ni 43-101 technical report casposo project argentina · 2015-02-09 · this certificate applies to...

NI 43-101 Technical ReportCasposo ProjectArgentina

Prepared for: Troy Resources NL Project No: 3101June, 2009

Prepared by:AMEC International (Chile) S.A. Rodrigo Marinho, P GeoWilliam Coquhoun, FSAIMMRalph Penner, MAusIMMGeoffrey Challiner, MIMMM

Effective Date: 06 May 2009

CERTIFICATE OF QUALIFIED PERSON

Rodrigo Alves Marinho, Principal Geologist, CPG, (AIPG) Américo Vespucio 100 Sur, Oficina 203

Las Condes, Santiago, Chile. Tel. 56-2-210-9500; Fax 56-2-210-9510

[email protected] I, Rodrigo Alves Marinho, CPG (AIPG) am employed as a Principal Geologist with AMEC International (Chile) S.A., a division of AMEC Americas Limited.

This certificate applies to the Technical Report entitled “NI 43-101 Technical Report, Troy Resources NL, Casposo Project, Argentina” (the Technical Report) dated 6 May, 2009.

I am a member of the American Institute of Professional Geologists (CPG-10971). I graduated from University of Sao Paulo State with a Bachelor of Engineering degree in Geology in 1993.

I have practiced my profession for 16 years. I have been directly involved in mineral exploration and mining projects for precious and base metals and industrial minerals in Argentina, Australia, Brazil, Burkina Faso, Colombia, Chile, Peru, Portugal, South Africa, United States and Venezuela.

As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–101 Standards of Disclosure for Mineral Projects (NI 43–101).

I visited the Casposo Project during 27–29 May, 2008 and again from 20–23 October, 2008.

I am responsible for Sections 1; 2; 3; 4.1 to 4.5; 5; 6; 7; 8; 9; 10; 11; 12; 13; 14, 15; 17.1; 20; 21; 22, and 23 of the Technical Report, and for the portions of the summary, conclusions and recommendations sections that pertain to mineral resources

I am independent of Troy Resources NL as independence is described by Section 1.4 of NI 43-101.

I have been involved with Casposo Project since 2005 as the auditor of the mineral resource estimates and during the preparation of the AMEC 2008 Updated Feasibility Study.

I have read NI 43–101 and this report has been prepared in compliance with that Instrument.

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.

“Signed and sealed”

Rodrigo Alves Marinho.CPG-AIPG (CPG-10971)

Dated: 1 June 2009

AMEC International (Chile) S.A Americo Vespucio Sur 100, Oficina 203 Las Condes, Santiago, Chile Tel: (562) 210-9500 Fax: (562) 210-9510 www.amec.com


William Colquhoun (FSAIMM) AMEC (Perú) S.A.

Calle Las Begonias 441, Piso 8, San Isidro, Lima, Perú Tel: (1) 221 3130 Fax: (1) 221 3143

I, William Colquhoun, FSAIMM, am employed as a Project Manager and Principal Metallurgist with AMEC (Perú) S.A., a division of AMEC Americas Limited.


I am a member of the Engineering Council of South Africa (Registration 96003) and a fellow of the Southern African Institute of Mining and Metallurgy (SAIMM). I graduated from the University of Strathclyde with a Bachelor of Science degree in Chemical and Process Engineering in 1982.

I have practiced my profession for 26 years. Since 1982, I have continually been involved in mineral processing projects for precious and base metals and industrial minerals in South Africa, Ethiopia, Canada, the United States, Australia, Chile, Perú, Argentina, Ecuador, Brazil, Ukraine, Mongolia, Russia and the Middle East. I have been directly involved in the preparation of feasibility studies relating to gold and silver projects and metallurgical investigations supporting these.


I visited the Casposo Project between 21 to 23 March 2005, 11 to 13 January 2006 and 5 to 7 April 2006.

I am responsible for Sections 4.6, 16; 18.11 to 18.13, and 19 of the Technical Report, and for the sections of the summary, conclusions and recommendations that pertain to economic analysis, metallurgical design and process, and environmental review.


I have been involved with Casposo Project from December 2005 to July 2008 as manager of the Feasibility Study, Feasibility Study Update, metallurgical design and financial analysis.




William Colquhoun FSAIMM

Dated: 1 June, 2009



Ralph Penner, MAusIMM AMEC International (Chile) S.A

Americo Vespucio Sur 100, Oficina 203 Las Condes, Santiago, Chile

Tel: (562) 210-9500 Fax: (562) 210-9510

I, Ralph Penner, MAusIMM, am employed as a Manager Technical Services – Mining with AMEC International (Chile) S.A.


I am a member of the Australasian Institute of Mining and Metallurgy (AusIMM). I graduated from Queen’s University with an Honours Bachelor of Science Degree in Mining Engineering in 1991.

I have practiced my profession for 16 years. I have been directly involved in underground and surface mine operations, and consulting in North and South America.


I visited the Casposo Project on 23 June, 2008.

I am responsible for Sections 17.1.6, 17.2.1 and 17.2.3, 18.1, 18.3, 18.4 and 18.6 to 18.10 of the Technical Report, and for those sections of the summary, conclusions and recommendations that pertain to open pit mineral reserves.


I have been involved with Casposo Project from April to July 2008 as the engineer responsible for open pit mineral reserves and open pit mine planning as part of the 2008 feasibility study update.


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. “Signed”

Ralph Penner, MAusIMM

Dated: 1 June, 2009

AMEC International (Chile) S.A Av. Américo Vespucio Sur 100, Piso 2 Las Condes, Santiago, Chile Tel +56 2 210 9500 Fax +56 2 210 9510 www.amec.com



Geoffrey Challiner MIMMM 8 Buckingham Close, Congleton, Cheshire.

United Kingdom. CW12 2GE Tel: +44 1260 290226

I, Geoffrey Challiner, am an independent mining engineer and Associate Technical Specialist for AMEC Americas Limited.


I am a member of The Institute of Materials, Minerals and Mining, (IMMM) United Kingdom. I graduated in Mining at the Royal School of Mines, Imperial College, London in 1975.

I have practiced my profession for 28 years. I have been directly involved in underground mine

management, planning and evaluation.


I have not visited the Casposo property.

I am responsible for Sections 17.2.2, 17.2.3, 18.2, and 18.5 of the Technical Report, and for the portion of the summary, conclusions and recommendations sections that pertain to underground mineral reserves.


I have previously been involved with the Casposo property during 2008, when I reviewed the underground mining portion of AMEC’s Feasibility Study Update.



“Signed”

Geoffrey Challiner MIMMM

Dated: 1 June, 2009

IMPORTANT NOTICE

This report was prepared as a National Instrument 43-101 Technical Report for Troy Resources NL (Troy) by AMEC International (Chile) S.A. (AMEC). The quality of information, conclusions, and estimates contained herein is consistent with the level of effort involved in AMEC’s services, 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 Troy subject to the terms and conditions of its contract with AMEC. This contract permits Troy 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.

Project No.: 3101 TOC i June 2009

NI 43-101 Technical ReportTroy Resources NL

Casposo Project, Argentina

C O N T E N T S

1.0 SUMMARY ................................................................................................................................... 1-5 1.1 Principal Outcomes ......................................................................................................... 1-5 1.2 Location and Access ....................................................................................................... 1-5 1.3 Tenure and Surface Rights.............................................................................................. 1-5 1.4 Geology and Mineralization............................................................................................. 1-5 1.5 Exploration and Development ......................................................................................... 1-5 1.6 Drilling.............................................................................................................................. 1-5 1.7 Database and Quality Assurance/Quality Control ........................................................... 1-5 1.8 Mineral Resources........................................................................................................... 1-5 1.9 Throughput Studies ......................................................................................................... 1-5 1.10 Mineral Reserves............................................................................................................. 1-5

1.10.1 Open Pit Mineral Reserves ................................................................................ 1-5 1.10.2 Underground Mineral Reserves ......................................................................... 1-5

1.11 Mining Operations ........................................................................................................... 1-5 1.12 Process and Process Plant ............................................................................................. 1-5 1.13 Financial Analysis............................................................................................................ 1-5

1.13.1 Capital Costs ...................................................................................................... 1-5 1.13.2 Operating Costs.................................................................................................. 1-5 1.13.3 Commodity Prices .............................................................................................. 1-5 1.13.4 Base Case Financials......................................................................................... 1-5

1.14 Recommendations........................................................................................................... 1-5 2.0 INTRODUCTION .......................................................................................................................... 2-5

2.1 Qualified Persons ............................................................................................................ 2-5 2.2 Site Visits ......................................................................................................................... 2-5 2.3 Effective Dates ................................................................................................................ 2-5 2.4 Previous Technical Reports............................................................................................. 2-5 2.5 Technical Report Sections and Required Items under NI 43-101................................... 2-5

3.0 RELIANCE ON OTHER EXPERTS.............................................................................................. 3-5 3.1 Mineral Tenure ................................................................................................................ 3-5 3.2 Surface Rights, Access and Permitting ........................................................................... 3-5 3.3 Environmental and Socio-Economic ............................................................................... 3-5 3.4 Financial Data.................................................................................................................. 3-5

4.0 PROPERTY DESCRIPTION AND LOCATION............................................................................ 4-5 4.1 Location ........................................................................................................................... 4-5 4.2 Tenure History, Agreements and Royalties..................................................................... 4-5 4.3 Property and Title in Argentina........................................................................................ 4-5

4.3.1 Mineral Title Administration ................................................................................ 4-5 4.3.2 Mineral Title Types ............................................................................................. 4-5 4.3.3 Surface Rights .................................................................................................... 4-5 4.3.4 Environmental Regulations ................................................................................ 4-5

4.4 Tenure Details ................................................................................................................. 4-5 4.5 Surface Rights ................................................................................................................. 4-5 4.6 Environmental.................................................................................................................. 4-5

4.6.1 Background ........................................................................................................ 4-5

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4.6.2 Environmental Impact Assessment .................................................................... 4-5 4.6.3 Socio-Economics................................................................................................ 4-5 4.6.4 Water Use Permits ............................................................................................. 4-5 4.6.5 Inspections and Reports..................................................................................... 4-5 4.6.6 Protected Natural Areas ..................................................................................... 4-5 4.6.7 Social and Cultural Heritage............................................................................... 4-5 4.6.8 Permits ............................................................................................................... 4-5

4.7 Comments on Section 4 .................................................................................................. 4-5 5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND

PHYSIOGRAPHY......................................................................................................................... 5-5 5.1 Accessibility ..................................................................................................................... 5-5 5.2 Climate............................................................................................................................. 5-5 5.3 Local Resources.............................................................................................................. 5-5 5.4 Infrastructure ................................................................................................................... 5-5

5.4.1 Local Infrastructure............................................................................................. 5-5 5.4.2 Site Infrastructure ............................................................................................... 5-5

5.5 Physiography................................................................................................................... 5-5 5.5.1 Seismicity ........................................................................................................... 5-5

6.0 HISTORY...................................................................................................................................... 6-5 6.1 Battle Mountain Gold ....................................................................................................... 6-5 6.2 Intrepid Mines Limited ..................................................................................................... 6-5

7.0 GEOLOGICAL SETTING ............................................................................................................. 7-5 7.1 Regional Geology ............................................................................................................ 7-5 7.2 Casposo Project Geology................................................................................................ 7-5 7.3 Deposit Geology .............................................................................................................. 7-5

7.3.1 Kamila Deposit ................................................................................................... 7-5 7.3.2 Mercado Deposit ................................................................................................ 7-5 7.3.3 Kamila SEXT (Kamila Southeast Extension) Target .......................................... 7-5 7.3.4 Inca SE (Inca Southeast Extension) Target ....................................................... 7-5 7.3.5 Panzón Target .................................................................................................... 7-5 7.3.6 Oveja Negra Target ............................................................................................ 7-5 7.3.7 Maya Target ....................................................................................................... 7-5 7.3.8 Cerro Norte Target ............................................................................................. 7-5 7.3.9 Julieta Target...................................................................................................... 7-5

8.0 DEPOSIT TYPES ......................................................................................................................... 8-5 8.1 Deposit Model.................................................................................................................. 8-5

9.0 MINERALIZATION ....................................................................................................................... 9-5 9.1 Mineralogical Studies ...................................................................................................... 9-5

9.1.1 Gangue Mineralogy and Textures ...................................................................... 9-5 9.1.2 Opaque Minerals and Textures .......................................................................... 9-5 9.1.3 Ag- and Au-bearing Alloys.................................................................................. 9-5

9.2 Deposits and Prospects................................................................................................... 9-5 9.2.1 Kamila Deposit ................................................................................................... 9-5 9.2.2 Mercado Deposit ................................................................................................ 9-5 9.2.3 Cerro Norte Target ............................................................................................. 9-5 9.2.4 Julieta Target...................................................................................................... 9-5 9.2.5 Mercado Norte, Panzón, Oveja Negra, Inca SE, and Maya Targets ................. 9-5

Project No.: 3101 TOC iii June 2009



9.3 Comment on Section 9 .................................................................................................... 9-5 10.0 EXPLORATION .......................................................................................................................... 10-5

10.1 Grids and Surveys ......................................................................................................... 10-5 10.2 Geological Mapping....................................................................................................... 10-5 10.3 Geophysics.................................................................................................................... 10-5 10.4 Surface Sampling .......................................................................................................... 10-5 10.5 Trenching....................................................................................................................... 10-5 10.6 Pits................................................................................................................................. 10-5 10.7 Drilling............................................................................................................................ 10-5 10.8 Density........................................................................................................................... 10-5 10.9 Other Studies................................................................................................................. 10-5 10.10 Comment on Section 10................................................................................................ 10-5

11.0 DRILLING ................................................................................................................................... 11-5 11.1 RC Drilling...................................................................................................................... 11-5 11.2 Core Drilling................................................................................................................... 11-5

11.2.1 Battle Mountain Drilling..................................................................................... 11-5 11.2.2 Intrepid Mines Drilling, 2002–2008................................................................... 11-5

11.3 Comment on Drill Programs .......................................................................................... 11-5 12.0 SAMPLING METHOD AND APPROACH .................................................................................. 12-5

12.1 Surface Sampling Procedures....................................................................................... 12-5 12.2 Trench Sampling Procedures........................................................................................ 12-5 12.3 Pit Sampling Procedures ............................................................................................... 12-5 12.4 RC Sampling Procedures.............................................................................................. 12-5 12.5 Core Sampling Procedures ........................................................................................... 12-5 12.6 Comment on Section 12................................................................................................ 12-5

13.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY ........................................................ 13-5 13.1 Sample Preparation....................................................................................................... 13-5 13.2 Analyses ........................................................................................................................ 13-5 13.3 Database ....................................................................................................................... 13-5 13.4 Bulk Density Measurements.......................................................................................... 13-5 13.5 Quality Assurance and Quality Control (QA/QC) .......................................................... 13-5

13.5.1 BMG QA/QC Program...................................................................................... 13-5 13.5.2 Intrepid QA/QC Program .................................................................................. 13-5

13.6 Sample Security ............................................................................................................ 13-5 13.7 Comment on Section 13................................................................................................ 13-5

14.0 DATA VERIFICATION................................................................................................................ 14-5 14.1 Database Reviews......................................................................................................... 14-5

14.1.1 AMEC March 2007 Review .............................................................................. 14-5 14.1.2 AMEC September 2007 Review....................................................................... 14-5 14.1.3 AMEC 2008–2009 Review ............................................................................... 14-5

14.2 QA/QC ........................................................................................................................... 14-5 14.2.1 AMEC March 2007 Review .............................................................................. 14-5 14.2.2 AMEC September 2007 Review....................................................................... 14-5 14.2.3 AMEC June 2008 Review ................................................................................ 14-5 14.2.4 AMEC Independent Sampling .......................................................................... 14-5 14.2.5 AMEC February 2009 Review.......................................................................... 14-5 14.2.6 Other Samples.................................................................................................. 14-5

Project No.: 3101 TOC iv June 2009



14.3 Comment on Section 14................................................................................................ 14-5 15.0 ADJACENT PROPERTIES ........................................................................................................ 15-5 16.0 MINERAL PROCESSING AND METALLURGICAL TESTING.................................................. 16-5

16.1 Metallurgical Testwork................................................................................................... 16-5 16.1.1 2002–2004........................................................................................................ 16-5 16.1.2 2005.................................................................................................................. 16-5 16.1.3 2006.................................................................................................................. 16-5 16.1.4 2007.................................................................................................................. 16-5 16.1.5 Conclusions ...................................................................................................... 16-5

16.2 Metallurgical Recoveries ............................................................................................... 16-5 16.3 Proposed Process Flowsheet........................................................................................ 16-5 16.4 Comment on Section 16 ................................................................................................ 16-5

17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES............................................. 17-5 17.1 Mineral Resource Estimation......................................................................................... 17-5

17.1.1 Drill Hole Database........................................................................................... 17-5 17.1.2 Construction of Geological Models................................................................... 17-5 17.1.3 Exploratory Data Analysis ................................................................................ 17-5 17.1.4 Composites....................................................................................................... 17-5 17.1.5 Capping ............................................................................................................ 17-5 17.1.6 Variography ...................................................................................................... 17-5 17.1.7 Block Model Setup............................................................................................ 17-5 17.1.8 Grade Estimation Parameters .......................................................................... 17-5 17.1.9 Block Model Validation ..................................................................................... 17-5 17.1.10 Dilution Halos ................................................................................................... 17-5 17.1.11 Mineral Resource Classification ....................................................................... 17-5 17.1.12 Assessment of Reasonable Prospects of Economic Extraction ...................... 17-5 17.1.13 Mineral Resources Cut-off Grades and Equivalency Calculations .................. 17-5 17.1.14 Dilution.............................................................................................................. 17-5 17.1.15 Mineral Resource Statement............................................................................ 17-5 17.1.16 Throughput and Trade-off Studies ................................................................... 17-5

17.2 Mineral Reserves........................................................................................................... 17-5 17.2.1 Open Pit Mineral Reserves .............................................................................. 17-5 17.2.2 Underground Mineral Reserves ....................................................................... 17-5 17.2.3 Mineral Reserves Statement ............................................................................ 17-5

17.3 Comment on Section 17................................................................................................ 17-5 18.0 ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORT ON DEVELOPMENT

PROPERTIES AND PRODUCTION PROPERTIES .................................................................. 18-5 18.1 Planned Mining Operations–Open Pit ........................................................................... 18-5 18.2 Planned Mining Operations–Underground.................................................................... 18-5 18.3 Planned Production Schedule ....................................................................................... 18-5 18.4 Mine Design–Open Pits................................................................................................. 18-5 18.5 Mine Design–Underground............................................................................................ 18-5

18.5.1 Mining Sequence.............................................................................................. 18-5 18.5.2 Ventilation......................................................................................................... 18-5 18.5.3 Ramps, Accesses and Ore Passes.................................................................. 18-5 18.5.4 Hydrology ......................................................................................................... 18-5

18.6 Waste and Tailings Management.................................................................................. 18-5 18.7 Material Handling........................................................................................................... 18-5

Project No.: 3101 TOC v June 2009



18.8 Mine Services ................................................................................................................ 18-5 18.9 Mine Site Infrastructure ................................................................................................. 18-5 18.10 Environmental................................................................................................................ 18-5

18.10.1 Baseline Studies............................................................................................... 18-5 18.10.2 Project Development Environmental Management Plan.................................. 18-5 18.10.3 Environmental Impact Assessment .................................................................. 18-5 18.10.4 Preliminary Closure Plan.................................................................................. 18-5

18.11 Capital Cost Estimates .................................................................................................. 18-5 18.12 Operating Costs............................................................................................................. 18-5 18.13 Financial Evaluation ...................................................................................................... 18-5

18.13.1 Sensitivity Analyses.......................................................................................... 18-5 19.0 OTHER RELEVANT DATA AND INFORMATION ..................................................................... 19-5

19.1 Intrepid Proposed Project Development Plan ............................................................... 19-5 19.2 Troy Project Development Plan..................................................................................... 19-5

20.0 INTERPRETATION AND CONCLUSIONS................................................................................ 20-5 20.1 Land, Tenure and Environmental .................................................................................. 20-5 20.2 Geology and Mineralization........................................................................................... 20-5 20.3 Exploration..................................................................................................................... 20-5 20.4 Drill, Sampling and Analytical Programs ....................................................................... 20-5 20.5 Database ....................................................................................................................... 20-5 20.6 Mineral Resource Estimation......................................................................................... 20-5 20.7 Mineral Reserve Estimation........................................................................................... 20-5 20.8 Proposed Mine and Process Plan ................................................................................. 20-5 20.9 Capital and Operating Costs ......................................................................................... 20-5 20.10 Financial Analysis.......................................................................................................... 20-5

21.0 RECOMMENDATIONS .............................................................................................................. 21-5 22.0 REFERENCES ........................................................................................................................... 22-5 23.0 DATE AND SIGNATURE PAGE ................................................................................................ 23-5

T A B L E S

Table 1-1: Casposo Mineral Resources, Effective Date 21 April 2008, Rodrigo Marinho, CPGeo ........ 1-5 Table 1-2: Casposo Mineral Reserves, Effective Date 14 June 2008, R. Penner, MAusIMM (Open

Pit Portion) and Geoffrey Challiner MIMMM (Underground Portion) ..................................... 1-5 Table 2-1: QPs for the Technical Report................................................................................................. 2-5 Table 2-2: Contents Page Headings in Relation to NI 43-101 Prescribed Items—Contents................. 2-5 Table 4-1: Project Tenure Summary ....................................................................................................... 4-5 Table 4-2: Right-of-Way Summary.......................................................................................................... 4-5 Table 7-1: Project Stratigraphic Column ................................................................................................. 7-5 Table 10-1: Coordinates of BMG Topographic Base Points ................................................................... 10-5 Table 10-2: Trench Summary.................................................................................................................. 10-5 Table 10-3: Pit Summary......................................................................................................................... 10-5 Table 11-1: Drilling By Year .................................................................................................................... 11-5 Table 11-2: Drilling Campaigns by Phase............................................................................................... 11-5 Table 11-3: 2008 Exploration Program, Drill Hole Results to 25 October 2008 ..................................... 11-5

Project No.: 3101 TOC vi June 2009



Table 12-1: Sample Types ...................................................................................................................... 12-5 Table 13-1: Bulk Density Statistics.......................................................................................................... 13-5 Table 13-2: Bulk Density Statistics – Intrepid In-House Measurements................................................. 13-5 Table 14-1: Summary of AMEC´s Re-sampling Programs ..................................................................... 14-5 Table 14-2: 2008 Drilling Campaign - CRM Best Values versus Actual Values ..................................... 14-5 Table 14-3: Summary of CRM Sample Performance.............................................................................. 14-5 Table 16-1: Overall Life-of-Mine Recovery ............................................................................................. 16-5 Table 16-2: Milling Schedule and Head Grades ..................................................................................... 16-5 Table 17-1: Drill Hole Raw Data Statistics .............................................................................................. 17-5 Table 17-2: Grade Caps.......................................................................................................................... 17-5 Table 17-3: Primary Statistics 1 m Capped Composites......................................................................... 17-5 Table 17-4: Block Model Parameters Kamila–Mercado.......................................................................... 17-5 Table 17-5: Ellipsoid Orientations, Kamila .............................................................................................. 17-5 Table 17-6: Ellipsoid Orientations, Mercado ........................................................................................... 17-5 Table 17-7: Estimation Parameters, Halo Dilution ................................................................................. 17-5 Table 17-8: Parameters Used to Constrain Mineral Resources ............................................................. 17-5 Table 17-9: Casposo Mineral Resources, Effective Date 21 April 2008, Rodrigo Marinho, CPGeo. ..... 17-5 Table 17-10: Open-Pit Parameters..................................................................................................... 17-5 Table 17-11: Underground Parameters .............................................................................................. 17-5 Table 17-12: Casposo Mineral Reserves, Effective Date 14 June 2008, R. Penner, MAusIMM

(Open Pit Portion) and Geoffrey Challiner MIMMM (Underground Portion) ........................ 17-5 Table 18-1: Planned Open-Pit Mine Phases........................................................................................... 18-5 Table 18-2: Planned Underground Development Schedule ................................................................... 18-5 Table 18-3: Planned Underground Production Schedule ....................................................................... 18-5 Table 18-4: Consolidated Mill Feed Schedule (Open Pit and Underground).......................................... 18-5 Table 18-5: Planned Open Pit Mining Equipment ................................................................................... 18-5 Table 18-6 Summary of Capital Costs by Work Area (US$ x 1,000) ..................................................... 18-5 Table 18-7: Summary of Capital Costs by Discipline (US$ x 1,000)....................................................... 18-5 Table 18-8: Life-of-Mine Operating Cost, US$ x 1,000........................................................................... 18-5 Table 18-9: Annual Operating Cost, US$ x 1,000................................................................................... 18-5 Table 18-10: Base Case Forward Gold and Silver Prices .................................................................. 18-5 Table 18-11: Base Case Cash Flow Summary .................................................................................. 18-5 Table 18-12: Base Case Economic Indicators ................................................................................... 18-5 Table 19-1: Key Milestones..................................................................................................................... 19-5

F I G U R E S

Figure 2-1: Project Location Plan ............................................................................................................. 2-5 Figure 2-2: Property Location Plan in Relation to Regional Centres........................................................ 2-5 Figure 4-1: Project Tenure Map................................................................................................................ 4-5 Figure 5-1: Property Access ..................................................................................................................... 5-5 Figure 5-2: Planned Site Infrastructure Layout......................................................................................... 5-5 Figure 6-1: Deposit and Prospect Location Plan, 2006............................................................................ 6-5 Figure 7-1: Detailed Geology, Casposo District ....................................................................................... 7-5 Figure 7-2: Location of Exploration Prospects and Targets ..................................................................... 7-5

Project No.: 3101 TOC vii June 2009



Figure 7-3: Geology Plan, Kamila, Kamila SEXT (incorporating Inca SE)............................................... 7-5 Figure 7-4: Typical Section, Kamila Deposit ............................................................................................ 7-5 Figure 7-5: Geological Plan, Mercado Deposit......................................................................................... 7-5 Figure 7-6: Typical Section, Mercado Deposit ......................................................................................... 7-5 Figure 7-7: Drill Hole Section CA-06-152, Kamila SEXT ......................................................................... 7-5 Figure 7-8: Geological Plan, Panzón Target ............................................................................................ 7-5 Figure 7-9: Geological Plan, Oveja Negra Prospect ................................................................................ 7-5 Figure 7-10: Geological Plan, Maya Zone.................................................................................................. 7-5 Figure 7-11: Geological Plan, Cerro Norte ................................................................................................. 7-5 Figure 7-12: Geological Plan, Julieta ......................................................................................................... 7-5 Figure 8-1: Schematic Deposit Model, Epithermal-style Deposits ........................................................... 8-5 Figure 9-1: Longitudinal Section Showing Au Grades, Inca Vein ............................................................ 9-5 Figure 9-2: Grade Thickness Contours, Kamila, Mercado and Kamila SEXT ......................................... 9-5 Figure 11-1: Drill Hole Location Plan, Kamila (includes Kamila SEXT and Inca SE)............................... 11-5 Figure 11-2: Drill Hole Location Plan, Mercado........................................................................................ 11-5 Figure 11-3: Drill Hole Location Plan, Julieta ........................................................................................... 11-5 Figure 16-1: Proposed Plant Layout......................................................................................................... 16-5 Figure 16-2: Proposed Process Flowsheet .............................................................................................. 16-5 Figure 17-1: Geological Solids, Kamila .................................................................................................... 17-5 Figure 17-2: External Vein Dilution........................................................................................................... 17-5 Figure 17-3: Open Pit Limits With and Without Underground Mining Option........................................... 17-5 Figure 17-4: 3-D View of Open Pits with and without Underground Mining Options ............................... 17-5 Figure 17-5: Cross Section 6548440N through Block Model Showing Differences Between Mineral

Resource Cut-Off Elevations for Underground/Open Pit Options and the Cut-Off Elevations used for Mineral Reserves. ................................................................................ 17-5

Figure 18-1: Ultimate Pit Design............................................................................................................... 18-5 Figure 18-2: Typical Underground Stope Schematic Profile .................................................................... 18-5 Figure 18-3: Schematic of the Underground Mining Activities ................................................................. 18-5 Figure 18-4: Mine Schematic Showing Proposed Open Pit and Underground Layout ............................ 18-5 Figure 18-5: Proposed Infrastructure Layout............................................................................................ 18-5 Figure 18-6: Sensitivity of IRR.................................................................................................................. 18-5 Figure 18-7: Sensitivity of Cumulative NCF ............................................................................................. 18-5 Figure 18-8: Sensitivity of NPV (8% Discount Rate) ................................................................................ 18-5 Figure 18-9: Sensitivity of Payback Period............................................................................................... 18-5

Project No.: 3101 Page 1-1 June 2009



1.0 SUMMARY

Troy Resources NL (Troy) commissioned AMEC International (Chile) S.A. (AMEC) to prepare a Technical Report on its wholly-owned Casposo gold–silver project in Argentina that incorporates information from an update (the 2008 Feasibility Study Update) to the 2007 feasibility study (2007 Feasibility Study) on the project, and drilling completed during 2008.

Troy acquired 100% interest in the Project from Intrepid Mines Limited (Intrepid) on 6 May 2009.

1.1 Principal Outcomes

• Probable open pit and underground Mineral Reserves totalling 1.73 Mt grading 5.16 g/t Au and 120.1 g/t Ag using a cut-off grade of 1.56 g/t gold equivalent for open pit, and 3.5 g/t gold equivalent for underground, and commodity prices of US$690/oz for gold, US$11.80 for silver, and processing recoveries of 93.7% for gold, and 80.6% for silver.

• Indicated open pit and underground Mineral Resources totalling 2.1 Mt grading 5.07 g/t Au and 136 g/t Ag, using a cut-off grade of 1.41 g/t gold equivalent for open pit, and 3.5 g/t gold equivalent for underground, and commodity prices of US$760/oz for gold, US$13 for silver, and processing recoveries of 93.7% for gold, and 80.6% for silver.

• Inferred open pit and underground Mineral Resources totalling 24.6 Mt grading 4.47 g/t Au and 193 g/t Ag using a cut-off grade of 1.41 g/t gold equivalent for open pit, and 3.5 g/t gold equivalent for underground, and commodity prices of US$760/oz for gold, US$13 for silver, and processing recoveries of 93.7% for gold, and 80.6% for silver.

• Step-out drilling performed by Intrepid during 2008 identified additional mineralization that is not included in these estimates. This mineralization represents potential upside for the Project, and should be included when the geological models are next revised and used to support re-estimation of mineral resources and mineral reserves.

• Since acquisition of the Project, Troy has identified potential capital and operating cost savings over the estimates in the 2008 Feasibility Study Update that may include use of a Troy-owned gold plant that is in storage in New South Wales, Australia.




1.2 Location and Access

The Casposo Project is situated about 150 km northwest of the city of San Juan, in the Department of Calingasta, San Juan Province, Argentina. The project can be accessed via a two hour drive west from San Juan, travelling on paved roads. The region can also be accessed from the city of Mendoza via a separate southern route. There is no rail or air access to the Project. The closest airport is in San Juan.

1.3 Tenure and Surface Rights

The Casposo Project covers an area of 100.21 km2, and comprises two Mining Leases, four exploration Cateos (Exploration Concessions) and one Manifestación de Descubrimiento (application stage for a Mining Lease), which covers a minor gap identified in the current mineral tenure.

Intrepid conducted a complete study of current surface ownership related to the Mining Leases and Cateos, which comprise the Casposo Project in 2003–2004. Surface rights in Argentina are not associated with title to either a mining lease or a claim and must be negotiated with the landowner(s). In 2004, Intrepid negotiated with a group of property holders who held non-subdivided (condominium) interests for the surface rights over the Project area. As at December 31, 2004 Intrepid had secured 92% of the condominium rights to the property. There has been no change in the percentage of condominium rights held since that date. Troy holds sufficient surface rights to allow the planned mine development to go ahead.

An Environmental Impact Assessment (EIA) was completed by Knight Piésold (KP) who developed and supervised the 2007 Feasibility Study baseline monitoring program. This was submitted for statutory authority approval by Intrepid in June, 2007. Environmentally, no material impact issues were identified in the EIA baseline studies for the proposed Project development.

On November 26, 2007, the EIA filed by Intrepid was approved by the Mining Secretary of the Province (Resolution 163 SEM). In this resolution among other items, Intrepid undertook a number of obligations, including:

• Contributing to the Provincial Fund for Electrical Infrastructure Development an amount of US$14.5 M.

• Establishing an Infrastructure Trust which will be funded by Intrepid through a percentage of gross sales.

• Establishing a training and capacity building agreement with the Government and the University of San Juan.




• Applying for and obtaining various sectorial permits and authorizations from the Province of San Juan.

AMEC has reviewed the list of other obligations contained in Resolution Nº 163 SEM and believes that adequate provisions are included in the updated capital and operating costs to reasonably meet these obligations.

1.4 Geology and Mineralization

The Casposo gold–silver mineralization occurs in both rhyolite and underlying andesite of the Permian–Triassic Choiyoi Group, where it is associated with banded quartz–chalcedony veins, typical of low-sulphidation epithermal environments. Adularia in the main veins gives an age date of 280± 0.8Ma (K/Ar), very close to the published age dates for the andesite unit.

Mineralization at Casposo occurs along a 10 km long west–northwest–east–southeast (N60ºW) regional structural corridor, with the main Kamila vein system forming a sigmoidal set 500 m long near the centre. The Mercado vein system is the northwesterly continuation of Kamila, separated by an east–west fault from the Kamila deposit. A series of east–west veins (Cerro Norte and Oveja Negra systems) appear to splay off these major sets to the east and northeast. Together with the mineralization southeast of Kamila (Kamila SEXT) and the Julieta veins (5 km to the west–northwest of Kamila), the Casposo vein district identified to date covers an area of about 100 km2.

1.5 Exploration and Development

From 1993 to 1999 Battle Mountain Gold (BMG) conducted regional exploration programs in the San Juan Province, identifying the Casposo mineralization in 1998. Work completed included surface sampling and geological mapping, trenching and pitting, an airborne magnetic and resistivity survey, and diamond drilling.

Intrepid commenced exploration during 2002. Since that date, regional reconnaissance studies, detailed trench sampling of the vein systems, logging and bulk sampling for metallurgical studies, gradient-array induced polarization (IP) and pole dipole IP surveys, and channel sampling and mapping have been completed.

A feasibility study, commissioned in 2005, was competed in March, 2007.




1.6 Drilling

Drilling to 25 October 2008 on the Project comprised 288 core holes (47,085 m) and 12 RC holes (2,185 m) for a combined RC and core drilled total of 300 holes for 49,270 m. A total of 46 of these holes (8,626 m) were drilled by BMG, and 254 holes (40,644 m), including the RC drilling, by Intrepid. Not all drill holes were used to support the mineral resource estimate.

In May 2008, Intrepid commenced a step-out program to identify additional mineralization in the Kamila area. This program is included above in the drilling total for the Project.

All drill holes that support mineral resource estimation have been geologically logged, initially using paper logs, but later using tablet-based software. Logging included lithology, mineralogy, geotechnical, hydrological and metallurgical parameters, and recovery percentages. Drill collars are picked up by a contract surveyor. Down hole surveys are typically taken by the drilling contractor.

BMG used ALS Geolab in Mendoza as the primary laboratory. Intrepid used ALS Chemex (in La Serena, Chile) as primary laboratory for most of the sampling programs, and Alex Stewart (in Mendoza, Argentina) as the secondary laboratory. Starting from drill hole 148 (February 2005), Intrepid switched to Alex Stewart (in Mendoza) as the primary laboratory.

The diamond core sample interval was usually 1 m to 2 m for BMG, and 0.5 m to 2 m for Intrepid (maximum 1.5 m in mineralized zones). The BMG samples were assayed for Au, Ag, Pb, Zn, Mo, Cu, As, Sb and occasionally for Hg. Intrepid samples have typically been assayed for Au, Ag, with a number of samples also analysed for a multi-element suite.

Bulk density was measured by ALS Chemex using the water displacement method. The 94 samples returned bulk densities for the quartz veins ranging within a relatively narrow dispersion interval, from 2.28 t/m3 to 2.72 t/m3. Similar trends were observed for andesites and rhyolites.

In addition, Intrepid carried out 183 direct bulk density measurements on core samples on site using the water displacement method. Bulk density values for veins range within a wide interval from 1.86 t/m3 to 2.96 t/m3. These measurements by Intrepid were not used in the mineral resource estimation.




1.7 Database and Quality Assurance/Quality Control

Data for the Project are stored in an Access® database, which is maintained on site. Geological and survey data are manually uploaded; assay data is uploaded as digital files supplied by the analytical laboratory.

BMG only had a very limited QA/QC program in place during their drill program, consisting of the insertion of 16 standards over the duration of the sampling campaign.

The QA/QC program implemented by Intrepid for the Casposo Project from 2003 to 2008 included the insertion of control samples to monitor assay accuracy (standards) and contamination (coarse blanks).

AMEC reviewed the QA/QC data for the BMG and Intrepid drilling phases, to Intrepid drill Phase VIII, and found the data suitable for use in mineral resource estimation. QA/QC data for the remaining sample types, trenches and pits, used in the resource estimation were not reviewed. Thus, AMEC has not commented on the precision and accuracy of that portion of the database or its suitability for use in mineral resource estimation.

1.8 Mineral Resources

Mineral resources were estimated using a database that was closed for estimation purposes in September 2007. Drilling completed during 2008 was not included in the mineral resource estimate.

The geological interpretation was completed by Intrepid based on lithological, mineralogical and alteration features logged in drill core, trenches and pits.

Intrepid defined five domain zones to represent the different vein systems at Kamila and Mercado. Domains were defined based on lithology, structure and grade boundaries. At the Kamila zone, domains are referred to as Aztec vein, B vein, Inca vein and High Grade (HG). The HG domain was determined using drill hole intercepts that are above 10.00 g/t Au equivalent within the other domains to separate the high-grade population from the lower grades. At Mercado only one domain is defined.

Intrepid used only one set of east–west oriented, 25 m spaced, vertical sections to interpret and model Aztec, B and Inca veins. High-grade capping was applied to gold and silver grades for all domains. Gold and silver grades are estimated using an inverse distance cubed (ID3) methodology. The block model used blocks of 4 m x 4 m x 6 m dimensions.




The Intrepid Kamila Zone Mineral Resource model was developed using industry-accepted geostatistical methods. AMEC validated the model estimates and found them to reasonably estimate grade and tonnage.

The open pit portion of the mineral resource estimate is summarized at a 1.41 g/t gold equivalent (AuEq) cut-off value. The cut-off value is calculated by reference to the gold price, operating costs and recovery values. Mineral resources are confined within Lerchs-Grossmann (L-G) pit shells for mineralization that can be exploited using open pit methods.

The underground portion of the mineral resource estimate is summarized at a 3.5 g/t AuEq cut-off value, calculated by reference to the gold price, operating and sales costs, and recovery values. Mineral resources are constrained within diluted stope boundaries for mineralization that is planned to be exploited using underground methods.

The mineralization at Casposo was classified into Indicated, and Inferred Mineral Resources, using logic consistent with the CIM Definition Standards referred to in NI 43 101. The effective date of the Mineral Resources is 21 April, 2008, and the Qualified Person (QP) for the mineral resources is Rodrigo Marinho, CPGeo. The Project mineral resource statement is included as Table 1-1.




Table 1-1: Casposo Mineral Resources, Effective Date 21 April 2008, Rodrigo Marinho, CPGeo

Deposit/Zone

Parameters Used To Confine Mineral

Resource

Cut-off AuEq (g/t)

Mineral Resource

Classification

Tonnes (t x

1,000)

Au (g/t)

Ag (g/t)

AuEq (g/t)

Au (oz x 1,000)

Ag (oz x

1,000)

AuEq (oz x

1,000)

Kamila Open Pit 1.41 Indicated 1,720.9 5.54 134 7.26 306.4 7,426.8 401.8 1.41 Inferred 14.6 5.80 144 7.66 2.7 67.8 3.6 Kamila SE Open Pit 1.41 Indicated 76.5 5.56 80 6.59 13.7 197.4 16.2 1.41 Inferred 1.2 3.23 55 3.93 0.1 2.1 0.1 Mercado Open Pit 1.41 Indicated 85.0 2.17 84 3.25 5.9 229.9 8.9 1.41 Inferred - - - - - - - Total Open Pit

Open Pit 1.41 Indicated 1,882.4 5.39 130 7.05 326.0 7,854.1 426.9

1.41 Inferred 15.8 5.61 137 7.38 2.8 69.9 3.7

Total Underground

Underground Confined within 3.5 g/t AuEq grade shell

Indicated 193.8 1.97 196 4.49 12.2 1,223.2 28.0

Confined within 3.5 g/t AuEq grade shell

Inferred 8.8 2.43 294 6.21 0.7 83.0 1.7

Notes: 1. Mineral Resources are estimated using a US$760/oz gold price and US$13/oz silver price. An economic

function that includes operating costs, metallurgical recoveries and royalty costs has been applied. 2. The combined underground and open pit Mineral Resources are inclusive of the combined underground and

open pit Mineral Reserves. After completion of the resource estimation the planned base of the open pit was raised, reducing the open pit Mineral Resources and increasing the underground Mineral Resources considered for Mineral Reserve estimation

3. Rounding as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content.

4. Tonnage and grade measurements are in metric units. Gold ounces are reported as troy ounces.

1.9 Throughput Studies

At the conclusion of the mineral resource estimation stage, AMEC undertook a mining throughput and trade-off study, which evaluated various combinations of open pit and underground mining, including mining operation without using underground mining methods, different underground mining methods, and various changes of elevation of the open pit floor. As a result of the study, it was determined that the optimum mining parameters were to utilize a combination of open pit and underground mining methods as proposed in the 2007 Feasibility Study because:

• The waste dump will be the same size and design as included in the 2007 Feasibility Study, reducing exposure to any potential environmental risk that could be associated with increases in dump size.




• Additional increment of the open-pit only scenario has a high stripping ratio (19:1).

• Underground development will give a platform for additional exploration and development possibilities for new discoveries.

• The open-pit only scenario requires a 45% higher peak open-pit mine capacity.

• The subsequent optimization, based on the optimal throughput rate, used the same block model as did the mineral resources, but modified the elevation at which planned open pit mining was to be completed and underground mining commenced. This resulted in some mineralization that had been classified as open pit mineral resources being considered as more optimally mined by underground methods, such that:

• Underground mineral resources have lesser tonnages, gold, and silver grades and therefore contained metal values than the underground mineral reserves, because the mineral reserves incorporate mineralization considered during mineral resource estimation to be extracted by open pit methods

• Open pit mineral resources have higher tonnages, gold, and silver grades and therefore contained metal values than the open pit mineral reserves, because higher-grade portions of the open pit mineral resources are planned to be extracted by underground methods.

1.10 Mineral Reserves

Mineral reserves were defined for the project at an effective date of 14 June, 2008, based on separate underground and open pit operations (Table 1-2). Mineral reserves take into account geological, mining, processing and economic constraints, and have been confined within appropriate L–G pit shells for the open pit portion and within stope boundaries for the underground portion, and thus are classified in accordance with the 2005 CIM Definition Standards for Mineral Resources and Mineral Reserves. The QP for the open pit mineral reserves is Ralph Penner, MAusIMM, whereas the QP for the underground mineral reserves is Geoffrey Challiner, MIMMM.




Table 1-2: Casposo Mineral Reserves, Effective Date 14 June 2008, R. Penner, MAusIMM (Open Pit Portion) and Geoffrey Challiner MIMMM (Underground Portion)

Probable Mineral Reserves Contained Metal (oz) Mining Area Tonnes

(t x 1,000)

Au (g/t) Ag (g/t) AuEq (g/t)

Au (oz x

1,000)

Ag (oz x

1,000)

AuEq (oz x

1,000) Open Pits Kamila Open-Pit 1,297 5.72 98 7.12 238.7 4,103.4 297.0 Mercado Open-Pit 102 1.79 66 2.73 5.9 216.9 8.9 Total Open Pits 1,399 5.44 96 6.80 244.6 4,320.3 305.9 Underground Kamila Underground 335 3.99 221 7.11 43.0 2,375.2 76.6 Total Open Pit and Underground 1,734 5.16 120 6.86 287.6 6,695.5 382.5

Notes: 1. All Mineral Reserves are in the Probable category. 2. Mineral Reserves are estimated using a US$690/oz gold price and US$11.80/oz silver price and an economic

function that includes operating costs, metallurgical recoveries and royalty costs. 3. Mine optimization was based on the optimal throughput rate and used the same block model as used for

estimation of the Mineral Resources, but raised the elevation at which planned open pit mining was to be completed and underground mining commence compared to the elevation which had been used to separate the open pit and underground Mineral Resources. This resulted in some mineralization that had been classified as open pit Mineral Resources being considered as more optimally mined by underground methods.



1.10.1 Open Pit Mineral Reserves

The Probable Mineral Reserves for the open pit were estimated separately for the proposed Kamila Main, Kamila SE and Mercado open pits. Mineral Reserves incorporate considerations for gold and silver prices (US$690 and US$11.80 respectively), recovery, mining, processing and general and administrative costs (G&A), and dilution. The overall open pit Probable Mineral Reserves are estimated to be 1.74 Mt at a grade of 5.44 g/t Au and 96 g/t Ag, using a AuEq cut-off grade of 1.56 g/t AuEq for open pit mineral reserves, and 3.5 g/t AuEq for underground mineral reserves. Open pit Mineral Reserves are shown in Table 1-2.

1.10.2 Underground Mineral Reserves

The Probable Mineral Reserves were estimated separately for the proposed Kamila underground mine. Underground mineral reserves incorporate considerations for gold and silver prices (US$690 and US$11.80 respectively), recovery, underground mining, processing and G&A costs, and dilution. The AuEq equation is also calculated separately for the underground mineral reserves. The overall underground Probable Mineral Reserves are estimated to be 0.3 Mt at a grade of 3.99 g/t Au and 221 g/t Ag,




using an AuEq cut-off grade of 3.5 g/t AuEq. Underground Probable Mineral Reserves are included in Table 1-2.

1.11 Mining Operations

The principal mineralized structures are contained in the Kamila zone, consisting of the Aztec, Inca and B veins, plus the adjacent lower grade Mercado zone. The Kamila deposit will be mined first with the top part being mined by open-pit and the deeper portion by underground. The Kamila open-pit consists of a large pit (Kamila Main pit) and a small satellite pit located 100 m to the southeast (Kamila SE pit), with a separate open pit developed at Mercado. The underground mine will be accessed by a decline and exploited using a stope benching with backfilling mining method with a bottom-up mining sequence.

The production rate for the mine will be 365,000 t/a (1,000 t/d) with all production for the first three years coming from the Kamila open pits and underground ore production starting towards the end of year 4. The Mercado open-pit will be mined in year 4 due to its lower grade and since it is located further away from the processing plant than the Kamila deposit. In Years 5 and 6 the milling production will reduce to 500 t/d and match underground output. Mining will be undertaken using a contractor.

The Casposo Mine Project will generate an estimated 6.1 Mt of waste rock and approximately 1.8 Mt of tailings over its planned six-year operating life. About 2 Mt of the mine waste rock is currently planned for use in road construction, in-pit disposal and underground backfill. The waste rock dump is designed for 8 Mt. The waste rock dump will be located just southeast of the Kamila Open Pit, and will be developed in a conventional manner, with haul trucks transporting and end-dumping the waste rock and dozers spreading and configuring the material on the working platform.

The Project will require the development of infrastructure to operate such as haul and access roads around the site facilities, the open pit and underground mines, a process plant, a waste rock dump, a tailings dump facility, administration and services (including water and power supply and communications). The current gravel access road to the site will be maintained, and upgraded as required for mine transport.

Environmentally, no material impact concerns have been identified in the baseline studies and subsequent Environmental Impact Assessment for the proposed Project development.




1.12 Process and Process Plant

Metallurgical testwork completed on the project to date includes:

• Bench-scale testing: Bond Work Index determination, gravity concentration and cyanidation bottle rolls, abrasion index.

• Mineralogical investigations: electron microprobe analysis, scanning electron microscope investigations.

• Leach program: two relatively coarse P80 grinds of 180 μm and 105 μm, and a finer grind of 200 mesh (74 μm) tested.

• Sodium cyanide and lime consumption.

• Flotation metallurgical studies.

• Thickening, filtration and pulp rheology investigations.

• Humidity cell testing.

The process flowsheet selected to process Casposo ore will use conventional primary jaw and secondary cone crushing, ball milling, gravity concentration for coarse gold and silver, cyanide leach, counter current decantation and washing and dewatering of tails by belt filtration. Gold and silver will be recovered by standard Merrill Crowe zinc precipitation and smelted to produce doré bars. The leached tailings, following filtration to recover precious metals, will be washed and rinsed on the same belt filter to remove cyanide. The cyanide wash solution will be collected for the destruction of cyanide using the conventional SO2/air process. The detoxified solution is recycled to the belt filter as wash solution.

This will minimize the fresh water requirements for the process. Filtered tailings will be trucked to a lined tailings management facility and stacked in compacted lifts.

The crushing plant and mill are designed to operate 365 days a year on two and three shifts (of eight hours) per day respectively, and process 365,000 t/a of ore. The nominal mill flowsheet throughput of 46.3 t/h of ore is based on processing 1,000 t/d and an assumed plant availability of 90%. For the average life of mine head grades, the overall gold and silver recoveries are projected to be 93.7% and 80.6% respectively.

1.13 Financial Analysis

The results of the economic analysis represent forward-looking information as defined under Canadian securities law. The results depend on inputs that are subject to a




number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those presented here. Factors that could cause such differences include, but are not limited to: changes in commodity prices, costs and supply of materials relevant to the mining industry, the actual extent of the mineral resources compared to those that were estimated, actual mining and metallurgical recoveries that may be achieved, technological change in the mining, processing and waste disposal, changes in government and changes in regulations affecting the ability to permit and operate a mining operation. Forward-looking information in this analysis includes statements regarding future mining and mineral processing plans, rates and amounts of metal production, tax and royalty terms, refinery terms, the ability to finance the project, and metal price forecasts.

1.13.1 Capital Costs

AMEC has estimated the capital cost to build the facilities described in the Feasibility Study Update to first gold pour to be US$86.0 M including working capital and 11% contingency. This is considered to be within an accuracy of ± 15 % with an 85% confidence level. Not included in this figure are estimated sustaining costs of US$12.8 M, or a contribution obligation of US$14.5 M towards the development of electrical facilities to supply power to the project. These are included directly in the project cash flow. About 90% of sustaining capital is applied to develop the underground mine.

Direct Capital Costs

The total estimated project direct capital cost in the Feasibility Study Update is US$50.7 M, which is about 55% higher (60% if a temporary and camp construction indirect cost redistribution are also considered) than the 2007 Feasibility Study cost of US$32.8 M. This increase is reasonably consistent with average mining industry equipment price escalation and construction areas unit cost index escalation prevailing in Argentina from the 2007 Feasibility Study base date of fourth quarter 2006 until this update.

The direct capital cost is based on the purchase of all new equipment. Critically, the project schedule assumes that a suitable used ball mill will be procured and supplied within twelve months. The current delivery time of new ball mills is greater than 20 months. The second critical path delivery package is currently the Merrill Crowe system (12 months).

Since finalization of the 2008 Feasibility Study Update, which was completed at an effective date when generally high industry cost escalation and long equipment item




delivery lead times were being experienced. Subsequent to this, there has been a change in the economic situation, which at the current effective date of this Report may result in lower new equipment pricing and improved delivery lead times.

Indirect Capital Costs

The total estimated project indirect capital cost is US$19.9 M, whereas the 2007 Feasibility Study cost estimate was US$6.6 M. About US$2.0 M of the cost increase is a result of the temporary and camp construction facility costs now included in indirect costs. Projected EPCM costs have also increased by about US$6.0 M to US$10.2 M. The additional growth in indirect costs can be attributed to general escalation and, in consultation with Intrepid, the incorporation of additional services and consultant contracts, standards and incentives now expected by Intrepid during the construction period.

Owner Costs

The total estimated Owner capital cost is US$7.0 M, an increase from the 2007 Feasibility Study cost of US$1.2 M. About 35% ($2.4 M) of the total is allocated to the Owner management team costs, including travel. The higher Owner costs also generally reflect an earlier build-up in the operations team manpower (6 to 12 months prior to operation) relative to the 2007 Feasibility Study (1 to 3 months) to meet specific training need obligations. Consequently manpower associated expenses (vehicle operation etc.) have also increased.

1.13.2 Operating Costs

Operating costs include all costs required to process 1,000 t/d of ore including normal surface development and extension of principal underground mine ramps and raises. The life of mine total operating costs, including mining, processing, and general and administration, are projected to be US$57.44/t of ore milled, or US$276/oz AuEq.

1.13.3 Commodity Prices

Gold and silver annual forward price curves, rather than fixed prices, were used by AMEC to recommend prices used in the financial analysis. These averaged US$733/oz and US$11.96/oz (on an AuEq weighted basis) respectively over the project life (2010–2015). Note the start date of the mine life is for illustrative purposes only, as the necessary permits, finance, and construction schedules have not been finalized. This approach realizes some near-term higher price advantage that can be reasonably expected for projects, such as Casposo, that can be put into production




within one to two years and have a relatively short mine life. Silver accounts for about 25% of total revenue in the project cash flow.

1.13.4 Base Case Financials

Results of the base case financial analysis indicate that the project has a potential after-tax internal rate of return of 4.6% and an after-tax net present value (NPV) of negative US$9.9 M at a discount rate of 8%. The base case scenario has a projected payback period of approximately 3.8 years. The financial analysis indicates that, generally, the project is more sensitive to changes in gold price than silver price, capital or operating costs, and is slightly more sensitive to capital costs than operating costs.

At the base discount rate of 8% used in this study, the indicated NPV of the project is negative. The financial analysis is based only on current mineral reserves. The project economics could improve if additional resources are discovered and inferred resources are eventually upgraded to higher confidence categories and converted to mineral reserves.

On May 15 2008, Intrepid initiated a drill program focused primarily on the Kamila and Mercado deposits, with limited drilling planned for the Cerro Norte and Julieta prospects. At the effective date of this Report, about 13,000 m of the drilling campaign had been completed. This drilling is not used in the mineral resource or mineral reserve estimations in this Report.

During the Feasibility Study Update the Aztec and Inca zones were expanded. However certain high stripping zones that were previously included in the open-pit were excluded. These may also provide an opportunity to expand mineral reserves in the future if higher metal prices can be used.

Planned Schedule

The project development schedule in the Feasibility Study Update assumed engineering start-up in August 2008. Therefore, the initial basic engineering program required to maintain and meet the project schedule in the update, and improve engineering definition and confidence, and identify potential second-hand equipment opportunities, was expected to be conducted in parallel with the ongoing exploration program.

The Feasibility Study Update was initiated during March 2008 and in order to meet internal key decision dates by Intrepid, was completed within four months. Due to this aggressive schedule, and delays in receiving vendor cost data, during the finalization




of this study some late stage price adjustments were submitted by vendors that have not been incorporated into the updated costing. These required adjustments include, among others, a further 10% increase in the new ball mill price of US$0.3 M and an increase of US$0.3 M for the rental of new generator sets. AMEC does not believe the aggregate incorporation of these will materially affect the study financial results or conclusions.

The main mechanical construction completion of the processing plant ready for the dry runs of ore, from the start of basic engineering, was projected to be about 18 months to the start of 2010, and commissioning was expected during the first two months of 2010. On this basis the overall project completion was scheduled to be 20 months. The production schedule incorporated a three-month ramp up during the first quarter of 2010 to reach maximum production levels by the end of 2010. Production was planned to average 90% of maximum in this period. These dates were for illustrative purposes and will likely be revised.

Power

Permanent power will be supplied by a power line and electrical facilities developed by others. No schedule was fixed for the development of these facilities. Based on an initial assessment of available preliminary designs and the scope for these electrical facilities, AMEC believes the construction should take about 18 months. In consultation with Intrepid, the previous project owner, AMEC assumed that construction of these facilities would only begin about six months after the mine basic engineering has commenced and will be completed by June 2010. This is six months later than required for commissioning and initial operation. For this reason a temporary diesel power plant must be hired for delivery close to commissioning to support the initial six months of the project operation.

Milestones

Among other key milestones, the Feasibility Study Update project schedule was based on the successful procurement of a second hand ball mill, and that Intrepid, the previous project owner, would apply for and obtain various sectorial permits and authorizations from the Province of San Juan to proceed with the development of the Casposo Mine Project.

Since acquisition of the Project on 6 May 2009, Troy has identified potential capital and operating cost savings over the estimates in the 2008 Feasibility Study Update that may include use of a Troy-owned gold plant that is in storage in New South




Wales, Australia. However AMEC has not evaluated this, or the effect on metallurgical recoveries, if any.

1.14 Recommendations

AMEC recommends that Troy undertake the following studies:

• Re-assess the geological interpretations using results of the additional drilling, and structural and geological studies performed during 2008, and update the interpretations, and geological models based on those interpretations. Consideration should be made to the use of geological contact constraints on mineralization in the models, rather than the existing grade-shells as used in the 2007 models.

• Assess the capabilities of the Troy-owned process plant in relation to the assumptions and testwork used to support the 2008 Feasibility Study Update, and assess, if there is significant variation, whether additional metallurgical testwork is required.




2.0 INTRODUCTION

Troy Resources NL (Troy) commissioned AMEC International (Chile) S.A. (AMEC) to prepare a Technical Report on its wholly-owned Casposo gold–silver project (the Project) in the Department of Calingasta, San Juan Province, Argentina (Figure 2-1 and Figure 2-2) that incorporates information from an update (the Feasibility Study Update) to the 2007 feasibility study (2007 Feasibility Study) on the project, and updated mineral resource and mineral reserve estimates.

Troy acquired the Project in May 2009 from Intrepid Mines Limited (Intrepid). The project is operated by Troy’s wholly-owned subsidiary company, Intrepid Minerals Corporation. For the purposes of this report, the Troy parent and subsidiary companies are referred to interchangeably as “Troy”.

The report has been prepared in compliance with National Instrument 43–101, “Standards of Disclosure for Mineral Projects” (NI 43–101) and documents the results of updates (Feasibility Study Update – completed June 2008) to the 2007 feasibility study (the 2007 Feasibility Study) on the Casposo Project completed by AMEC in March 2007. The technical report was initially prepared for Intrepid, and has been readdressed and updated for Troy. The update summarizes the change of Project ownership, and drilling undertaken on the Project to 25 October 2008.

AMEC understands that Troy will use the Report in support of the disclosures on the Casposo Project in a press release to the Toronto Stock Exchange entitled “Troy Completes Acquisition of the Casposo Gold-Silver Deposit From Intrepid Mines Ltd.”, dated 6 May 2009.

The report uses the metric system, and all dollar figures cited are United States dollars. The exchange rate as of the report effective date of 6 May 2008, was Argentinean peso 3.80 to US$1.




Figure 2-1: Project Location Plan

Note: Figure supplied by Intrepid Mines Limited.




Figure 2-2: Property Location Plan in Relation to Regional Centres

Note: Figure supplied by Intrepid Mines Limited.




2.1 Qualified Persons

The Qualified Persons (QPs), as defined in NI 43–101 and in compliance with Form 43–101F1 (the Technical Report), responsible for the preparation of the technical report include:

• Rodrigo Marinho: CPG, AIPG; Principal Geologist, (AMEC, Santiago)

• William Colquhoun: FSAIMM; Principal Metallurgist and Project Manager, Casposo Feasibility Study (AMEC, Lima).

• Ralph Penner: MAusIMM, Manager Technical Services–Mining (AMEC, Santiago)

• Geoffrey Challiner: MIMMM, (AMEC Associate Technical Specialist)

2.2 Site Visits

AMEC QPs conducted site visits to the Casposo Project between 2005 and 2008 as shown in Table 2-1. The QPs are not aware of any material changes to the Project since the site visits.

Table 2-1: QPs for the Technical Report

Qualified Person Site Visits Report Sections of Responsibility (or Shared Responsibility)

Rodrigo Marinho 27–29 May 2008, 20–23 October 2008 Sections 1; 2; 3; 4.1 to 4.5; 5; 6; 7; 8; 9; 10; 11; 12; 13; 14, 15; 17.1; 20; 21; 22, and 23

William Colquhoun 21 to 23 March 2005, 11 to 13 January 2006, and 5 to 7 April 2006 Sections 4.6; 16; 18.11 to 18.13 and 19

Ralph Penner 23 June 2008 Section 17.2.1 and 17.2.3; 18.1; 18.3; 18.4 and 18.6 to 18.10.

Geoffrey Challiner No site visit Section 17.2.2 and 17.2.3; 18.2 and 18.5

2.3 Effective Dates

Several effective dates are appropriate for this report, as shown below:

• Effective Date of the Report – 6 May, 2009 (date of acquisition of the Project by Troy)

• Effective Date of the Mineral Resources – 21 April, 2008

• Effective Date of the Mineral Reserves – 14 June, 2008

• Effective Date of the Capital Cost Estimate and Financial Analysis – 30 June, 2008




2.4 Previous Technical Reports

Troy has not previously submitted a Technical Report on the project.

Previous reports submitted by Intrepid are as follows:

• Colquhoun, W., Marinho, R., Penner R., Challiner G. and Wakefield, T., 2008: NI 43-101 Technical Report, Intrepid Mines Limited Casposo Project, Argentina, prepared for Intrepid Mines Limited, July 11, 2008.

• McGuinty, W., 2008: An Updated Report of Exploration Activities for the Casposo Property, Department of Calingasta, San Juan Province, Argentina, prepared for Intrepid Mines Limited, March 16, 2007.

• Colquhoun, W., Taylor, G., Marinho, R., and Simon, A. 2007: Casposo Project - San Juan, Argentina, Technical Report on Feasibility Study, prepared for Intrepid Mines Limited, March 30, 2007.


• McGuinty, W., and Puritch, E., 2006: An Updated Resource Estimate and Report of Exploration Activities for the Casposo Property, Department of Calingasta, San Juan Province, Argentina, prepared for Intrepid Mines Limited November 9, 2006).

• McGuinty, W., 2006: An Updated Report of Exploration Activities for the Casposo Property Department of Calingasta, San Juan Province, Argentina, prepared for Intrepid Minerals Corporation, February 20, 2006.

2.5 Technical Report Sections and Required Items under NI 43-101

Table 2-2 relates the sections as shown in the contents page of this report to the Prescribed Items Contents Page of Form NI 43-101F1. The main differences are that Item 25 “Additional Requirements for Technical Reports on Development Properties and Production Properties” is incorporated into the main body of the report, following Item 19, “Mineral Resource and Mineral Reserve Estimates”, and that all illustrations (Item 26, “Illustrations”) are included in the body of the report following the text citation of the appropriate illustration.




Table 2-2: Contents Page Headings in Relation to NI 43-101 Prescribed Items—Contents

Form NI 43-101 F1 Item Number

Form NI 43-101 F1 Heading

Report Section Number Report Section Heading

Item 1 Title Page Cover page of report Item 2 Table of Contents Table of contents Item 3 Summary Section 1 Summary Item 4 Introduction Section 2 Introduction Item 5 Reliance on Other Experts Section 3 Reliance on Other Experts Item 6 Property Description and

Location Section 4 Property Description and

Location Item 7 Accessibility, Climate, Local

Resources, Infrastructure and Physiography

Section 5 Accessibility, Climate, Local Resources, Infrastructure and Physiography

Item 8 History Section 6 History Item 9 Geological Setting Section 7 Geological Setting Item 10 Deposit Types Section 8 Deposit Types Item 11 Mineralization Section 9 Mineralization Item 12 Exploration Section 10 Exploration Item 13 Drilling Section 11 Drilling Item 14 Sampling Method and

Approach Section 12 Sampling Method and

Approach Item 15 Sample Preparation,

Analyses and Security Section 13 Sample Preparation,

Analyses and Security Item 16 Data Verification Section 14 Data Verification Item 17 Adjacent Properties Section 15 Adjacent Properties Item 18: Mineral Processing and

Metallurgical Testing Section 16 Mineral Processing and

Metallurgical Testing Item 19 Mineral Resource and

Mineral Reserve Estimates Section 17 Mineral Resource and

Mineral Reserve Estimates Item 20 Other Relevant Data and

Information Section 19 Other Relevant Data and

Information Item 21 Interpretation and

Conclusions Section 20 Interpretation and

Conclusions Item 22 Recommendations Section 21 Recommendations Item 23 References Section 22 References Item 24 Date and Signature Page Section 23 Date and Signature Page Item 25 Additional Requirements for

Technical Reports on Development Properties and Production Properties

Section 18 Additional Requirements for Technical Reports on Development Properties and Production Properties

Item 26 Illustrations Incorporated in report under appropriate section number




3.0 RELIANCE ON OTHER EXPERTS

The QPs, authors of this Technical Report, state that they are qualified persons for those areas as identified in the appropriate QP “Certificate of Qualified Person” attached to this report. The authors have relied, and believe there is a reasonable basis for this reliance, upon the following reports, which provided information regarding mineral rights, surface rights, permitting, taxation and environmental issues in sections of this Technical Report as noted below.

3.1 Mineral Tenure

AMEC QPs have not reviewed the mineral tenure, nor independently verified the legal status or ownership of the Project area, or underlying property agreements and disclaims responsibility for the information provided by legal experts. AMEC has relied upon legal experts retained by Intrepid in Section 4.4 of this Report for this information through the following documents:

• Bosque, Hugo Arturo, 2006: Proyecto Casposo: Legal due diligence summary, Hugo Arturo Bosque to Goodman and Carr LLP, internal report prepared for Intrepid Mines Ltd., 13 November, 2006.

• Certificate of Title Document, 2006: Certificado de Titularidad: certified copy of certificate of title to the Kamila Mina, internal document supplied to Intrepid Mines Ltd by the Corte de Justica, San Juan, 18 April 2006.


• Emails and discussion meetings with Intrepid during the completion of the 2007 Feasibility Study and 2008 Feasibility Study Update.

AMEC has also relied upon Troy experts for information pertaining to an additional tenure application as discussed in Section 4.4 of the Report through the following:

• Echuca, M., 2009: Casposo Mining Rights Chart: word document emailed to AMEC, dated 27 May 2009.

3.2 Surface Rights, Access and Permitting

AMEC QPs have relied on information regarding Surface Rights, Road Access and Permits, including the status of the granting of surface rights by the Argentine




Government for land designated for mining, milling, dumps, and tailings impoundments and have relied on opinions and data supplied by Intrepid representatives for Section 4.5 of this report as follows:

• R y J Lopez Aragon, 2006: Tax Review: Contadores Públicos review of Argentine taxation regime, internal document prepared for Intrepid Minerals Ltd., December 2006.

• Policia Minera, 2008: Corresponde Expediente No 425 214-B-00, Servidumbre de Facilidades Mineras Casposo: document from Policia Minera to Intrepid Mines Ltd, dated 30 June, 2008.


3.3 Environmental and Socio-Economic

AMEC QPs have relied upon, and disclaims responsibility for legal and environmental information regarding the environmental status and mine closure plan for the Properties documented in Sections 4.6 and 18.10 of this report as prepared by opinions of experts retained by Intrepid, through the following documents:

• Knight Piésold, 2007a: Sections 8, 9 and 10, 2007 Casposo Feasibility Study.

• Knight Piésold, 2007b: Proyecto Casposo, Informe de Impacto Ambiental: unpublished report to Intrepid Mines Ltd., May 2007.

• Government of San Juan Province, 2007: Resolución Nº 163 SEM.– San Juan: El expediente Nº 1100-0156-2007, iniciador: Intrepid Minerals Corporation S/Informe de Impacto Ambiental de Explotación del Proyecto Casposo: Resolution regarding the construction of the Casposo Project, 26 November, 2007

• Emails and discussion meetings with Intrepid and Knight Piésold personnel during the completion of the 2007 Feasibility Study and the 2008 Feasibility Study Update.

3.4 Financial Data

AMEC QPs have relied upon information regarding the construction and proposed commercial operation of electrical facilities for the project through the PIEDE Fund, and have relied on opinions and disclaim responsibility for information supplied by other experts for royalties and taxes as described in Section 18.13 of this report as follows:




• R y J Lopez Aragon, 2006: Tax Review: Contadores Públicos: review of Argentine taxation regime, internal document prepared for Intrepid Minerals Ltd., December 2006.

• Barker & McKenzie, 2008: Casposo Project Electrical Facilities Trust: internal document prepared for Intrepid Minerals Ltd.,




4.0 PROPERTY DESCRIPTION AND LOCATION

4.1 Location

The Casposo Project is situated about 150 km northwest of the city of San Juan, in the Department of Calingasta, San Juan Province, Argentina (see Figures 2-1 and 2-2). The Property is at approximate latitude 31º12’ S and longitude 69º36’ W and centred on coordinates 6,548,000 north, 2,438,000 east (Gauss Kruger, Datum Campo Inchauspe 1969 Zone 2).

Mineralization defined to date is hosted in the Kamila and Mercado deposits, together referred to as the Kamila Zone.

4.2 Tenure History, Agreements and Royalties

In 2000, Battle Mountain Gold Corporation (BMG) was issued the Kamila Mina (Mining Lease) #520-0438-M-98. This mining lease covers the former Casposo Cateo1 546094 B 94 (Prospecting License) and the subsequent Manifestación de Descubrimiento (Declaration of Discovery) #520-0438-M-98. The conditions of the Mining Lease are defined under Ministerial Resolution No. 52-DM-2000, a copy of which can be found in the offices of the Gobierno de la Provincia de San Juan, Secretaria de Minería, Mesa de Entradas y Salidas.

The Kamila Mina Lease was subsequently held by Newmont Mining Corporation after the merger of BMG and Newmont on January 10, 2001. Ownership of the Kamila Mining Lease was assigned to Newmont Mining on October 17, 2001 and then by private agreement to a former employee, Mr. Eduardo Antonio Machuca on May 14, 2002.

On 17 May 2002, the Ministry registered the transfer of ownership to Eduardo Antonio Machuca, who at that time held clear and valid title to the Kamila mining lease. However, by 25 November 2002, the Kamila mining lease was registered to three partners: Eduardo Antonio Machuca, Hugo Arturo Bosque and Luis Alfonso Vega.

On 22 May2002 IML signed a “Letter of Intent” with two of the vendors (Eduardo Machuca and Hugo Bosque) owning the Kamila Lease. On 1 July 2002 IML signed a “Rental Agreement with Option to Purchase” (the Agreement) with the three owners of the Kamila Lease, Eduardo Antonio Machuca, Hugo Arturo Bosque and Luis Alfonso Vega for a 100% interest in the “Kamila Mine Property” subject to “Option Payments” totalling US$300,000 over two years (US$50,000 payable on signing) and to a “Reserve Royalty” of US$1/oz of gold equivalent (up to a maximum of US$450,000).




The royalty is based on mineable and recoverable reserves defined by a feasibility study and was to be paid on or before 1 July 2005. The Agreement was then re-structured so that beginning in 2006, annual payments of US$150,000 were scheduled to be paid by Intrepid to the vendors each July, until the royalty total of US$450,000 is paid, or the property attains commercial production. A payment of US$150,000 was made in June 2006; a further US$150,000 was paid in July 2007. Intrepid states that prescribed cash commitments have been met.

On production, a “Production Royalty” of US$6/oz of gold equivalent will be paid to the vendors, net of any advanced royalties. Gold equivalent ounces mined surpassing 450,000 oz will be subject to reduced royalty payments of US$5/oz of gold equivalent.

In addition to the Option and Royalty payments, Intrepid committed to a total of US$600,000 in exploration expenditures over the first two years of the Option period on the property, of which a minimum of US$300,000 would be spent in each year. Intrepid met this first year minimum investment obligation by spending in excess of US$493,000 by 30 June 2003. By 30 June 2004 Intrepid had completed expenditures of US$838,133, exceeding the US$600,000 requirement.

The Agreement is also subject to a 5 km “Area of Influence” surrounding the Kamila mine, so that any new land within this area would be subject to the same terms as those set out in the Agreement. Since 2002, Intrepid Minerals has been applying for contiguous land areas as Cateos to cover prospective ground adjacent to the Kamila Lease.

On 8 February 2006, the three original vendors (Eduardo Machuca Woodbridge, Hugo Arturo Bosque and Luis Alfonso Vega) transferred the title to the Kamila Mine property to Intrepid Minerals Corporation Sucursal.

On 4 July 2006, Intrepid Mines Limited announced the completion of the merger between Intrepid Minerals Corporation and NuStar Mining Corporation Limited. As a result of the merger, Intrepid Minerals Corporation became a wholly-owned subsidiary of Intrepid Mines Limited. Intrepid Minerals Corporation Sucursal remains a branch office of Intrepid Minerals Corporation, and the holder of the Casposo property mineral titles.

During September 2007, Intrepid announced its intention to merge with Emperor Mines Ltd. The merger was completed in March 2008.

On 29 March 2009, Troy announced the acquisition of the Project from Intrepid for the sum of US$20 million on closing and US$2 million on the sixth month anniversary of first production.




4.3 Property and Title in Argentina

4.3.1 Mineral Title Administration

Information in this section is taken from Godoy (2007) and Torres (2004).

The Argentine Mining Code which dates back to 1886 is the legislation which deals with mining in the country. Special regimes exist for hydrocarbons and nuclear minerals. In the case of most minerals, the Mining Code dictates that the owner of the surface is not the owner of the mineral rights; these are held by the State. The State is also bound by the Code to grant to whoever discovers a new mine the rights to obtain a “mining concession”.

Owners must comply with three conditions; payment of an annual fee, investment of a minimum amount of capital, and the carrying out of a reasonable level of exploitation. Failure to do so could lead to forfeiture of the property back to the State.

The administrative organization for mining-specific regulation is the Federal Ministry of Planning, Public Works and Investment which has a Mining Department headed by the Secretary of Mines. The Argentine Mining Law is a federally drafted law implemented through bi-lateral accords with the provinces that have jurisdiction over mineral rights. In recent years several provinces have made changes to the federal law as it applies in their jurisdictions in response to local initiatives. San Juan Province, where the Casposo Project is located has made very few changes to the current federal statute.

In 1993, Argentina implemented a new Mining Investment Law (No 24,196), a Mining Reorganization Law (No. 24,224), a Mining Modernization Law (No 24,498), a Mining Federal Agreement (No. 24 also made to update the Mining Law (Decree 456/97). These amendments offered attractive economic incentives for exploration and mining to foreigners, and include both fi,228), and a Financing and Devolution of IVA Law (No 24,402). Amendments were nancial and tax guarantees. This group of laws also creates the basis for federal-provincial harmonization of mining rules such as import duty exemptions, unrestricted repatriation of capital and profits and a 3% cap on Provincial royalties.

In 2001, Law 25.429 “Update of the Mining Investment Law” was passed and in March 2004 approval was reached for a key provision of the Law allowing refund of the IVA (or value added tax) for exploration related expenses incurred by companies registered under the Mining Investment Law.




In 1995, Law N° 24.585 Environmental Protection (Mining Code) was passed and provides regulation for operations and environmental reporting at the exploration and exploitation levels.

In summary, the major changes to the mining code encompass:

• Exploration areas have been increased to a maximum of 100,000 ha per company and per province.

• Exclusive aerial prospecting areas of 20,000 km2 are also permitted.

• A guarantee of tax stability for 30 years.

• Expenditures made in prospecting, exploring and construction of mining installations are tax deductible and value added taxes are recoverable.

• Imports of capital goods, equipment and raw material are exempt from import duties.

• Royalties will not exceed 3% of the ex-mine value of the extracted mineral.

• Environmental funds to correct damage are required and are deductible from income taxes; a National system of permanent mining environmental monitoring is set up. Implementation at the provincial level has been variable and in 2004-05 the San Juan province began to increase staffing for monitoring purposes.

• Municipal taxes on mining were eliminated.

• Systemization and digital conversion of mining property registers has been implemented to varying degrees of success in each province and the definition by geographic co-ordinates now establishes mining rights.

4.3.2 Mineral Title Types

A Cateo (exploration right) is an area of land staked during the early stage of exploration. In Argentina, this is called the “Prospecting Stage”. Cateos may be contiguous or separate and are subject to certain restrictions on size. A Cateo is sub-divided into 500 ha units with a defined exploration term determined by the cumulative number of units comprised. The maximum possible term is 1,100 days for the maximum lease size of 10,000 ha commencing from the grant date. Prior to its expiry, the holder of a Cateo may apply at any time for conversion to one or more ‘Manifestación de Descubrimiento’ (Application period for a Mining Lease) or ‘Mina’ (Mining Lease) rights within the perimeter of the Cateo up to its full area. Minas and Manifestaciones can also be established as the result of a discovery in open ground. A mining lease is subdivided into a minimum of two pertenencias, which are generally 6 ha for small deposits and 100 ha for larger, disseminated deposits.




To apply for a Manifestación or Mina, the applicant must present a representative sample of the outcrop as the discovery and indicate its co-ordinates and the surrounding area to be covered by the title. After about a 6-month period the Manifestación will be registered and convert to a ‘Mina’ or Mining Lease. Conversions and applications are administratively dependant and not date-dependant and are therefore not automatic. Processing times from one provincial jurisdiction to another may vary.

4.3.3 Surface Rights

Access over surface property rights in Argentina is obtained through the Ministry of Mines, who are required to communicate with the surface owners and ensure that they cooperate with the activities of the exploration/mining companies. Notice can be difficult due to delayed filing of personal property title changes and registry as well as limited staffing and mobility of the relevant authorities.

Private property rights are secure rights in Argentina, and the likelihood of expropriation is considered low. The Argentine legal and constitutional system grants mining properties all the guarantees conferred on property rights, which are absolute, exclusive and perpetual. Mining property may be freely transferred and purchased by foreign companies.

In 2000, a request to establish a camp easement was filed with the San Juan government. This is a standard step in the title process so as to identify the location of operations. The area submitted was preliminary, as economic deposits and infrastructure sites had not been delineated. In late 2004, an amended Mining Camp easement plan was submitted to more correctly identify the area of potential operations at Kamila. The easement was granted 30 June, 2008.

4.3.4 Environmental Regulations

Under Argentine Mining Law, the Provincial Mining Secretary of the San Juan Province manages the provincial environmental approval system for new mining projects. The applicable evaluation process of the Environmental Impact Assessment (EIA) is defined by the Escribanía de Minas (SEM) according to the size of the mining project.

The new Decree of the Provincial Law 1679 SEM, dated October 2006, states that for small and medium mining projects in San Juan Province, the EIA must be presented together with the Feasibility Study. This allows the SEM to determine the size of the deposit in order to set up the members of the Evaluation Commission, as well as the corresponding terms of reference.




The environmental approval process is summarized as follows:

• The applicant completes the Environmental Baseline Studies and EIA and this is presented to the SEM. The SEM will determine within 24 hours if the project is classified as a small-scale (<8,000 t/d) or medium-scale (>8,000 t/d <25,000 t/d) project.

• The Mine Environmental Authority (AAM) will deliver the EIA to the Comisión Evaluadora Multidisciplinaria Ambiental Minera (CEMAM) and the Provincial Mining Consulting Council.

• The CEMAM will consist of several institutions and within no more than five working days, will designate a representative and assistant that will evaluate the EIA. Within 30 working days for small projects, and 45 for medium projects, CEMAM will issue a technical assessment on the acceptance, or rejection of the project’s EIA. After this period the SEM will request the applicant to respond to any comments and/or questions about the Project.

• The CEMAM may request presentations or expositions of the EIA, as well as meetings with the representatives of the applicant and their consultants, inspection visits, or demand opinions to professionals and other organizations.

• The applicant has a 30-day period to submit their replies to CEMAM’s comments and questions.

• The CEMAM will then take a further 30-day period to review the documentation and announce its decision on the approval for the EIA.

• The applicant holds community meetings according to the previous Community Participation Plan.

• The AAM will continue with a consulting process issuing an announcement in the Provincial Bulletin over a three working-day period and allowing anyone interested to have access to the EIA (for five working days for small projects and 10 working days for medium projects).

• Comments or objections should be presented in writing to the Secretary of Mines within three working days for small projects and five working days for medium projects, counted from the day after public consultation’s due date. The EIA will incorporate community inputs.

• Once the EIA is approved, proceedings towards granting of the Environmental License starts. It is estimated that another 30 day period is needed to prepare and grant the Environmental certificate, which is valid for two years.




After obtaining the EIA, the applicant must apply and obtain various permits and authorizations from the Province of San Juan to proceed with Project development. The permits and authorizations demonstrate compliance with current legislation for the construction and operation of mining operations.

4.4 Tenure Details

The Casposo Project covers an area of 100.21 km2, and comprises two Mining Leases, four exploration Cateos (Exploration Concessions) and one Manifestación de Descubrimiento (application stage for a Mining Lease). The current tenure is shown in Figure 4-3 and summarised in Table 4-1.

Although still active, Cateos 313 and 120 have been covered by Mining Lease 414-1348-I-05, named Julieta. Until granted, there are no expiry dates for Cateos. The two granted Cateos have been superseded by this Mining Lease, which is awaiting survey prior to to being granted.

Troy has made application for a very small exploration, Manifestación de Descubrimiento, Alicia 1, which covers a minor gap in the existing tenure.

AMEC considered, based on the expert opinions cited in Section 3.1 of this Report, that the supporting information on mineral tenure held by Intrepid for the Casposo Project was valid, and sufficient to support declaration of mineral resources and mineral reserves.

AMEC has relied upon information supplied by Troy for the change in ownership of the Project, and as a consequence, AMEC believes there is sufficient supporting information on mineral tenure to support declaration of mineral resources and mineral reserves.

4.5 Surface Rights

Intrepid conducted a complete study of current surface ownership related to the Mina and Cateos, which comprise the Casposo Project in 2003–2004. Surface rights in Argentina are not associated with title to either a mining lease or a claim and must be negotiated with the landowner(s).




Figure 4-1: Project Tenure Map

Note: Figure supplied by Troy Resources NL. Geographic north is to the top of the map




Table 4-1: Project Tenure Summary Property Name File Type Name Date of Last

Title Activity Area [Ha] Notes

Casposo 520-0438-M-1998 Mine Lease Kamila February 2, 2009 3487.09 Granted

Casposo 4141348-I-2005 Mine Lease (pending) Julieta March 12, 2007 2600 Final survey

pending

Casposo 11240189-I-2007 Manifestación de Descubrimiento Alicia I May 27, 2009 15.86 Charted

Casposo 425313-C-2002 Exploration Cateo Casposo Norte August 15, 2003 397.8 Published

Casposo 425120-C-2003 Exploration Cateo Casposo Oeste August 02, 2003 2211.27 Charted, publication pending

Casposo 425119-C-2003 Exploration Cateo Casposo Este August 02, 2003 2326.13 Charted, publication pending

Casposo 425315-C-2002 Exploration Cateo Casposo Noreste August 15, 2003 1591.58 Published

In 2004, Intrepid negotiated with a group of property holders who held non-subdivided (condominium) interests for the surface rights over the Project area. As at December 31, 2004 Intrepid had secured 92% of the condominium rights to the property. There has been no change in the percentage of condominium rights held since that date.

The property purchase has been approved by the Border Guard, the agency which reviews foreign ownership along national border areas in Argentina. Troy holds sufficient surface rights to allow the planned mine development to go ahead.

Rights-of-Way

In order to access the northern portion of the Kamila Project, a new access road was constructed via Quebrada La Puerta in 2005, see Table 4-2.

Table 4-2: Right-of-Way Summary

File Name Length [Km] Comment

520-0538-M-98 Road Servitude Kamila 22 Granted

414-1349-V-2005 Road Servitude Julieta 21 Publication pending

A new right-of-way was requested for this road in October 2005 and approval of the application is still pending. The right-of-way request has the following reference: 414.1349-V-05 Dpto. Calingasta - Pampa de la Puerta - DM No. 6 Servidumbre de Camino. The access request is not required to be finalized for project construction.




The surface rights equity and the currently held right-of-way permit secure future access for exploration and development purposes.

Camp Easement

The easement for access to the camp was granted on 30 June, 2008, File Nº 425-214-B-2000, and covers 814.88 ha.

4.6 Environmental

4.6.1 Background

Prior to initiation of exploration work in Argentina, an environmental certificate must be obtained. BMG initiated the filing process for this report in 1999 and made various revisions as they conducted their work programs. In 2001, BMG filed a report and a ministerial inspection took place but final approval was not obtained as Newmont, subsequent to their take-over of BMG, dropped the exploration and mining rights to the property.

Intrepid was allowed to continue the filing process for the Kamila mining lease. In March 2004, an inspection of the Casposo site was undertaken by the Ministry of Mines and in April 2004, final approval was obtained for the environmental study including updates for each work program undertaken by the Company. In 2007, Intrepid received approval for the updated environmental reporting for the Casposo Project.

Intrepid maintained its environmental reporting of exploration programs to the date of the acquisition, and received regular inspections from the San Juan Department of Mines.

Troy will continue to abide by the appropriate regulatory requirements that will include ongoing inspections of the Property by the San Juan Department of Mines.

4.6.2 Environmental Impact Assessment

An Environmental Impact Assessment (EIA) was completed by Knight Piésold (KP) who developed and supervised the original Feasibility Study baseline monitoring program. This was submitted for statutory-authority approval by Intrepid in June, 2007. Environmentally, no material impact issues were identified in the EIA baseline studies for the proposed Project development.




On November 26, 2007, the EIA filed by Intrepid was approved by the Mining Secretary of the Province (Resolution 163 SEM). In this resolution among other items, Intrepid undertook the obligations listed below prior to the start of construction. These items include unknown risks, uncertainties and other factors that are largely outside the control of Intrepid and may cause actual schedule and costs to differ materially from those presented in this Technical Report. The items include:

• Contributing to the Provincial Fund for Electrical Infrastructure Development (PIEDE Fund) a non-refundable amount of US$14.5 M specifically allocated to the construction of electrical facilities that would supply electricity to the Casposo Project. The agreement envisages US$8 M paid as capital during the construction process, and US$6.5 M contributed in staged payments over years two to five of the Casposo operation. The time frame for the construction of these facilities or unit power supply cost has not been established

• Establishing an Infrastructure Trust which will be funded by Intrepid through a percentage of gross sales. The fund will receive 1% of gross sales from the first two years of operations and 1.5% thereafter. Administration of the fund will be jointly managed by Intrepid and the Province of San Juan, and be directed to development of roads, water, health, education, agriculture, tourism and mining activities which will promote sustainable development objectives in the Department of Calingasta. Intrepid’s participation in the administration of this fund will be governed by a Corporate Social Responsibility project being developed with the local community

• Establishing a training and capacity building agreement with the Government and the University of San Juan which will begin the process of preparing a local workforce for a range of activities related to mining operations at Casposo. These programs will be delivered through the by the Mining Institute of San Juan University and the Provincial Secretary of Mines in Troy’s social office in Calingasta

• Applying for and obtaining various sectorial permits and authorizations from the Province of San Juan to proceed with the development of the Casposo Mine Project. The permits and authorizations should demonstrate compliance with current legislation for the construction and operation of the mine.

AMEC has reviewed the list of other obligations contained in Resolution Nº 163 SEM and believes that adequate provisions are included in the updated capital and operating costs to reasonably meet these obligations.




4.6.3 Socio-Economics

During the development and operation of the Casposo Project an increase in labour demand and goods and services is expected, and the expectation this generates could favour migration to the Calingasta area. It is estimated that about 60 to 80 unskilled and semi-skilled jobs generated during the mine operation will be filled primarily by local inhabitants. Additional unskilled work will be created by the mining contractor who will establish a camp in Calingasta. Skilled workers will likely be recruited in San Juan city and commute weekly to site. Construction requirements will peak at about 300 contractors but while providing opportunities for local unskilled labour, this will be temporary.

The Department of Calingasta has a basic or limited economic structure. In general there is a lack of employment and personal income is low. The main economic activity in the zone is agriculture.

During the EIA review process that culminated in Resolution 163 SEM, Intrepid undertook the following additional social and community related obligations, either prior to construction or during operation:

• Shall provide information to the potentially affected community regarding those events that may pose health risks for the population or the environment along with the presentation of an action plan to be implemented in each case.

• Shall agree with the Mining Environmental Authority on a plan, for the life of the mine, for a community participation audit program to provide a forum for the community, through representation by their official and legitimate institutions, to participate in the monitoring of environmental issues and access to the results obtained.

• Shall submit to the Mining Environmental Authority for approval the implementation of occupational training plans in mining and general tasks for the local population in the area, with a view to having sufficient labour on site.

During the operation of the mine the following obligations will also apply:

• Doctors specialized in mining-related illnesses and accidents, staff trained in handling emergencies in isolated areas, and social workers and psychologists must be available to assist workers and their families in managing health and safety issues.

• Plan for guided visits by the community shall be foreseen and coordinated with the Mining Environmental Authority.




• Provide a minimum number of scholarships, professional practice or internships for university or technical school students as well as contributions to scientific research projects related to community development. It shall also plan and supply on behalf of the Company an appropriate plan to have students conduct study visits and/or summer internships, etc. with the objective of promoting their adequate technical training and to allow for the potential renewal of the technical positions of the project and job placement.

• Preference shall be given to suppliers from the Province of San Juan, both for the supply of materials, goods and inputs, as well as for mining and engineering services, during construction, operation and closure. If qualified companies are not available in San Juan to supply the required goods or services, the Company shall implement a cooperation strategy with business owners from the province that will help local development of the specific skills required. Furthermore, preference shall be given to local labour, with priority given to the project’s area of impact (Department of Calingasta) and the rest of the province. If none exist, the Company shall train them.

• Preference shall be given to the acquisition of inputs from the Department and Province, then from the Nation. If none exist, inputs of international origin may be adopted.

• With a view to maintaining good community relations, the Company shall submit a Communication Plan for approval and ongoing revision to the Mining Environmental Authority, which will provide for clarification and disclosure of the activities being performed. This can be achieved through meetings with community and academic institutions, disclosure in the media and a crisis management communication plan.

• A community relations office shall be maintained in Calingasta for the duration of the operation phase.

AMEC reviewed the list of socioeconomic obligations contained in Resolution 163 SEM and believes that reasonable overall provisions have been made in the updated Owners capital and general and administrative operating indirect costs to meet the obligations (see Section 18.11). AMEC notes that some of these obligations include uncertainties and risks associated with the scope of the obligations and may cause actual costs to differ from the overall provisions made in the 2008 Feasibility Study.

4.6.4 Water Use Permits

Intrepid routinely applied for, and received, temporary water use permits from the appropriate provincial water authority to service its exploration drilling programs. A




projection of daily water usage was provided by Intrepid, as well as the time frame in which the water would be drawn. The applicable fee for the water use was charged to Intrepid, and pre-paid, based on the projected water usage. These permits were requested prior to each drilling campaign.

Troy will be required to apply for appropriate water use permits as and when exploration drilling programs are planned.

4.6.5 Inspections and Reports

Intrepid filed annual exploration work reports at the Department of Mines at both provincial and federal levels of government.

The Casposo site was inspected by the San Juan Ministry of Mines in 2004 and in 2005 and found to comply with the applicable standards under the law. The updated environmental report of its exploration activities was also accepted in April 2004. A further update, filed in 2007, was approved. The next report is due in 2009–2010.

Troy will be bound by the appropriate regulatory reporting requirements.

4.6.6 Protected Natural Areas

Six protected Natural Areas lie outside the direct area of influence of the Project. Three of the protected areas should be noted because of their proximity to the existing access routes that connect the localities within the Project’s socioeconomic area of influence. These are the Don Carmelo Protected Natural Area, the Cerro Alcázar Protected Natural Area and the El Leoncito National Park.

The Don Carmelo Protected Natural Area features geological formations that are about 3 km away from the access route to the Project. National Route 149 does not cross the Don Carmelo Protected Natural Area or the Cerro Alcázar Protected Natural Area.

The El Leoncito National Park is traversed by a major access road, National Route 412, which may be used as an access route for some project supplies from the port of Valparaiso in Chile when the mine operation is underway.

4.6.7 Social and Cultural Heritage

Archaeological field surveys have been completed by Intrepid for the project access road area and the project development area. The surveying and protection of




archaeological sites at the Project was carried out under the supervision of a qualified archaeologist retained by Intrepid and authorized by the Secretary of Culture.

In the Mercado deposit area, an arrowhead was found; the area is postulated to have been occupied sporadically, possibly for hunting. Near La Cantera, historical small quarries, paths and embankments that are inferred to have been used to load and transport a type of red, pink, and grey soft rock were noted. However, there was no material available near the quarries that could be used to date the usage period.

A palaeontological survey was carried out to identify any bedrock outcrops within the Project’s Direct Area of influence that may contain invertebrate, vertebrate or plant fossils of potential value. Volcanic rock such as rhyolitic porphyry and andesite was identified. No sedimentary rocks were encountered.

4.6.8 Permits

Troy will require various permits and authorizations from the Province of San Juan to proceed with the development of the Project. The permits and authorizations demonstrate compliance with current legislation for the construction and operation of the mine. Permits that have been, or will need to be obtained include:

• Use of surface and groundwater resources

• Discharge of liquid effluents

• Cultural and natural patrimony

• Disposal of solid non-dangerous industrial and domestic waste

• Transport and disposal of hazardous waste permit

• Storage of chemical and toxic substances

• Fuel storage

• Authorization for the Installation of a food factory and dining room permit, permit for water treatment plant, potable water quality certificate, authorization for private potable water system

• Boiler systems national law 19.587 (Sanitary Code)

• Camps and civil constructions in general

• Explosives

• Tailings dam or tailing storage facilities




• Operación Minera Ley Provincial 6.531 y Reglamento Policía Minera 40/48 (Mining Operations Provincial Law 6.531 and Mining Police Rules 40/48

• Water concession for industrial mining use and for population use, Hydraulics Department

• Registration in the National Registry of Dangerous Waste Generators

• Telecommunications

• Quarries of Construction Aggregates Mining Code: “Subsecretaría de Estado de Minería” (Undersecretariat of Mining)

• Authorization for construction and operation of a sewage treatment plant.

4.7 Comments on Section 4

AMEC is of the opinion that there is adequate supporting information on the validity of the mineral tenure to support declaration of mineral resources and mineral reserves.

Troy holds a significant portion (92%) of the surface rights that will be required to support mining operations in the proposed mining area, and this holding is sufficient to allow Project development. Property purchase has been approved by the Border Guard, the agency which reviews foreign ownership along national border areas in Argentina.

A right-of-way is required to access the northern portion of the Kamila Project via Quebrada La Puerta; however this right-of-way is not required to be finalized for project construction.

Exploration and associated feasibility study work have been performed under the appropriate permits under provincial and national laws.

Baseline environmental studies were completed. Present environmental liabilities are believed to be limited to the exploration camp.




5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

5.1 Accessibility

The property is located in the Department of Calingasta, San Juan Province, Argentina approximately 150 km from, or a two hour drive west from, the city of San Juan, travelling on paved roads. The region can also be accessed from the city of Mendoza via a separate southern route (Figure 5-1).

Access to the Project north from the international airport in Mendoza follows National Route 40 via the city of San Juan to the town of Talacasto, then along Provincial Routes 436, 414 and 12 to the village of Calingasta (the population centre nearest to the Project), and finally along Provincial Route 412 to the main site access road.

Alternatively, the site can be reached from Mendoza by two other road combinations: by following National Route 40 to National Route 7 and continuing northwest to the town of Uspallata, then along Provincial Routes 39 and 412 via Calingasta to the main site access road; or from the city of San Juan to the town of Talacasto on National Route 40 then along Provincial Route 436 to Cerro Puntudo and south along Provincial Routes 425 and 412 to the main site access road. The southern route via Uspallata passes through El Leoncito National Park to the town of Barreal. Barreal serves as the base for the El Pachón Copper project, currently held by Xstrata plc.

There is no rail or air access to the Project. The closest airport is in the city of San Juan, which is suitable for 737-series jet services.

5.2 Climate

The climate is classified “desert dry”, with a median annual rainfall of 75 mm and a temperature range accentuated by the altitude, both seasonally and daily. The median temperature is 14.5ºC. Summers are generally warm (highs of 30ºC) and winters dry and cold (lows of -2ºC).

The area is generally arid with a short summer rainy season (January–March). Rains can be very strong and the lack of vegetative cover contributes to localized flash flooding. Net evaporation rates are high, and exceed annual rainfall by a significant margin. Of the total annual rainfall, 80% occurs between October to March. Rainfall in the high mountains is common during other months of the year as well.




Figure 5-1: Property Access

Note: Figure from Intrepid Mines Limited.

During the winter months (June to September), snow falls at the site, occasionally with up to several centimetres accumulating. Even so, snowfall melts almost immediately if exposed to a full day of sun.

The area can be very windy during the whole year. The area is subject to strong, short-lived easterly winds that are locally referred to as “zonda” winds. This phenomenon brings dry winds of up to 100 km/h and can cause severe drops in humidity.




5.3 Local Resources

San Juan city is a major centre with full hospital service and education to university level with two universities. The Universidad Nacional de San Juan has a century-old mining engineering and geology faculty as well as diverse science and humanities programs and a medical school.

The nearest town to the Project is Calingasta, a village of approximately 2,000 people, located approximately 20 km to the southeast. The nearest settlement is at the hamlet of Villa Corral, about 20 km to the east.

During the development and operation of the Casposo Project an increase in labour demand and goods and services is expected for the local communities, possibly leading to some migration to the Calingasta area.

The planned mine supply chain for most materials is from the city of San Juan, the local hub for supplies to the Veladero Mine and Pascua–Lama Project that are operated by Barrick Gold Corp. San Juan is approximately 150 km from Casposo. Many major equipment providers and several international engineering firms have warehouses and offices in the city and a number of new mine service and supply businesses have been opened. Major items such as fuel and reagents are planned to be sourced from San Juan or from Buenos Aires and hauled by transport contractors.

5.4 Infrastructure

5.4.1 Local Infrastructure

Roads

Paved access to the Project ends at Villa Corral (Figure 5-1). In 1998, an easement was requested by the previous property holder for a 22-km road access to the Kamila zone from Villa Corral. After the easement was granted by the Survey Department of the San Juan government, gravel road access to the Kamila Zone was constructed in 1999.

Power

Intrepid undertook to fund the construction of electrical facilities through the PIEDE Fund. This includes the construction of a power line (by others) to supply power to Casposo. Intrepid undertakes to contribute the non-refundable US$14.5 M to the PIEDE Fund that will be specifically allocated to the financing of the electrical facilities. Details of Intrepid’s undertakings are defined in a Memorandum of Agreement (MoA).




The electrical facilities and associated power line will not become the property of Intrepid, they remain vested in PIEDE. As long as Intrepid fulfills the agreements of the MoA, PIEDE will be obligated to supply power to the project for a price that is still to be established. The current assumption is that this price will be similar to other existing projects in the area.

Based on an initial assessment of available preliminary designs and the scope for these electrical facilities, AMEC believes the construction of the electrical facilities should take about 18 months. No time frame has yet been established for such construction. In consultation with Intrepid, AMEC has assumed that construction will only begin about six months after the basic mine engineering has commenced. This is six months later than required for commissioning and initial operation of the mining and processing operations. For this reason a temporary diesel power plant will need to be hired for delivery close to commissioning to support the initial six months of the project operation.

The Casposo site will be supplied from a 32kV overhead line. This will consist of a combination of switching, controlling and voltage step-down equipment arranged to reduce transmission voltage to primary distribution voltage for distribution of electrical energy to distribution substations.

A 1,000 kW diesel fuelled generation facility based on a single medium-speed reciprocating engine, located in a metal container placed on an open slab, complete with cooling and all auxiliary equipment, will provide an emergency power supply.

The use of rented temporary power generators is envisaged to provide the power requirements during the initial six months month of operation. Allocation has been made in the cost estimates for the Project for three 1,500 rpm generating sets with a generator of the same size, acting as a standby unit.

Water

Fresh water will be obtained from a well located in the Vallecito dry river bed, 13 km from the plant, at an elevation 100 m above the plant site. A 1,200 m3 capacity tank located at the plant site will provide both fire and fresh water storage.

Process water will be sourced from the process water pond, as reclaim from the processing plant.




5.4.2 Site Infrastructure

Current site infrastructure comprises a gravel access road and a weather station. Camp operations during the exploration and early development work are serviced from Troy-owned property in Villa Calingasta and Villa Corral.

The planned site infrastructure consists of: haul and access roads, roads around the site facilities, open pit and underground mines, a process plant, waste rock dumps, a tailings dump facility and administration and services (including water and power supply and communications). Planned infrastructure is discussed in more detail in Section 18.9.

The planned infrastructure layout is shown in Figure 5-2.




Figure 5-2: Planned Site Infrastructure Layout




5.5 Physiography

The Casposo property lies on the western side of the Calingasta Valley near the western edge of San Juan Province at the base of the Cordillera Frontal. The average elevation is roughly 2,400 masl. The Project site is located at the base of rugged terrain, characterized by low mountains with steep slopes, and ravines associated with dry drainage systems.

The dominant plant formation is shrub steppe (>1 m tall) and sub-shrub (<1 m tall) with a dominance of perennial grasses in the herbaceous stratum. There are no vegas or endemic plant species in the Project Area.

Two faunal surveys have been undertaken on the Project Area during 2006 by Knight Piésold. Forty animal species were identified during the summer campaign: one reptile, 33 birds and six mammals. During the winter campaign, 35 species were identified in the study area: two reptiles, 23 birds and ten mammals. Both the median density and average abundance of species tend to steadily decrease with a decrease in altitude.

Within the Project Area, the only endemic species is the pale basketweaver or Asthenes steinbachi, but this is not expected to be irreversibly negatively affected by mine operations.

5.5.1 Seismicity

The region of San Juan, including the area of the Project, is in an active tectonic area, having experienced two large-scale earthquakes of magnitude Ms 7.0 or greater, over the last sixty years. In particular, this region had been struck by a Ms 7.4 earthquake in 1944, causing nearly 10,000 casualties and leaving half the province homeless. Similarly, a magnitude 7.0 earthquake occurred in 1977, resulting in seventy people killed and up to 40,000 left homeless in western Argentina. Records indicate that large-scale earthquakes occur in the region every forty to fifty years. Better building construction techniques and codes accounted for major improvement in death toll statistics. All facilities must now be built to withstand Richter 7 earthquakes to Argentine codes equivalent to UBC4 or better.

Despite the severe seismic classification of the Province, records indicate the Project is located in an area of relative low seismic density.

Additional site seismic, mass movement and risk assessment studies were completed by Intrepid using a local Argentine consultant, Chisnanco SRL, and these are included




in the project EIA report that was submitted by Knight Piésold in May 2007, and approved in November 2007.




6.0 HISTORY

There is no recorded exploration on the Project prior to 1998. Deposit and prospect locations referred to in this section are shown in Figure 6-1.

6.1 Battle Mountain Gold

From 1993 to 1999 BMG conducted regional exploration programs in the San Juan Province, Central Argentina, on the basis of Landsat interpretation and the analysis of favourable mineralization criteria. In 1998, BMG focused its efforts on the Casposo Project, located in the Cordillera Frontal, where Landsat colour anomalies were interpreted to indicate the presence of intense alteration processes. Several outcropping veins yielding values as high as 5.65 g/t Au over 63 m were identified.

BMG undertook a program of surface sampling and geological mapping. A total of 22 trenches for 1,620 m of trenching were completed on the Kamila Zone, and 8,626 m of drilling in 46 holes were completed on the Kamila and Mercado deposits (collectively referred to as the Kamila Zone) during 1998–2000. BMG’s exploration also included an airborne magnetic and resistivity survey across an area measuring 15 x 25 km. A number of targets were delineated however only limited follow-up was carried out over areas outside the Kamila Zone.

A resource estimate was completed by BMG, but is not reported here as it was estimated prior to the introduction of NI 43–101 guidelines.

6.2 Intrepid Mines Limited

Exploration by Intrepid commenced in July 2002, with regional reconnaissance studies, detailed trench sampling of the vein systems, and re-logging of core and bulk sampling for metallurgical studies.

Mapping the northwest strike extension of the Casposo structure led to the identification of mineralized structures along the Casposo corridor over a total strike length of 1.6 km. A 1,678 m diamond drill program (16 holes, Intrepid Phase 1 drilling) was completed in early 2003, comprising twin hole drilling of selected BMG holes, and infill drilling over the Kamila Zone.

A resource estimate, based on open pit and underground mining methods, was prepared in 2003 (Pitman and Puritch, 2003) using data from 50 drill holes, 46 trenches and four pits.




Figure 6-1: Deposit and Prospect Location Plan, 2006





From October 2003 to April 2004, Intrepid conducted a second phase of diamond drilling and surface exploration at Casposo. This Phase II program consisted of 3,158 m (24 holes) of drilling on the Kamila target and 1,804 m (13 holes) of drilling on the Mercado and Panzón targets. Intrepid also drilled 2,185 m using reverse circulation (RC; 12 holes) methods. Seven of these holes were drilled on a reconnaissance grid along structural zones in the Casposo Epithermal System, and not on the Kamila deposit per se. The main focus of drilling at Kamila was to upgrade and expand the resources identified in the 2003 estimate. An updated resource estimate was prepared in April 2004 for the Kamila-Mercado deposits, based on 93 drill holes, 108 trenches and five pits.

In June 2004, Intrepid commissioned gradient-array induced polarization (IP) and pole dipole IP surveys at the Kamila property. The surveys were conducted by Quantec Geoscience Argentina S.A. and comprised 18.5 km of gradient array IP and 2.75 km of pole–dipole survey. The focus of the survey was the southeastern extension of the Kamila vein system.

The 2004 resource estimate was used as the basis for a Preliminary Assessment in mid-2004 (Buck et al, 2004a; 2004b). The Preliminary Assessment evaluated heap leach and open pit mining methodologies. This provided sufficient encouragement that a third round of drilling commenced.

From October 2004 to February 2005, 3,492 m of HQ diamond core drilling in 25 holes (Intrepid Phase III drilling) were completed. Diamond drilling focused on enhancing geological and grade continuity within the Kamila zone by increasing drill density within the major vein domains to a nominal 25 m spacing. Diamond drilling also included evaluation of the Kamila Zone proximal vein systems such as Mercado Norte, Panzón and Maya, and satellite vein systems of the Oveja Negra prospect. Channel sampling and mapping were also undertaken at the Cerro Norte prospect 1 km east of Kamila.

From April to December 2005, Intrepid completed a further 3,980 m of diamond drilling in 20 holes (part of the Intrepid Phase III and Phase IV drilling programs). Drilling continued to evaluate the Kamila zone at depth, but also tested the Panzón, Oveja Negra and Inca SE extension prospects. A resource update was completed by Eugene Puritch, with an October 2005 effective date, and validated by external consultants RSG Global Inc (McGuinty, 2007).

In 2006, 9,944 m in 85 holes were drilled, primarily over the Kamila, and Mercado deposits, and the Kamila SEXT and Julieta prospects. Drilling was part of the Intrepid Phase V, VI and VII programs. A new resource estimate for Kamila with an effective date of November 2006 was completed by Intrepid (McGuinty and Puritch, 2006). The estimate used an updated drill and trench database which included drill holes up to




hole CA-06-174. The database comprised 172 drill holes, 112 trenches and 5 pits. In January 2006 road construction was completed by Intrepid to accommodate drill testing at the Julieta prospect. During February 2006, an initial 960 m of core in 10 holes was completed to a maximum 40 m depth. This was followed up in July 2006 by 21 shallow diamond holes for 1,675 m, resulting in nominal 25 m drill spacings across the prospect. Fluid inclusion studies were also completed.

A feasibility study, commissioned in 2005, was competed in March, 2007. AMEC provided the initial metallurgy, geotechnical investigations, mining method selection, locations of proposed facilities, and financial modeling. AMEC also estimated mineral reserves for the Kamila and Mercado deposits. Environmental and social baseline and impact studies were completed by Knight Piésold and incorporated into the feasibility study by AMEC. The feasibility study included the following:

• Proposed mining of two separate deposits – Kamila and Mercado.

• Mining estimated to generate an estimated 10 Mt of waste rock; 2 Mt planned for use in road construction, in-pit disposal and underground backfill, remaining 8 Mt to be stored in the waste rock dump.

• Mine plan based on a contract mining company providing ore to a conventional gold and silver whole leach recovery plant to support average milling rate of 1,000 t/d (365,000 t/a).

• For average life of mine head grades, overall gold and silver recoveries projected at 93.7% and 80.6% respectively.

• Average annual production estimated at 50,478 oz of gold and 1.1 Moz of silver or 68,483 oz of gold equivalent annually (gold and silver prices of US$500 and US$8.50/oz respectively) over five year mine life.

• Process design and operational plan based on existing technology. Flowsheet uses conventional primary jaw and secondary cone crushing, ball milling, gravity concentration for coarse gold and silver, cyanide leach, counter current decantation and washing and dewatering of tails by belt filtration. Gold and silver recovered by standard Merrill-Crowe zinc precipitation and smelted to produce dorè bars. Leached tailings, following filtration to recover precious metals, are washed and rinsed on the same belt filter to remove cyanide. Cyanide wash solution collected for the destruction of cyanide using a conventional SO2/air process. Detoxified solution is recycled to the belt filter as wash solution to minimize fresh water requirements for the process. Filtered tailings trucked to a lined tailings management facility and stacked in compacted lifts.

• Processing plant planned to generate 1,000 t/d of tailings over estimated five year operating life, producing about 1.8 Mt of tailings solids.




During November 2007, AMEC completed an update to the mineral resource, to include 29 additional drill holes, located in the vicinity of the Inca vein on the southeast side of the Kamila deposit. Although the mine plan includes the Mercado deposit, approximately 500 m to the northwest of the Kamila deposit, the mineral resources for Mercado were not updated, as no significant additional drilling was conducted since the previous mineral resource statement in early 2007. The Lerchs–Grossmann open pit parameters used to constrain the updated mineral resource estimate included:

• A mill production rate of 365,000 t/a

• Base case metal prices of US$600/oz Au and US$10/oz Ag

• Selling costs of metal of US$9.41/oz Au and US$0.567/oz Ag

• Metal recoveries of 93.7% Au and 80.6% Ag

• Total costs of USD$20.50/t for open pit (incremental mining, processing, general and administrative [G&A]), and USD$ 56.58 for underground (mining, processing, G&A).

The mineral resource estimate resulted in a small increase in tonnage, and a minor decrease in gold grade from that estimated for the 2007 Feasibility Study. AMEC removed the “artificial floor” that was used to constrain the previous open-pit design for Kamila. The floor was imposed to allow concurrent safe underground and open pit mining to take place. Instead, in the Feasibility Study Update the L–G pit shell created in Whittle software was allowed to extend as deep as economically practicable. Results indicated that the proposed underground mining scenario considered in the 2007 Feasibility Study required review.

In April 2008, AMEC was requested to update the November 2007 mineral resource estimate, using revised metal prices and operating costs. The April 2008 revised estimate used slightly different metal prices from that completed in November 2007. The April 2008 data form the basis of the mineral resource estimate presented in Section 17 of this report, and the amended mine plan discussed in Section 18.

The 2007 Feasibility Study was updated during 2008, to reflect changes in some areas of the proposed mining plan, and requirements arising from the EIS review. These changes are discussed in Sections 16 and 18 of this Report. The amended mineral reserves based on the Feasibility Study Update are included in Section 17.

Subsequent to the completion of the 2008 updated Feasibility Study, Intrepid completed an additional 13,000 m of drilling, which is summarized in Section 11 of this Report.




7.0 GEOLOGICAL SETTING

7.1 Regional Geology

The regional geological summary is adapted from McGuinty (2007).

San Juan Province straddles three major north–south-trending ranges, the Cordillera Principal, Cordillera Frontal and Precordillera as well as part of the Pampean range (Sierras Pampeanas range). The Project is located on the eastern border of the Cordillera Frontal, separated from the Precordillera to the east by the Rodeo-Calingasta–Uspallata Valley.

The Cordillera Principal runs along the Chile-Argentine border for some 1,500 km. It is a volcanically and seismically active zone formed by subduction of the Nazca plate beneath the South American continent. This convergent plate margin has been active since the Cretaceous. The main basement is formed by Permian–Triassic intrusive and volcanic rocks, of calc-alkaline affinity and andesitic to rhyolite composition, regionally known as the Choiyoi Group. These and younger sediments of Jurassic and Cretaceous age have been thickened by compression and thrusting principally since the Late Cretaceous in a thin-skinned fold thrust belt.

The Cordillera Frontal comprises a basement of Carboniferous clastic sediments to the west, intruded and overlain by Permian–Triassic volcanic and intrusive complex to the east. This complex consists of the same rock units as those in the Cordillera Principal, and was also uplifted with the Cordillera Principal. The Choiyoi Group hosts coeval mineralization, mainly porphyry Cu–Mo and Cu–Au deposits such as San Jorge and El Salado and low-sulphidation Au systems such as Casposo, La Cabeza and Castaño Nuevo. Tertiary mineralization occurs at Poposa (high-sulphidation Au) and at Paramillos (porphyry Cu–Mo) prospects.

The Precordillera comprises a series of north–south ranges, covering about 1,000 km north–south and 100 km east–west. It is the product of large-scale tectonic compression since the Jurassic and culminating in the Miocene, and is still seismically active. The ranges in San Juan Province comprise Palaeozoic limestones and clastic sediments separated by plains reminiscent of the Basin and Range extensional terrain of the western United States.

East of the Precordillera, the Pampean and Transpampean Ranges (Sierras Pampeanas) are composed of Precambrian and Palaeozoic granitic and metamorphic rocks. Uplift occurred along Tertiary Laramide-style high angle reverse faults. These ranges host minor Precambrian mineralization and, within the Precordillera, some




Tertiary-aged deposits, associated with calc-alkaline to alkaline volcanic and sub-volcanic centers of Miocene Pliocene age (for example Famatina and Gualcamayo).

7.2 Casposo Project Geology

In San Juan Province, the Cordillera Frontal is underlain by marine sediments (shales, sandstones and conglomerates) of the Carboniferous Cerro Agua Negra Formation. These sedimentary sequences are overlain by a thick intrusive and volcanic sequence assigned to the Permian–Triassic Choiyoi Group (Figure 7-1).

Figure 7-1: Detailed Geology, Casposo District

Note: Figure from Intrepid Mines Ltd.

Basal andesitic volcanic flows, tuffs and breccias are the main sub-surface unit in the Casposo Property and are overlain by rhyolite, rhyolite-dacite flows and dacitic ignimbrite flows. The volcanic units dip gently to the east at 15–20º and are cross-cut by north–south, east–west and northwest–southeast-trending structures. Rhyolite and




andesite dykes that trend north–south transect older rock units. Table 7-1 presents a stratigraphic column through the Project Area.

The Casposo gold–silver mineralization occurs in both the rhyolite and underlying andesite, where it is associated with banded quartz–chalcedony veins, typical of low sulphidation epithermal environments. Adularia in the main veins gives an age date of 280 ± 0.8Ma (K/Ar), very close to the published age dates for the andesite unit. Post-mineralization dykes, of rhyolitic (Kamila), aphanitic-felsic and trachytic (Mercado) composition often cut the vein systems. These dykes, sometimes reaching up to 30 m thickness, are usually steeply-dipping and north–south-oriented.

Mineralization at Casposo occurs along a 10 km long west–northwest to east-southeast-trending regional structural corridor, with the main Kamila vein system forming a sigmoidal set 500 m-long near the centre (see Figure 6-1). The Mercado vein system is the northwesterly continuation of Kamila, and is separated by an east–west fault from the Kamila deposit. A series of east–west-striking veins (Cerro Norte and Oveja Negra systems) appear to splay off these major sets to the east and northeast. The Casposo vein district identified to date covers an area of about 100 km2; the known deposits and targets are summarized in Figure 7-2.




Table 7-1: Project Stratigraphic Column Formation Unit Age Estimated

Thickness (where known)

Description Comments Petrographic Descriptions

Recent Deposits

Qt

Las Minitas Formation

Qt

Cambachas Formation

Tc

Ao Las Chinches Formation

Kc–Tc

Andesite–Basalt Dykes

>Tr Very late post-mineralization. May be pre-main faulting

Latest magmatic event

Granite-Rhyolite Dykes

Colanguil granite phase: Includes the Tocota and Fraguita Plutons (tonalities and granodiorites) and Red Granite Suite in the same area. Cerro Colorado

Late post mineralization. Pre-main faulting. FeOx stained after pyrite – some white quartz veins

2

Colanguil Batholith

Casposo Granodiorite

250 Ma

Cerro Casposo and Rosarita area

1 (alteration M. Antonia prospect)

Vallecito Pluton

264 Ma

Welded Rhyolites

>200 m Massive, strongly spherulitically devitrified welded rhyolite unit. Poorly consolidated 1m base surge deposit at Julieta

Post mineralization? W area of Ao La Puente and Julieta. Andesites similar to Casposo area but thick welded rhyolite sequence around Don Bosco prospect is certainly Palque Fm. And same andesite seen locally below rhyolite at Julieta. Possibly younger than this vein but not likely.

None

Within Palque Fm – High Andesite Unit

<100 m Massively bedded andesite ash-flows and flow breccias with rare cm “basement” clasts. Weak argillic-propylitic alteration in the two areas known.

Occurs at Julieta (thin) and La Puerta S (thick) below the welded rhyolite unit.

None El Palque Formation

Dacite Ash Flow

150 m Single, major welded crystal dacite ashflow unit. Never mapped out. A similar unit occurs apparently within the Upper andesite unit near Pascual.

Generally only weakly altered, may contain megaveins at south Rosarita.

1

Trachyte Dykes

Early post mineralization

Megadyke-Dome

Early post (late syn) mineralization

1

Casposo Vein System

280 Ma

Brecciated-Banded Qtz-(Adularia) Veins

Many Co-Vega de Los Machos Intrusions

Oldest Trachyte Dykes

Pre-mineralization. Contain veins. Cut by EW Qtz-Carbonate veins.

2




Figure 7-2: Location of Exploration Prospects and Targets

Figure courtesy Intrepid Mines Ltd.




7.3 Deposit Geology

7.3.1 Kamila Deposit

The Kamila deposit is developed structural corridor of sinistral faults characterised by a pair of west–northwest to east–southeast-trending bounding vein systems, the Inca and B-veins. These veins appear to dip towards each other, and may converge to the southwest at depth and to the southeast along strike.

The envelope encloses a series of ‘ribs’ or dilatational veins, which trend north–south and dip steeply west. The most important of these veins are the Aztec and Aztec Footwall vein structures. The majority of the exploration to date in the Kamila deposit by Intrepid has been directed towards the Aztec, B-vein and Inca structures.

The vein system extends for over 650 m along strike and over 260 m in depth, with a general dip of 60º to 70º to the southwest. At surface, the individual veins attain 12 m maximum thickness, which decreases with depth to less than 4 m.

Geological mapping in 2003 indicated that veins at Kamila–Mercado were oriented along three dominant structural trends; N140ºE, north–south and east–west. Significant precious metal mineralization at Kamila and Mercado appeared to be related to the intersection of N140ºE and north–south-trending quartz-bearing structures.

A geological plan for the Kamila deposit and a typical geological section are shown in Figures 7-3 and 7-4 respectively.

7.3.2 Mercado Deposit

The Mercado vein system is exposed 200 m north of the Kamila deposit and is separated from it by the east–west-trending, south-dipping Mercado fault. A geological plan for the Mercado deposit and a typical geological section are shown in Figures 7-5 and 7-6.

This northwest–southwest-trending hydrothermal quartz vein zone extends for over 500 m along strike, and over 150 m in depth, dipping 45º to 50º to the southwest. The Mercado system is variably composed of a compact vein (Main Mercado Vein or MV-1) or various thinner parallel veins, from which the north–south-trending MV-1 vein splits. At surface, the Mercado veins reach 8–10 m in thickness (including over 4 m for the MV-1 vein), but widths generally decrease with depth to less than 4 m. To the north, a subset vein, Mercado North, has been identified.




Figure 7-3: Geology Plan, Kamila, Kamila SEXT (incorporating Inca SE)





Figure 7-4: Typical Section, Kamila Deposit

Note: Section looking north. Section is oriented west to east, along section line 6548325, and was drawn at 1:2,000 scale. Geological codes are those shown on Figure 7-2. Figure from Intrepid Mines Limited.




Figure 7-5: Geological Plan, Mercado Deposit





Figure 7-6: Typical Section, Mercado Deposit

Note: Section looking north. Section is oriented west to east, along section line 6548925, and was drawn at 1:2,000 scale. Geological codes are those shown on Figure 7-4. Figure from Intrepid Mines Ltd.




Both the Mercado and Mercado North areas display bounding fault and dilatational vein characteristics that are similar to those of the Kamila deposit. At surface, the vein system crops out as an apparent forked vein system opening to the south towards the Kamila deposit and dipping to the west. Intrepid considers Mercado to be part of a larger Kamila structure. The Kamila zone appears to be down-dropped relative to Mercado, possibly along a late-stage east–west-trending fault.

7.3.3 Kamila SEXT (Kamila Southeast Extension) Target

The Kamila SEXT zone was discovered in February 2006 by exploration hole CA-06-152 which intersected a brecciated quartz vein assaying 4.51 g/t Au and 2,274 g/t Ag over 1.60 m at a depth of 90 m downhole. This zone is not exposed at surface, being truncated by a low angle, south-dipping, southeasterly-trending fault. Holes intersecting the Kamila SEXT structure laterally did not produce significant mineral intercepts although the vein structure was present over core intervals of 6 to 9 m. It appears the vein in this area is situated in a normal fault plane (west side down) which offsets the relatively flat-lying contact between the andesites and overlying rhyolite strata seen at Kamila. A typical section for Kamila SEXT is presented in Figure 7-7.

7.3.4 Inca SE (Inca Southeast Extension) Target

The Inca SE target area comprises the southeast extension of the Inca vein that follows a similar orientation that Kamila SEXT target (see Figure 7-2). The Inca vein system is hosted in altered porphyritic andesites. Alteration is generally propylitic with associated silicification and local brecciation. Quartz–adularia-calcite veins and banded quartz veins were intersected in drilling and also pyrite and minor chalcopyrite are found in the host rock.

7.3.5 Panzón Target

The Panzón target is located approximately 600 m west–northwest of the Mercado Zone. The Panzón vein system is parallel to the Mercado and Kamila vein structures. True horizontal separation of the two vein structures appears to be 250 m. Projection of this structure suggests this feature may be an extension of the structure controlling the B-vein system, or, alternatively, a separate more southerly vein structure that may be related to the Maya vein. At Panzón limited low-grade veining was intercepted in a volcanic sequence intruded by numerous dykes. Felsic dykes in this area trend north-south and occupy northwest–southeast-trending structures previously mineralized by quartz veins and have stoped out the vein material making consistent drill targeting of mineralized zones difficult. A geological plan for the Panzón target is included as Figure 7-8.




Figure 7-7: Drill Hole Section CA-06-152, Kamila SEXT

Note: Cross section shows vein and drill intercepts as grade thickness (g/t x m). Geological codes are those shown on Figure 7-2. Figure from Intrepid Mines Limited.




Figure 7-8: Geological Plan, Panzón Target





7.3.6 Oveja Negra Target

The Oveja Negra veins occur in unaltered andesite volcanic rocks (Figure 7-9) and range in thickness from 30 cm to 1.5 m, generally striking east–northeast–west–northwest and dipping to the north. Several veins have sigmoidal patterns which generally retain the same axial planar strike and dip as the main veins. The main quartz–carbonate vein set is intersected by a series of smaller southerly-trending veins.

7.3.7 Maya Target

The Maya zone may be an extension of the Panzón target. Mineralized breccia and vein material is exposed over an area of about 300 m by 300 m, developed in rhyolite breccias and tuffs. Figure 7-10 presents the geology of the Maya zone.

7.3.8 Cerro Norte Target

Cerro Norte is a steep hill underlain by rhyolite volcanics. These volcanics are cut by a persistent set of east trending sub-vertically dipping quartz and quartz carbonate veins. The prospect comprises three main parallel vein sets that are separated by distances of more than 100 m. The aerial distribution of the vein system is approximately 1 km by 1 km. These veins are generally banded and locally brecciated and may locally exceed 4 m in width, although the average width is 2 m. Individual veins may be traced for over 100 m.

Each braided vein complex extends over widths of between 2 to 10 m with strike lengths ranging from 650 m to 950 m. The geology of the Cerro Norte area is shown in Figure 7-11.




Figure 7-9: Geological Plan, Oveja Negra Prospect

Figure from Intrepid Mines Limited.




Figure 7-10: Geological Plan, Maya Zone





Figure 7-11: Geological Plan, Cerro Norte





7.3.9 Julieta Target

The Julieta vein structure was discovered by Intrepid staff in 2005. The vein system is parallel to and roughly on-strike with the Kamila–Mercado vein system, 4 km to the southeast. Host rocks to the Julieta vein set are vitreous, rhyolitic, welded ashflows which are weakly pyritized and, in the vicinity of Julieta veins, cut by numerous quartz-calcite stockwork veinlets.

The vein system is emplaced along a southeast–northwest–trending, southwest–dipping fault with dips of 50º to 75º. A slightly later trachyte dyke of varying width (but generally less than 10 m), lies on the hanging wall of the vein, and locally cuts the vein. The dyke is propylitized and argillically altered. A single 10 m wide north–south-trending rhyolite porphyry dyke cuts the vein in its southern part of the central area, though the veins that occur to the south and north appear to be similar, reflecting little change as a result of displacement. A set of steeply dipping north–south-oriented and east–west-trending veinlets and faults cut, and sinistrally offset the main vein. A geological plan for the Julieta system is included as Figure 7-12.




Figure 7-12: Geological Plan, Julieta





8.0 DEPOSIT TYPES

The mineralization identified at the Kamila and Mercado deposits, and other prospects within the Casposo Property are examples of low-sulphidation epithermal deposition of gold and silver.

8.1 Deposit Model

The type description for low-sulphidation epithermal deposits below is abstracted from Panteleyev (1996).

Low-sulphidation epithermal deposits are high-level hydrothermal systems, which vary in crustal depths from depths of about 1 km to surficial hot spring settings. Host rocks are extremely variable, ranging from volcanic rocks to sediments. Calc-alkaline andesitic compositions predominate as volcanic rock hosts, but deposits can also occur in areas with bimodal volcanism and extensive subaerial ashflow deposits. A third, less common association is with alkalic intrusive rocks and shoshonitic volcanics. Clastic and epiclastic sediments in intra-volcanic basins and structural depressions are the primary non-volcanic host rocks.

Mineralization in the near surface environment takes place in hot spring systems, or the slightly deeper underlying hydrothermal conduits. At greater crustal depth, mineralization can occur above, or peripheral to, porphyry (and possibly skarn) mineralization. Normal faults, margins of grabens, coarse clastic caldera moat-fill units, radial and ring dyke fracture sets, and hydrothermal and tectonic breccias can act as mineralized-fluid channelling structures. Through-going, branching, bifurcating, anastomosing and intersecting fracture systems are commonly mineralized. Mineralization forms where dilatational openings and cymoid loops develop, typically where the strike or dip of veins change. Hangingwall fractures in mineralized structures are particularly favourable for high-grade mineralization.

Deposits are typically zoned vertically over about a 250 to 350 m interval, from a base metal poor, Au–Ag-rich top to a relatively Ag-rich base metal zone and an underlying base metal rich zone grading at depth into a sparse base metal, pyritic zone. From surface to depth, metal zones grade from Au–Ag–As–Sb–Hg-rich zones to Au-Ag-Pb-Zn–Cu-rich zones, to basal Ag–Pb–Zn-rich zones.

Silicification is the most common alteration type with multiple generations of quartz and chalcedony, which are typically accompanied by adularia and calcite. Pervasive silicification in vein envelopes is flanked by sericite–illite–kaolinite assemblages. Kaolinite illite–montmorillonite ± smectite (intermediate argillic alteration) can form




adjacent to veins; kaolinite–alunite (advanced argillic alteration) may form along the tops of mineralized zones. Propylitic alteration dominates at depth and along the deposit margins.

Mineralization characteristically comprises pyrite, electrum, gold, silver, and argentite. Other minerals can include chalcopyrite, sphalerite, galena, tetrahedrite, and silver sulphosalt and/or selenide minerals. In alkalic host rocks, tellurides, roscoelite and fluorite may be abundant, with lesser molybdenite as an accessory mineral.

Post the summary by Panteleyev, a number of workers have revisited the epithermal deposit classifications. Corbett (2001) introduced subcategories of arc-related low-sulphidation and rift-related low sulphidation to the traditional epithermal classifications in an attempt to better categorize features of epithermal deposits in the Chile–Argentina area. In 2000, Hedenquist et al (2000) identified transitional features in a number of the South American epithermal deposits, and termed the transitional members “intermediate sulphidation” deposits.

Figure 8-1 shows a model for formation of epithermal-style mineralization. There can be a continuous gradation within a mineral district from low-sulphidation through intermediate- to high-sulphidation (pyrite–enargite–luzonite–covellite) assemblages.




Figure 8-1: Schematic Deposit Model, Epithermal-style Deposits

Note: Figure from Sillitoe and Hedenquist, 2003.




9.0 MINERALIZATION

9.1 Mineralogical Studies

Mineralogical studies were completed during 2003 on the Casposo Project to quantify gangue mineralogy, gangue textures, opaque mineral mineralogy and textures, and mineralization textures and mineralogy (Kishar Research Inc., 2003).

9.1.1 Gangue Mineralogy and Textures

Results of the gangue review were:

• Polyphased crustiform banded veins appear to be typical. Quartz grain sizes ranges from ultra fine-grained–cryptocrystalline to very fine-grained, to 0.05 mm. Textural variations across individual bands as well as contrasting textural and mineralogical differences between adjacent bands imply different physiochemical parameters controlled precipitation of the various hydrothermal minerals and that the composition of the hydrothermal fluid varied across and between bands.

• Adularia is present as very fine anhedral to subhedral grains up to 0.1 mm, and can be a major component of some crustiform bands. Clusters of adularia grains can aggregate along the interpreted base of a band and decrease in abundance away from the inferred basal contact. This mineralogical variation implies either changing fluid composition or rapidly changing physiochemical conditions during ongoing crystallization of a particular band.

• Carbonate is present in all textural varieties of quartz. Carbonate is present as ultra fine-grained matrix carbonate within cryptocrystalline to very fine-grained quartz laminae, as subhedral aggregates within fine-grained quartz, and as interstitial anhedra between equigranular very fine-grained quartz. The latter most probably represent cavity-fill, and filling of discontinuous micro-fractures by veinlets that are concordant and discordant to layering

• Sparsely distributed ultra fine-grained sericite and kaolinite both interstitial to quartz are present in some lamina and based on the textural relation to quartz and carbonate; these phyllosilicates are inferred to be primary.




9.1.2 Opaque Minerals and Textures

Opaque minerals could be subdivided into three assemblages:

• An early sulphide assemblage, represented by base metal sulphides including low Fe sphalerite + chalcopyrite + galena. The sulphides form clotted aggregates that are distributed along and near the base of very fine-grained quartz-rich bands

• A middle assemblage dominated by sulphosalts with native metal alloys and minor base metal sulphides and selenide. The Ag- and Au-bearing alloys include electrum, native silver; the silver-bearing minerals include tetrahedrite-tennantite, argentotennantite, antimonpearcite, pyrargyite, acanthite, naumannite and the accompanying sulphides and selenides include chalcopyrite, galena and clausthalite. Pyrite was not identified with this assemblage. This sulphosalt episode partially to completely mantles minerals belonging to the early base metal sulphide stage

• A final stage, consisting of poorly represented late stage that comprises sulphosalts + silver selenide and silver sulphide + native silver assemblage that is hosted in micro-veinlets within either of the previous two assemblages. Acanthite (Ag2S) is the only high silver-bearing mineral and the presence of this mineral marks the most significant mineralogical difference between this stage and the preceding sulphosalts-rich episode

9.1.3 Ag- and Au-bearing Alloys

The native metal alloys of Au and Ag are present as minute zoned grains that vary up to 100 µm in the longest dimension. These grains are enclosed by gauge minerals, along the contact with sulphosalts and as inclusions in sulphosalts. The native metal alloys are typically zoned with gold-rich (gold + silver) cores and mantled by more silver-rich margins.




9.2 Deposits and Prospects

9.2.1 Kamila Deposit

The gold–silver mineralization at the Kamila deposit is structurally controlled and occurs in crustiform-colloform quartz veins and stockworks in both andesites and rhyolites. The veining extends for about 2 km in a northwest–southeasterly direction, attaining widths of up to 500 m. Arsenopyrite and stibnite occur in the stockwork zones that are developed adjacent to the gold-bearing veins. Vein alteration is characterized by strong to pervasive silicification. Wallrock alteration varies from argillic to propylitic. Banded quartz–calcite veins with lattice bladed textures are common in the andesites.

Interpretations of the drill core show that mineralization is vertically zoned, as follows:

• At 2,400 masl, crustiform textures are dominant

• Between 2,300–2,400 masl quartz crystalline textures are dominant

• At <2,300 masl coarse crystalline quartz–carbonate textures dominate.

Quartz vein textural mapping from drill core and surface exposures indicate that the Aztec vein is dominated mainly by brecciated and banded textures, with minor bladed and massive patches. The B veins are texturally similar to the Aztec vein, and the Inca vein shows a balance between the dominant banded ± brecciated textures along with areas of crustiform and colloform textures.

A longitudinal section (Figure 9-1) through the mineralization showing gold grades is included for the Inca vein systems.

9.2.2 Mercado Deposit

Mineralization within the Mercado vein system contains moderately higher base metal values, as well as increased amounts of iron and arsenic sulphides, as compared to the veins at the Kamila deposit. Mineralization and differences in mineralogy associated with this vein system suggest the relative position of Mercado within an epithermal system would be lower than Kamila.

Two main quartz vein texture types were noted from drill core and surface exposures: banded–brecciated and banded with some areas also showing minor colloform textures. A longitudinal section through the mineralization at Mercado that shows grade–thicknesses is included in Figure 9-2.




Figure 9-1: Longitudinal Section Showing Au Grades, Inca Vein

Note: Au grades in g/t Au; Figure from Intrepid Mines Limited.




Figure 9-2: Grade Thickness Contours, Kamila, Mercado and Kamila SEXT

Note: Au grades in g/t AuEq; Figure from Intrepid Mines Limited.




9.2.3 Cerro Norte Target

Vein textures vary from calcite–quartz in the east part of the Cerro Norte target to lattice bladed–banded breccias in the west. Both of these features are indicative of high-level mineralizing episodes within a typical epithermal system.

Wallrock and host rock (andesite and rhyolite) captured within the anastomosing vein systems is silicified and contains numerous micro-veinlets of quartz and calcite commonly containing values of 0.1 g/t Au to 0.3 g/t Au over widths of 2 m to 10 m. These anomalous intervals are found in each vein set and across the entire (east to west) extent of the veins system. Silver values are low, generally in a 1:1 ratio with gold.

9.2.4 Julieta Target

The Julieta target contains two mineralization stages, an early main vein with a central sigmoidally-shaped loop, and a north–south-trending vein swarm that constitutes a “stockwork” zone. The main vein is cut and displaced left-laterally (<5 m) by the vein swarm.

Veins include well banded quartz–chalcedony–calcite zones to the north and south of the central “Loop Zone” where banded, white, microcrystalline quartz and chalcedony form on average 50% of the vein system.

The Julieta vein system shows similar geochemical patterns to the Kamila area with very low base metal, As, Hg, and Ba values. The two also share moderately anomalous Sb (>10 ppm to <200 ppm), which is strongly correlative with Au values, and low iron levels, corresponding to a low pyrite concentration.

Fluid inclusion studies on five samples of the Julieta vein (Townley, 2003) indicate that the relative depth of exposure is significantly higher than Casposo, as suggested by its stratigraphic setting. This would suggest possible continuity of mineralization at depth.

9.2.5 Mercado Norte, Panzón, Oveja Negra, Inca SE, and Maya Targets

At the Inca SE target, the exploration studies confirmed the continuity of the mineralization in quartz–adularia banded veins and locally within breccia and stockworks zones.

The extension of the Inca SE vein was confirmed for approximate 500 metres along strike and close to the proposed 2,200 m level underground.




No information on the mineralization styles for the remainder of the targets was available to AMEC. All were reported by Intrepid (McGuinty, 2007) to be low-sulphidation quartz-adularia-type veins that carry gold and silver values.

9.3 Comment on Section 9

The mineralization style and setting is sufficiently well understood at Kamila and Mercado to support declaration of mineral resources and mineral reserves, and to support mine planning.




10.0 EXPLORATION

Two main phases of exploration have been undertaken on the Project: Battle Mountain Gold (BMG), from 1998–2000, and Intrepid Mines Ltd (Intrepid) from 2002 to the present. The exploration history is summarised in Section 6 of this report. In general, there is little documentation available on the methodologies of the BMG programs. Intrepid is in possession of all remaining physical core samples and core and channel sample assay certificates for sampling completed by BMG prior to the 2002 acquisition by Intrepid of the Property.

10.1 Grids and Surveys

Alfredo Herrada, an external contractor, connected the BMG local grid (based on the Argentine Gauss Krüger Campo Inchauspe 1969 system, with elevations established from USO 91) to the to the National Geodesic Grid through three base points (Table 10-1). These measurements were referenced to the National Point 14-093, with Posgar ′94 coordinates (Campo Inchauspe 1969 datum) as follows: Latitude = -31° 12′ 19.8062″; Longitude = -69° 27′ 40.6477″; Ellipsoidal Elevation = 1429.496 m.

Table 10-1: Coordinates of BMG Topographic Base Points

Point x (CAI ‘69) y (CAI ‘69) x (Posgar ‘94)

y (Posgar ‘94)

PB 01 6,547,715.64 2,439,623.26 6,547,508.88 2,439,534.07 PB 02 6,547,974.29 2,439,353.55 6,547,767.53 2,439,264.36 PB 03 6,548,285.55 2,438,754.96 6,548,078.79 2,438,665.77

In 2003, Intrepid contracted Eagle Mapping Sudamérica to complete a low altitude flight over the Casposo area to take air photos, using two double-frequency Topcon GPS ground receivers as control. Based on the photos, a 1:1,000 topographic map with 2 m contour lines was prepared.

10.2 Geological Mapping

As a base for geological mapping, BMG used a 1:10,000 topographic map prepared by the Instituto de Fotogrametría of the San Juan University through photogrammetric restitution of 1:40,000 scale aerial photos. Successive restitutions to more detailed scales (up to 1:1,000) were later conducted. Intrepid has undertaken prospect-scale mapping at 1:1,000 scale in areas that were not covered by the initial BMG mapping.




10.3 Geophysics

In 2004, Quantec undertook a time domain induced polarization and resistivity (IP/resistivity) survey on a portion of the Casposo Project, with the aim of detecting and delineating silicified structures and related disseminated sulphides associated with gold mineralization. The grid consisted of 100 m-spaced northeast–southwest lines staked with wooden pegs at 50 m intervals along the lines.

Interpretation of pole- dipole array results described similar structures through the centre and northern portions of the geophysical grid suggesting the anomalies have source depths of 60 m to 80 m. Evaluation of the two pole-dipole lines 100W and 100E, which traversed the Kamila zone proper, did not discern a consistent trend in resistivity or chargeability making extension of a predictable trend outside of the zone difficult.

10.4 Surface Sampling

AMEC has not reviewed results of first-pass exploration programs on the Project. This work comprised stream sediment and soil sampling, and has been superseded by the drilling and trenching programs described in the following subsections. Information on the programs is included in Technical Reports completed by McGuinty (2005), Puritch (2003), and Pitman and Puritch (2004).

10.5 Trenching

A summary of the trenching undertaken on the Project is given in Table 10-2. Assay results from 70 of these trenches are incorporated into the mineral resource estimate reported in Section 17. Sampling completed by BMG was confined to the period 1998–2000, and Intrepid trenching occurred during the period 2002–2004.




Table 10-2: Trench Summary

Target Area Number of Trenches Total Length (m) Comment

Cerro Norte 72 1,598.85 Intrepid Kamila 22 1620 BMG Kamila 57 915.2 Intrepid Kamila Mayan NW 20 79.8 Intrepid Kamila Inca Footwall 6 20.2 Intrepid Mercado 15 791.27 BMG Mercado 15 406 Intrepid Mercado NW 10 154.3 Intrepid Oveja Negra 26 277.1 Intrepid Panzón 11 106.5 Intrepid subtotal BMG 37 2,411.27 BMG subtotal Intrepid 217 3,557.95 Intrepid

Total Trenches 254 5,969.22 Total

The Intrepid Casposo database includes 217 trenches, totalling 3,558 m, of which 115 were completed at the Kamila deposit, 40 at the Mercado deposit, 11 at the Panzón prospect, and 26 in the Oveja Negra prospect. A total of 22 trenches were completed by BMG at Kamila, and an additional 15 trenches were dug at Mercado. The remaining 25 trenches were completed on prospects outside the main deposits, such as Cerro Norte.

10.6 Pits

During 2002, Intrepid systematically sampled four areas on the Kamila vein system and one area above the Mercado vein by digging shallow pits, primarily to provide material for additional metallurgical test work.

Veins were sampled in a grid across the true width of each vein and over intervals along strike length of 10 to 20 m (see Table 10-3) to produce approximately 20 kg of material from each pit. The distance between the various pits sampled at Kamila was approximately 500 m. In addition one pit centred on the Mercado vein was sampled. Samples collected from all five completed pits are incorporated into the current mineral resource estimate (Section 17).




Table 10-3: Pit Summary Area Sampled Sample Vein Width

(m) Length

(m) Gold (g/t)

Silver (g/t)

Au Equivalent

(g/t)

Au Equivalent

(oz/ton) 1595 Mercado 10 20 4.05 140 6.05 0.18 1596 B-vein 12 10 8.06 102 9.51 0.28 1597 Aztec 8 15 3.95 129 5.79 0.17 1598 Inca 10 18 114.9 569 123 3.59 1599 B-vein extension 6 15 7.88 148 9.99 0.29

Note: gold equivalence based on Ag:Au ratio of 70:1

During construction of the geological model (see Section 17), AMEC adjusted the surface location of a few of the pits. The adjusted pits were surveyed with a hand-held GPS, and were a few metres offset of the vein projection to the surface.

10.7 Drilling

Nine phases of diamond drilling and one phase of reverse circulation (RC) drilling have been completed on the deposit. Details for these programs are presented in Section 11 of this Report.

10.8 Density

Density determinations are discussed in Section 13 of this Report.

10.9 Other Studies

In conjunction with exploration and development programs, the following additional studies have been completed; these studies are discussed in detail in previous technical reports, including Colquhoun et al, (2007), McGuinty, (2007; 2006), and McGuinty and Puritch (2007).

• Mineralogy: Six samples in polished section from the Kamila Zone (Inca and AF veins) were examined under scanning electron microscope by personnel from Kishar Research Inc.

• Vein textural mapping: Vein textural mapping was undertaken on all drill core and surface vein exposures during 2003–2005 by C. Gustavo Fernandez and Irma L. Belvideri.

• Fluid inclusion study: Fluid inclusions contained within 25 samples of drill core from the Casposo area were evaluated for salinity and estimated depth of formation during 2003 and 2005.




• Structural Geological Analysis of Casposo District: approximately 191 sites that had geological observations and structural data collected were studied by Eric Nelson in November 2008 to establish the structural vectors for orientation studies of the mineralization and quartz veins.


The exploration programs completed to date are appropriate to the style of the Casposo deposits.




11.0 DRILLING

Intrepid Mines and prior operator BMG have conducted exploration activities on the Casposo Property since 1998. Core drilling (NQ and HQ diameter) and a small amount of RC drilling were completed on several zones and prospects during the period 1998 to 2008.

Drilling to 25 October 2008 on the Project comprised 288 core holes (47,085 m) and 12 RC holes (2,185 m) for a combined RC and core drilled total of 300 holes for 49,270 m. A total of 46 of these holes (8,626 m) were drilled by BMG, and 254 holes (40,644 m), including the RC drilling, by Intrepid Mines.

The date of 12 September, 2007 was used as the cut-off date for supply of data to inform mineral resource estimation. Not all holes completed on the Project were used to support the estimation. Drilling completed during 2008 has not been interpreted or as yet incorporated into an updated geological model for the Project.

A drill hole summary is included as Table 11-1 by year, and by drilling phase in Table 11-2. A drill hole location plan showing all holes completed to October 2008 for the Kamila area (including Inca SE, and Kamila SEXT) is included as Figure 11-1, for Mercado in Figure 11-2, and for the Julieta deposit in Figure 11-3.

Table 11-1: Drilling By Year

Year Company Drilling Type Deposits and Prospects Drilled No. Holes

Metreage (m)

1999 BMG Core Kamila, Mercado 26 4,337.17 2000 BMG Core Kamila, Mercado, Cerro Norte 20 4,288.97 2003 Intrepid Core Kamila, Mercado 33 4,104.33 2004 Intrepid Core Kamila 37 4,820.55 2004 Intrepid RC Kamila, BEXSE*, Rosarita Sur* 12 2,185.00

2005 Intrepid Core Kamila, Mercado, Panzon, Oveja Negra 29 5,850.40

2006 Intrepid Core Kamila, Mercado, Kamila SEXT, Mercado SE 54 7,305.75

2007 Intrepid Core

Inca Ext, Kamila SEXT, Kamila, Aztec and B Veins, waste rock and tailings facility locality, process plant locality and condemnation drilling

28 3,315.65

2008 Intrepid Core Kamila and Mercado 61 13,062.45 Totals 300 49,270.27

Note: * indicates areas drilled are outside the main Kamila deposit.




Table 11-2: Drilling Campaigns by Phase

Company Phase Drilling Type Period Range of Hole

Numbers No.

Holes Metreage

(m) BMG Core 1998–2000 to hole CA-00-46 46 8,626.14 Intrepid I Core 2002– early 2003 to hole CA-03-62 16 1,677.83 Intrepid II Core Late 2003–early 2004 to hole CA-04-98 36 4,790.45 Intrepid III Core Late 2004– middle 2005 to hole CA-04-116 18 2,456.6 Intrepid IV Core Late 2005–early 2006 to hole CA-05-124 8 1,660 Intrepid V Core Up to July 2006 to hole CA-05-138 14 2,029.05 Intrepid VI Core July–August 2006 to hole CA-06-154 16 3,912.3 Intrepid VII Core September 2006 to hole CA-06-199 45 5,554.8 Intrepid VIII Core March to May 2007 to hole CA-07-219 * 28 3,315.65 Intrepid IX Core 2008 to hole CA-08-280 61 13,062.45 Intrepid RC 2004 12 2,185 Totals 300 49,270.27

Note: total metres vary from Table 11-1 due to rounding differences. Program VIII includes eight geotechnical holes




Figure 11-1: Drill Hole Location Plan, Kamila (includes Kamila SEXT and Inca SE)

Figure from Intrepid Mines Limited




Figure 11-2: Drill Hole Location Plan, Mercado

Figure from Intrepid Mines Limited




Figure 11-3: Drill Hole Location Plan, Julieta

Figure from Intrepid Mines Ltd.




11.1 RC Drilling

Intrepid used a sole contractor, Major Drilling (Major), for RC drilling. Holes were oriented to 45°, 90°, 135°, 300°, 310°, 350° and had inclinations from -50° to -60°.

The RC hole depths ranged from 123 m to 207 m, averaging 182 m. All RC holes were drilled with a 139.7 mm (5.5”) diameter drill bit.

No logging or sampling procedures were available to AMEC. RC drilling is not used in support of the mineral resource estimate.

11.2 Core Drilling

11.2.1 Battle Mountain Drilling

Between 1998 and 2000, BMG completed 8,626 m of core drilling in 46 holes, to approximate a 50 m x 50 m drilling grid (Puritch, 2004). Drill hole depths ranged from 75.3 m to 437.4 m, averaging 187.5 m. Drilling was completed primarily on the Kamila and Mercado deposits, but two holes tested the Cerro Norte prospect.

BMG used two contractors: Major and Connors Drilling (Connors) who completed 11 holes (1,732 m) and 35 holes (6,894 m) respectively. Most holes were east or northeast-oriented, generally normal to the strike of the silicified units, although four holes were also oriented to the north. All drill holes had 45º to 80º inclinations.

The drill hole diameter was primarily NQ (47.6 mm nominal core diameter), although some holes were collared with HQ (63.5 mm nominal core diameter), and reduced to NQ for the deeper sections.

Collar Surveys

Drill collars are surveyed using a GPS instrument. AMEC validated survey data as discussed in Sections 14.2.1 and 14.2.2.

Down Hole Surveys

Acid tests (27 holes) and the Tropari system (19 holes) were used to measure the down hole deviations. AMEC verified the survey data, as discussed in Section 14.2.2.




Logging Procedures

BMG used the following core logging procedures:

• Core was placed in well-identified, 1 m long, labelled wooden core boxes, from left to right, with the start and finish of each drill run labelled with a metreage marker.

• Core boxes were closed and regularly transported to core logging facility, and laid out in order of increasing hole depth.

• Core box labels and metreage were checked for accuracy and core was photographed and printed in paper format.

• Specially designed forms including general data, as location, date drilled, diameter, down hole deviation, etc., were used for logging.

• Geological data recorded included lithology, alteration, veining, mineralization, structures, and references about the oxide/sulphide boundary, all numerically or alphanumerically coded. A copy of the geological codes used in logging was provided in the Technical Report by Colquhoun et al,(2007), and is not reproduced in this report.

• Initially, the geotechnical data were not systematically recorded. Later, recovery and RQD were documented for all BMG holes from CA-00-30 forward.

• Information from the drill logs was hand-entered into BorSurv, a special logging program, using a single-entry procedure.

Drill hole geological data from BMG are available on site as descriptive logs recorded on A4 paper sheets. BMG core is currently stored at site, along with the Intrepid core.

11.2.2 Intrepid Mines Drilling, 2002–2008

Between the acquisition date of the property in 2002 and October 2008, Intrepid completed 38,549 m of core drilling in 242 drill holes (up to drill hole CA-08-280), in addition to 2,185 m of RC drilling in 12 holes, for a total 254 drill holes (40,644 m). Drill contractors included Connors, Bolland and Major Drilling (2008 campaign) for core, and Major Drilling for the RC holes.

Most core drill holes were oriented to the east (ranging from northeast to southeast), generally normal to the strike of the silicified units, although 22 holes were also oriented to the west and one hole to the north. The majority of holes used in the resource estimate in Section 17 have 45º to 90º inclinations (mostly sub-vertical holes




from Phase IX drilling). Core drill hole depths ranged from 20 m to 409.8 m, averaging 158.9 m.

The diamond drill hole diameter was primarily HQ (NQ diameter was used in three holes only, CA-03-48, CA-05-133 and CA-05-134). All Intrepid core has been drilled with the HQ-3 triple tube method to ensure minimum core rotation and maximum sample recovery, with the exception of two holes, at Panzón, in 2005, which were drilled with NQ-diameter tools.

In May 2008, Intrepid commenced a step-out exploration core drill hole program, designed to test for additional mineralization that had the potential to be converted to mineral resources.

Drilling focused on easterly strike and plunge extensions to the Inca Vein structure and has intercepted the Inca Vein at distances ranging from 50 m to 150 m away from existing mineralization that has been incorporated in mineral resource estimation. This campaign also aimed to test the Kamila Southeast Extension, returning anomalous gold intercepts. Drill spacing at Kamila SEXT remains at a wider spacing than the other drilled areas.

Significant results from this program are summarized in Table 11-3. Drill hole locations were included earlier in Section 11, in Figures 11-1 to 11-3. Drill hole information from the 2008 drilling program has not been interpreted, and does not inform the mineral resource estimate discussed in Section 17.




Table 11-3: 2008 Exploration Program, Drill Hole Results to 25 October 2008

Hole ID Easting Nothing Elevation Total Depth

(m)

Intercept From (m)

Intercept To (m)

Drilled Width

(m)

True Width

(m)

Gold (g/t Au)

Silver (g/t Ag)

AuEqv (g/t Au) Vein

CA-08-220 2439285.34 6548298.64 2454.13 78.20 64.55 64.95 0.40 0.29 0.03 -2 NSV Inca SE

2439284.14 6548298.50 2454.07 98.40 32.40 33.55 1.15 0.49 0.04 2 NSV Inca SE 36.75 38.25 1.50 0.63 0.35 28 0.72 Inca SE 42.35 45.50 3.15 1.33 0.15 22 0.44 Inca SE

CA-08-221

88.15 88.90 0.75 0.32 0.31 45 0.91 Inca SE 2439268.93 6548255.46 2456.3 119.00 5.80 9.90 4.10 2.90 0.09 -2 NSV B Vein

98.60 103.75 5.15 3.64 1.53 205 4.26 Inca SE CA-08-222

including 102.60 103.75 1.15 0.81 5.67 825 16.67 Inca SE 2439249.82 6548233.35 2446.21 132.00 23.55 29.15 5.60 5.05 1.02 15 1.22 B Vein SE CA-08-223

including 23.55 25.65 2.10 1.89 1.74 23 2.05 B Vein SE 2439198.18 6548256.73 2452.7 177.80 18.45 19.60 1.15 0.91 0.02 -2 NSV B Vein CA-08-224

161.30 165.30 4.00 3.16 4.52 438 10.36 Inca SE 2439209.82 6548226.47 2442.21 241.00 45.80 49.30 3.50 2.05 0.52 12 0.68 B Vein SE

223.70 227.80 4.10 2.03 1.70 332 6.13 Inca Deep CA-08-225

including 225.70 227.80 2.10 0.89 2.56 537 9.72 Inca SE CA-08-226 2439212.20 6548201.93 2439.96 159.50 143.95 146.25 2.30 1.54 17.74 827 28.77 Inca Deep CA-08-227 2439211.25 6548201.97 2439.99 239.70 185.90 190.35 4.45 2.39 1.63 165 3.83 Inca CA-08-227 192.90 193.50 0.60 0.32 1.84 405 7.24 Inca CA-08-228 2439251.07 6548146.55 2421.83 147.00 28.70 30.65 1.95 1.50 0.09 7 NSV B Vein SE

2439290.88 6548125.16 2417.74 254.80 17.15 18.30 1.15 0.81 1.75 34 2.20 B Vein SE 206.15 212.90 6.75 2.85 6.41 2245 36.34 Inca Deep CA-08-229

including 206.15 208.10 1.95 0.82 17.60 6480 104.00 2439249.74 6548174.40 2425.54 300.00 25.00 31.60 6.60 4.67 0.12 6 NSV B Vein SE CA-08-230

225.35 226.35 1.00 0.42 0.15 19 NSV Inca 2439211.36 6548228.26 2442.07 159.50 22.60 23.80 1.20 1.04 0.08 10 NSV B Vein SE CA-08-231

136.60 140.80 4.20 2.67 2.62 341 7.16 Inca Deep 2439090.52 6548248.16 2453.54 273.50 73.40 76.40 3.00 2.66 0.65 28 1.02 B Vein CA-08-232

218.70 220.20 1.50 0.92 3.54 4 3.59 Unknown vein





(m)

Intercept From (m)

Intercept To (m)

Drilled Width

(m)

True Width

(m)

Gold (g/t Au)

Silver (g/t Ag)

AuEqv (g/t Au) Vein

249.85 251.30 1.45 0.89 0.20 31 0.61

?interpreted Inca

2439165.03 6548275.69 2468.48 228.00 44.90 51.90 7.00 6.04 1.10 16 1.31 B Vein 165.50 168.80 3.30 2.52 4.01 552 11.37 Inca CA-08-233

201.50 202.50 1.00 0.77 2.36 285 6.16 Possibly Inca 2439272.67 6548276.18 2455.22 181.00 20.75 23.70 2.95 2.09 -0.01 -2 NSV B Vein

71.00 74.10 3.10 1.55 0.03 -2 NSV ?interpreted Inca SE

78.80 83.70 4.90 1.54 0.05 12 NSV ?interpreted Inca SE

CA-08-234

88.60 92.40 3.80 1.90 0.05 5 NSV ?interpreted Inca SE

2439279.12 6548277.11 2455.26 90.80 20.80 21.55 0.75 0.55 0.05 -2 NSV B Vein 24.50 25.50 1.00 0.73 -0.01 -2 NSV B Vein

39.20 42.20 3.00 2.20 0.54 31 0.95

?Interpreted ferruginous zone

CA-08-235

62.50 63.00 0.50 0.37 0.22 5 0.29 Inca SE CA-08-236 2439265.35 6547899.01 2418.02 254.50 215.80 218.60 2.80 0.96 1.12 136 2.93 K SE

2439299.78 6547880.69 2412.33 207.50 188.60 189.50 0.90 0.31 0.44 87 1.60 K SE CA-08-237 191.50 193.50 2.00 0.68 2.34 463 8.50 K SE

CA-08-238 2439243.65 6547912.36 2421.78 287.00 231.10 232.10 1.00 0.34 0.20 50 0.87 K SE CA-08-239 2439252.92 6547814.88 2417.75 327.50 285.00 285.90 0.90 0.31 0.12 59 0.91 K SE

2439198.89 6548254.25 2452.53 245.70 191.60 192.20 0.60 0.30 0.42 102 1.78 Inca Deep 210.70 211.95 1.25 0.63 0.04 9 NSV Inca Deep CA-08-240

222.70 226.50 3.80 1.90 0.29 61 1.11 Inca Deep CA-08-241 2439278.84 6547877.38 2418.10 273.00 219.40 220.65 1.25 0.43 0.30 29 0.69 K SE

CA-08-242 2439365.65 6547885.99 2409.93 238.00 K SE- No Intercept

CA-08-243 2439165.16 6548257.38 2462.43 256.20 224.20 227.20 3.00 1.72 0.29 45 0.89 Inca Deep CA-08-244 2439256.01 6547820.55 2417.33 265.00 243.80 245.65 1.85 0.91 4.28 355 9.01 K SE CA-08-245 2439312.56 6547948.66 2415.06 164.00 129.10 131.30 2.20 1.57 0.10 14 NSV K SE CA-08-246 2439164.76 6548256.99 2462.37 247.20 90.05 94.20 4.15 3.17 0.33 38 0.84 B Vein





(m)

Intercept From (m)

Intercept To (m)

Drilled Width

(m)

True Width

(m)

Gold (g/t Au)

Silver (g/t Ag)

AuEqv (g/t Au) Vein

203.00 207.00 4.00 2.57 2.85 594 10.77 Inca Deep

237.65 238.60 0.95 0.61 0.27 117 1.83 Inca Deep 2439305.86 6547875.30 2414.52 190.85 161.80 164.30 2.50 1.78 0.25 47 0.88 K SE 2439266.91 6548141.18 2419.28 136.60 21.25 22.05 0.80 0.74 0.60 22 0.89 B Vein CA-08-247

104.90 106.20 1.30 0.93 0.03 41 NSV Inca Deep 2439087.02 6548269.59 2456.38 252.50 43.85 45.78 1.93 1.74 0.27 16 NSV B Vein

53.65 55.40 1.75 1.58 2.63 58 3.40 B Vein 60.35 61.00 0.65 0.59 2.00 38 2.51 B Vein

CA-08-249

193.30 195.65 2.35 2.03 0.06 4 NSV ?Interpreted Inca Deep

2439265.50 6548140.00 2419.5 171.60 142.90 150.10 7.20 4.62 108.71 4423 167.68 Inca Deep CA-08-250 142.90 144.50 1.60 1.03 437.61 13742 620.84 Inca Include

CA-08-251 2439265.18 6548139.61 2419.47 221.70 202.00 206.70 4.70 2.35 0.32 76 1.33 Inca Deep

2439115.18 6548253.44 2456.98 250.70 45.45 48.05 2.60 2.24 0.09 8 NSV ?Interpreted B Vein?

54.35 59.95 5.60 5.42 0.10 7 NSV ?Interpreted B Vein?

199.50 200.35 0.85 0.65 0.44 150 2.44 Inca

CA-08-252

218.15 218.70 0.55 0.42 0.01 6 NSV Inca 2439282.03 6548130.88 2418.17 159.80 120.75 127.10 6.35 4.86 13.34 755 23.41 Inca

including 120.75 125.75 5.00 3.83 16.79 927 29.15 Inca CA-08-253

135.35 136.85 1.50 1.15 1.40 198 4.04 Inca CA-08-255 2439114.54 6548252.72 2456.78 287.00 231.10 232.85 1.75 1.24 1.26 582 9.02 Inca

2439303.96 6548122.84 2417.64 141.50 5.00 8.80 3.80 3.28 5.24 80 6.31 B vein 114.75 116.78 2.03 1.66 3.91 601 11.92 Inca CA-08-257

123.78 126.60 2.82 1.82 2.57 404 7.96 Inca CA-08-258 2439068.12 6548280.15 2461.76 250.00 54.30 57.50 3.20 2.49 2.09 51 2.77 B Vein

2439303.52 6548122.42 2417.51 180.80 5.15 9.15 4.00 3.25 6.02 57 6.78 B vein

114.20 115.30 1.10 0.71 1.03 143 2.94 ?Interpreted Inca Splay

CA-08-259

124.95 130.80 5.85 3.76 2.44 140 4.31 Inca





(m)

Intercept From (m)

Intercept To (m)

Drilled Width

(m)

True Width

(m)

Gold (g/t Au)

Silver (g/t Ag)

AuEqv (g/t Au) Vein

139.70 140.40 0.70 0.45 1.63 250 4.96 ?Interpreted Inca Splay

144.88 150.10 5.22 3.35 12.52 1115 27.39 Inca

including 144.88 146.90 2.02 1.30 31.20 2660 66.67 Inca 2439303.11 6548122.08 2417.46 295.00 3.80 9.70 5.90 4.17 1.82 24 2.14 B vein

CA-08-260 189.20 190.10 0.90 0.38 0.20 96 1.48

?Interpreted Inca

2439067.54 6548279.55 2461.93 249.30 62.75 69.50 6.75 4.81 1.02 89 2.21 B vein CA-08-261 212.50 214.50 2.00 1.27 2.72 1754 26.11 Inca

2439304.62 6548123.40 2417.71 130.10 4.40 8.20 3.80 3.25 8.18 152 10.21 B Vein CA-08-262 108.70 110.70 2.00 1.88 0.83 103 2.20 Inca

CA-08-263 2439198.86 6548151.76 2430.29 329.50 97.75 102.10 4.35 4.35 0.96 297 4.92 B vein 2439066.96 6548278.84 2462.07 279.50 87.70 91.30 3.60 2.16 0.93 35 1.40 B Vein CA-08-264

262.80 266.95 4.15 1.74 0.04 19 NSV Inca 2439088.28 6548333.88 2484.51 344.60 20.17 54.45 34.28 17.14 10.44 234 13.56 B-Aztec

54.45 66.05 11.60 5.80 0.31 28 NSV B-Aztec CA-08-265

327.25 329.00 1.75 0.45 0.06 19 NSV Inca

CA-08-266 2439266.57 6548009.54 2423.29 168.50

Inca- Drill hole Abandoned

2439235.75 6548016.34 2427.11 294.50 120.50 122.00 1.50 1.13 0.36 62 1.19 B Vein CA-08-267 243.05 245.50 2.45 1.72 1.57 337 6.06 Inca

CA-08-268 2439216.79 6548012.44 2418 332.00 144.20 145.37 1.17 0.80 0.08 4 NSV Inca 2439037.86 6548340.76 2484.73 222.10 43.25 54.60 11.35 7.71 0.15 6 NSV B Vein?

53.00 54.60 1.60 1.09 0.70 4 NSV Include 87.50 93.90 6.40 4.35 1.33 45 1.93 Aztec 93.90 98.40 4.50 3.06 1.00 13 1.17 Aztec SW 103.30 106.30 3.00 2.04 1.99 99 3.31 Aztec

CA-08-269

204.92 205.76 0.84 0.48 8.51 237 11.67 Inca CA-08-270 2439210.43 6548202.33 2439.97 190.00 180.80 182.60 1.80 0.76 0.94 198 3.58 Inca CA-08-271 2439002.77 6548334.89 2489.22 272.10 24.50 27.30 2.80 1.90 0.31 10 NSV B´





(m)

Intercept From (m)

Intercept To (m)

Drilled Width

(m)

True Width

(m)

Gold (g/t Au)

Silver (g/t Ag)

AuEqv (g/t Au) Vein

68.25 72.50 4.25 2.89 5.46 99 6.78 B-Aztec

104.75 107.80 3.05 2.07 0.13 3 NSV B-Aztec 127.00 135.55 8.55 5.81 4.93 156 7.01 B-Aztec 131.00 133.00 2.00 1.36 16.24 505 22.97 Include 139.30 140.20 0.90 0.61 0.94 64 1.79 B-Aztec 140.65 141.95 1.30 0.88 0.35 57 1.11 B-Aztec 231.85 233.65 1.80 1.02 0.09 48 NSV Inca

246.20 247.35 1.15 0.65 0.01 7 NSV Inca 2439306.26 6548092.39 2416.05 177.60 19.80 21.60 1.80 1.22 0.13 4 NSV B vein CA-08-272

157.70 158.80 1.10 0.63 3.12 537 10.28 Inca

15.70 16.70 1.00 0.79 0.74 10 NSV ?Interpreted B Vein CA-08-273

2439307.13 6548093.25 2416.03 150.00 132.75 135.00 2.25 1.93 0.23 38 NSV Inca 2439324.42 6548075.23 2414.86 163.00 143.90 146.80 2.90 2.03 2.88 403 8.25 Inca

144.40 145.30 0.90 0.63 8.93 1246 25.54 Inca Include CA-08-274

151.30 153.30 2.00 1.40 0.78 78 1.82 Inca Splay? 2439324.03 6548074.72 2414.88 190.00 171.35 179.90 8.55 4.88 34.44 1925 60.11 Inca CA-08-275

including 171.35 174.35 3.00 1.71 94.63 4696 157.24 Inca 2439323.78 6548074.38 2414.91 259.00 39.40 43.00 3.60 1.80 5.63 97 6.92 B vein CA-08-276

240.60 243.50 2.90 1.20 1.93 1021 15.54 Inca

CA-08-277 2439394.61 6548101.26 2419.1 159.50 Inca- No Intercept

2438655.10 6548832.13 2497.23 201.00 179.05 181.50 2.45 2.02 0.24 57 1.01 Mercado CA-08-278 189.40 190.05 0.65 0.54 0.29 33 0.73 Mercado

CA-08-279 2438612.78 6548864.31 2494.18 200.60 179.30 182.90 3.60 2.98 0.66 80 1.72 Mercado 2439347.02 6548063.06 2413.08 236.10 19.25 21.80 2.55 1.41 2.00 119 3.58 B vein CA-08-280

192.00 195.00 3.00 1.02 0.29 54 1.01 Inca Note: Gold equivalency is based on a ratio of 75:1 Ag:Au.




Recovery

The geotechnical database at the time of mineral resource estimation included recovery data from 123 core holes or 10,967 m, representing about 68% of the total core holes as at September 2007, and about 40% of the drilling metreage.

Collar Surveys

At the time of mineral resource estimation, drill collars were surveyed using a GPS instrument. AMEC validated collar locations as discussed in Section 14.1. Subsequent to the mineral resource estimation and AMEC’s data validation, all drill hole collars were resurveyed using a total station instrument.

Down Hole Surveys

The Tropari system was used to measure the down hole deviations in 13 drill holes, the Sperry Sun method for drill holes to hole CA-07-219, and a Reflex instrument for the remainder of the holes. The values were noted on paper and then introduced into the logging forms and the database. AMEC conducted verification checks on the survey data (see Section 14.1).

Logging Procedures

Intrepid used the following core logging procedures:

• Core was placed in well identified, 1 m long, wooden core boxes, from left to right, with the start and finish of each drill run labelled with a metreage marker;

• Core boxes were closed and regularly transported to core logging facility, and laid out in order of increasing drill hole depth;

• Core box labels and metreage were checked for accuracy and core was photographed in digital format by a company geologist;

• Specially designed forms were used for logging. These included general header data, such as location, date drilled, core diameter, down hole deviation, etc;

• Geological data recorded included lithology, structures, alteration, and mineralization. A set of alphanumeric codes synthesize the geological data;

• Geotechnical data recorded included RQD and recovery, as well as coded hardness, weathering and various fracture data;




• Information from the drill logs was hand-entered into Excel files using a single-entry procedure.

Intrepid drill hole geological data are available on site as descriptive logs recorded on paper sheets.

Once core was logged and sampled, it was stacked by drill hole in an enclosed warehouse or was stored, covered by tarpaulins, outside of the warehouse. All boxes are stored with lids.

11.3 Comment on Drill Programs

The quantity and quality of the lithological, geotechnical, collar and downhole survey data collected in the exploration programs by BMG and Intrepid are sufficient to support mineral resource and mineral reserve estimation, such that:

• Core logging meets industry standards for gold exploration

• Geotechnical logging meets industry standards for planned open pit operations

• Collar surveys have been performed using industry-standard instrumentation

• Downhole surveys accurately represent the trajectories of the holes.

Drill intersections, due to the orientation of the drill holes, are typically greater than the true width of the mineralization. An illustration of the relationship between drilled thickness and thickness of mineralization is shown in Figures 7-4, 7-6 and 7-7.

Orientation of the mineralization is outlined in the above figures included in Section 7 and Figures 9-1 and 9-2 in Section 9.

Drill data generated during 2008 have not been incorporated into the geological model, and thus do not inform the current mineral resource estimate. AMEC recommends that in the next mineral resource update, these data are reconciled in plan, cross- and long-section to existing interpretations, and the existing interpretations modified as appropriate.

Troy should also review and incorporate into the geological models any changes to the drill collar locations as a result of the latest Total Station collar survey results, as these may present slight changes in drill collar locations to those generated from earlier hand-held GPS surveys.




In addition, AMEC recommends that the geological and structural interpretation discussed in Section 10.9 is incorporated into the updated geological interpretations and subsequent geological models.




12.0 SAMPLING METHOD AND APPROACH

Sampling programs at the Casposo Project have included drill core samples, RC samples and various geochemical samples including surface rock chip, soil and stream sediment sampling (surface sampling), trench and pit sampling (channel sampling).

The surface sampling programs are not used as supporting data for the mineral resource estimation and are therefore the sampling methods for these programs are not discussed in detail in this report.

No detailed information was available for AMEC to review for the logging, sample collection and sample preparation protocols for the BMG exploration programs.

Intrepid established detailed logging, sample collection, and sample preparation protocols for core and RC sampling, and implemented procedures for the collection of geotechnical data.

During AMEC’s site visits in 2006, 2007 and 2008, core and RC drilling procedures were observed.

Table 12-1 summarizes the sample database by sample type.

Table 12-1: Sample Types

Type Number Total Length (m) Percentage Average Length (m) Surface 1,734 ---- Channel 1,730 4,054 2.34 Core BMG 5,332 6,466 1.21 Core Intrepid 9,365 12,048 1.29 RC Intrepid 810 1,183 1.46

12.1 Surface Sampling Procedures

Soil and stream sediment samples were dried and screened with an 80 mesh sieve, after which a 100 g sub-sample was split, bagged and sent to the laboratory. The rock chip samples were collected with hammer and chisel, and consisted of approximately 1 cm diameter fragments, taken from an area of influence of about 2 m in diameter. The average weight was 3 kg.




12.2 Trench Sampling Procedures

Continuous channel sampling was conducted in the trenches with chisel and hammer, usually at the bottom of the excavations. The average length was 2.38 m, but about 85% of the channel samples were 1 m to 4 m long, and nearly 12% exceeded 5 m, sometimes reaching 10 m in some of the BMG trenches. The average channel sample weight was 3 kg to 5 kg.

12.3 Pit Sampling Procedures

Pit samples were also collected using channel sampling methods. Samples were composited to approximate 20 kg weights.

12.4 RC Sampling Procedures

RC samples were collected from the cyclone every 1 m, then homogenized and split twice, to obtain a 3 kg to 5 kg sample. Another split of the sample was stored as backup. The remaining reject was discarded.

12.5 Core Sampling Procedures

Core was split in half with a mechanical splitter (BMG) or diamond saw (Intrepid). One half of the core was sent for analysis and the remaining half returned to the core box in its original orientation as a permanent record. Normally, the entire hole was sampled. The sample interval was usually 1 m to 2 m for BMG, and 0.5 m to 2 m for Intrepid (maximum 1.5 m in mineralized zones). Highly-fragmented core was bound with adhesive tape before splitting.

The current procedure is to have all drill core taped prior to splitting, even when the core is intact.


Core sampling methods are acceptable, meet industry-standard practices, and are adequate for mineral resource and mineral reserve estimation and mine planning purposes.

Pit and trench sampling procedures were not reviewed by AMEC. AMEC comments that the trench samples are longer than is normal practice for sampling vein material.




The density determination procedure is consistent with industry-standard procedures (see Section 13). There are sufficient density determinations to support the density values utilized in waste and mineralization tonnage interpolations.




13.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY

13.1 Sample Preparation

Sample preparation methods for rock chip and stream sediment sampling are not discussed in this report, as the data are not used in resource estimation.

BMG used ALS Geolab in Mendoza as the primary laboratory. However, there were no detailed references in the BMG data available to AMEC in regards to sample preparation procedures.

Intrepid used ALS Chemex (in La Serena, Chile) as primary laboratory for most of the sampling programs, and Alex Stewart (in Mendoza, Argentina) as the secondary laboratory. The samples were bagged in large sacks holding 10 samples each. ALS Chemex collected the samples at the camp, and transported them to Mendoza with their own vehicle. Sample preparation by ALS Chemex occurred in its Mendoza facilities; samples were then shipped by ALS Chemex from Mendoza to La Serena.

The preparation protocol at the ALS Mendoza preparation facility consisted of:

• Drying

• Crushing to 85% passing 10 mesh

• Splitting and pulverization of 1,000 g to 85% passing 200 mesh (74 µm)

• Separation of two bags of pulp with approximately 200 g each

• Pulps were forwarded directly by ALS Chemex to their main laboratory in Chile.

Starting from drill hole 148 (February 2005), Intrepid switched to Alex Stewart (Mendoza) as the primary laboratory. During this period, no check samples were sent to a secondary laboratory. The sample preparation protocol at Alex Stewart was similar to the protocol used by ALS Chemex.

13.2 Analyses

The BMG samples were assayed for:

• Au by fire assay (FA) using method PM209

• Ag, Pb, Zn, Mo, Cu, As, Sb by atomic absorption spectrometry (AAS) using method G105 and occasionally for Hg using method G008.




The Intrepid samples submitted to ALS Chemex were assayed as follows:

• Au by FA with either a gravimetric or AAS finish, using method AA Au-AA24 or method Au-GRA22 for samples with Au>10 g/t

• Ag in samples expected to have high Ag values by either four acid digestion and AAS, or FA and gravimetric finish, using method Ag-AA63 or method Ag-GRA22 for samples with Ag>100 g/t

• 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, Zn by four acid digestion and inductively coupled plasma with atomic emission spectroscopy (ICP-AES), using method ME-ICP61

• Hg by cold vapour/AAS, using method Hg-CV41

Intrepid samples submitted to Alex Stewart were assayed using the following:

• Au by FA and either a gravimetric or AAS finish, using method Au4-50 or Au4A-50 for samples with Au>10 g/t

• Ag by three techniques: four-acid digestion followed by AAS reading for check samples up to February 2006, aqua regia digestion followed by inductively coupled plasma with optical emission spectroscopy (ICP-OES) reading for ordinary samples after February 2006, and FA and gravimetric finish for samples with Ag>200 g/t up to February 2006 and for all samples in mineralized intersections after February 2006. Method numbers were GMA, ICP-AR-39 and Ag4A-50.

Detection limit ranges were provided in full in Colquhoun et al, (2007), and are not included in this report.

13.3 Database

Data generated on the Casposo Project are stored in an Access® database. Surveyed drill collars summarized into an Excel® spreadsheet file by the surveyor and then despatched to the Intrepid database manager, who imports the collars into the Access® database. Downhole surveys are manually entered into the database from the downhole camera shots. Lithology intervals and descriptions are manually entered from the drill hole paper log. Assays are imported from digital files sent by the laboratory and linked to the Access® database by the sample number.




13.4 Bulk Density Measurements

Intrepid conducted a limited bulk density sampling program on the Casposo Project, during 2005–2007, which produced 94 samples from 36 holes. The bulk density samples consisted of half core pieces, 10 cm to 15 cm long, which were taken from quartz veins and silicified breccias (47), andesites (28) and rhyolites (19). The bulk density statistics for Casposo are presented in Table 13-1.

Table 13-1: Bulk Density Statistics

Parameter Quartz Veins Andesites Rhyolites Average (t/m3) 2.56 2.69 2.59

Standard Deviation (t/m3) 0.08 0.05 0.08

Coefficient of Variation 3.2% 1.7% 3.1% Median (t/m3) 2.58 2.69 2.57 Mode (t/m3) 2.53 2.69 2.58

Count 47 28 19 Minimum (t/m3) 2.28 2.58 2.48 Maximum (t/m3) 2.72 2.79 2.73

Drill hole bulk density samples were sent to ALS Chemex facilities in Mendoza. AMEC visited the ALS Chemex Mendoza preparation facilities on February 21 and 22, 2005, and reviewed the bulk density determination procedure. The standard water displacement method is used, by covering the samples with a paraffin-wax coat and measuring the sample mass in air (Ma) and submerged in water (Mw).

Bulk density of quartz veins ranges within a relatively narrow dispersion interval, from 2.28 t/m3 to 2.72 t/m3, and similar trends can be observed for andesites and rhyolites. The depth of the quartz vein bulk density samples ranged from 14.5 m to 228.5 m, but no significant variation with depth was observed.

In addition, Intrepid carried out 183 direct measurements on core samples on site using the water displacement method. Trained Intrepid personnel conducted bulk density determinations on the most representative lithological units. The determination procedure consisted of drying the sample and weighing it in air and under water. Some samples, evidently considered porous, were covered with a thin plastic film. The samples ranged between 8 cm and 73 cm in length, and had an average length of 17.1 cm.

The statistics of Intrepid direct measurements are shown in Table 13-2. The bulk density values for veins range within a wide interval from 1.86 t/m3 to 2.96 t/m3.




Table 13-2: Bulk Density Statistics – Intrepid In-House Measurements

Parameter Veins Andesites Rhyolites

Count 111 18 54 Average Bulk Density (t/m3) 2.45 2.64 2.51

Standard Deviation 0.14 0.14 0.12

Coefficient of Variation 5.85% 5.20% 4.62%

Max Bulk Density (t/m3) 2.96 2.86 2.72 Min Bulk Density (t/m3) 1.86 2.39 2.14

The simple buoyancy method may be used for competent, non-porous and dry core samples, otherwise the rock could contain some water during the weighing in air, or water can infuse the sample during weighing in water, thus giving systematic positive errors that may lead to overestimates of mineral resource tonnages. The porosity of mineralized rock has not been measured and the water displacement method does not correct for porosity; this presents a risk that the density will be over-estimated.

Given the density of water (ρ) is 1 g/cm3, the bulk density (D) was calculated as the weight of the dry sample in air (Mair) divided by the difference of the weight of the dry sample in air and the weight of the sample in water (Mw). Hence:

D= Mair/(Mair-Mw) x (ρ)

AMEC recommends that the bulk density procedures used on site be improved, and should take porosity into consideration.

13.5 Quality Assurance and Quality Control (QA/QC)

13.5.1 BMG QA/QC Program

BMG only had a very limited QA/QC program in place during their drill program, consisting of the insertion of 16 standards over the duration of the sampling campaign. BMG did not insert twin samples, coarse duplicates or blanks in the sample batches. Occasionally, some pulp duplicates appear to have been assayed (Irma Belvedieri, technical communication, December 2005), but the results are not identified in the database. However, there are no other references in the data made available to AMEC for the BMG QA/QC program.




13.5.2 Intrepid QA/QC Program

The QA/QC program implemented by Intrepid for the Casposo Project from 2003 to 2008 included the insertion of control samples to monitor assay accuracy (standards) and contamination (coarse blanks). Sampling, sub-sampling and assay precisions were not assessed, since the QA/QC program lacked the insertion of twin samples, coarse duplicates and pulp duplicates.

13.6 Sample Security

The chain-of-custody for core samples collected and being shipped from site is as follows:

• Core is transported to the camp in the village of Calingasta either by the company geologists, company technicians or alternatively by the drill contractors and placed in the core logging area of the company-owned fenced compound where the sample intervals are rechecked, recoveries are noted and core is photographed. Sampling takes place in the compound using a diamond saw.

• Prepared samples are placed in plastic sample bags with a sample tag; the tops of the bags are folded over several times and stapled shut. Bags are then combined in numerical sequence in rice bags; the number of samples can vary, depending on weight, but averages ten. The total sample weight is about 25 kg.

• Each rice bag has the company name and has a list of samples written on the outside.

• A sample submission form accompanies each shipment, which is transported to the assay laboratory in trucks operated by laboratory employees or contractors. Intrepid notifies the laboratory prior to each shipment going out.

• Assays and analyses are sent electronically by the laboratory to a pre-set list of recipients with final paper and electronic certificates sent to Intrepid’s San Juan office.

No chain of custody procedures have been identified by AMEC for the pit, trench and RC samples. Sample security was not generally practiced during these programs. Sample security relied upon the fact that the samples were always attended or stored in designated sampling areas. Sample collection, preparation, and transportation have always been undertaken by BMG, Intrepid, or laboratory personnel using corporate vehicles. Chain of custody procedures consisted of filling out sample submittal forms that are sent to the laboratory with sample shipments to make certain that all samples were received by the laboratory.





Sample preparation and sample analysis for core, RC, trench and pit samples has been performed by recognized independent laboratories.

Core security measures are generally performed in accordance with exploration best practices and industry standards. No chain of custody procedures have been identified by AMEC for the pit, trench and RC samples.

Sample security has relied upon the fact that the samples were always attended or locked in the on-site sample preparation facility. Chain-of-custody procedures consist of filling out sample submittal forms that are sent to the laboratory with sample shipments to make certain that all samples are received by the laboratory.

The bulk density determination procedure performed by ALS Chemex is consistent with industry-standard procedures. Bulk density determination procedures performed by Intrepid personnel on site could be improved, and should take porosity into consideration. AMEC recommends that additional density determinations be performed on each vein and rock type, including waste material.

Current sample storage procedures and storage areas are consistent with industry standards.




14.0 DATA VERIFICATION

14.1 Database Reviews

Intrepid maintains an Access® database that contains drill holes, trenches, and pits, and covers a number of exploration targets such as Julieta, Panzón and Oveja Negra, as well as the Kamila and Mercado deposits. The Gems® and MapInfo® software programs source data directly from this database.

14.1.1 AMEC March 2007 Review

During the period 2005 to 2007 AMEC completed a number of database checks, which focused on data available for Kamila and Mercado, as follows:

• In December 2005, AMEC reviewed the collars of 21 diamond drill holes from the BMG and Intrepid campaigns, and measured the coordinates with a Vista e-Trex GPS, set for the Campo Inchauspe 1969 datum and a user-defined UTM projection. The measured coordinates were compared with the database coordinates, and the maximum planar difference found was 24 m. As part of the collar review, AMEC also plotted all the Casposo drill holes on a topographic map and compared the collar altitude with the location altitude according to the contour lines in the topographic map. None of the holes presented significant differences in elevation, and all appear to be correctly plotted.

• In August 2006, AMEC checked the GPS coordinates of two topographic reference points, PB 01 and PB 02, and the collars of 12 representative drill holes from the 2006 Intrepid campaign, using a Vista e-Trex GPS. The measured coordinates were compared with the original coordinates, and the maximum planar differences in X and Y coordinates were 6.6 m and 9.2 m, respectively, all within the acceptable GPS error.

• AMEC conducted a database validation using Gems® software tools that check each table for missing intervals and intervals that are out of sequence or overlapping, and also compare the total drill hole length against the interval lengths defined in the secondary tables. AMEC verified drill holes, trenches and pits effectively used for resource estimation. Minor errors, primarily overlapping intervals, were identified in the assay, lithology and survey tables. AMEC recommended correction of these intervals to ensure a clean database.

• AMEC visually reviewed the down hole survey table, cross-checked the information from various cells in the Excel® spreadsheet that contained the survey data through simple formulas, and did not find significant discrepancies between collar survey data and down hole survey data, or between the down hole survey




data for consecutive intervals. For Casposo, the average deviation in azimuth was 4.2º/100 m, and the average deviation in dip was 3.3º/100 m, which are considered reasonable.

• Drill hole pairs CA-99-19 and CA-03-47, CA-99-20 and CA-03-50 at Kamila, and CA-99-4 and CA-03-63, at Mercado were used as twin hole comparison drill holes. The Au and Ag grade versus depth distributions were plotted on mirror graphics. Although the grades usually differed, in all cases there was a good match between the positions of the mineralized intervals in the original and the twin holes.

• AMEC visually cross-checked the original geological logs and the information included in the digital files for ten drill holes, and found only few minor changes in the spelling. The information included in the digital files corresponds accurately to the hand-written descriptions.

• AMEC reviewed selected core intervals from 11 drill holes and compared the core with the original logs from the drill holes. AMEC checked the main lithologic contacts, alteration features, structures and sample intervals, which were adequately recorded. The core intervals were adequately marked in the boxes. Sample intervals (from-to) were usually in agreement with major lithology changes on drill logs, but occasionally sampling did not respect these boundaries, and included up to 20 cm of the wall rocks in the “mineralized” sample.

• Intrepid provided AMEC with copies of 16 certificates from ALS Geolab (BMG program), as well as eleven certificates from ALS Chemex and two certificates from Alex Stewart (Intrepid program). The Au and Ag assay results from the reviewed certificates were manually re-entered by AMEC. The certificates included 2,490 samples from the BMG program, representing 47% of the BMG Au and Ag assay data, and 1,270 samples from the Intrepid program, representing 24% of the Intrepid Au and Ag assay data to hole CA-06-166. All reviewed samples were included in the database. The double data entry was checked against the database. The error rate of the BMG Au assay data in the database is 2.6%, which is above the 1% acceptable figure, although only 16 of these values (0.007% of the entries) had differences exceeding 0.3 g/t. The error rates of the BGM Ag assay data and the Intrepid Au and Ag assay data are within an acceptable range. These data can be used in the resource estimation, although AMEC recommends that Intrepid re-digitize the BMG Au assay data.

14.1.2 AMEC September 2007 Review

About 10% of the 2006–2007 drilling was reviewed, from the Intrepid VI and VII drill phases:




• A total of 157 records from an Excel worksheet, “Kamila – Assay”, supplied by Intrepid, were audited against 1,276 available records. This represents 12.3% of the data. Checks were performed against the original scanned assay certificates for all elements analysed, and the “From” and “To” values were checked against the original sample sheets. No significant errors were identified.

• The lithology review comprised checking of 78 records out of a total of 772 records based on the “From”, “To” and “Litho Code” entries. The “Kamila–Litho” Excel worksheet was checked against the scanned original geology logs. No significant errors were encountered.

• The 32 survey collar co-ordinates that were checked are sourced from a list supplied by Alfredo Herrada a surveyor engaged through the Instituto de Investigaciones Mineras, Universidad Nacional de San Juan. The GPS procedures described to survey the points conform to generally acceptable survey principles. Three-dimensional plots of the drill holes revealed no anomalous holes either in terms of the position of the drill hole, or down-hole deviations in direction.

14.1.3 AMEC 2008–2009 Review

AMEC undertook the following data verification on the 2008 data:

• On 23 October 2008, AMEC reviewed the drilling procedures in place for the 2008 drilling campaign. Unfortunately the only rig on site had recently moved to a new hole location during the AMEC visit, and therefore AMEC could not verify drilling procedures; however, Major Drilling, the company contracted by Intrepid, have good procedures and a high level of experience in drilling these type of deposits, and they also have significant experience in Argentina.

• AMEC verified the location of 14 drill hole collars from the 2008 campaign. Using a handheld GPS setup with Kraus Krugger coordinate system, differences found between the original survey and the AMEC GPS survey were within the range of accuracy of the GPS. A few drill hole collars were not correctly identified during the first day of the site visit; however, the problem was rectified during the site visit.

• Alfredo Herrada a surveyor engaged through the Instituto de Investigaciones Mineras, Universidad Nacional de San Juan, surveyed 31 collar co-ordinates for comparison with previous surveying. The work was performed using two receptors Ashtech-ProMark 3 Monofrequency (L1) - Monocode (C/A). Differences under 0.30 m were found and AMEC accepted the results of the survey verification.




14.2 QA/QC

14.2.1 AMEC March 2007 Review

AMEC had access to the results of 619 control samples (standards, coarse blanks and check samples), which accounted for approximately 10.6% of all core samples collected and assayed by Intrepid. The control samples covered the drilling programs from BMG, and up to the Intrepid VI drill phase. The insertion frequency was as follows: 3–4 coarse blanks and 5–6 standard samples per one hundred samples included in the submission batch. The actual frequency of the check samples is not clear, since such samples were randomly chosen. Up to August 2005, the check samples were re-submitted for assaying to Alex Stewart Mendoza, the secondary laboratory. However, after that date no check samples were submitted. Results of the AMEC review are reported in the following subsections.

Standard Samples (SS)

BMG used two standards (40410 and Bor-3) at the end of the exploration program, both of them obtained from an unknown source. In total, 16 standard samples were assayed by ALS Geolab. AMEC prepared control charts for Au and for the two standards. No outliers were identified. The Au accuracy was good for both standards: -2.8% bias for standard 40410, and -0.6% bias for Bor-3. Unfortunately, the standards were introduced only at the end of the program, for which the laboratory accuracy remains insufficiently assessed.

Intrepid used 11 certified standards until early 2006 in the sample batches submitted to ALS Chemex. Nine standards were acquired from Ore Research & Exploration Pty Ltd., whereas two of them (40410 and Bor-3) are from an unknown source. In total, 268 standard samples were assayed by ALS Chemex. AMEC prepared control charts for all the standards, and Ag control charts for two standards, OREAS 61Pb and OREAS 62Pb. Only one outlier was identified for Au for standard OREAS 62Pb, which represents a very low rate of failing samples.

The Au accuracy was generally good for most standards with the exception of standards OREAS 6Ca (-9.3% bias) and OREAS 7Ca (-7.8% bias), which were accepted with care, since other standards corresponding approximately to similar values had acceptable accuracies. The Ag accuracy for standard OREAS 62Pb was very poor (negative), close to the unacceptable boundary (-9.1% bias); however, considering the low value of the standard (21.9 ppm Ag), AMEC does not consider this to be a definitive assessment of the Ag accuracy.




The overall Au accuracy was acceptable (-3.0% bias). On the other hand, Ag exhibited an overall poor accuracy (8.3% bias), close to the unacceptable limit of 10%. However, considering that the two Ag standards have very low values, AMEC does not judge this as a definite assessment of the overall Ag accuracy.

On the basis of these results, AMEC concludes that the Au accuracy at ALS Chemex during the Intrepid exploration campaign was acceptable. However, AMEC could not properly assess the Ag accuracy, due the low Ag values of the inserted standards.

Intrepid used five certified standards in 2006 in the sample batches submitted to Alex Stewart, all of them acquired from Ore Research & Exploration Pty Ltd. In total, 27 standard samples were assayed by Alex Stewart. AMEC prepared Au control charts for all the standards. No outliers were identified. The Au accuracy was acceptable for all standards. The overall Au accuracy was acceptable (0.1% bias). On the basis of these results, AMEC concludes that the Au accuracy at Alex Stewart during the Intrepid exploration campaigns was acceptable.

Coarse Blanks (PB)

Intrepid used coarse blank material to evaluate assay contamination during preparation. Coarse blank versus previous sample plots were prepared for the studied elements for assays produced at ALS Chemex. The analysis of 165 coarse blank samples showed some minor cross-contamination for Au in two samples, although none of them exceeded 20 times the detection limit.

An additional 27 coarse blank samples were assayed at Alex Stewart in 2006. All yielded values below the detection limits. Therefore, no obvious Au and Ag cross contamination was identified during sample preparation at ALS Chemex and Alex Stewart.

Check Samples (CS)

In total until mid-2005, Intrepid sent 128 check samples to Alex Stewart in Mendoza for external control. The samples were assayed for Au and Ag. To the best knowledge of AMEC, the check sample batches did not include internal control samples. RMA plots prepared for Au and Ag indicated a good fit between the check assays and the original assays, reflected in the high values of the coefficient of determination R2 (ranging between 1.000 and 0.999), as well as acceptable Au and Ag bias values of ALS Chemex as compared to Alex Stewart (0.5% and -0.4%, respectively).




Granulometric Checks

There are no references in the data made available to AMEC as to whether any granulometric (sieve) checks were conducted by BMG or Intrepid on the Casposo Project on reject or pulp samples.

14.2.2 AMEC September 2007 Review

The September review focused on drilling completed in Intrepid VI and VII phases, which had not been included in the March 2007 audit.

Duplicate Data

There are 176 valid duplicate assays for Au and 505 valid Ag duplicate assays (this excludes assays where one of the values is presented as greater than a certain range, e.g. >200 ppm). This represents approximately one in seven assays for Au and one in three assays for Ag. Plotting of the duplicate data indicated that gold duplicate samples displayed reasonable correlation at all grades. Silver duplicate values that plotted close to the origin displayed the greatest differences. This may be partly ascribed to there being two apparent detection limits (0.5 ppm and 1 ppm) for the Ag data.

AMEC recommends that the Ag outlier pairs identified in the duplicate analysis are further investigated.

Blanks

There are 59 blank samples within the data set of 1,276 assays. This represents approximately 1 in 21 assays. All 59 blanks yield expected trace values for Au.

Standards

Four standards are represented in the data examined, with a combined total of 74 assays. Control charts constructed for each standard indicated that typically, the analyses reported under the best value for the standards. Biases ranged from about -1.9% to 3% for the gold standards data. The silver data displayed more of a range, with biases from -0.9% to +3.5%. However, as the values plot within the control limits, the data are considered acceptable, and the assay data can be used in mineral resource estimation.




14.2.3 AMEC June 2008 Review

In June 2008, AMEC reviewed the QA/QC results for the phase VIII Intrepid drill campaign. A total of 26 standards and 31 blank samples were submitted for assay together with 697 core intervals from 28 drill holes, for insertion rates of 3.7% for standards and 4.4% for blanks. No duplicate sample results were made available to AMEC for this drill campaign.

Three standards were included into sample dispatches to control assay accuracy: OREAS standards 15Pc, 7Pb, and 61Pb. All three have certified values for gold, and 61Pb has a certified value for silver. The standards range in gold grade from 1.61 g/t Au to 4.75 g/t Au. The certified silver value for standard 61Pb is 9.0 g/t Ag.

AMEC analysis of the standard results found that the accuracy of the Alex Stewart gold and silver assays for the ranges checked was acceptable. While AMEC finds the range of gold grades checked acceptable, AMEC finds the range of silver values checked to be unacceptable. AMEC recommends that Intrepid employ another silver standard in their QA/QC program to control assay accuracy at higher silver grades (>9.0 g/t Ag).

Of the 31 blank samples submitted with the routine core samples, only two samples reported silver values greater than the lower detection limit. No samples reported gold values greater than the lower detection limit. Based upon these results, AMEC concludes that carry-over contamination in the sample preparation procedures was not a significant problem at Alex Stewart during this drill campaign.

Because no duplicate samples were provided to AMEC for the phase VIII Intrepid drill campaign, AMEC is unable to comment on the precision of the Alex Stewart gold and silver assays from this campaign. A previous AMEC review of duplicate data from Alex Stewart found the gold and silver assays to be acceptably precise. Based upon these findings, AMEC finds it reasonable to accept that the gold and silver assays from this campaign have similar precision to that of the previous campaign, and thus are acceptable for use in mineral resource estimation.

AMEC recommends that Troy conduct a program of pulp duplicate samples from this campaign to confirm this conclusion.

14.2.4 AMEC Independent Sampling

During site visits to the Casposo Project in 2005 and 2006 by AMEC personnel to collect data to support the 2007 Feasibility Study, AMEC conducted independent sampling programs, which consisted of collecting twin core check samples from the




BMG and the Intrepid programs, and pulp check samples from the Intrepid program. BMG twin check samples were only taken during the 2005 site visit, and the pulps from the BMG program were not available. The twin and pulp check samples are equivalents of the above defined twin and check samples, respectively, re submitted in this case to a third certified laboratory. These samples are used to obtain an independent estimation of the overall accuracy.

These check samples were resubmitted by AMEC to ACME laboratory in Santiago. The 2005 program included samples assayed until July 2005 at ALS Geolab for BGM and at ALS Chemex for Intrepid. The 2006 program included Intrepid samples assayed between July 2005 and August 2006 at ALS Chemex and Alex Stewart. The check sample batches also included reasonable proportions of pulp duplicates of the samples included in the batch, as well as standard samples and pulp blanks. These samples are necessary to assess the precision, accuracy and possible assay contamination, respectively, at the third laboratory.

A summary of the check program is given in Table 14-1.




Table 14-1: Summary of AMEC´s Re-sampling Programs

Date of Site Visit Type of Sample Campaign Primary

Laboratory

Number of Samples

(% of Samples in Mineral Intersections)

December 2005

Twin Check Samples

Pulp Check Samples

Pulp Duplicates Standards

Pulp Blanks

BMG Intrepid

Intrepid

ALS Geolab ALS Chemex

ALS Chemex

12 (7.5%) 24 (4.5%)

39 (7.4%)

4 5 2

August 2006

Twin Check Samples

Pulp Check Samples

Coarse Duplicates Pulp Duplicates

Standards Pulp Blanks

Intrepid

Intrepid

ALS Chemex Alex Stewart

ALS Chemex Alex Stewart

9 (9.1%)

11 (8.9%)

10 (10.2%) 10 (8.9)

1 2 1 2

Following the resampling and evaluation of the data, AMEC concluded that:

Diamond Drilling

• Although AMEC could not directly assess the Au and Ag sampling errors during the BMG and Intrepid exploration programs, on the basis of independent re-sampling AMEC infers that the Au and Ag sampling errors were probably within or close to acceptable limits, and thus, the samples can be used in resource estimation.

• Although AMEC could not directly assess the Au and Ag analytical precision during the Intrepid exploration program, on the basis of independent re-sampling AMEC inferred that the Au and Ag analytical precisions were probably within or close to acceptable limits, and thus the samples can be used in resource estimation.

• The Au and Ag sub-sampling variances during the BMG and Intrepid programs could not be evaluated.

• On the basis of independent re-sampling, AMEC established that the assay accuracy for Au and Ag at ALS Geolab during the BMG exploration program was satisfactory.




• Assay accuracy for Au and Ag at ALS Chemex during the Intrepid exploration program was satisfactory, which was confirmed by AMEC´s re-sampling program.

• Assay accuracy for Au and Ag at Alex Stewart during the Intrepid exploration program was satisfactory, which was confirmed by AMEC´s re-sampling program.

• BMG did not evaluate the possible contamination during preparation and assaying at ALS Geolab.

• No significant cross-contamination was detected during preparation at ALS Chemex and Alex Stewart during the Intrepid exploration program.

Analytical precision and accuracy at ACME during AMEC´s re-sampling programs were satisfactory; no significant cross-contamination was detected during assaying at ACME. AMEC considered that the Au and Ag assays of the BMG and Intrepid diamond drill hole exploration campaigns at Casposo can be used to support mineral resource and mineral reserve estimation.

14.2.5 AMEC February 2009 Review

Intrepid implemented a limited QA/QC program for the 2008 drilling campaign. This program consisted of the insertion of certified reference materials (CRM) and coarse blanks.

Additional control samples (coarse and pulp duplicates and check samples submitted to an umpire laboratory) were assayed after the drilling campaign was completed. In total the 414 control samples accounted for approximately 13.4% of all samples collected and assayed.

The Alex Stewart Laboratory was used as the primary laboratory, whereas the ACME Analytical laboratory was used as the umpire laboratory.

Control samples were not inserted regularly. CRM samples were included in sample submissions according based on criteria identified by the logging geologist, and typically comprised at least one CRM sample per drill hole. Coarse blanks were inserted in the sample flux after a sample containing mineralised material.

CMR Samples

Accuracy of gold and silver grades during the 2008 drilling campaign was carried out by the use of seven certified reference materials. A summary of the characteristics and performances of the seven CRMs are presented in Tables 14-2 and 14-3.




In principle, the standards values have to lie within the AV±2*SD boundaries to be accepted. Otherwise, the value was qualified as an outlier. The analytical bias was calculated as:

Bias (%) = (AVeo / BV) – 1

where AVeo represents the average recalculated after the exclusion of the outliers. The bias values are assessed according to the following ranges: good, between -5% and +5%; reasonable, with care, from -5% to -10% or from +5 to +10%; unacceptable, below -10% or above 10%.

Table 14-2: 2008 Drilling Campaign - CRM Best Values versus Actual Values

Standard ID Au (ppm) Ag (ppm) AVeo BV CI BV CI Au

(ppm)Ag

(ppm)OREAS 61Pb 4.75 4.49 - 5.01 9.00 8.00 - 9.90 4.83 8.85

OREAS 7Pb 2.77 2.66 - 2.88 -- -- 2.81 --

OREAS 6Pc 1.52 1.49 - 1.56 -- -- 1.63 --

OREAS18Pb 3.63 3.49 - 3.77 -- -- 3.78 --

OREAS 15Pa 1.02 0.96 - 1.07 -- -- 1.01 --

OREAS 15Pc 1.61 1.51 - 1.70 -- -- 1.63 --

OREAS 61d 4.76 4.69 - 4.83 9.27 9.00 - 9.54 4.95 8,85

Table 14-3: Summary of CRM Sample Performance

CRM ID Nr. of Samples Nr. Outliers Individual Bias (%) Overall Bias (%) Au

(ppm) Ag

(ppm) Au

(ppm) Ag

(ppm) Au

(ppm) Ag

(ppm) Au

(ppm) Ag (*) (ppm)

OREAS 61Pb 14 15 0 1 1.58 1.64

OREAS 7Pb 19 - 0 - 1.46 -

OREAS 6Pc 9 - 0 - 7.02 -

OREAS18Pb 9 - 1 - 3.99 -

OREAS 15Pa 9 - 0 - -1.09 -

OREAS 15Pc 16 - 1 - 1.33 -

OREAS 61d 10 9 0 - 4.03 4.54

3.18 -

(*) Insufficient data to calculate Ag overall bias.

The overall bias for each element was calculated, taken into consideration the results of all the standards used for each element during the extent of the program. In this case, the overall bias (BiasOA) of the primary laboratory for each element was calculated as:




BiasOA (%) = RLS – 1

where RLS is the slope of the linear regression line of the AVeo versus BV for each standard and element.

During the analysis of 86 CRM samples, representing 2.8% of the samples, there were a total of three outliers (two cases for Au and one case for Ag). Both elements showed low individual and overall biases. On the basis of these results, AMEC concludes that the Au and Ag accuracies at Alex Stewart during 2008 campaign were within acceptable ranges.

Coarse Blanks

Cross-contamination would be considered significant if the blank value exceeds three times the practical detection limit for the element. The analytical detection limits reported by Alex Steward were for 0.01 ppm for Au and 0.5 ppm for Ag. However, there were not sufficient pulp duplicate data to calculate the practical detection limits for the project. The practical detection limits often are greater than analytical detection limits.

AMEC reviewed 192 coarse blanks for Au and Ag, corresponding to 6.2% of the total samples. There are six events of Au contamination and three events of Ag contamination. These events are probably related to the grade of the precedent sample instead of a mix-up problem. AMEC concludes that non-significant cross-contamination occurred during sample preparation at Alex Stewart.

Coarse Duplicates

The coarse duplicates were evaluated according to the hyperbolic method. The analysis of 25 coarse duplicates (0.9% of the total number of samples assayed) yielded two failures for Au (7.1%). There were not sufficient data to evaluate coarse duplicates for Ag; however, the result of only three duplicate pairs showed no significant differences.

An acceptable level of precision is achieved if the failure rate does not exceed 10%. On other hand, AMEC considers that an acceptable proportion of coarse duplicates could be in the range of 2% to 5%. Therefore, the amount of coarse duplicate pairs is strictly insufficient to assess Au and Ag sub-sampling precisions at the Alex Stewart laboratory.

The agreement of coarse duplicate pairs can be considered as acceptable for Au. In AMEC’s opinion, therefore, the sub-sampling precision for Au can be considered




satisfactory at the Alex Steward laboratory. However, despite of fact the three sample pairs showed good agreement, there are insufficient data to allow the analytical precision for Ag to be assessed.

Pulp Duplicates

The pulp duplicates were evaluated according to the hyperbolic method. The analysis of 34 pulp duplicates (1.1% of the total number of samples assayed) yielded four failures for Au (11.8 %). There were insufficient data to evaluate pulp duplicates for Ag, however, ten duplicate pairs showed no significant differences.

An acceptable level of precision is achieved if the failure rate does not exceed 10%. On other hand, AMEC considers that an acceptable proportion of pulp duplicates could be in the range of 2% to 5%. Therefore, the number of pulp duplicate pairs is strictly insufficient to assess Au and Ag analytical precisions at Alex Stewart.

Finally, the agreement of pulp duplicate pairs for Au can be considered as marginal and in the limit of acceptance. In AMEC’s opinion the analytical precision for Au can be considered acceptable for the Alex Stewart laboratory. However, the precision of Ag could not be assessed due to insufficient data.

Check Samples

In total, 74 check samples were sent for external control to ACME. The samples were assayed for Au and Ag. The check samples represent 2.39% of the total samples.

For processing the check assays, the few values below the detection limits were replaced by half the detection limits. The RMA analysis indicates a good fit for Au and Ag between Alex and ACME, reflected in the high values of the coefficient of determination R2 for both Au (0.9912) and Ag (0.9953) after the exclusion of five outliers (6.8%) and no outliers, respectively, and the acceptable relative biases (-0.7% and 0.3%, respectively). AMEC concludes that the accuracy at Alex for Au and Ag as compared to ACME is satisfactory.

Intrepid developed a very limited QA/QC program during 2008 drilling program. The overall control sample proportion was approximately 13.4%. Although accuracy and cross-contamination were controlled by the use of standards and coarse blanks, precision of the assays at Alex Stewart was not monitored by the use of duplicates at the same time of the drilling campaign.

A few re-analyses were carried out after in coarse and pulp duplicates at Alex Stewart and check samples were sent to a secondary laboratory.




AMEC is the opinion that accuracy and precision of the assays are acceptable with care, since the proportion of control samples were limited. Cross-contamination did not occur at the Alex Stewart laboratory.

14.2.6 Other Samples

QA/QC data for the remaining sample types, trenches and pits, used in the resource estimation were not reviewed. Thus, AMEC has not commented on the precision and accuracy of that portion of the database or its suitability for use in mineral resource estimation.


Following data review, AMEC concluded that:

• Although AMEC could not directly assess the Au and Ag sampling errors during the BMG and Intrepid exploration programs, on the basis of independent re-sampling AMEC infers that the Au and Ag sampling errors were probably within or close to acceptable limits, and thus, the samples can be used in resource estimation.

• Although AMEC could not directly assess the Au and Ag analytical precision during the Intrepid exploration program, on the basis of independent re-sampling and additional re-analysis of pulp samples, AMEC inferred that the Au and Ag analytical precisions were probably within or close to acceptable limits, and thus the samples can be used in resource estimation.

• The Au and Ag sub-sampling variances during the BMG and Intrepid programs could not be directly evaluated. Intrepid re-analyzed a few coarse duplicates and AMEC can infer that the Au and Ag sub-sampling errors were probably within or close to acceptable limits, and thus, the samples can be used in resource estimation.

• On the basis of independent re-sampling, AMEC established that the assay accuracy for Au and Ag at ALS Geolab during the BMG exploration program was satisfactory.

• Assay accuracy for Au and Ag at ALS Chemex during the Intrepid exploration program was satisfactory, which was confirmed by AMEC´s re-sampling program.

• Assay accuracy for Au and Ag at Alex Stewart during the Intrepid exploration program was satisfactory, which was confirmed by AMEC´s re-sampling program and the evaluation of CRM analysis.




• BMG did not evaluate the possible contamination during preparation and assaying at ALS Geolab.

• No significant cross-contamination was detected during preparation at ALS Chemex and Alex Stewart during the Intrepid exploration program.

• Analytical precision and accuracy at ACME during AMEC´s re-sampling programs were satisfactory; no significant cross-contamination was detected during assaying at ACME.

AMEC concludes that the Au and Ag assays of the BMG and Intrepid diamond drill hole exploration campaigns at Casposo can be used to support mineral resource and mineral reserve estimation.




15.0 ADJACENT PROPERTIES

There are no properties that are at an advanced exploration, development or production stage adjacent to the Casposo Project.




16.0 MINERAL PROCESSING AND METALLURGICAL TESTING

16.1 Metallurgical Testwork

16.1.1 2002–2004

Between 2002 and 2004 Intrepid sampled surface areas and core from the Kamila vein system and one area above the Mercado vein for metallurgical testwork.

During 2002, metallurgical bench-scale testing was conducted at the Instituto de Investigaciones Mineras (IIM) in the San Juan Faculty of Engineering, University of San Juan. The work included Bond ball mill work index (BWI) determination, gravity concentration and cyanidation bottle rolls. Selected splits of the 2002 samples were also forwarded to Kappes, Cassidy & Associates (KCA) of Reno, Nevada for independent verification. This work basically confirmed the IIM metallurgical testing.

In 2003 Intrepid submitted 110 m of half-core samples from Kamila to IIM for additional bottle roll leach testing at P80 grinds of 180 μm and 105 μm. Some coarser bottle roll leach extractions were also conducted to investigate heap leaching potential. Mineralogical investigations were also conducted on selected samples of Kamila core and included Electron Microprobe analysis by Kishar Research and scanning electron microscope (SEM) investigations by Miller and Associates.

Leach tests were conducted on surface and core samples. The work indicated the Casposo samples tested were reasonably amenable to direct cyanidation and did not require intensive grinding. AMEC resampled selected intervals of these same core samples to create new composites for the basis of the 2007 feasibility study program. The objectives were to conduct independent verification of the IIM results, as well as to assess finer grinding at 75 μm, and optimization of leach extraction conditions. AMEC´s analysis of the IIM results suggested low cyanide concentrations could be limiting the ultimate extractions achieved in the IMM testwork, particularly for gold.

Based on very poor coarse bottle roll leach extractions reported by IIM in their September 2003 report, heap leaching was not considered an option for Casposo ore, and no additional work was conducted, or recommended.

Sodium cyanide and lime consumption were studied in the IIM 2003 program. The BWI and abrasion index (AI) were measured on seven Casposo samples. Some samples showed reasonable amenability to gravity concentration. Tests conducted by IIM resulted in up to 25% of the gold being recovered by gravity.




Mineralogical reports on some drill core samples taken from below 2,400 meter elevation showed that the gold and silver values are present as fine grained (generally <25 µm) gold, electrum, native silver, acanthite, and silver-bearing tetrahedrite-tennantite.

16.1.2 2005

In 2005 Resource Development Incorporated (RDI) carried out flotation metallurgical studies on a 50 kg composite sample prepared from 48 individual samples of Kamila analytical rejects, drill core rejects or reverse core cuttings. RDI initially treated the sample using gravity methods. Four different P80 grind sizes were tested: 300, 212, 150 and 105 μm.

Reasonable gravity extractions were achieved, especially within the coarse fractions, as well as very good concentrate grades. The gravity tail was used as the flotation feed to determine the flotation extraction as well as the combined extraction. Four scoping flotation tests at four size fractions were completed. With finer grinding, the gold recovery increased. Silver recovery was best at P80 grind of 150 μm. The highest gold combined gravity and flotation concentrate grade was obtained at the finest grind of 105 μm.

The following conclusions were drawn:

• Gravity recovered 8.5% to 21.1% of gold and 8% to 20.2% of silver in the feed.

• Flotation recovered 62% to 72% of gold and 75% to 83% of silver in the flotation feed.

• Combined gravity and flotation process recoveries were 66.1% to 73.3% for gold and 79.1% to 86.2% for silver.

• The finer the primary grind, the higher the precious metal recoveries generally and the higher the concentrate grade.

These concentration studies indicated that combined gravity and flotation process may be an alternative, though second best in terms of recovery, to the cyanidation process.

16.1.3 2006

SGS Lakefield completed testwork to confirm the 2004 IIM metallurgical tests, and to provide the metallurgical data necessary to support a feasibility process flowsheet selection trade-off study. AMEC resampled core intervals representing the splits from the IIM samples in 2003 and collected new 2006 drill core, and forwarded these to




SGS Lakefield Research for independent verification testing. Additional surface bulk samples were taken from existing trenches for the BWI and AI tests.

The SGS program compared whole ore cyanidation to a gravity + flotation + concentrate cyanidation flowsheet. In addition, general ore characterization tests, including head analyses, quantitative mineralogy, BWI determinations, acid base accounting and settling and filtration testing were completed.

Additional testwork was completed later in 2006; this test program was to optimize the metallurgical parameters for the gravity separation and gravity tailings cyanidation flowsheet chosen, develop equipment design selection criteria and conduct recovery variability mapping to develop an overall geometallurgical grade-recovery model. General ore characterization tests were also completed, including additional head analysis and ore hardness BWI mapping.

Thickening, filtration and pulp rheology investigations were conducted by Pocock International in order to provide:

• Flowsheet development data for use in a solid liquid separation and tailings disposal method trade-off study AMEC prepared

• Process design criteria for settling aid (flocculant) selection and consumption, and equipment sizing

The test work was conducted on-site at SGS Lakefield.

In addition to metallurgical testing, humidity cell testing was conducted by SGS to characterize tailings acid mine drainage (AMD) potential on a composite leach sample created in the metallurgical program.

Subsequent to the initial series of variability tests and based on those results, several parameters were identified as requiring further evaluation for design or optimisation for leach extraction, including pulp density, grind size and dissolved oxygen and zinc concentrations.

AMEC completed an economic trade-off study using the SGS test work data to support the selection of a process flowsheet for the 2007 Feasibility Study. Four processing and project configurations were investigated. Direct ore cyanidation and Merrill Crowe (MC) precious metal recovery routes were identified as the most economic processes. Additional dewatering test work and trade-off studies were subsequently conducted on the direct leaching cases to support the selection of one of three flowsheet tailings disposal and dewatering options. The trade-off study identified the dry stack




alternative using a hybrid combination of counter-current decantation (CCD) and filtration as the most economic.

16.1.4 2007

Between March and May 2007, Intrepid completed a small exploration program, primarily focused on the Southeast Inca and Southeast Extension zones. The Mineral Resource estimated during the Feasibility Study Update for the Kamila deposit in this included 14 of the 2007 drill holes plus the 2006 drilling that had not been included in the 2007 Feasibility Study resource database. No additional metallurgical testwork was completed on samples of this core. AMEC does not regard this as material, for two reasons, firstly because the holes included did not significantly increase the mineral resources estimate and secondly, because the drill intercepts are regarded as incremental extensions to structures which were characterized metallurgically in the 2007 Feasibility Study. Therefore their metallurgy is expected to be similar.

16.1.5 Conclusions

The vein structures all have very similar geometallurgical characteristics and mineralogical compositions and these can be expected to respond reasonably well to conventional gold-silver processing methods, and to achieve good recoveries. These conclusions are supported by both historical and the 2007 feasibility study testwork.

16.2 Metallurgical Recoveries

Detailed recovery mapping testwork was completed in the 2007 feasibility study test work program and did not indicate any marked variability in gold or silver leach extraction with the plan, elevation or vein structure from which the sample was taken. These data were used to develop an overall geometallurgical grade–recovery model. Recoveries are calculated on an annualized basis, based on correlations, and are dependent on mill feed grade. For the average life-of-mine head grades, the overall gold and silver recoveries were projected in the 2007 Feasibility Study to be 93.7% and 80.6% respectively (Table 16-1).




Table 16-1: Overall Life-of-Mine Recovery

Head Tail Calc Extraction Sol Loss Misc Loss Overall Recovery

g/t g/t % % % %

Gold 4.68 0.27 94.4% 0.5% 0.2% 93.7% Silver 114 21 82.1% 0.5% 1.0% 80.6%

These recoveries remain the basis of the overall metallurgical recovery for the Feasibility Study Update. Recoveries are calculated on an annualized basis, and are dependent upon mill feed grade.

16.3 Proposed Process Flowsheet

The proposed mine plan discussed in Section 18 of this Report is based on a contract mining company providing ore to a conventional gold and silver whole-leach recovery plant to support an average milling rate of 1,000 t/d (365,000 t/a) in Years 1 to 4. All facilities were designed for this throughput, and for operation on a continuous basis, 24 h/d, 365 d/a. In Years 5 and 6 when the proposed underground mine is operating, the daily milling throughput declines to 500 t/d. Table 16-2 presents the proposed milling schedule based on the proposed mine plan. This is based on a planned ramp-up of 90% in the first quarter of the initial year of operation.




Table 16-2: Milling Schedule and Head Grades

Mill Production Units % Au + Ag Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Total

Operating Days Days 365 365 365 365 365 230 2,055 Tonnes per Day days 1,000 1,000 1,000 1,000 500 500 Mill Feed Tonnes per Year t/a (x 1,000) 356 365 365 351 183 115 1,734 Silver g/t Ag 63 115 100 119 203 247 120 Gold g/t Au 5.40 7.28 4.73 4.09 4.12 3.89 5.16

Silver oz/a (x 1,000) 724 1,350 1,179 1,341 1,188 913 6,695

Gold oz/a (x 1,000) 62 85 56 46 24 14 288

Mill Recoveries Silver % 77 80 79 80 83 84 80 Gold % 93 94 93 93 93 93 93 Metals Production

Silver oz/a (x 1,000) 558 1,079 935 1,074 982 765 5,393

Gold oz/a (x 1,000) 58 80 52 43 23 14 269

Precipitate kg/a (x 1,000) 75% 26 48 41 46 42 32 235

Doré kg/a (x 1,000) 95% 20 38 32 37 33 25 185

The process design and operational plan is unchanged from the 2007 Feasibility Study and is based on existing conventional technology. The process flow sheet will use conventional primary jaw and secondary cone crushing, ball milling, gravity concentration for coarse gold and silver, cyanide leach, counter current decantation and washing and dewatering of tails by belt filtration. Gold and silver will be recovered by standard Merrill-Crowe zinc precipitation and smelted to produce doré bars. The leached tailings, following filtration to recover precious metals, will be washed and rinsed on the same belt filter to remove cyanide. The cyanide wash solution will be collected for the destruction of cyanide using a conventional SO2/air process. The detoxified solution is recycled to the belt filter as wash solution. This will minimize the fresh water requirements for the process. The filtered tailings will be trucked to a lined tailings management facility and stacked in compacted lifts.

A conventional two-stage crushing (mobile) and single stage ball mill circuit was originally recommended for the basis of the Casposo comminution circuit feasibility flowsheet. However since the 2007 Feasibility Study cost base date, there have been




significant cost escalations in crushing and grinding equipment, material and steel consumable prices. The power supply concept changed in the Feasibility Update from on-site diesel generation to a power line supply basis. This results in a significant reduction in the projected power unit operating costs for the Project.

Given these material changes, AMEC completed an economic trade-off study analysis of alternative crushing and grinding configuration options, for the basis of an updated comminution circuit recommendation. All the options considered were based on an optimized 1,000 t/d scale project scale. This scale was established in a separate mining method and project scale desk top study summarized in Section 18 of this Report.

The comminution study update compared the following crushing and grinding options:

• Alt-1 mobile conventional two-stage crushing and ball mill

• Alt-2 fixed conventional two-stage crushing and ball mill

• Alt-3 SAG and pebble crusher (SABC) and ball mill.

Economic analysis that was based on new equipment prices reconfirmed the 2007 Feasibility Study comminution circuit selection of conventional two-stage crushing (mobile) and ball milling (Alt -1) for the basis of the Feasibility Study Update.

An almost 100% escalation in the cost of new grinding mills since the 2007 Feasibility Study resulted in the initial capital expenses of the SAG and ball mill alternative (Alt-3) being much higher than conventional crushing and ball milling (Alt-1 and Alt-2). Although the operating cost of Alt-3 is nominally lower than Alt-1 and Alt-2, the total operating cost saving does not offset the higher capital cost of Alt-3 over the relatively short proposed mine life of about six years.

A 3-dimensional rendering of the overall plant site is shown in Figure 16-1 and a simplified depiction of the overall concept process flowsheet is shown in Figure 16-2.




Figure 16-1: Proposed Plant Layout




Figure 16-2: Proposed Process Flowsheet





Metallurgical testwork completed on the Project was appropriate to establish the optimal processing route for a low-sulphidation gold–silver deposit.

Metallurgical tests were performed on samples that were representative of the mineralization.

Recovery figures are based on bench scale metallurgical testwork appropriate to support the feasibility study flowsheet.

The planned process route is based on conventional technology.




17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

17.1 Mineral Resource Estimation

The geological models for the Kamila and Mercado deposits were prepared by Intrepid and its independent consultants during early 2007. Rodrigo Marinho, CPG, Principal Geologist, (AMEC, Santiago), audited and reviewed these models and accepted the geological models for use in support of mineral resource estimation. Mr Marinho is the Qualified Person for the mineral resource estimates dated 21 April, 2008 (QP) for this resource.

17.1.1 Drill Hole Database

The Project database was closed for resource estimation purposes as at 12 September 2007. The database contains information from the Kamila, Mercado and other prospects that are both in the Casposo Project and now outside the Project as follows:

• 227 core drill holes

• 12 RC holes

• 5 pits

• 158 trenches.

The following data, drilled prior to September 2007 and restricted to the Kamila and Mercado areas, were used to support the 2008 mineral resource estimate update:

• 159 core drill holes

• 5 pits

• 70 trenches.

Drilling completed during 2008 has not been used to support mineral resource estimation.

17.1.2 Construction of Geological Models

2007 Feasibility Study

The geological model was constructed in early 2007 using Gems® commercial mine modelling software. Intrepid defined five domain zones to represent the different vein




systems at Kamila and Mercado. Domains were defined based on lithology, structure and grade boundaries. These elements were interpreted on section and plan as appropriate.

At the Kamila deposit, domains are referred to as Aztec vein, B vein, Inca vein and High Grade (HG). The HG material is internal to all three veins, Aztec, B and Inca.

The HG domain was determined using drill hole intercepts that are above 10.00 g/t Au equivalent (AuEq) within the other domains to separate the high-grade population from the lower grades. At Mercado only one domain is defined. Geological model outlines for the Kamila Zone are shown in Figure 17-1.

Intrepid used only one set of vertical sections, oriented east–west, and spaced at 25 m, to interpret and model the Aztec, B and Inca veins. Interpretation of the HG domain also used east–west-oriented vertical sections that were spaced every 25 m to generate bench interpretations every 3 m.

2008 Feasibility Study Update

AMEC did not perform any additional reviews of the geological models constructed in March 2007, as the supplied solids and geological interpretations were accepted as audited during the 2007 Feasibility Study. Audits of the 2007 drilling were performed, as discussed in Section 14 of this report.

The Southeast Inca (Inca SE) vein model initially constructed by Intrepid during early 2007 was rebuilt by AMEC as part of the Feasibility Study Update to include an additional 29 drill holes. The mineralized vein structures for the Inca vein were defined using a 1.40 g/t AuEq cut-off grade-shell (see Section 17.1.13). Section spacing of 25 m was used to remain consistent with the earlier models, as was the AuEq cut-off grade shell.

Wire-frames built by Intrepid for the Aztec and B veins and the HG zone during early 2007 were modified by AMEC to include data from an additional 11 drill holes.

During the updating the solid models with additional drill holes, AMEC compared the solid models as received from Intrepid against the new drill holes. Where the solid model did not capture the assays at or above 1.40 g/t AuEq or where the solid models captured grades less than 1.40 g/t AuEq, the intersections were edited by AMEC to include and exclude the appropriate assays for each solid based on the 1.40 g/t AuEq cut-off. Cut-off grades for the HG domain remained at 10 g/t AuEq.

No modifications were performed on the Mercado geological model.




The modelled solids for the Feasibility Study Update are shown in Figure 17-1.

Figure 17-1: Geological Solids, Kamila




17.1.3 Exploratory Data Analysis

The database provided to AMEC contained both raw assay data and capped data. AMEC performed basic statistics on this information. Table 17-1 summarizes the statistics of raw data for Kamila and Mercado, based on the defined domains.

Table 17-1: Drill Hole Raw Data Statistics

Zone Element No. Samples Min. Max. Mean Coefficient of

Variation Au (ppm) 858 0.01 178.5 2.5 3.3 Aztec Ag (ppm) 858 0.40 1,530.0 62.5 2.3 Au (ppm) 397 0.10 207.0 2.8 4.3 Inca Ag (ppm) 397 0.50 2,612.0 122.7 2.3 Au (ppm) 934 0.10 151.0 2.1 3.3 B Ag (ppm) 934 0.10 1,933.0 38.9 3.2 Au (ppm) 363 0.10 346.0 14.5 2.3 High Grade Ag (ppm) 363 0.50 4,990.0 344.6 1.7 Au (ppm) 2,552 0.01 346.0 3.1 3.3 Combined Total Ag (ppm) 2,552 0.10 4,990.0 81.3 2.5 Au (ppm) 645 0.00 36.9 1.1 2.6 Mercado

(not updated since 2007 Feasibility Study) Ag (ppm) 644 0.00 2787.0 68.60 3.1

17.1.4 Composites

Composites of 1 m length were created inside the geological solids. The compositing process started at the first point of intersection between the drill holes and the geological solid.

Non-assayed intervals were not utilized in the composite generation process. All composites that were shorter than 0.4 m (at the lower domain boundary) were discarded to avoid introducing bias from the very short composites.

17.1.5 Capping

For the Feasibility Study Update mineral resource estimate, AMEC used a grade-capping restriction based on 1.0 m composites and not on the raw assay data, contrary to the capping strategy used in the 2007 Feasibility Study. Table 17-2 shows the updated capping values for gold and silver. Mercado grade caps are unaltered from the 2007 Feasibility Study, and use raw assay data as the basis for the cap. AMEC recommends that when the Mercado deposit model is updated, the basis for the grade caps is reviewed.




Table 17-2: Grade Caps

Aztec Inca B High Grade Mercado

Au Capping Number of Composites 993 422 1,161 312 Capped Grade (g/t Au) 37.50 27.50 29.80 91.10 10 Number of Capped Composites 3 4 11 8 8 % of Metal Capped 10.5 23.1 8.7 19.8 Ag Capping Number of Composites 993 422 1,161 312 Capped Grade (g/t Au) 711.0 574.0 628.0 1,796.0 1,000 Number of Capped Composites 6 11 6 8 8 % of Metal Capped 2.6 15.2 6.2 6.2

In comparing grade capping from the Feasibility Study Update with that used for the 2007 Feasibility Study, there are three significant differences:

• Gold capping in the Inca Vein has increased from 15.0 g/t Au to 27.5 g/t Au. AMEC believes that the capped grade of 15.0 g/t Au used in the 2007 Feasibility Study may have been too restrictive, as 45% of the contained gold was capped based on the raw assay data

• Gold capping in the High Grade Zone has reduced from 120.0 g/t Au in the 2007 Feasibility Study to 91.1 g/t Au in the Feasibility Study Update

• Silver capping in the B Vein has increased from 300 g/t Ag in the 2007 Feasibility Study to 628 g/t Ag in the Feasibility Study Update.

As a result of the grade capping, the co-efficient of variation for all of the veins has been reduced (Table 17-3), with the exception of Mercado, which was not assessed.

Table 17-3: Primary Statistics 1 m Capped Composites

Zone Elem. Number of Composites Minimum Maximum Mean CV

Au 993 0.01 37.50 2.11 1.72 Aztec Ag 993 0.5 711.0 62.0 2.03 Au 422 0.01 27.50 1.97 1.96 Inca Ag 422 1.0 574.0 89.7 1.42 Au 1,161 0.01 29.80 2.05 2.16 B Ag 1,161 0.1 628.0 34.2 2.35 Au 312 0.01 91.10 16.42 1.21 High-Grade Ag 312 0.5 1,796.0 378.4 1.16 Au 2,888 0.01 91.10 3.61 1.88 Total Ag 2,888 0.1 1,796.0 85.6 1.98




17.1.6 Variography

Intrepid created omni-directional and directional variograms for gold and silver for the Mercado deposit. Orientations of the variograms were defined by the experience and knowledge of the deposit from the Intrepid geologist. Then, directional variograms were built along mineralization strike, down dip and across dip.

AMEC constructed directional variograms for gold and silver for the Kamila deposit, to include the High Grade Zone and the Aztec, B and Inca veins, along mineralization strike, and down dip. Variogram orientations were supplied by Intrepid geologists.

Variograms were fitted using spherical models. For inverse distance estimation, the variograms were used for direction of search and search range distances (see Section 17.1.8). The lensoid shape of the mineralized veins reduced the major search direction to along strike or down dip.

AMEC is satisfied that the variogram orientations and search distances are adequate for the deposit type and the ID estimation methodology, given that the variograms were created to help define search distances and ranges for grade estimation.

17.1.7 Block Model Setup

The Kamila–Mercado model, incorporating the Mercado, HG, Aztec, B and Inca veins is oriented north–south with no rotation, such that the X axis is parallel to the easting direction and the Y axis is parallel to the northing direction. Model parameters are given in Table 17-4. Block model construction data included:

• Block coordinates

• Rock codes

• Classification codes

• Average distance of samples used for estimation

• Density

• Estimation pass

• Distance to closest sample

• Number of samples

• Vein percentage inside the block

• Gold and silver grade estimates.




Table 17-4: Block Model Parameters Kamila–Mercado Parameter Min (m) Max (m) Extent (m) Block Size

(m) Number of Blocks

Easting 2438500 2439400 900 4 225 Northing 6548000 6549200 1200 4 300 Elevation 2192 2600 408 6 68

17.1.8 Grade Estimation Parameters

Gold and silver grades were estimated using an inverse distance cubed (ID3) methodology. Two estimation passes were defined using incremental search ellipsoid radii. Table 17-5 shows the ellipsoid orientations and radii used for each domain at Kamila, whereas Table 17-6 shows the same parameters for Mercado. Mercado parameters are unchanged from the 2007 Feasibility Study.

Table 17-5: Ellipsoid Orientations, Kamila Search Radius Search Orientation Composites

Vein Element Pass Azimuth Dip Azimuth X Y Z Min Max

Max per

Hole 1 260 -60 350 45 35 10 3 12 2 Au 2 260 -60 350 100 100 50 1 12 2 1 260 -60 350 45 30 10 3 12 2

Aztec Ag

2 260 -60 350 100 100 50 1 12 2 1 220 -50 310 40 35 10 3 12 2 Au 2 220 -50 310 100 100 50 1 12 2 1 220 -55 310 25 35 10 3 12 2

Inca Ag

2 220 -55 310 100 100 50 1 12 2 1 220 -65 310 30 35 10 3 12 2 Au 2 220 -65 310 100 100 50 1 12 2 1 220 -55 310 35 40 10 3 12 2

B Ag

2 220 -55 310 100 100 50 1 12 2 1 260 -60 350 30 30 5 2 12 2 Au 2 260 -60 350 150 150 10 1 12 2 1 260 -60 350 30 30 5 2 12 2

High Grade

Ag 2 260 -60 350 150 150 10 1 12 2

Table 17-6: Ellipsoid Orientations, Mercado Ellipsoid Rotation (º) Ellipsoid Ranges (m) Domain Element Estimation

Pass Azimuth Dip Azimuth X Y Z 1 245 -55 335 115 40 10 Au 2 245 -55 335 150 150 150 1 245 -55 335 125 60 10

Mercado Ag 2 245 -55 335 150 150 150

Radii and ellipsoid orientations were defined based on the analysis of variograms and geological interpretation. Search ellipses used for the first estimation pass had a




radius that corresponded to 100% of the variogram range in each of the anisotropic orientations. The search distances used in the estimation have geological support based on the size and shape of the deposit and the current drill spacing. AMEC verified that most of the blocks were estimated in the first run. The second run only estimated blocks inside solid models that had no grade assigned in the first estimation pass.

AMEC performed visual checks of the individual blocks compared to the composites for each zone and no obvious problems were found. AMEC used the block model statistics as an additional method for the grade estimate verification. The statistics were performed only for blocks that were estimated to enable comparison to the composites from the mineralized zones. From the comparison of composites and blocks statistics, AMEC did not identify any significant problems.

17.1.9 Block Model Validation

AMEC generated a nearest-neighbour (NN) estimate to validate the ID3 estimation. The NN methodology used only one composite, the closest to the block according to the applied variography, to estimate block grades. Validation comprised:

• Primary statistical comparison: except for the Inca domain, the ID3 and the NN grades for Au were very close and indicated that the ID3 estimates were reasonable. The Inca domain Au ID3 mean grade is 7% higher than the NN mean grade, but is also 7% lower than the capped composite mean grade. Although AMEC accepts the ID3 grade estimates for the Inca vein, there is a risk that the Au grade has been over-estimated. AMEC believes that the risk has been reduced by the Au grade capping of the Inca which has removed 23% of the metal. In comparing the Ag statistics for all three grade sources, the capped composite mean grade is lower than all zones, except for the B Vein. The mean grades between the ID3 and the NN are all within 4%, indicating that the ID3 estimates are all reasonable.

• Swath plots: The easting graphs show a good comparison across the deposit with the strongest grade in the central portion and good grades at the far eastern side of the Kamila deposit. The northing graphs show a good grade comparison with the highest gold grades in the southern end of the deposit. The elevation graphs indicate a good grade comparison with the highest grades occurring about 100 m below the surface. The gold grade appears to increase from surface to about 100 m in depth and from this point downward the average gold grade continually decreases. Based on the combined swath plots, AMEC is satisfied that the ID3 model is a reasonable estimate of the Kamila Zone mineralization.




17.1.10 Dilution Halos

In order to estimate grades immediately outside the veins that could dilute the mineralization at the mining stage, AMEC expanded the vein wire-frames outwards by 0.5 m. AMEC assigned a percentage of air in the blocks at or above the surface topography. This air percentage has precedence over the vein percentage, thus the portions of the solids that were interpreted above topography were treated as air.

AMEC estimated the grades of the blocks in the dilution halo using 1 m long down-the-hole composites, broken at vein contacts. A code was assigned to the five closest composites from the contact and outside the vein. Once the codes were assigned, the resulting file was imported back into GEMS® as points. Only these composites were used to estimate gold and silver grades in the dilution halo. Estimation parameters are shown in Table 17-7.

Table 17-7: Estimation Parameters, Halo Dilution Search Orientation (Deg.) Search Radius (m) No. Comp. Estimation

Method Estimation

Pass Azim Dip Azim. X Y Z Min Max Max. Comp.

per Hole

1 230 -55 340 45 30 10 3 12 2 ID3 2 230 -55 340 100 100 50 1 12 2

AMEC did not cap the halo grades, and recommends that a detailed capping study be conducted to define, if applicable, an appropriate capping strategy. A total of 75 blocks out of the 47,147 halo blocks were not estimated. The vein halo blocks were not assigned a classification category and were used only for the purpose of adequately diluting the block model.

17.1.11 Mineral Resource Classification

AMEC based the mineral resource classification primarily on the variography and the estimation runs. After both estimation runs were completed, all blocks inside the respective vein solid that had the closest composite at a distance of ≤35 m and used at least three composites to estimate the block, were classified as Indicated. Based on variography, the first structure for all zones had a search range between 30 m and 45 m. The blocks had also to show a reasonable prospect of economic extraction to be included in the mineral resource statement.

All other blocks that had been estimated were classified as Inferred and again the blocks must show a reasonable prospect of economic extraction to be included in the mineral resource statement.




17.1.12 Assessment of Reasonable Prospects of Economic Extraction

Open Pit

AMEC generated a series of open pit shells using Whittle® software and the Lerchs-Grossmann (L–G) algorithm to identify mineralization that had a reasonable prospect of economic extraction using an open-pit mining method. The parameters used in the open pit shell are summarized in Table 17-8. Parameters included:

• Cost of Sales: included base transportation and insurance costs, melting, refining and treatment costs

• Royalties: included provincial mining royalty, and production royalty

• Taxes and Duties: included corporate income tax, value added tax (IVA), export tax, debits and credits tax, and “Bienes Personales” (Personal Assets) tax

• Fideicomiso Agreement: equates to a mining promotion royalty in San Juan Province

Open pit operating costs have increased in the Feasibility Study Update by 25% over those costs used in the 2007 Feasibility Study. Mining costs were not included in marginal cut-off grades in the Feasibility Study Update but were applied to pit limit optimizations. The gold price used is significantly higher, US$760 in the Feasibility Study Update as opposed to the US$450/oz used in the 2007 Feasibility Study.

The increase in gold price for the optimization runs is partially offset by the first-time inclusion of taxation and royalty provisions in the L–G pit shells.

Underground

AMEC created a grade-shell for mineralization that could be exploited using underground methods, by employing a 3.5 g/t AuEq cut-off to confine the mineralization, and designing preliminary underground stopes within the grade shell. Grade-shell gold equivalent grades varied according to the mining method selected.




Table 17-8: Parameters Used to Constrain Mineral Resources

Parameters Units Open Pit Mineral

Resources

Underground Mineral

Resources Metal Prices Au US$/oz 760 760 Ag US$/oz 13.00 13.00 Cost of Sales Au US$/oz 4.88 4.88 Ag US$/oz 0.50 0.50 Export Duty % 5.0 5.0 Boca Mina % 3.0 3.0 Provincial Mining Royalty % 1.0 1.0 Fideicomiso % 1.5 1.5 Debits and Credits Tax % 0.6 0.6 Production Royalty US$/oz AuEq 3.35 3.35 Effective Au Price after Royalties, Taxes and Duties US$/oz 678 678 Effective Ag Price after Royalties, Taxes and Duties US$/oz 10.55 10.55 Operating Costs Process US$/t 19.46 19.46 Mining (Incremental Ore Haul) US$/t 0.84 34.86 General and Administration US$/t 8.33 8.33 Open Pit Mining Cost US$/t 2.93 Recovery Au % 93.7 93.7 Ag % 80.6 80.6 Au/Ag ratio 1:77.82 1:77.82 Geotechnical Slope Angle Degrees 46.5 Marginal Cut-Off Grade g/t AuEq 1.41 3.09

AMEC noted that using long-hole stoping resulted in an AuEq cut-off grade of 3.09 g/t AuEq; however, use of a more selective mining method increased the mining cost by about US$10/t, which raised the marginal cut-off to 3.5 g/t AuEq. Thus, a 3.5 g/t AuEq cut-off was used to limit mineralization.

The following considerations were taken into account when designing the stopes:

• Minimum width of 1.5 m

• At least 15 m of continuity

• Practical vein shape inside the grade-shell.

AMEC designed the stope polygons on vertical sections every 10 m and then built a wire-frame that was used to estimate grade and tonnage. The parameters used in the underground stopes are also summarized in Table 17-8.




17.1.13 Mineral Resources Cut-off Grades and Equivalency Calculations

Open Pit

The gold equivalent cut-off was determined according to the parameters below:

• Au/Ag ratio 1:77.8

• Au Price US$760/oz

• Ag Price US$13/oz

• Grams/troy oz 31.1035

• Process Cost US$19.46/t

• G&A Cost US$8.33/t

• Au Process Recovery 93.7%

• Ag Process Recovery 80.6%.

Therefore the equation to determine the cut-off is as follows:

(US$19.46/t + US$8.33/t)/[(US$760/oz/31.1035) x (94%)] = 1.41 g/t AuEq

This cut-off value does not include the cost of mining, as this value is an incremental cut-off that would be applied to the loaded haulage trucks as they exit from the open pit. Trucks filled with mineralized rock above this cut-off would be sent to the process plant or end-of mine stockpile while trucks loaded with rock below that grade would be sent to the waste dump. This methodology is consistent with pit design using the Whittle optimizer which develops an economic pit shell considering all cost and price factors, then applies this incremental cut-off to determine which mineralization within that pit shell is to be included in the resource.

Underground

The cut-off grade calculation was as follows:

Operating costs ÷ effective gold price – sale cost ÷ recovery = 3.58 g/t AuEq.

where the effective gold price was US$21.64, and the total operating cost, based on a selective mining cost, was $44.86/t.




17.1.14 Dilution

The model has considered external or contact dilution, 0.5 m outside the vein, as part of the vein material included in the block model as indicated in Figure 17-2. The diluted model was used for declaration of both open pit and underground mineral resources and mineral reserves.

Figure 17-2: External Vein Dilution

17.1.15 Mineral Resource Statement

Mineral resources take into account dilution, and geological, mining, processing, and economic constraints, and have been confined within appropriate L–G shells, and thus can be classified in accordance with the 2005 CIM Definition Standards for Mineral Resources and Mineral Reserves. Mineral resource estimates for the Kamila and Mercado deposits have an effective date of 21 April 2008, and are summarised in Table 17-9. The Qualified Person for the mineral resource estimate is Rodrigo Marinho, CPGeo. Mineral resources are reported using a gold price of US$760/oz and a silver price of US$13/oz.

AMEC notes that there is potential for the mineralization that is currently classed as Inferred Resources to be converted to higher-confidence mineral resources during exploration and blast hole drilling programs.

17.1.16 Throughput and Trade-off Studies

Prior to mineral reserve estimation, AMEC conducted a preliminary plant throughput and mining method desktop study, based on plant throughput rates of 750 t/d, 1,000 t/d, 1,250 t/d, and 1,500 t/d using open-pit scenarios with and without underground mining. Two methods were used to derive the economic break point between open-pit and underground mining methods.




Table 17-9: Casposo Mineral Resources, Effective Date 21 April 2008, Rodrigo Marinho, CPGeo.

Deposit/Zone

Parameters Used To Confine Mineral Resource

Cut-off AuEq (g/t)

Mineral Resource

Classification Tonnes

(t x 1,000) Au

(g/t) Ag

(g/t) AuE

q (g/t)

Au (oz x

1,000)

Ag (oz x

1,000)

AuEq (oz x

1,000)

1.41 Indicated 1,720.9 5.54 134 7.26 306.4 7,426.8 401.8 Kamila Open Pit 1.41 Inferred 14.6 5.80 144 7.66 2.7 67.8 3.6 1.41 Indicated 76.5 5.56 80 6.59 13.7 197.4 16.2 Kamila

SE Open Pit 1.41 Inferred 1.2 3.23 55 3.93 0.1 2.1 0.1 1.41 Indicated 85.0 2.17 84 3.25 5.9 229.9 8.9 Mercado Open Pit 1.41 Inferred - - - - - - - 1.41 Indicated 1,882.4 5.39 130 7.05 326.0 7,854.1 426.9 Total

Open Pit Open Pit 1.41 Inferred 15.8 5.61 137 7.38 2.8 69.9 3.7 Confined

within 3.5 g/t AuEq grade shell

Indicated 193.8 1.97 196 4.49 12.2 1,223.2 28.0

Total Underground

Underground Confined

within 3.5 g/t AuEq

grade shell

Inferred 8.8 2.43 294 6.21 0.7 83.0 1.7

Notes: 1. Mineral Resources are estimated using a US$760/oz gold price and US$13/oz silver price and an economic

function that includes operating costs, metallurgical recoveries and royalty costs has been applied. 2. The combined underground and open pit Mineral Resources are inclusive of the combined underground and

open pit Mineral Reserves. After completion of the resource estimation the planned base of the open pit was raised, reducing the open pit Mineral Resources and increasing the underground Mineral Resources considered for Mineral Reserve estimation



In the first method, economic open-pit limits were derived using the Lerchs-Grossmann algorithm, and included in a Whittle® FX analysis, using total underground mining costs of US$50/t and US$60/t. These costs reflected a range of base underground operating cost scenarios, and included an additional US$15/t to account for underground development capital costs. The difference in estimated open-pit reserves for these two cases was approximately 5%. AMEC considered that the pit limit was relatively insensitive to underground mining costs.

The second method involved the definition of potential underground stopes, using a 4 g/t AuEq cut-off to target resources. The areas of interest for underground mining were outlined and removed from consideration in the economic pit limit evaluation. The estimated open-pit resources for this case fell between the upper and lower limits for the underground scenario above, and confirmed the robustness of the open-pit.




The results indicated that the most economic plant throughput rate was 1,000 t/d using combined open-pit and underground mining methods. Thus, AMEC recommended that the combined scenario of open pit and underground mining, as proposed in the 2007 Feasibility Study, also be the method for the 2008 Feasibility Study Update for the following technical reasons:

• Waste dump will be the same size and design as included in the 2007 Feasibility Study, reducing exposure to any potential environmental risk that could be associated with increases in dump size.

• The open-pit only scenario has a high ore to waste stripping ratio (1:19).

• Underground development will give a platform for additional exploration and development possibilities for new discoveries.

• Open-pit only scenario requires a 45% higher peak open-pit mine capacity.

The subsequent mine optimization, based on the optimal throughput rate, used the same block model as did the mineral resources, but modified the elevation at which planned open pit mining was to be completed and underground mining commence from that elevation which had been used to separate the open pit and underground mineral resources. This resulted in some mineralization that had been classified as open pit mineral resources being considered as more optimally mined by underground methods, such that:

• Underground mineral resources have lesser tonnages, gold, and silver grades and therefore contained metal values than the underground mineral reserves, because the mineral reserves incorporate mineralization considered during mineral resource estimation to be extracted by open pit methods

• Open pit mineral resources have higher tonnages, gold, and silver grades and therefore contained metal values than the open pit mineral reserves, because higher-grade portions of the open pit mineral resources are planned to be extracted by underground methods.

Figures 17-3 and 17-4 illustrate the two mining scenarios tested in the desktop study. Figure 17-5 shows a section through the block model at 6548440N that illustrates the differences between the mineral resource and the mineral reserve models described above.




Figure 17-3: Open Pit Limits With and Without Underground Mining Option




Figure 17-4: 3-D View of Open Pits with and without Underground Mining Options




Figure 17-5: Cross Section 6548440N through Block Model Showing Differences Between Mineral Resource Cut-Off Elevations for Underground/Open Pit Options and the Cut-Off Elevations used for Mineral Reserves.

Stopes for mineral reserve estimates

Pit shell used to delimit mineral resources

Pit shell used to delimit mineral reserves

Stope for mineral reserve estimates

Stopes for mineral resource estimates

Topographic surface




17.2 Mineral Reserves

A hybrid mining case was developed for the Casposo Project. The principal mineralized structures are contained in the Kamila deposit, consisting of the Aztec, Inca and B veins, plus the adjacent lower-grade Mercado deposit. The Kamila deposit will be mined first with the top part being mined by open-pit methods and the deeper portion by underground methods. The Kamila open-pit will consist of a large pit (Kamila Main pit) and a small satellite pit located 100 m to the SE (Kamila SE pit). Mercado will be mined by open pit methods toward the end of the planned mine life.

The concept behind this option is that the shallower ore would be mined by low strip ratio open pit mining (i.e. low cost open pit mining) and the deeper and narrower ore that would require high strip ratios to mine by open pit would be mined by underground methods.

17.2.1 Open Pit Mineral Reserves

Mineral reserves were estimated using a diluted mineral resource block model. Open pit mineral reserves were confined within Lerchs–Grossmann pit shells. Underground mineral reserves were confined within appropriate stope boundaries.

Operational Dilution

Due to the narrowness of the veins that will be mined, it is not possible to always separate material below cut-off inside and along strike of the vein. It is possible, in some instances, to separate below-cut-off sectors of the vein in a manner approximately perpendicular to the vein. In other words, it is necessary in most cases to either accept or reject the whole vein across its width with the exception of very wide zones. This results in an operational (internal) loss and dilution. The net effect of contact dilution and the operational loss/dilution is a 21% increase in tonnage and a decrease in metal grades of 14%.

Economic Parameters

AMEC used an overall slope angle of 46.5º for pit limit optimization. Other parameters considered included the cost of sales, royalties, taxes and duties, and the Fideicomiso Agreement, as summarized in Section 17.1.12.

Open pit operating costs have increased in the Feasibility Study Update by 25% over those costs used in the 2007 Feasibility Study. The gold price used is significantly higher, US$690/oz in the Feasibility Study Update as opposed to the US$450/oz used




in the 2007 Feasibility Study. Gold price increases are partially offset by the inclusion for the first time of taxation and royalty provisions in the L–G parameters.

The silver price has also increased, from US$7/oz in the 2007 Feasibility Study to US$11.80 in the Feasibility Study Update.

Economic parameters used are summarized in Table 17-10. The open-pit mining cost is not included in the marginal cut-off grade calculations, but is applied to pit limit optimization.

Cut-off Grades and Equivalency Calculations

The marginal cut-off grade (grams per tonne Au equivalent or g/t AuEq) for the open pits was calculated as follows, using the parameters listed in Tables 17-10, and modified as appropriate:

Au Equivalent cut-off grade = (process cost + incremental ore haul cost + general and administrative cost) ÷ ((effective Au price – Au cost of sales) ÷ 31.1035 * Au recovery) = (US$19.46 + US$0.84 + US$8.33) ÷ ((US$615 - US$4.53) ÷ 31.1035 * 0.937) = 1.56

where the effective Au price ($615/oz) is the base case Au price ($690/oz) reduced to effectively account for the royalties, taxes and duties, and the Fideicomiso Agreement, as summarized in Section 17.1.12.




Table 17-10: Open-Pit Parameters

Parameter Unit Values Metal Prices Au US$/oz 690 Ag US$/oz 11.80 Cost of Sales Au US$/oz 4.53 Ag US$/oz 0.49 Export Duty % 5 Boca Mina % 3 Provincial Mining Royalty % 1 Fideicomiso % 1 Debits and Credits Tax % 0 Production Royalty US$/oz AuEq 3.35 Effective Au Price after Royalties US$/oz 615 Effective Ag Price after Royalties US$/oz 10.55 Operating Costs Process US$/t 19.46 Mining (Incremental Ore Haul) US$/t 0.84 General and administrative US$/t 8.33 Open Pit Mining Cost US$/t 2.93 Recovery Au % 93.7 Ag % 80.6 Marginal Cut-Off Grade g/t AuEq 1.56 Ag Equivalent g/t Ag 70.56

The corresponding silver equivalency (AgEq) value was calculated as follows:

Ag Equivalent = (effective Au price – Au cost of sales) * Au recovery ÷ (effective Ag price – Ag cost of sales) * Ag recovery = ((US$615 – US$4.53) * 0.937) ÷ ((US$10.55 – US$0.49) * 0.806) = 70.56

17.2.2 Underground Mineral Reserves

AMEC redefined the mining method, the stope definitions and the infrastructure development for the Casposo underground mine in the Feasibility Study Update when compared to the 2007 Feasibility Study. One major consideration for this was the redefinition of the open pit limits. AMEC selected a stope benching method combined with cemented rock backfill as the most appropriate mining method.

Economic Parameters

Underground parameters used to constrain the underground mineral reserves are shown in Table 17-11. Cut-off grades for mineralization to be included in underground mineral reserves have been elevated to 3.5 g/t AuEq, which is higher than the 3.0 g/t AuEq figure used in the 2007 Feasibility Study.




Table 17-11: Underground Parameters Parameter Unit Values Metal Prices Au US$/oz 690 Ag US$/oz 11.80 Cost of Sales Au US$/oz 4.53 Ag US$/oz 0.49 Taxes and Duties Export Duty % 5.0 Boca Mina % 3.0 Provincial Royalty % 1.0 Fideicomiso % 1.5 Debits and Credits Tax % 0.6 Production Royalty US$/oz AuEq 3.35 Effective Prices after taxes and duties Effective Au Price US$/oz 615 Effective Ag Price US$/oz 10.55 Operating Costs Process US$/t 19.46 Mining US$/t 34.86 General and administrative US$/t 8.33 Recoveries Au % 93.7 Ag % 80.6 Cut-off grade Marginal Cut-Off Grade g/t AuEq 3.5

Equivalency Calculations

The underground gold and silver equivalency equations were similar to those listed for the open pit in Section 17.2.1, but were based on the parameters listed in Table 17-11.

Modifying Factors

Underground mineral reserves were confined within appropriate stope boundaries. AMEC estimated an approximate mineral resource loss in the stopes of 10% in unblasted material plus 5% in broken ore loss, which would be inaccessible to the load-haul-dump machinery. Dilution estimates comprise 0.5 m of hangingwall and footwall material beyond planned stope outlines. AMEC considers these to be reasonable modifying factors for use in the estimation of the underground mineral reserves.

17.2.3 Mineral Reserves Statement

Mineral reserves for the Casposo Project are classified in accordance with the 2005 CIM Definition Standards for Mineral Resources and Mineral Reserves, and are




reported to a gold price of US$690/oz and a silver price of US$11.80/oz. Mineral reserves are summarized in Table 17-12.

Table 17-12: Casposo Mineral Reserves, Effective Date 14 June 2008, R. Penner, MAusIMM (Open Pit Portion) and Geoffrey Challiner MIMMM (Underground Portion)

Probable Mineral Reserves Contained Metal (oz) Mining Area Tonnes

(t x 1,000)

Au (g/t) Ag (g/t) AuEq (g/t)

Au (oz x

1,000)

Ag (oz x

1,000)

AuEq (oz x

1,000) Open Pits Kamila Open-Pit 1,297 5.72 98 7.12 238.7 4,103.4 297.0 Mercado Open-Pit 102 1.79 66 2.73 5.9 216.9 8.9 Total Open Pits 1,399 5.44 96 6.80 244.6 4,320.3 305.9 Underground Kamila Underground 335 3.99 221 7.11 43.0 2,375.2 76.6 Total Open Pit and Underground 1,734 5.16 120 6.86 287.6 6,695.5 382.5

Notes: 1. All Mineral Reserves are in the Probable category. 2. Mineral Reserves are estimated using a US$690/oz gold price and US$11.80/oz silver price and an economic

function that includes operating costs, metallurgical recoveries and royalty costs. 3. Mine optimization was based on the optimal throughput rate and used the same block model as used for

estimation of the Mineral Resources, but raised the elevation at which planned open pit mining was to be completed and underground mining commence compared to the elevation which had been used to separate the open pit and underground Mineral Resources. This resulted in some mineralization that had been classified as open pit Mineral Resources being considered as more optimally mined by underground methods.



Ralph Penner, MAusIMM, is the qualified person for the open pit portion of the mineral reserve estimate. Geoffrey Challiner, MIMMM, is the qualified person for the underground portion of the mineral reserve estimate. Underground and open pit mineral reserves have an effective date of 14 June 2008.

AMEC notes that, with additional exploration drilling, and blast hole drilling undertaken during the planned mining operations, there is potential to increase mineralization within higher-confidence mineral resource categories. These mineral resources, if successfully converted to mineral reserves, could provide additional upside to the Project.


The QPs are of the opinion that the Mineral Resources and Mineral Reserves for the Project, which have been estimated using pit, trench, RC and core drill data, have




been performed to industry best practices, and conform to the requirements of CIM (2005). The Mineral Reserves are adequate to support mine planning.

Mineral Reserves by definition have taken into account environmental, permitting, legal, title, taxation, socio-economic, marketing and political factors and constraints, as discussed in Section 4 and Section 18 of this Report. The Mineral Reserves are adequate to support mine planning.

Drill data generated during 2008 have not been incorporated into the geological model, and thus do not support mineral resource estimation. AMEC recommends that these data are reconciled in plan, cross- and long-section to existing interpretations, and the existing interpretations modified as appropriate.

Troy should also review and incorporate into the geological models any changes to the drill collar locations as a result of the latest Total Station collar survey results, as these may present slight changes in drill collar locations to those generated from earlier hand-held GPS surveys.

In addition, AMEC recommends that the geological and structural interpretation discussed in Section 10.9 is incorporated into the updated geological interpretations and subsequent geological models.

The additional data may warrant replacement of the current grade shell constraints on the mineralization with more detailed geological interpretations that more closely honour the vein contacts.

Once the geological models have been updated, AMEC recommends that mineral resources and mineral reserves are updated for the Project.




18.0 ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORT ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES

18.1 Planned Mining Operations–Open Pit

The open pit mining plan comprises the mining of two separate orebodies—Kamila and Mercado—separated by a distance of approximately 1 km. The mining strategy is to start mining the Kamila Main open-pit by subdividing it in two phases, continuing with Kamila SE pit (Phase 3) and finally with the separate Mercado pits (Phase 4). These four phases are summarized in Table 18-1. Pit locations are shown in Figure 18-1.

Table 18-1: Planned Open-Pit Mine Phases To Process Plant Waste Total

Tonnes (x 1,000)

Au Eq (g/t)

Au (g/t)

Ag (g/t)

Tonnes (x 1,000)

Tonnes (x 1,000)

Strip Ratio

Phase 1 472 8.71 7.34 96 2,149 2,620 4.6 Phase 2 745 6.19 4.75 102 3,422 4,167 4.6 Phase 3 80 6.42 5.28 80 188 269 2.3 Phase 4 102 2.73 1.79 66 340 442 3.3 Total 1,399 6.80 5.44 96 6,099 7,498 4.4




Figure 18-1: Ultimate Pit Design

Detailed pit design was completed using Whittle® and Datamine® software and was based on the optimum open pit shell. The deepest pit will be Kamila Main, with a maximum depth of 124 m below original topography.

The minimum mining width is 40 m. Since the block model has a block height of 6 m, the pit design incorporated a triple bench of 18 m, or three blocks between catch benches. A ramp width of 10 m with a gradient of 10% was planned for Kamila Main. For the Mercado and Kamila SE pits, a ramp width of 7 m with a gradient of 10% was designed, since these pits are not deep and the truck cycle permits one-way traffic.

Prior to the start of mining, a haul road from the plant to the Kamila Main pit and waste dump is planned to be constructed and the initial pioneering access road to the top elevation of pit will be completed. The construction of this road will be a significant task due to the steepness of the hill and the fact that major drill-and-blast side cuts will be required.

Mercado




18.2 Planned Mining Operations–Underground

Development of the underground mine will commence during the third year of open pit production by which time development of the Kamila pit will permit access to the portal location. AMEC selected a stope benching method combined with cemented rock backfill. Mining will proceed from the bottom to top. Two sublevels will initially be driven following the strike of the vein separated at 12 m.

Blast hole rings will be drilled down from the upper sublevel. Two or three rings of holes will be blasted at each time and the broken ore is extracted from the lower sublevel using a remote-controlled load-haul-dump (LHD) machine. Benching proceeds in this fashion leaving an empty stope until the geomechanically-defined limit is reached, typically 17 m to 20 m along the strike of the vein.

Thereafter, the stope is filled with rockfill. Ore loss in the stopes was estimated to be 10% in un-blasted shoulders below the upper sublevel, and 5% in broken ore loss, which are inaccessible to the LHD. Dilution estimates comprise 0.5 m of hangingwall and footwall material beyond planned stope outlines.

The stope will be rock-filled from the upper sublevel by adding cement to produce stability to allow the subsequent mining of adjacent ore, where present. Once the stope is backfilled, the drilling, blasting, extraction and backfilling sequence is repeated until all the reserves have been mined along the full strike of the vein. The next stope will then be mined above the previously-filled stope by driving a new upper sublevel. This second stope then uses the upper sublevel for drilling, blasting and backfilling operations, and utilizes the previous stope upper level as the new stope lower extraction level for the remote controlled LHDs, which now operate with the previous stope backfill as floor. This sequence of operation will be repeated upwards until the top of the vein is reached. The ore will be hauled to surface by 25 t diesel trucks.




Figure 18-2: Typical Underground Stope Schematic Profile

8 - 16 m

Bolts

Fill

Loss

Direct mining activities will be undertaken by a contractor. Contracted activities include development, stope drilling and blasting, mucking, and truck haulage and rockfilling operations. The contractor will provide all the mobile mining equipment necessary to undertake these activities. The general mine services including the provision of air, water, power, ventilation, and dewatering will be the responsibility of Intrepid.

Figure 18-2 shows a schematic profile of a typical stope, whereas Figure 18-3 presents a schematic of the planned mining sequence. Table 18-2 shows the planned underground development schedule, and Table 18-3 shows the planned ore production schedule.




Figure 18-3: Schematic of the Underground Mining Activities

Retreat

Bolts

Bolts

Cemented Rock FillRock Fill

Shot Muck

Max. Dimention

Table 18-2: Planned Underground Development Schedule Year 3 Year 4 Year 5 Total

Development (m) 1,239 4,568 2,727 8,534

Table 18-3: Planned Underground Production Schedule

Units Year 4 Year 5 Year 6 Total Tonnage Tonnes x 1,000 133 168 34 335 Diluted Gold Equivalent Grade g/t AuEq 6.44 7.58 7.44 7.11 Diluted Gold Grade g/t Au 3.82 4.30 3.08 3.99 Diluted Silver Grade g/t Ag 185 231 221

18.3 Planned Production Schedule

The production rate for the mine will be 365,000 t/a with all production for the first three years coming from the Kamila open pits and underground ore production starting towards the end of Year 4. The Mercado open-pit will be mined in Year 4 due to its lower grade and since it is located further away from the processing plant than the Kamila deposit.

The 2008 updated planned production schedule is included as Table 18-4, and a schematic of the proposed mining operation in Figure 18-4. Differences between the schedule reported in the 2007 Feasibility Study and the updated plan include




expansion of the Aztec and Inca zones, and exclusion of certain high-stripping zones that were previously included in the open-pit.

Table 18-4: Consolidated Mill Feed Schedule (Open Pit and Underground) Year (-1) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Total

Open-Pit Tonnes to Plant (t x 1,000) 32 333 365 365 304 - - 1,399

Au (g/t) 4.41 5.49 7.33 4.67 4.13 - - 5.44 Ag (g/t) 47 65 116 100 106 - - 96 AuEq (g/t) 5.08 6.41 8.99 6.08 5.64 - - 6.8 Waste Tonnes (t x 1,000) 468,000 1,667,000 1,635,000 1,635,000 694,263 - - 6,099,263

Total Open-Pit Tonnes 500 2,000 2,000 2,000 998 - - 7,498

Underground Tonnes to Plant (t x 1,000) - - - - 38 183 115 335

Au (g/t) - - - - 3.63 4.12 3.89 3.99 Ag (g/t) - - - - 226 203 247 220 AuEq (g/t) - - - - 6.83 6.99 7.39 7.11 Total – Mill Production (Open Pit + Underground) Tonnes Processed (t x 1,000) - 365 365 365 342 183 115 1,734

Au (g/t) - 5.4 7.33 4.67 4.08 4.12 3.89 5.16 Ag (g/t) - 63 116 100 119 203 247 120 AuEq (g/t) - 6.3 8.99 6.08 5.77 6.99 7.39 6.86 Strip Ratio 14.6 5.0 4.5 4.5 2.3 4.4 Total – Mill Feed Tonnes Processed (t x 1,000) - 356 365 365 351 183 115 1,734

Au (g/t) - 5.4 7.33 4.67 4.08 4.12 3.89 5.16 Ag (g/t) - 63 116 100 119 203 247 120




Figure 18-4: Mine Schematic Showing Proposed Open Pit and Underground Layout

The main mechanical construction completion of the processing plant ready for the dry runs of ore, from the start of basic engineering, is projected to be about 18 months to the start of 2010. On this basis the overall project completion is scheduled to be 20 months. The production schedule incorporates a three-month ramp up during the first quarter of 2010 to reach maximum production levels by the end of 2010. Production is planned to average 90% of maximum in this period.

Permanent power will be supplied by a power line and electrical facilities developed by others. The planned provision of power is discussed in Section 5 of this report.

18.4 Mine Design–Open Pits

A specialist mining contractor will be retained to perform all the mining activities. The contract will be all-inclusive with the contractor supplying all the required manpower, mining equipment, support equipment and infrastructure facilities to meet the scheduled mining rates. Required equipment for the open pit is summarized in Table 18-5. The mining schedule envisages operation over 355 working days, for 51 weeks production per year.




Table 18-5: Planned Open Pit Mining Equipment

Y-1 Y1 Y2 Y3 Y4 Drilling 5" PANTERA 1500 1 1 1 1 1Ore Control Drill DrillTech Mission D2455 1 1 1 1 1Hydraulic Excavator CAT 345 1 2 2 2 1Haul Truck Scania P420 CB8X4 3 4 4 4 4Bulldozer Komatsu D-155 AX 1 1 1 1 1Motor Grader 1 1 1 1 1Water Truck 1 1 1 1 1Fuel/Lubrication Truck 1 1 1 1 1Mechanic/Welding Truck 1 1 1 1 1Blasting Loader 1 1 1 1 1Blasters Truck 1 1 1 1 1Lighting Plants 4 4 4 4 4Tire Handler Truck 1 1 1 1 1Crew Van 1 1 1 1 1Pickup Trucks

Equipment numbers required per year

3 3 3 3 3

Loading and hauling of ore and waste in the open pits will be done using backhoe style excavators with 2.6 m3 buckets and 3–4 fixed body conventional highway-type haul trucks (36 t). All ore and waste rock will require drilling and blasting; loose overburden over the pit area is minimal. The waste stockpile will be located approximately 350 m to the southeast of the Main Kamila pit.

Drilling of both ore and waste will be done with a diesel, hydraulic top-hammer, self-contained rig. Holes will be 127 mm diameter for both ore and waste with a drill hole pattern of 3.5 m x 4 m for ore and 4 m x 4.5 m for waste. This will contribute to slightly higher costs for ore mining when compared to waste mining.

Ore and waste mining benches will be 6 m in height, with blast holes drilled to 6.6 m in depth (0.6 m of sub-grade). The pit design was based on an 11.5 m wide berm being provided every 18 m vertically.

Total drilling requirements will be approximately 11,500 m/a for ore, 40,000 m/a for waste, and an additional 35,000 m/a for pre-split and wall control drilling. Drill holes will be loaded with ANFO, which will be mixed at the blasting site. The powder factor has been calculated to be 214 g/t in ore and 152 g/t in waste. The use of an excavator is considered to be critical to the minimization of dilution and to ensure good ore recovery. Grade control will be essential to maintaining the projected mill head grades.

The haulage trucks will be 36 t fixed body conventional highway type vehicles. A 36 t truck was preferred in the 2007 Feasibility Study; however, the mining contractor may choose a smaller size due to the fact that the 28 t model is a very common throughout




Argentina. All haulage roads and ramps were designed with a maximum gradient of 10% and a width of 10 m which is suitable for these types of highway trucks.

Typical ore haulage distance to the plant from the Kamila Main pit will be 1.5 km and to the waste dump will be 1.2 km. A distinct feature of the Kamila Main pit is that much of the ore and waste to be hauled within the pit will be transported “down grade” due to the fact that much of the deposit is located in a hill.

18.5 Mine Design–Underground

18.5.1 Mining Sequence

Mining commences from the base of the veins and progresses upwards. Where the stopes have vertical continuity and where the horizontal continuity of the stopes is more than 40 m, a 10 m rib pillar at the central part will be left to protect the access to the loading drifts. This rib pillar will be recovered after the uppermost stope of that vein is extracted. Cemented rock-fill will be placed on both sides of this rib pillar to provide stability during subsequent pillar recovery mining operations. Where the stopes are isolated, the access is located at one end of the vein and no pillar will be left.

The sequence for mining the first and bottom stope is the following:

• Both the lower drift (which will be used for ore extraction) and the upper drift (which will be used for down hole bench drilling) must be fully developed.

• The drifts will be located in the central part of the vein, following the vein along strike. The 4 m x 4 m drifts will be slashed to 8 m width to improve manoeuvrability for longhole drilling and LHD stope mucking operations.

• After the bench drilling is completed, two or three rings of drilling are blasted at one time. ANFO explosive will be used in dry holes and emulsion explosive will be used, where necessary, in wet, dead-end blast holes.

Drilling will be undertaken using track drills drilling down from the upper drift in a stope. The drilling pattern will be 1.5 m x 1.5 m. Blast holes that break to the lower level will be around 8 m in length. Holes that do not break through to the lower level will be around 12 m.

Extraction of the ore in the lower level will be performed with remote controlled 6 yd3 (4.6 m3) load-haul-dump vehicles (LHDs). The LHDs will load trucks in the lower stopes or will dump in grizzlies located at dump points connected to ore passes, for the




upper stopes. From the ore pass dumps and lower stopes ore will be hauled to the plant using 25 t trucks.

18.5.2 Ventilation

Ventilation will be established for the mine by the fresh air entering the 5 m x 4 m main access ramp, circulating through the levels and stopes and exiting the mine through three ventilation raises located strategically for each vein. Each ventilation raise will have its own electric main fan to force the air circulation. For each of the working faces (two stopes and four drifts) forced fresh air from the main access will be directed to the faces with auxiliary fans and ducts. The total mine calculated air requirement is 110 m3/s.

18.5.3 Ramps, Accesses and Ore Passes

The access ramp portal will be located near the bottom of the Kamila SE pit. Ramp gradient will be -10% for 280 m, where it connects to the spiral ramp of the upper Aztec NE vein. This spiral ramp has loops of 16 m radius and a +12% inclination for convenient access to the sub-levels of the upper stopes.

The accesses to the production drifts are horizontal and have a maximum distance of 25 m between the spiral ramps and the entrance points to the veins. The location of these entrance points depend upon the length of the stopes. If the stopes are 20 m or less, their entrance point is located at one extreme. If the vein strike is more than 40 m long, the entrance point to the stope is located near the center point. These accesses are 4 m by 4 m.

Remuck stations (4.6 m x 4.1 m x 15 m long) to provide for loading of trucks will be excavated every 150 m along the ramp except where other development will be available to serve this purpose. Safety bays (2.0 m x 2.0 m) will be excavated every 50 m along the ramp.

The ore passes have been located near the stopes to optimize the LHD hauling cycles. All the upper levels have connections to the ore passes. Ore passes are 3 m by 1.5 m for the purpose of having two sections, a man-way and the ore pass. Inclination of the ore passes is 70º.

18.5.4 Hydrology

Hydrogeological analysis conducted by Knight Piésold (KP), indicates that water inflows to the mine will be minimal and dewatering requirements will not be significant.




The majority of the pumping requirements will be to remove process water introduced into the mine for drilling, wash down of headings for geological mapping, and spraying of muck piles and roadways for dust control.

The mine plan includes a permanent collection sump and pump station at the bottom of the mine and a pair of submersible pumps (one as a spare) with capacities of about 22 m3/h. It is expected that this pump would only operate a maximum of 25% of the time.

While the ramp is being driven submersible pumps will be used to dewater the mine. On surface, the water will be pumped to a settling pond located adjacent to the portal to remove sediments and then will be either reused in the process plant, sprayed on the roadways for dust control or otherwise will evaporate.

18.6 Waste and Tailings Management

The 2007 Feasibility Study made provision for separate, but abutting, waste rock dumps (WRD) and dry-stack tailings management facilities (TMF), located southeast of the Kamila deposit.

The WRD was designed to contain 8 Mt of waste, but in the 2008 updated mining plan will only be required to store 6.1 Mt. The height of each bench of the waste dump is 20 m with a face angle of 33.5º and a berm width of 15 m. The final slope angle is 25º. Most of the waste will be produced from the open pits with a small portion also coming from the underground mine development. Once the Kamila Main pit has been mined out, some waste will be returned to the underground mine as backfill. This waste will be supplied by hauling waste being stripped from the planned Mercado pit directly to the underground mine.

The Project will generate about 1.8 Mt of tailings over its planned five-year operating life. The estimated tailings mass requires around 1.4 Mm3 when filtered and dry-stacked. The TMF abuts the southeast end of the WRD and extends to the southeast. The TMF is planned to be progressively closed as it is operated, using non-reactive, suitable waste rock to construct a cover resistant to erosion by wind, direct precipitation and water run-off.

The 2007 Feasibility Study base case included a geomembrane liner over the prepared foundation surface of the TMF, which was retained in the Feasibility Study Update. The proposed liner extended on the eastern side of the WRD to ensure that a barrier to any downward seepage infiltration to the native foundation soils is maintained beneath the entire tailings deposit. As part of the EIA process, Intrepid




undertook to upgrade the proposed impermeable liner of the TMF to include a low permeability soil barrier, under drains, and monitoring piezometers.

Tailings will be washed, rinsed and filtered using vacuum filtration. The filtered tailings will be transported by haul truck to the dry-stack TMF where they will be spread and packed by dozers. Additional compaction, as required, will be provided by a compactor, to reduce wind-borne erosion, and to improve trafficability on areas that are not planned to be covered with waste rock sheeting.

Sulphur contents greater than 0.5% by mass, which can be an indicator for acid mine drainage (AMD) potential, have been identified in approximately 12% of the rhyolite and about 8% of the andesite in the Kamila zone.

18.7 Material Handling

Ore from both the open pit and underground will be trucked to the run-of-mine ore stockpile located at the plant. The ore will be loaded from the stockpile by a front-end loader and hauled to the feeder to the crusher. Any oversize will be moved to one side and the transported to a blasting pad where the large pieces will be blasted. To even out grade fluctuations to the mill, blending of ore from the open pit and underground and from higher-grade sources can be achieved by modifying the sequence that the front-end loader feeds the mill.

18.8 Mine Services

The services to be provided for maintenance and infrastructure for mining will be minimal due to the simple and compact nature of the mine and the short mine life planned.

The only permanent maintenance facilities to be provided will be a shop on surface which will service both the open pit and underground operations. All equipment repairs on the mobile equipment will be completed in that shop. The only exception to this would be routine repairs to the open pit and underground as these are slow moving units and cumbersome to bring to the shop. However, if major repairs would be required these units would be brought to the surface shop.

The power requirements for the open pit are minimal as almost all equipment will be diesel powered including the production drills. The main power requirement before the start of the underground mine will be to supply power to the mining contractors’ surface maintenance and office facility as well as for pit dewatering. The underground will use a significant quantity of electrical power for ventilation fans, production and




development drill rigs, pumps, compressors and lighting. These loads will start in the middle of Year 2 as the ramp development begins and then will reach full load in the remaining years.

18.9 Mine Site Infrastructure

The proposed infrastructure layout is shown in Figure 18-5.




Figure 18-5: Proposed Infrastructure Layout




Planned site facilities include:

Ore Storage

• Run-of -mine coarse ore stockpile.

Plant Area

• Crusher plant

• Fine ore storage bin and emergency stockpile

• Grinding and gravity

• Counter current decantation thickener plant

• Filter plant and tailings stockpile

• Cyanide destruction and process water distribution

• Process water collection pond

• Plant control room (with internal office and slurry sample preparation room).

Administration

• Gatehouse and weigh scale

• Administration and engineering offices

• Assay laboratory

• Warehouse, and storage yard

• Maintenance workshops

• Canteen and infirmary

• Power generator plant

• Fuel storage

• Reagent mixing

• Fresh water and fire water storage and distribution

• Potable water plant

• Air services

• Merrill Crowe and refinery

• Site water collection pond




Mine Area

• Contractors’ area (offices, warehouse, heavy vehicle repair shop, fuel tank) and facilities

• Explosives magazine

• Detonator magazine

• Underground air compressor services

• Underground mine water settling pond

Water Well Supply Area

• Wells

• Fresh water supply tank and distribution pipe

18.10 Environmental

18.10.1 Baseline Studies

Knight Piésold (KP) developed and supervised a baseline monitoring program. During 2006, monthly baseline monitoring of meteorology, water quality, hydrology, hydrogeology, air quality; seasonal baseline monitoring of flora and fauna, limnology and ichthyology; and special studies including geomorphology, seismicity, soils, and landscape were conducted by KP. The baseline study extended similar studies that were initiated by Intrepid prior to the 2007 Feasibility Study. Intrepid also commissioned archaeological and seismic studies, which KP incorporated into the baseline report.

18.10.2 Project Development Environmental Management Plan

A preliminary environmental management plan (EMP) was developed to summarize the significant, adverse impacts that the development, operation and closure of the Project could have on the environment and to suggest measures that could mitigate these recognized, potential adverse impacts to acceptable levels. General recommendations for the management and care of the physical environment, biological environment and archaeological and cultural heritage were made in the preliminary EMP.




18.10.3 Environmental Impact Assessment

KP developed an Environmental Impact Assessment (EIA) report for the Project. On 26 November 2007, the EIA, which had been filed by Intrepid, was approved by the Mining Secretary of the Province (Resolution 163 SEM). The EIA is discussed in Section 4.5.2. of this Report.

18.10.4 Preliminary Closure Plan

The closure and reclamation plan developed for the Feasibility Study summarizes the following:

• The anticipated conditions of the principal site facilities and infrastructure at the end of the mine operation.

• The closure criteria or objectives as determined from the estimated post-closure environmental and land-use objectives.

• The strategies and time frame required to achieve these criteria.

The closure and reclamation plan is considered preliminary since some elements of the plan, such as post-closure monitoring requirements and associated cost estimates, may require revision upon Project approval. Further, the specific details of the Mine Closure and Reclamation Plan will evolve as mining progresses, and so the plan will be updated periodically during the mine life. The final plan will be generated two years before mine closure.

The project closure plan components include the open pits, the underground workings, the mine service facilities, the Waste Rock Dump (WRD), the Tailings Management Facility (TMF), the various ore stockpiles and process plant, the administration buildings, shops, laboratory and power supply elements, the fresh water supply system and the site access and internal roads.

The closure activities and subsequent, short-term post-closure monitoring were estimated in the 2007 Feasibility Study to cost around US$0.9M. This cost has been escalated by 50% in the Feasibility Study Update to about US$1.3M based on Argentine bulk earthwork construction cost escalation since the fourth quarter 2006 cost base date of the Feasibility Study. This figure does not include the cost of dismantling and removing or disposing of any structures, installations and equipment other than the concrete foundation elements. Some major equipment will have a salvage value net of the dismantlement cost, while other equipment, such as tanks,




vessels, pump-boxes and piping are assumed to have a scrap value, net of their dismantlement and removal cost.

In general terms, the closure plan promotes, where technically and economically feasible, the rehabilitation of disturbed areas as much as possible to their pre-operation state. Areas permanently altered by the mine operation will be closed in a manner acceptable for physical, environmental, land-use and safety considerations.

18.11 Capital Cost Estimates

The total estimated capital cost to design and build the Casposo Project, including contingency, is US$86.0 M. The capital costs are summarized by work area and discipline in Tables 18-6 and 18-7. Contingency has been applied at 11% based on a @Risk Simulation analysis. All costs are expressed in second quarter 2008 US dollars, with no allowance for escalation, exchange rates variation, interest during construction or taxes (IVA).

Not included in this are estimated sustaining costs of US$12.8 M, or a contribution obligation of US$14.5 M towards the development of electrical facilities to supply power to the project. These are included directly in the project cash flow. About 90% of sustaining capital is applied to develop the underground mine.

The total estimated project direct capital cost is US$50.7 M, which is about 55% higher (60% if a temporary and camp construction indirect cost redistribution are also considered) than the Feasibility Study cost of US$32.8 M. This increase is reasonably consistent with average mining industry equipment price escalation and construction areas unit cost index escalation prevailing in Argentina from the Feasibility Study base date of fourth quarter 2006 until this update.

The direct capital cost is based on the purchase of all new equipment. Critically, the project schedule assumes that a suitable used ball mill will be procured and supplied within twelve months. The current delivery time of new ball mills is greater than 20 months. The second critical path delivery package is currently the Merrill Crowe system (12 months).




Table 18-6 Summary of Capital Costs by Work Area (US$ x 1,000) Area Description Supply Construction and Erection Total

Imported Local Man-hours

Direct Cost

Indirect Cost

Sub Contract

Sub Total

Direct Costs 100 Open Pit 250 4,000 2 8 4,727 4,737 4,987 200 Process Plant 10,671 9,318 245,000 423 1,904 6,293 8,620 28,609 300 Process Plant Buildings 180 15,000 2 6 636 644 824 400 Site and Services 1,103 2,758 94,000 62 219 7,332 7,613 11,474

500 Tailings and Waste Rock Management 1,580 1,580 1,580

600 Ancillary Facilities 205 26,000 9 30 3,025 3,064 3,269 Total Direct Cost 12,024 12,461 384,000 498 2,167 23,593 26,258 50,742 Indirect Costs 900 Indirects 19,939 19,939 19,939 3000 Owner Costs 6,960 6,960 6,960 Total Indirect Cost 26,899 26,899 26,899 9000 Contingency 1,424 1,476 59 257 5,156 5,472 8,373

Total Cost 13,447 13,937 384,000 556 2,424 55,649 58,629 86,014

Table 18-7: Summary of Capital Costs by Discipline (US$ x 1,000) Supply Construction and Erection

Disc. Description Imported Local Man

Hours Direct Cost

Indirect Cost

Sub Contract

Sub Total

Total

0 Mining 2,778 2,778 2,778 1 Earth Moving 63,00 8,266 8,266 8,266 2 Concrete 89,000 2,668 2,668 2,668

3 Structural Steel 1,351 18,000 1,315 1,315 2,666

4 Architectural 18,000 2,293 2,293 2,293 5 Mechanical 10,028 6,260 144,000 271 1,260 4,011 5,542 21,830 6 Piping 1,160 27,000 123 547 398 1,067 2,228 7 Electrical 1,995 3,314 17,000 93 328 422 5,730

8 Instrumentation 376 8,000 9 33 475 517 894

9 Indirects 1,424 1,476 59 257 33.445 33,761 36,662 Total Cost 13,447 13,937 384,000 556 2,424 55,649 58,629 86,014

The direct capital cost estimate covers the direct field site costs of executing the Project, plus the indirect costs associated with design, procurement, and construction efforts, but excludes sustaining capital costs of US$12.8 M and working capital, as well as a contribution obligation of US$14.5 M to PIEDE (see Section 5). These costs are included directly in the project cash flow model. The estimate also excludes sunk and financing costs, or any other costs arising in the eventuality of delays to the construction schedule. Temporary power generation equipment mobilization and hire costs to support the first six months of operation are included in operating costs. About 90% of sustaining capital is applied to develop the underground mine, starting in Year 3.




The estimate was prepared based on the work breakdown structure, the list of commodities, and estimate cost codes developed for the Casposo Project and on AMEC cost estimating guidelines. It has been updated principally by exception using the feasibility estimate as a starting basis and is largely based on the original feasibility design and material take-offs adjusted where required.

The main impact of this update to the design of the facilities and considered in the capital cost estimate includes:

• An updated mine plan based on new resource/reserve estimates, mine design and additional geotechnical data.

• Updated permanent power supply line concept (mine site interface only) and incorporation of electrical redundancy to match this, including a diesel emergency generator set.

• Elimination of permanent generator plant and diesel fuel facilities. The concrete slab for this facility is retained for a temporary diesel power plant that is assumed will be hired to support the first six months of project operation.

• An updated tailings management facility geotechnical design (impermeable barrier specification) as an obligation of the EIA resolution agreement.

• No change to process plant or other infrastructure.

In addition, since the completion of the 2007 Feasibility Study, the project EIA resolution has been approved, which contains a number of specific social, training, construction standards and environmental obligations. Many of these obligations are required to be implemented during construction, and have been incorporated by AMEC into the Owner costs estimate, largely under the guidance of Intrepid.

Updated equipment and bulk material prices have been supported by formal budgetary re-quotations, recent telephone quotations and current similar in-house data. To obtain accurate local costs, budgetary level construction direct costs were quoted by local companies located in San Juan, Argentina. Construction indirect costs were included in the budgetary quotations obtained from contractors. In the 2007 Feasibility Study some indirect costs, specifically temporary contractor facilities and camp facilities, were included in contractor rates and therefore direct costs. These have been moved to the construction indirect costs in the Feasibility Study Update.




The number of construction man-hours is estimated to be about 384,000 h (unchanged from the 2007 Feasibility Study). The total estimated project direct capital cost is US$50.7 M, which is about 55% higher (60% if the above construction camp and contractor indirect cost redistributions are also considered) than the 2007 Feasibility Study cost of US$32.8 M.

The indirect costs include EPCM (about 50% of total indirect cost) and other project related indirect execution costs including among other items, temporary construction and camp facilities, mobile equipment, freight and duties, and service contracts and consultants (together about 33% of total indirect costs). Indirect costs were estimated as a mixed percentage of the total direct cost of the project (EPCM 20%), contractor quotations, and in consultation with Intrepid relative to project specific requirements.

The total estimated project indirect cost is US$19.9 M, increased from the 2007 Feasibility Study cost estimate of US$6.6 M. About US$2.0 M of the cost increase is a result of the temporary and camp construction facility costs now included in indirect costs. Projected EPCM costs have also increased by about US$6.0 M to US$10.2 M. The additional growth in indirect costs can be attributed to general escalation and, in consultation with Intrepid, the incorporation of additional services and consultant contracts, standards, and incentives now expected by Intrepid during the construction period.

Owner costs have been estimated largely in consultation with Intrepid to match their new corporate project development structure and philosophy, and considering additional project specific training, environmental and social pre-construction obligations that arose in the EIA resolution process following the 2007 Feasibility Study.

The total estimated Owner cost is US$7.0 M, an increase from the 2007 Feasibility Study cost of US$1.2 M. About 35% (US$2.4 M) of the total is allocated to the Owner’s management team costs, including travel. The higher Owner costs also generally reflect an earlier build-up in the operations team manpower (6 to 12 months prior to operation) as compared to that envisaged in the 2007 Feasibility Study (1 to 3 months) to meet specific training need obligations. Consequently manpower-associated expenses have also increased.

The contingency used is 11.0% based on a @Risk Simulation analysis. The contingency amount is an allowance added to the capital cost estimate to cover unforeseeable costs within the scope of the estimate. These can arise due to presently undefined items of work or equipment, or to the uncertainty in the estimated quantities and unit prices for labour, equipment, and materials. Contingency does not cover scope changes or project exclusions.




18.12 Operating Costs

AMEC has estimated the mining, process and general and administrative operating costs, with input from Intrepid. The mine operating cost estimate prepared by AMEC is based on contract mining. Operating costs have been prepared in second quarter 2008 US dollars, and exclude:

• Contingency

• Allowance for escalation

• Value-added (IVA) taxes

• Import duties.

Two distinct operating phases are considered in the development of the operating costs:

• Years 1 to 4: Initial mining in the Kamila open pit at 1,000 t/d

• Years 5 to 6: End of pit operation and start of underground operation at 500 t/d.

The operating cost estimates have been assembled by area and component, based upon estimated staffing levels, consumables and expenditures according to the mine plan and process design. The operating costs include all costs required to produce 1,000 t/d from the planned open pits and 500 t/d from the proposed underground mine, including the normal underground mine development, and extension of principal underground mine ramps and raises. Not included in the operating costs are doré shipping and refining costs, sustaining capital, and closure costs, all of which are included directly in the cash flow model.

Life-of-mine operating costs are shown in Table 18-8 and annual operating costs in Table 18-9.




Table 18-8: Life-of-Mine Operating Cost, US$ x 1,000

Labour US$ Expenses US$

Total Cost US$ US$/t Milled

Mine operations 1,920 35,252 37,172 21.44Processing operations 6,302 29,693 35,995 20.76 Administration 5,704 20,730 26,433 15.24 Total 13,925 85,675 99,600 57.44

Table 18-9: Annual Operating Cost, US$ x 1,000

Year Mining US$ Processing US$

Admin. US$

Total US$

Open Pit US$/t Mined

Underground US$/t Mined

US$/t Milled

US$/oz AuEq

1 7,155 8,161 5,231 20,547 3.58 - 57.74 3062 7,039 6,762 4,609 18,410 3.52 - 50.44 1873 7,060 6,726 4,609 18,396 3.53 - 50.40 2714 6,246 6,631 4,609 17,746 5.03 32.49 49.84 2855 5,931 4,722 4,609 15,262 32.49 83.63 3886 3,740 2,993 2,766 9,499 32.56 82.69 359

Total 37,142 34,772 26,433 84,798 3.75 32.52 57.44 276Note: Gold price of US$733/oz, silver price of US$11.96/oz used in AuEq calculation

Based on an internal review of local manpower costs, in consultation with Intrepid, the 2007 Feasibility Study burdened manpower unit rates were increased by 20%, across all areas, for the basis of the Feasibility Study Update. Fuel costs increased from US$0.67/ℓ to US$1.00/ℓ. Freight rates for consumables were escalated by 50% to reflect increased logistics transportation costs associated with higher fuel costs and general fixed cost escalation. The average power supply cost of US$0.085/kWh used in the Feasibility Study Update (including base power, maximum demand, and maintenance charges) was provided by Intrepid based on discussions with regional authorities and similar mining projects. No power price supply agreement has yet been established for the project.

Mining open pit operating costs represent about US$26 M of the total life-of-mine mining cost. This is unchanged from the 2007 Feasibility Study despite a 50% increase in the base fuel price used in the Feasibility Study Update. The reason for this is that during the mining update the Aztec and Inca zones were expanded, and certain high-stripping zones that were previously included in the open-pit were excluded. As a result of this optimization, the stripping ratio is considerably lower in the Feasibility Study Update than in the 2007 Feasibility Study, and has largely offset the 60% increase in open pit mining unit cost from about US$2.40/t mined to US$3.75/t mined.




Total underground operating costs of US$10.9 M in the Feasibility Study Update also remained similar to the 2007 Feasibility Study (about US$12.3 M.) However, underground sustaining capital increased from US$2.1 M to US$11.5 M. This is a result of a transfer of most development costs to sustaining capital costs. In the 2007 Feasibility Study, because of the top-down mining approach used, much of the development that occurred in conjunction with mining was included in the operating cost. In the bottom-up mining method used in the Feasibility Study Update, additional front-end development is required to access the lower part of the mine. The overall life of mine underground cost (including sustaining capital) increased by about 57% to US$22 M in the Feasibility Study Update, from about US$14 M in the 2007 Feasibility Study. This is reasonably consistent with the direct cost escalation experienced in other areas. However, AMEC has estimated the mining costs by reference to its database of contract mining costs. It is recommended that Intrepid seeks site-specific contractor quotations to confirm the operating estimate and underground portion of the sustaining capital.

Total life of mine process operating costs increased in the Feasibility Study Update from about US$34.8 M to US$36.0 M from the 2007 Feasibility Study. This small increase is a result of a US$7.6 M increase (38%) in non-power process-related costs being offset by a US$6.4 M reduction in power costs, reflecting the new power line supply concept and a lower unit cost.

The general and administrative (G&A) costs include administrative personnel, general office supplies, safety and training supplies, travelling, contracted consultant services, insurance, permits, security, camp, building maintenance, environmental management, and employee transportation. These are largely fixed Owner overhead-related expenses and were mainly updated by exception by Intrepid. This update was based on the 2007 Feasibility Study G&A manpower schedule (a 20% increase in manpower rates) and indirect cost breakdown structure.

Indirect G&A expenses are mainly fixed allowances based on the Owner’s expected corporate and management overhead operating cost structure and other project specific expenses including among others, community development and training obligations. Intrepid have updated these allowances based on a new project development corporate structure, and interpretation of the obligations arising from the EIA resolution. As a result, the total life-of-mine G&A indirect costs have increased substantially from US$7.5 M to US$20.7 M. The indirect expenses represent about 75% (or US$3.3 M/a) of the life-of-mine average annual G&A cost of about US$4.4 M/a. AMEC preliminary benchmarking indicates the annual G&A indirect cost expenses lies in the middle to upper range of indirect costs in the industry for an operation of this scale and type.




The Feasibility Study Update was initiated during March 2008 and in order to meet internal key decision dates by Intrepid, was completed within four months. Due to this aggressive schedule, and delays in receiving vendor cost data, during the finalization of this study, some late stage price adjustments were submitted by vendors that have not been incorporated into the updated costing. These required adjustments include, among others, a further 10% increase in the new ball mill price of US$0.3 M, and an increase of US$0.3 M for the rental of new generator sets. AMEC does not believe the aggregate incorporation of these will materially affect the study financial results or conclusions.

18.13 Financial Evaluation

The results of the economic analysis represent forward-looking information as defined under Canadian securities law. The results depend on inputs that are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those presented here. Factors that could cause such differences include, but are not limited to: changes in commodity prices, costs and supply of materials relevant to the mining industry, the actual extent of the mineral resources compared to those that were estimated, actual mining and metallurgical recoveries that may be achieved, technological change in the mining, processing and waste disposal, changes in government and changes in regulations affecting the ability to permit and operate a mining operation. Forward-looking information in this analysis includes statements regarding future mining and mineral processing plans, rates and amounts of metal production, tax and royalty terms, smelter and refinery terms, the ability to finance the project, and metal price forecasts.

The Casposo Project was analyzed using a discounted cash flow approach assuming 100% equity. All cash inflows and outflows are in constant, second quarter, 2008 US dollars, unless otherwise specified. Projections for annual revenues and costs are based on data developed for the mine, process plant, ancillary facilities, infrastructure, capital expenditures, and operating costs as discussed elsewhere in this report.




Table 18-10: Base Case Forward Gold and Silver Prices

Calendar Year 2008 2009 2010 2011 2012 2013 2014 2015 Project year 1 2 3 4 5 6 7 8 Production year -2 -1 1 2 3 4 5 6 Au Forward Price, (US$/oz) 832 793 763 741 725 713 703 697 Ag Forward Price, (US$/oz) 17.20 15.24 13.85 12.84 12.10 11.54 11.13 10.81

Sustaining capital costs are those costs which, at the time the estimate is prepared, are expected to be required for sustainable production from the operation. Estimated LOM sustaining capital costs of US$12.8 M were incorporated directly into the financial model.

Additionally, Intrepid have made a financial obligation through PIEDE to contribute towards the construction of power line electrical facilities. Baker & McKenzie, legal representatives of Intrepid, reviewed this agreement and the general consensus legal view is that the MoA is a binding agreement as long as the government fulfills any conditions imposed on it. Intrepid’s US$14.5 M contribution to PIEDE is not included in AMEC’s capital cost estimate because it was not estimated, but is included directly in the project financial cash flow and amortized over the life of the mine.

Mine closure costs were estimated at US$1.3 M and, for the cash flow analysis, are included in the last year of the project. An estimated salvage recovery value of about US$4.5 M is also applied in the same year for the main capital equipment utilized in the Project net of the cost of dismantlement, removal and taxes.

The doré cost of sales used in the cash flow model is based upon terms as received in budget quotation communications.

Results of the base case financial analysis indicate that the project has a potential after-tax Internal Rate of Return (IRR) of 4.6% and an after-tax Net Present Value (NPV) US$(9.9) M at a discount rate of 8%. The base case scenario has a projected payback period of approximately 3.8 years.

A summary of base case cash flow analysis is provided in Table 18-11 and key economic indicators for the project are shown in Table 18-12.




Table 18-11: Base Case Cash Flow Summary

Cash Flow LOM Total US$ 000

Sales (Recovered Metal Value) 261,247 Cost of Sales (Smelting Charges & Doré Transportation) (5,228) Net Revenue 256,019 Total Operating Costs (Mining, Milling, general and administrative) (99,600) Operating Cash Flow 156,419 Provincial Turnover Tax (4,693) Export Tax (12,937) Provincial Royalty (1,564) Debits and Credits Tax (1,195) Municipal Tax (0) Production Royalty (1,198) Fedeicomiso (1,926) Net Operating Cash Flow 132,905 Income Tax (4,975) Cash Flow After Tax 127,931 Pre-Production Capital Costs (86,013) Sustaining Capital (12,798) Power Line (14,500) Mine Closure (1,335) Salvage Value 4,547 Value Added Tax (IVA) Paid (23,809) Recovered 23,809 Net Annual IVA 0 Net Cash Flow 17,832

Table 18-12: Base Case Economic Indicators

Economic Indicator After Tax Internal Rate of Return (IRR) 4.6% Cumulative Net Cash Flow, undiscounted (Cumulative NCF) US$17.8 M Project NPV, 8% discount(1) (NPV) US$(9.9) M Project Payback Period 3.8 years

Note: Net present value is calculated from the start of Year -2 (two years before starting doré production) and assumes that all cash flow amounts occur at the end of each year of the Project.

At the base discount rate of 8% used in this study, the indicated NPV of the project is negative. As the cash flow contribution is relatively strong, it is likely the project financials would benefit from an increase in mineral reserves.

AMEC notes that the financial analysis is based only on current mineral reserves. There is an expectation that the project economics are likely to improve if additional resources are discovered and inferred resources are eventually upgraded to higher confidence categories and converted to reserves. Intrepid have budgeted for, and commenced, a step-out drilling program that is designed to test for additional mineralization. This program is discussed in Section 21.




18.13.1 Sensitivity Analyses

Sensitivity of the project’s economic indicators (listed in Table 18-12) to changes in key variables such as gold and silver prices, capital cost, and operating cost were examined. Each of these variables was allowed to vary at a percentage change in the range of -30% to 30%, with intervals of 10%, from the base case figure. Respective changes in IRR, cumulative net cash flow (NCF), NPV and payback period are depicted in Figures 18-6, 18-7, 18-8, and 18-9.

Figure 18-6: Sensitivity of IRR

Figure 18-7: Sensitivity of Cumulative NCF




Figure 18-8: Sensitivity of NPV (8% Discount Rate)

Figure 18-9: Sensitivity of Payback Period1

The sensitivity analysis indicated that, generally, the project is more sensitive to changes in gold price than silver price, capital or operating costs, and is slightly more sensitive to capital costs than operating costs.

1 Payback period equal to 6 indicates that the project has not reached the point of payback, given the current assumptions.




19.0 OTHER RELEVANT DATA AND INFORMATION

19.1 Intrepid Proposed Project Development Plan

For the Casposo Project, the critical project development milestones include project financing approval, basic engineering, procurement of used ball mill and Merrill Crowe plants, sectorial permit awards, and site establishment (Table 19-1). The critical path runs through the bidding process and delivery time of used ball mill and ball mill electromechanical installation. The key activities to commence plant operation are the procurement and delivery of major capital components, such as the ball mill, Merrill Crowe plant and conveyors.

Table 19-1: Key Milestones

Description/Phase Month No. EP and CM contract award and basic engineering start 0 Start detailed engineering for temporary facilities 0 Start detailed engineering for process plant 1 Sectorial permits approved 2 Construction site mobilization 3 Earthmoving and roads start 5 Basic engineering complete 6 Pit Pioneering road construction start 6 Detailed engineering complete 10 Temporary facilities complete 10 Concrete and structural steel start 10 Used ball mill on site 12 Electromechanical installation start 12 Electrical equipment on site 14 Concrete and structural steel complete 16 Mechanical completion 18 Commissioning and project completion 20

19.2 Troy Project Development Plan

Subsequent to purchase of the Project in May 2009, Troy have identified potential capital and operating cost savings over the estimates in the 2008 Feasibility Study Update, that may include use of a Troy-owned gold plant that is in storage in New South Wales, Australia.




20.0 INTERPRETATION AND CONCLUSIONS

The following conclusions and interpretations are based on the Feasibility Study Update:

20.1 Land, Tenure and Environmental

• The Casposo Project is located in northwestern Argentina in the San Juan Province, department of Calingasta, and is approximately 150 kilometres west of the city of San Juan. There is no rail or air access to the Project. The closest airport is in San Juan.

• The land tenure holdings for the Casposo Project cover an area of 100.21 km2. Tenure comprises a two Mining Leases, four exploration Cateos, and one Manifestación de Descubrimiento application, which Troy lodged during 2008 to cover a minor gap identified in the current mineral tenure.

• There is sufficient supporting documentation on the validity of the mineral tenure to support declaration of mineral resources and mineral reserves.

• As at December 31, 2004 Intrepid had secured 92% of the condominium rights to the property, and there has been no change in the percentage of condominium rights held since that date. Troy holds sufficient surface rights to allow the planned mine development to go ahead.

• Troy is aware of the permitting requirements for the planned Casposo operations, and will ensure that mining activities are conducted within the regulatory framework required by the Argentinean authorities.

• Environmentally, no material impact issues were identified in the EIA baseline studies for the proposed Project development. On November 26, 2007, the EIA filed by Intrepid was approved by the Mining Secretary of the Province (Resolution 163 SEM). There is sufficient information on the environmental impact of the operation, and subsequent closure and remediation requirements that mineral resources and mineral reserves can be declared, and to support the mine plan.

20.2 Geology and Mineralization

• The Casposo gold–silver mineralization is typical of mineralization that has developed in low-sulphidation epithermal environments.

• Mineralization occurs in both rhyolite breccias and underlying andesite of the Permian–Triassic Choiyoi Group, where it is associated with banded quartz-chalcedony veins. It is characterised by low Fe sphalerite + chalcopyrite +




sulphosalts + pyrite, and is typically silver and base-metal rich. The opaque mineral assemblage includes translucent (low Fe) sphalerite, chalcopyrite, pyrite, lead sulphide and selenide, several sulphosalt minerals, native metal alloys that range from silver-rich electrum to native silver, silver selenide and sulphide and rare native arsenic.

• Several additional targets and showings of similar style mineralization have been identified by Intrepid on the project. Subsequent to additional exploration by Troy with positive results, these targets may add to the existing mineral resource and/or reserve base for the project and increase the mine life.

• The geology of the Casposo Project and the controls on mineralization are well understood.

20.3 Exploration

• From 1998 to 2000, Battle Mountain Gold (BMG) conducted regional exploration programs in the San Juan Province, identifying the Casposo mineralization in 1998. Work completed included surface sampling and geological mapping, trenching and pitting, an airborne magnetic and resistivity survey, and diamond drilling.

• Intrepid commenced exploration during 2002. Since that date, regional reconnaissance studies, detailed trench sampling of the vein systems, logging and bulk sampling for metallurgical studies, gradient-array induced polarization (IP) and pole dipole IP surveys, and channel sampling and mapping have been completed.

• The exploration programs completed to date are appropriate to the style of the Casposo deposits.

20.4 Drill, Sampling and Analytical Programs

• Drilling to 25 October 2008 on the Project comprised 288 core holes (47,085 m) and 12 RC holes (2,185 m) for a combined RC and core drilled total of 300 holes for 49,270 m. A total of 46 of these holes (8,626 m) were drilled by BMG, and 254 holes (40,644 m), including the RC drilling, by Intrepid.

• The date of 12 September 2007 was used as the cut-off date for supply of data to inform mineral resource estimation. Not all drill holes were used to support the estimation.

• In May 2008, Intrepid commenced a step-out program to identify additional mineralization in the Kamila area. These drill holes are included in the total




Project drilling. Drilling has not been reviewed by AMEC, and is not used to support the mineral resource or mineral reserve estimations in this Report.

• All drill holes that support mineral resource estimation have been geologically logged, initially using paper logs, but later using tablet-based software. Logging included lithology, mineralogy, geotechnical, hydrological and metallurgical parameters, and recovery percentages. Drill collars are picked up by a contract surveyor. Down hole surveys are typically taken by the drilling contractor. The quantity and quality of the lithological, geotechnical, collar and downhole survey data collected in the exploration and delineation drill programs are sufficient to support mineral resource and mineral reserve estimation.

• The diamond core sample interval was usually 1 m to 2 m for BMG, and 0.5 m to 2 m for Intrepid (maximum 1.5 m in mineralized zones). Core sampling methods are acceptable, meet industry-standard practice, and are adequate for mineral resource and mineral reserve estimation and mine planning purposes. AMEC did not review sampling procedures for the pits or trenches.

• Sample security has relied upon the fact that the samples were always attended or locked in the on-site sample preparation facility. Chain of custody procedures consist of filling out sample submittal forms that are sent to the laboratory with sample shipments to make certain that all samples are received by the laboratory.

• Current sample storage procedures and storage areas are consistent with industry standards.

• BMG used ALS Geolab in Mendoza as the primary laboratory. Intrepid used ALS Chemex (in La Serena, Chile) as primary laboratory for most of the sampling programs, and Alex Stewart (in Mendoza, Argentina) as the secondary laboratory. Starting from drill hole 148 (February 2005), Intrepid switched to Alex Stewart (in Mendoza) as the primary laboratory.

• The BMG samples were assayed for Au, Ag, Pb, Zn, Mo, Cu, As, Sb and occasionally for Hg. Intrepid samples have typically been assayed for Au, Ag, with a number of samples also analysed for a multi-element suite. The quality of the gold and silver analytical data is reliable.

• AMEC has reviewed the QA/QC for core drill data for the Intrepid drill programs for Phases 1 to VIII, and BMG core data, and considers the data are suitable for use in mineral resource estimation. AMEC has not reviewed the QA/QC data for the pit and trench sampling.

• Bulk density was measured by ALS Chemex using the water displacement method. The 94 samples returned bulk densities for the quartz veins within a relatively narrow dispersion interval, from 2.28 t/m3 to 2.72 t/m3, and similar trends can be observed for andesites and rhyolites.




• In addition, Intrepid carried out 183 direct bulk density measurements on core samples on site using the water displacement method. Bulk density values for veins range within a wide interval from 1.86 t/m3 to 2.96 t/m3. These measurements do not support mineral resource estimation

• The density determination procedure is consistent with industry-standard procedures. There are sufficient density determinations to support the density values utilized in waste and mineralization tonnage interpolations; however, AMEC recommends that additional density determinations be performed.

20.5 Database

• The data used to estimate the Mineral Resources at Casposo consists of samples and geological information from 159 core drill holes, 70 trenches and five pits. The database close-off date was 12 September, 2007.

• AMEC considers the database to be sufficiently robust to support classification of Indicated and Inferred Mineral Resources. However, AMEC has identified a number of issues with the database that could be improved prior to advancing to a higher confidence level (Measured Resources) for the estimate. These include:

─ Documentation of the trench and pitting programs ─ Validity of using long channel sample lengths in resource estimation ─ Drill hole recoveries, including grade versus recovery studies ─ Documentation of collar survey methodologies ─ Review of the applicability of using drill holes that have acid-etch

downhole surveys in resource estimation ─ The drilling QA/QC review that identified analytical biases close to the

acceptable limits, and use of silver standards that are outside of the average grades encountered to date within the deposits and prospects of the project

─ QA/QC review of the surface (trench and pit) sampling.

20.6 Mineral Resource Estimation

• The geological interpretation was completed by Intrepid in 2007, based on lithological, mineralogical and alteration features logged in drill core, trenches and pits. AMEC modified the interpretations to incorporate additional drilling completed later in 2007.

• Intrepid defined five domain zones to represent the different veins systems at Kamila (Aztec vein, B vein, Inca vein and High Grade domains) and Mercado




(Mercado domain). Domains were defined based on lithology, structure and grade boundaries.

• Grade caps were assigned to data that was composited on 1 m intervals. Composites of less than 0.4 m in length were discarded

• Gold and silver grades are estimated using an inverse distance cubed (ID3) methodology.

• Two estimation passes are defined using incremental search ellipsoid radii, which are derived from variogram analysis and geological interpretation by Intrepid geologists.

• The block model used blocks of 4 x 4 x 6 m dimensions. The model is oriented north–south, and has no rotation

• Mineral resources take into account dilution, and geological, mining, processing, and economic constraints, and have been confined within appropriate L–G shells

• The mineral resource estimate is summarized at a 1.41 g/t AuEq cut-off value, calculated by reference to the silver and gold ratios (77.8:1), gold price of US$760/oz, process and G&A cost allocations (US$19.46/t and US$8.33/t respectively, and assumed process recoveries (93.7% for Au, and 80.6% for Ag).

• The resource estimate AuEq equation does not take mining costs or dilution factors into account. The value is considered to be acceptable for reporting the mineral resources.

• The mineralization at Casposo was classified into Indicated, and Inferred Mineral Resources, using logic consistent with the CIM Definition Standards referred to in NI 43 101. The effective date of the Mineral Resources is 21 April, 2008.

• Mineral resources are acceptable for use in estimating mineral reserves.

• Drill data generated during 2008 have not been incorporated into the geological model, and thus do not support mineral resource estimation. AMEC recommends that these data are reconciled in plan, cross- and long-section to existing interpretations, and the existing interpretations modified as appropriate.

• Troy should also review and incorporate into the geological models any changes to the drill collar locations as a result of the latest Total Station collar survey results, as these may present slight changes in drill collar locations to those generated from earlier hand-held GPS surveys.

• In addition, AMEC recommends that the geological and structural interpretation discussed in Section 10.9 is incorporated into the updated geological interpretations and subsequent geological models.




• The additional data may warrant replacement of the current grade shell constraints on the mineralization with more detailed geological interpretations that more closely honour the vein contacts.

• Once the geological models have been updated, AMEC recommends that mineral resources are updated for the Project.

20.7 Mineral Reserve Estimation

• A hybrid mining case was developed for the Casposo Project. The Kamila deposit will be mined first with the top part being mined by open-pit methods and the deeper portion by underground methods.

• The Kamila open-pit will consist of a large pit (Kamila Main pit) and a small satellite pit located 100 m to the SE (Kamila SE pit). The underground mine will be accessed by a decline and exploited using a stope benching method combined with cemented rock backfill.

• Mineral Reserves incorporate considerations for gold and silver prices (US$690 and US$11.80 respectively), recovery, mining, processing and G&A costs, and dilution for open pit and underground reserves.

• Mineral reserves were estimated using the diluted mineral resource block model. Open pit mineral reserves were confined within Lerchs–Grossmannn pit shells. Underground mineral reserves were confined within appropriate stope boundaries.

• Mineral Reserves for the Casposo Project are classified in accordance with the 2005 CIM Definition Standards for Mineral Resources and Mineral Reserves, and are reported to a gold price of US$690. Mineral Reserves were defined for the project at an effective date of 14 June, 2008

• Mineral reserves are acceptable for use in mine planning.

• Mineral Reserve estimates should be updated for the Project to incorporate the additional drill information generated during 2008.

20.8 Proposed Mine and Process Plan

• The production rate for the mine will be 1,000 t/d for a total six-year mine life, with all production for the first three years coming from the Kamila open pits and underground ore production starting in Year 4.

• In Years five and six the milling production will reduce to 500 t/d and match underground output. Mining will be undertaken using a contractor.




• The process flowsheet selected to process Casposo ore will use conventional primary jaw and secondary cone crushing, ball milling, gravity concentration for coarse gold and silver, cyanide leach, counter current decantation (CCD) and washing and dewatering of tails by belt filtration. Gold and silver will be recovered by standard Merrill-Crowe (MC) zinc precipitation and smelted to produce dorè bars. The leached tailings, following filtration to recover precious metals, will be washed and rinsed on the same belt filter to remove cyanide. The cyanide wash solution will be collected for the destruction of cyanide using the conventional SO2/air process. The detoxified solution is recycled to the belt filter as wash solution. This will minimize the fresh water requirements for the process. Filtered tailings will be trucked to a lined tailings management facility and stacked in compacted lifts.

• The crushing plant and mill are designed to operate 365 days a year on two and three shifts (of eight-hours) per day respectively, and process 365,000 t/a of ore. The nominal mill flowsheet throughput of 46.3 t/h of ore is based on processing 1,000 t/d and an assumed plant availability of 90%. For the average life of mine head grades the overall gold and silver recoveries are projected to be 93.7% and 80.6% respectively.

• The Casposo Mine Project will generate an estimated 6.1 Mt of waste rock and approximately 1.8 Mt of tailings over its planned six-year operating life. About 2 Mt of the mine waste rock is currently planned for use in road construction, in-pit disposal and underground backfill. The waste rock dump is designed for 8 Mt. The waste rock dump will be located just southeast of the Kamila Open Pit, and will be developed in a conventional manner, with haul trucks transporting and end-dumping the waste rock and dozers spreading and configuring the material on the working platform.

• The Project will require the development of infrastructure to operate such as haul and access roads around the site facilities, the open pit and underground mines, a process plant, a waste rock dump, a tailings dump facility, administration and services (including water and power supply and communications). The current gravel access road to the site will be maintained, and upgraded as required for mine transport.

20.9 Capital and Operating Costs

• Capital costs to first gold pour are estimated at US$86.0 M including working capital and 11% contingency.

• Sustaining costs of US$12.8 M, and a contribution obligation of US$14.5 M towards the development of electrical facilities to supply power to the project, are




not included in this figure, but are included directly in the project cash flow. About 90% of sustaining capital is applied to develop the underground mine.

• The total estimated project direct capital cost is US$50.7 M. The total estimated project indirect capital cost is US$19.9 M. The total estimated Owner capital cost is US$7.0 M.

• The life of mine total operating costs, including mining, processing, and general and administration, are projected to be US$57.44/t of ore milled, or US$276/oz AuEq. Operating costs include all costs required to process 1,000 t/d of ore including normal surface development and extension of principal underground mine ramps and raises.

• Troy has recognized the opportunity to reduce the costs of developing the Casposo deposit through the use of equipment they own that is currently in storage in Australia.

20.10 Financial Analysis

• Gold and silver annual forward price curves, rather than fixed prices, were used by AMEC to recommend prices used in the financial analysis. These averaged US$733/oz and US$11.96/oz (on a AuEq weighted basis) respectively over the project life (2010–2015). Silver accounts for about 25% of total revenue in the project cash flow.

• The project has a potential after-tax internal rate of return of 4.6% and an after-tax net present value (NPV) of US$(9.9) M at a discount rate of 8%. The base case scenario has a projected payback period of approximately 3.8 years.

• At the base discount rate of 8% used in this study, the indicated NPV of the project is negative. As the cash flow contribution is relatively strong it is likely the project financials would benefit from an increase in reserves.

• The financial analysis indicates that, generally, the project is more sensitive to changes in gold price than silver price, capital or operating costs, and is slightly more sensitive to capital costs than operating costs.

• The financial analysis is based only on current mineral reserves. There is an expectation that the project economics are likely to improve if additional resources are discovered and inferred resources are eventually upgraded to higher confidence categories and converted to reserves.

• The project development schedule in the Feasibility Study Update assumed engineering start-up in August 2008. Therefore, the initial basic engineering program required to maintain and meet the project schedule in the Feasibility Study Update, improve engineering definition and confidence, and identify




potential second-hand equipment opportunities, would be conducted in parallel with the 2008–2009 exploration program.

• The Feasibility Study Update was initiated during March 2008 and in order to meet internal key decision dates by Intrepid, was completed within four months. Due to this aggressive schedule, and delays in receiving vendor cost data, during the finalization of this study some late stage price adjustments were submitted by vendors that have not been incorporated into the updated costing. These required adjustments include, among others, a further 10% increase in the new ball mill price of US$0.3 M and an increase of US$0.3 M for the rental of new generator sets. AMEC does not believe the aggregate incorporation of these will materially affect the study financial results or conclusions.

• Since finalization of the 2008 Feasibility Study Update, which was completed at an effective date when generally high industry cost escalation and long equipment item delivery lead times were being experienced. Subsequent to this, there has been a change in the economic situation, which at the current effective date of this Report may result in lower new equipment pricing and improved delivery lead times.

Subsequent to purchase of the Project in May 2009, Troy has identified potential capital and operating cost savings over the estimates in the 2008 Feasibility Study Update that may include use of a Troy-owned gold plant that is in storage in New South Wales, Australia. However AMEC has not evaluated this gold processing plant, or the effect of a change in flowsheet on process metallurgical recoveries and costs or other project costs, if any.




21.0 RECOMMENDATIONS

AMEC recommends that Troy undertake the following studies:

• Re-assess the geological interpretations using results of the additional drilling, and structural and geological studies performed during 2008, and update the interpretations, and geological models based on those interpretations. Consideration should be made to the use of geological contact constraints on mineralization in the models, rather than the existing grade-shells as used in the 2007 models.

• Assess the capabilities of the Troy-owned process plant in relation to the assumptions and testwork used to support the 2008 Feasibility Study Update, and assess, if there is significant variation, whether additional metallurgical testwork is required.




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McGuinty, W., 2006: An Updated Report of Exploration Activities for the Casposo Property Department of Calingasta, San Juan Province, Argentina: Intrepid Minerals Corporation, unpublished Technical Report to the Toronto Stock Exchange, Sedar filing March 2006.

McGuinty, W., and Puritch, E., 2007: An Updated Resource Estimate and Report of Exploration Activities for the Casposo Property, Department of Calingasta, San Juan Province, Argentina: unpublished Technical Report to the Toronto Stock Exchange, Sedar filing, November 2006.

McGuinty, W., and Puritch, E., 2007: An Updated Report of Exploration Activities for the Casposo Property Department of Calingasta, San Juan Province, Argentina: Intrepid Minerals Corporation, unpublished Technical Report to the Toronto Stock Exchange, Sedar filing, March 2007.

Meridian Gold Inc., 2007: Esquel Project, Southern Argentina: report posted to Meridian Gold website, accessed 1 May 2007, http://www.meridiangold.com/operations_esquel.cfm.

Miller and Associates, 2004a: Scanning Electron Microscope Investigation of Selected Casposo Samples: unpublished internal report to Intrepid Mines Ltd, April 2004.

Miller and Associates, 2004b: Scanning Electron Microscope Investigation of Selected Casposo Samples: unpublished internal report to Intrepid Mines Ltd, April 1 2004.

Miller and Associates, 2004c: Scanning Electron Microscope Investigation of Selected Casposo Samples: unpublished internal report to Intrepid Mines Ltd, April 5 2004.

Morrison, G., Dong G. & Subhash J., undated: Textural Zoning in Epithermal Quartz Veins: unpublished internal report to Intrepid Mines Ltd., Klondike Exploration Services, undated.




Moritz Mining Services, 2005: Review of Intrepid Historical Testwork: unpublished internal memorandum to Intrepid Mines Ltd., September 2005.

Natural Resources and Water, 2006: Exploring Queensland’s Gold Opportunities: report posted to Dept of Natural Resources and Water website, accessed 1 May 2007, http://www.nrw.qld.gov.au/mines/publications/qgmj/2006/sep/article_19.pdf.

Neu, R. 2000: Casposo Metallurgy. Kori Kollo Mine, Bolivia: unpublished internal memorandum, Battle Mountain Gold.

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23.0 DATE AND SIGNATURE PAGE

The effective date of this Technical report, titled “NI 43-101 Technical Report, Troy Resources NL, Casposo Project, Argentina”, is 6 May, 2009.

Signed,

“signed” or “signed and sealed”

Rodrigo Marinho CIPG


Ralph Penner MAusIMM

Geoffrey Challiner MIMM

AMEC Dated: 1 June, 2009.




[email protected] I, Rodrigo Alves Marinho, CPG (AIPG) am employed as a Principal Geologist with AMEC International (Chile) S.A., a division of AMEC Americas Limited.


I am a member of the American Institute of Professional Geologists (CPG-10971). I graduated from University of Sao Paulo State with a Bachelor of Engineering degree in Geology in 1993.

I have practiced my profession for 16 years. I have been directly involved in mineral exploration and mining projects for precious and base metals and industrial minerals in Argentina, Australia, Brazil, Burkina Faso, Colombia, Chile, Peru, Portugal, South Africa, United States and Venezuela.


I visited the Casposo Project during 27–29 May, 2008 and again from 20–23 October, 2008.

I am responsible for Sections 1; 2; 3; 4.1 to 4.5; 5; 6; 7; 8; 9; 10; 11; 12; 13; 14, 15; 17.1; 20; 21; 22, and 23 of the Technical Report, and for the portions of the summary, conclusions and recommendations sections that pertain to mineral resources


I have been involved with Casposo Project since 2005 as the auditor of the mineral resource estimates and during the preparation of the AMEC 2008 Updated Feasibility Study.




Rodrigo Alves Marinho.CPG-AIPG (CPG-10971)

Dated: 1 June 2009





I, William Colquhoun, FSAIMM, am employed as a Project Manager and Principal Metallurgist with AMEC (Perú) S.A., a division of AMEC Americas Limited.


I am a member of the Engineering Council of South Africa (Registration 96003) and a fellow of the Southern African Institute of Mining and Metallurgy (SAIMM). I graduated from the University of Strathclyde with a Bachelor of Science degree in Chemical and Process Engineering in 1982.

I have practiced my profession for 26 years. Since 1982, I have continually been involved in mineral processing projects for precious and base metals and industrial minerals in South Africa, Ethiopia, Canada, the United States, Australia, Chile, Perú, Argentina, Ecuador, Brazil, Ukraine, Mongolia, Russia and the Middle East. I have been directly involved in the preparation of feasibility studies relating to gold and silver projects and metallurgical investigations supporting these.


I visited the Casposo Project between 21 to 23 March 2005, 11 to 13 January 2006 and 5 to 7 April 2006.

I am responsible for Sections 4.6, 16; 18.11 to 18.13, and 19 of the Technical Report, and for the sections of the summary, conclusions and recommendations that pertain to economic analysis, metallurgical design and process, and environmental review.


I have been involved with Casposo Project from December 2005 to July 2008 as manager of the Feasibility Study, Feasibility Study Update, metallurgical design and financial analysis.





Dated: 1 June, 2009





Tel: (562) 210-9500 Fax: (562) 210-9510

I, Ralph Penner, MAusIMM, am employed as a Manager Technical Services – Mining with AMEC International (Chile) S.A.


I am a member of the Australasian Institute of Mining and Metallurgy (AusIMM). I graduated from Queen’s University with an Honours Bachelor of Science Degree in Mining Engineering in 1991.

I have practiced my profession for 16 years. I have been directly involved in underground and surface mine operations, and consulting in North and South America.


I visited the Casposo Project on 23 June, 2008.

I am responsible for Sections 17.1.6, 17.2.1 and 17.2.3, 18.1, 18.3, 18.4 and 18.6 to 18.10 of the Technical Report, and for those sections of the summary, conclusions and recommendations that pertain to open pit mineral reserves.


I have been involved with Casposo Project from April to July 2008 as the engineer responsible for open pit mineral reserves and open pit mine planning as part of the 2008 feasibility study update.


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. “Signed”

Ralph Penner, MAusIMM

Dated: 1 June, 2009

AMEC International (Chile) S.A Av. Américo Vespucio Sur 100, Piso 2 Las Condes, Santiago, Chile Tel +56 2 210 9500 Fax +56 2 210 9510 www.amec.com





I, Geoffrey Challiner, am an independent mining engineer and Associate Technical Specialist for AMEC Americas Limited.


I am a member of The Institute of Materials, Minerals and Mining, (IMMM) United Kingdom. I graduated in Mining at the Royal School of Mines, Imperial College, London in 1975.

I have practiced my profession for 28 years. I have been directly involved in underground mine

management, planning and evaluation.


I have not visited the Casposo property.

I am responsible for Sections 17.2.2, 17.2.3, 18.2, and 18.5 of the Technical Report, and for the portion of the summary, conclusions and recommendations sections that pertain to underground mineral reserves.


I have previously been involved with the Casposo property during 2008, when I reviewed the underground mining portion of AMEC’s Feasibility Study Update.



“Signed”

Geoffrey Challiner MIMMM

Dated: 1 June, 2009

CONSENT OF QUALIFIED PERSON



[email protected]

To: Securities Regulatory Authority

British Columbia Securities Commission Alberta Securities Commission Saskatchewan Financial Services Commission Manitoba Securities Commission Ontario Securities Commission Autorité des marchés financiers du Quebec New Brunswick Securities Commission Nova Scotia Securities Commission Securities Office, Prince Edward Island Securities Commission of Newfoundland and Labrador

Re: Troy Resources NL press release entitiled “Troy Completes Acquisition of the Casposo Gold-Silver Deposit From Intrepid Mines Ltd.”, dated 6 May 2009. I, Rodrigo Alves Marinho, CPG consent to the public filing of Sections 1; 2; 3; 4.1 to 4.5; 5; 6; 7; 8; 9; 10; 11; 12; 13; 14, 15; 17.1; 20; 21; 22, and 23 of the technical report titled “NI 43-101 Technical Report, Troy Resources NL, Casposo Project, Argentina” the (“Technical Report”). I consent to extracts from, or a summary of, the Technical Report in the press release (the “Press Release”) by Troy Resources NL entitled “Troy Completes Acquisition of the Casposo Gold-Silver Deposit From Intrepid Mines Ltd.”, dated 6 May 2009”. I confirm that I have read the Press Release and that it fairly and accurately represents the information in the Technical Report that supports the disclosure. “signed” Rodrigo Alves Marinho, CPG, (AIPG) 1 June 2009 AMEC International (Chile) S.A Americo Vespucio Sur 100, Oficina 203 Las Condes, Santiago, Chile Tel: (562) 210-9500 Fax: (562) 210-9510 www.amec.com






Re: Troy Resources NL press release entitiled “Troy Completes Acquisition of the Casposo Gold-Silver Deposit From Intrepid Mines Ltd.”, dated 6 May 2009. I, William Colquhoun, FSAIMM, consent to the public filing of Sections 4.6, 16; 18.11 to 18.13, and 19 and the portions of the summary, conclusions and recommendations that pertain to economic analysis, metallurgical design and process, and environmental review, of the technical report titled “NI 43-101 Technical Report, Troy Resources NL, Casposo Project, Argentina” the (“Technical Report”). I consent to extracts from, or a summary of, the Technical Report in the press release (the “Press Release”) by Troy Resources NL entitled “Troy Completes Acquisition of the Casposo Gold-Silver Deposit From Intrepid Mines Ltd.”, dated 6 May 2009”. I confirm that I have read the Press Release and that it fairly and accurately represents the information in the Technical Report that supports the disclosure. “signed” William Colquhoun FSAIMM 1 June, 2009





Tel: (562) 210-9500 Fax: (562) 210-9510



Re: Troy Resources NL press release entitiled “Troy Completes Acquisition of the Casposo Gold-Silver Deposit From Intrepid Mines Ltd.”, dated 6 May 2009. I, Ralph Penner, MAusIMM, consent to the public filing of Sections 17.1.6, 17.2.1 and 17.2.3, 18.1, 18.3, 18.4 and 18.6 to 18.10 of the Technical Report, and for those sections of the summary, conclusions and recommendations that pertain to open pit mineral reserves of the technical report titled “NI 43-101 Technical Report, Troy Resources NL, Casposo Project, Argentina” the (“Technical Report”). I consent to extracts from, or a summary of, the Technical Report in the press release (the “Press Release”) by Troy Resources NL entitled “Troy Completes Acquisition of the Casposo Gold-Silver Deposit From Intrepid Mines Ltd.”, dated 6 May 2009”. I confirm that I have read the Press Release and that it fairly and accurately represents the information in the Technical Report that supports the disclosure. “signed” Ralph Penner, MAusIMM 1 June, 2009 AMEC International (Chile) S.A Americo Vespucio Sur 100, Oficina 203 Las Condes, Santiago, Chile Tel: (562) 210-9500 Fax: (562) 210-9510 www.amec.com







Re: Troy Resources NL press release entitiled “Troy Completes Acquisition of the Casposo Gold-Silver Deposit From Intrepid Mines Ltd.”, dated 6 May 2009. I, Geoffrey Challiner, MIMMM, consent to the public filing of Sections 17.2.2, 17.2.3, 18.2, and 18.5 and the portions of the summary, conclusions and recommendations sections that pertain to underground mineral reserves, of the technical report titled “NI 43-101 Technical Report, Troy Resources NL, Casposo Project, Argentina” the (“Technical Report”). I consent to extracts from, or a summary of, the Technical Report in the press release (the “Press Release”) by Troy Resources NL entitled “Troy Completes Acquisition of the Casposo Gold-Silver Deposit From Intrepid Mines Ltd.”, dated 6 May 2009”. I confirm that I have read the Press Release and that it fairly and accurately represents the information in the Technical Report that supports the disclosure. “signed” Geoffrey Challiner, MIMMM 1 June, 2009

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