RIO NARCEA GOLD BELT PROPERTIES

Purchase of El Valle/Carles Assets

Acquisition: On March 30, 2007 Kinbauri through its wholly owned subsidiary Kinbauri España, S.L. acquired valuable assets lying within the Rio Narcea Gold Belt (“RNGoldB”) of northwestern Spain: the El Valle Mill and auxiliary facilities, the El Valle Mine, Carlés Mine and two other exploration properties, La Brueva and Ortosa/Godán (the “Assets”) from Rio Narcea Gold Mines, S.L. (“Rio Narcea”): mineral rights included exploitation permits totalling 4.3 sq km and investigation permits totalling 0.6 sq km. At the end of 2006, Rio Narcea had placed the plant and mines on care and maintenance, citing that they no longer fit into the Company’s growth strategy. Approval of the acquisition was received from the Venture Exchange on July 26, 2007. The El Valle Mill, with a capacity to treat up to 750,000t/year, includes a number of circuits and systems: a primary crusher, SAG and ball mill, pebble crusher, flotation, concentrate thickener and filtration, gravity, CIL, cyanide destruction, carbon regeneration, elution electro-winning, calcining and smelting, reagent preparation and water recovery. Auxiliary facilities include offices, warehouses, maintenance shops, change houses, and a sample preparation and fire assay laboratory. A tailings facility is available. Approximately 3.5 km of underground infrastructure are in place at the El Valle Mine and 3.0 km at the Carlés Mine, all of which facilitate development and drilling at the mine sites. The fixed assets have a replacement value of approximately $100M.

Geology and Mineralization: The RNGoldB is a 45 km long, 4 km wide northeast trending zone characterized by gold occurrences, high fracture density zones and felsic intrusions. The 15 km central zone between Sales to the north and Boinás to the south is marked by at least 9 known gold zones which from north to south are: Ortosa, Godán, Carlés, La Brueva, Pando, Antoñana, Villaverde-Pontigo, Mari Luz, Sta. Marina and El Valle.

The gold mineralization in this district is hosted in a series of Lower Cambrian to Devonian sedimentary rocks. This stratigraphic package has been thrusted, folded and faulted during the Hercynian Orogeny to form the N20°E trending Rio Narcea anticline. It is overturned to the northwest and is affected by a number of low angle reverse faults, which produce strong brecciation. Subsequently, extensional events resulted in the formation of 3 main sets of normal faults: NNE-SSW; NNW-SSE and E-W, which are the loci for emplacement of the main intrusive rocks and provided conduits for associated hydrothermal systems. The NE trending fracture system, which has been activated several times, is most significant for gold mineralization. Alpine thrusting of the Paleozoic sequence over Tertiary sediments occurred later and reactivated the Hercynian faults.

Episodic magmatism began in Upper Carboniferous and continued through Upper Permian. It is marked by 5 intrusive centers (Ortosa-Godán, Carlés, Le Brueva-Pando and El Valle-Boinás). Later, porphyry dykes were preferentially intruded along NNE to NE trending steeply dipping structures.

El Valle Mineralization: Two types of gold mineralization characterize El Valle: mesothermal gold-copper skarn mineralization related to a granite porphyry intrusive stock in contact with limestones and dolomites of the Lancera Fm. and later epithermal mineralization related to faulting and subvolcanic quartz-feldspar porphyry dykes. Retrograde calcic skarns show erratic and mostly uneconomic mineralization. Magnesium (“Black”) skarns contain significantly higher grades of gold and copper and are good targets for underground mining. Gold-copper mineralization is associated with magnetite, chalcopyrite, pythotite, pyrite and arsenopyrite. Highest gold grades occur where low temperature mineralization overprints a gold-copper skarn forming hematitic jasperoid with native copper and minor cuprite and chalcocite. Increases in As-Sb and Hg are also associated with in this late stage mineralizing event. The jasperoid and jasperoid breccias are structurally and stratigraphically controlled and cut all lithologies in association with porphyry dykes. Gold has also been encountered in late tectonic breccias related to low angle thrust faults. Finally meteoric alteration has produced a new generation of oxidation along fracture/breccia zones. Numerous prospective zones with documented resources are present, including Boinás South and West, Monica, High Angle 1 and 2, Black Skarn North, Charnela, Caolinas, East and West Breccia, El Valle Fault, Area 107 and Area 108; Monica has been mined underground.

Carlés Mineralization: This deposit is a gold-copper bearing skarn deposits located along the northerly edge of a granodiorite intrusion. The skarn ranges in thickness from 1.5 to over 2.5m and can have continuity of 400m; it is open at depth. Gold mineralization is closely associated with chalcopyrite and bornite. Mineralization at Carlés can be divided into: Carlés East, Carlés North, Carlés NW and Carlés West. Although open-pit and underground mining have been undertaken at Carlés, established and remaining surface and underground resources form a core for future development. The skarns at Carlés have averages that generally range from 3.5 to 5g Au/t and 0.4% to 1.0% Cu. Shoots showing grades of 14g Au/t to 19.4g Au/t were noted at Carlés North and Carlés NW.

La Brueva: The deposit is adjacent to a large Roman open-pit. An indicated resource of 64,000 ounces has been defined in a steeply plunging ore shoot, this shoot is open along strike and at depth.

Godán-Ortosa Molybdenum/Gold/Copper prospect: Godán includes a mineralized zone that encompasses silicified carbonate with arsenopyrite, exoskarn and altered diorite; one hole averaged 0.54g Au/t and 0.15% Mo over 54m, including 0.45% Mo over 9.8m. This Mo/Au/Cu prospect is open at depth and along strike. Further to the west, Godán and Ortosa consist of gold skarns developed in carbonates/siltstones in contact with granodiorite intrusions. At Ortosa, two zones have a strike length of over 1,200m and may be over printed by epithermal mineralization.

History of Exploration and Development: Modern exploration of the RNGoldB began in 1971 and 1972 when Gold Field Española S.A. mapped the Carlés Skarn. In 1981 Boliden Minerals A.B. completed a seven hole, 1,085 metres, core drilling program on the La Ortosa intrusive. Exploraciones Mineras del Cantabrico S.A. in 1985 drilled an additional three core holes for a total of 624 metres at La Ortosa and one hole to a depth of 346 metres at the Godán prospect. Anglo American Company initiated a systematic program of gold exploration in RNGoldB in 1985. Anglo’s first phase of exploration at Carlés included 1,292 metres of percussion drilling in 25 holes and 13,147 metres of core drilling in 58 holes; mineralized intercepts were assayed for gold, silver, copper and arsenic. Anglo, in joint venture with Hullas del Coto Cortes, S.A. (“HCC”) developed 910 meters of decline, 200 metres of ore drives and 80 metres of raises at Carlés by the end of 1990. A total of 929 underground samples were collected and a total of 6,012 metres in 108 core holes were drilled to determine the extent and continuity of the skarn mineralization in the deposit. A study completed by Anglo in 1991 indicated that Carlés was technically feasible. The Anglo/HCC joint venture also completed 4,555 metres in 26 core holes at Boinás East (part of the El Valle mine), 3,474 metres in 13 core holes at El Valle and 903 metres in four core holes at the Godán prospect. Concord Minera Asturiana (“CMA”) joined Anglo and HCC in April 1992 to continue work on the project as operator for the joint venture. By August 1993, CMA had completed the first round of drilling at El Valle and defined a zone of high-grade gold mineralization in the West Breccia over a strike length of 250 metres. CMA and HCC acquired Anglo’s remaining interest in the joint venture and formed Rio Narcea, A.I.E. (“Rio Narcea”), to hold their interest in the RNGoldB properties. By 1994, Rio Narcea and precursors had completed 9,727 metres in 50 holes on the RNGoldB, including 7,090 metres in 32 holes at El Valle and 1,148 metres at the La Brueva prospect. Rio Narcea expanded its exploration drilling program on the RNGoldB through the remainder of 1994 and 1995 to delineate the mineralization at El Valle. In 2000, Rio Narcea and Barrick Gold completed a 909m diamond drill program.

Infill metallurgical, hydrological, geotechnical and sterilization drilling was completed at El Valle during 1996 in order to complete a Feasibility Study, authored by MinCorp Ltd. The resource estimate for the Feasibility Study included 8 million tonnes of measured and indicated resource with an average grade of 4.6g Au/t (1.2 million ounces gold) and 2.9 million tonnes of inferred resource with a grade of 3.7 g Au/t (0.3 million ounces gold). The open pit reserve was estimated as 0.7 million ounces of gold contained in 2.2 million tonnes at 5.7g Au/t at El Valle, 1.0 million tonnes at 4.6g Au/t at Boinás East, and 0.9 million tonnes at 5.0g Au/t at Boinás West.

Infill drilling, 16,283 metres in 96 holes, was initiated in 1996 at Carlés. Contemporaneous with this program, a gold skarn was identified at the Godán prospect where an additional 5,656 metres were drilled in 17 holes prior to the end of 1998.

El Valle Open-pit Production: Production at Boinás West during 1997-1998 was 620,000 tonnes of ore averaging 5.22g Au/t (104,000 ounces gold), plus 250,000 tonnes of low grade mineralization averaging 1.38g Au/t (11,000 ounces gold). The Boinás West pit was backfilled by waste material from the Boinás East open pit during 1999. At Boinás East 1,020,000 tonnes averaging 5.79g Au/t and 0.52% Cu. (192,450 ounces) were mined. The Boinás East pit was filled with waste from the El Valle pit where 2,760,000 tonnes of ore containing 600,000 ounces of gold were mined prior to the end of open pit operations in 2003.

El Valle Underground Production: During 2002 and 2003 a feasibility study for underground mining at Boinás East was completed. A total of 850,000 tonnes with a grade of 7g Au/t and 1.2% Cu were estimated as underground reserves at that time. Between 2004 and 2006, 314,000 tonnes with grades of 3.2g Au/t and 1.0% Cu were mined at Boinás East.

Carlés Production: At Carlés, open pit mining beginning in 2000 and ending in 2004, resulted in the mining of 305,233 tonnes containing 57,994 ounces of gold. Prior to the end of mining in 2006, 443,718 tonnes containing 72,646 ounces of gold were mined underground.

A N.I. 43-101 compliant resource report dated March 21st, 2007 was prepared for Kinbauri by Ore Reserves Engineering and documented the following resources for El Valle, Carlés and La Brueva, at the time of purchase:
Total Measured and Indicated:

• 477,000 oz gold (2.6Mt at 5.7g Au/t)
• 57.2 million lbs copper (2.3Mt at 1.13% Cu)

Total Inferred:

• 845,000 oz gold (3.2Mt at 8.3g Au/t)
• 25.5 million lbs copper (1.6Mt at 0.84% Cu)

Exploration and Development 2007 Kinbauri Exploration Increases Resources: Initial exploration and definition drilling was concentrated on Area 107 and Black Skarn North within the El Valle Mine to expedite the rejuvenation of production within the RNGoldB. For a complete list of drill intercepts prior to March 31st, 2007 for Area 107 see Table 1 and for Black Skarn North, Table 2. Kinbauri’s first drill program, 25 holes totalling 6,273m was focused on expanding resources within Area 107 and the Black Skarn zone to support a minimal six year mine life. Some of better drill intersections showed:
85g Au/t and 8.2% Cu over 2.35 metres 39.1g Au/t and 1.6% Cu over 4.45 metres 24.00g Au/t and 7.5% Cu over 3.55 metres 8.04g Au/t and 2.1% Cu over 33.85 metres 5.10g Au/t and 1.4% Cu over 72.00 metres
A revised resource estimate was prepared in November, 2007 and published in January, 2008 as a result of this additional drilling. Resources for Area 107 and the Black Skarn as of January 16, 2008 stand as follows:
Area Tonnes Gold (g/t) Copper (%) Ounces Gold Tonnes Copper Gold cut-off (g/t) Indicated         Black Skarn 1,194,353 3.74 0.75 143,677 8,933 2.6 Area 107 518,202 9.15 0.89 152,516 4,588 3.5 BSN + 107 1,712,555 5.38 0.79 296,193 13,521                 Inferred             Black Skarn 1,697,964 3.92 0.50 213,931 8,548 2.6 Area 107 1,214,064 10.54 0.63 411,279 7,598 3.5 BSN + 107 2,912,028 6.68 0.55 625,710 16,147

The up-date represents an increase of 284,193 ounces of gold and 13,521 tonnes of copper (1,674,555 tonnes at 5.4g Au/t and 0.8% Cu) indicated resources and 210,170 ounces of gold and 14,147 tonnes of copper (1,688,119t at 4.2g Au/t and 2,467,028t at 0.6% Cu) for resources from the previous estimates for Area 107 and the Black Skarn zone. Total increase in resources in Area 107 and Black Skarn is 494,363 ounces gold and 27,668 tonnes copper (60.9M pounds Cu). Most zones at El Valle and Carlés, including Area 208, East Breccia, El Valle Fault, Charnella South, Mónica and High Angle 1 and 2 are open along strike and at depth. Zones 107 and BSN are open to the west and at depth. Underground exploration drilling is planned for 107, BSN, Area 208 and East Breccia in 2008 to expand resources in these areas.

Total Resources for the RNGBelt now stand at 725,200 ounces gold (4.2Mt at 5.4g Au/t) and 87.1 million pounds copper (4.1Mt at 1.0% Cu) Indicated and 1,042,000 ounces gold (5.3Mt at 6.1g Au/t) and 50.0 million pounds copper (4.1Mt at 0.6% Cu) Inferred.

Exploratory surface drilling was initiated in October as follow with one rig over three areas: Area 208 at El Valle, Carlés and Godán:

• Area 208 (El Valle): Six holes for a total of 1,750 meters to test potential high grade extension of Area 208.
• Carles: Six holes in Carles for a total of +150 meters to test at depth the extension of known resources at Carles.
• • Godán: Two holes for 600 meters to test Mo-Au-Cu targets.
  

The 2007 program also included drifting in the Black Skarn area with a 300 meter decline and 50 meters of drilling bays to accommodate later definition drilling and at Area 107 to include 150 meter of access and 20 meters of drilling bays with a 15 meter testing drift in ore to follow in 2008. Definition drilling of Area 107 commenced from upper adits in October.

Exploration and Development 2008 and Beyond

Kinbauri’s plans for 2008 are (i) to convert inferred and indicated resources into proven and probable reserves in order that proper mine design may be completed (ii) expand total resources as quickly as possible through prudent exploration and (iii) complete a feasibility study. Total budgeted expenditures for exploration and development in 2008 are as follows:

Technical Report for the El Valle, Carlés, La Brueva, and Godán gold Deposits	Table 1. Area 107 Drill Intercepts as of March, 2007 Table 2. Black Skarn North Drill Intercepts as of March, 2007

El Valle: Results of Drilling by Kinbauri España, S.L. are shown below