Mineralization on the Property is characteristic of porphyry copper-gold mineralization. Porphyry-type deposits in Mexico occur in a northwest trending belt 2,800 km long on the west side of the country, following the Pacific continental margin (Sillitoe, 1976). The belt is located in the Sonoran Basin and Range, Sierra Madre Occidental and Sierra Madre del Sur covering the states of Sonora, Sinaloa, Chihuahua, Durango and Michoacán.

Mineralization on the Property consists of structurally controlled zones of stockwork and
disseminated sulphide mineralization that are hosted entirely within a multi-phase tonalite intrusive complex. These sulphide-bearing zones contain significant concentrations of copper and gold with lesser silver and molybdenum values. The current resources are hosted in three distinct zones: the relatively high-grade North and South Zones and the lower grade Tizate Zone.

Morphologically, two of the zones, the North and Tizate Zones, are crudely tabular with shallow to moderate dips. Both have rough dimensions of approximately 1,100 by 600 m and thicknesses of up to 200 m. The South Zone has a smaller footprint, 600 by 500 m, but a greater vertical extent of up to 400 m, although this is possibly the result of faulting.

In the North and South Zones some generations of veins within the structural deposits display a prominent 325° to 350° orientation parallel to the north-northwest fault trend. Dips are generally vertical to steep either east or west. Other prominent orientations are also present including a set with a near east-west orientation and moderate southerly dip. The attitude of vein sets in the Tizate Zone has not yet been accurately determined; however, consistent core to vein angles in drill holes suggest several persistent orientations. The strong preferred orientation of these veins and evidence of shearing suggests development of the zones was during late magmatic stages (Shonk, 1994).

There is an oxide horizon and a narrow transition layer present in the deposits on the Tepal Property above the sulphide mineralization. The depth of oxidation ranges from 20 to 40 m on the hilltops and 0 to 20 m in the drainages. Minerals in the oxidized zone include malachite, chalcocite, minor azurite, tenorite and minor chrysocolla. Shonk (1994) indicated that a thin supergene-enriched layer exists locally at the base of the oxide horizon and consists of chalcocite and covellite coatings on sulphide grains and local areas of poddy, massive chalcocite. While minor chalcocite has been noted in drill core, drill hole assays do not indicate any leaching of copper from the oxide horizon and no local copper enrichment zones at the oxide- sulphide interface. The transition zone may be up to 15 m thick; however, it is usually significantly less than this and in some cases is absent altogether. The transition is identified by the overlapping presence of iron oxides and sulphide mineralization.

Primary sulphide mineralization consists dominantly of disseminated and stockwork- controlled chalcopyrite and pyrite with minor, locally significant pyrrhotite, bornite, sphalerite, molybdenite and galena. The highest grade mineralization is associated with low total sulphide contents and low pyrite: chalcopyrite ratios.

Micron-sized native gold is usually associated with the chalcopyrite either as grains attached to the surface or fracture fillings within copper sulphides (Duesing, 1973), although free grains can also occur. Hypogene sulphide mineralization typically occurs as irregular individual sulphide grains or interstitial patches of pyrite- chalcopyrite-bornite within the granular, altered tonalite porphyry groundmass, often associated with growth of granular quartz in the groundmass, as chalcopyritepyrite veinlets and as quartz- hydrobiotite/Fe-chlorite-pyrite-chalcopyrite veinlets associated with sericite-hydrobiotite/Fe- chlorite-pyrite-quartz alteration (Shonk, 1994).

Intensity of mineralization is strongly related to the presence of late magmatic quartz and the density of late magmatic veining (Shonk 1994). Both the North and South Zones have a crude zonation with a gold-rich core associated with the highest gold and copper values and highest Au: Cu ratios to a copper dominant periphery with lower Au: Cu ratios and then to a barren pyritic halo (Shonk, 1994). Silver and molybdenum values are also somewhat elevated in the core areas but distribution is more erratic and is not always coincident with Au or Cu values. In particular Mo often seems to occur with elevated values in the North and South Zones over short drill hole assay intervals, perhaps due to specific structural controls.

In the Tizate Zone, copper values are on average slightly lower than the North and South Zone averages and gold grades are significantly lower. Grade distribution however is very even and the very high-grade cores and lower grade fringes seen at the other deposits are not seen here. Both the Ag and Mo values are significantly higher than in the other deposits and they show greater coincidence with Au and Cu, particularly with respect to Mo.

Mineralization on the Property is characterized by strongly anomalous Cu, Au, Ag, Zn, and Mo and more erratic and weakly anomalous Pb, Mn, Bi, and As. Unfortunately, inter-element relationships have not been systematically analyzed over the mineralized zones because the Teck soil sampling program, which covers the core of the Property, and most Teck drill core samples were both only analyzed for Cu and Au. Anomalous levels of As, Pb and Zn have been encountered in recent drilling which have full Inductively Coupled Plasma (ICP) data. In most cases, elevated levels of these elements occur erratically in veins and mineralized structures or areas outside of the deposits.

Mining of the Tepal deposit is planned as a conventional open pit operation. Three pits are proposed: North, South and Tizate. Pit designs are double-benched. Haul roads and in-pit ramps are designed at 10% gradient and 30m width. 30m is sufficient for two-lane CAT 789D traffic. The ramp is narrowed to 23m (single-lane CAT 789D traffic) within 60m of the pit bottom to reduce waste stripping.

The mine plan uses a fleet of diesel equipment supplied by Caterpillar (Tracsa), Mexico. The fleet includes: 6050 hydraulic shovels, a 994H and 992K wheel loaders, 789D trucks, and MD6540 rotary drills as the primary mining equipment. The primary mining equipment would be supported by a fleet of track dozers, motor graders, a rubber tire dozer and water truck. A contract waste stripping fleet would be used to supplement the mine fleet in Years 6 through 10.

The process consists of copper flotation of sulphides to produce a saleable concentrate, cyanide leach of the first cleaner tailings and pyrite flotation concentrate and cyanide leach of oxide material. Two plants have been designed; one for the sulphides and one for the oxides.

Oxide Plant Design
Oxide feed will be processed through the gyratory crusher one day out of five to provide 27,500 t to the crushed mineralized material stockpile. The crushed mineralized material stockpile will feed the secondary and tertiary crushing circuits at a rate of 5,500 t/d to produce a final product 80% passing
(P80) of 9.5 mm. The crusher product will feed one ball mill for further reduction to P80 of 143 microns. From the grinding circuit the cyclone overflow will feed the pre-leach thickener followed by CIL. The loaded carbon from the CIL circuit will be pumped to the ADR plant to remove the precious metals. The CIL tailings will combine with the sulphide CIL tailings at the cyanide destruction circuit. The final tailings will be pumped to the TMF.

Sulphide Plant Design
The sulphide circuit consists of crushing, grinding, conventional copper flotation with regrind, concentrate dewatering, filtering and load-out. The copper rougher tailings will feed a pyrite rougher flotation circuit to produce a concentrate that will be reground and combined with the copper first cleaner tailings to be leached.

The sulphide concentrator was designed to process 22,000 t/d sulphide mineralized feed The ROM will be reduced through three stages of comminution, then the copper minerals, along with some gold and silver, will be recovered by flotation.

The copper rougher/scavenger concentrates will be reground and cleaned to a final commercial concentrate grade and then dewatered. The produced copper-gold concentrate will be trucked offsite to a copper smelter.

Copper rougher/scavenger tailings will be sent to pyrite flotation. Pyrite concentrate and the first copper cleaner tailings will be combined and thickened for feed to a sulphide CIL circuit. Loaded carbon will be sent to the common oxide/sulphide ADR plant where doré bars will be produced. The combined flotation tailings and cyanide destruction tailings will be pumped to the TMF. A reclaim barge will recover water from the TMF for re-use in the process plant as make-up water.