April 2016 Eng. Juan Luis Frias Trevizo

The Álamo Project Ensenada, Baja California North

SUMMARY

The visit from the 28th to the 30th of March, 2016 has the following objectives •Review the area to identify zones favorable to containing free gold and to continue refining with the equipment available at the site (immediately) •Zones favorable to containing mineralization deposits (short term) •Develop an integral exploration program to evaluate the veins and deposits (short to medium term) The El Álamo Mining District is one of the most important gold-bearing mineral deposits in Baja California North, in which prospecting and mining has long been developed, principally for gold but also very important placers, which to date are worked primarily in artisanal form, panning soils and river sediments. The mines only were worked in zones of higher grade and the maximum depth explored in wells, both inclined and vertical, of 20 to 50 meters, but there are mines such as The Princess with developments greater than 100 meters; one of the main reasons for leaving this district was flooding problems due to lack of pumping in mines and the poor conditions of work sites, all work sites, are currently inaccessible. In the areas known as El Álamo and La Biznaga, which include the mining concessions totaling 3000 hectares that is the property of AIVN DE MEXICO SA DE CV, veins of quartz are observed as principal structures, with brownstone anomalies generated by the oxidization of iron mineral that can be associated with broad zones of dispersed mineralization; as well we have mines known as La Princesa and La Aurora where the vein, of irregular thickness between 0.2 and 1.0m, is observed superficially; the gold content, according to reports of CRM 1976 is reported by the majority of the mining works to be on the order of 1 to 200 g/t, in the form of small mineralized inclusions throughout the structure. It is very common to observe the gold in the zones corresponding to the mineralized inclusions that contained a higher concentration of sulfur, those which by way of oxidation and leaching leave cells or box Works in which can be observed free gold. Equipment is currently available at the site (drum and Knelson concentrator with a capacity of 60 tph) to continue gold panning activity that was suspended in 2014 with a production of 500 tpd

El Álamo is located

between the

geographic coordinates

31°36”N latitude and

116°04”W longitude,

with principal access

from the Ensenada -

San Felipe highway,

which intersects a

branch to the SW at 91

Km, which in turn

connects with the town

of El Álamo at 18 Km;

the trip requires an

estimated time of 1.3

hours. The site

includes a landing strip

that is currently

unavailable.

Location and Access

El Álamo

The geologic and structural characteristics of the El Álamo mining district can be considered simple up to a certain point, since the study area is comprised of the granitic batholith of Baja California, by formations whose composition varies from granodiorite to quartz-diorite, from hornblende to biotite, of an age corresponding to the upper Cretaceous; it is common to observe the impact of dikes of different compositions, which are well considered both before and after the veins.

Regional Geology

Capital

Municipal capital

Municipal boundary

Cenozoic, Tertiary,

extrusive igneous

Mesozoic, Cretaceous,

intrusive igneous

Cenozoic, Quaternary, Soil

Mesozoic, Cretaceous,

extrusive igneous

Paleozoic Metamorphic

Mesozoic, Jurassic,

Metamorphic

Mesozoic, Metamorphic

Mesozoic, Cretaceous,

Sedimentary

BAJA CALIFORNIA SOUTH

GULF OF CALIFORNIA

(SEA OF CORTES)

PACIFIC OCEAN

UNITED STATES OF AMERICA

Beaches of

Rosarito

El Álamo

Samples March 2016

Preliminary sampling

Camp and equipment

Areas of interest

Area proposed outside the stream for equipment installation

Shaft with water for gold panning 4 inch pump

Current gold panning area with current equipment (Drum and Knelson)

Area to explore (stream) for panning in 2016 with current equipment a resource of 191250 metric tons is estimated requiring a rectangular 25m sampling totaling 90 samples

Veins NW-SE 40° are the principal system of mineralized structures

Brownstone anomalies to explore as dispersed

La Biznaga zone NW of the project, Areas of Interest

Current gold panning area with current equipment (Drum and Knelson)

Area to explore (stream) for planning in 2016 with current equipment a resource of 81600 metric tons is estimated requiring a rectangular 25m sampling totaling 40 samples

Veins NW-SE 40° are the principal system of mineralized structures

Brownstone anomalies to explore as dispersed

Area 750m long, 75m wide, 2 meters deep and a specific gravity of 1.8 for 202,500 metric tons; to establish the concentration of free gold requires a sampling in pits by excavator with a 25x25 meter grid downstream with a total of 90 samples established

750 m

75 m

Area 500m long, 52m wide, 1.5 meters deep and a specific gravity of 1.8 for 70,200 metric tons; to establish the concentration of free gold requires a sampling in pits by excavator in a 25x25 meter grid in La Biznaga stream, with a total of 40 samples established

500 m

52 m

LA PRINCESA MINE LARGE VEIN ALLUVIAL BANK IN THE STREAM TO PAN MARCH 16

PANNING GOLD IN ARTISANAL FORM, SAN DAVID SHAFT AREA

FREE GOLD IN PAN

DIAMOND BNO IN BIZNAGA AREA COLOR ANOMALY

Equipment Status Comments

Drum 800 tpd unavailable Evaluate repair

Knelson 60 tph unavailable

Evaluate repair 10in mobile conveyor belt 17

meters unavailable

Evaluate repair CAT 345 excavator available

John Deere excavator unavailable

Evaluate repair 988 loader available

CarryDozer John Deere

(equiv d7) available

Sullair Compressor

Generators 100, 135 y 240 kw

Generator

Diesel tank 17000 liters

Lubrication truck

Dump truck 12m3

Submersible pumps 4 in

Submersible pump 6 in

available 3

3 1

available available

available available

available

available

available

KNELSON

DRUM

Economic sensitivity test for panning gold with current equipment

Total 67,345.71 849.70 509.82

Note Based on operating 12 hour shifts 6 days per week 26 days per month, the metallurgical recovery will depend on the concentration of gold to be confirmed by assay, granulometric analysis, continuity of the operation and the condition of the equipment as well as the economic recovery will be a function of the price and net liquidation including point of entry and cost of delivery.

Total 15

T.C 17.50

Cost US$/oz

Expense US$/month Drum Knelson

Diesel 24,660.00 311.14 186.68

Maintenance 20,571.43 259.55 155.73

Labor 14,400.00 181.68 109.01

Food 3,857.14 48.67 29.20

Trailer rental 1,714.29 21.63 12.98

Shipping, other 1,285.71 16.22 9.73

Administration 857.14 10.81 6.49

Personnel Quantity

Operators 5

Mechanics 2

Electricians 2

Assistants 3

Driver and cook 3

Equipment

Drum Knelson

Price Oz Au sales 950 950

Resource tons 272,700 272,700

Tons/day 700 700

Tons/month 18200 18200

Lifetime/years 1.25 1.25

Conc Au gr/tons 0.30 0.30

Recup % 45 65

Oz/day 3.05 4.40

Oz/month 79.26 132.10

Sales US$ 75,295.16 125,491.94

Cost US$/Oz 849.70 509.82

Profit US$/mes 7,949.45 58,146.22

Profit margin % 10.56 46.33

Conclusions ● Excavations in 25 meter grid to obtain samples and assign gold concentration to the resource

estimated at 272,700 metric tons in the Encampment and Biznaga stream, 130 samples in total.

● Semi-detailed mapping of areas of interest both for gold panning and to explore dispersed

deposits from which gold can be recovered by gravimetric concentration requires obtaining 100

samples distributed in the color anomalies mentioned in the area of encampment and Biznaga

● As well as the chemical analysis of the samples, a rated granulometric analysis is required to

improve the operating parameters of both the drum and the Knelson.

● The execution of the sampling and semi-detailed mapping for the areas mentioned requires 12

days. The topographic map of the mining concessions to be elaborated with contours at

minimum every 10 meters. The startup cost of the equipment currently unavailable as well as the

best distribution and location of the equipment to be carried out by a specialist who will be

recommended.

● The maps of mineral concessions assigned to AIVN DE MEXICO are required immediately, and to

know who surrounds these concessions or if they are free and we determine which are of interest

to immediately claim.

● To obtain the permission of the owners of lands where we are going to work in the areas of

interest mentioned, both for gold panning and for exploration of dispersed deposits.

● To investigate the permits before SEMARNAT (Secretary of the Environment and Natural

Resources) to obtain information on the streams, if you think it necessary.

● It is important to put the Knelson concentrator in operation since the coarse gold in the feed is

that which produces a good recovery

● A lower counterpressure of water generates a better recovery; its reduction permits the

concentration of finer gold particles given the lower force of the water current

● The water provided by the San David shaft section 2x2.5 meters and 90 meters deep is located at

650 meters from the encampment and requires gauging to determine if it is sufficient for the

process which requires a minimum of 17 m3/hour of clean water, 204 m3 in the 12 hours of daily

operation.

● The granulometry of the material and/or mineral feed is the most important variable (rated

granulometric analysis)

Conclusions ● The economic sensitivity analysis of gold panning - the best results are with the Knelson controlling

the variables such as granulometry, constant feed and counterpressure of water; the concentration

of 0.30 gr/ton in this analysis is information estimated by Eduardo Baoullosa and would require

determination of the sale price per ounce.

● The increment in the margin of the Knelson vs. the drum is the recovery; 65% vs 45% respectively

The estimated total cost of the work described for a second visit of the project is US$ 11,760,

59% of which are the analysis of the 230 samples shown in table 1.

TABLE 1

Total 11760

José García Juan Luis Frias T.

Víctor Frias T.

The chemicals analyzed in Chemex are Au by absorption (AA23) and Ag + 35 elements by plasma (ICP41)

Activity Responsible Execution time Unit cost/US$

Total

Mining concession map JG Immediate

Topographic map contours 10 meters JG Immediate

Permits landowners areas of interest JG Immediate

Sampling of the areas for gold panning 130 samples (Chemex Laboratory)

JLFT 4 days 30 3900

Sampling of the areas for exploration of dispersed deposits 100 samples (Chemex Laboratory) optional in this visit, recommended to take advantage of the trip and to expand the zones suitable for panning gold

JLFT 30 3000

Granulometric analysis and gravimetric concentration tests, laboratory in Chihuahua

JLFT 350 350

Sampling fees JLFT 4 days 150 600

Semi-detailed mapping fees JLFT 8 days 150 1200

Vehicle rental JLFT 12 days 40 480

Excavation of pits (Diesel and Operator) JLFT 2 days 350 350

Airline ticket Chihuahua-Tijuana JLFT 410 410

Hotel Ensenada JLFT 30 360

Gasoline JLFT 300 300

Food JLFT 200 200

Evaluation of the rehabilitation of equipment; a person will be recommended

JLFT, VFT 2 days 100 200

Airline ticket Chihuahua-Tijuana 410 410