ABSTRACT

THE PIERINA PROJECT AND THOUGHTS ABOUT EXPLORATION

The project which discovered the Pierina deposit began with private funding in early 1991, but
in 1993 it was merged into Arequipa Resources, a Canadian junior company. Four Peruvian
exploration geologists did field work with a focus on copper during 1991 and 1992. In 1993 the
project was phased into gold exploration. The budget increased and several drilling projects were
carried out, but no mineable deposits found. Library and field studies in 1993 defined a northwest
trending epithermal gold belt in northern Peru and systematic grass roots exploration began. This
involved ground and aerial reconnaissance and prospect examination together with wide spaced
geochemical sampling.

In the Yungay graben several subcommercial epithermal gold occurrences are present along
the east boundary of the graben, and elongated clay-alunite zones are present along both
boundaries. Claims were staked by Arequipa covering all of these alteration zones. A BLEG survey
was unsuccessful, but was followed by a helicopter supported sampling program in which a few
geochem samples were collected in each alteration zone. Two samples in the Irene claim on the
west side of the graben contained gossan textures and anomalous Zu and Ag values. Several
months later a grid of geochem samples taken around the original samples encountered 0.5 g Au
values and follow-up work defined the 400 x 600 m, 1.6 g Au Pierina anomaly. A later 50 x 50 grid of
92 pits 2-3 m deep indicated an average grade of 6.6 Au over the same area. Based on the
homogeneous grade found in the surface outcrop and in our two adits, subsequent drilling was done
on a wide, 100 x 100 m grid of mostly vertical holes.

After nine holes were completed Barrick Gold made a surprise hostile takeover offer of Can.
$27 for all of the Arequipa shares. This offer was raised to Can. $30, or a total price of Can. $1.1
billion, after we had drilled a total of 42 holes.

The paper also offers opinions regarding organization and strategy for successful mineral
exploration and discusses the profile of successful explorationists. The roll of junior companies is
reviewed and suggestions made about optimum sized exploration budgets and the Who, How, Why of
exploration success.