CORCOESTO PROPERTY

Location: Corcoesto lies within the Malpica Gold Belt (“MGB”) in northwestern Spain and consists of three concessions totalling 778 hectares. Shear zones, within a medium grade metamorphic unit, host several gold occurrences in the MGB; seven areas hosting vein systems have been delineated. Quartz veins form the core of high grade zones within these systems.

Historical Resources: In 2003, Rio Narcea Gold Mines Ltd. (“RNGM”) defined the following resources based on an open-pit heap leach operation and a gold price of $350 US per ounce: Measured resources of 171,000 ounces gold (3,648,000 t averaging 1.46g Au/t); Indicated resources of 186,000 ounces gold (4,024,000 t averaging 1.45g Au/t); and Inferred resources of 79,000 ounces gold (1,573,000 t averaging 1.56g Au/t). The metallurgy indicated that the heap leach concept was not feasible at those prices since much of the fine-grained gold is encapsulated in quartz. The nature of the ore and the numerous high grade intercepts encountered during infill drilling indicated good potential for a high grade vein underground mine, subject to further expansion of high grade resources.

Kinbauri’s Initial Drill Programs: Kinbauri completed two major drill programs totalling 4,378 m at Corcoesto during 2006: 3,044 m were completed on the Pozo del Ingles vein system (“Pozo”). Good continuity and variable grade distribution of a foot wall vein (“PI 20”) were established over a strike length of 300m and to a depth of 200m. High grade shoots within PI 20 defined by a 5g Au/t cut-off were noted immediately west and east of a cross-cutting fault. Veins in the hanging wall at Pozo also yielded some high grade intercepts. Some of the best results of the drill campaigns were as follows:

• 1.15m of 15.83g Au/t and 1.0m of 6.50g Au/t in diamond drill hole (“DDH”) 05K1; 1.0m of 45.83g Au/t in DDH 05K2
• 1.0 m of 10.40g Au/t in DDH 05K4
• 1.4m of 5.4g Au/t and 2.1m of 10.29g Au/t in DDH 05K5
• 1.25m of 12.83g Au/t and 1.0m of 8.21g Au/t in DDH 05K9
• 2m of 6.41g Au/t and 4.5m of 5.45g Au/t in DDH 06K14
• 2m of 10.26g Au/t in DDH 06K20

Two drill holes totalling 681 meters were also drilled on the Peton de Lobo (“Lobo”) vein system in early 2006 to confirm increasing gold grades at depth there:

• DDH 06K13 intercepted 2.6g Au/t over 11.2m at a down-hole depth of 118m, 2.7g Au/t over 5.85m at a down-hole depth of 269m and 7.3g Au/t over 6.25m at a down-hole depth of 210.7m, both some 85m down-dip from similar intercepts in other holes at shallower depths.
• DDH 06K16 located 50m west of DDH 06K13, intercepted 6.0g Au/t over 2m at a down-hole depth of 30.2m, 6.1g Au/t over 2m at a down-hole depth of 11.2m and 6.8g Au/t over 2m at a down-hole depth of 190.6m.

Geochemistry Identifies Gold Zones: Soil geochemistry was completed in 2005 and 2006 over most of Corcoesto. In addition to gold in soil anomalies outlining known vein systems, numerous new gold in soil anomalies were delineated. These soil anomalies also indicated extension of the Lobo and Cova Crea vein systems to the east and west respectively. Follow-up trenching totalling 1,118m identified numerous auriferous vein systems; previous trenching by RNGM had realized numerous gold intercepts, including values of up to 28.6g Au/t over 1m and 98g Au/t over 1.2m. Four shallow DDHs were completed in late 2005 to follow-up results of initial trenching; intersections of 2.7g Au/t over 5.4m in DDH 06K21 and 5g Au/t over 5.3m in DDH 06K15 were recorded in these shallow holes.

A N.I. 43-101 compliant resource report by Ore Reserves Engineering ("ORE") was completed in 2006. The open-pittable resources at Corcoesto with an average grade of 1.75g Au/t and cut-off of 0.90 Au/t were estimated to be:

• Measured Resources: 142,000 ounces Au (2.48Mt at 1.78g Au/t)
• Indicated Resources: 122,000 ounces Au (2.19Mt at 1.74g Au/t)
• Measured and Indicated: 264,000 ounces Au (4.67Mt at 1.76g Au/t)
• Inferred Resources: 32,000 ounces Au (0.59Mt at 1.69g Au/t)

A further 34,700 ounces Au (0.18Mt at 6.16g Au/t) were deemed to be inferred resources with underground development potential.
ORE further concluded that:

‘The Corcoesto Project has very good prospects for progressing from exploration to a working mine.’

‘Successful development of an operating property will most likely require both expansion of the open-pit minable resource and development of a significant underground minable resource. Recommendations for achieving these goals were as follows.

1. Continue drilling at the Pozo del Ingles and Peton de Lobo to extend the resource to the west and east respectively where further resources will expand open-pit minable potential by increasing the resource and by providing access to pits from the hillside.
2. Continue trenching and drilling on the northern zones, including Montefurado and Picotos, to define significant new resources.
3. Continue drilling on the deep extensions of Pozo del Ingles and Peton de Lobo to further define the underground potential. After sufficient underground resources have been defined from surface, start underground exploration to prove continuity of mineralization for underground mining and to develop an underground reserve base.
4. Do sufficient metallurgical testing to provide design parameters for feasibility level plant capital and operating cost estimates.

Exploration should be targeted towards a combined open-pit plus underground operation with a mill in the 1000 to 2000 tpd range. A reasonable target for a development decision is to expand the current open-pit resource by 25% to 35% while increasing grade to at least 1.75 g Au/t. The economics of the project may be enhanced further by developing additional high-grade underground resources, but underground reserves may not be essential for a successful project.'

Drill Program Expands Resources: During the second and third quarters of fiscal 2007, Kinbauri completed a 4,332m drill program, which was concentrated on extending known mineralization on all vein systems; namely the Picotos, Fonterremula and Montefurado vein systems in the northern part of Corcoesto and Cova Crea and Peton de Lobo vein systems in the southern part.

Results from drilling on the Picotos vein systems show continuity in gold grades indicative of a meaningful increase in open-pittable resources. Some of the better intersections are:

• *12.26g Au/t over 1m in DDH 06K35
• 5.00g Au/t over 5.25m on DDH 06K15
• 2.74g Au/t over 3.5m and 10.14g Au/t over 1m in DDH 06K37
• 5.04g Au/t over 4.65m in DDH 06K23
• 2.89g Au/t over 5.6m in DDH 06K22
  (for more results see Figure entitled Picotos Zones with Assay Results from Drill Holes and Trenches Highlighted; and Table: Picotos Vein Systems Assay Results).

At Fonterremula, DDH 06K38 extended the vein system 50m to the east with grades of 1.16g Au/t over 2m and 1.7g Au/t over 1.2m; these relatively low grades are similar to other drill hole intersections within Fonterremula. However previous trenching and drilling encountered higher grades e.g.

• 2.95g Au/t over 8m in DDH COR-215
• 3.19g Au/t over 1.6m in DDH COR-22X
• 3.76g Au/t over 6m, 6.34g Au/t over 18m and 9.04g Au/t over 3m

At Montefurado, two holes drilled during 2007 restricted the vein system to a maximum strike length of 75m. Previous drill holes at Montefurado had intersected:

• 2.09g Au/t over 5.75m in DDH 05K12
• 5.62g Au/t over 4.5m in DDH COR-217
• 1.60g Au/t over 5m in DDH COR-224

At the western end of the Cova Crea vein systems, three diamond drill holes indicate that these systems can be extended to the west and at depth. Intersections included:

• 5.78g Au/t over 1m in DDH 07K52
• 5.08g Au/t over 1m in DDH 07K53
• 2.59g Au/t over 12.9m including 7.48g Au/t over 3.5m, in DDH 07K56

Four holes were drilled at the eastern end of the Peton de Lobo systems; some of the better intersections are:

• 4.45g Au/t over 3m and 2.24g Au/t over 1m in DDH 06K39
• 2.51g Au/t over 6.4m, including 5.44g Au/t over 1m, in DDH 06K48 \
• 2.22g Au/t over 1.2m and 1.76g Au/t over 1.3m in DDH 06K44
• 9.08g Au/t over 1m and 5.06g Au/t over 2.3m in DDH 06K47

Increased Resources: New inferred resources identified by Kinbauri drill campaigns based on a 0.9g Au/t cut-off for the northern vein systems and the Cova Crea and Peton de Lobo extensions are as follows:

• Northern Vein System: 90,675 ounces (1.54Mt at 1.83g Au/t)
• Southern Vein System: 140,140 ounces (0.66Mt at 1.85g Au/t)

Ore Sorting and Waste Disposal: Kinbauri has had a desk-top study completed to evaluate the net benefits of various gold prices. The nature of the gold mineralization has been re-examined. It appears that economic development could be enhanced by confirming the applicability of sorting of ore and economic disposal of waste rock. These activities are scheduled for 2008.