rockstone research urs1 english

7/31/2019 Rockstone Research URS1 English

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In the Heart of Two Giants

The Bale: Why two major gold producers may

bid for this gold explorer

Surrounded by two large gold producers, Urastar Gold Corp. owns the last properes within

a special gold district in Mexico that are not controlled by major mining companies. The well-

known miners Agnico-Eagle and Alamos Gold have secured all properes around the Mulatos

Gold Mine - solely Urastar is le operang prospecve projects in that district and even in theheart of those two majors. How valuable properes near the Mulatos Mine can be demonstra-

ted Grayd Resources in 2011 which company was taken over by Alamos for around $255 milli-

on thus paying more than $200 per ounce in the ground - a record price for this part of Mexico

Why this high price? Well, the Mulatos Mine is among the world`s gold mines with the highest

prot margins. The producon costs are below $400 per ounce, whereas the industry average

is geng close to $1,000. Hence, a potenal take-over or property acquision may be around

the corner, especially when considering the latest press-release dated August 3: Urastar is

exploring strategic alternaves available to the Company, including a potenal sale. The

Board of Directors intends to consider the full range of available opons. Also, the Companyis pleased to announce that it has engaged the services of Dahlman Rose & Company, LLC

of New York, as its exclusive nancial advisor to assist in the evaluaon of these opons.

INITIATING COVERAGE August 6, 2012 Urastar Gold Corp. TSX.V: URS OTCQX: URNRF Frankfurt: 3U3

Type of Analysis: Iniang Coverage

Recommendaon: Speculave Buy

Price Target: C$0.55

Price Target in view of: 6 months

Home Exchange: TSX Venture (Canada)

Market Capitalizaon: C$13.8 million

Current Price: C$0.40 (08/03/12)

Dierence to Price Target: +38%

Analyst: Stephan Bogner (Dipl. Kfm)


2/32

Analyst: Dipl. Kfm. Stephan BognerResearch Label: Rockstone Research Ltd.

Bro #504, 81 Oxford St.London W1D 2EU, EnglandPhone: +44-20-8123-9832info@rockstone-research.comwww.rockstone-research.com

Analyzed Company: Urastar Gold Corp.Suite 804 - 750 West Pender StreetVancouver, B.C.Canada V6C 2T7Phone: +1.604.682.2928Toll Free: +1.888.400.2928Fax: [email protected]

ISIN: CA91704D1096Home Exchange: Toronto Venture Exchange (Canada)Symbol: URS

Type of Analysis: Iniang CoverageIniang Coverage: 08/03/12Recommendaon: Speculave BuyPrice Target: C$0.55Price Target in view of: 6 MonthsCurrent Price: C$0.40 (08/03/12)Dierence to Price Target: 38%52 Week High / Low: C$0.57 / C$0.18

Market Capitalizaon: C$13.8 millionShares (issued & outstanding): 34.54 million

Warrants (total outstanding): 20.9 million8.250.000 @ C$0.10 unl 11/02/1312.707.400 @ C$0.75 unl 03/11/16

Cash: approx. C$1.5 millionTrading Volume (10 Day Average): 64,640 (08/03/12)

Moving Averages (08/03/12)21 Day @ C$0.3250 Day @ C$0.27200 Day @ C$0.32

Price Performance (08/03/12)7 Day: +0.01 (+16%)21 Day: +0.03 (+25%)30 Day: +0.11 (+70%)90 Day: +0.08 (+48%)180 Day: +0.01 (-14%)200 Day: +0.14 (+91%)

Month to Date: +0.02 (+21%)Quarter to Date: +0.15 (+100%)Year to Date: +0.08 (+48%)

www.rockstone-research.com


URS @ TSX.V

(1 Year Linear in CAD)


3/32

www.rockstone-research.com 3


OTCQX (USA):

Symbol: URNRF

Current Price: $0.415 (08/06/12)

Trading Volume (3 Month Average): 15,549

52 Week High / Low: $0.50/ $0.198

Frankfurt Exchange (Germany):Symbol: 3U3WKN: A1JJ8SCurrent Price: 0.37 (08/06/12)

2012 High / Low: 0.45 (03/09/12) / 0.11 (06/27/12)

Price Performance / Average Trading Volume per Day1 Week: +42% / 37,8964 Weeks: +123% / 30,34752 Weeks : +56% / 3,052

Sources:

www.urastargold.comwww.alamosgold.comwww.agnico-eagle.comwww.newmont.comwww.sedar.comwww.tsx.comwww.edgaronline.comwww.vantagewire.comwww.quotemedia.comwww.canadianinsider.comwww.otcmarkets.comwww.deutsche-boerse.dewww.consors.dewww.onvista.dewww.stockcharts.comwww.googlemaps.com

www.mininginvestor.net/company_prole/urastar-gold-corp-urs-v

www.theaureport.com/pub/co/5276

www.ickr.com/photos/goiricelaya/3479125923/in/pho-tostream

www.navdat.org/coverages/geology

www.unige.ch/sciences/terre/mineral/studchap/Acvies/eldtrips/mex/MexicoFieldGuide09-UniGeneva.pdf

Abbreviaons:

$ = U.S. Dollar = Euro@ = At% = Percent& = And> = Above; more than< = Below; less thanAg = SilverAs = ArsenicAu = GoldBa = BariumB.C. = Brish Columbia

C$ = Canadian DollarCAD = Canadian DollarCorp. = CorporaonCu = CopperEUR = Eurog = Gram(s)ha = HectaresISIN = Internaonal Securies Iden-caon Numberkm = KilometerLtd. = Limitedm = Meter(s)MA = Moving AverageMn = Manganese

NO = North-EastNSR = Net Smelter RoyaltyNW = North-WestOTC = Over The Counter ExchangePb = LeadRC = Reverse CirculaonSb = AnmonySE = South-EastSW = South-Westt = Ton(s) (metric)TSX.V = Toronto Venture ExchangeUS$ = U.S. DollarUSD = U.S. DollarOz = Troy Ounce(s) (31.1034768 g)

WKN = WertpapierkennnummerZn = Zinc

3U3 @ Frankfurt

(1 Year Linear in EUR)

90 Day MA (orange)

URNRF @ OTCQX

(1 Year Linear in USD)


4/32

Evaluaon & Prognosis

Vancouver-based Urastar Gold Corp.

(URS) is a resource exploraon com-pany with 3 gold exploraon projects

(El Anminio, El Jabali and La Juliana)

in Mexicos Sierra Madre Gold Belt,

which is one of the richest gold belts

in the world with several major mines

and discoveries within the last few ye-

ars. Another asset is the Black Point

property in the prolic Bale Moun-

tain-Eureka District (Nevada, USA). All

4 properes have records of past pro-

ducon and are located in world-class

mining camps.

Formerly, URS was a capital pool com-

pany compleng its qualifying transac-

on on June 30, 2009.

Aer detailed review of all public

available informaon, we rate the

stock of Urastar Gold Corp. as underva-

lued. The reasons are simple.

First of all, a management team was installed that is highly experienced

in terms of Mexico. Chief geologist Bill Reed has more than 40 years of

experience in the mining industry, especially Mexico, where he was co-

founder and chief geologist of Paramount Gold & Silver Corp. (TSX, NYSE:

PZG; market cap: C$360 million) today developing more than 7 million

gold ounces equivalents. Prior to that, he was the chief geologist (Me-

xico) for Hecla Mining (NYSE: HL; market cap: $1.3 billion). Adrian Ro-

bertson (President & CEO of URS) is a professional engineer and worked,

among others, for Vale and Teck.

Hence, it does not surprise that such a Mexico-experienced manage-

ment team has secured such prospecve exploraon properes in the

prolic Sierra Madre Gold Belt.

Notably, there exist market rumors that senior mining companies may

have an interest in taking over URS or forming a joint-venture. The readeris cauoned that the exploraon results of the company along with the

respecve analysis of the author are solely preliminary in nature (ini-

ang coverage) and are not conclusive evidence of the likelihood of the

occurrence of an economic/mineable deposit at this stage as further ex-

ploraon is required by the company for a more in-depth interpretaon

by the analyst during the next months. However, the recent drilling suc-

cess made by URS may already lead to a take-over or property acquisi-

on by a senior mining company as the El Jabali and La Juliana properes

are situated within mining claims of Alamos Gold Inc. (TSX: AGI; market

cap.: C$1.9 billion) and Agnico Eagle Mines Ltd. (TSX: AEM; market cap.:

C$7.4 billion). Furthermore, URS has a market value of solely C$14 milli

on which may be considered a bargain by one (or both) of those neigh-

bors entering the bidding that may have already started or may start in

the near future as the latest press-release (08/03/12) has demonstrated

as having engaged Dahlman Rose as exclusive nancial consultant.

Last year, Alamos took over Grayd Resources for around C$250 as also

operang a prospecve project close to the Mulatos Mine.

The largest Mexican gold mine, La Herradura, is located only 50 km from

the El Anmonio property and where gold is mined with an average mi

neralizaon of only 0.78 g/t gold (cut-o: 0.33 g/t). Thanks to the possi

bility of heap leaching, La Herradura is one of the most cost-eecve and

thus most protable gold mines in the world. Close to La Herradura are

3 other gold mines that operate with average mineralizaons of around

0.6 g/t. Since El Anmonio is located next to a highway and close to bes

mining infrastructure, the chances seem good that a cost-eecve openpit operaon may start here as well, especially when considering that the

deposit is strongly oxidized making possible heap leaching.

We set our price target for the next 6 months at a minimum of C$0.55

(+38%) thus giving the company a market cap of around C$20 million

with 34.5 million shares issued and outstanding. Should the current

drilling successes be even improved over the next weeks and months

a much higher market valuaon is seen to be not unlikely, especially if

market prices for gold and silver stabilize.




5/32

The Gold Report Interview with Jay Taylor (7/18/12):

There are four factors that lead me to consider Urastar Gold Corp. to

be a very worthy speculaon for investors who can aord to e up ca-pital for an undetermined length of me and who understand the risk/

reward tradeo for junior exploraon stocks. First, key personnel form

the foundaon for a strong management team. Secondly, I believe there

is a fairly high likelihood that the companys Anmonio property in Me-

xico can host a near-surface, mulmillion-ounce gold deposit. Thirdly,

I believe that various people who informally stand behind this project

have deep pockets and as such increase the probability that the lights

will be kept on even if market condions become even more strained.

Lastly, the current market cap makes this a very low-cost speculaon.

. .the upside could be a factor of 10, 20, or 30 mes the downside risk

with exploraon success and a turn in the markets. Its dicult to nd

beer A-4 risk/reward opportunies than Urastar Gold at this me.

Jay Taylor in Gold, Energy & Tech Stocks (6/29/12):

Urastar Gold Corp. is in the midst of a 10,000-m drill program and

results reported thus far have been very encouraging, given the fact

that sub-1 g/t deposits can be highly protable at this point in me,

especially for projects like the El Anmonio that are located with good

infrastructure and easy access. The potenal for the El Anmonio

property to become another mulmillion-ounce deposit within the

Mojave-Sonora megashear appears to be good, given the widespread,

near-surface mineralizaon on this 12,500-ha property...the presence

of extensive zones of alteraon and fracturing, as well as mineralized

veins over a large area, could provide the kind of massive tonnage that

could make for a very protable open-pit gold mine. Also, on a posive

note, there is evidence that this deposit would be largely oxidized and

thus most likely amenable to heap-leach extracon.

Morning Coee (6/14/12):

Urastar Gold Corp. released results for its reverse-circulaon drill pro

gram on the El Jabali property in Mexico, including several intercepts

of near-surface, high-grade gold. The highlight holes include: LJB-12

03, 59m grading 1.462 g/t Au from 7.667.1m, including 24m at 3.324

g/t Au from 13.738.1m and 112.8m grading 0.432 g/t Au and from

0112.8m; and LJB-12-04, 13.7m grading 1.173 g/t Au from 19.833.5m

and 53.3m grading 0.396 g/t Au and from 4.657.9m.

Jordan Roy-Byrne, The Daily Gold Premium (4/22/12):

Urastar Gold Corp. is just geng things started, so expect to hear a lo

more in the coming months. . .the backdrop is compelling; the company

was founded by a group that has had previous success and has con

sistently been able to raise money. El Anmonio is located in a highly

prospecve area and region. . .obviously, the mineralizaon is there

(old workings, extensive occurrences of oxidized rock); Urastar needs

to discover the best areas and expand from there.



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6/32

EL JABILA & LA JULIANA

El Jabali and La Juliana are highly prospecve gold exploraon properes

in the largest epithermal precious metals region of the world - the Sierra

Madre Gold Belt. Over the last 400 years, some 40 million ounces of gold

and 2 billion ounces of silver were mined in the Sierra Madre Occidental

Range. Over the last few years, this district has become an area of global

focus and immense opportunity in the search for new precious metal

deposits.

Both properes are located only approx. 7 km from Alamos Golds ag-ship Mulatos Mine which, in 2010, reported reserves of 2.4 million oun-

ces gold (proven + probable) and is one of the lowest cost heap-leach

gold mines in the world. Gold mineralizaon at El Jabali and La Juliana is

similar to that found at the Mulatos Mine.

El Jabali consists of a single exploraon concession covering an area of

approx. 70 ha, contains several past producing mines including La Dura

and Zaragosa and is located only 2 km from La Juliana (704 ha), which is

also oponed by URS and where small-scale surface mining took place

in the past.




7/32

Current Exploraon

EL JABALI:

Mapping and sampling work carried out in 2011 idened numerous tar-

gets in addion to the potenal extension of the historic mineral zones

of the La Dura Mine. Preliminary exploraon by URS has returned values

from trace to 30 g/t gold in grab samples. Nave gold has also been iden-

ed in outcrop on the southern extension of the La Dura Mine Trend.

URS completed an 805 m reverse circulaon (RC) drill program in May

2012 with a total of 10 drill holes, 2 of which were abandoned and twin-

ned in order to reach the target depth. The inial holes were drilled to

test for extensions of mineralizaon to the north (north of the open-pit)

and south on the El Jabali Mine Trend. While dicult ground condions

prevented half of the drill holes from reaching their target depth, only 2

of the 8 holes failed to intersect signicant gold mineralizaon. On June

13, URS released assays (see table on next page with best holes).

LA JULIANA:

URS has reviewed the results of past work and has completed conrma-

on eld work and construcon of a geological model.

An 850 m RC drill program was completed in early 2012 resulng in si-

gnicant new gold intersecons on the La Juliana deposit. This program

focused on historic areas of gold producon, interpreng historic drilling

and vectoring in on possible mineralized conduits. New assay highlights

include 6 m grading 1.9 g/t gold.

Previous drill programs employed convenonal RC and core drilling tech-

nics. These technics have proven to be ineecve for capturing the high

grade gold mineralizaon in the Mulatos district.

URS is employing modern centre-face sampling RC drilling at El Jabali

and La Juliana. Centre face sample RC has been proven very eecve in

the Mulatos district by Agnico Eagle (formerly Grady) and Alamos Gold.

Past Exploraon & Mining

EL JABALI:

In 1994, Francisco Gold Corp. undertook a campaign of mapping, soil and

rock geochemistry, geophysics, and drilling.

This work shows the presence of large areas of silica altered and brec-

ciated rhyodacite with associated coincident gold, anmony and lead

geochemical anomalies.

Drilling consisted of 1,218 m with 12 holes. The area of historic workings,

anomalies and gold showings is 1 km in strike length.

LA JULIANA:

Modern exploraon at the La Juliana property includes previous pro-

grams of mapping, soil and rock geochemistry, geophysics and drilling

by Chesapeake Gold Corp. (2002-2003), Dasher Exploraon Ltd. (2004

2005) and Pediment Exploraon (2007). This work shows the presence

of large areas of silica altered and brecciated rhyodacite with associated

coincident gold, anmony and lead geochemical anomalies.

Total drilling to date amounts to 3,668 m with 32 holes, of which 5 holes

(515 m) were cored. The area of anomalies and gold showings is 2 km in

strike length.

HistoryEL JABALI:

El Jabali has produced gold from small scale operaons since rst being

discovered by Jesuit priests in 1635.

Between 1990-2003, the property changed hands a number of mes

Previous owners included Kenneco and Placer Dome.



RC drilling on the La Juliana property


8/32




9/32

In 2003, Alamos and Naonal Gold merged to form Alamos Gold Inc.

(AGI). AGI, through its wholly owned Mexican subsidiary MON, owns

100% interest in the Salamandra property. The Salamandra property sur-

rounds the El Jabali property, which in turn covers the La Dura satellite

gold system.

In total, Alamos Salamandra property consists of the Mulatos deposit

(145,000160,000 oz gold producon expected in 2011) and 8 satellite

gold systems known as El Halcon, La Yaqui, Los Bajios, El Jaspe, La Dura

(covered by the El Jabali property), Cerro Pelon, El Victor/San Carlos and

El Carricito. Alamos connues to very successfully explore and develop

these addional gold resources throughout these claims.

The El Jabali property was acquired by loery. An exploraon program

of rock chip sampling and limited drilling was done on the property prior

to the loery. Rock chip sample results from this program are signicant

with gold values ranging up to 28 g/t Au.

LA JULIANA:

Since colonial mes, this area has been aracve for gold mineraliza-

on. Gold mineralizaon is hosted by all the sequences of volcanic and

volcano-sedimentary rocks correlated with the Tarahumara Formaon.

The historic mines on the La Juliana property are of signicant interes

for gold exploraon. Historic small scale mining has occurred in severa

small open-pits which focused on high-grade nave gold in the late stage

silica veinlets, as well as bulk mining of the silicied rhyodacites in relaon to local and regional fault systems.

Modern exploraon at the La Juliana prospect includes previous explo-

raon programs of mapping, soil and rock geochemistry, geophysics, and

drilling by Chesapeake Gold Corp. (2002-2003), Dasher Exploraon Ltd

(2004-2005) and Pediment Exploraon (2007).

The Juliana property consists of 3 concessions and covers an area of ap

prox. 704 hectares. An area of 300 hectares has been covered by detailed

exploraon including trenching, geological mapping, soil and rock geo-

chemistry, IP/Resisvity geophysics and drilling.

Property Interests

EL JABALI:

On November 18, 2010, the Company entered into a Leer of Intent to

acquire a 100% interest in the El Jabali property. To earn its interest, UR

is required to make cash payments of $2 million over a 5 year period as

follows:

$10,000 upon signing of the leer agreement; (paid)

$40,000 upon the TSX-Venture Exchange approval, subsequently

amended to December 31, 2011; (paid)

$75,000 on November 30, 2011, subsequently amended to $50,000

(paid) plus 120,000 common shares due within 5 business days from the

approval by TSX Venture Exchange.

$75,000 on November 30, 2012

$150,000 on November 30, 2013

$200,000 on November 30, 2014

$1.45 million on November 30, 2015.

The cash payments are subject to a 16% tax. The property is subject to a

3% NSR. URS has the right to purchase each 1% NSR for $1 million before

November 30, 2015.

LA JULIANA:

URS has entered into an opon agreement to acquire a 100% interest in

the La Juliana property. To earn its interest, URS is required to make cash

payments of $2 million over a 5 year period as follows:

$30,000 upon signing of the leer of intent; (paid)

$30,000 on January 14, 2012; (paid)

$30,000 on July 14, 2012; (paid?)

$30,000 on January 14, 2013

$30,000 on July 14, 2013

$100,000 on January 14, 2014



RC drilling on the La Juliana property


10/32

$100,000 on July 14, 2014

$100,000 on January 14, 2015

$100,000 on July 14, 2015

$725,000 on January 14, 2016 $725,000 on July 14, 2016

The property is subject to a 2% NSR.

URS has the right to purchase each

1% NSR for $1 million 5 years aer

signing.

Local & Regional Geology

EL JABALI:

The property lies within the Sierra

Madre Occidental Terary volcanic

terrain and within the Mulatos Mi-

ning District, which is part of the Si-

erra Madre Gold Belt.

Gold mineralizaon is hosted by fractured rhyodacites on the south side

of a locally dominant rhyolite dome and is similar in habit to that found

at the Mulatos Mine.

Alteraon assemblages at Mulatos are typical of high suldaon depo-

sits with zonaon from distal propylic alteraon to illite to kaolinite to

dickite/pyrophyllite to pervasive and vuggy silica alteraon. Gold is pre-

dominantly hosted within silicic alteraon.

Gold mineralizaon controls are both structural and stragraphic; struc-

tural zones control silica alteraon and higher-grade gold concentraons,

and secondary stragraphic control is along ow boundaries and within

coarse grained volcaniclasc fragmental units.

The El Jabali property covers a massive, cli-forming, silica-hemate

altered rhyolite. Massive to banded rhyolite is exposed in the area of

mineralizaon, on clis to the east of the claim and extending north and

south of the claim.

The La Dura (Jabali) hydrothermal system is conguous with another pro-

spect to the south that is described in the Alamos 2003 Annual Reportas Los Bajios.

The La Dura satellite gold system is covered by the Jabali claim. In other

words, the Jabali project is actually a part of Alamos La Dura prospect,

which was described in their 2003 Annual report as follows:

The La Dura prospect contains a large area of intense silicic alteraon

of over 3.5 kilometres in length with several historic gold workings. A

core concession is not controlled by Alamos. (The core concession is

the Jabali project).

The Los Bajios area may be the central part of one large, regional hyd

rothermal system, with Halcon located in the western poron, La Dura

to the north, and La Yaqui on the south as lateral, distal equivalents

The size of the airborne resisvity anomalies and extent of alteraon

indicates potenal for at least one Mulatos-size deposit within the

zone.

LA JULIANA:

The La Juliana claim lies within the Sierra Madre volcanic province. It co

vers historic mine workings of interest for gold exploraon. Mineralized

structures at the La Juliana pit are exposed and consist of silicied vein

breccias with abundant iron oxide (hemate) and with nave gold lling

late stage veinlets in the breccias.

Stragraphic rock units that outcrop in the region range from Cretace-

ous to Quaternary in age and include sedimentary, volcano-sedimentary

and volcanic sequences with intrusive bodies of granodioric composi

on and rhyolite emplaced during the Oligocene. Extensive hydrotherma

alteraon zones and gold mineralizaon in the area is associated with

the youngest intrusive bodies. These strata overlie the northern edge ofthe Cortez basement terrane.

Structurally, the area is aected by 2 major fault systems: an older NW-

SE direcon and a younger NE-SW direcon. In general, the faults can

be aributed to tectonic basin and range extension. Curvilinear feature

oen reect intrusions emplaced during the laramide orogeny.

La Julianna hosts large areas of silica altered and brecciated rhyoda-

cite with associated coincident gold, anmony and lead geochemical

anomalies in both sill and fault bound environments. Silica alteraon



District airborne resisvity respon

se. Silicied areas show up as highly

resisve anomalies, shown in red. (La

Dura / El Jabali indicated by gold star.

All known gold and gold-copper oc-

currences are associated with resis-

vity anomalies. (2003 Alamos Annua

report)


11/32

may be vuggy, granular or patchy in tex-

ture and is associated with illite, dickite

and alunite. Gold-rich zones are closely

associated with hemac silica brecciasdeveloped along faults oriented.

Mineralizaon

Mineralizaon on the El Jabali property is

associated with iron-stained outcrops of

silicied volcanic rocks. Mineralized areas

are disnguished by yellowish limonite-

jarosite or blood-red hemate staining,

vuggy silica or grey silicicaon and zones

of crackle breccia.

Above: Cli forming rhyolite on the El Ja-

bali property. The view to the northeast

at mid-cli level shows strong blood red

hemate stain.

The main mineralized zone is marked by

a glory hole that exposes highly fractured

and jarosite-stained silicied and breccia-

ted rhyolite. An adit located just south

and downhill from the glory hole leads to

a honeycomb of old underground mine

workings. Several fault and fault brec-

cia structures are evident in the under-

ground exposures.

Gold was observed by URS geologists du-

ring the site examinaon just west of the

old mine. The gold is very ne and occurs

on fractures in a vuggy silica altered rhy-

olite. There are also physical remains of

a crude slucing operaon which indicates

that free gold is present.

Alteraon and gold occurrences:




12/32

The following text and pictures are taken from the website of Alamos

Gold Corp. (www.alamosgold.com) and give an overview of their ag-

ship property Mulatos:

Alamos owns and operates the Mulatos Mine, which is located in the Si-

erra Madre Occidental mountain range in the east-central poron of the

State of Sonora, Mexico. The mine is approximately 220 km by air east

of the City of Hermosillo, and 300 km south of the border between theUSA and Mexico. The Salamandra group of concessions covers an area

of more than 30,000 hectares, which contains the Mulatos Deposit plus

several signicant satellite gold systems, including Puerto del Aire, El Hal-

con, La Yaqui, Los Bajios, Cerro Pelon, El Victor, San Carlos, El Carricito,

and El Realito. An advanced exploraon program to develop addional

mineral resources for inclusion into an expanded Mulatos Pit is ongoing.

In addion to increasing resources near current mining operaons, Ala-

mos has a regional exploraon program that is focused on other targets

within the Mulatos District.




13/32

The Mulatos Mine operates 365 days a year and produces gold on-site as

dore containing approx. 60 to 80% gold by weight, which is sent to a re-

nery for nal processing prior to sale. Construcon of the mine began in

the third quarter of 2004, and the mine was completed in January 2006at a cost of approx. $74 million. Commercial producon was declared on

April 1, 2006.

Although the 2004 Feasibility Study called for only a 10,000-tonnes-per-

day ore crushing operaon, Alamos sized the major components of the

Mulatos Mine, including the crusher, conveyor, and gold recovery plant,

to handle a mining and processing operaon with a capacity of up to

15,000 tonnes per day. In 2005, an expansion budget of $20 million was

approved to increase the scale of mining operaons from the 2004 Feasi-

bility Study level of 10,000 tonnes of ore per day.

At the start of 2010, Alamos commissioned a closed circuit crushing sys-

tem designed to improve the size consistency of stacked ore. In October

2010, the company added a scalping screen plant to the crushing circuit

designed to increase throughput. Actual average daily crusher through-

put for 2010 was 13,000 tonnes per day.

Based on current proven and probable mineral reserves and current

throughput rates, Mulatos has an expected mine life of approx. nine

years. Inial capital costs incurred to construct the mine have been re-

covered, however, the company is invesng further in its current heap

leach operaons to improve recoveries and throughput, and in a planned

mill expansion in order to increase global producon.

In 2011, the company started to construct a gravity mill in order to incre

ase global producon. The mill has been designed to process high-grade

ores, such as those found within the Escondida zone.

In the year-ended December 31, 2010, the company produced 156,000

ounces of gold at a cash operang cost of $302 per ounce. In 2011, the

Company is forecasng gold pro

ducon of 145,000 to 160,000

ounces from the Mulatos Mine a

a cash operang cost of $365 to

$390 per ounce of gold sold, which

is exclusive of the 5% royalty. Inclu

sive of the 5% royalty and assuming

an average realized gold price o

$1,500 per ounce, this would equa

te to a total cash cost range of $440

to $465 per ounce of gold sold.

The Mulatos Deposit is part of an

epithermal, high-sulphidaon

disseminated gold system, hosted

within an Oligocene rhyodacite

ow dome and breccia complexIt is associated with a large hydro

thermal alteraon zone that covers

more than 10 square kilometres

Gold mineralizaon is closely asso

ciated with silicic and advanced ar

gillic alteraon occurring near the

upper contact of a rhyodacite por

phyry and in overlying dacite ows

and volcaniclasc rocks.




14/32

2012 Producon Guidance

The Company is forecasng strong producon growth in 2012, between

200,000 and 220,000 ounces of gold at a cash operang cost of $365 to

$390 per ounce of gold sold, exclusive of a 5% royalty.

Including the 5% royalty and assuming a $1,600 gold price, this equates

to a total cash cost range of $445 to $470 per ounce of gold sold.

The Company expects gold produced from the gravity mill, which wil

process high-grade ore from Escondida, will add a minimum of 67,000

ounces of producon in 2012 at a grade of 13.4 g/t Au. Based on bulk

sample tesng conducted in 2007, the Company believes that there is

the potenal for higher producon from the gravity mill as a result of

realizing posive grade reconciliaon to the reserve grade.




15/32

The following key parameters form the basis for the 2012 producon

forecast and operang cost esmate:

Combined gold recovery of 77% (heap leach ore, 72% recovery; mill

ore, 90% recovery)

Throughput: 17,500 tpd (includes 500 tpd from the gravity mill)

Average grade: 1.33 g/t Au blended grade (heap leach ore, 1.0 g/t Au;

mill ore, 13.4 g/t Au)

Waste-to-ore rao of 0.64:1

Mexican peso:United States dollar foreign exchange of 13:1

The Company expects these parameters to uctuate throughout 2012

and as a result, these parameters should be treated as full-year averages

and will not necessarily be reecve of quarterly operang

results.

2012 Mulatos Operang and Development Budget

The 2012 Mulatos capital and development budget is $26

million and includes the following key items:

Capital Expenditure - Mexico 2012 Budget

Capitalized pre-stripping costs $9.7 million

Construcon $3.0 millionCrusher improvements $5.4 million

Sustaining Capital $7.9 million

Total $26.0 million

2012 Mulatos Exploraon Budget

The 2012 Mulatos exploraon budget is $8.6 million. The

Company expects that approximately 65% of the 2012 ex-

ploraon costs in Mexico will be expensed.

A minimum of 22,500 metres (m) of reverse-circulaon

(RC) and core drilling is planned at Mulatos, with a focus on

the following targets:

San Carlos Northeast 5,000 m

Compadres 4,500 m

East Estrella 3,000 m

Mulatos Mine Area (Escondida, El Victor North, and El Vic-

tor South) 10,000 m

In addion to the drill programs outlined above, the Compa

ny also has a large reconnaissance-level exploraon program

planned for 2012 to assess several of its regional grassroots

targets, including Puerto del Aire, San Nicolas, La Dura, La

Palma, El Halcon and West Halcon, and Osmuri.

High-Grade Gravity Mill

Construcon completed in January 2012

Capital cost: $20 million

2012 Planned producon: minimum 67,000 oz Au

Ancipate about 1 month of gold producon in Q1/12

How the Gravity mill system works:

Plant recovers gold into a gravity concentrate through the rougher

and cleaner Inline Pressure Jigs (IPJ), in combinaon with a Knelson

Concentrator

Gold concentrate is intensively leached using the Inline Leach Reactors

(ILR) to produce pregnant soluon

Pregnant soluon treated using electrowinning

Gravity tailings are dewatered and conveyed to the leach pad.




16/32

EL ANTIMONIOThe El Anmonio property is considered signi-

cant in respect of numerous factors:

The presence of mineralized veins over a large

area besides widespread fracturing and altera-

on of sedimentary rocks suggesng a potenal

for disseminated-style mineralizaon.

Geological similaries to the near-by La Herra-

dura Mine (largest gold mine in Mexico) with an

average mineralizaon of 0.78 g/t and a cut-o

grade of 0.33 g/t gold.

Previous arsanal mining acvies stopped at

the water table and where overburden conce-

aled the veins.

Extensive oxidaon suggesng possibilies for

heap leach oxide gold.




17/32

Current ExploraonOn July 11, URS announced having entered into a contract for 1,500 m

of core drilling (3 holes with 500 m each) at its agship property El An-

minio (12,500 ha) in northwest Sonora, Mexico. Simultaneously, URS iscompleng its 10,000 m reverse circulaon (RC) drill ing program, where-

as some 8,000 m have been drilled with 37 holes already. Assay results

have been announced up to hole 30 (lastly on July 27) and have returned

several wide gold bearing intercepts including those summarized in the

table below. We consider the preliminary results from these holes to be

highly signicant and indicave of the potenal for a bulk tonnage gold

deposit to be mined via open-pit(s).

The exploraon target is a bulk mineable gold deposit centered on previ-

ously mined veins and new areas discovered through eld work.

So far, 6 main and 10 minor areas with gold values or mining workings

have been dened and the current 10,000 meter RC drilling program is

expected to test these dened targets in 2012.

Given the locaon in the Mojave-Sonora Megashear, the geology, and

the extensive historical workings on the property, we knew there was

potenal for widespread gold mineralizaon at El Anmono. I think

the results of the rst few thousand meters of drilling on the propertyshow that we may be onto something very signicant here. Based on

these results, were planning to connue to aggressively explore at E

Anmonio and expand on some of these intercepts. (Adrian Robert

son, P.Eng., President of Urastar Gold Corp.)

Past Exploraon & MiningSeveral clusters of veins have been previously mined for anmony within

an area extending over 6 x 4 km on the El Anmonio property. In each

cluster, one or more veins have been excavated by pits, or stoped along

the structure and accessed by shas or adits. Historically, there has been

producon of anmony and gold from placer workings of gravel. The

overall amount mined appears to be relavely small (below 250,000 t).

Today, arsanal miners are recovering small amounts of gold nuggets

from gravel using metal detectors. The nuggets do not appear to have

been transported very far as they are fairly coarse and not rounded or

aened.




18/32

In 2009, a total of 42 samples were collected from historic workings and

altered outcrops over an area of over 4 x 2 km on El Anmonio. The-

se workings are sited on vein swarms, with each swarm localized within

areas approx. 0.5 km square. Further sampling was done in October of2010, following acquision of addional ground. Several samples from

the 2009 campaign returned elevated gold values ranging up to 2.2 g/t

Au, with the average of all 42 samples collected being 0.32 g/t Au. Silver

results are elevated and range up to 69 g/t Ag, and anmony is high (over

10,000 ppm). Elevated values for several other metals were obtained

including As, Ba, Mn and locally Pb and Zn.

We consider these results to be highly signicant, because most of the

samples are of altered and weakly mineralized material that was le be-

hind - hence, the ore grade material that was mined at surface is not in-

cluded in the sampling average made by URS. The best sample (in terms

of grade x width) is 1.23 g/t Au over 5.2 m, which was a chip sample

across a ferruginous siltstone containing 10-20% quartz stringers. This

sample demonstrates the presence of open-pit ore-grade material in al-

tered sedimentary rocks that were not previously mined.

HistoryThe rst recorded date of mining acvies in the district is 1722. In the

early 1800s, explorers panning for gold mistook anmony for nave sil-

ver. The rst underground workings were developed in 1882 by a Boston

company in the central part of the district. In 1942-1943, Rafael Ruiz,

Charlie Thompson and Roberto Moreno exploited several veins, deve-

loped new areas, and installed a 100 tons per day (tpd) otaon mill.

Producon never reached full capacity.

The main mines in producon during the 1960s were La Piedra Azul, La

Argenna, San Miguel, San Jos, La Montaa, El Promontorio, San Fran-

cisco, Palo Verde, La Limea, El Pensamiento and La Fortuna. Esmated

total producon was 25,000 t of anmony.

The Mexican company Vitro developed an exploraon program in 1982

cung 18 trenches that were 100-400 m long and drilled 18 core and

6 RC holes. From 1994 to 1997, Minorco and IMC developed another

extensive exploraon program that included mapping, sampling and

geophysics (VLF-EM and 4 IP-Mag lines). The drilling campaign of 1996-

1997 by Minorco reported several low-grade intersecons in the collared

RC holes. From 2005 to date, Peoles, thru the subsidiary Exploraciones

Mineras Parrea S.A de C.V., consolidated their land posion with inter-mient acvies in the central poron of the district. From 2007 to date,

Lic Benjamin Lagarda began to stake claims at El Anmonio, and in 2009,

URS oponed the claims from Lagarda.

Property InterestsBy an agreement dated November 8, 2010 and subsequently amen-

ded on December 22, 2011, URS has acquired an opon agreement to

purchase a 100% interest in the El Anmonio property. To earn its inte-

rest, URS is required to make cash payments of $2 million over a 5 year

period as follows:

US$10,000 upon signing of the leer agreement (paid);

US$40,000 upon the TSX-Venture Exchange approval (paid);

US$45,000 on December 20, 2011 (paid);

US$30,000 when drilling contractors and the required equipment aremobilised (paid);

US$75,000 on December 20, 2012;

US$150,000 on December 20, 2013;

US$200,000 on December 20, 2014;

US$1,450,000 on December 20, 2015.

The cash payments are subject to a 16% tax. The property is subject to

a 3% net smelter returns royalty (NSR). URS has the right to purchase

each 1% NSR for $1 million before November 2015.

Local GeologyThe El Anmonio property consists of 12,500 hectares and is located 40

km west of Caborca, Sonora, in the heart of the Mojave-Sonora Megas-

hear.

The host rocks are various sedimentary rocks including Permo-Triassic

limestone, Jurassic arenite, and Cretaceous arenite - all intruded by up

per Cretaceous-lower Terary diorite, Terary rhyolite and rhyodacite

Highly ferruginous argillaceous sedimentary units, that host low-grade

gold, are present. The mineralizaon is low sulphidaon Sb, Ag, Au veins

mesothermal style with a late-stage epitheral overprint. Quartz veins

vein breccia, quartz veinlets and silicicaon associated with faults and

shear zones cut sedimentary rocks including siltstone, greywacke and lo

cal limestone.

The vein quartz is of 2 types:

1. The main type is white, medium-grained, and cockscomb-textured to

massive white quartz of probable mesothermal style.

2. The second type consists of microcrystalline white chalcedonic quartz

of low temperature epithermal style.

The 2 types occur together in fault zones that are associated with purple

hemac altered wall rocks. The hemate iron oxide is a supergene wea

thering product of original sulphides presumed to be pyrite. Sulphide

mineralizaon is rare within the vein quartz and consists of patches and

small seams of black-grey ne-grained sulphide.

Alteraon is generally widespread and consists of argillizaon with li-monite and/or hemac iron oxide staining that extends a few hund

red meters around the mined fault/vein structures. The altered zones

commonly contain quartz stringers (10% quartz). There are large areas o

alteraon and some quartz veins that have never been pied or mined.

All of the historical workings are located on disconnuous quartz veins

and quartz stringer zones associated with faults. Several orientaons o

vein/fault structures are developed. The deposit is characterized by large

areas of altered rocks containing intense fracture networks and crackle

breccias, with hemate and/or limonite coangs on fractures.




19/32




20/32

Regional Geology of La HerraduraFrom the guidebook of the ore geology eld trip to NW-Mexico by the

University of Geneva (2009):

In terms of crustal provinces, this region corresponds to the Caborca

block (Dickinson & Lawton, 2001) which is a Laurenan ane terrane

with an underlying Proterozoic basement ~1.7-1.8 Ga years old. How

ever, its proximity to the proposed Mojave-Sonora megashear in thenortheast, the structure that sutures the Caborca block and the North

American Block, results in pervasive deformaon and complex faulng in

the mine area. As would be expected in this tectonic seng, the deposit

exhibits a strong structural control. The mineralizaon is conned to a

NW-SE trending slice of amphibolite-facies Proterozoic gneisses that is

bounded to the NE by the Victoria fault and to the SW by the Ocollo

fault. These shear zones separate the Proterozoic rocks from a low-grade

metavolcanic/metasedimentaryurassic sequence to the east and an inci

piently metamorphosed sequence of limestones and quartzites of uppe

Paleozoic age to the west...




21/32

La Herradura Mineralizaon & Mining...Gold rich veins are restricted to the

Proterozoic rocks which consist of bio-

te-feldspar-quartz and quartz-feldspar

gneisses of sedimentary and plutonic

origin. The hydrothermal system is struc-

turally controlled and the higher grade

mineralizaon occurs in quartz-sulde

veins lling tensional fractures. Quartz-

sericite-albite alteraon is widespread

in the core of the deposit and grades to

propylic in the outer parts where the

gneisses are more biote rich. Geochro-

nological results indicate that the age of

the mineralizaon is lower Terary, con-

rming its Laramidic origin. The averagegrade is calculated to 1 g/t of Au with

a cut-o of 0.33 g/t. Mining of the mi-

neralized body is being conducted in 2

adjacent open pits, the Centauro and the

Yaqui pits. The principal pit (Centauro)

is approx. 1km long and 0.65 km wide,

but the projected megapit will join the 2

smaller ones and will extend another 1.2

km to the NW following the gneissic host

rocks along strike.

Above: Simplied geological map of the mine area (from Quintanar-Ruiz

2008). The host rocks of the mineralizaon, the Proterozoic gneisses, are

shown in orange. These rocks dene a NW-SE trending belt, bounded by

the Victoria and Ocollo faults to the NE and SW respecvely. Topogra-

phic contours dene the actual sizes of the Centauro and Yaqui pits, and

the doed yellow line denes the perimeter of the projected megapit.

Below: The Centauro Pit; Mineralized hydrothermal breccias in the mi

ning front. The mineralogy consists of quartz-hemate-galena-gold.




22/32

The La Herradura Mine (Centauro Pit); Picture above from Chema Goi-

ricelaya, Februar 2009, Flickr.com; Picture below from googlemaps.com

The Mojave-Sonora Megashear hosts millions of ounces of gold produc-

on, reserves, and resources. The most signicant gold mine along this

structure is La Herradura. It is the largest producing gold mine in Mexico

with resources of more than 8 million ounces, and is located only 50 km

from El Anmonio.

The district around Herradura is experiencing a major exploraon boom

which started just few years ago thanks to new discoveries, La Herraduraincreasing their mined reserves due to their exploraon success, and the

price increase of gold and silver.

Many of the mines in the district currently in producon started with

small mining prospects that underwent new geological interpretaons

or were explored in several stages. The mining of anmony with gold

and silver, along with the 50 veins in the El Alamo Range district, presents

a prospecve opportunity to explore for a mineable gold deposit at El

Anmonio.




23/32

Satellite view of the Centauro open pit (Google Earth).

Newmont has a 44% interest in La Herradura, which is located in Mexico

Sonora desert 400 km south of Mesquite and 125 km northwest from the

nearest large town of Caborca in the State of Sonora, with a populaon

of 81,000 (2010 census). Workers from area villages are provided daily

transportaon to the mine site. La Herradura is operated by Fresnillo PLC

(which owns the remaining 56% interest and is the operator) and compri

ses an open pit operaon with run-of-mine heap leach processing.

The Centauro Deep exploraon project is taking shape below the

main pit of Herradura for development as an underground

mine.




24/32

Management

Adrian Robertson, P.Eng President, CEO, Director

Mr. Robertson is a professional engineer with life of mine experience

ranging from exploraon and nancing through producon and reclama-

on.

Mr. Robertsons previous work experience includes posions with Vale

(formerly Inco Ltd), Teck, Golder Associates and TVX Corp.

In addion to his responsibilies with Urastar Gold Corp, Mr. Robertson

is also a consultant and corporate pilot working with several Vancouver

based junior mining companies.

Mr. Robertson is also a director of Meadow Bay Gold Corp and is Presi-

dent and CEO of Silver Pursuit Resources.

Charles (Bill) W. Reed Director, Senior Geologist

Mr. Reed is a Registered Professional Geologist with over 40 years of

work experience in the mining industry exploring for disseminated and

high grade vein gold-silver, porphyry copper-molybdenum, and volcano-

genic and replacement polymetallic deposits in United States, Mexico,

Lan America and Africa.

Mr. Reed was directly involved in the discovery and development of nu-

merous mines which have produced more than several million ounces

of gold. Mr. Reeds most recent success was as co-founder of Paramount

Gold and Silver Corp (TSX, NYSE: PZG). As he was responsible for bringing

the agship San Miguel project in Chihuahua, Mexico into the Paramount

porolio of assets. Mr. Reed is uent in Spanish and has a very strong

knowledge of the business and community culture in Mexico.

In addion, Mr. Reed was Chief Geologist (Mexico) for Hecla Mining

Company (NYSE: HL)

Michel Snglhamber Director

Mr. Snglhamber has signicant experience in the Mexican mining indus-

try. He currently represents Umicore Belgium (formerly Union Miniere),

a $8 billion public company, in Mexico. They are acve in precious metals

products and catalysts, advanced materials and zinc speciales.

Mr. Snglhamber is also the Chairman of two very successful Mexican

mining companies, Minera Productos Metalicos y Derivados SA de CV,

and Minera Recami SA de CV, an exploraon company in Sonora, Mexico.

He is also a director of Paramount Gold & Silver Corp. (TSX, NYSE: PZG).

Between 1991 and 2000, Mr. Snglhamber was on the Board of Director

and on the Technical Board of Mexicana de Cananea SA de CV (Grupo

Mexico).

In 1990, he was instrumental in the Union Miniere team that worked

in Mexico for the pre-nancing of the acquision of La Caridad coppe

mine from Nansa for Mexicana de Cobre of the Larrea Group, Grupo

Mexico.

From 1986 to 2004 he was the chairman of Sogem Mexico SA de CV, the

metal trading division of Umicore SA (today Traxis Mexico SA de CV).

Between 1980 and 1986, he represented Aquaroc Internaonal in Mexi

co, a lial of the Consorum BURRUS Switzerland.

Mr. Snglhamber was President of the Belgo Luxemburg Mexican Cham

ber of Commerce in 1987, and in 2002, and was awarded the Belgian

decoraon of Ocer of the Crown.

John Morita CFO, Director

Mr. Morita has been a professional accountant for over 35 years and a

member of the Cered General Accountants Associaon of B.C. For the

past twenty years.

Mr. Morita has been a management consultant, advising on income tax

and personal nancial maers, and has held a variety of senior posions

as a director and/ or CFO with various public companies listed on the TSX

Venture Exchange and Canadian Naonal Stock Exchange (CNSX).

Mr. Morita played a major role in referring and successfully compleng

(Mar/ 05) ACP Ace Venture Corps Qualifying Transacon which was the

RTO of Cantronic Systems Inc. (TSX.V: CTS) a Tier 1 company.

Mr. Morita is currently the CFO and a director of Urastar Energy Inc

(TSXV:URS) and Mineral Mounan Resources Ltd. (TSX.V: MMV). He is

CFO of Maxtech Ventures Inc. (TSX.V: MVT), Acadia Resources Corp

(TSX.V: AIC) and Golden Cross Resources (CNSX: GOX). Mr. Morita also

serves on the Board of Directors of Polo Biology Global Group Corpora-

on.




25/32

Technical Analysis

In October 2009, the stock price of Urastar Gold Corp.

(URS) on the Toronto Stock Exchange (TSX) rosefrom approx. C$0.05 to C$0.35, whereaer a consoli-

daon beneath the blue resistance took place - which

together with the green support line was forming a

(blue-green) triangle.

In April 2010, the price managed to break above the

blue resistance and undertook a so-called breakout

to $0.55, whereaer a consolidaon beneath the red

resistance took place - which is called a pullback (to

the blue-green triangle).

In late 2010, the price managed to break above the red

resistance at approx. C$0.30, whereaer the so-called

thrust started (highlighted in light-green) reaching

approx. C$0.90 in mid-2011.

Aer this thrust, a consolidaon back to the green

support at approx. $0.20 occured, whereaer the pri-

ce consolidated sideways beneath the blue resistance

at approx. $0.30.

In early 2012, the price managed to break above the

blue resistance and undertook a breakout to approx.

C$0.55, whereaer a pullback beneath the red resis-

tance took place.

Recently, the price managed to break above the red

resistance at approx. C$0.30 - hence, we expect ano-

ther thrust to have just started.

Furthermore and in general, a strong buy-signal is ge-

nerated when a price succeeds in rising above the 260-

day Exponenal Moving Average (EMA) curve, which

currently runs at C$0.34. As the price currently tra-

des at C$0.40, a strong buy-signal is acve (sell-signal

when breaching this support).

Relavely to the HUI mining index, URS has a beerperformance since mid-2009 (green upward-trend).

The next strong buy-signal is generated when brea-

king above the red resistance. The MACD just rose

above the red resistance giving another buy-signal.

The PPO indicator generates a strong buy-signal when

rising above the red resistance. The ROC broke above

the red resistance recently and undertook a pullback.

A strong up-move (thrust) is ancipated when rising

above the red resistance again.




26/32

Financials

Excerpt from the Condensed Consolidated Interim Financial Statements December 31, 2011:




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