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See Figures 1-4 for detailed images showing sample results. The sampled areas were between the mined out sections of the vein (stopes) from the historic work in the 1940's which, in all probability, had better grades and/or thicknesses as they were mined out, whereas the material sampled by Kimber was left behind.

Description of style of mineralization and geology

In addition to confirming the favourable nature of the gold and silver mineralization along the Carmen vein structure, sampling of several cross cut drifts driven into the hanging wall and footwall of the principle vein correlate well with the modeling of the disseminated mineralization in the adjacent wall rock that surrounds the higher grade zones. Comparison of the cross cut samples with nearby reverse circulation and core drill holes provided further support of the geological model at Carmen. For example, sample results from the hanging wall mineralization exposed in the first cross cut drift over 26 metres of sample width averaged at 0.28 g/t gold, 61.9 g/t silver for 1.46 g/t gold eq. adjacent to the Carmen vein.

Of special interest was the observation that the more permeable TBX and FTU lithological units allowed dissemination of the mineralizing fluids into the rock adjacent to the Carmen and Hilos vein structures. The more massive and brittle PQ unit was favorable for formation of vein stockworks and breccias. The TBX unit is a volcaniclastic unit consisting of mudflow (lahar) deposits deposited in paleo-river channels eroded in the underlying volcanic tuff deposits. Rounded boulders and cobbles of altered volcanics are surrounded by volcanic ash and sandstone that are permeable to the hydrothermal fluids, allowing the mineralization to spread laterally out from the vein structures. Similarly, the FTU unit, a weakly to moderately consolidated volcanic breccia deposit found beneath the TBX, has good permeability allowing for the mineralization to disseminate into the surrounding country rock. The PQ unit is interbedded with the TBX and FTU units, and consists of thick, massive lava flows of rhyolite to rhyodacite quartz porphyry that is a dense and brittle host rock. This unit hosts stockwork and breccia hosted mineralization adjacent to the veins, especially where secondary hanging wall veins such as the Carmen splays (see samples S049 and S058) and Hilos 1 and 2 vein intersections.

Description of the current work program and history of the underground mining

The underground work program initiated at the Carmen deposit was aimed at providing more than 650 metres of underground access to high-grade gold-silver mineralized structures, including the Carmen and Hilos structures (see figures 2 and 3 below). Thus far access has been achieved within all four of the targeted adits and total access exceeds 965 metres within the historic underground mine workings. Levels rehabilitated currently include Hilos Mine levels 0 and 1 (results released on December 20, 2012) and Carmen Mine levels 1 and 3. Assay results have been received for sampling on the Hilos levels 0 & 1 and Carmen 1 level. Rehabilitation and sampling continues on the Carmen Level 3 workings.

Figures 1 & 2 show the spatial relationship of the historic workings with relation to the proposed Open Pit as outlined in the 2011 Preliminary Economic Assessment (the "PEA"). While the levels being sampled are within the proposed Open Pit, the sampling and mapping will provide important insight in respect of the continuity of the same vein structures below the proposed pit bottom. This information will be incorporated into the ongoing economic and engineering studies of the Carmen deposit development alternatives.