights is somewhat slow and bureaucratic but is appropriate under Mexican
law.
49. Allowing for concurrent and multiple activities the total project development period is
estimated to be 39 months from the date of issuing this prefeasibility study.
50. Total overall life of mine, site cash operating costs are estimated at US$22.71/t ore.
Operating costs are considered adequate for preliminary feasibility study purposes.
51. The capital cost for the Los Verdes project is estimated at $138.8 million expressed in first
quarter 2008 US dollars.
52. The process plant design is based on a preliminary but incomplete technical design data.
Upon receipt of final technical design data there may be some re-sizing of equipment which
may impact the capital cost estimate for the process plant.
53. Social and community aspects of the project have been assessed to prefeasibility study
standards.
20-3
MQes
54. A cashflow model was developed which is suitable for prefeasibility study purposes. The
model generated a pre-tax NPV at an 8% discount rate of US$96.9 million on a 100% equity
constant dollar basis. The corresponding pre-tax IRR is 23% and the project has a payback
period of 3.3 years.
55. Based on the deposit’s size, orientation and relationship with the surface topography, it is
most suitably developed using conventional open pit mining technology.
56. The mineable reserve is estimated to be 7,050kt at 0.137% Mo and 0.657% Cu. The strip
ratio is estimated at 1.7 tonnes of waste per tonne of ore. Approximately 3,292kt of oxide
material with a grade of 0.103% Mo and 0.102% Cu will be stockpiled.
57. The average life of mine mining cost is estimated at US$1.85/t material mined.
58. The mine capital cost (excluding prestripping) is estimated at US$13.474 million.
20-4
MQes
SECTION 21
RECOMMENDATIONS
21.0 RECOMMENDATIONS
1. Continued work at Los Verdes is recommended to complete a detailed Feasibility Study for
production of the sulfide copper-molybdenum Resource at Los Verdes. The recommended
work is described in the Work Program in Table 21-1, below, to be carried out during the last
3 quarters of 2008.
2. Investigation of the groundwater supply should continue with detailed aquifer testing
including long-term pumping (7 days) of test wells.
3. An Environmental Impact Statement should be completed, and the process of applying for
Operating permits should commence.
4. Some anomalies in downhole surveys preclude defining the exact margins of the secondarily
enriched sulfides, and hence the ultimate pit limits. Before a final pit design is done it will be
necessary to drill several holes (CAM estimates from 10 to 15) and survey these using
gyroscopic methods of demonstrated reproducibility to define the final non-mineral mineral
contact. Angle drilling should be done perpendicular to cross-section lines, to confirm
continuity between sections.
5. Metallurgical testing is needed to improve existing data on copper and molybdenum
recoveries and production of marketable concentrates. Additional drilling should be carried
out to obtain samples for testing and for geometallurgical mapping. Upon completion of the
recommended testwork program the material balance should be reconfigured and equipment
sizing finalized.
6. A considerable tonnage of oxide mineralization contains molybdenum oxide (ferrimolybdite)
at a potential value at current prices in excess of $50 dollars per tonne, and probably not
amenable to flotation. CAM recommends that alternative metal recovery technology for this
material be examined. The oxide material would have to be mined in any case, in order to
access the underlying Mixed and Sulfide mineralization.
7. Additional core samples are needed to obtain added molybdenum-oxide mineralization for
metallurgical tests.
8. Sample preparation for the field duplicates be reviewed to see if a finer crush or larger sample
size can reduce the number of anomalous values found in QA/QC checks.
9. Two of the drill holes with precise downhole surveys be twinned by either RC or diamond to
determine if the bias observed in RC versus diamond holes actually exists.
10. The deposit contains silver and tungsten at grades that may be of economic interest as
byproducts. As far as is known Cominco did not assay for silver and the Cominco assays for
tungsten were expressed as WO3. Because of time constraints, tungsten and silver were not
included in this Resource estimate. CAM recommends that both tungsten and silver be
included in future Resource estimates.
11. A coherent and uniform electronic database, probably in Microsoft access, should be
compiled for use in future Resource estimation work. This compilation is largely a
clerical/technical job, but needs proper geological supervision. Future Resource estimation
should be enhanced by a number of incremental improvements in the raw data and in
estimation methodology. These include the use of Access, with links to source documents;
reducing the model size to cover just the area of the open pit, plus a small perimeter; rotating
the model to be parallel to sections; wireframing the sulfide boundary.
12. Further definition of lithologic and mineralization units should be obtained.
13. All of the metallurgical test work to date has been on composites, so a single volume
containing mixed and sulfide within the secondarily enriched sulfides is consistent with
current data. However, if additional metallurgical testing indicates differences between
mixed sulfides (i.e. with chalcocite) and hypogene sulfides (i.e. chalcopyrite and bornite), an
21-1
MQes
interpretation of the differences between these two mineral types may be required. CAM
recommends additional interpretation as warranted, as the project proceeds.
with appropriate laboratory testing prior to completion of the final Feasibility Study. Further,
all outside sources and on-site borrow areas for required soil materials should be identified
and characterized. Pit slope design should include development of a rock quality/rock mass
strength model of the pit area, and updating of the pit slope stability report based on rock
mass strength and limit equilibrium stability analysis. All major facility sites and major road
and pipeline alignments should be field checked for geologic hazards.
life and a stochastic model should be prepared.
with appropriate laboratory testing prior to completion of tailings and ECD facility designs.
Outside sources and on-site borrow areas for required soil materials should be identified and
characterized.
17. The proposed tailings and ECD locations should be field checked for geologic hazards.
18. Condemnation Drilling should be completed for all facilities.
19. It is recommended that additional site-specific sampling using drill holes and test pits be
completed along with appropriate laboratory testing prior to completion of final facility
design.
and characterized.
21. Pit slope design should include development of a rock quality/rock mass strength model of
the pit area, and updating of the pit slope stability report based on rock mass strength and
limit equilibrium stability analysis.
22. All major facility sites and major road and pipeline alignments should be field checked for
geologic hazards.
23. Additional site-specific sampling using drill holes and test pits be completed along with
appropriate laboratory testing prior to completion of final facility design.
24. Tailings should be properly characterized for final design.
and characterized.
26. The tailings and ECD should be field checked for geologic hazards.
27. The existing hydrologic information is used to advance the design of the project.
28. A meteorological station should be setup and site specific data collection started to verify
regional data used.
29. Surface water rights should be obtained.
30. Investigation of the groundwater supply should continue with a detailed aquifer testing
pumping including long-term pumping (7 days) of test wells.
31. The effects of water extraction on down stream users should be determined.
32. Alternatives for closure and stability of tailings should be further developed.
33. Incorporate onsite testing of tailings in the planned nursery program when operations begin.
34. Use of post-mining land uses should be commenced in collaboration with the appropriate
local and regional stakeholders to facilitate conversion of mining facilities to other uses.
35. The EMAP should be updated and commenced in accordance with the work program.
36. Strong relations should be maintained with the community and VGM should continue to
assist in community development.
37. The process toward obtaining surface rights should be continued; the State of Sonora should
be asked to assist in the progressing this process if it becomes appropriate.
38. Although the project execution plan for the project has reached prefeasibility standards, it is
recommended that VGM commences the work program immediately and evaluates reducing
equipment order delivery times and assessing contract strategies.
21-2
MQes
39. Operating costs should be updated and refined to reflect additional detail developed in the
final feasibility study.
40. Considerable escalation is presently occurring in equipment costs as well as construction
costs for mining projects. It is recommended that the basis for this estimate is monitored
closely through vendor quotations, etc and updated as necessary.
41. A treatment capacity study should be performed to confirm that the 1.0Mt/y production rate is
optimal for the deposit.
42. An evaluation should be performed evaluating the use of smaller haul trucks (20 to 25t
range).
43. Mining phases should be improved to decrease preproduction period waste stripping. A
fourth mining phase is one possibility worth considering.
44. Detailed term sheets for treating concentrates should be obtained.
45. VGM should continue to enhance the project’s economic model for purposes of discussions
with sources of financing.
46. Resolve the average LOM mining cost into fixed and variable components for pit
optimization. This will increase the accuracy of mining costs associated with ore and waste
movement. Thus material mined near the pit rim would be assigned a lower mining cost than
material mined from the highest or lowest benches.
47. Design the oxide stockpile separately from the waste storage area. Prepare annual build up
plans for both facilities.
48. Take a closer look at blasthole drills, especially the following:
a. Drill penetration rates (need testing, may be able to correlate with exploration
drilling rates)
b. Required powder factors for adequate fragmentation of ore and waste
c. Drill bit life (need abrasion testing)
49. Develop owner/operator maintenance costs for the mining fleet.
50. Perform haul cycle analyses to more accurately estimate haul truck productivity.
51. Improve the design ultimate pit to reduce the overall stripping ratio. This will require
working with the geotechnical engineer to refine the slope design criteria.
52. Consider blending possibilities for copper as well as molybdenum when performing
production scheduling.
53. Improve the mining phases to delay starting the final pushback. A fourth mining phase is one
possibility worth considering.
54. The Work Program shown in Table 21-1 needs to be funded.
A Work Program encompassing the above recommendations, and others, is set forth below in Table
21-1.
21-3
MQes
Table 21-1: Recommended Los Verdes Work Program for 2008
Estimated
Category Activity Objective Amount Unit Cost
Cost, $US
Surface rights surface purchase or
Property $ 1,500,000
acquisition lease from ejido
Mapping/ Determine district
Geology 60 sq km $500/sq km $30,000
Prospecting potential
Core Drilling Refine pit limits 600 m $ 100/m $ 60,000
Drilling Core Drilling Metallurgical samples 400 m $ 100/m $ 40,000
Geologist Drill geology 2 months $ 3000/mo $ 6,000
Geological Constrain grade $7,000/ labor
4 months $28,000
Model Update Modeling month
Resource Update
Update Grade $27,000/
Model for Feasibility 1 month $27,000
Model labor Month
Update Mine
Mining Finalize for Feasibility $90,000
Planning
Laboratory Measure recovery from
Metallurgy $250,000
tests sulfide and oxide ores
Engineering and Feasibility Determine project
$750,000
design Study economics
Design & Geotech Drilling;
Geotechnical Geotech Borrow sources $340,000 estimate $340,000
Investigation investigation; design
Waste Rock
Waste Mgmt Mgmt. Plan & $115,000 estimate $115,000
Design
Drill test & Develop
Hydrology Water drilling contractor estimate $ 310,000
wells
Infrastructure* $0
PEP/POP $175,000
Cost Estimat’n* $0
Marketing* $0
EIS Continue EIS contractor n/a $ 20,000
Environmental Submit permit

Permitting contractor n/a $ 310,000
applications
Tests Monitoring contractor n/a $100,000
Social &
$50,000
Community
Economics* $0
TOTAL: 4,201,000
* = Costs included in Feasibility Study
21-4
MQes
SECTION 22
REFERENCES
22.0 REFERENCES
1. “Investigacion Metalúrgica Para La Recuperacion De Molibdeno, Cobre Y Tungsteno

Contenido En El Mineral De Los Verdes – Proyecto No. NP-6-75” by Servicios Industriales
Peñoles, S.C. dated September 21, 1976.
2. “Mineralogic Evaluation of Three Samples from The Los Verdes Tungsten Deposit, Sonora,
Mexico” by Minerals Products Technology Metals Division – UCC, Niagara Falls, New York
dated February 1, 1979.
3. “Experimentacion Metallurgica Realizada En El Proyecto Los Verdes” by Servicios
Industriales Peñoles, S.C., dated October 17, 1979.
4. “Microscopic Examination of Tungsten Ore From Hermosillo, Sonora, Mexico” by Mountain
States Research And Development, Tucson, Arizona 85731, dated January 27, 1981.
5. “Heavy Liquid And DWP Testing Of Tungsten Ore From Hermosillo, Sonora, Mexico” by
Mountain States Research And Development, Tucson, Arizona 85731, dated June 4, 1981.
6. “Metallurgical Studies of The Los Verdes Ore, (Report No. 3)” by Niihama Laboratory,
Sumitomo Metal Mining Co., Ltd, dated September 13, 1981.
7. “Indicative Concentration Tests on Wolframite Ore From Los Verdes, Chihuahua, Mexico –
Report 1981–12-10” by Swedish Mineral Processes AB, dated December 10, 1981.
8. “Investigacion Metallurgica Para La Recuperacion De Molibdeno, Cobre Y Tungsteno
Contenido En El Mineral De Los Verdes – Proyecto No. NP-6-75” by Servicios Industriales
Peñoles, S.C. dated June 15, 1982.
9. “Metallurgical Testing of Composite Sample for the Los Verdes Prospect, Mexico”, by
Resource Development, Inc., dated January 28, 2008.
10. “Los Verdes Copper Molybdenum Project Preliminary Metallurgical Assesssment –
KM2044” by G&T Metallurgical Services Ltd., dated November 19, 2007.
11. “Los Verdes Copper Molybdenum Project Sonora, Mexico Additional Metallurgical
Assesssments – KM2147” by G&T Metallurgical Services Ltd., dated April 7, 2008.
12. “Flocculant Screening, Gravity Sedimination and Pulp Rheology Studies Conducted for:
Virgin Metals, Inc. Los Verdes Project (Tailing Sample)” by Pocock Industrial, Inc., dated
February 2008.
13. “Technical report Los Verdes Project Sonora, Mexico”, by Chumsky, Armbrust and Meyer
Llc., dated 29 February, 2008.
14. Letter Referencing “Molidbeno Los Verdes S.A. de C.V.; Title Opinion”, by Tapia, Robles y
Cabrera S.C., dated March 3, 2008.
15. Letter Referencing “Molidbeno Los Verdes S.A. de C.V.; Surface Land”, by Tapia, Robles y
Cabrera S.C., dated March 31, 2008.
16. Letter Referencing “Labor Related Cost Estimations”, by Fernando Parada, dated February
13, 2008.
17. “Earthquake Design Criteria for Los Verdes Project, Sonora, Mwxico”, by The Mines Group,
Inc., dated October 20, 2007.
18. “Hydrology Report for Los Verdes Project, Sonora, Mwxico”, by The Mines Group, Inc.,
dated September 20, 2007.
19. “Virgin Metals, Inc., Los Verdes Mine Feasibility Level Pit Slope Stability Analysis and
Design”, by The Mines Group, Inc., dated January 22, 2008.
20. “Environmental Control Dam Conceptual Design Report”, by The Mines Group, Inc., dated
March 12, 2008.
21. “Document No. CIS/DIR/107/08” by Instuto Nacional de Antropologia e Historia, dated May
2008.
22-1
MQes
22. “Safety and Environmental Management Plan”, by Virgin Metals / Minera Alamos, S.A. DE
C.V., dated July 2008.
23. “Estudio de Impacto Ambiental Modalidad Particular, Proyecto Los Verdes”, by Heurística
Ambiental Consultoría, dated July 2008.
24. “Estudio de Riesgo Ambiental Nivel 2, Proyecto Los Verdes”, by Heurística Ambiental
Consultoría, dated July 2008.
25. “Estudio Técnico Justificativo Para la Autorización de Cambio de Utilización de Terrenos
Forestales en una Superficie De 105.65 Hectáreas, Para la Actividad Minera, Proyecto Los
Verdes”, by Heurística Ambiental Consultoría, dated June 2008.
26. “Estudio Geohidrologico Regional Proyecto Los Verdes”, by Hidrolab Consultores, S.C,
dated February 2008.
27. “CAM, 2007, Technical report, Los Verdes property, Sonora, Mexico”, prepared by Fred
Barnard and Robert Sandefur of CAM (Chlumsky, Armbrust & Meyer LLC), dated 23
January 2007 and filed on SEDAR on 29 January 2007.
28. CRM (Consejo de Recursos Minerales), 1994, Monografía Geológico-Minera Del Estado De
Sonora: English-language edition, 220 pages.
29. “G&T, 2007, Los Verdes Copper-Molybdenum project - Preliminary metallurgical
assessment”, report prepared by Tom Shouldice, P.Eng. John Folinsbee, P.Eng. of G&T
Metallurgical Services Ltd., dated November 19, 2007. 104 pages in pdf format.
30. “Peñoles (Servicios Industriales Peñoles S.A. de C.V.), 1979, Proyecto los Verdes”, dated
July 1979, submitted to the then-owner of concessions then in force in the Moly Pit area east
of the Bacanora concession; contains 5 pages of text plus several maps and cross-sections, no
assay results.
31. Sears, Barry & Associates, Ltd., 2005, Report on the Los Verdes Molybdenum-Copper
Project, Sonora, Mexico Prepared for Virgin Metals Inc.; 43-101-compliant report dated
November 14, 2005; 50 pdf pages. Posted on the SEDAR website without the Title Opinion.
32. RDI, 2008, Metallurgical testing of composite sample for the Los Verdes Prospect, Mexico:
consulting report by Deepak Malhotra and Ed Bentzen of RDI (Resource Development Inc.)
for Virgin Metals, Inc., dated 28 January 2008. 35 pages plus appendices.
33. “CAM, 2008, Technical report, Los Verdes property, Sonora, Mexico”, prepared by Fred
Barnard and Robert Sandefur of CAM (Chlumsky, Armbrust & Meyer LLC), dated 29
February 2008.
34. “Caterpillar Performance Handbook, Edition 34”, Caterpillar Incorporated, Peoria Illinois
USA, October 2003.
35. “Komatsu Specifications & Application Handbook, Edition 27”,August 2006.
36. “Blasting Principles for Open Pit Mines”, William Hustrulid, Professor Emeritus Colorado
School of Mines, Golden Colorado USA, 1999.
37. “SME Mining Reference Handbook”, Raymond L. Lowrie PE, Littleton Colorado USA,
2002.
38. “Pre-Feasibility Study – Los Verdes Project Sonora, Mexico”, Hidrolab Consultores S.C.,
Heuristica Ambiental, The Mines Group, Inc., Chlumsky Armbrust & Meyer, Mine and
Quarry Engineering Services, Inc., dated July 2008.
22-2
MQes
SECTION 23
DATE and SIGNATURE PAGE
23.0 DATE and SIGNATURE PAGE
The undersigned prepared this Technical Report, titled Technical Report Pre-Feasibility Study Los
Verdes Project, Sonora, Mexico, dated 3rd September, 2008 in support of the public disclosure of
technical aspects of the Los Verdes project by Virgin Metals, Inc. The format and content of the report
are intended to conform to Form 43-101F1 of National Instrument 43-101 (NI 43-101) of the
Canadian Securities Administrators.
Signed,
____________________________________
Christopher Kaye, MAusIMM, B. Eng (Chemical). 3rd September, 2008
___________________________________
Anthony Brown, B. Met., M. Met., MIMMM, C. Eng. 3rd September, 2008
____________________________________
Howard Steidtmann, MAusIMM, B. Sc. Mining Engineering 3rd September, 2008
_______________________________________
Robert Sandefur, P.E. 3rd September, 2008
_______________________________________
Fred Barnard, Ph.D., California Professional Geologist #7432 3rd September, 2008
23-1
MQes
_______________________________________
Anthony Crews, BS Eng. (Civil), P.E. 3rd September, 2008
23-2
MQes
CERTIFICATE OF QUALIFIED PERSON
Christopher Kaye, MAusIMM
1730 S. Amphlett Blvd., Suite 200,
San Mateo, CA 94402
I, Christopher Edward Kaye am a Principal Process Engineer, with the firm of Mine and Quarry
Engineering Services, Inc. (MQes) of 1730 S. Amphlett Blvd. Suite 200, San Mateo, CA 94402,
USA. I carried out this assignment for MQes;
This certificate applies to the technical report entitled “Technical Report, Pre-feasibility Study, Los
Verdes Project, Sonora, Mexico” dated 3rd September, 2008;
I am a member of Australasian Institute of Mining and Metallurgy in Australia. I graduated from

the University of Queensland, Australia, with a B. Eng. in Chemical Engineering in 1984;
I have worked as a process engineer in the minerals industry for over 20 years. I have been
directly involved in the mining, exploration and evaluation of mineral properties internationally for
gold and base metals;
I personally visited the Los Verdes project site near Hermosillo, Mexico on June 5th, 2007 as part
of the due diligence necessary to compile this report;
I am responsible for the preparation of parts or all of Sections 1, 2, 3, 19, 20, 21 and 22 of the
Technical Report on the Pre-feasibility Study for the Los Verdes Project, Sonora, Mexico dated
3rd September, 2008;
I am independent of Virgin Metals, Inc. as independence is described by Section 1.4 of NI 43-

101. I have not received, nor do I expect to receive, any interest, directly or indirectly, in Virgin
Metals, Inc.;
MQes, Chlumsky, Armbrust & Meyer, LLC (“CAM”) and The Mines Group, Inc. were retained by
Virgin Metals, Inc. to prepare a Technical Report on the Pre-feasibility Study for the Los Verdes
Project, Sonora, Mexico in accordance with National Instrument 43-101. The report is based on
our review of project files and information provided by Virgin Metals, Inc. and discussions with
company personnel;
I have read National Instrument 43-101 and Form 43-101F1 and, by reason of education and past
relevant work experience, I fulfill the requirements to be a “Qualified Person” for the purposes of
NI 43-101. This technical report has been prepared in compliance with National Instrument 43-
101 and Form 43-101F1;
As of the date of this certificate, to the best of my knowledge, information and belief, the technical
report contains all scientific and technical information that is required to be disclosed to make the
technical report not misleading.
_______________________
Christopher Edward Kaye, MAusIMM
Dated: 3rd September, 2008
23-3
MQes
Anthony J. Brown B. Met, M. Met, MIMMM, C. Eng
226 Amherst Avenue
San Mateo, CA 94402
I, Anthony J. Brown am an independent Process Engineer. I carried out this assignment for the
firm of Mine and Quarry Engineering Services, Inc. (“MQes”) with offices at 1730 S. Amphlett
Blvd. Suite 200, San Mateo, CA 94402, USA;
I am a member of the Institute of Materials, Minerals, and Mining. I graduated from Sheffield
University, England with degrees of Bachelor of Metallurgy (1969) and Master of Metallurgy
(1970);
I have worked as a process engineer in the minerals industry for over 30 years. I have been
I personally visited the Los Verdes project site near Hermosillo, Mexico June 5, 2007 as part of
the due diligence necessary to compile this report;
I am responsible for the preparation of Sections 1.8, 16.0, and portions of Sections 1.22.1, 1.23,
19.13.2, 19.14, 20 and 21 of the Technical Report on the Pre-feasibility Study for the Los Verdes
Project, Sonora, Mexico dated 3rd September, 2008;

Metals, Inc.;
company personnel;
101 and Form 43-101F1;
_______________________
Anthony J. Brown B. Met, M. Met, MIMM, C. Eng
23-4
MQes
Howard Steidtmann,
118 Drew Court
Stateline, NV 89449
I, Howard Steidtmann, am a consulting Mining Engineer and owner of the Mine Planning Group
with offices at 118 Drew Court, Stateline, Nevada 89449, USA. I personally carried out this
assignment for the firm of Mine and Quarry Engineering Services, Inc. (MQes) with offices at
1730 S. Amphlett Blvd. Suite 200, San Mateo, CA 94402, USA;
I am a member of the Australasian Institute of Mining and Metallurgy. I graduated from the
Colorado School of Mines, Golden, Colorado 80401, USA with a B. Sc. degree in Mining
Engineering in 1986;
I have worked as a mining engineer in the minerals industry for over 20 years. I have been
I personally visited the Los Verdes project site near Hermosillo, Mexico on June 5th, 2007 as part
of the due diligence necessary to compile this report;
I am responsible for the preparation of parts or all of Sections 1, 17, 19, 20, 21 and 22 of the
Technical Report on the Pre-feasibility Study for the Los Verdes Project; Sonora, Mexico dated

Metals, Inc.;
company personnel;
101 and Form 43-101F1;
_______________________
Howard Steidtmann
23-5
MQes
Robert L. Sandefur
1139 S. Monaco Pkwy.,
Denver, Colorado 80224 USA
I, Robert L. Sandefur, certify that:
1. I am a Consulting Minerals Geostatistician, affiliated with Chlumsky, Armbrust and Meyer

LLC at 200 Union Boulevard, Suite 430, Lakewood, Colorado 80228, USA.
2. I am a Certified Professional Engineer (#11370) in the state of Colorado, USA and a member
of the Society for Mining, Metallurgy, and Exploration (SME).
3. I graduated from the Colorado School of Mines with a Professional (BS) degree in
engineering physics (geophysics minor) in 1966 and subsequently obtained a Masters of
Science degree in physics from the Colorado School of Mines in 1973.
4. I have practiced my profession as geostatistical resource analyst continuously since 1969.
5. From 1969 to present, I have worked on mining projects in over 20 countries, have
statistically analyzed more than 400 mineral deposits, and have personally visited more than
50 operating metal mines.
6. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI
43-101”) and certify that by reason of my education, affiliation with a professional
association (as defined in NI 43-101) and past relevant work experience, I fulfill the
requirements to be a “qualified person” for the purposes of NI 43-101.
7. During April 1-3, 2008, I visited the Hermosillo offices of Virgin Metals, Inc. to review
database source documents. I also visited the Los Verdes deposit to review core and surface
geology as well as to verify collar locations, collar azimuth and dip, and sample storage.
8. I am responsible for the preparation parts or all of Sections 1, 2, 14, 17, 19, 20, 21 and 22 of
the Technical Report on the Pre-Feasibility Study for the Los Verdes Project, Sonora, Mexico
dated 3rd September, 2008.
9. The report is based on my personal review of published and unpublished information on the
property and on a review of data and reports supplied by Tamerlane on work performed on
the project.
10. I am not aware of any material fact or material change with respect to the subject matter of
this report that is not reflected in the report, such that the exclusion of these facts would make
this report misleading.
11. I am independent of Virgin Metals Inc. and any of their subsidiary companies, applying all of
the tests in section 1.5 of National Instrument 43-101.
12. I have read National Instrument 43-101 and Form 43-101F1, and the report has been prepared
in compliance with that Instrument and Form.
23-6
MQes
13. I have read this Technical Report and do not have any reason to believe that there are any
misrepresentations contained within it.
14. I hereby notify the British Columbia Securities Commission of my consent to the filing of
this Technical Report with stock exchanges and other regulatory authorities in Canada, and
any publication by them, including electronic publication in the public company files on their
website accessible by the public, of the Technical Report.
Dated this 3rd day of September, 2008.
Signed_____________________________________
Robert L. Sandefur, P.E.
23-7
MQes
Fred Barnard
1835 Alkire Street
Golden, CO 80401 USA
1. I am a consulting minerals geologist, affiliated with Chlumsky, Armbrust and Meyer LLC at
200 Union Boulevard, Suite 430, Lakewood, Colorado 80228, USA.
2. I am a certified Professional Geologist (#7432) in the state of California in good standing.
3. I obtained a B. A. degree in Geology from the University of California at Berkeley in 1963

and a Ph.D. degree in Geology from the University of Colorado at Boulder in 1968.
4. Since 1968 I have practiced continuously as a geologist in the mining industry, as a corporate
employee of INCO and later of Anaconda Minerals, and subsequently since 1985 as an
independent consultant. I have been involved in the geology, exploration, and evaluation of
metallic and some non-metallic mineral deposits in about 40 countries.
5. I am a Fellow of the Society of Economic Geologists, and a Member of the Geological

Society of America, and Certified Mineral Appraiser #2006-2 of the American Institute of
Mineral Appraisers.
6. My professional work has included field visits to molybdenum and copper molybdenum
deposits in Colorado, Arizona, New Mexico, Nevada, Montana, Sonora (Mexico), Chile,
Peru, and Uzbekistan for the purposes of carrying out or reviewing geology, sampling
programs, project evaluation and/or resource/reserve validation.
7. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI
43-101”) and certify that by reason of my education, affiliation with a professional
association (as defined in NI 43-101) and past relevant work experience, I fulfill the
requirements to be a “qualified person” for the purposes of NI 43-101, with regard to
porphyry-related molybdenum-copper deposits.
8. I visited the Los Verdes Project in Sonora, Mexico during 29-30 October, 2006 and the
Minera Alamos de Sonora office in Hermosillo, Sonora on 31 October, 2006, to review
mineralization, procedures and data storage, and the commercial sample-preparation facility.
9. I am highly fluent in Spanish and am able to converse readily with Spanish-speaking persons
of all education levels.
10. I am responsible for parts or all of Sections 1, 2, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15, 18, 19, 20,
21 and 22 of the Technical Report on the Pre-Feasibility Study for the Los Verdes Project,
Sonora, Mexico dated 3rd September, 2008. I am not aware of any material fact or change
with respect to the subjects of this report which is not reflected in this report, which would
make this report misleading.
11. As defined in Section 1.5 of National Instrument 43-101, I am independent of the issuer,
Virgin Metals, Inc., applying all of the tests in section 1.5 of National Instrument 43-101.
23-8
MQes
12. I have read National Instrument 43-101 and Form 43-101F1, and have prepared this report in
compliance with those documents.
13. I hereby notify the British Columbia Securities Commission of my consent to the filing of
this Technical Report with stock exchanges and other regulatory authorities in Canada, and
any publication by them, including electronic publication in the company files on their
website accessible by the public, of the Technical Report.
Dated this 3rd day of September, 2008.
Signed _______________________________ Date: 3rd day of September, 2008 seal

Fred Barnard, Ph.D.
23-9
MQes
1325 Airmotive Way, Suite 175 U
Reno, NV 89502 USA
I, Anthony E. W. Crews, am a Civil/Geotechnical Engineer, with the firm of The Mines Group, Inc.,
1325 Airmotive Way, Suite 175 U, Reno, NV, 89502, USA. I carried out this assignment for The
Mines Group;
I am a member of the American Society of Civil Engineers (ASCE) and the Society of Mining
Engineers (SME). I graduated from the University of the Witwatersrand, South Africa, with a
degree in Civil Engineering in 1975.
I have worked as a civil engineer in the minerals industry for over 33 years. I have been directly
involved in the mining, exploration and evaluation of mineral properties internationally for gold
and base metals;
I personally visited the Los Verdes project site near Sonora, Mexico on June 5th, 2007 as part of
the due diligence necessary to compile this report;
I am responsible for the preparation of parts or all of Sections 1, 19, 20, 21 and 22 of the
Technical Report on the Pre-feasibility Study for the Los Verdes Project, Sonora, Mexico dated

Metals, Inc.;
Mine and Quarry Engineering Services (“MQes”), Chlumsky, Armbrust & Meyer, LLC (“CAM”) and
The Mines Group, Inc. were retained by Virgin Metals, Inc. to prepare a Technical Report on the
Pre-feasibility Study for the Los Verdes Project, Sonora, Mexico in accordance with National
Instrument 43-101. The report is based on our review of project files and information provided by
Virgin Metals, Inc. and discussions with company personnel;
101 and Form 43-101F1;
_______________________
23-10
MQes

Mexico 1

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Mexico 1

Uploaded by

Copyright:

Available Formats

MQes

Prepared by: The Mines Group, Inc.

Effective Date: 28th July, 2008

1.0 SUMMARY ...............................................................................................................................1-1

Table 1-1: Mineral Resource Estimates at a Cutoff Grade of 0.03% Mo Eq.......................................1-6

1.2 Property Description and Ownership

1.4 Geology and Mineralization

Los Verdes contains molybdenum-copper-(tungsten) mineralization in stockworked granodiorite and

Vertical zonation in the deposit, as confirmed by VGM drilling, is as follows:

1.5 Exploration and Data Compilation

1.5.2 Data Compilation and Verification

1.5.3 Bulk Density (Specific Gravity) of Mineralization

1.6 Resource Estimation

1.6.1 Resource Tabulation

To convert a mineral Resource to a Reserve, it is necessary to apply actual economic and

1.7 Mineral Reserves

1.8 Mineral Processing and Metallurgical Testing

• Molybdenum concentrate: Recovery 71%, Grade 57%.

1.9 Mining Operations

Table 1-3: Reserve/Resource Summary

Tonnes Average Mo Average Cu

1.12 Tailings Disposal

1.14 Water Management

• Upgrade of the local access road to Santa Ana.

1.17 Project Execution Plan

1.18 Operations Plan

1.20 Environmental, Health and Safety

1.21 Social and Community

1.22 Project Economics

1.22.1 Operating Costs

• Availability of local in-country labor.

1.22.3 Sensitivity Analyses

Capital costs have a larger effect on IRR’s than Molydenum prices.

1.23 Conclusions and Recommendations

1. Mineralization at Los Verdes is hosted in a granodiorite cut by veins, stockworks, and

• Primary grinding to a P80 of 150μm.

• Molybdenum concentrate: Recovery 71%, Grade 57%.

• Geologic modeling to establish distribution and proportion of significant ore

Environmental Submit permit

2.0 INTRODUCTION AND TERMS OF REFERENCE

2.1 Sponsorship and Use

2.2 Qualified Persons

2.3 Sources of Information

3.0 RELIANCE ON OTHER EXPERTS

The metallurgical, geological, mineralization, exploration technique and certain procedural

4.0 PROPERTY DESCRIPTION AND LOCATION

4.2 Mineral Properties

1. Exploration Concessions, carrying the right to undertake exploration including extracting a

4.3 Environmental Issues

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE and

5.1 Access, Physiography, and Climate

5.2 Local Resources and Infrastructure

Table 6-1: History of Los Verdes Area

Period Owner or Lessee Work Undertaken Location

6.1 Prior Exploration, Development, and Production

6.1.1 Cominco Exploration

6.1.2 1996-2005 Exploration

6.1.3 Virgin Metals Exploration

6.2 Historical Mineral Resources

7.0 GEOLOGICAL SETTING

7.1 Regional Geology

Figure 7-1: Regional Geologic Setting – Los Verdes

Legend and Notes: