The Álamo Project Ensenada, Baja California North. April 2016 Eng. Juan Luis Frias Trevizo

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1 The Álamo Project Ensenada, Baja California North April 2016 Eng. Juan Luis Frias Trevizo

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

3 Location and Access El Álamo is located between the geographic coordinates N latitude and W longitude, with principal access from the Ensenada - San Felipe highway, which intersects a branch to the SW at 91 Km, which in turn connects with the town of El Álamo at 18 Km; the trip requires an estimated time of 1.3 hours. The site includes a landing strip that is currently un.

4 Regional Geology UNITED STATES OF AMERICA The geologic and structural characteristics of the El Álamo mining district can be considered simple up to a certain point, since the study area is comprised of the granitic batholith of Baja California, by formations whose composition varies from granodiorite to quartz-diorite, from hornblende to biotite, of an age corresponding to the upper Cretaceous; it is common to observe the impact of dikes of different compositions, which are well considered both before and after the veins. Beaches of Rosarito PACIFIC OCEAN Capital Municipal capital Municipal boundary Cenozoic, Tertiary, extrusive igneous Mesozoic, Cretaceous, intrusive igneous El Álamo GULF OF CALIFORNIA (SEA OF CORTES) BAJA CALIFORNIA SOUTH Cenozoic, Quaternary, Soil Mesozoic, Cretaceous, extrusive igneous Paleozoic Metamorphic Mesozoic, Jurassic, Metamorphic Mesozoic, Metamorphic Mesozoic, Cretaceous, Sedimentary

5 Preliminary sampling Samples March 2016 El Álamo

6 Areas of interest Area proposed outside the stream for equipment installation Camp and equipment Shaft with water for gold panning 4 inch pump Current gold panning area with current equipment (Drum and Knelson) Area to explore (stream) for panning in 2016 with current equipment a resource of metric tons is estimated requiring a rectangular 25m sampling totaling 90 samples Veins NW-SE 40 are the principal system of mineralized structures Brownstone anomalies to explore as dispersed

7 La Biznaga zone NW of the project, Areas of Interest Current gold panning area with current equipment (Drum and Knelson) Area to explore (stream) for planning in 2016 with current equipment a resource of metric tons is estimated requiring a rectangular 25m sampling totaling 40 samples Veins NW-SE 40 are the principal system of mineralized structures Brownstone anomalies to explore as dispersed

8 52 m 75 m Area 750m long, 75m wide, 2 meters deep and a specific gravity of 1.8 for 202,500 metric tons; to establish the concentration of free gold requires a sampling in pits by excavator with a 25x25 meter grid downstream with a total of 90 samples established 750 m Area 500m long, 52m wide, 1.5 meters deep and a specific gravity of 1.8 for 70,200 metric tons; to establish the concentration of free gold requires a sampling in pits by excavator in a 25x25 meter grid in La Biznaga stream, with a total of 40 samples established 500 m

9 LA PRINCESA MINE LARGE VEIN ALLUVIAL BANK IN THE STREAM TO PAN MARCH 16 PANNING GOLD IN ARTISANAL FORM, SAN DAVID SHAFT AREA FREE GOLD IN PAN DIAMOND BNO IN BIZNAGA AREA COLOR ANOMALY

10 Equipment Status Comments Drum 800 tpd un Evaluate repair Knelson 60 tph un Evaluate repair 10in mobile conveyor belt 17 meters un Evaluate repair CAT 345 excavator John Deere excavator un Evaluate repair 988 loader CarryDozer John Deere (equiv d7) Sullair Compressor Generators 100, 135 y 240 kw Generator Diesel tank liters Lubrication truck Dump truck 12m3 Submersible pumps 4 in Submersible pump 6 in 3 3 1

11 KNELSON DRUM

12 Personnel Quantity Operators 5 Mechanics 2 Electricians 2 Assistants 3 Driver and cook 3 Total 15 Economic sensitivity test for panning gold with current equipment Cost US$/oz Expense US$/month Drum Knelson Diesel 24, Maintenance 20, Labor 14, Food 3, Trailer rental 1, Shipping, other 1, Administration Equipment Drum Knelson Price Oz Au sales Resource tons 272, ,700 Tons/day Tons/month Lifetime/years Conc Au gr/tons Recup % Oz/day Oz/month Sales US$ 75, , Cost US$/Oz Total 67, Note Based on operating 12 hour shifts 6 days per week 26 days per month, the metallurgical recovery will depend on the concentration of gold to be confirmed by assay, granulometric analysis, continuity of the operation and the condition of the equipment as well as the economic recovery will be a function of the price and net liquidation including point of entry and cost of delivery. Profit US$/mes 7, , Profit margin % T.C 17.50

13 Conclusions Excavations in 25 meter grid to obtain samples and assign gold concentration to the resource estimated at 272,700 metric tons in the Encampment and Biznaga stream, 130 samples in total. Semi-detailed mapping of areas of interest both for gold panning and to explore dispersed deposits from which gold can be recovered by gravimetric concentration requires obtaining 100 samples distributed in the color anomalies mentioned in the area of encampment and Biznaga As well as the chemical analysis of the samples, a rated granulometric analysis is required to improve the operating parameters of both the drum and the Knelson. The execution of the sampling and semi-detailed mapping for the areas mentioned requires 12 days. The topographic map of the mining concessions to be elaborated with contours at minimum every 10 meters. The startup cost of the equipment currently un as well as the best distribution and location of the equipment to be carried out by a specialist who will be recommended. The maps of mineral concessions assigned to AIVN DE MEXICO are required immediately, and to know who surrounds these concessions or if they are free and we determine which are of interest to immediately claim. To obtain the permission of the owners of lands where we are going to work in the areas of interest mentioned, both for gold panning and for exploration of dispersed deposits. To investigate the permits before SEMARNAT (Secretary of the Environment and Natural Resources) to obtain information on the streams, if you think it necessary. It is important to put the Knelson concentrator in operation since the coarse gold in the feed is that which produces a good recovery A lower counterpressure of water generates a better recovery; its reduction permits the concentration of finer gold particles given the lower force of the water current The water provided by the San David shaft section 2x2.5 meters and 90 meters deep is located at 650 meters from the encampment and requires gauging to determine if it is sufficient for the process which requires a minimum of 17 m3/hour of clean water, 204 m3 in the 12 hours of daily operation. The granulometry of the material and/or mineral feed is the most important variable (rated granulometric analysis)

14 Conclusions The economic sensitivity analysis of gold panning - the best results are with the Knelson controlling the variables such as granulometry, constant feed and counterpressure of water; the concentration of 0.30 gr/ton in this analysis is information estimated by Eduardo Baoullosa and would require determination of the sale price per ounce. The increment in the margin of the Knelson vs. the drum is the recovery; 65% vs 45% respectively The estimated total cost of the work described for a second visit of the project is US$ 11,760, 59% of which are the analysis of the 230 samples shown in table 1. The chemicals analyzed in Chemex are Au by absorption (AA23) and Ag + 35 elements by plasma (ICP41) TABLE 1 Activity Responsible Execution time Unit Total cost/us$ Mining concession map JG Immediate Topographic map contours 10 meters JG Immediate Permits landowners areas of interest JG Immediate Sampling of the areas for gold panning 130 JLFT 4 days samples (Chemex Laboratory) Sampling of the areas for exploration of JLFT dispersed deposits 100 samples (Chemex Laboratory) optional in this visit, recommended to take advantage of the trip and to expand the zones suitable for panning gold Granulometric analysis and gravimetric JLFT concentration tests, laboratory in Chihuahua Sampling fees JLFT 4 days Semi-detailed mapping fees JLFT 8 days Vehicle rental JLFT 12 days Excavation of pits (Diesel and Operator) JLFT 2 days Airline ticket Chihuahua-Tijuana JLFT Hotel Ensenada JLFT Gasoline JLFT Food JLFT Evaluation of the rehabilitation of equipment; a JLFT, VFT 2 days person will be recommended Airline ticket Chihuahua-Tijuana José García Juan Luis Frias T. Víctor Frias T. Total 11760