Property Geology
Within the Liam Regional Venture Area, the oldest volcanic units are those of the Tacaza Formation which in turn are overlain by the Late Miocene Alpabamba volcanics consisting of bedded, felsic to andesitic tuffs and lavas and associated re-worked units. It is the Alpabamba units which host the Cerro Crespo-Queshca gold-silver mineralization.

Cerro Crespo butte is a high-level, complex, hydrothermal vent system located on the southern side of the maar-like crater and exhibiting several felsic diatreme/brecciation events. At a depth of 150 to 200 m some of these diatreme/breccia zones become narrow, fault-controlled feeder zones.

MINERALIZATION
The Soteco Joint Venture initially identified the Liam area as a zone of high sulphidation type epithermal gold-silver mineralization and in particular that the Cerro Crespo butte could represent a vent related diatreme-type body.

Subsequently Misosa ( Minera del Suroeste S.A.C.) mapped and sampled in detail Cerro Crespo and Queshca and then carried out an initial diamond drilling program at Cerro Crespo. Detailed mapping and sampling in 2002 and 2003 resulted in the collection of 410 channel samples mainly on the top of Cerro Crespo and on its northern and eastern flanks. The mapping identified the various breccia units, while the sampling identified five areas, from northwest to southeast and referred to as Areas A, B, C, D, and E, of gold-silver mineralization with grades ranging from anomalous to being of economic interest.

The Misosa channel sampling at Cerro Crespo produced the following conclusions:
1) Cerro Crespo is a high level, complex volcanic hydrothermal vent system within an extensive high sulphidation alteration zone.
2) A significant gold-silver zone of mineralization is associated with the hydrothermal vent system.
3) High grade silver values with subordinate gold were found in Zones A, B and C in the upper part of the butte at elevations between 5,350 and 5,375 m, and also in Zone D at an elevation of 5,200 m suggesting 150 to 175 m of vertical continuity in the eastern part of the butte. In Zone E at 5,150 m silver values decrease but copper increases.
4) The upper part of Cerro Crespo is strongly oxidized, silver migration is generally in the order of centimetres.

Queshca Zones 1 and 3 are at elevations between 5,125 and 5,150 m, while Zone 6 South is about 5,030 m, and Zone 6 North spans elevations from 4,950 to 5,000 m i.e. the lowest part of Zone 6 North is at least 175 m below Zones 1 and 3.

From the mapping at Cerro Crespo as well as the diamond drilling, it is possible that the gold-silver mineralization at Cerro Crespo is confined to the brecciated and highly silicified zone of the butte, which is in turn surrounded by an argillic-siliceous alteration zone. The mineralized zone trends northwesterly, with a strike length in the order of 350 m, a width of 125 to 150 m and a vertical extent of approximately 150 m. The zone of better grade mineralization appears to be “V” shaped in cross-section with the zone being wider at the top of the butte and diminishing in width at depth as it passes into the feeder zones. The main areas of mineralization are on the two arms of the “V” with smaller, discontinuous areas within the upper mouth of the “V”. This overall picture is distorted by the east-west faults and movement of the adjacent blocks.

It is possible that the work performed to date identified a high sulphidation, breccia-hosted and highly silicified zone of gold-silver mineralization at Cerro Crespo with the potential to be of economic significance.

Within the area outside of the original Liam Core Zone Area discovery of four goldbearing zones; the A Zone, the B Zone, the Ibel Zone and the Teton Zone. Subsequently, the A and B Zones were re-named the Astana and Farallon respectively. Additional work suggests that Astana and Farallon may be parts of one zone and they are now combined as the Astana-Farallon Zone. The work in this area has also identified the Astana South and Astana Southwest zones of mineralization.

The on-going prospecting sampling and geological mapping outside of the original Core Zone has resulted in the discovery of six additional zones of gold-silver epithermal-type mineralization, the Esquinas, the Careli, the Huacullo, the Gran Leon, Pacobamba, and the Aluja. In addition, the Numa and Pacobamba skarn mineralization have been identified.

The zones that exhibit characteristics of high sulphidation type epithermal gold-silver mineralization are: Cerro Crespo, Cerro Queshca, Astana, Astana South, Astana Southwest, Aluja, Carmen and Careli.

The Astana-Farallon zone lies approximately 8 km southwest of the Cerro Crespo butte. Work during 2005 outlined a large epithermal system over an area approximately 10 km long and up to 4.5 km wide. All mineralization is associated with extensive fracture systems containing druzy quartz, hematite and barite hosted by an altered rhyodacite. Crackle breccias and tectonic breccias are also present. The Astana zone measures approximately 300 m x 200 m while the Astana South is approximately 200 m x 100 m and the Astana Southwest is 600 m x 200 m. All of these zones are considered to be of the high sulphidation type mineralization. The Farallon zone which measures approximately 1,200 m x 800 m is considered to be of the low sulphidation type. The Astana and Farallon zones are approximately 3 km apart and the intervening area is mainly overburden covered.

The Aluja zone is located approximately 45 km north-northwest of Cerro Crespo. The mineralization is associated with high sulphidation type gold-silver epithermal veins and breccia zones hosted within the Barroso volcanics that cover an area of 2.0 km by 1.5 km. Alteration includes multiple phases of silica, including large areas of granular silica interpreted to be formed by upper level, vapor-phase alteration. Multiple gold-bearing hydrothermal breccia bodies cross-cut the granular silica zones.

The Careli zone is located approximately 35 km north-northeast of Cerro Crespo and consists of a poorly exposed zone of vuggy silica measuring approximately 700 m along strike and up to 200 m wide. The mineralization is possibly of the high sulphidation type with the general trend of the mineralization being northwest-southeast.

The Ibel zone, which is of the low sulphidation type, is located 28 km northwest of Cerro Crespo. Two areas of mineralization have been identified and sampled. These are the Huamancharpa Sur and the Huamancharpa Norte. At Huamancharpa Sur alteration and mineralization has been identified over an area measuring 1,200 m by 800 m. The host rocks are shales which have been silicified and moderately stockworked. Mineralization appears to consist on surface of limonite (after pyrite) and arsenopyrite within the quartz stockwork. At Huamancharpa Norte gold-silver mineralization is associated with hydrothermal veins and breccias. Four separate zones of veins and breccias have been identified which vary in length from 450 to 3,000 m and with widths ranging from 1 to 10 m.

The Huacullo zone is located 6 km southeast of Ibel and again consists of low sulphidation type epithermal mineralization. Mineralization consists of veins and hydrothermal breccias which extend for up to 1,200 m and range from 0.5 to 10 m in width. Four main breccia vein zones with a northwest-southeast trend have been identified with the largest being 2,000 m long and up to 20 m wide and hosting typical low sulphidation type mineralization.

The mineralization at Numa is associated with extensive breccia and stockwork type replacement bodies in limestone with the largest of the zones being the Numa West zone which extends for approximately 2,500 m north-south and varies in width from 5 to 50 m.

Crespo is a high sulphidation epithermal deposit and will be mined utilising open-pit methods with an average daily production of 6,850 tonnes and a stripping ratio of 1.15:1. Drilling and blasting will be carried out directly by Hochschild with earthworks being developed by contractors.

The Feasibility Study details the construction of a 6,850tpd process comprising stages for primary, secondary and tertiary crushing, agglomeration, heap leaching with cyanidation, Merrill Crowe processing, pressure filter separation and smelting to obtain a doré product. Recoveries are expected to be 80% for gold and 35% for silver.