TECHNICAL REPORT ON THE COMSTOCK MINE PROJECT GOLD HILL, NEVADA, USA PREPARED FOR: GOLDSPRING, INC. MAY 17, 2010 PREPARED BY:

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1 TECHNICAL REPORT ON THE COMSTOCK MINE PROJECT GOLD HILL, NEVADA, USA LATITUDE º NORTH LONGITUDE º WEST PREPARED FOR: GOLDSPRING, INC. MAY 17, 2010 PREPARED BY: MR. MIKE MARTIN MR. JOSEPH KANTOR MR. MARK ANDERSON BEHRE DOLBEAR & COMPANY (USA), INC. 999 Eighteenth Street, Suite 1500 Denver, Colorado (303) A Member of the Behre Dolbear Group Inc. 2009, Behre Dolbear Group Inc. All Rights Reserved.

2 TABLE OF CONTENTS 2.0 TABLE OF CONTENTS...i 3.0 SUMMARY INTRODUCTION LOCATION OWNERSHIP GEOLOGY MINERALIZATION MINERAL RESERVES AND RESOURCES Drilling, Sampling, and Assaying Quality Assurance/Quality Control Resource and Reserve Estimation Procedures Resource and Reserves EXPLORATION MINE REHABILITATION PROCESSING INFRASTRUCTURE ENVIRONMENTAL AND TAILING DISPOSAL PROJECT ECONOMICS CONCLUSIONS Recommendations Geology and Ore Resources Mining Processing INTRODUCTION RELIANCE ON OTHER EXPERTS PROPERTY DESCRIPTION AND LOCATION ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY HISTORY GEOLOGICAL SETTING GEOLOGIC SETTING Regional Geology Regional Stratigraphy Regional Structure Regional Alteration District Mineralization PROPERTY GEOLOGICAL SETTING DEPOSIT TYPES GEOLOGIC MODEL MINERALIZATION EXPLORATION Project i BEHRE DOLBEAR

3 TABLE OF CONTENTS (CONTINUED) DRILLING PRE PLUM MINING AND GOLDSPRING DRILLING RECENT DRILLING CAMPAIGNS AND PROCEDURES DRILL HOLE SURVEYS DOWN HOLE SURVEYING LOGGING SAMPLING METHOD AND APPROACH SAMPLING PROCEDURE SAMPLE PREPARATION, ANALYSES, AND SECURITY SAMPLE PREPARATION ASSAY PROCEDURES QUALITY ASSURANCE/QUALITY CONTROL LAB CERTIFICATION SECURITY OTHER ASSAYING DATA VERIFICATION...40 ADJACENT PROPERTIES MINERAL PROCESSING AND METALLURGICAL TESTING RECOVERABILITY METALLURGICAL MINERALOGY POSSIBLE PLANT DESIGN MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES INTRODUCTION CAPPING OF ASSAY GRADES BULK DENSITY DETERMINATION ELECTRONIC DATABASE ESTIMATION PROCEDURES MINERALIZED ENVELOPES VARIOGRAPHY BLOCK MODEL PARAMETERS KRIGING DETAILS BLOCK MODEL RESULTS BLOCK MODEL CHECKS RESOURCE AND RESERVE CATEGORIZATION RESERVE STATEMENT (NON-NI COMPLIANT) OTHER RELEVANT DATA AND INFORMATION NORTHERN EXTENSION HISTORIC RESOURCE NORTHERN EXTENSION EXPLORATION POTENTIAL ECONOMIC ANALYSIS REFERENCES MISCELLANEOUS GOLDSPRING INTERNAL REPORTS MAPS OTHER DOCUMENTS INTERNET SITES Project ii BEHRE DOLBEAR

4 TABLE OF CONTENTS (CONTINUED) CONCLUSIONS RECOMMENDATIONS GEOLOGY AND ORE RESOURCES MINING PROCESSING DATE AND SIGNATURE PAGE ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES MINING OPERATIONS Operations RECOVERABILITY MARKETS CONTRACTS ENVIRONMENTAL CONSIDERATION Environment Permitting Permits Nevada Permits Nevada Permits Federal Permits County Permits Environmental Issues TAXES Taxes Royalties CAPITAL AND OPERATING COST ESTIMATES ECONOMIC ANALYSIS MINE LIFE...73 APPENDIX 1.0 COMSTOCK MINE PROJECT MINING CLAIMS...A1-1 LIST OF TABLES Table 3.1 Table 3.2 Table 13.1 Table 19.1 Table 19.2 Table 19.3 Table 19.4 Table 19.5 Table 19.6 Table 20.1 Measured, Indicated, and Inferred Resources... 4 Measured and Indicated Heap Leach and Mill Resources... 5 Drill Hole Series in the Database Variogram Models for Gold and Silver Block Model Parameters Global Inventory Summary of CMP Block Model Goldspring s CMP Mineral Resource Goldspring s Economic Parameters for Pit Shell Generation Measured and Indicated Resources Northern Extension Historic Resource Project iii BEHRE DOLBEAR

5 TABLE OF CONTENTS (CONTINUED) Table 25.1 Table A1.1 Table A1.2 Permit Status Comstock Mining Applicable Permit and Regulatory Compliance Survey CMP Patented Mining Claims... A1-2 CMP Unpatented Mining Claims... A1-5 LIST OF FIGURES Figure 5.1. Figure 6.1. Figure 6.2. Figure 8.1. Figure 9.1. Figure 9.2. Figure 9.3. Figure 9.4. Figure 9.5. Figure Figure Figure Figure Figure Figure Figure CMP land holdings CMP location Comstock mining district historic mining areas Comstock historic underground workings minute geologic map (NBMG 2009) and CMP property Schematic longitudinal vertical projection along the plane of the Comstock Lode prior to post-mineral displacement Comstock mining district historic mining areas Map of the Comstock district showing veins and general distribution of alteration assemblages Local geologic map with stratigraphic column Location of CMP deposits Location map of drill samples Historic underground workings and development drill holes Check assay comparisons between American Assay and ALS Chemex Laboratories Gold and silver variograms Section 771,600 North with modeled blocks and structural interpretation Example GoldSpring pit shells Project iv BEHRE DOLBEAR

6 3.1 INTRODUCTION 3.0 SUMMARY Behre Dolbear & Company, Ltd. (Behre Dolbear) has been retained by GoldSpring, Inc. (GoldSpring) to prepare a Technical Report on the Comstock Mine, 100% owned or leased by GoldSpring. GoldSpring is in the process of formulating operational and financial planning for the property. To date, GoldSpring has completed development drilling, preliminary mine planning, operational planning and financial analysis and has undertaken considerable permitting work, as described briefly in this report on the Comstock Mine property. The purpose of this report is to provide an independent review and critique of the mineral resource estimates at the property, together with a statement and review of the work already done by GoldSpring and its other consultants on the preliminary planning and analysis. This report is written in compliance with NI Standards of Disclosure for Mineral Projects. 3.2 LOCATION The Comstock Mine Project (CMP) is located in Storey County, Nevada, approximately 3 miles south of Virginia City and 30 miles southeast of Reno, Nevada. Access to the property is by State Route 342, a paved highway. The Project includes the Comstock Mine, an existing open pit gold and silver mine and heap leach facility, which will be redesigned and constructed to accommodate new ore. 3.3 OWNERSHIP The CMP s mineral estate consists of 4,238 acres of active lode mining claims in the Comstock Lode Mining District. The acreage is comprised of 590 acres of patented claims (private lands) and 3,648 acres of unpatented claims, Bureau of Land Management (BLM) administered. A complete list of all the claims is given in Appendix 1.0. Figure 5.1 in the body of the main report illustrates the CMP land holdings. The topography base map is the United States Geological Survey (USGS) Virginia City, 7½-minute quad sheet, 1:24,000 scale, and portions of the Flowery Peak, New Empire, and Dayton sheets. Individual land leases, patents, or mineral entry claims are color coded as per legend description. 3.4 GEOLOGY Because of the Comstock District s historic significance during the American Civil War and its worldclass bonanza precious metal grades, the geology is well known and has been studied in detail by many researchers. Detailed surface mapping and the careful logging of reverse circulation drill chips by the GoldSpring staff have enhanced their understanding of the CMP geology. The Comstock District is located within the western portion of the Basin and Range Province of Nevada, between Reno and Carson City. The majority of the epithermal ore bodies occur as veins, breccia zones, and stockworks hosted in three major structural zones: the northeast striking, east dipping Comstock and Occidental fault zones and the northwest striking, east dipping Silver City fault zone. The principal host rocks are Miocene-aged volcanics, volcanoclastic units, and various phases of quartz diorite to andesite porphyry as stocks, dikes, and plugs. Mineralization is related to several overlapping, superimposed Project BEHRE DOLBEAR

7 hydrothermal events with both high and low sulfidation styles of alteration. Some of the magmatic events were directly associated with hydrothermal activity. Placer gold deposits were discovered in 1850 and the lode gold-silver deposits were discovered in Production since 1950 has been intermittent. Over 8.2 million ounces of gold and over 192 million ounces of silver were produced prior to 1965 (Bonham, 1969). 3.5 MINERALIZATION Mineralization within the CMP area is hosted by the northwest striking Silver City fault zone and is enhanced in volume and grade where intersected by cross-cutting east-west and northeast striking structures. Detailed geologic studies by the GoldSpring staff have identified four sub-parallel northwest striking faults within the Silver City fault zone. The spacing between these faults is about 150 feet, while thicknesses of mineralization along individual faults range from 40 to 120 feet. Mineralization within the project drill area is gold enriched with silver to gold ratios of approximately 10:1. This compares to ratios of silver to gold of 100:1 over the Comstock bonanza ore bodies. Drilling has outlined gold and silver mineralization over a strike distance of nearly 1 mile, with in-fill drilling on 50- to 70-foot centers over 0.6 of a mile. The bulk of the exploration drilling is in the Billie the Kid and Lucerne pit areas, a lateral distance of about 0.6 mile. Mineralization is open-ended to the north and south along strike and downdip to the east. 3.6 MINERAL RESERVES AND RESOURCES Drilling, Sampling, and Assaying Nearly 700 Reverse Circulation (RC) holes, drilled by GoldSpring and their predecessors, have defined mineral resources at the Lucerne and Billie the Kid open pits together with those along strike and downdip. Sampling was undertaken using a wet rotary splitter. Two equal splits plus duplicates on 100-foot intervals were collected, with the samples being secured with good chain of title from the drill site to the primary assay laboratory. For the GoldSpring exploration and development campaigns, all drilling, surface and down-hole surveying, hole abandonment, geologic logging, sampling, and assays were performed to industry-recognized standards Quality Assurance/Quality Control Check sampling was undertaken via duplicates, blanks, and standards inserted into the sample stream at regular intervals. Quality Assurance/Quality Control (QA/QC) check sampling results show no bias and are excellent. The primary assay laboratory, American Assay Laboratories, employs a vigorous internal duplicate and standard assay procedure. Behre Dolbear assumes that earlier pre-goldspring drilling and sampling followed industry recognized standards Resource and Reserve Estimation Procedures Dr. Robert Cameron, Ph.D. (Robert Cameron Consulting) is a well-recognized authority on computerized mineral resource and reserve calculations and methodology. Dr. Cameron reviewed the GoldSpring resource and reserve modeling and calculations and reran the program (Cameron 2009). He reviewed and discussed all factors, i.e., high-grade assay capping, variograms, rock density, electronic database, block models and parameters, and Kriging and estimation methods. In addition, Dr. Cameron reviewed the Project BEHRE DOLBEAR

8 geologic, drilling, sampling, and assaying data. Dr. Cameron physically spot checked assay certificates and compared them to the electronic data and found no errors. Behre Dolbear has not repeated this exercise. Dr. Cameron found that the reserve estimation was a reasonable estimate of the potential reserves at the CMP. It should be noted that the Mineral Reserves Declaration Report (Anderson, 2009) that Dr. Cameron reviewed was written under SME guidelines, not NI Technical Report requirements. Nonetheless, Dr. Cameron concluded that the reserve statement by GoldSpring is a reasonable estimate provided that final permitting and legal issues are resolved. Behre Dolbear has neither remodeled nor re-run the resource, but has visually compared assay cross sections to both block model sections and plans, and finds the block model reasonable. Higher- grade blocks are bounded by structure and have strike directions both northwesterly and northeasterly mimicking the recognized structural controls. Based upon this review, Behre Dolbear agrees with the total mineral resource estimates. GoldSpring utilized a computerized block model for their resource and reserve estimate. The block model grades were generated using ordinary Kriging; Michael Norred of Techbase International Ltd. developed the model. He used the Techbase computerized mine design package, which is an industry accepted, commercially available software. Veins and breccias control higher-grade mineralization. Surrounding these are lower-grade envelopes of stockwork veining and disseminations, which allows the treatment of the mineralized zones as an envelope that was used to limit the grade model. The envelopes included all samples with gold grades >0.005 ounce per ton and were created on east-west and north-south sections and at 10-foot intervals on plan (level) maps Resource and Reserves There are several factors that concern the classification and extent of Resources as per NI Technical Report requirements. 1) Under the NI Technical Report guidelines, both Probable and Proven Reserves that have been estimated as per the Anderson Report require that the economically mineable part of a Measured or Indicated Mineral Resource must be converted into Reserve status by the production of at least a Preliminary Feasibility Study. To date there has been no Preliminary Feasibility Study. 2) The GoldSpring mine plan does not include ramps. 3) The GoldSpring mine plan does not include mining dilution, other than within the block model, and ore loss. 4) The Starter Pit, where GoldSpring intends to begin mining in the short term, is totally on Private Lands. As it generally includes close-spaced drill holes, much of the mineralization within it can be considered a Measured Resource. GoldSpring is planning to execute some in-fill drilling to better define the west edge of the deposit and fill in some gaps in the 50- to 70-foot drill spacing within the starter pit. Some of this drilling, in two specific high-grade zones, will be on 25-foot centers. Until the infill drilling is completed, some of the areas are not defined well enough to be considered a Measured Resource but are sufficiently well defined to be considered as Indicated Resources. 5) The remainder of the resource (Expanded Pit area) is on Federal mining claims that are on BLM administered lands. This will require the National Environmental Policy Act Project BEHRE DOLBEAR

9 (NEPA) process to be initiated by the BLM. GoldSpring will need to comply with the NEPA process by preparing an Environmental Impact Statement that evaluates the impacts of the total project on the environment and humans. This process is estimated by GoldSpring to take about four years. Although the outcome is likely to be favorable, at this point in time, the timing for expanding operations is uncertain. GoldSpring has addressed this uncertainty in their sensitivity analysis with a case that assumes an additional year of production from a mining operation on patented ground only. 6) State Route 342 must be relocated in order to exploit the expanded pit resources. This is probably not a major concern, but it does add a small measure of uncertainty. This issue does not prevent GoldSpring from opening the mine, but could affect the timing for expanding the mine, and could affect a portion of the resource. Thus based upon the above, a Proven or Probable Reserve cannot be stated under NI Technical Report requirements at this time. When Issues 1 to 3 are resolved, it is possible that only the Starter Pit mineralization may then qualify as Proven and/or Probable Reserves. The remainder of the potentially economic mineralization in the Expanded Pit presently classified as Measured and Indicated Resource would remain so until Issues 4 to 6 are also resolved. From the global inventory in the block model, a total resource was established based upon whether a block could eventually be mined economically by using mining costs and recoveries for each block. Resources were then categorized and summarized using blocks within the model that could eventually be economically extracted at gold prices ranging from $200 to $1,200 per ounce. The estimated Measured and Indicated Resource plus the Inferred Resource, as per NI Technical Report requirements, are shown in Table 3.1. Table 3.2 further classifies the Measured and Indicated Resources by Heap Leach and Mill type resources along with waste tonnage and strip ratios. Dr. Cameron suggested that perhaps half of the Measured Resource should be re-categorized as Indicated Resource. As such, if a portion of the Measured Resource blocks were reclassified as Indicated Resource blocks, it would increase the Indicated Resource by the same amount it would decrease the Measured Resource. The total tonnage or contained ounces within the combined Measured and Indicated Resource would not change. TABLE 3.1 MEASURED, INDICATED, AND INFERRED RESOURCES Au Ag Total Au Tons (opt) (opt) (ounces) Total Ag (ounces) Measured Resources 12,761, ,000 4,900,000 Indicated Resources 10,152, ,000 3,584,000 Total Measured and Indicated 22,913, ,000 8,484,000 Inferred Resource 6,613, ,000 1,612,000 Project BEHRE DOLBEAR

10 Measured and Indicated Resource TABLE 3.2 MEASURED AND INDICATED HEAP LEACH AND MILL RESOURCES Tons Au (opt) Ag (opt) Total Au (Ounces) Total Ag (Ounces) Recoverable Au (Ounces) Recoverable Ag (Ounces) Heap Leach 10,337, ,000 1, , ,000 Mill 12,576, ,000 6,619, ,000 5,295,000 Total Measured and Indicated 22,913, ,000 8,484, ,000 5,851,000 Waste 1 36,567,000 1 Waste to Ore Ratio at 1.60:1 Note: The term Ore is generic and does not imply Reserve classification of economic viability. Heap Leach gold recovery at 65%; heap leach silver recovery at 30%. Mill gold recovery at 95%; mill silver recovery at 80%. Through the review, the author confirms that the resource model and classifications are appropriate and NI Technical Report compliant. Furthermore, the author confirms that the resource estimates prepared by GoldSpring, confirmed by Cameron (2009), are accurate, conform to industry standards, and comply with the standards set out in NI EXPLORATION After studying all of the information provided by GoldSpring, including the vertical cross-sections through the expanded pit area, Behre Dolbear believes that further drilling outside the presently planned ultimate pit limits is likely to result in developing substantial additional resources. The potential for substantial additional resources, based upon the presence of underground workings, mineralized outcrops, historic drilling, and geologic mapping, is particularly encouraging northward in the area GoldSpring terms the Northern Extension. The northerly extension of mineralization beyond the Lucerne/Billie the Kid area has an estimated strike length of 2,700 feet. GoldSpring has inventoried a number of Historic Resources through the review of technical reports written by previous mine operators in this Northern Extension area. The Historic Resource is estimated at 1,920,000 tons with a grade of ounce of gold per ton and ounce of silver per ton. Although the data is historic and potential resources non-compliant with NI Technical Report requirements, it is a reasonable expectation of potential mineralization. A portion of the Northern Extension is included in the GoldSpring block model. This Inferred Resource is already included within the Inferred Resource category in Table Beyond the limits of the block model, GoldSpring has proposed an exploration potential with as much as 19,000,000 tons with an average resource grade similar to already established resources. This mathematical calculation is based upon the resource of 9,135 tons per strike-length-foot over the densely drilled Lucerne and Billie the Kid areas. It should be noted that this assessment is purely conceptual in nature; that there has been insufficient exploration to define a mineral resource; and that it is uncertain if further exploration will indeed result in a mineral resource. However, it is a reasonable expectation of potential mineralization since mineralized outcrops, underground workings, and past drilling confirm the existence of mineralization. GoldSpring has budgeted an extensive RC drilling campaign in 2010 to test a number of high-quality exploration targets in the Northern Extension area. Project BEHRE DOLBEAR

11 3.8 MINE REHABILITATION To date, mine rehabilitation has consisted only of the reclaiming of a portion of the Billie the Kid waste rock storage area in PROCESSING The exploration and development phase of the current GoldSpring operations has included a broad range of metallurgical tests on various composites representing the three general ore types present on the properties. All contemporary testing has been done at the McClelland Laboratories in Sparks, Nevada. These ore types have been identified as Alta Andesite, Rhyolite, and Metavolcanic. In addition, the three rock types have been composited into high-grade, medium-grade, and low-grade composites. To date, bottle roll tests have been run to establish the amenability of the ore types to cyanide leaching, and column leach tests have been run on the high-grade and low-grade composites. All testing was performed on RC (reverse circulation) drill cuttings. The average gold recovery from column leach testing has been 76.2% (low grade opt) and 93.8% (high grade opt) at leach cycles of 184 and 323 days respectively. The high grade composite was subjected to a full milling simulation, including comminution, gravity concentration, CN leaching and tailings agglomeration. This test yielded a total gold recovery of 98.4%. In the test that simulated the agglomeration of low-grade ore with process tailings the resulting agglomerates were subjected to geotechnical evaluation of their integrity under heap leach conditions. The tests indicated that a heap constructed with this method could not maintain integrity at a height of over approximately 30 feet. This test, however, was preliminary and was based on RC drill cuttings. GoldSpring plans additional tests using drill core to clarify the preliminary results INFRASTRUCTURE The Comstock Mine infrastructure consists principally of a refurbished office building and some old, but not antiquated, production and auxiliary buildings, containing some usable equipment, remaining from the previous operations in Water and electric supplies are sufficient for near-term future use. Property access is by a 1.5-mile gravel road that intersects State Highway 342. Communications, including telephone, are installed and operable ENVIRONMENTAL AND TAILING DISPOSAL Section 3.11 and Section 25.5 were prepared by Mr. William A. Napier, Senior Associate of Behre Dolbear, under the supervision of Mr. Michael Martin, QP, Mining and Metallurgical Society of America (MMSA). The CMP is located in the Comstock Historic District, a designated cultural historic site. Thus far, test mining (2004 to 2006) has occurred on patented claims. Since 2007, the project has been in a voluntary temporary closure mode. In 2009, Comstock began to apply for and obtain permits needed for the resumption of operations at a nominal production rate of 2,400 tpd. The Company is preparing to trigger the National Environmental Policy Act (NEPA), once the Plan of Operations has been submitted to the Bureau of Land Management (BLM). The Company intends to extend operations onto government lands, contingent on a positive decision to recommence operations. As part of the NEPA process: 1) State Route 342 will need to be re-aligned in support of the extension of the new pit. Project BEHRE DOLBEAR

12 2) Minor trespasses onto federal land, that have occurred over the last five years, are being managed through a dialog with the BLM. The Plum Mining Company PMC has generally been in compliance with their existing permits and legislative requirements. Early in 2009, PMC received a series of warning notification letters for not submitting reports within the stipulated time frames. The Mine Safety Health Administration (MSHA) fined the Company for minor administrative penalties. PMC has maintained good relationships with regulatory authorities and is well positioned to proceed with the next stage of environmental permitting. During Project hiatus, PMC has reduced its community engagement programs. From the available data, PMC has maintained support within the key communities of interest. To date, there has been no indication of opposition to the Project from national, regional, or local environmental associations, or anti-mining groups. A description of the environmental aspects is found in Section A moderate risk of a delay to the schedule for expanding the operation has been determined because of the complexity of the Federal NEPA permitting process coupled with the need to re-route a portion of State Route 342. GoldSpring has addressed this uncertainty in their sensitivity analysis with a case that assumes an additional year of production from a mining operation on patented ground only. Tailings produced from the small mill treating the higher grade fractions of the resources will be mixed with the crushed low-grade going to the heap for leaching PROJECT ECONOMICS The cash flow spreadsheet included with the Mineral Reserves Declaration Report of The Comstock Mining Company LLC, provided by GoldSpring, Inc., was examined. Mr. William Jennings compiled his own cash flow spreadsheet (without changing GoldSpring s capital and operating costs) and achieved comparable results: Net present value (NPV) at 8% discount rate of $81,760,997, whereas GoldSpring reported $85,609,954, a difference of 4.5%. Mr. Jennings s calculation of rate of return is 52.5%, while GoldSpring s is 53.4%. It should be noted by the reader that these economic analyses were made on the Comstock Mine mineral resources, and not on reserves. They should not be given significant weight, until such time as reserves can be calculated, and costs, etc., used can be verified by at least a preliminary pre-feasibility study CONCLUSIONS Brhre Dolbear believes the CMP represents a well-explored epithermal precious metal deposit within a world-class mining district. The deposit is hosted in structurally prepared rocks within the northwest striking, east dipping Silver City fault zone. Grades and extent of mineralization are enhanced where this fault zone is intersected by east-west and northeast striking faults. The geology of the project area is well described and understood through vigorous surface mapping and drill hole logging. The density of geologic data is high, and the reliability is excellent, particularly in the Starter Pit area. Additional drilling is required in the Expanded Pit area. Drilling and assaying followed accepted industry-standard methods, and the evaluation of QA/QC results is very good. Due to a number of factors, most importantly the lack of a Preliminary Feasibility Study, all of the mineralization is classified as Measured, Indicated, and Inferred, with none fulfilling the NI Technical Report requirements for Reserve status. Additional Project needs include continued in-fill drilling in the Expanded Pit area, initiation of a geotechnical/metallurgical large-diameter drill core program, completion of an EIS, and re-location of a Project BEHRE DOLBEAR

13 state highway. Exploration opportunities to expand the known mineralization down-dip and along strike to the north and south are outstanding and have the potential of doubling the estimated Measured and Indicated Resource Recommendations Geology and Ore Resources GoldSpring is planning a 6-core-hole geotechnical/metallurgical drilling campaign. It is recommended that this program be initiated and perhaps expanded to insure sufficient data is acquired concerning the Expanded Pit scenario; Following completion of this currently planned core drilling program, GoldSpring should carry out at least a preliminary pre-feasibility study to establish new capital and operating costs and thus be able to calculate reserves that conform to NI Technical Report requirements; and GoldSpring should move as rapidly as possible towards completing an Environmental Impact Statement (EIS) for the expansion towards production from the Expanded Pit. Dr. Cameron recommended budgeting additional funds for this task. Behre Dolbear concurs with this recommendation. It should be noted, however, that an EIS sometimes take longer to complete and cost more than expected Mining GoldSpring has assumed ultimate pit slopes of 61º (without a ramp) in its design work and financial evaluations. On request, the pit shell was rerun by GoldSpring in 5 increments to 45º, at which angle there was only a relatively minor change in resources and the stripping ratio from the 61º slope assumed. It is recommended that slope stability studies be performed by an independent consultant to ascertain the correct safe slope for the pit Processing Additional metallurgical testing will be required to guide the final design and capital cost estimates the for processing facilities to maximize the recovery of gold and silver. The samples tested in the work completed by McClelland Laboratories, detailed in prior paragraphs, were obtained from RC cuttings. Drill core samples, representative of the resources to be processed, need to be subjected to both column leach testing, simulated Counter Current Decantation (CCD) leach testing, and Grind, Cyanide, Leach, Precipitation, Agglomeration (GCLPA) testing. It is entirely possible that crush sizes in heap leach could exceed ½ inch, thereby, making the process economics very favorable even when considering a slightly lower gold and silver recovery. This may prove to be very favorable if a single treatment option such as whole ore leach were to be chosen. Project BEHRE DOLBEAR

14 4.0 INTRODUCTION Behre Dolbear & Company, Ltd. (Behre Dolbear) has been retained by GoldSpring, Inc. (GoldSpring) to prepare an NI Technical Report on the Comstock Mine, which is 100% owned or leased by GoldSpring. GoldSpring is in the process of formulating operational and financial planning for the property. To date, GoldSpring has completed only preliminary mine planning, operational planning, and financial analysis, plus considerable permitting work, as described briefly in this report on the Comstock Mine property. The purpose of this report is to provide an independent review and critique of the mineral resources and reserves at the property, together with a statement and review of the work already done by GoldSpring and its other consultants on the preliminary planning and analysis. This report is written in compliance with NI Standards of Disclosure for Mineral Projects. The principal sources of the information and data contained in this report are: the current senior staff of GoldSpring, Inc. (see Section 5.0); Mineral Reserves Declaration Report for the Comstock Mine Project by Dennis Anderson, P.E., Senior Engineer, GoldSpring, Inc., June 30, 2009; and Review of the Reserves Calculations at GoldSpring, Inc. s Comstock Mine Project, Gold Hill, Nevada by Robert Cameron, Ph.D, Robert Cameron Consulting, September 17, This report was prepared by three persons and critically reviewed for quality control by a fourth person. Three of these five individuals visited the property in January Mr. Michael Martin, mining engineer and report manager, is the Qualified Person who wrote the mining and certain other sections and visited the Comstock Mine property and Company offices from January 6-8, Mr. Mark Anderson, metallurgist, is the Qualified Person who wrote the metallurgical and processing sections and visited the Comstock Mine property and Company offices from January 6-7, The Qualified Person who wrote the geology, resource, and reserves sections of the report, Mr. Joseph Kantor, did not visit the Comstock Mine site but had extensive conversations, as well as written communications, with GoldSpring personnel. Mr. William Napier, environmental specialist, under the supervision of Mr. Michael Martin wrote the permitting, etc. section, and visited the Comstock Mine property and Company offices from January 6-8, Mr. William Jennings, financial analyst, reviewed CMP s financial analysis, but did not visit the mine site or Company offices. Mr. Derek Rance, P.Eng. performed critical quality control and technical review of this document. Project BEHRE DOLBEAR

15 5.0 RELIANCE ON OTHER EXPERTS The current information and data contained in this report, or used in its preparation, were in part provided by the following CMP personnel and consultants: James Golden, P.E., Former Chief Operating Officer, GoldSpring, Inc. Laurence Martin C.P.G., Chief Geologist, GoldSpring, Inc. Dennis Anderson P.E., Senior Engineer, GoldSpring, Inc. Michael Norred, President, Techbase International, Ltd. Dr. Robert Cameron, Robert Cameron Consulting It is important to note that the status of the owned and leased patented and unpatented claims that constitute the Comstock Mine Property, as described in this report, has not been verified. It is recommended that a comprehensive legal review be performed as to the status of these leases. Also, no attempt has been made to confirm the legality of licenses conferring the rights to mine, explore, and produce gold, silver, and other metal products, and accordingly the Qualified Persons disclaim any responsibility or liability in connection with such information or data. Figure 5.1 illustrates the CMP land holdings. The topography base map is the USGS Virginia City, 7½-minute quad sheet, 1:24,000 scale, and portions of the Flowery Peak, New Empire, and Dayton sheets. Individual land leases, patents, or mineral entry claims are color coded as per legend description. Project BEHRE DOLBEAR

16 Figure 5.1. CMP land holdings Project BEHRE DOLBEAR

17 6.0 PROPERTY DESCRIPTION AND LOCATION The (CMP) is located in Storey County, Nevada, approximately 3 miles south of Virginia City and 30 miles southeast of Reno, Nevada. The project includes the Comstock Mine, an existing open pit gold and silver mine and heap leach facility that will be redesigned and constructed to accommodate new ore. The CMP is located in portions of Section 8, Township 16 North, Range 21 East, Mount Diablo Baseline and Meridian (MDB&M), Storey County, Nevada. The mine site is adjacent to Highway 342 and south of the towns of Gold Hill and Virginia City, Nevada. The CMP is located on both private lands and public lands administered by the BLM. The location of the Project is shown in Figure 6.1. Between 2003 and 2006, the PMC developed and operated an open pit gold mine and heap leach operation on their properties. A mining contractor was utilized for mining and crushing the ore. PMC personnel operated the heap leach pad and Merrill-Crowe recovery plant between 2004 and During this period, approximately 500,000 tons were mined from the Billie the Kid open pit and 16,175 ounces of gold and 68,514 ounces of silver were recovered. The project was put on care and maintenance status in March 2007, when the focus of the project turned to mineral exploration. Following suspension of operations, PMC has acquired additional properties in and around the historic Comstock mining district and has compiled historic information and performed geologic reconnaissance on its expanded land holdings. In the Hartford Complex, GoldSpring designed and implemented a closely-spaced (50- to 75-foot centers) drill program to adequately define and categorize the mineralized material as mineable reserves. In addition, several drill holes were allocated to test selected target areas along prominent mineralized trends. Over 92,800 feet of reverse-circulation (RC) drilling had been completed by early This definition drilling campaign of has resulted in delineation of open pit gold resources that are the subject of this report. The objective of the development drilling was to provide information necessary for detailed mine planning that will enable the project to resume precious metals production in late 2010/early Concurrently, metallurgical testing was conducted to provide information necessary for processing and design factors. The CMP property boundary is centered along strike of the southern portion of the Comstock-Davidson fault and the Silver City fault, shown on Figure 6.2. Referred to as the Hartford Complex, the CMP includes multiple historic mines along the strike of the Silver City fault, including the New York shaft, the Keystone mine, the Keystone open pit, Justice mine, Alta shaft, Lady Washington, Waller Defeat, Woodville mine, Lucerne open pit, Succor mine, Drysdale mine, Silver Hills mine, and the Billie the Kid open pit. Drilling was concentrated in the Lucerne pit area as it extends northeasterly beyond the Woodville shaft and northwesterly toward the Justice shaft. Centered in the Lucerne open pit and west of the Billie the Kid open pit, geologic mapping and sampling, coupled with limited drilling peripheral to the resource area, have identified favorable geology projected both northerly and southerly. The northern projection of mineralization includes the Justice and Keystone mine areas. Project BEHRE DOLBEAR

18 Figure 6.1. CMP location Project BEHRE DOLBEAR

19 Figure 6.2. Comstock mining district historic mining areas Project BEHRE DOLBEAR

20 Starting in 2006, PMC acquired additional surface and mineral rights in the Comstock Lode Mining District. At the date of this report, CMP controls approximately 590 acres of patented mining claims and 3,648 acres of unpatented claims, for a total of 4,238 acres (see list of claims in Appendix 1.0). The CMP exploration program has conducted surface geochemistry, geology mapping, rock chip, and shallow auger sampling that have identified a number of favorable target areas. The CMP has consolidated exploration and historic production records using Techbase software to generate a computer model of the Comstock Mining District, with the objective of delineating additional geologic targets and identifying promising areas that have not previously been fully evaluated. Project BEHRE DOLBEAR

21 7.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY All-weather access to the CMP is via Nevada State Route 341 from Reno, Nevada to Virginia City, Nevada, a distance of roughly 35 miles. State Route 342, south from Virginia City, provides access to the site, and continues to connect with U.S. Highway 50 and Carson City, approximately 12 miles to the southwest. The CMP mine office, shop, lab, and process facility is located in Section 6, Township 16 North, Range 21 East, Mount Diablo Baseline and Meridian (MDB&M), Storey County, Nevada, approximately 1.5 miles west of Gold Hill on private land. Access to the facility from Route 342 is via American Flat road, an all-weather improved gravel road. The BLM-permitted haul road right-of-way starts at the mine site in Section 8, Township 16 North, Range 21 East, MDB&M, and traverses portions of Sections 5, 6, and 8, Township 16 North, Range 21 East and terminates at the Process Facility in Section 6, Township 16 North, Range 21 East, MDB&M. The haul road right-of-way traverses both private (patented) land and public lands administered by the BLM. Legal access to the plant is granted pursuant to Title V of the Federal Land Policy and Management Act of October 21, 1976 (90 Stat. 2776; 43 U.S.C. 1761), as is access across BLM administered sections. The climate is typical of middle latitude, semiarid lands where evaporation potential exceeds precipitation throughout the year. The Sierra Nevada Mountain Range (Sierras) to the west effectively limits the flow of Pacific moisture into the Great Basin. The mean annual precipitation is about 6 to 18 inches, much of which is snow. The mean annual temperature is about 42 F to 50 F. Runoff is rapid from the mountains, where streams are dry most of the year. The soils generally are well-drained. The vegetation is abundant sagebrush with sparse trees. The nearest towns are Gold Hill and Virginia City, approximately 1.5 miles and 3.5 miles respectively, east of the mine office, but both towns have many vacant buildings and very limited resources. Reno, only 30 miles away, and Carson City, 12 miles away have major resources of all kinds. Infrastructure at the mine site is limited to local water and power and a few old buildings, although the mine offices are adequate for small- to moderate-size operations. The topography in the Virginia range is moderately rugged with elevations ranging from 4,500 to 7,853 feet. The average elevation of Virginia City is 6,200 feet. The Virginia City area is on the westernmost part of the Great Basin, which is a series of northerly trending, linear, fault block mountain ranges rising above intervening structural valleys. Front slopes are abrupt and back slopes are typically gentler. The block faulting began in the middle and late Tertiary period and continues to today. Project BEHRE DOLBEAR

22 8.0 HISTORY Discovery of bonanza grade silver and gold deposits under the present town of Virginia City in 1860 led to development of the Comstock Lode. Production records from 1859 to 1965 were compiled from the Nevada Bureau of Mines, Bulletin 70, The published production figures for the Comstock District are as follows: Gold 8,256,179 troy ounces; Silver 192,010,565 troy ounces; Copper 76,630 pounds; Lead 55,504 pounds. The CMP is centered at the Comstock Mine open pit operation ( ) that expanded the historic Billie the Kid and Lucerne open pits, shown on Figure 6.2. The CMP includes a number of additional historical mining operations along the strike of the Silver City fault zone, including the New York mine, the Keystone Mine, and the Keystone open pit, Justice Cut, Justice Mine, Alta shaft, Lady Washington, Waller Defeat workings, Woodville Mine, Succor Mine, Drysdale Mine, and the Silver Hills Mine. The collection of historic data and detailed geologic features is ongoing and will continue to update the database. Newly-acquired data and new concepts will redefine and improve priority targets and exploration philosophy. Prior to the commencement of the latest surface drilling campaign, GoldSpring initiated a detailed review of previous geologic interpretations to develop new geologic concepts. In conjunction, the historic underground workings that could be reconciled for the entire Comstock District were digitized. The historic workings were reviewed and compared to the new geologic concepts. Multiple exploration targets for future drilling have been generated through this process. The historic underground workings for the Comstock District are illustrated in Figure 8.1. Project BEHRE DOLBEAR

23 Figure 8.1. Comstock historic underground workings Project BEHRE DOLBEAR

24 9.1 GEOLOGIC SETTING 9.0 GEOLOGICAL SETTING Due to its bonanza grade and production of gold and silver ores, its historic significance prior to and during the U.S. Civil War, and its close proximity to major population centers, the world-class Comstock District is well represented in the geologic literature. The papers by Hudson (2003), Dr. Cameron (2009), and especially GoldSpring s Mineral Reserves Declaration Report (Anderson, 2009) were freely used by Behre Dolbear. Additional sources of information are available in the Section 21.0 (References). The Comstock District is located within the western portion of the Basin and Range Province of Nevada between Reno and Carson City. The district lies within a northwestern trending belt of Miocene andesitic rocks that have been block faulted, producing up-thrown horsts and down-thrown grabens. The district exhibits classic hydrothermal alteration that extends well beyond the limits of known mineralization. Placer gold deposits were discovered in 1850, and the lode gold-silver deposits were discovered in The Comstock District soon after became world-renowned and hosted bonanza precious metal orebodies that have been studied by many geologists since The bulk of the production occurred within the years and continuously but at a lesser scale until about Production since 1950 has been intermittent. Over 8.2 million ounces of gold and over 192 million ounces of silver were produced prior to 1965 (Bonham, 1969). Moderate amounts of copper and lead have also been recovered from various base metal rich deposits Regional Geology Mesozoic metasedimentary and igneous rocks are overlain by Oligocene to Miocene ash-flow tuffs. A thick sequence of middle Miocene andesitic volcanic rocks and intrusions host the bulk of the hydrothermal alteration and ore deposits. Some of the magmatic events were directly associated with hydrothermal activity. Major northwest and northeast striking faults are the principal structural ore controls. Relatively recent geologic papers describe the district as hosting several superimposed hydrothermal systems. Pliocene to Holocene reactivation of faults offset many deposits and the associated hydrothermal alteration zoning. Figure 9.1 depicts the regional geology with the GoldSpring property position as an overlay Regional Stratigraphy The oldest rocks exposed in the Comstock District are siltstone and sandstone with minor interbedded limestone of the Lower Jurassic Gardnerville Formation (Hudson, 2003). These rocks are intruded by a fine-grained pyroxene gabbro that crops out intermittently over an area of 12 square miles. These older rocks are intruded by Cretaceous diorite, granodiorite and granite stocks and dikes. In the southern part of the district erosion created valleys and canyons filled with Oligocene to early Miocene felsic ash-flow tuffs. Bonham (1969) described this formation as the +1,000-feet-thick Hartford Hill Rhyolite, consisting of a few feet of basal conglomerate overlain by mostly welded ash-flow tuff and minor ash-fall tuff. More recently, the Hartford Hill Rhyolite has been re-named as the Santiago Canyon Tuff. According to Bonham, K-Ar dates indicate an age of about 23 million years while Bingler (1979) suggests 20.5 to 21.8 million years. The source area (Bingler, 1979) is about 6 to 12 miles to the south. Project BEHRE DOLBEAR

25 Figure minute geologic map (NBMG 2009) and CMP property Project BEHRE DOLBEAR

26 Unconformably overlying the Santiago Canyon Tuff is a thick sequence of probably locally erupted andesite of the early Miocene Alta Formation, the major host rock in the district. The lower portion consists of nearly 1000 feet of interbedded hornblende-augite, augite, and hornblende andesite flows, flow breccias, mudflow breccias, and minor volcanoclastic sedimentary rocks. Castor (2002) dated the lower Alta Formation from to 18.2 million years. The upper portion of the Alta Formation, dated by Castor as to million years, consists of over 2,200 feet of hornblende and hornblendepyroxene andesite flows and rare andesitic breccias. Between the upper and lower Alta Formation is the Sutro Member consisting of 0 to 30 feet of lacustrine siltstone, sandstone, and conglomerate. Intrusive into the older units is the Davidson Diorite, which consists of various phases of mediumgrained, equigranular quartz diorite to andesite porphyry as stocks, dikes, and plugs. Similar intrusives occur to the west and east over an area about 7 miles long and 3 miles wide in a roughly east-west direction. Bonham describes a slightly older unit, the American Ravine Andesite Porphyry, but it is likely that this is part of the Davidson intrusive complex. The Davidson Diorite has yielded a wide range of K- Ar and fission-track ages that overlap the K-Ar age of the Alta Formation. Unconformably overlying the Alta Formation is the Kate Peak Formation, informally divided into a hydrothermally altered lower member and an essentially unaltered upper member of similar composition and texture (Hudson, 2003). The formation consists of hornblende andesite to dacite porphyry flows and intrusives, commonly with phenocrysts of augite and/or biotite, and rarely traces of quartz. The lower member dikes and plugs crop out over much of the district but appear to be concentrated near the productive part of the Comstock Lode. The early intrusive phases, primarily plugs of the lower member, appear to lack strong structural control, but many of the dikes parallel or intrude the Comstock, Silver City and Occidental Lodes suggesting concurrent faulting and intrusion initiated later during Kate Peak Formation magmatism. Following extensive alteration related to the emplacement of the lower member, the area was eroded with an unknown thickness of rock removed, and the upper member was emplaced on what appears to be a surface of relatively low relief (Hudson, 2003). More than 1,500 feet of flows and lahars of the upper member are preserved in fault blocks in the eastern portion of the district, but in most of the district, only a few erosional remnants remain. The next youngest Cenozoic unit is the Knickerbocker Andesite. It occurs in the south end of the district as intrusive masses and flows and as dikes in the Kate Peak Formation. Remnants of a flow of McClellan Peak Olivine Basalt of Pleistocene age occur in the American Flat area in the southern portion of the district. Locally, Pleistocene and Recent alluvium cover older rocks Regional Structure Rocks in the Comstock District were cut by numerous Late Cenozoic normal faults before, during, and after mineralization. The major pre-mineralization and syn-mineralization faults are the east-dipping Comstock, Silver City, and Occidental fault zones. Numerous other faults localize minor alteration and small orebodies. The Comstock fault zone is the major and economically the most important structure in the district. It is traceable for more than 7 miles. The northern portion strikes N15ºE changes to N65ºE at the north edge of American Flat and then turns abruptly south striking N5ºW. For most of its strike length, the fault zone is bounded by nearly parallel faults, and most of the Comstock Lode is confined between these parallel faults, known to the miners as the west wall and east wall. Below the depth of 125 feet, the fault zone dip is 40º to the east and gradually flattens to 35º to the east. The horizontal distance between the two Project BEHRE DOLBEAR

27 walls at the surface is commonly more than 450 feet, but at depth, the true width between the two walls ranges from 0 to about 150 feet. The Occidental Lode (Brunswick Lode) roughly parallels the Comstock fault zone, having a general strike of N15ºE and a dip of about 40º to the east. For most of its strike length, it consists of a single fault but it splays into several branches at its southern end. Behre Dolbear feels these splays are an important structural component in the CMP. The Silver City fault zone is the major northwesterly striking structure in the district. From its intersection with the Comstock fault zone, near the Overman Mine, it strikes about N50ºW for nearly 1.5 miles before curving to a more northerly strike. Historic mapping (Gianella, 1936) indicates that the Silver City fault zone, similar to the Comstock fault zone, is bounded by two parallel faults that dip as much as 65º northeast near the surface and flatten to about 40º northeast at depth. More detailed mapping by GoldSpring geologists and others shows a more complicated structural pattern Regional Alteration Studies of the complicated geology, mineralogy, and alteration in the Comstock District date back to the mid 1860s. The term propylite was first applied to rocks in the district, which Becker (1892) realized were altered andesite. Much more recently, Hudson (2003) recognized 12 spatially overlapping Miocene hydrothermal alteration assemblages or sub-assemblages in the Comstock District. He assigned most of the assemblages to deep low-sulfidation or intermediate-moderate depth high-sulfidation alteration, using the classification scheme of Hedenquist, et al. (2000). Hudson defined the various alteration suites by the presence of essential minerals, common minerals, and uncommon minerals. He characterized the high-sulfidation alteration suite as containing essential minerals of alunite, quartz, pyrophyllite, diaspore, kaolinite, dickite, and cristobalite; common minerals as pyrite and alunite; and hematite as an uncommon mineral. A combined high- and low-sulfidation assemblage includes the essential minerals illite, quartz, and muscovite; common minerals as pyrite and anhydrite; and smectite as an uncommon mineral. The low-sulfidation alteration is divided into three separate propylitic suites and a potassic suite. The essential propylitic minerals include chlorite, epidote, albite, calcite, and quartz; common minerals such as quartz, calcite, zeolites, smectite, K feldspar, illite and pyrite; and uncommon actinolite and muscovite. The potassic suite is characterized by essential amounts of biotite and commonly contains quartz, pyrite, and pyrrhotite, with uncommon amounts of chalcopyrite. An in-depth study of the hydrothermal alteration suites is beyond the scope of this report. However, Hudson produced an interesting schematic longitudinal vertical projection along the plane of the Comstock Lode during mineralization reconstructing the positions of orebodies, vein mineralogy, and general distribution of alteration assemblages (Figure 9.2). The deepest zone hosts quartz stockwork veins and massive quartz. This is followed upward by a zone of quartz-adularia stockwork veins and massive quartz. All the orebodies are developed within the quartz-adularia stockwork-massive quartz zone, with the basal portions of orebodies marked by massive calcite. The next shallower zone contains illite alteration ± anhydrite and in part is superimposed along the top of the quartz-adularia stockwork and massive quartz zone. A sericitic alteration suite is areally limited between illite and quartz-adularia zones. He omitted near-surface alteration due to a lack of data. Project BEHRE DOLBEAR

28 Figure 9.2. Schematic longitudinal vertical projection along the plane of the Comstock Lode prior to post-mineral displacement (Hudson, 2003) District Mineralization The main ore zones in the Comstock District relate to the three main structural (fault) controls: the Comstock, Occidental, and Silver City fault zones. Mineral deposition occurred multiple times, with hydrothermal events superimposed on one another. K-Ar ages of alunite, adularia, and muscovite range from 12.7 to 16.3 Ma. Gangue mineralogy and ore mineralogy are similar throughout the district, but mineral concentrations vary by individual lodes. The lodes are a combination of small, lenticular intermittent ore shoots contained within a much larger mass of lower grade veins, breccias, and stockwork vein zones, complexly rearranged by post-mineralization faulting. With the recent increase in precious metal prices, some of the large masses of lower grade mineralization may be economic. Gangue mineralogy typically is quartz ± adularia, pyrite, calcite, and manganese oxides. District wide, the ore minerals consist of a base metal-precious metal suite, with some minerals found in each lode and others not known or recognized at all. The most common include sphalerite, chalcopyrite, galena, pyrite, acanthite, and electrum. Minor minerals include stephanite, aguilarite, jalpaite, miargyrite, pearcite, polybasite, proustite, pyrargyrite, pyromorphite, sternbergite, stromeyerite, tetrahedrite, and uytenbogaardite (Terrill, 1914; Bastin, 1923; Coats, 1936; Barton, et al., 1978; Vikre, 1989). Native silver, covellite, chalcocite, and chlorargyrite were found in oxidized and partly oxidized zones (Bastin, 1923). Figure 9.3 identifies many of the historic mines and shafts with an overlay of the GoldSpring property position. Note that the Brunswick Lode on the upper right is equivalent to the Occidental Lode. Project BEHRE DOLBEAR

29 Figure 9.3. Comstock mining district historic mining areas Project BEHRE DOLBEAR

30 9.2 PROPERTY GEOLOGICAL SETTING Much of the detailed descriptions of the property geology are based upon the Mineral Reserves Declaration Report (Anderson, 2009). Behre Dolbear has not attempted to reconstruct the geologic scenario. Nonetheless, based upon historic third-party data, the GoldSpring interpretations appear valid. It is obvious that significant effort was spent in a successful attempt to unravel the complex threedimensional structural fabric. The CMP is located in the southern portion of the Comstock District, where mineralization is hosted by the northwest striking, east dipping Silver City fault zone and its cross-cutting intersections with northeast striking faults. Where mineralization outcropped along the Silver City fault zone, several shallow open pits were developed, such as the Lucerne, Billie the Kid, Justice Cut, Keystone, and Overman pits. New mapping and structural interpretations by GoldSpring staff have appreciably added to the understanding of the multiple sub-parallel, moderate- to low-angle brecciated fault zones that are collectively part of the historic Silver City fault zone. The newly recognized sub-parallel individual faults from east to west are the Gold Canyon fault, the Silver City fault, the Billie the Kid fault, and the Drysdale fault. The spacing between these northwesterly striking faults is about 150 feet, while thicknesses of mineralization along individual faults range from 40 to 120 feet. Importantly, the precious metal mineralized zones are enhanced in volume and grade by cross-cutting east-west and northeast striking structures. As noted in older publications, the Occidental fault zone splays into several individual quartz-calcite structures to the south as shown in blue in the southeast portion of Figure 9.4 (Hudson, 2003). The northwesterly of these splays is the Woodville vein. Behre Dolbear speculates that the southerly extensions of these structures are the northeast striking faults that intersect the Silver City fault zone in the vicinity of the Lucerne and Billie the Kid bulk tonnage deposits. The importance of these intersections cannot be overstated for they created the zones of weakness that allowed for hydrothermal fluid flow, stockwork veins, and the potential for bulk tonnage mineralization. Additionally, it has been recently recognized that precious metal mineralization within the Billie the Kid and Lucerne deposits is also spatially related to an east dipping quartz porphyry intrusive dike, which parallels or occupies moderate- to low-angle structures within the Silver City fault zone. The dike intruded along a single structure and then by post dike faulting or post fault intrusion crossed into the next low-angle structure up-gradient. Figure 9.5 depicts the project geology with the most recent stratigraphic column. Project BEHRE DOLBEAR

31 Figure 9.4. Map of the Comstock district showing veins and general distribution of alteration assemblages Note: OL is Occidental Lode. Splays are shown in blue. Project BEHRE DOLBEAR

32 Figure 9.5. Local geologic map with stratigraphic column Project BEHRE DOLBEAR

33 10.1 GEOLOGIC MODEL 10.0 DEPOSIT TYPES The geologic model is similar to other Miocene-aged, volcanic-related, precious metal bonanza and bulk tonnage epithermal systems. Pre-mineralized volcanism included ash-fall, ash-flow, and intrusive activity followed by several periods of andesitic magmatic events. Three major structural features, the Comstock, Occidental and Silver City fault zones, offset the volcanic and minor volcanoclastic units and were critical to ground preparation for later mineralizing events. Pre-mineralized barren quartz, alunite, pyrophyllite, and clay alteration (high-sulfidation style) is zoned outward from mostly discontinuous, crudely radial fractures associated with andesitic intrusions. Blanket-like cristobalite, alunite, and kaolinite alteration exposed at the periphery of the district may be linked to pre-ore alteration near the paleo water table. Later, large tonnages of low grade, precious metal-bearing massive quartz, quartz-adularia, and quartzcalcite were deposited in major fault zones that also localized the younger bonanza grade deposits. Quartz-chlorite-illite-localized muscovite (sericite) alteration (deep low-sulfidation style) developed coeval with vein deposition. Propylitic alteration, evidenced by much chlorite and epidote formed haloes around the higher temperature portion of veins. Adularia and bladed calcite indicate boiling events during the deep low-sulfidation activity. The main stage of gold-silver-copper-zinc-lead bonanza ores was deposited late in the low-sulfidation event in dilatant zones in the major fault zones. Widespread lowergrade mineralization was developed at intersections with cross-cutting structures and in large envelopes surrounding the higher-grade veins. Precious metal-bearing massive calcite and quartz-calcite veins and stockwork veins developed in the lower portions of many deposits. Finally, Pliocene to Holocene reactivation of faults displaced and offset many deposits, redistributing both economic mineralization and hydrothermal alteration zones. Project BEHRE DOLBEAR

34 11.0 MINERALIZATION The CMP includes what was locally known as the Plum Mine, an open pit gold and silver mine and heap leach that operated between 2003 and Approximately 500,000 tons were mined from the Billie the Kid open pit from which 16,175 ounces of gold and 68,514 ounces of silver were recovered. The project area hosts many historic underground mines including the New York, Keystone, Justice, Alta, Lady Washington, Waller Defeat, Succor, Drysdale, Silver Hill and Woodville, and the Keystone, Justice, Lucerne, and Billie the Kid open pits (Figure 11.1). Mineralization within the project drill area is gold-enriched with silver to gold ratios of approximately 10:1. This compares to ratios of silver to gold of 100:1 over the Comstock bonanza ore bodies. Drilling has outlined gold and silver mineralization over a NW-SE strike distance of nearly 1 mile, with in-fill drilling on foot centers over 0.6 mile of that distance. The bulk of the exploration drilling is in the Billie the Kid and Lucerne pit areas, a distance of about 0.6 mile. Precious metal mineralization is controlled by northwesterly striking, eastward dipping faults and is enhanced at the intersections with northeast and east-west striking faults. The spacing between the northwesterly striking faults is about 150 feet, while thicknesses of mineralization along individual faults range from 40 to 120 feet. Importantly, the precious metal mineralized zones are enhanced in volume and grade by cross-cutting east-west and northeast striking structures. Gold and silver mineralization in the project area typically occurs within late stage manganiferous calcitequartz and drusy quartz filling faults, fractures, breccia zone, and stockwork veinlets. Drilling results from show that precious metal mineralization is strongly related to cockscomb and vuggy quartz veining, with or without limonite and locally can have a high percentage of disseminated goethite after pyrite. Coarse, bladed calcite may or may not occur in quartz-mineralized zones, but drusy quartz and micro calcite veining occurring together has been a visual indicator of elevated gold-silver grades during geologic logging of the drill holes. Calcite-dominated vein fillings with sulfides and associated elevated precious metal grades have been identified in the deeper drill intercepts. The majority of the mineralization in the resource area is hosted within the Alta Formation and quartz porphyry. Deeper drilling has identified structurally controlled mineralization hosted within the older volcanic rocks, possibly the Santiago Canyon tuff. It is obvious from a cursory study of the level block model plan sections that contiguous mineralized blocks (both higher and lower grade zones) strike both northwesterly and northeasterly, paralleling the principal pre-existing fault zones. In addition, in some cases, zones of similar grade material terminate along northeast striking features, undoubtedly representing younger movement on northeast striking fault zones. Overall continuity of mineralization is stronger in the northwesterly direction, as would be expected since the primary structural control is the northwesterly striking Silver City fault zone. Project BEHRE DOLBEAR

35 Figure Location of CMP deposits Project BEHRE DOLBEAR

36 12.0 EXPLORATION Within the CMP area, a closely-spaced drilling campaign on 50- to 75-foot centers was designed and implemented to expand and define the deposit at the Lucerne and Billie the Kid pits. Limited drilling northeasterly of the Lucerne open pit beyond the Woodville shaft and northwesterly toward the Justice shaft indicates that similar volcanic stratigraphy and mineralized structural trends continue. South of the Lucerne open pit and west of the Billie the Kid open pit, geologic mapping and limited drilling have identified similar mineralization continuing to the south. Detailed reviews of historic mine reports continue to identify new target areas based on prospective veins, structures, and geology in old underground workings. GoldSpring has also conducted surface geochemical surveys (rock chip and shallow auger sampling), geologic mapping, and limited exploration drilling that have identified multiple favorable targets. Press releases issued in 2009 highlight exploration drilling successes in the Justice area and northerly extensions of the Billie the Kid zone. Based upon the presence of many old mine workings, and wide relatively continuous envelopes of low-grade mineralization surrounding veins, it is reasonable to assume that substantial additional resources will be found down dip of known mineralization and along strike of mineralized fault zones. Project BEHRE DOLBEAR

37 13.0 DRILLING All information in this section was derived from the Mineral Reserve Declaration Report dated June The author did not observe any of the drilling or sampling campaigns and so cannot independently verify the accuracy of the information. In December 2007, PMP commissioned an exploration drilling program in the Lucerne open pit area. The goal was to test down dip and expand along strike the mineralization from the Lucerne pit, operated by Rea Gold Corporation from Prior to the December 2007 drilling campaign, records exist for 514 drill holes. PMP drilled 182 holes between December 2007 and February 2009 (Cameron, 2009) PRE PLUM MINING AND GOLDSPRING DRILLING GoldSpring s database contains both present and past drilling on the property. The current programs began in 2007 and are well documented. Some 514 earlier drill holes have been entered into the database but the data may not be complete for all holes. Table 13.1 lists all of the different drill hole series currently in the database. TABLE 13.1 DRILL HOLE SERIES IN THE DATABASE Drill Hole Series Number of Holes Drill Hole Series Number of Holes 97-x 12 L07-xx 6 BK-xx-0 11 L08-xx 99 BZ01-x 14 L91-xx 164 D90-x 10 L92-xx 37 DK91-x 6 L93-xx 16 E08-xx 45 L94-xx 4 HL-xx-xx 71 L98-xx 12 HLA-x 71 LHRC-x 2 HO-x 4 O-xx-xx 14 K-xx 29 ORC-xx 28 K08-xx 1 P09-xx 22 K09-xx 3 SV09-xx 6 L-x 12 Total Number of Holes 1, RECENT DRILLING CAMPAIGNS AND PROCEDURES The current campaigns, termed the CMP/Hartford Hill Project, starting in December 2007, total 182 holes, and are designated by a letter followed by the year (E08, K08, K09, L07, L08, P09, and SV09). The initial 182 holes (through February 2009), totaled 92,790 feet and cost an average of $31.90 per foot. This all-in cost included the drilling, dozer and support equipment, and down hole surveying, as well as primary and check assays. The drilling campaign was conducted utilizing standard reverse circulation drill equipment (RC). The early 2008 campaign (actually started in December 2007) was contracted to Drift Exploration, located in High River, Alberta, Canada, who operated two MPD-1000 track mounted drill rigs. In October 2008, the program was accelerated with the addition of two additional rigs, a Project BEHRE DOLBEAR

38 Schramm 685 truck mounted and a MPD-1500 track mounted rig, contracted from DeLong Drilling and Construction of Winnemucca, Nevada. Hole diameters vary by the drill rig used for any particular hole. For the Schramm 685, the diameter is 5¾ inches; for the MPD-1500, the diameter is 5 to 5¼ inches; and for the MPD-1000, the diameter is 5¼ to 5 inches. Occasionally, holes were necessarily reduced in diameter to complete the hole. At each site, surface casing was set to protect the collar from collapsing. The holes were cased to bedrock. All holes drilled through mine dumps or mine fill areas were cased through the loose material until competent rock was intersected. Water, on-demand drilling mud and hole conditioners were added to suppress silica dust and maintain the integrity of the hole. Holes were advanced using hammer bits. When adverse conditions were encountered, a tri-cone bit was used to complete the drill hole. After completion of the drill hole and down hole survey, the hole was abandoned by pumping bentonite (expanding clays) slurry from the bottom of the hole to within 10 feet of the surface in accordance with the NDEP and Nevada Division of Water Resources (NDWR) drill hole abandonment regulations. The remainder of the hole was surface plugged with 10 feet of Portland cement. Each drill crew consisted of a driller and two driller s helpers. The helpers had multiple tasks. In addition to assisting in mechanical drill duties, they were also responsible for sample bag labeling (including duplicates), chip tray numbering, sample and chip tray collection, and sample storage on site. The helpers were also responsible for keeping a clean and safe work site and cleaning the wet rotary splitter or dry Jones splitter. Figure 13.1 shows the location of drill samples, while Figure 13.2 depicts the location of historic underground workings in relation to the development drill holes DRILL HOLE SURVEYS Collar coordinates for GoldSpring s drilling campaigns were surveyed utilizing GPS equipment, accurate to within one centimeter. From 2007 through October 2008, the surveys were performed by Telesto Nevada, Inc. From November 2008 through 2009, the surveys were completed by GoldSpring s in-house surveyor. Once a proposed drill hole collar was marked, a Brunton compass, set to a 15½ degree East magnetic declination, was used to align a string line upon the drill pad s surface. Once the string line was positioned on the correct azimuth, the string line was used as a guide for painted stripes, providing an accurate azimuth alignment to aid the driller positioning the rig DOWN HOLE SURVEYING The early drilling in the CMP/Hartford Hill Project did not include down hole surveys. In the 2007/2008 program, four or five holes were surveyed down hole and found to have drifted about 13 feet in 800 feet of depth. After October 7, 2008, drill holes were down hole surveyed if the target depth was in excess of 500 feet. International Directional Services (IDS) from Winnemucca, Nevada completed the down-hole surveys. Project BEHRE DOLBEAR

39 Figure Location map of drill samples Project BEHRE DOLBEAR

40 Figure Historic underground workings and development drill holes Project BEHRE DOLBEAR

41 13.5 LOGGING Reverse circulation drill holes are logged from small, washed, representative chip samples from each 5-foot interval. The samples are stored in plastic containers, and the containers are marked with hole numbers and drill intervals and stored for future reference. Each container has 20 separate storage compartments (representing 100 feet of drilling). GoldSpring geologists logged each hole from the chips and recorded the data on paper forms, which were later entered into a spreadsheet format. Geologic information on rock type, faulting, veining, alteration, iron and manganese oxidation, and sulfides was imported into Techbase for each down-hole interval. Data from the historic drill logs were recast into the new format logging sheets and entered into the Techbase database. Project BEHRE DOLBEAR

42 14.1 SAMPLING PROCEDURE 14.0 SAMPLING METHOD AND APPROACH RC drill samples were collected every five feet from the surface to the hole bottom by passing the entire sample stream into a wet rotary splitter. The wet rotary splitter contains removable pie-shaped platelets that allow flexibility in the size of the representative split collected. GoldSpring maintained a consistent 20:1 volumetric split product at the exit of the sample collection port or tube. A simple Y -shaped exit tube allowed for the collection of two 5- to 10-pound samples which were collected in clean 5-gallon buckets and then poured into pre-labeled 15-inch by 17-inch cloth sample bags. The Y tube was leveled whenever necessary to produce an approximately split between the two buckets. The buckets were rinsed with fresh water and the water poured into their respective sample bags; thus, cleaning the bucket and recombining the fines with the larger sample. The sample bags were tied and placed into larger 24 inches 36 inches rice bags (4 to 6 samples per rice bag). The rice bags were then placed into a crib or crate which had been provided by the principal assay lab, American Assay Laboratories of Sparks, Nevada (AAL). The cribs were then transported daily to GoldSpring s office complex for storage in capped plastic bins for pickup by AAL. The cribs had hinged lids that were locked after the drill shift and unlocked just prior to shipping offsite. AAL were scheduled to pick up the sample cribs near the end of a 10-day drilling shift or AAL-convenient interim period. Predominantly one hole was placed in the shipping crib, but if additional crib room was needed to ship a few samples from another drill hole, a plastic liner separated the two sample sets. The second sample (or second split) was collected by CMP personnel, who perform in-house analyses (drying, crushing, cyanide soluble extraction, and atomic absorption analyses for gold and silver reported in ounce of gold per ton). For additional quality control checks, a duplicate sample was collected from the rotary splitter each 100 feet beginning at a depth of 50 feet. Down hole contamination is not unusual during RC drilling, particularly in broken ground. This is particularly noticeable at rod changes. To minimize or eliminate potential down-hole contamination, at the end of each 20-foot drill rod cycle, the hole was allowed to circulate and the driller stabilized the hole by reaming and dressing the walls of the last 20 feet drilled. When the next 20-foot rod was added, drill rotation was started and down the hole pressures were allowed to stabilize hole conditions. A screen was placed over the discharge of the splitter and was checked for debris that would have its origin up hole. The sample container was re-positioned under the wet rotary splitter only when the driller observed a clean return in the screen. This procedure takes little time but is very successful in minimizing down-hole contamination. Discussions with GoldSpring indicate that excessive water, which would have overflowed the 5-gallon buckets, was rarely encountered; thus, loss of fine material is not an issue. Normally, these RC drilling and drill sampling procedures provide a good representative sample. Poor recovery areas are easily identified. Individual high-grade veins that are less than 5 feet in the down hole direction are diluted with wall rock material. The drill holes were mostly vertical or angled. Most angle holes were drilled across expected structures in an attempt to provide a true width of mineralization. Some holes were drilled in a generalized down dip direction, over emphasizing the actual true width. During 3-D resource modeling, apparent widths of higher grade mineralization were taken into account. Project BEHRE DOLBEAR

43 15.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY 15.1 SAMPLE PREPARATION As described in Section 14.1, the original RC samples were split into two 5- to 10-pound samples utilizing a wet rotary splitter. One set was shipped to AAL, the primary commercial laboratory. AAL sample preparation procedures are as follows: samples are bar-coded and weighed at reception; batch size is 50 samples which are racked to minimize sample swapping samples are dried and individually transferred to various sized stainless steel pans dried samples are jaw crushed (>85% 6-mesh to >95% 10 mesh) samples are Jones riffle split one to four pound splits are pulverized in a Vertical Spindle Pulverizer to 120 to 150 mesh or to 200 mesh if requested a 1-pound pulp is placed in a 3-inch 5-inch labeled pulp packet. Only limited descriptions of the sampling and quality assurance/quality control (QA/QC) procedures followed by historic operators are available. Based on review of the summary reports, the sampling done prior to GoldSpring appears to GoldSpring to have been handled by analytical, geological, and engineering employees, and professional mining consultants. GoldSpring concluded that it was not unreasonable to expect that these persons used sampling techniques in accordance with industry-accepted protocols ASSAY PROCEDURES For the GoldSpring samples, 30-gram (1-assay ton) pulp charges were standard. AAL also offers 15-gram (½-ton) and 60-gram (2-assay ton) options. The sample is mixed with 100- to 180-grams of flux and fused. The assayer makes notes on the quality of each fusion. A lead button is separated and the assayer reports any low weights or slag composition problems. The button is cupelled and the bead is weighed gravimetrically or parted (AAS/ICP). The solution is examined for any undissolved prill, and solution is read AAS/ICP. The results are recorded to enable fire assay personnel to discard any crucible that has a sample >2 pm QUALITY ASSURANCE/QUALITY CONTROL For the GoldSpring drilling campaigns, numerous check samples were conducted to ensure quality control on assay results. Duplicate RC samples were collected from every hole every 100 feet starting at 50 feet and were shipped to AAL for analysis. Commercial standards with various gold concentrations (as prepackaged pulps) were inserted into the sample stream at the pulp stage. Blanks were also added to check AAL results. AAL also inserted their own internal standards and check samples. AAL has a 3-step quality control procedure. Step 1 includes two standards and one blank per batch of 50 assays. AAL requires 90% to 110% of accepted standard value for the sample results to be valid. They require that the blank be less than twice the detection limit for low-level results to be valid. QA charting is continuously updated. The second step quality control is a duplicate run of samples called control (4 per 50 assays). In the initial stages of a project, if a control shows a variation of >20%, AAL analyzes a group of samples around and including the control to determine if there was an analytical problem, a swap, or a sampling problem. If there is an analytical problem, the problem batch is rerun. If there is a sample preparation problem, the Project BEHRE DOLBEAR

44 samples is re-prepared and analyzed in its entirety. The third pass quality control is to repeat any unusual results. This includes low results in high value areas and high results in low value areas. In March and April of 2008, a series of check samples were collected for comparison between AAL and ALS Chemex Laboratory of Sparks, Nevada. Figure 15.1 shows a reasonable agreement between the two laboratories. The mean gold value for the set of samples assayed by AAL was ounce of gold/ton while the mean value for the ALS Chemex set was ounce of gold/ton. Figure Check assay comparisons between American Assay and ALS Chemex Laboratories 15.4 LAB CERTIFICATION AAL (incorporated in 1987) is ISO certified and is a reputable laboratory under the Mineral Exploration Best Practices Guidelines. AAL has participated in all CANMET-PTP MAL studies (certification analyses) twice a year since their inception in They also participate twice a year in GEOSTATS, SMA (US and Canada), and IOAG SECURITY Drill samples were secured in a locked crib each night after the drill shift was completed and remained secure until samples were picked up by AAL. Once samples were in possession of AAL, the lab handled security with their normal procedures. Pulps and RC chip trays are stored at the GoldSpring office complex OTHER ASSAYING On occasion, some samples were submitted to ALS Chemex for their 32-element ICP assay procedure. The results are to be used for mostly environmental purposes, i.e., acid generation potential of waste rock dumps. Project BEHRE DOLBEAR

45 16.0 DATA VERIFICATION GoldSpring s resource and reserve modeling and calculations were reviewed in detail by Dr. Robert Cameron, Ph.D., in September 2009 (Cameron, 2009). In addition, Cameron reviewed the geologic, drilling, sampling, and assaying data. Concerning GoldSpring s geologic model, Dr. Cameron concluded that a great deal of time was spent understanding the three-dimensional geologic conditions and ore controls and that the GoldSpring geologic model supports the resource model. In particular, the structural control by northwest striking, northeast dipping, and northeast striking, southeast dipping fault zones and their intersections is demonstrated in variography studies. After reviewing the geologic cross sections (east-west and northsouth) and the resource block models in section and plan, the author concurs that the geologic model is well supported by the geologic data. Dr. Cameron also concluded that the drilling, sampling, sample preparation, and assaying met industry standards. If the drilling procedures were conducted strictly in accordance with those described in the Anderson (2009) report, then they were to industry standards. The RC samples chain of title is reasonable and the sample collection technique is to industry standards. AAL, the primary assay contractor, and ALS Chemex, used generally on check samples, are well-respected assay laboratories, both personally known to the author. Dr. Cameron physically spot checked assay certificates and compared them to the electronic data and found no errors. The author did not repeat this exercise. Project BEHRE DOLBEAR

46 17.0 ADJACENT PROPERTIES No adjacent properties were reviewed. In a district as large as the Comstock District, there are undoubtedly other patented and unpatented mining properties within the area. Project BEHRE DOLBEAR

47 18.0 MINERAL PROCESSING AND METALLURGICAL TESTING GoldSpring has utilized the services of McClelland Laboratories in Sparks, Nevada to provide base metallurgical testing on samples of RC cuttings. The base testing included bottle roll tests on a multitude of samples representing the three rock types: Alta Andesite, Rhyolite, and Metavolcanic. Results of the bottle roll tests indicated favorable gold recoveries utilizing cyanide leaching. With the successful conclusion of bottle roll tests, column leach tests were performed on composites of high-grade and lowgrade ores. The bottle roll tests were performed at a particle size of <½ inch and achieved gold recoveries in the range of 48.5% to 87.9% at cycle times of approximately 96 hours. Currently several flow sheets for gold recovery have been proposed including low grade heap leaching, gravity separation of the sized high grade ore along with cyanidation of the gravity tails, and pulp agglomeration of the leach tailings with the combined heap leaching of the low grade ore. With mostly favorable cyanide leach results, the one anomalous test is a geotechnical failure of the pulp agglomerated leach tails with low-grade ore when predicted heap construction reaches 30 feet. This test, however, was preliminary and was based on RC drill cuttings. GoldSpring plans additional tests using drill core to clarify the preliminary results. In addition to bottle roll and column leach tests, the various ore types and composites have been subjected to the following metallurgical evaluations: Grind versus Recovery Cyanidation tests, which ground the sample to <100mesh and <200mesh Tyler followed by 96 hours of leaching. For all ore types tested, the samples exhibited very little sensitivity to grind. Bond Crusher Impact Analysis Bond Abrasion Index Bond Grindability Index 15.7 kwhr/st. The samples tested indicate that the CMP ores will have moderate crushing and grinding resistance RECOVERABILITY Column leach testing of the high grade and low grade composites indicates that the resources at the CMP will have heap leach gold recoveries at a <½-inch crush size of 93.8% for high-grade and 76.2% for lowgrade. Silver recoveries will vary from 83.8% to 50.6% for the high-grade and low-grade ores respectively. The head grades for the high-grade and low-grade composites are opt Au, opt Ag, and opt Au, opt Ag, respectively. The pulp agglomeration testing indicated a gold recovery of 87.0% in the low-grade/cyanide tailings column. Silver recovery was 61.2% under the same conditions. The combined gravity concentration, high grade leach, pulp agglomeration test (GCLPA) indicated a possible recovery of 98.4% for gold and 81.6% for silver. It should be mentioned that this technique would be the most capital intensive and would require a thorough geotechnical evaluation and design to support stacking the pulp agglomerated low-grade feed. The recovery in the gravity circuit shown by GoldSpring is high, but the grade of the gravity concentrate is too low to smelt (smeltable gravity concentrates typically grade 5,000 to 15,000 opt. If the gravity concentrates are cleaned up (increased in grade), the gold recovery will drop significantly. While the gravity tailings will be placed in the cyanide leach or on the heap, additional testing is required to indicate the true overall recovery of gold in the circuits being proposed. Project BEHRE DOLBEAR

48 18.2 METALLURGICAL MINERALOGY Comprehensive mineralogy on all ore types and metallurgical products has not been completed as of this date. Preliminary examination has the gold being present as free gold and electrum, with a maximum particle size of approximately 65 mesh or less. Silver is present primarily in electrum and minor amounts as argentite (acanthite) Ag 2 S. The reduced silver recoveries under cyanidation as compared to gold are probably due to manganese interference with the leaching process POSSIBLE PLANT DESIGN GoldSpring is in possession, on site, of various pieces of mineral processing equipment. Among these are the crushing-agglomeration-belt conveying system previously used by PMC to construct the pads that currently exist on the property controlled by GoldSpring. The plant was operating satisfactorily when shut down, but no detailed mechanical analysis of the mechanical and electrical components is currently available. In addition, GoldSpring has secured the agglomeration drum, belt mixers, and conveyor system from the Gooseberry mine, and some of this equipment may be used in the final plant design. A final flowsheet incorporating this equipment, however, has not yet been completed. In addition, the Merrill-Crowe zinc precipitation plant constructed by PMC is still existent at the site. The plant has the potential to support a 3,000-stpd, low-grade ore, heap leach operation and appears to be in good condition. Detailed plant design is required prior to recommendation of the use of the plant in any future operations. The proposed program of flow sheet development and plant design has been outlined by GoldSpring. 1 The suggested program includes: 1) Completion of a process development and metallurgical testing program that allows a final process design flow sheet to be created. This includes the use of drill core samples to form metallurgical composites and the resolution of geotechnical heap leach issues. 2) Production of fixed design criteria that outline all of the basic process and production criteria. 3) Creation of a final process flow sheet and final draft material balance for the plant and for all of the service facilities. 4) Vendor selection and sizing of all process equipment. 5) Production of a detailed material balance for all processes and services. 6) Production of layout drawings (plan & elevation) for all plant processes, including services. This will include preliminary site preparation plans as well as leach pad and ponds. 7) Production of final piping and instrumentation drawings (P&IDs). 8) Production of electrical single-line diagrams. 9) Vendor selection and sizing of all electrical equipment. 10) Detailed design (portions of which can be started without completing all of the previous nine steps). a) site grading and drainage; b) leach pad and ponds; c) building and facility foundations; d) equipment foundations; e) buildings; 1 Stillar, Steve, Memorandum to Kim Drossulis, Telesto Nevada, Inc., Project Development, March Project BEHRE DOLBEAR

49 f) structural engineering; g) pumps and piping; h) electrical systems and wiring plans; and i) instrumentation systems. Completion of steps 1 through 9 above, will when combined with complete geology, mineral resource and reserves, mining plans, metallurgical plans, environmental permitting, marketing, land tenure, and financial analysis provide the essential components of an acceptable feasibility study. Project BEHRE DOLBEAR

50 19.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES 19.1 INTRODUCTION Dr. Robert Cameron, Ph.D. (Robert Cameron Consulting) is a well-recognized authority on computerized mineral resource and reserve calculations and methodology. Dr. Cameron reviewed the GoldSpring resource and reserve modeling and calculations and reran the program (Cameron 2009). He reviewed and discussed all factors, i.e., capping, variograms, density, electronic database, block models, and parameters and Kriging and estimation methods. It should be noted that the Mineral Reserves Declaration Report (Anderson, 2009), that Dr. Cameron reviewed, was written under SME guidelines, not NI Technical Report requirements. He concluded that the reserves (under SME rules) were a reasonable estimate of the potential reserves at the CMP. The author has neither remodeled or re-run the resource, but has visually compared assay cross sections to both block model sections and plans, and finds the block model reasonable. Higher-grade blocks are bounded by structure and have strike directions both northwesterly and northeasterly mimicking the recognized structural controls. Based upon this review, the author agrees with the total mineral resource estimates CAPPING OF ASSAY GRADES No capping of assay grades was performed for the resource calculations. It is a common practice to cap high-grade gold and silver assays to eliminate over estimation of metal content due to outliers; the lack of high-grade continuity between drill holes; and structural controls of high-grade intersects. Based upon variography studies, continuity of grade is good in the down dip direction. During the resource modeling, higher-grade mineralization was constrained by the model and by structural intersections. Higher-grade values do not cross bounding structures, as is demonstrated in the plan block model. Geologic logging also confines the higher-grade mineralization to vein material. The Kriging techniques utilized by GoldSpring have minimized outlier effects. Furthermore, considering that the Project is located within the Comstock District, noted for its bonanza grade veins, the lack of capping high-grade values is not expected to make an appreciable difference in the resource (personal communication with Dr. Cameron, 2010) BULK DENSITY DETERMINATION Tonnage factors were provided for resource estimations by GoldSpring. The tonnage factors were based upon GoldSpring s experience during previous mining in the project area and tests performed by MacTec, Inc. A tonnage factor of 12.9 in-place cubic feet per ton was used for both mineralized and unmineralized material, and 13.5 cubic feet per ton was used for fill material. These factors are in line with results of a 2007 geotechnical test by MacTec, Inc. (Cameron, 2009). GoldSpring is planning additional tests prior to detailed engineering, including whole-rock densities for core samples in order to confirm or fine-tune the factors based upon rock types. Dr. Cameron concluded that the density and tonnage factors, used by GoldSpring, are typical for epithermal precious metal deposits in volcanic rocks and represent little risk to the overall resource determination. The author concurs with this conclusion ELECTRONIC DATABASE Techbase International, Ltd. was retained to build the computerized database to capture all the geologic data related to the project, including both the historic and newly acquired information. Under the direction Project BEHRE DOLBEAR

51 of Michael Norred, the database was designed to include not only the CMP data but also the data on all the Company s property holdings and surrounding areas in the Comstock Mining District. Robert Cameron Consulting was given a copy of the electronic database, which contains: topography; drill hole locations and down hole surveys; assays; geologic logs; property boundaries; and old mine workings. Dr. Cameron did not perform a complete database audit but spot checked the accuracy of the assay and geologic logs from a few selected drill holes and found no errors. The author did not undertake spot checking ESTIMATION PROCEDURES GoldSpring utilized a computerized block model for their resource and reserve estimate. Michael Norred developed the block model, with grades generated using block ordinary Kriging using the Techbase computerized mine design package, which is an industry-accepted, commercially available software. The stages undertaken for estimation were: the drill hole database was compiled and verified; Techbase was used to plot drill hole and topographic information for verification or location data; geologic controls were established by generating mineralized envelopes; 10-foot composites were generated for the drilling contained within the mineralized envelopes; variography analysis was conducted; block grades were estimated using block ordinary Kriging on the blocks within the mineralized envelope; blocks were tagged and categorized as Measured, Indicated or Inferred; adjustments to each of the blocks were made using plots of the old underground workings to account for tonnage already removed by historic mines; and grade and tonnages were summarized MINERALIZED ENVELOPES Mineralization in the project area is controlled by three separate structural patterns. The most important is the northwest striking, northeast dipping Silver City fault zone. Mineralization also spreads out along east-west and northeast striking faults and is enhanced at fault intersections. Gold and silver mineralization is not limited to a single host rock but for the most part is confined to the Alta Formation and an intrusive unit. Deeper mineralization is also found in the Santiago Tuff. Higher-grade precious metal values are surrounded by lower grade values. This geological interpretation allows the treatment of the mineralized zones to be considered as an envelope, which has been used to limit the grade model. East-west sections were plotted showing gold grades, rock types, faulting, and veining. Intersections of the underground workings with the sections were also plotted. An outline was drawn on the section, Project BEHRE DOLBEAR

52 generally following the east-dipping Silver City fault zone, and expanded, particularly along east-west and northeast striking faults, to include all samples with gold grades >0.005 ounce per ton. The underground workings provided geologic inference for extending the mineralized envelopes. The resulting mineralized envelope was then digitized for each cross section. The same process was repeated on north-south sections, guided by the east-west section envelopes. Level maps were plotted for each 10 feet vertically through the CMP resource area. Drill hole intercepts, underground workings, and the trace of the east-west and north-south section mineralized envelopes were plotted. An outline of the mineralized envelope on each section was drawn and digitized. Mineralized envelope outlines were also digitized on each level, as were envelopes for any overburden, mine dump, or backfilled areas. The outlines were used to assign a code for each 5-foot assay, indicating whether it was inside or outside the mineralized envelope VARIOGRAPHY A variogram is a key to the geostatistical estimation of mineralized material. It is a mathematical representation of the degree of correlation between samples versus distance and direction. Variograms were calculated separately for gold and silver assays, and were limited to those samples inside the mineralized envelope. The resulting variograms are shown in Figure On the graphs, the horizontal axis is distance in feet. The vertical axis, labeled Gamma, is the variance between pairs of samples, divided by two. Figure Gold and silver variograms Project BEHRE DOLBEAR

53 GoldSpring calculated variograms for a series of directions before selecting the set of three orthogonal directions showing the greatest continuity. Theoretically, the three sets should mimic the principal fault controls in the project area. The dashed lines show the variogram model, which was selected to fit the data with a smooth curve. The direction of greatest continuity, shown by the red lines is north 65º east, dip 60º, which is essentially down the dip of the Silver City fault zone. The next-greatest continuity, shown in green, was found in the direction north 25º west, sub-parallel to the strike of the Silver City Fault zone with the third direction is shown in blue at north 65º east dip minus 30º, perpendicular to the plane of the fault zone. The parameters for the modeled variograms are shown in Table TABLE 19.1 VARIOGRAM MODELS FOR GOLD AND SILVER Sill Range Range Range Gold Sill N65E 60º dip 1 N25W 2 N65E -30º dip 3 Nugget Spherical Spherical Silver Nugget 0.15 Spherical Spherical Major Axis Oriented N65E with 60º Dip (positive dip is downward) 2 Semi-Major Axis at N25W 3 Minor Axis at N65E -30º Dip Dr. Cameron reviewed the variography model work and believes that it is consistent with the drilling data. GoldSpring s personnel note that the nugget value for gold is 40% of the total sill, and the nugget value for silver is 25% of the total sill, which are both reasonable for a precious metals deposit. The directions of continuity for silver were found to be the same as for gold, although it appears correlated over a maximum distance of 130 feet versus 105 feet for gold. It is also interesting to note that the down-dip continuity for silver is significantly greater, at 130 feet. One interpretation for this finding is that the silver mineralization is more related to the east-west and northeast trending faults, rather than the Silver City fault zone. Another interesting finding can be seen on the plot for the gold variogram. After reaching the sill, the variogram plot drops to a valley, then rises again. This suggests a hole-effect model, with a periodicity close to 150 feet, which is roughly the spacing between the sub-parallel faults making up the Silver City fault zone (Anderson, 2009) BLOCK MODEL PARAMETERS A three-dimensional block model was chosen as the numerical model to represent the deposit in order to estimate the resources and reserves at the CMP. The modeled region selected is the area of closely spaced development drilling, centered on the Lucerne Pit. The block model is 4,110 feet 4,510 feet 1,200 feet and contains 22,243,320 blocks. Table 19.2 shows the major parameters that define the block model in 3D space. Project BEHRE DOLBEAR

54 TABLE 19.2 BLOCK MODEL PARAMETERS Number of Size Distance Minimum Maximum Blocks (feet) (feet) Columns (E-W) ,320,395 2,324,505 4,110 Rows (N-S) ,768,995 14,773,505 4,510 Levels ,629 5,820 1,200 The CMP block model was created with 10-foot cubic blocks. The 10-foot level size matches the proposed mining lift height (40-foot benches, taken in 10-foot lifts). The 10-foot 10-foot block size in plan approximates the selective mining unit derived from the blast hole spacing. The range of elevations included in the block model starts at an elevation of 5,820 feet, which includes all of the terrain in the modeled area. It extends to an elevation of 4,620 feet, which is approximately the bottom of the deepest drill holes from the drilling program. When deeper holes are drilled, the model can easily be extended to include additional levels. Geology was then assigned to the blocks in the block model, based on geological outlines drawn for each level of the model. Each block was assigned a material type: FILL for overburden, dump, and backfill material; ZON for blocks within the mineralized envelope; or blank for un-mineralized country rock. A block fraction was also calculated for each block, representing the proportion of each block below the current topography. The gold and silver grades for each block were estimated using Ordinary Kriging KRIGING DETAILS Ordinary Kriging is an estimation strategy designed to estimate the blocks through a series of successively increasing search radii. These were set at 50%, 80%, 120%, 170%, and 230% of distances approximating the variogram range. At each set of distances, the strategy required at least four samples, and a maximum of 12, with no more than three samples from any drill hole. The practical effect of this limit was to make sure that each block was estimated as an interpolation between at least two drill holes, rather than extrapolating from a single drill hole. The initial search radius at half the variogram range helps to preserve the short-range variability of the mineral deposit, while also limiting the influence of any single drill hole. Expanding the search a step at a time introduces additional data only when needed to estimate a block. For the FILL blocks, which include overburden, mine dumps, pit backfill, and stope backfill, a different strategy was used. Since backfilled material may have come from different distances, it is not geostatistically correlatable, so a Kriging approach is not valid. Instead, the FILL blocks were estimated as the moving average of up to the 10 closest samples within 50 feet of the block center. In addition to the estimated gold and silver grades, the distance to the nearest sample was found for each block. An average distance to the two nearest drill holes was also found and calculated as a percentage of the variogram range. These results were used later to assign resource and reserve classifications to each block. Dr. Cameron reviewed the Kriging techniques and concluded that the techniques used by GoldSpring for Kriging should produce a reasonable estimate of the resource based on the available data. The author concurs with this conclusion. Project BEHRE DOLBEAR

55 19.10 BLOCK MODEL RESULTS Global estimation results from the Kriging work were reported by GoldSpring in their Mineral Reserves Declaration Report of June Table 19.3 summarizes the estimated Measured and Indicated material in the block model, showing grade and tonnage above selected gold values measured in ounces per ton. This simple summary includes all Measured and Indicated material within the mineralized envelope, without consideration of metal prices or other economic factors, and thus should be considered a global mineral inventory tabulation, exclusive of Inferred Resources, within and outside of any potential open pit. The table shows the number of tons available at a series of cutoffs, the gold and silver grades, and the ounces of metal contained in those tons. Au Cutoff (opt) TABLE 19.3 GLOBAL INVENTORY SUMMARY OF CMP BLOCK MODEL Average Grades Tons Au Ag Au (opt) (opt) (oz) Contained Ounces Ag (oz) ,758, ,818 6,524, ,683, ,022 5,971, ,717, ,880 4,717, ,144, ,818 3,503, ,438, ,436 2,547, ,919, ,684 1,884, ,010, ,968 1,432, ,061, , , , , , BLOCK MODEL CHECKS Dr. Cameron reviewed the cross sections and the construction of the mineralized envelopes. Dr. Cameron also performed independent calculations of the block model grades to verify the grade and tonnages reported by GoldSpring. Nearest Neighbor, Inverse Distance, and Kriging calculations were used to check block grade estimates developed by GoldSpring. Dr. Cameron believes that the GoldSpring model is a somewhat conservative statement of the grades and potential contained ounces of gold and silver. The author also reviewed each block model section and plan map for continuity and comparison to drill hole penetrations and found no obvious flaws. An example of a block model section is shown in Figure Figure 19.2 is an expanded portion of east-west section 771,600 North that combines independently produced structural interpretations and mineral block envelopes from the block model. Superimposing the two revealed that the mineral grades honor the structural interpretation. Project BEHRE DOLBEAR

56 Figure Section 771,600 North with modeled blocks and structural interpretation RESOURCE AND RESERVE CATEGORIZATION Definitions of the various categories of mineral resources and minerals reserves under NI Technical Report requirements are shown below. Inferred Mineral Resource Mineral Resources An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. Indicated Mineral Resource An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability Project BEHRE DOLBEAR

57 of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. Measured Mineral Resource A Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity. Mineral Reserves A Mineral reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined. In the GoldSpring block model, the confidence of the estimated grades was determined based on distance and on the number of different drill holes used to estimate that grade. Each block was tagged with a numeric code based on the information as to a potential resource category. The general rules for tagging the blocks were: Blocks within the mineralized envelope and with samples from the two closest drill holes within the variogram range for the gold assays (105 feet down-dip, 65 feet along strike, and 40 feet across the structure) were considered Measured. Blocks within the mineralized envelope and with samples from the two closest drill holes farther than the gold variogram range, but within the range of the silver variogram (130 feet, 90 feet, 130 feet) were considered Indicated. Any blocks estimated as backfill are included in the Indicated category. Blocks within the mineralized envelope but with a distance to the two closest drill holes farther than either of the variogram ranges were considered Inferred. To determine whether a block could be eventually economically extracted, GoldSpring assigned mining costs and recoveries to each block. Average mining slopes of 61º were used for the pit wall design, and a series of potential economic pit shells was generated using a series of gold prices, ranging from $200 to $1,200 per ounce. Examples of various GoldSpring pit shells ($300, $600, $925, and $1,200) are shown in Figure A block was considered mineable only if its value was high enough to pay for any waste material above it. Resources were then categorized and summarized using blocks within the model that could eventually be economically extracted at gold prices ranging from $200 to$1,200 per ounce. Table 19.4 categorizes the Measured and Indicated Mineral Resources at the CMP as presented by GoldSpring and was originally completed under SME 2007 guidelines. The Inferred Resource shown in Table 19.4 is Project BEHRE DOLBEAR

58 estimated as the sum of the Inferred Resource in the $1,200 pit shell plus the additional potentially economic tons estimated within the northern extension portion of the GoldSpring block model, but not included in their pit shells. As stated, the CMP resource is compliant with NI Technical Report requirements. Figure Example GoldSpring pit shells Project BEHRE DOLBEAR

59 TABLE 19.4 GOLDSPRING S CMP MINERAL RESOURCE Average Grade Contained Ounces Tons Au (ounce/ton) Ag (ounce/ton) Au (ounces) Ag (ounces) Measured 12,761, ,000 4,900,000 Indicated 10,152, ,000 3,584,000 Measured and Indicated 22,913, ,000 8,484,000 Inferred 6,613, ,000 1,612,000 Utilizing operating costs, as shown in Table 19.5, a silver price at $18.50 per ounce, and a gold price at $1,200 per ounce; heap leach recoveries of 65% and 30% for gold and silver, respectively; and mill recoveries of 95% and 80% for gold and silver, respectively, the estimated Measured and Indicated Resources are 22,913,000 tons, with an average gold grade of ounce per ton and an average silver grade of ounce per ton as shown in Table This estimation is the combined tonnage and grade of heap leach and mill grade material based upon GoldSpring s internal economic studies and is the same Measured and Indicated Resource previously shown in Table TABLE 19.5 GOLDSPRING S ECONOMIC PARAMETERS FOR PIT SHELL GENERATION Initial Pit Expanded Pit Waste Heap Mill Waste Heap Mill Mining Rate 1,200 tpd 1,800 tpd 600 tpd 6150 tpd 3,000 tpd 1,100 tpd Mining $1.47 $1.95 $1.95 $1.29 $1.63 $1.63 Crush $2.32 $2.32 $2.32 $2.32 Milling $13.34 $9.20 Leaching + Smelt $1.85 $1.85 $1.80 $0.20 Total Cost/ton $1.47 $6.12 $19.46 $1.29 $5.75 $13.35 Gold Recovery 65.00% 95.00% 65.00% 95.00% Silver Recovery 30.00% 80.00% 30.00% 80.00% Project BEHRE DOLBEAR

60 Project BEHRE DOLBEAR TABLE 19.6 MEASURED AND INDICATED RESOURCES Au Ag Total Au Total Ag (opt) (opt) (ounces) (ounces) Tons Recoverable Au (ounces) Heap Leach 10,337, ,000 1, , ,000 Mill 12,576, ,000 6,619, ,000 5,295,000 Total Measured and Indicated 22,913, ,000 8,484, ,000 5,851,000 Waste 1 36,567,000 1 Waste to Ore Ratio at 1.60:1. Note: The term Ore is generic and does not imply Reserve classification or economic viability. Heap Leach gold recovery at 65%; heap leach silver recovery at 30%. Mill gold recovery at 95%; mill silver recovery at 80%. Recoverable Ag (ounces) Technical Report on the Comstock Mine, Gold Hill, Nevada, USA

61 Dr. Cameron suggested that perhaps half of the Measured Resource should be re-categorized as Indicated Resource. As such, if a portion of the Measured Resource blocks were re-classified as Indicated Resource blocks, it would increase the Indicated Resource by the same amount it would decrease the Measured Resource. The total tonnage or contained ounces within the combined Measured and Indicated Resource would not change. Through our review, Behre Dolbear confirms that the resource model and classifications are appropriate and NI Technical Report compliant. Furthermore, the author confirms that the resource estimates prepared by GoldSpring, confirmed by Cameron (2009) are accurate, conform to industry standards, and comply with the standards set out in National Instrument RESERVE STATEMENT (NON-NI COMPLIANT) For a reserve statement corresponding to SME guidelines, GoldSpring applied the Techbase floating cone pit generator to produce a series of economic pit shells, using an economic block model at an average pit slope of 61º. The cost and recovery data used for generating an economic model are shown in Table Various pit shells were generated using gold values ranging from $200 to $1,200 per ounce of gold. The potential resources are combined within an initial Starter Pit and an Expanded Pit. Importantly, the Starter Pit is totally within private land, while the Expanded Pit extends onto United States Bureau of Land Management (BLM) administered lands. Using this scenario, GoldSpring s Mineral Reserve Declaration report reported Mineral Reserves as per SME guidelines These reserves are not compliant with NI Technical Report requirements. There are several factors that concern the classification and extent of Resources and Reserves as per NI Technical Report requirements. Under the NI Technical Report requirements, both Probable and Proven Reserves that have been estimated as per the Anderson Report, require that the economically mineable part of a Measured or Indicated Mineral Resource must be converted into Reserve status by the production of at least a Preliminary Feasibility Study. To date, there has been no Preliminary Feasibility Study. The GoldSpring mine plan does not include ramps. The GoldSpring mine plan does not include mining dilution and ore loss. GoldSpring is planning to execute some in-fill drilling to better define the west edge of the deposit and fill in some areas in the 50- to 70-foot drill spacing within the starter pit. Some of this drilling, in two specific high-grade zones, will be on 25-foot centers. Until the in-fill drilling is completed, some of the areas may not be defined well enough to qualify as a Measured Resource but are sufficiently well-defined to be considered as Indicated Resources. The remainder of the resource (Expanded Pit area) is on Federal mining claims that are on BLM administered lands. This will require the National Environmental Policy Act (NEPA) process to be initiated by the BLM. GoldSpring will need to comply with the NEPA process by preparing an Environmental Impact Statement that evaluates the impacts of the total project on the environment and humans. This process is estimated by GoldSpring to take about four years. Although the outcome is likely to be favorable, at this point in time, the timing for expanding operations is uncertain. GoldSpring has addressed this uncertainty in their sensitivity analysis with Project BEHRE DOLBEAR

62 a case that assumes an additional year of production from a mining operation on patented ground only. State Route 342 must be-relocated in order to exploit the expanded pit resources. This is not a major concern, but it does add a small measure of uncertainty. This issue does not prevent GoldSpring from opening the mine, but could affect the timing for expanding the mine, and could affect a portion of the resource. Thus, based upon the above, a Proven or Probable Reserve cannot be stated under NI Technical Report requirements. When issues in the first three bullets (above) are resolved, it is possible that only the Starter Pit mineralization may qualify as Proven and/or Probable Reserves. The remainder of the potentially economic mineralization in the Expanded Pit, presently classified as Measured and Indicated Resource, would remain so until issues in the remaining three bullets are also resolved. Project BEHRE DOLBEAR

63 20.0 OTHER RELEVANT DATA AND INFORMATION 20.1 NORTHERN EXTENSION HISTORIC RESOURCE Mineralization related to the Silver City Fault Zone does not terminate in the immediate densely drilled Lucerne and Billie the Kid area. On the contrary, the historic Justice, Keystone, and New York Mines are just to the north and are reported to have been mining the same zone. The density of the underground workings in this area is similar to that in the Lucerne and Billie the Kid portion of the structure (see Figure 9.1 for locations of nearby historic mines). Preliminary geologic mapping by GoldSpring geologists indicates that the Justice and Keystone open cuts were made on the outcrop of what GoldSpring identifies as the Billie the Kid fault. GoldSpring has data from 69 historic drill holes, drilled in the Northern Extension area. A number of these holes were used in a Northern Extension Historic Resource estimation. GoldSpring has inventoried a number of Historic Resources through the review of technical reports written by previous mine operators in the Northern Extension area. GoldSpring has documented the date and source of these Historic Resources. The relevance, reliability, and comparison to current categories is not available. The author has not done sufficient work to verify the Historic Resource estimate. GoldSpring is not treating it as a current resource estimate. The Historic Resource estimate cannot be relied upon; however, it is a reasonable expectation of potential mineralization since mineralized outcrops, underground workings and past drilling confirm the existence of mineralization. Table 20.1 shows the Northern Extension Historic Resource. TABLE 20.1 NORTHERN EXTENSION HISTORIC RESOURCE Historic Resource Description Au Ag Tons (opt) (opt) Overman Pit (Remaining Mineralization on West Side of Pit) 70, Tailings from Caledonia/Overman Mill 30, HOM/UMC Tailings Impoundment from Con-Imperial and Loring Pits ( ) 1,350, Gold Hill Pit (UMC 1985 Exploration Summary) 426, Yellow Jacket Dump (UMC 1985 Exploration Summary) 38, Gold Hill Dump (UMC 1985 Exploration Summary) 6, Total 1,920, NORTHERN EXTENSION EXPLORATION POTENTIAL The northerly extension of mineralization beyond the Lucerne/Billie the Kid area has an estimated strike length of 2,700 feet. A portion of this extension is included in the GoldSpring block model. This Inferred Resource is already included within the Inferred Resource category in Table Beyond the limits of the block model, GoldSpring has proposed an exploration potential with as much as 19,000,000 tons with Project BEHRE DOLBEAR

64 an average resource grade similar to already established resources. This mathematical calculation is based upon the resource of 9,135 tons per strike-length-foot over the densely drilled Lucerne and Billie the Kid areas. It should be noted that this assessment is purely conceptual in nature; that there has been insufficient exploration to define a mineral resource; and that it is uncertain if further exploration will indeed result in a mineral resource. However, it is a reasonable expectation of potential mineralization since mineralized outcrops, underground workings and past drilling confirm the existence of mineralization. GoldSpring has budgeted an extensive RC drilling campaign in 2010 to test a number of high-quality exploration targets in the Northern Extension area ECONOMIC ANALYSIS The cash flow spreadsheet, included with the Mineral Reserves Declaration Report of The Comstock Mining Company LLC, provided by GoldSpring, Inc., was examined by Mr. William Jennings, P.E.. Since the cash flow spreadsheet, included with the Mineral Reserves Declaration Report, is in Microsoft Word format, rather than Microsoft Excel format, no formulas are available for checking. The basic input shown on the cash flow spreadsheet was entered into a new cash flow spreadsheet, using its own formulas for Nevada minerals tax, depreciation, and federal income taxes. Using a Base Case gold price of $925/ounce, Comstock Mining determined the net present value at 8% discount to be $85,609,954, while the new spreadsheet determined the net present value at 8% discount to be $81,760,997, a difference of 4.5%. Minor differences are presumably due to Comstock Mining carrying more decimal places in the input data than are shown in the report and the new spreadsheet s determination of depreciation and taxes. It is the author s opinion that the Comstock Mining spreadsheet is mathematically and conceptually correct and is in a format typical of cash flow spreadsheets. The reported sensitivities appear to be correctly calculated. In the Comstock Mining report, a sensitivity is determined at $725/ounce of gold, based on a three-year average price of $ (calendar years ). Gold prices were reviewed for that period, and the average price was determined to be $ The eight-cent difference is considered to be of no consequence. It should be noted by the reader that these economic analyses were made on the Comstock Mine mineral resources, and not on reserves. They should not be given significant weight, until such time as reserves can be calculated, and costs, etc, used can be verified by at least a preliminary pre-feasibility study. Project BEHRE DOLBEAR

65 21.1 MISCELLANEOUS 21.0 REFERENCES American Assay Laboratories, 2010, Procedures Document. Anderson, D., June 20, 2009, Mineral Reserves Declaration Report for the Comstock Mine Project, Storey and Lyon Counties, Nevada, 142 pages. Arnold, J.R., Comments on SEC File No. S , Concept Release on Possible Revisions to the Disclosure Requirements (relating to the Definition of Mineral Reserves ), 4 pages. Ashley, R.P., Silberman, M.L., and O Neil, J.R., 1979, Age of the Davidson Granodiorite and mineralization in the Comstock Lode mining district of western Nevada: U.S. Geological Survey Professional Paper 1150, pp Bingler, E.C., 1978, Abandonment of the name Hartford Hill Rhyolite Tuff and Adoption of New Formation Names for Middle Tertiary Ash-flow Tuffs in the Carson City-Silver City Area, Nevada: U.S. Geological Survey Bulletin 1457-D, p. D1-D19, 1:30,000. Becker, G.F., 1882, Geology of the Comstock Lode and the Washoe district: U.S. Geological Survey Monograph 3, 422 pages. Berger, B.R., Tingley, J.V., and Drew, L.J., 2003, Structural localization and origin of compartmentalized fluid flow, Comstock Lode, Virginia City, Nevada: Economic Geology, v. 98, pp Bonham, H.F., and Papke, K.G., 1969, Geology and mineral deposits of Washoe and Storey Counties, Nevada: Nevada Bureau of Mines, Bulletin 70, 140 pages. Cameron, R., September 18, 2009, Review of the Reserves Calculations at GoldSpring Inc. s Comstock Mine Project, Gold Hill, Nevada, 72 pages. Cameron, R., January 2010, personal communications. Carrington, R.G., 2004, Idealized North Looking Section Through Comstock Lode, Storey County, Nevada: Carrington Consultants report for GoldSpring, Inc. Castor, S.B., Garside, L.J., Christopher, D., Hudson, D.M., and McIntosh, W.C., 2005, Epithermal mineralization and intermediate volcanism in the Virginia City area, Nevada, in Rhoden, H.N., Steininger, R.C., and Virke, P.G., eds., Geological Society of Nevada Symposium 2005: Window to the World, Reno, Nevada, May 2005, pp Calkins, F.C., and Thayer, T.P., 1945, Geologic map of the Comstock Lode District, Nevada: U.S. Geological Survey, 1:24,000. Criss. R.E., Singleton, M.J., and Champion, D.E., 2000, Three-dimensional oxygen isotope imaging of convective fluid flow around the Big Bonanza, Comstock Lode Mining District, Nevada: Economic Geology, v. 95, pp Church, J.A., 1879, The Comstock Lode, its formation and history, Trans. Am. Inst. Min. Eng., New York, 226 pages. CIM Definition Standards for Mineral Resources and Mineral Reserves, Prepared by the CIM Standing Committee on Reserve Definitions, Adopted by CIM Council on December 11, 2005, 10 pages. Edmondo, G., 1991, Relationship between intrusive activity and ore deposition, Comstock Lode District, Nevada: [M.S. Thesis], University of Alaska-Fairbanks, 194 pages. Gianella, V.P., 1936, Geology of the Silver City District and the southern portion of the Comstock Lode, Nevada: Nevada Bureau of Mines and Geology Bulletin 29, 108 pages, 1:27,000. Hedenquist, J.W., Arribas R., and Gonzalez-Urien, E., 2000, Exploration for Epithermal Gold Deposits, in Hagemann, S.G., and Brown, P.E. eds., Gold in 2000; Reviews in Economic Geology, v. 13, pp Hudson, D.M., 2003, Epithermal Alteration and Mineralization in the Comstock District, Nevada: Economic Geology v. 98, pp Project BEHRE DOLBEAR

66 Hudson, D.M., 2005, Brief Summary of the Geology of the Comstock District, Nevada, Geological Society of Nevada GSN Symposium 2005 Field Trip Guidebook #10. Hudson, D.M., Castor, S.B., Garside, J., and Henry, C.D., 2009, Geologic map of the Virginia City Quadrangle, Nevada, Nevada Bureau of Mines and Geology Map, 1:24,000. National Instrument Standards of Disclosure for Mineral Projects, 32 pages. Rea Gold Corp., October 27, 1983, Phase I Completion Report Brunswick Property, Comstock Mining District, Storey County, Nevada: Charlton International, 61 pages. Rose, R.L., 1969, Geology of parts of the Wadsworth and Churchill Butte quadrangles, Nevada: Nevada Bureau of Mines, Bulletin 71, 1:48,000. SEC Guide 7, Description of Property by Issuers Engaged or to Be Engaged in Significant Mining Operations, pp Singleton, M.J., 2002, Hydrothermal Processes at the Comstock Lode Mining District, Virginia City, Nevada: [Ph.D Dissertation], Washington University, Saint Louis, Missouri, 284 pages. Singleton, M.J., and Criss, R.E., 2002, Effects of Normal Faulting on Fluid Flow in an Ore-Producing Hydrothermal System, Comstock, Nevada: Journal of Volcanology and Geothermal Research, v. 115, pp The SME Guide for Reporting Exploration Results, Mineral Resources, and Mineral Reserves (The 2007 SME Guide), September 29, 2007, The Society for Mining, Metallurgy and Exploration, Inc., 47 pages. Thompson, G.A., 1956, Geology of the Virginia City quadrangle, Nevada: U.S. Geological Survey Bulletin 1042-C, 1:62,500. Thompson, G.A., and White, D. E., 1964, Regional geology of the Steamboat Springs area, Washoe County, Nevada: U.S. Geological Survey Professional Paper 485-A, 1:62,500. Vikre, P.G., McKee, E.H., and Silberman, M.L., 1988, Chronology of Miocene hydrothermal and igneous events in the western Virginia Range, Washoe, Storey, and Lyon Counties, Nevada: Economic Geology, v. 83, pp GOLDSPRING INTERNAL REPORTS GoldSpring, Inc., Cost Estimate Report: Comstock Mine Project, Storey and Lyon Counties, Nevada, June 12, GoldSpring, Inc., Metallurgy Report: Comstock Mine Project, Storey and Lyon Counties, Nevada, March 18, MAPS 1) Comstock Lode Project, GoldSpring s Permit Area. Drawn by J.L. Merchant, Dated 01/07/10. 2) Comstock Lode Project, GoldSpring s Claims, Drawn by J.L. Merchant, Dated 01/07/10. 3) Comstock Mining Corporation, Proposed Open Pit Expansion, Undated. 4) Review of Maps of the Site of PMC s Head Office, Reno, Nevada: Figure 1 Location Map; Figure 2 Overview of Hartford Complex; Figure 3 Site Map; Figure 4 Mine Pit and Process Facility OTHER DOCUMENTS 1) Mineral Reserves Declaration Report for the Comstock Mine Project by D. Anderson, P.E., Senior Engineer, GoldSpring, Inc., June 30, ) Modification to the Class 11 Air Quality Operating Permit, March 3, Project BEHRE DOLBEAR

67 3) Nevada Bureau of Mines and Geology, Special Publication L-6 (revised to May 2009; additional update July 2009), State and Federal Permits Required in Nevada Before Mining or Milling Can Begin, Compiled by Doug Driesner, Nevada Division of Minerals. 4) 2008 Vegetation Baseline Report, Comstock Mine, Storey and Lyon Counties, Nevada, Jacquelyn G. Picciani, Consultant, 3530 Deodar Street, Silver Springs, Nevada, ) Review of All Environmental and Health and Safety Files Located at the PMC Site Office, Virginia City, Nevada. 6) Review of the Environmental Impact Statement, dated mid 1990s, Located at the PMC Site Office in Virginia City, Nevada. 7) State of Nevada, Department of Conservation and Natural Resources, Division of Environmental Protection, Bureau of Mining Regulation and Reclamation: Water Pollution Permit; Permit Number NEV ) Fact Sheet Pursuant to NAC 445A.401, Water Pollution Permit NEV INTERNET SITES GoldSpring Website, State of Nevada Website, SHPO Website, Environmental Associations. Project BEHRE DOLBEAR

68 22.0 CONCLUSIONS The author believes that the CMP represents an epithermal precious metal deposit within a world class mining district. The deposit is hosted in structurally prepared rocks within the northwest striking east dipping Silver City fault zone. Grades and extent of mineralization are enhanced where this fault zone is intersected by east-west and northeast striking faults. The geology of the project area is well described and understood through vigorous surface mapping and drill hole logging. The density of geologic data is high and the reliability is excellent, particularly in the Starter Pit area. Additional drilling is required in the Expanded Pit area. Drilling and assaying followed accepted industry-standard methods and the evaluation of QA/QC results is very good. Due to a number of factors, most importantly the lack of a Preliminary Feasibility Study, all of the mineralization is classified as Measured, Indicated, and Inferred with none fulfilling the NI Technical Report requirements for Reserve status. Additional project needs include continued in-fill drilling in the Expanded Pit area; initiation of a geotechnical/metallurgical large-diameter drill core program; completion of an EIS; and relocation of a state highway. Exploration opportunities to expand the known mineralization down-dip and along strike to the north and south are outstanding and have the potential of doubling the estimated Measured and Indicated Resource. Project BEHRE DOLBEAR

69 23.1 GEOLOGY AND ORE RESOURCES 23.0 RECOMMENDATIONS GoldSpring is planning a 6-core-hole geotechnical/metallurgical drilling campaign. The author recommends that this program be initiated and perhaps expanded to ensure that sufficient data is acquired concerning the Expanded Pit scenario: Following completion of this currently planned core drilling program, GoldSpring should carry out at least a preliminary pre-feasibility study to establish new capital and operating costs and thus be able to calculate reserves that conform to NI Technical Report requirements; and GoldSpring should move as rapidly as possible towards completing an Environmental Impact Statement (EIS) for the expansion towards production from the Expanded Pit. Dr. Cameron recommended budgeting additional funds for this task. The author concurs with this recommendation. It should be noted, however, that EIS s frequently take longer to complete and cost more than expected MINING GoldSpring has assumed ultimate pit slopes of 61º (without a ramp) in its design work and financial evaluations. It was requested that the pit shell be re-run by GoldSpring at 45º. This was done and did not result in a major change in resources and/or the stripping ratio. The author recommends that slope stability studies be performed by an independent consultant to ascertain the correct safe slope for the pit PROCESSING Additional metallurgical testing will be required to support optimal flow sheet decisions and subsequent capital spending. The samples tested in the work, completed by McClelland Laboratories detailed in prior paragraphs, were obtained from RC cuttings. Drill core samples, representative of the resources to be processed, need to subjected to both column leach testing, simulated CCD leach testing, and GCLPA testing. It is entirely possible that crush sizes in heap leach could exceed ½ inch; thereby, making the process economics very favorable even when considering a slightly lower gold and silver recovery. This might prove to be very favorable if a single treatment option such as whole ore leach were to be chosen. Project BEHRE DOLBEAR

70 24.0 DATE AND SIGNATURE PAGE The undersigned prepared this Technical Report, titled Technical Report on the Comstock Mine Project, Gold Hill, Nevada, USA; dated 15. The format and content of the report are intended to conform to Form F1 of National Instrument (NI ) of the Canadian Securities Administrators. Signed and Sealed Michael D Martin, Q.P. (Mining) 15 Date Joseph A Kantor Q.P. (Geology) 15 Date Mark A. Anderson Q.P. (Metallurgy) 15 Date Project BEHRE DOLBEAR

71 25.0 ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES 25.1 MINING OPERATIONS Operations The Comstock Mine will be a hard rock operation, mined by one or more open pits, encompassing several of the previously-mined smaller pits and some of the old underground workings. Mining will proceed in three phases. The first phase, called the Starter Pit, is restricted to patented (private) land controlled by GoldSpring. This has the advantage of a simplified permit process, with modifications to existing permits to allow the addition of a small milling circuit to the existing heap leach processing. Concurrent with planning and construction for opening the Starter Pit, development drilling and detailed mine planning will proceed for the Expanded Pit phase. The Expanded Pit will approximately double production, for both mill ore and heap leach ore. The Expanded Pit will also include unpatented mining claims controlled by GoldSpring. In order to mine all of the mineral reserves in the CMP, State Route 342 must be relocated. A final, Ultimate Pit, phase will continue after the road has been relocated. Extraction of ore and waste materials from the proposed open pit mine will be by conventional drill and blast mining techniques using front shovel/truck operations. The initial mine operation is scheduled for eight hours per day, five days per week. Mining will be carried out in 10-foot lifts with final high-wall catch benches left every 40 feet RECOVERABILITY Column leach testing of the high-grade and low-grade composites yielded heap leach gold recoveries at a <½ inch crush size of 93.8% (high-grade) and 76.2% (low-grade). Silver recoveries will vary from 83.8% to 50.6% for the high-grade and low-grade ores, respectively. The head grades for the high-grade and low-grade composites are opt Au, opt Ag, and opt Au, opt Ag, respectively MARKETS The CMP expects to produce only gold and silver. No marketing activities are anticipated to be required CONTRACTS The CMP has not yet entered into any refining, sales, hedging or forward sales contracts or other arrangements as of the date of this report ENVIRONMENTAL CONSIDERATION The purpose of the Environmental Consideration section of this Report is to summarize the Environmental, Safety, and Community aspects of the CMP to determine if there are any significant unresolved environmental liabilities that could lead to significant costs and to determine if there are any fatal flaws that may affect the ability to proceed to the next stage of permitting. Project BEHRE DOLBEAR

72 The development of the CMP Environmental Health and Safety Management System (EHSMS) is at an early stage. The main document including the Environment Policy is located at the mine site. The Environmental Health and Safety (EHS) Policy contains provisions that the Company will conduct its activities in compliance with all environmental laws and regulations. The Policy also applies to the Company s contractors. During the operational phase of the test mine, the CMP undertook a formal risk assessment process to evaluate and rank potential site risks. Since the temporary closure period has been in effect, there has been little work on the EHSMS. The current CMP effort is to maintain compliance with existing permits, regulatory requirements and prepare for the next phase of operations Environment Permitting During the test mine operation between 2004 to 2007, the CMP acquired the necessary operating permits for the Billie the Kid Mine and its leaching operation. In 2007, the Company invoked a voluntary temporary closure mode while continuing with advanced exploration and preliminary engineering. During early 2009, a portion of the Billie the Kid waste rock storage area was reclaimed. No other site work was performed for the balance of the year. In 2009, the Company began to acquire and amend permits in anticipation of resuming operations in The CMP permitting strategy is comprised of three elements: 1) Maintain and comply with existing permits. 2) Where possible, revise and amend permits, allowing for resumption of operations at the nominal rate of 2,400 tpd. The increased production rate will require the construction of new facilities and the expansion of existing infrastructure. 3) Plan and commence the NEPA process to include non-patented lands as part of the design to expand the operations Permits The following shows the current status of state, federal, and county permits either acquired or still required for the CMP (see also Table 25.1) Nevada Permits Nevada Permits Permits acquired or in process to operate at 2,400 tpd. Water Pollution Control Permit (WPCP) The Bureau of Mining Regulation and Reclamation issues the WPCP. The CMP applied for a major modification of their WPCP (NEV ) seeking authorization to process up to 720,000 tons of ore per year. The permit was issued on November 11, 2009 for a five year term. Air Quality Permit The Bureau of Air Pollution Control issues the Air Quality Operating Permit. The application to amend the Air Quality Operating Permit (AP ) is planned to be submitted in early This permit is expected to be issued in mid Project BEHRE DOLBEAR

73 Project BEHRE DOLBEAR TABLE 25.1 PERMIT STATUS COMSTOCK MINING APPLICABLE PERMIT AND REGULATORY COMPLIANCE SURVEY Laws, Regulation, Regulatory Agency Requirements Permit Number Permit Document Nevada Department of Wildlife Nevada Department of Environmental Protection Nevada Department of Environmental Protection Nevada Department of Environmental Protection Nevada Department of Environmental Protection State of Nevada Division of Minerals State of Nevada Fire Marshall State of Nevada Department of Conservation and Natural Resources Division of Water Resources Industrial Artificial Pond Permit Water Pollution Control Permit Reclamation Permit Storm Water General Permit Air Quality Permit Laws Regulating Permit NRS and NRS Hazardous Waste Material Storage Permit Water Use Permit Permit required to operate ponds and impound solution containing chemicals but causing no harm or danger to wildlife Permit required to ensure that ground water quality will not be degraded and public safety and health will be protected Permit required to guarantee the surety amount for reclamation of the project Control and reduce pollution from storm water discharge associated with industrial activity from metal mining Permit to maintain quality of air and reduce pollutants with strict adherence to all conditions and regulations Reporting of discovery of dangerous conditions as a result of past mining practices Storage of hazardous material and chemicals on site MSDS Permission to use and appropriate water for the purpose of mining and processing S24167 NEV #0196 NVR AP Hazmat # #71246-T Technical Report on the Comstock Mine, Gold Hill, Nevada, USA

74 Project BEHRE DOLBEAR TABLE 25.1 PERMIT STATUS COMSTOCK MINING APPLICABLE PERMIT AND REGULATORY COMPLIANCE SURVEY Laws, Regulation, Regulatory Agency Requirements Permit Number Permit Document State of Nevada Department of Taxation Storey County Building and Planning Department Storey County Code Enforcement Department Storey County Sherriff's Department Lyon County Fire Protection U.S. Federal Government MSHA Mine Safety and Health U.S. Bureau of Land Management State Business License Special Use Permit Excavation Permit County Business License Cyanide Tank Permit Health and Safety Regulations Employment and Production Road and Water Line Right-of-Way License to conduct business activities in the state of Nevada Permit to allow 24 hours day operation of mining, processing, drilling and blasting, and exploration drilling for the project - Must be in compliance with State, Federal and local codes. Permit to excavate mining property and ensure that prehistoric or historic remains be preserved when discovered during excavation License to conduct business activities in Storey County, Nevada Permit to allow storage of "special" Cyanide holding tank within Storey County - double walled, contained Training and Compliance during operations; Tracking of employment and production reporting Permit granting right-of-way over federal land for road use from Hwy 341 to fee land property. Rightof-way for above ground water line from water well to fee land property # SUP A # #APN MSHA # N Technical Report on the Comstock Mine, Gold Hill, Nevada, USA

75 Water Use Permit For the past decade, PMC has been permitted (#71246-T0) to use water for mining and processing. Water consumption, when operations resume at the higher production rate, will increase. Two additional wells will need to be drilled. According to the available data and discussions with CMP staff, securing the additional water resources should not be problematic. Storm Water Permit The CMP has obtained from the Nevada Department of Environment a Storm Water General Permit (NVR ). This permit will expire on June 1, This permit needs to be amended once there is a resumption of operations Nevada Permits Nevada Permits Current may need amendment prior to resuming operations. Mine Reclamation Permit The CMP has obtained Mining Reclamation Permit (#0196) issued by the Nevada Department of Environmental Protection. This permit describes the reclamation requirements for the operation. The permit limits the size of the leach pad to five panels, at a maximum height of 40 feet. Currently, only three of the panels have ore placed on them (approximately tons). Since the 13 acre pad is designed with five panels for a height of 105 feet and a total capacity of 2.4 million tons of ore, the reclamation permit will need to be revised to cover the greater height. Four processing and water management ponds (pregnant pond, barren pond, overflow pond, and storm water pond) are located next to the heap pad. Once the operation decision has been made, the leach pad will have to be redesigned to control run-off and maintain heap stability. The CMP will need to seek an amendment to this permit. The current amount of financial surety is $1,170,782 to reclaim the 103 acres of disturbed area. The permit allows for 10 acres to be disturbed as part of an exploration drilling program. A major modification and permit amendment will be required when operations resume. The amendment process will trigger a public notice. The CMP estimates the incremental cost of providing additional financial assurance for the expansion will be $500,000 to $1,000,000. In addition to the bond increase, the reclamation permit amendment will require a significant amount of engineering effort and operational documentation. Industrial Artificial Pond Permit The Nevada Department of Wildlife has issued an Industrial Artificial Pond Permit (S24167). This permit will be updated once operations resume. Water Pollution Control Permit The CMP has a groundwater quality permit (NEV ) used to prevent the degradation of water for public safety and health. Currently, The CMP is in compliance with the above noted permits. These permits require the submission of additional details prior to starting operations. The permits contain typical and standard provisions that do not place any anomalous or additional prohibitions on the Company. The CMP participated in the Environmental Protection Agency Toxic Release Inventory Audit and will be applying for a special mercury air emission permit issued by the Nevada State Department of Environment. In early 2009, The CMP received several Notices and Letters of reprimand from regulatory authorities notifying the Company that it was late on the submission of annual reports or summaries, as required by permit conditions and/or regulations. By the end of 2009, all administrative requirements had been addressed Federal Permits Project BEHRE DOLBEAR

76 Rights of Way Currently, the CMP has obtained a road right of way for the operations from the Bureau of Land Management (BLM). There is a small annual fee associated with this permit. National Environmental Policy Act (NEPA) The Company intends to submit the Plan of Operations to the BLM in late This plan will include a detailed description of all mining and processes. The CMP is proposing a two-phase program. The first phase of the project will be developed on private land. During the second phase, the project will extend onto government lands. The Plan will be submitted to the BLM and will trigger the NEPA process. There are three levels of NEPA review: i) Categorical Exclusion These are activities, usually identified in Policy or Regulations, with known minor individual or cumulative environmental effects. These activities will not require further investigations or assessment. ii) Environmental Assessment An environmental assessment determines if a proposed activity could cause environmental effects. If no significant impacts are identified then the NEPA review process is completed. However, if significant environmental effects are identified, then an Environmental Impact Statement needs to be completed. iii) Environmental Impact Statement (EIS) An Environmental Impact Statement identifies project interactions that could cause a significant environmental impact. The EIS process includes public review and the participation of numerous government authorities. Once the EIS is completed, a Record of Decision is issued. An Environmental Assessment normally takes up to two years; then, if an EIS is triggered, another three years are required to complete this process and obtain a Record of Decision. Occasionally, a Proponent will by-pass the environmental assessment phase if they suspect the project will cause or could cause a significant environmental effect. The CMP has determined that the proposed project (on government lands) will likely cause a significant effect (aesthetics and line of sight on Historic lands) and, therefore, will proceed directly to the EIS phase. Two factors that need to be considered when the project triggers the EIS process are: i) Since the project is located on historic lands, other federal and state departments (for example, the U.S. National Park Service) that may not normally participate in a mine review may become involved. Also, the Project will be subject to the National Historic Preservation Act and the Nevada State Historic Preservation Office. Their participation and unfamiliarity with mining, creates uncertainty. ii) The project will involve re-aligning State Route 342, addressing the Billie the Kid open pit trespass 2, developing a mine and the infrastructure (i.e., cyanide, heap leaching, tailings impoundments) on historic lands, and re-location of certain landowners. Entering a public review process may draw attention to certain aspects of the Project that may cause specific concerns County Permits The Storey County Building and Planning Department has issued a Special Use Permit for the operation of this mine. The County has issued excavation permits, cyanide tank permits, and business permits. 2 See Summary, paragraph vii Project BEHRE DOLBEAR

77 These permits require amendments to accommodate the proposed expansion once operations resume. Throughout 2009, the Storey County Building Department has undertaken inspections of the site. No significant variances have been identified. Currently, all County permits are held within Storey County; however, permits may be required from Lyon County during the phase of operation that will include mining on the joint private and federal mineral estate, beginning three to five years from now Environmental Issues Sulfidic Oxidation Sulfidic oxidation of waste rock, ore stockpiles, tailings, or pit walls can lead to a long-term liability. Permit NEV requires the CMP to perform acid neutralization and acid generation tests on the waste rock. The results have consistently shown the waste rock is non-reactive 3. The ratio of net neutralization potential compared with net acid generating potential is at least 7:1, well within the ratio of 3:1 to 5:1 used as a guide to assess acid generating potential. There has been no testing from the pit walls. However, from the available data, there is little likelihood of a significant risk of acid mine drainage occurring at the site. Ore and Waste Rock Mineralization The mercury mineral cinnabar is associated with the mineral deposit. The CMP participated in the Environmental Protection Agency mercury inventory study 4. No analyses of other potential contaminants such as antimony, arsenic, and cadmium were available. The CMP staff indicated the Comstock ore deposits are noted for the lack of rogue metals/metalloids. Hydrogeology The hydrogeological regime of the mine area has not been characterized in detail or modeled to assess water flow patterns and groundwater quantity. The groundwater table is estimated to be approximately 300 to 500 feet below the Lucerne open pit. Billie the Kid is 150 feet above the Lucerne Pit. Available data indicate the proposed pit depths will not intercept groundwater. The CMP staff believe the pit will remain dry during closure. If a pond does form during closure, the CMP indicated a portion of the Pit will be backfilled. Realignment of Route 342 The pit design will encroach upon the exiting corridor of Route 342. The CMP is proposing a two-stage route alteration. The first stage will be done on CMP land and the second stage will occur after the NEPA process. The CMP staff have been in contact with the Nevada Department of Transport (NDOT) and have hired a consultant to assist in this matter. As part of the realignment, the CMP has proposed NDOT manage the engineering of the road. Historical Contamination The property is located in an area of past mining activity. Along with the historical assets are potential environmental, health, and safety liabilities. If the CMP intrudes onto some of these sites, there is a possibility that the Company will assume, at least in part, the cost of site remediation. For example, adjacent to the current mill is the HOM 30-acre Tailings Impoundment Area. This tailings area has recently been successfully reclaimed by another party. Although no immediate plans are proposed for the site, the area could be used as an additional leach pad location or the tailings could be reprocessed. Another concern is that the CMP could incorporate properties that are part of the Carson River Mercury Superfund Site (the only site in Nevada listed on the Superfund National Priorities List (NPL)). Although the remediation plan for the NPL site concluded no further clean-up work is required, disturbing past workings could trigger further remediation measures. Therefore, the CMP must take a cautious approach when purchasing and developing past workings, including waste rock storage areas, mine workings and tailings impoundment areas. 3 The Fact Sheet for Permit NEV prepared by the Nevada Department of Environmental Protection states: Continued characterization of the waste rock has not indicated acid generating potential. 4 See Permitting Summary on page 3 of this Report Project BEHRE DOLBEAR

78 Encroachment on BLM Land During the development of the Billie the Kid pit, PMC extended the length of the Pit onto BLM lands. Also, the waste rock storage area was over-built onto BLM land. PMC notified BLM of these two trespasses. On July 31, 2008, PMC sent a letter to BLM notifying them of the removal of the waste rock from federal lands and their intention to contour and vegetate the same area. This work was completed in early The Company intends to address the pit encroachment during the NEPA process. Second Encroachment on BLM Land During the 2007 exploration program, PMC mistakenly transgressed onto BLM land without the proper authorization. PMC notified BLM of the violation. The CMP has applied for Notice to Explore on BLM land and to rectify the previous transgression. The permit application is currently under review and its progress is slow, as a result of concern over the loss of historic and cultural resources during the past exploration drilling campaign. The Company will be conducting a further archaeological study in hopes of addressing the concern. Company staff indicated that a fine or mitigation may be levied against the Company. The licensing administrator at BLM considers the incident a minor matter under resolution TAXES Taxes The Project is subject to ST&S sales tax on materials, supplies, and services; to Nevada Minerals Tax; and to Federal Income Tax (which is not applicable for the first 4 to 5 years of operation because of loss carry-forwards). GoldSpring has accounted for these taxes in their financial spreadsheet calculations Royalties GoldSpring has used an average 5% royalty deduction in their financial spreadsheet. The terms of the royalty agreements were not reviewed CAPITAL AND OPERATING COST ESTIMATES A preliminary pre-feasibility study is required to establish new capital and operating costs, thus allowing calculation of reserves that conform to NI guidelines ECONOMIC ANALYSIS See Section MINE LIFE GoldSpring s preliminary estimate of mine life is 14 years. 5 The view was confirmed during a telephone conversation with BLM staff. Project BEHRE DOLBEAR

79 Michael D. Martin CERTIFICATE OF QUALIFICATIONS I, Michael D. Martin of 499, Crawford St., Golden, Colorado, USA certify that: 1. I am a Senior Associate, Behre Dolbear and Company, (USA) Inc., 999, Eighteenth Street, Suite 1500, Denver, Colorado, I am a graduate of Cambridge University, England with an M.A. (Science) in 1955 and of the Royal School of Mines, London University, England with a B.Sc. (Min. Eng.) in I am a member of SME and a Qualified Professional (QP) member Mining, of the Mining and Metallurgical Society of America, QP Member number 01326QP. 4. I have practiced my profession continuously since 1953 and have been involved in management and mining engineering activities for copper, molybdenum, gold, silver, and iron ore projects. As a result of my experience and qualifications I am a Qualified Professional as defined by National Instrument and am a Qualified Person (Professional) for this Instrument. 5. I have read the definition of qualified person as set out in National Instrument (NI ) and certify that by reason of my education, affiliation with a professional association (as defined in NI ) and past relevant work experience, I fulfill the requirements to be a qualified person for the purposes of NI I am responsible for Sections 1.0 to 2.0, Parts of Section 3.0, Sections 4.0 to 8.0, 21.0, 20.2, and parts of Sections 23.0 to 24.0, Sections 25.2 and 25.6 of the Technical Report on the Comstock Mine, Gold Hill, Nevada, USA, dated I visited the Comstock Mine Property on January 6-7, I have had no prior involvement with the property that is the subject of the Technical Report. 9. To the best of my knowledge, information, and belief, my contributions to the Technical Report contain all scientific and technical information that is required to be disclosed to make the report not misleading. 10. I am independent of GoldSpring, Inc. as set out in Section 1.4 of National Instrument I have read National Instrument and the Technical Report has been prepared in compliance with National Instrument and Form F I consent to the filing of this Technical Report with any stock exchange and other regulatory authority and any publication by them, including electronic publication in the public company files on their websites accessible by the public. Dated 15 Signed and Sealed Michael D. Martin, QP Project BEHRE DOLBEAR