Medinah Minerals, Inc. - Compliance Officer

The following are selected excerpts from the June 19, 2000 Howe Chile Limitada report on the Alto de Lipangue and Los Dos Marias gold/copper properties.
The complete report is available for viewing at the corporate offices of
Medinah Mining, Inc.

GEOLOGICAL REPORT
ON THE
LIPANGUE AND LAS DOS MARIAS
GOLD-COPPER
PROPERTIES
METROPOLITAN REGION, CHILE
FOR
MEDINAH MINING INC.

Report No. 0029
Howe Chile Limitada
(A.C.A Howe International Limited – South American Office)
La Serena, Chile

Robert Cinits, P.Geo.
June 19, 2000

TABLE OF CONTENTS

SUMMARY

1.0 INTRODUCTION

General
Terms of Reference
Scope, Sources of Information, and Disclaimer
Units and Currency

2.0 LOCATION, ACCESS AND PROPERTY DESCRIPTION

2.1 Location and Access
  2.2 Geography and Climate
  2.3 Property Description and Current Status
  2.4 Acquisition & Maintenance of Mineral Rights in Chile

3.0 CHILE

3.0 CHILE
3.1 Introduction
3.2 Geography
3.3 Climate, Vegetation and Drainage
3.4 Demography
3.5 Business Investment Climate in Chile
3.6 Mineral Resources of Chile
3.6.1 Gold and Copper Production in Chile

4.0 GEOLOGICAL SETTING

4.1 Tectonic Setting of Central and Northern Chile

5.0 HISTORY

5.0 HISTORY
5.1 Lipangue Property – History and Previous Exploration Work
5.2 Las Dos Marias Property – History Previous Exploration Work
5.3 Medinah Exploration Program - Lipangue
5.3.1 Phase I – Reconnaissance Over the Lipangue (and Dos Marias)

6.0 PROPERTY GEOLOGY AND MINERALIZATION

6.0 PROPERTY GEOLOGY AND MINERALIZATION
6.1 Lipangue Property Geology
6.1.1 Lipangue Property Mineralization
6.1.1.1 Lipangue Breccia
6.1.1.2 Quartz Vein Mineralization
6.1.1.3 Howe Verification Sampling
6.2 Las Dos Marias Property Geology
6.2.1 Las Dos Marias Property Mineralization
6.2.1.1 Shear Zone Hosted Gold Mineralization
6.2.1.2 Manto Style Copper Mineralization
6.2.1.3 Howe Verification Sampling

7.0 CONCLUSIONS AND RECOMMENDATIONS

7.0 CONCLUSIONS AND RECOMMENDATIONS
7.1 Conclusions
7.2 Recommendations
7.2.1 Lipangue Property
7.2.2 Las Dos Marias Property

8.0 PROPOSED BUDGET

8.0 PROPOSED BUDGET
8.1 Lipangue Property
8.2 Las Dos Marias Property

SOURCES OF INFORMATION

CERTIFICATE

SUMMARY

At the request of Mr. Gregory Chapin, President of Medinah Mining Inc. ("Medinah"), a public New York company (NASDAQ – OTC) with offices located at 148 South Main Street, Lake Elsinore, CA, 92530, U.S.A, Howe Chile Limitada ("Howe"), which is a wholly owned subsidiary of Howe International Consulting Ltd, and part of the A.C.A Howe International Limited group of companies, was retained to review the exploration and mining activities completed to date over the Lipangue Gold-Copper-Silver, and Dos Marias Gold+/-Copper Properties. The properties are located in the Metropolitan Region of Chile, approximately 30 kilometres northwest of Santiago.

Howe was retained by Medinah on March 28, 2000 with the terms of reference for this assignment consisting of the preparation of a qualifying geological report complying with Canadian reporting guidelines as set out in proposed National Instrument 43-101 (scheduled to replace National Policy 2A), covering the mineral potential of the Lipangue and Las Dos Marias Properties. This report will update and replace a previously prepared Howe report (Geological Report on the Lipangue and Las Dos Marias Gold-Copper Properties, Howe Chile Limitada Report #0025, August 2, 1999). It is Howe’s understanding that this report is required by Medinah in support of a financing with the NASDAQ-OTC Stock Exchange.

The Lipangue Property consists of a total of 5 claims (3 mensuras and 2 manifestacions) covering 1,363 hectares. The Dos Marias property consists of one "mensura" (mining claim), which covers a total of roughly 130 hectares. Both the Lipangue and Dos Marias properties are currently held 100% by Medinah, through their wholly owned Chilean subsidiary Medinah Mining Chile, and were acquired by Medinah through a purchase agreement with the previous owner, Juan Jose Quijano ("Quijano"), which became effective on April 23, 1999. Medinah has recently purchased a pre-existing royalty commitment from Quijano for preferred shares of Medinah and retains the right to re-purchase 50% of these shares for future financings.

The project area is located in central Chile, approximately 30 kilometres northwest of Santiago in the coast range mountains at an elevation of approximately 2,000 metres. The properties can be easily reached from Santiago along a paved highway to the town of Lampa and then along approximately 13 kilometres of 4 wheel drive roads which climb to an elevation of about 2,000 metres to the Altos de Lipangue plateau. The Lipangue property covers the majority of the plateau, while the Dos Marias Property is located on it’s western slopes. Dirt roads pass through the middle of both property areas, and from here most other parts of the properties can be reached in a truck or by foot along dirt roads and trails.

The nearest city with any reasonable infrastructure is Santiago, however the most basic exploration supplies can be purchased in Lampa, approximately 1 hour driving time from the property. Deep water ports exist in the cities of Valparaiso and San Antonio on the Pacific coast, approximately 65 and 70 kilometres direct distance northwest, and southwest of the property, respectively. Electrical power, sufficient only for local town use, and telephone services currently exist in the town of Lampa, however a major power grid runs just west of Lampa. Telephone service in Chile is excellent, most of it being connected to a fiber optic network while the cellular network covers most major cities and has reception from the Lipangue Property and higher elevations of the Dos Marias Property.

The Andean region of Chile attained the status of a major gold province as a result of gold exploration successes started in the late 1970’s and continuing since then. The majority of the new discoveries are of epithermal, or porphyry type, however pluton related vein and metasomatic related discoveries were also made. A large portion of the deposits are related to porphyry systems as high sulphidation mineralization above, or low sulphidation and contact metasomatic mineralization around, the porphyry-type mineralization. Most of the exploration over the past 20 years or so has focused in the high cordillera where infrastructure is almost non-existent and harsh winter and high elevation conditions prevail. Very little exploration was concentrated in the lower elevation coast range mountains and as such, prospects such as Lipangue and Dos Marias remain largely unexplored.

The Lipangue and Dos Marias Properties are located on the "Altos de Lipangue" which is a relatively flat, northeast elongate plateau covering an area approximately four kilometres long and one to two kilometres wide. The plateau, and its western flanks (which includes the Dos Marias Property), are underlain by a volcanic sequence, intercalated with continental and marine sediments which are intruded by Upper Cretaceous aged granitic rocks of the central batholith. The area surrounding the properties is host to several diverse types of metallic mineralization such as vein, stratiform, stockwork/breccia, skarn, and shear zone hosted copper/gold/silver mineralization which occur in a variety of geological environments.

The area surrounding the Lipangue and Dos Marias properties has been exploited since Spanish conquistador times both for the alluvial gold and the oxidized portions of the high grade quartz veins. Evidence of hand cobbed placer activity can be seen in many locations over both properties. Although several "pirquineiro style" mining operations started in the area about the turn of the century, the first well documented mining activities were in the Fortuna de Lampa mine, just east of the Lipangue property which was active over an approximately 30 year period between the early 1940’s and the late 1960’s. During this time the property saw intermittent, small scale, mining activity on a narrow vein style gold deposit which reportedly produced almost 2,000 tonnes of vein style mineralization grading 63.9 grams gold/tonne, 51.2 grams silver/tonne, and 0.2% copper.

The Dos Marias Property is host to numerous old adits, shafts, and pits which are located along the Quebrada Durazno and surrounding hillsides in the vicinity of the old Dos Marias Mine. The workings on the west side of the creek are the oldest and most extensive and appear to have been exploiting gold rich quartz veins and pyritic zones within a shear zone. The timing of this work is unknown, but early diggings and gold placer operations further north down the creek, may date back hundreds of years, possibly to Spanish colonial times. No data regarding these mining activities were made available to Medinah and it is unknown as to the amount of gold (+/-copper?) mined and processed, the average grade, or the extent of the workings. More recent adits have been excavated into the hillside on the east side of the creek following several copper +/-gold mineralized manto horizons. Based on the limited amount of dumps, it appears that this material may have been hand cobbed and hauled to a plant for milling. Similar to the other workings, no data documenting this previous mining activity was forwarded to Medinah.

The first documented exploration program over the Lipangue Property, that Howe is aware of, was completed by Shell (La Division Metales de Shell Chile S.A.) in 1985 as part of a reconnaissance regional exploration program over the Altos de Lipangue plateau. Shell’s project covered a northeast elongate area of about 7 to 8 kilometres by 2 kilometres wide and included ground presently covered by Medinah’s Lipangue and Dos Marias Properties. The most positive results were returned from a very limited mapping and sampling program over the Lipangue Property where they outlined what they believed to be a roughly east northeast elongate area of subcropping hydrothermal breccia. Even though at the end of their limited program this breccia remained for all intent and purpose, unexplored and had unknown strike and depth potential, they still believed that it represented an excellent precious and base metal target that could host a significant resource.

The Lipangue Property

The Lipangue Property is underlain by a generally north striking, east dipping volcano-sedimentary sequence of rocks which corresponds with the Ocoa and Purehue Members of the Veta Negro Formation, and which, to the east, is intruded by Cretaceous aged granodiorite of the central batholith. The contact zone with the granodiorite runs roughly north-south through the central portion the property, between the Lo Amarillo and Cerro Negro knolls and is host to the recently discovered Lipangue gold-copper-silver breccia pipe.

The Lipangue Property was first obtained by Medinah in 1998, and after the initial Phase I review by their consulting geologist Gordon House it was highly recommended as a potential target for polymetallic breccia style mineralization. Medinah’s second phase of exploration, which took place between September 13^th and October 8^th, 1998 consisted of gridding, geological mapping, and an IP/resistivity survey which further outlined the surface extent of the breccia target and defined several geophysical targets that would be drill tested during the next phase.

The Phase III work program occurred between February 8^th and April 18^th, 1999 and consisted of 1,652 metres of diamond drilling in 7 separate holes. Individual holes ranged in depth between 70 and 348 metres and were all targeted to intercept the Lipangue gold-copper-silver mineralized hydrothermal breccia.

The Phase IV work program, the most recent phase of exploration, took place between August 1999 and April, 2000 and consisted of fill-in grid lines that were covered by an second IP/resistivity survey, geological mapping, and 1,181 metres of diamond drilling in 5 holes, all designed to further outline the Lipangue breccia. By the end of this most recent phase of exploration work, Medinah had outlined the surface extent of the breccia which occurs as an east-west elongate, ovoid shaped body that outcrops in trenches over an area measuring roughly 150 to 200 metres (east-west) and up to 100 metres wide. The drilling has traced the breccia 100 metres along strike and 250 metres down its apparent dip to the south, where it has continually averaged between 50 and 75 metres in thickness.

Surface exposures of the breccia are heavily oxidized and consist of rounded to subangular clasts of intensely altered granodiorite, cemented by a matrix of crystalline quartz and limonite and iron-oxides. Limited sampling of previously excavated trenches indicates that the oxidized portions of the breccia are heavily leached and are only weakly anomalous in gold, copper, and silver.

The drilling indicates that the oxidation level varies between 25 and 50 metres in depth, below which it steeply plunges to the east southeast and consists of rounded and sub-angular clast and matrix supported fragments of altered granodiorite (varying amounts of fine disseminated and coarse "earthy" chlorite, along with sericite, silica, clay +/-pyrophyllite and alunite?). The fragments are set in a matrix of finer grained fragments and flour, along with coarse crystalline vuggy quartz, 1 to 15% coarse anhedral blebs of pyrite, chalcopyrite, and in places chalcocite (replacing chalcopyrite), sphalerite, and galena. Fine disseminated pyrite (trace to 5%), and lesser amounts of chalcopyrite are common throughout the granodiorite fragments. Late quartz veinlets, generally less than a centimetre in width, cut the breccia in places, and are mineralized with pyrite, chalcopyrite, and at times chalcocite, sphalerite and galena. Although the breccia is almost continually mineralized across its width, the intensity of both alteration and sulphide mineralization is variable and the most intense sulphide mineralization usually occurs near the hanging wall contact.

Even though the two drilling programs by Medinah have been completed over a fairly restricted area, with all of the 12 holes occurring within a 350 metres radius of each other, nine of these holes have intersected significant thickness of variably altered and mineralized breccia. These nine holes that intersected the breccia have been drilled on 4, north-south oriented, irregular spaced sections (separated by 25 to 50 metres) which cover a 100 metre east-west distance. Two of the early holes from the first drill program were collared approximately 120 and 220 metres further to the east in an attempt to trace the breccia along strike in that direction, but failed to intersect it. The IP/resistivity survey (completed by Geodatos on behalf of Medinah in 1998) indicates that an eastward plunging polarized body continues another 400 metres east of the known surface extent of the breccia, and that the top of the breccia could be as deep as 120 metres by this point. The breccia may have a strong east to east northeast structural control, and therefore could evolve into a narrower breccia-dike or brecciated fault much further to the east.

The 5 drill holes along section E crossed the breccia at its widest point where it continually averaged between 50 and 75 metres in width, and was traced down a –60º south apparent dip for about 250 metres where it remains open at depth.

Geochemical analysis completed by Acme Analytical on the Medinah drill hole samples indicate that the breccia below the oxidation level, is anomalously mineralized over most of its entire width, with significant weighted averages of gold, silver, and copper as shown below:

Drill hole L99-03

	1.72 grams gold/tonne, 10.07 grams silver/tonne, and 0.40% copper across 84 metres; and,
	0.37 grams gold/tonne, 2.88 grams silver/tonne, and 0.04% copper across 36 metres

Drill hole L99-05

	0.23 grams gold/tonne, 1.35 grams silver/tonne, and 0.07 % copper across 40 metres and,
	0.47 grams gold/tonne, 2.11 grams silver/tonne, and 0.10% copper across 24 metres

Drill hole L99-06

0.60 grams gold/tonne, 13.7 grams silver/tonne, and 0.39% copper across 154 metres

Drill hole L99-07

0.49 grams gold/tonne, 9.68 grams silver/tonne, and 0.31% copper across 124 metres

Drill hole L99-08

3.83 grams gold/tonne, 27.2 grams silver/tonne, and 0.40 % copper across 56 metres (which includes several higher grade sections including 3 metres grading 15.61 grams gold/tonne, 99.56 grams silver/tonne, and 0.90 % copper, and 9 metres grading 14.76 grams gold/tonne, 56.9 grams silver/tonne, and 1.01 % copper

Drill hole L00-09

5.93 grams gold/tonne, 23.6 grams silver/tonne, and 0.81% copper across 6 metres,

Drill hole L00-11

	0.23 grams gold/tonne, 3.47 grams silver/tonne, and 0.17 % copper across 12 metres and,
	0.22 grams gold/tonne, 0.66 grams silver/tonne, and 0.06 % copper across 9 metres

Drill hole L00-12

	0.33 grams gold/tonne, 3.06 grams silver/tonne, and 0.07 % copper across 11 metres and,
	0.56 grams gold/tonne, 2.33 grams silver/tonne, and 0.14 % copper across 28 metres

An approximately 20 metre wide zone of higher grade mineralization occurs at, or close to the hanging wall contact with the granodiorite on most sections. Section E, having the most drill hole information has traced the high grade zone from just below the oxidation level to a depth of 225 metres down the apparent dip of the breccia. This same high grade zone also appears on sections E+25*, and E+50. Significant weighted averages across this zone include:

SECTION E

Drill hole L99-03

2.59 grams gold/tonne, 20.84 grams silver/tonne, and 0.85 % copper across 29 metres

Drill hole L99-06

	1.6 grams gold/tonne, 34.45 grams silver/tonne, and 0.66 % copper across 8 metres and,
	1.39 grams gold/tonne, 44.16 grams silver/tonne, and 1.25 % copper across 19 metres

Drill hole L99-07

1.26 grams gold/tonne, 18.11 grams silver/tonne, and 0.49 % copper across 28 metres

Drill hole L99-08

6.49 grams gold/tonne, 10.07 grams silver/tonne, and 0.63 % copper across 32 metres

SECTION E+25

Drill hole L99-05

7.92 grams gold/tonne, 23.42 grams silver/tonne, and 0.86 % copper across 10 metres*

SECTION E+50

Drill hole L99-12

2.23 grams gold/tonne, 16.16 grams silver/tonne, and 0.55 % copper across 25 metres

*In hole L99-05, the high grade zone was hosted in a zone of intensely "chloritized and magnetite-rich granodiorite" in the hanging wall of the breccia. The location of this zone correlates with the high grade zones on sections E and E+50 and indicates that this may be a continuous mineralized sheet, however more drilling will be required in this area to the actual geometry of the high grade zone.

The western boundary of the breccia has been roughly defined by drill holes P00-09 and 10, on Section DE+50 as an undulating contact that roughly follows the southeast dipping andesite-granodiorite contact. Hole P00-09 just clipped the western edge of the breccia, intersecting a narrow, but high grade interval that yielded 5.93 grams gold/tonne, 23.6 grams silver/tonne, and 0.81% copper across 6 metres. Hole P00-10, which was drilled about 60 metres up the projected apparent dip of the breccia, missed it, probably drilling just west of its contact. However, a strong IP anomaly returned from the recent survey indicates that the breccia could occur below (and possibly widen), and to the west of hole P00-09, at about 200 metres depth. More drilling will be needed to accurately determine the western extent of the breccia.

The breccia remains completely open to the east, and down plunge. Even though to date 9 holes have intersected the breccia, its geometry and structural control(s) are still poorly understood. Typical of hydrothermal breccias, the down plunge extent could be very deep and possibly overlie a larger porphyry style mineralized system at depth.

In addition to breccia style mineralization, the Lipangue property also hosts several narrow (0.10 to 0.50 metres wide), variably oriented, auriferous quartz veins. Most of these are hosted within the granodiorite in the eastern two thirds of the plateau and were mined or explored by "pirquineiro" style operations over the past century. This style of target has not yet been explored by Medinah at Lipangue, and should be considered a lower priority target. Based on the known mineralization at the nearby Fortuna Property, which occurs just east of Lipangue (on land currently held by Cerro Dorado Inc.), these veins are usually very narrow, but can be very high grade, and often can average above 50 grams gold/tonne. Typically they consist of a gangue, which is primarily quartz and some sericite, mineralized with pyrite-arsenopyrite +/-sphalerite-chalcopyrite-galena-hematite-tetrahedrite and gold.

LAS DOS MARIAS PROPERTY

The Dos Marias Property occurs on the northwest slope of the Altos de Lipangue plateau and is underlain by a generally north striking, east dipping sequence of volcanic and volcanoclastic rocks with intercalated marine and continental sedimentary rocks which correspond with the Lo Prado Formation. The main structural feature, and the main exploration target on the property has been a 340º to 350º striking, 70º west dipping, 50 to 100 metre wide auriferous shear zone which trends through the middle of the property. Regional geology maps show an extensive area of hydrothermal alteration, centered on the shear and which extends south from the middle of the property, about 2 kilometres to the granodiorite contact.

Similar to the Lipangue Property, Dos Marias was first obtained by Medinah in 1998 and after the initial Phase I review by their consulting geologist Gordon House, it was recommended as a potential target for shear zone hosted gold mineralization and stratabound skarn replacement copper mineralization. Medinah’s second phase of exploration, which took place between September 8^th and October 16^th, 1998 consisted of gridding, geological mapping, and an IP/resistivity survey which further outlined the surface extent of the shear zone and defined several geophysical targets.

Phase III occurred between February 8^th and April 18^th, 1999 and consisted of a very small, two hole diamond drilling program which totaled approximately 456 metres of drilling. The two vertical holes were about 156 and 301 metres in depth, respectively and were both collared to test the shear zone style of mineralization several hundred metres south of the old workings. Both holes yielded positive results and warranted a follow-up drill program.

Phase IV, the most recent phase of exploration, took place between September 22, 1999 and March 29, 2000 and consisted of gridding, geological mapping, and a CSAMT geophysical survey, and 3 additional diamond drill holes.

The geology in the area mapped by Medinah, consists of a central, north striking, 30º east dipping volcanic sequence which is both overlain and underlain by units of hornblende and feldspar porphyritic to massive andesite. The volcanic sequence consists of ash flow and ash fall deposits and variably skarnified, interbedded limey sedimentary horizons which in the southern parts of the property have been intruded by a 50 to 75 metre wide granodiorite dike. The skarnified limestone units with the volcanic unit are host to several disseminated to massive copper skarn replacement lenses which were lightly exploited in the past.

The shear zone roughly follows the base of Quebrada Durazno, and within the property boundaries can be traced over a strike length of about 700 metres (traced through surface outcrops, diamond drill holes, and extrapolated along strike through IP/resistivity results). The dip of the shear zone cross-cuts the gently east dipping host lithology, which is predominantly siliceous and pyritic ash tuff and tuff of the volcanic sequence, and the underlying porphyritic andesites. Mineralization occurs as fine disseminated pyrite and quartz-sulphide (pyrite+/-arsenopyrite?)+/-carbonate-chlorite-pyrophyllite stringers 2 to 5 centimetres wide, and spaced 15-25 centimetres apart.

On surface the shear zone is best exposed in the area of old workings (the Las Dos Marias Mine) in the central portion of the claim, however also in several drill road cuts, and in outcrops in the creek bed, west of the drill holes. The surface mineralization consists of strongly sheared (north northwest striking and steeply west dipping), and silicified tuff and porphyritic andesite with 1 to 20 % disseminated pyrite which is cut by several quartz-pyrite veinlets up to 2 centimetres wide and oriented subparallel to the shearing direction. Two independent surface channel chip samples, collected by Howe in 1999 across select surface exposures of the vein at the old workings and near the collar location of DM99-01 yielded:

	3.82 grams gold/tonne across 1.5 metres and;
	1.39 grams gold/tonne across 2.5 metres

The strongest, and best mineralized portions of the shear zone appear to be hosted in the eastern, or foot wall portions, and the intensity and gold grades appear to drop in the hanging wall sections. Even though 5 drill holes have been drilled into the zone, the structural and/or lithological controls and the geometry of the mineralized zones within the shear have yet to be determined. Results of Medinah’s two drill programs yielded several anomalous weighted averaged values including:

DM99-01

	6.48 grams gold/tonne across 2 metres ( between 11 and 13 metres)
	0.64 grams gold/tonne across 6 metres (between 23.5 and 29.5 metres)
	0.50 grams gold/tonne across 53 metre (between 50 and 103 metres)

DM99-02

	2.44 grams gold/tonne across 5 metres (between 37 and 42 metres)
	91.99 grams gold/tonne across 2 metres (between 68 and 70 metres)
	0.48 grams gold/tonne across 10 metres (between 70 and 80 metres)
	0.36 grams gold/tonne across 23 metre (between 150 and 173 metres)

DM00-03

	0.80 grams gold/tonne across 10 metres (between 177 and 187 metres)
	1.49 grams gold/tonne across 3 metres (between 178 and 181 metres)

DM00-04

	1.81 grams gold/tonne across 1 metre (between 57 and 58 metres)
	0.30 grams gold/tonne across 6 metres (between 67 and 73 metres)
	0.35 grams gold/tonne across 6 metres (between 79 and 85 metres)
	0.39 grams gold/tonne across 8 metres (between 93 and 101 metres)
	0.52 grams gold/tonne across 13 metres (between 128 and 141 metres)
	0.41 grams gold/tonne across 4 metres (between 164 and 168 metres)

DM00-05 (and 5a)

	0.73 grams gold/tonne across 4 metres (between 127 and 131 metres)
	0.48 grams gold/tonne across 9 metres (between 160 and 169 metres)

The two 1999 holes were drilled vertically to intersect the southern extension of the shear zone in the vicinity of a granodiorite dike, however once drilled, the location of these holes was found to be collared in the shear zone, therefore missing the footwall and possibly the strongest mineralized portion of the auriferous structure.

A narrow, but very high grade auriferous fault/breccia gouge zone hosted within the main shear zone, consisting of clay-carbonate-sericite alteration and 1 to 5 % disseminated pyrite and traces of molybdenum and chalcocite, was intersected in hole DM99-02 between approximately 66 and 73 metres. Although core in this interval was extremely broken and recovery was well below normal levels, the analytical results of two consecutive, one metre samples taken by Medinah, between 68 and 70 metres, yielded 61.77 and 122.2 grams gold/tonne. A quarter core repeat sample by Howe of the second sample, between 69 and 70 metres, returned a spectacular value of 455.02 grams gold/tonne across one metre. The extremely high grade and varying results yielded from the Medinah and Howe analyses reflects the probable nuggety nature of the gold mineralization in this fault zone and perhaps in other portions of the shear zone.

Based on the results of these two holes it was decided to test the full width of the shear zone, with holes DM00-03, 04, and 05 drilling from the west to the east and intersecting the high grade zones, below the two earlier holes. The results of the second drilling programs were disappointing, especially since the high grade gold zone intersected in hole DM99-02 could not be traced to depth. The drilling did confirm that the shear zone has a significant width of 150 metres, and that it is not continually mineralized across this entire width and varies from intensely sheared and pyritized sections, to very lightly fractured and weakly altered portions with minor sulphide mineralization. Gold grades are only weakly anomalous across the shear zone and localized in a few zones with weakly anomalous values.

The 5 holes completed to date over Dos Marias have not been successful in locating a wide, low grade, bulk mineable gold target that Medinah was hoping for, and it now appears that the property is much more structurally complicated that originally believed. Recent geological mapping by House substantiates the complex structure where numerous new faults and shears have been located at oblique angles to the main shearing direction. The mapping also determined that many of the auriferous structures in the northern portion of the shear zone are aligned along a 50º orientation, and not subparallel to the trend of the main shear zone as originally believed. This could imply that the drilling may have been oriented subparallel to, therefore missing a significant portion of, the main gold bearing structures at Dos Marias. This oblique angle is not uncommon in shear zone related deposits worldwide as the principal gold accumulation can often be found in several structural sites, including: obliquely oriented tension gash type veins; zones of bifurcation within, or splays off of, the main shear; or at points where the main shear is intersected by oblique angled faults, etc. The area should be carefully re-mapped in detail with a strong emphasis placed upon the structural relationship between gold mineralization and the shear zone, prior to commencing further drill programs.

The other main mineralized target at Dos Marias is stratabound or "manto" replacement skarn copper mineralization which is hosted in a series of north striking, east dipping limey tuff and sedimentary horizons ("mantos") on the east side of the creek. Very little follow up work has been completed over this target however recent mapping by Medinah in an adit ("the manto adit") on the east side of the creek, has revealed that the individual mantos are not more than a few metres in thickness, but are vertically "stacked" throughout the stratigraphic sequence, the true thickness of which has yet to be determined. Mineralization consists of disseminated and semi-massive to massive pyrite and chalcopyrite lenses, however many of the exposures are well oxidized and consist of various copper oxides, limonite, and iron oxides, mixed with pyrite and chalcopyrite. It is uncertain if low grade copper values occur in the lightly skarnified units between the mantos.

A 1.5 metre channel chip sample taken by Howe in the manto adit across an interbedded sequence of partially oxidized skarnified limey sediments and siliceous volcanics with minor amounts of copper oxide mineralization and traces of fine disseminated pyrite and chalcocite, yielded 1.96% copper. Based on this analytical result and the occurrence of additional subparallel manto horizons, Howe recommends that portions of this tunnel be systematically sampled to test the grade of the other manto horizons and the surrounding weakly skarnified sediments/volcanics to see if a wide, potentially bulk mineable copper resource exists here.

Surface mapping several hundred metres along strike to the south of this adit has located rubble of epidote-diopside skarnified limey sediments mineralized with irregular shaped blebs of pyrite and/or chalcopyrite and it is thought that this rubble is similar to the manto style copper skarn mineralization which is exposed in the adit suggesting that additional pods of this mineralization will occur both along strike and stacked vertically throughout the volcanic/sedimentary sequence.

During Howe’s two visits to the Lipangue and Dos Marias Properties, time was spent reviewing the surface geology, the style and extent of mineralization, drill hole locations, and the extent of previous workings. Independent samples were taken from both surface and underground exposures of the mineralized zones. Howe also visited the core storage facilities in both Santiago and Lampa where several representative intervals of core from both properties, through both mineralized and barren sections, were reviewed by Howe. Several quarter core samples were collected by Howe which repeat intervals that were previously split and analysed by Medinah. In total, 30 confirmation type samples were collected from the two properties (18 from Lipangue and 12 from Dos Marias). The gold analytical results obtained from the Howe sampling at both properties were in the same general range of values of those reported by Medinah, but often upwards of several grams higher or lower. Similarly, silver and copper values at Lipangue were generally in the same range, but at times several grams, or tenths of a percent, higher or lower, respectively. Silver and copper results at Dos Marias were generally low and considered insignificant. Although this difference can be attributed to a nuggety effect for the gold, the blebby and inconsistent nature of the breccia style mineralization could in effect give quite variable assay results for all of the elements, even from two halves of a split core. During future drill programs, Medinah should consider using a larger diameter core to get a more representative sample.

Howe feels confident that the analytical values reported by Medinah from their recent drilling campaigns over both the Lipangue and Dos Marias Properties give a general representation of the values that can be expected from these prospects. Future drill programs should be preceded by early stage mineralogical testing to determine the general characteristics of the gold grains in the mineralized domains which will assist in determining the optimum sampling scheme for future exploration programs. In addition, a full quality assurance program should be adapted by Medinah for all future exploration programs to minimize unavoidable sample assay errors which are introduced by the acts of sample collection, sample preparation and assaying

Medinah’s Lipangue property contains the Lipangue polymetallic breccia pipe which represents an excellent target to host underground, bulk mineable, gold-copper-silver mineralization. This target remains open to the east and down plunge, and could become much larger in extent as Medinah traces it in these directions. The breccia is still in the earliest stages of drill definition and Medinah believes that with a minimal exploration program the potential size of this target can be substantially increased. Other parts of the Lipangue Property have only been reviewed on a preliminary basis, or not at all, and these should be further explored, since the potential exists for additional breccia style mineralization. Howe concurs with this target objective.

The Dos Marias Property, hosts an early stage, grass roots shear zone hosted gold prospect and stratabound or manto replacement skarn copper mineralization. Recent drilling into the shear zone hosted gold target has returned mixed results, however a new geological map by Medinah indicates that structure of the property is much more complex that originally believed and that the main gold bearing structures may actually be oriented in oblique to the main shear zone, which is subparallel to the direction of the recent drilling. The property hosts areas of strong pervasive alteration, and indications of numerous old mining operations and based on this Medinah believes that it warrants an re-evaluation of the gold potential. The manto replacement copper skarn mineralization remains untested.

Medinah’s land position is secure in both properties, in that it covers the strike and down dip extent of all of their defined mineralized zones and leaves sufficient ground to define new targets along strike or on other parts of the property.

Howe recommends that a two phase, results driven program be conducted in order to further assess the large tonnage, bulk mineable, breccia hosted gold-copper-silver potential over the Lipangue Property. The total cost for Phases I (US$482,900) and II (US$800,250) is approximately US$1,300,000.

Howe also recommends that a two phase, results driven program be conducted in order to assess the vein style, and shear zone hosted gold mineralization and copper skarn replacement mineralization over the Dos Marias Property. The total cost for Phase I (US$89,760) and II (US$169,400) is approximately US$260,000.

1.0 INTRODUCTION

1.1 GENERAL

At the request of Mr. Gregory Chapin, President of Medinah Mining Inc. ("Medinah"), a public New York company (NASDAQ – OTC) with offices located at 148 South Main Street, Lake Elsinore, CA, 92530, U.S.A, Howe Chile Limitada ("Howe"), was retained to review the recent phase of exploration completed to date over the Lipangue and Las Dos Marias ("Dos Marias") Gold-Copper Properties. The two properties are located within two kilometres of each other, within the Metropolitan Region of Chile, approximately 30 kilometres northwest of Santiago.

The Lipangue Property consists of 5 individual mining claims which together cover an area of 1,363 hectares. The Las Dos Marias property consists of 1 mining claim which covers approximately 130 hectares. Both are held 100% by Medinah, through their wholly owned Chilean subsidiary Medinah Mining Chile.

1.2 TERMS OF REFERENCE

Howe Chile is a wholly owned subsidiary of Howe International Consulting Limited and part of the A.C.A Howe International Limited group of companies which offer geological, geophysical, and mining consulting services to the international mining industry, including geological, evaluation and valuation reports on mineral properties. The firm was incorporated in the Province of Ontario, Canada in 1966 and has continuously operated under a "Certificate of Authorization" to practice as Professional Engineers (Ontario) since 1970. The firm’s services are provided through offices in Toronto, Canada, Denver, USA, London, England, and La Serena, Chile. Howe’s La Serena office was opened in 1996. Howe is not an insider, associate or affiliate of Medinah.

The geological report on the Lipangue and Las Dos Marias Properties was prepared by Robert Cinits, P.Geo. currently acting as the General Manager of Howe Chile Limitada. Mr. Cinits has more than 15 years experience in the mining industry, and has most recently worked on projects in Chile, Peru, Argentina, Brazil, Colombia, Ecuador, Honduras, and Costa Rica. Mr. Cinits has prepared numerous qualifying reports and valuations for various Canadian, American, and British stock exchanges.

1.3 SCOPE, SOURCES OF INFORMATION AND DISCLAIMER

In preparing this report, Howe relied on geological reports and maps, miscellaneous technical papers, published government reports and historical documents listed in the "Selected References" section at the conclusion of this report, public information and Howe’s experience. In addition, on April 7, 2000 Mr. Cinits visited both the Lipangue and Las Dos Marias Properties. During this period the drill sites of each of the recently completed diamond drill holes were visited. Between April 7 and 8, 2000 Howe remained at the Medinah field office in Lampa where diamond drill core from the recent drill programs over the Lipangue and Las Dos Marias Properties are stored. Representative sections of several of the drill holes from each property were reviewed and independent confirmation samples taken. This visit was complimented by background knowledge gained during an earlier trip to the site and to Medinah’s core storage facility in Santiago by Mr. Cinits between June 16 and 17, 1999 and on July 14, 1999 (see Cinits, 1999).

Howe has only reviewed the land tenure in a preliminary fashion and has not independently verified the legal status or ownership of the properties or underlying option agreements.

The results and opinions expressed in this report are based on Howe’s field observations and the geotechnical data listed in the "Sources of Information". While Howe has carefully reviewed all of the information provided by Medinah as listed in the sources of information, and believe they are reliable, Howe has not conducted an in-depth independent investigation to verify its accuracy and completeness.

The results and opinions expressed in this report are conditional upon the aforementioned geological and legal information being current, accurate, and complete as of the date of this report, and that no information has been withheld which would affect the conclusions made herein. Howe reserves the right, but will not be obliged to revise our report and conclusions if additional information becomes known to us subsequent to the date of this report. Howe does not assume responsibility for Medinah’s actions in distributing this report.

During the 1999 and 2000 field examinations of the Lipangue and Dos Marias Properties a number of samples were independently collected by the author and submitted to ITS (Bondar-Clegg) Laboratories in La Serena, Chile and ALS-Geolab (Chemex) laboratories Santiago, Chile. The results of these samples are included in this report.

1.4 UNITS AND CURRENCY

All measurement units used in this report are metric and currency in US dollars unless stated otherwise. The currency used in Chile is the Peso. The exchange rate as of June 4, 2000 is $US 1.00 is equal to approximately 503 Pesos.

2.0 LOCATION, ACCESS AND PROPERTY DESCRIPTION

2.1 LOCATION AND ACCESS

The Lipangue and Las Dos Marias Properties are located approximately 30 kilometres northwest of Santiago in the coastal range mountains. The approximate UTM coordinates of the center of the Lipangue Property is 315500 E, 6314000N and the Dos Marias Property is 312000E, 6313500N.

The project area is best accessed from Santiago, the capital city of Chile. From here one drives northwest about 25 kilometres to the town of Lampa. One must then travel north approximately 6 kilometres along a well maintained gravel road (route G-16) which parallels the base of the coast mountains until the Hacienda Mercedes at Chicauma. After entering through a steel gate, with a guard house, on the west side of the road, one drives an additional 6 kilometres along a 4 wheel drive road which rapidly gains elevation up a bumpy gravel and boulder filled open valley to an elevation of approximately 550 metres. At this point the valley abruptly ends and the road continues up a "cuesta" (a series of about 19 switch backs) which climb up a steep slope for approximately 7 kilometres. At the top of the cuesta, the northeast corner of the rolling Alto de Lipangue plateau is reached at an elevation of about 1,950 metres. The eastern edge of the Lipangue property is crossed just a few hundred metres west of the crest of the mountain and the La Fortuna de Lampa Mine.

To reach the Dos Marias property one must continue west southwest across the Altos de Lipangue plateau and the Lipangue property and then drop in elevation about 500 metres down the west slope of the plateau. The drive from Lampa to the Lipangue Property takes approximately 1 hour to complete, while the drive to Dos Marias takes an additional 15 minutes to complete. The road passes through the central portions of both properties and other parts must be reached by travelling off-road in a 4 wheel drive truck or by foot.

A second, more southerly access road leaves the "Hacienda Lipangue" south of Lampa on route G-16 and reaches the plateau near the south and west boundaries of the Lipangue Property and the eastern edge of the Dos Marias property however this road needs upgrading and for the moment all travel must be done along the more northerly route.

A 400 metre long, E-W oriented dirt air strip straddles the eastern boundary of the Lo Amarillo claim of the Lipangue Property. Although it is not maintained, it appears to be in relatively good shape and with minimal care small planes could easily land there now.

The small town of Lampa is able to supply only the most basic needs (food, fuel, hardware, etc.) for very early stages of exploration, and more advanced projects must be serviced from Santiago. Electrical power, sufficient only for local town use currently exists in the village of Lampa, however a major power grid runs just west of the town. Telephone service in Chile is excellent, most of it being connected to a fibre optic network while the cellular network covers most major cities and has reception from most parts of the Lipangue Property and higher elevations on the Dos Marias Property.

Deep water ports exists at Valparaiso and San Antonio on the Pacific coast, approximately 65 kilometres northwest and 70 kilometres southeast of the property, respectively.

2. GEOGRAPHY AND CLIMATE

The Lipangue and Dos Marias Properties are situated within a few kilometres of each other in the coastal range mountains. The Lipangue Property covers the majority of the Altos de Lipangue Plateau except for the easternmost edge, which has an average elevation of almost 2,000 metres. The northeast oriented gently rolling plateau crosses the central third of the property dropping steeply off in the northern and southern thirds of the property down to elevations of 1,500 and 1,200 metres, respectively.

The Dos Marias Property is located along the western slope of the plateau where elevations range between 1,150 and 1,550 metres. The north trending Quebrada Durazno runs through the middle of the property. Both properties are covered by low shrubs, cactus, tough grasses, and rare small trees. Local farmers use the area for summer grazing of cattle, horses and goats.

The property areas have a Mediterranean type of climate with cool and rainy winters (April to September) and dry hot summers. The average temperatures for the hottest (January) and coldest (July) months at Santiago are 20ºC and 8º C, respectively. The average annual precipitation at Santiago is approximately 381mm. Snow is extremely rare around Santiago, however it is known to occur at the higher elevations of the property area.

2.3 PROPERTY DESCRIPTIONS AND CURRENT STATUS

The Lipangue Property consists of a total of 5 contiguous claims covering approximately 1,363 hectares. Of these claims, three are registered as "mensuras" (mining claims) in the name of Juan Jose Quijano and together cover a total of approximately 763 hectares; and two are "manifestacions" (application stage for a mining claim) which were staked by Medinah at the end of the last drilling phase and which cover an area of approximately 600 hectares. The property extends roughly 3,000 metres in a north-south direction and 900 metres east-west.

Table 2.1: Lipangue Claims

Claim Type	Claim Name	Area (hectares)
Mensura	Lo Amarillo 1-72	288
Mensura	Millalelfun 1-55	275
Mensura	Amparo 1-40	200
Manifestacion	Gordon 1-60	300
Manifestacion	Gordon 61-120	300

The Dos Marias property consists of one "mensura" (mining claim), which covers a total of roughly 130 hectares, and is registered in the name of Juan Jose Quijano. This property extends approximately 1,750 metres in a northwest direction, and 750 metres northeast-southwest.

Both the Lipangue and Dos Marias properties are currently held 100% by Medinah, through their wholly owned Chilean subsidiary, Sociedad Contractual Minera Medinah Mining, Chile ("Medinah Mining, Chile") and were acquired by Medinah through a purchase agreement with the previous owner, Juan Jose Quijano ("Quijano"), which became effective on April 23, 1999. Medinah has purchased a pre-existing royalty commitment from Quijano for preferred shares of Medinah and retains the right to re-purchase 50% of these shares for future financings.

2.4 ACQUISITION AND MAINTENANCE OF MINERAL RIGHTS IN CHILE

Chile’s current mining policy is based on legal provisions that were enacted as part of the 1980 constitution. These were established to stimulate the development of mining and to guarantee the property rights of both local and foreign investors. According to the law, the state owns all mining resources, but exploration and exploitation of these resources by private parties is permitted through mining concessions, which are granted by the courts. The concessions have both rights and obligations as defined by a Constitutional Organic Law (enacted in 1982). Concessions can be mortgaged or transferred and the holder has full ownership rights and is entitled to confiscate the rights of way for exploration and exploitation. In addition, the concession holder has the right to defend his ownership against state and third parties. An exploration concession is obtained by a claims filing and includes all minerals that may exist in its area. Exploration mining rights in Chile are acquired in the following stages:

Pedimento: A pedimento is an initial exploration claim whose position is well defined by NS-EW UTM coordinates. The minimum size of a pedimento is 100 hectares and the maximum is 5,000 hectares with a maximum length-to-width ratio of 5:1. The duration of validity is for a maximum period of 2 years, however at the end of this period it must be reduced in size by at least 50% and renewed for an additional 2 years. If the yearly claim taxes are not paid on a pedimento, then the claim can remain in good standing by paying double the annual claim tax the following year. Pedimentos are allowed to overlap with pre-existing ones, however the underlying one always takes precedent, providing the claim holder doesn’t let the claim lapse due to lack of payments, filing errors, etc.
Manifestacion: Before a Pedimento expires, or at any stage during its two year life, it is converted to a Manifestacion which lasts for 220 days.
Mensura: Prior to the expiration of a manifestacion, the claim is surveyed by a government licensed surveyor. Once surveyed and the application is accepted by the government, the claim becomes a mensura ("patented claim")

At each of the 3 main stages of the claim acquisition process, several steps are required (inscription payments, notarization, tax payments, "patente" payment, lawyers fees, publication of the extract, etc) before the application is finally accepted by the court. A full description of the process is documented in Chile’s mining code.

If accepted by the court the claim is published in the official mining bulletin (published weekly). At the manifestacion and mensura stages a process for opposition from conflicting claims is allowed. Most companies in Chile retain a Chilean representative to review the weekly mining bulletins and ensure that their land position in Chile is kept secure.

In 1997, an environmental law was introduced in Chile (Decree No. 30) which states that any exploration or mining project must present an Environmental Impact Study or an Environmental Impact Declaration to the CONAMA, the environmental authority, for approval. This application process must be initiated prior to starting any field work and can take up to several months for approval.

3.0 CHILE

3.1 INTRODUCTION

Chile is unique for its very long (4,345 kilometres) and comparatively narrow shape, averaging 177 kilometres in width (ninety kilometers wide at its thinnest point in the south and 380 kilometers across at its widest point in the north) and for its great variety of natural features. It extends from latitudes 18º to 56º south and contains one of the driest regions in the world and one of the wettest areas in South America. It is bound on the north by Peru, on the northeast by Bolivia, on its long eastern border by Argentina and on the west by the Pacific Ocean (see Figure 1.1). The country covers an area of approximately 756,000 square kilometres and has a population of just over 15 million people, over 80% of whom live in urban areas.

3.2 GEOGRAPHY

Chile consists of three distinct longitudinal structural regions: the Andes, the Coastal Range and the Central Valley, each with its own diverse climatic regions.

The Andes:

The Andes (Cordillera) run along the entire length of the eastern part of the country. The watershed between the Pacific and Atlantic oceans, which follows the central and often highest ridges of the Andes, was adopted (by agreement with Argentina) as Chile's eastern boundary. In the north, approximately to 27º latitude, the Andes consists of two or more almost parallel ranges. The Chilean Andes are highest, and most rugged and precipitous in the northern and central parts of the country, with peaks above 6,000 meters (20,000 feet). South America's highest peak, Aconcagua (6,960 metres or 22,834 feet), rises just east of Chile's border close to Santiago. Mountain passes in this part of the Andes are few and difficult, rising above 3,000 metres. South of Santiago the Andes become gradually lower, with peaks of approximately 3,700 metres. Passes are much lower and easier to negotiate. In the extreme south, the Andes are fragmented by deep glacial valleys, and ocean inlets and channels. The mountains extend through the island of Tierra del Fuego to the southern end of the continent.

Near the Chilean Andes and along their western flank is one of the world's densest concentrations of volcanoes, both extinct and active. There are over 2,000, including 48 that have erupted at least once within the last 100 years. The abundance of volcanic features in Chile and its vicinity is also reflected in the frequent seismic events and conspicuous evidence of recent tectonic movements.

The Coastal Range:

The second structural region is the coastal range (Cordillera de la Costa), which follows the coastline closely throughout northern and central Chile, from Arica to Puerto Montt. Medinah’s Lipangue and Dos Marias Properties are located in this range. It rises abruptly from the shoreline in high cliffs that for hundreds of miles form an unbroken wall, creating a coastline devoid of natural harbors and a formidable obstacle to access inland. Large parts of the coastal range are actually an eroded plateau descending west to the sea by cliff-bound terraces. The coastal range rises to an elevation of approximately 2,700 metres. The southward extension of the coastal range beyond Puerto Montt forms a chain of approximately 3,000 hilly islands, extending along a fjord-lined coast to Cape Horn at the southern extremity of the South American continent. The largest of these islands is Chiloe, just south of Puerto Montt.

The Central Valley:

The third structural region, and the most important one, insofar as human settlement is concerned, is the depression between the Andes and the coastal range known as the Central Valley. It is a long and narrow basin of varying width, reaching approximately 80 kilometers (50 miles) at its widest section. The Central Valley is not continuous, as it is interrupted by E-W oriented spurs from the Andes and is divided by a wide mountainous intrusion into two main basins, each of which includes a number of smaller basins.

The northern basin, extending from Arica to Copiapo, includes the Atacama desert, one of the driest areas on the earth. The second major basin is that of central Chile. It extends from Santiago, southward to Puerto Montt and is Chile's main agricultural area. As well as having rich agricultural land it is also Chile’s most densely inhabited region, and includes Chile’s three largest metropolitan areas - Santiago, Valparaíso, and Concepción. It is climatically the most attractive part of the country.

3.3 CLIMATE, VEGETATION AND DRAINAGE

Extending over 38 degrees of latitude, and from sea level to altitudes of over 6,000 metres, Chile has a wide variety of climatic conditions. Extremely arid conditions prevail over the northern part of the country in the Atacama Desert where the average annual rainfall is about 1mm. Temperatures are moderate along the coast throughout the year and more extreme inland, especially in the central basin.

Central Chile (between 30-40 degrees latitude) has a Mediterranean type of climate, with cool and rainy winters (April to September) but without a completely dry season. Average annual precipitation increases substantially and temperatures decrease toward the south. The average temperatures for the hottest (January) and coldest (July) months at Santiago are 20º and 8º C, respectively. The average annual precipitation at Santiago is approximately 381mm.

The climate of the southern region is cool and rainy the year round. It is characterized by abundant low clouds. The average temperature for the warmest (January) and the coldest (July) months are 14º and 4º C, respectively. The average annual precipitation is 3022mm. The changes of the snow line on the westward-facing slopes of the Andes can serve as an indication of the variation in climatic conditions with latitude and elevation. The line of permanent snow is approximately 5,500 metres (18,000 feet) in Chile's extreme north. It descends to about 4,300 metres (14,000 feet) opposite Santiago and to 670 metres (2,200 feet) at Tierra del Fuego.

The main seasons in Chile are: spring - September 21 to December 20; summer - December 21 to March 20; autumn - March 21 to June 20; and winter - June 21 to September 20.

The principal rivers in Chile include the: Aconcagua, Baker, Bío-Bío, Imperial, Loa (Chile's longest at about 483 kilometers), Maipo, Maule, Palena, Toltén, and Valdivia.

3.4 DEMOGRAPHY

Chile’s population currently stands at about 15.1 million with a 1.27 percent average annual population growth rate. The birth rate in 1998 was estimated to be 18.28 births/1,000 population, while the death rate was 5.55 deaths/1,000 population. The net migration rate is just about zero. Chile is one of the most urbanized countries in Latin America, with 86 percent of the population residing in urban areas. Nearly 90 percent of the population is concentrated in central Chile, in the area between Coquimbo in the north and Puerto Montt in the south, mainly in the region's Central Valley. Even in this part of the country, with the exception of Santiago metropolitan area, the average population density does not exceed 50 inhabitants per square kilometer. The average population density for the entire country is 18 per square kilometer. The largest cities in Chile include: Santiago, Valparaiso, Concepcion, Antofagasta, Puero Montt, La Serena, and Copiapo.

The official language in Chile is Spanish, however some of the indigenous Indian population still use native languages, mainly Araucanian. The majority of the Chilean people come from a mixed ethnic background of European and native American ancestry. In the decades following World War II immigration from Europe contributed much to the comparatively rapid growth of the population. The largest ethnic Groups in Chile include: 66% Mestizo (mixed native American and European ancestry); 25% European; 7% native American; and 2% other. The main native American indigenous communities include: Mapuche (also called Araucanian), Aymara, Rapa Nui, Quechua, Colla, Alacalufe, and Yagán. These communities are mainly concentrated in the Andes in northern Chile, in some valleys of south central Chile, and along the southern coast.

In 1966 reforms to the education system changed the length of primary education to eight years and secondary education to four years. In 1998 the adult literacy rate was estimated at 95.2%, with people attending an average of 7.5 years of schooling.

Over the past 15 or 20 years heavy investments in programs for very poor and in water and sanitation systems helped lower infant mortality rates and raise life expectancy. In 1998 life expectancy was estimated at about 75.16 (72.01 years male, 78.48 years female) while infant mortality was estimated at 10.39 per 1,000 live births.

The religious background of the majority of Chileans is Roman Catholic (89%), while about 9% are Evangelical or Protestant. The remainder is made up of other smaller religious groups which include Jewish, Muslim, and Christian Orthodox.

3.5 BUSINESS INVESTMENT CLIMATE IN CHILE

Chile's economy is primarily based on its rich mineral resources, agriculture, on its rich fishing grounds, and on industry. There has been, however, much instability in the value of the most important minerals (copper, iron, nitrate, and gold) mined in Chile and their contribution to the GNP and to the country's exports. These depend largely on demand and prices in the world market and on Chile's ability to compete with other mineral-producing countries. The exploitation of Chile's mineral resources is to a large extent in the hands of foreign companies, but Chilean nationalized companies such as Codelco and CMP are considered major world producers of copper and iron, respectively.

The small miner ("pirquinero") has played an important role in Chilean mining history, even though today they represent a small fraction of the total yearly amount of ore produced in Chile. Thousands of pirquinero operations still exist throughout the country, many of which receive a subsidized copper price at the government run ("Enami") flotation and heap leach plants. Most of these operations are exploiting narrow, high grade veins and/or mantos using crude, inefficient mining and milling methods, while health and safety measures are rarely considered. In addition, high grade dumps at abandoned mining operations are often scavenged by the pirquineros who selectively hand sort the dumps and haul it to be processed. A hand full of small operations are using more advanced technology and processing their own mined material by heap leach or vat leach methods, or with flotation plants.

Mining plays a dominant role in northern and central Chile while forestry, fishing, agriculture are important in the south. Chile’s main exports are minerals, wood pulp, and fishmeal and of these mining contributes 48% of total exports. Constant fluctuations in the extent and value of the production of minerals has prompted the development of industry and agriculture, especially for export.

The annual GDP per capita was estimated at $4,468 in 1999. For 15 years prior to 1998, annual economic growth has been on average between 4 to 8 percent, peaking in 1995. Between the mid-1980’s and 1997, the Chilean economy was in a boom during which time significant gains were made in output, exports, employment and profits. In addition, inflation during this period was one of the lowest in Latin America. Since 1997 Chile has experienced a decline in exports which can be attributed to the "Asian Crisis" and declining metals prices (copper and gold). This has been devastating to the total amount of foreign mining and exploration investment in Chile, especially from the junior mining industry. Between 1998 and 1999, the amount of money invested in Chilean mining through the DL 600 law (a foreign investment incentive program) has dropped from 2.4 billion to 1.1 billion. This year the amount is expected to be between 600 to 700 million (Mineria Chilena, February, 2000). Presently Chile is at the tail end of a recession and the foreign debt rose by 18% in 1999 to US$33.98 billion. Unemployment has started to drop slightly from the past two years and currently stands at about 8.9%. Even though mining is down, foreign investment continues to be quite strong, and is expected to start rising again over the next few years. In 1998 total foreign investment was US$6.0 billion with about 40% of this going towards mining. Since 1990 approximately US$27 billion of foreign investment has been spent in Chile, with about 42% being attributed towards mining. The vast majority of that investment came from Chile’s largest trading partners, the U.S.A, Canada, and Spain and was directed towards mining, the electricity and services industries.

3.6 MINERAL RESOURCES OF CHILE

In the last 15 years, new geologic data in Chile have been generated at an increasingly rapid pace by state agencies, universities, and private industry. This progress is largely driven by governmental mapping and industry mineral exploration programs. New digital geological, lithotectonic, geophysical, and hydrogeological maps are constantly being produced by the Chilean state geological agency, Sernageomin (Servicio Nacional de Geologia y Mineria) and a recently started project, MAP (The Multinational Andean Project). MAP is a collaboration between the Canadian International Development Agency, the Geological Survey of Canada and the National Geoscience Agencies of Chile, plus Argentina, Bolivia, and Peru which will continue to help in the understanding of the metallogeny of Chile (and other parts of South America) and assist in the future development of mineral resources.

3.6.1 GOLD AND COPPER PRODUCTION IN CHILE

The Chilean mining sector has grown rapidly since the late 1970’s with the start-up of numerous new world class mining operations. Currently, mining constitutes almost half of the country’s foreign trade, and most of the foreign currency revenues. The Chilean mining sector is attractive to both national and foreign investors and despite the current economic downturn the country is still considered one of, if not the best, South American countries for foreign investment. As a result of this active industry Chile is well poised to meet all of the infrastructure and labour demands for new mining projects.

Chile is the largest copper producer and exporter in the world, and hosts roughly 30% of the world’s reserves. In 1999 Chile produced 4.4 million tons of fine copper representing 40% of the world’s total (Mining Magazine, April 2000). With about 270 million tons of known reserves Chile has enough copper to continue current production for about 75 years. Almost all of Chile’s copper is exported and domestic consumption does not top 100,000 tons, less than 3 percent of total production (Compendio de la Mineria Chilena, 1998). In the 30 years between 1969 and 1998 annual copper production has increased 564% and during this time around UA$1,059 million was spent on copper exploration (Mining Magazine, April 2000). As a result of this investment 22 new major copper discoveries were made during this period, including Escondida, Collahuasi, Los Pelambres, Zaldivar, Escondida Norte, and Candelaria. Some of the largest copper mines in Chile, and the world are shown on Figure 3.1 and include:

	Escondida (BHP, RTZ, Mitsubishi, IFC) : recovered, proved, and probable resources 2,262 Mt grading 1.15% Cu.
	Chuquicamata (Codelco): 6,000 Mt grading 1.0% Cu (approx.)
	El Teniente (Codelco): 3,750 Mt grading 1.3% Cu (approx.)
	Collahuasi (Falconbridge, Minorco, Mitsui Group): proven, 818 Mt grading 0.82% Cu, probable 1,060 Mt grading 0.84% Cu.
	Cerro Colorado (Rio Algom): 204 Mt grading 1.02% Cu.
	Los Pelambres (Anaconda S.A., Nippon, Marubeni, Mitsui, Mitsubishi):2,400 Mt grading 0.67% Cu
	El Abra (Phelps Dodge, Codelco): 770 Mt grading 0.55% Cu.
	Candelaria (Phelps Dodge, Sumitomo): 432 Mt grading 0.88% Cu.
	Radomiro Tomic (Codelco): 2,510 Mt grading 0.59% Cu

Historically, Chile has held an important place in the gold market, mainly due to the El Indio Mine which opened in 1978. In the 30 years between 1969 and 1998 annual gold production has increased 27-fold from 1,827 kilograms to 49,770 kilograms (while silver increased 1,219% from 95,650 kilograms to 1,166,380 kilograms), and during this time approximately US$759 was spent on precious metal exploration (Mining Magazine, April 2000). During this period 18 significant deposits were discovered, the most important of which are: El Indio, La Coipa, Refugio, and Cerro Casale.

Chile currently rates 10^th among gold producing countries worldwide, and third in Latin America, after Brazil and Peru (Mineria Chilena, June, 1999). Chilean gold production in 1978 leaped from about 4,000 kilograms per annum to about 17,000 kilograms with El Indio’s opening. Chilean annual gold production continued to increase until 1996 when it peaked at over 53,000 kilograms. In 1997 production dropped to 49,460 kilograms primarily due to extremely harsh winter conditions in the high cordillera that year along with declining world gold markets, and remained around 50,000 kilograms in 1998 as well. Barrick announced in 1997 that due to rising production costs and lower gold prices, production at both the El Indio and Tambo Mines would be phased out over the next few years and the mines will be kept in a "care and maintenance" state. Even with the continuing lower gold prices in 1999, new discoveries are still being made and a figure of 70,000 kilograms per annum is projected when new projects such as Barrick’s Pascua Project (17.1 million ounces gold and 560 million ounces silver), and the Bema/Arizona Star/Placer Dome JV on Cerro Casale (23 million ounces gold and 6 billion pounds copper), are expected to come into production, adding significantly to the total amount of gold currently being produced. Some of the largest Chilean gold producing mines at present are shown on Figure 3.1 and include:

	El Indio (Barrick: 16.1 million tonnes grading 5.17 grams Au/t, proven and probable; 4.4 million tonnes grading 4.42 grams Au/t, possible) Note: El Indio is due to close operations this year.
	Refugio (Bema/Kinross: 146 million tonnes grading 0.9 grams Au/t).
	Fachinal (Coeur d’Alene: 0.9 million tonnes grading 3.96 grams Au/t and 192 grams Ag/t in underground operations plus, 3.2 million tonnes grading 1.92 grams Au/t and 87.4 grams Ag/t in open pit operations);
	La Coipa (Placer Dome/TVX: 67.5 million tonnes grading 1.24 grams Au/t, 60 grams Ag/t);
	Andacollo Gold (Dayton: 130 million tonnes grading 0.70 grams Au/tonne)
	El Peñon (Meridian: reserves, 4.7 million tonnes grading 6.0 grams Au/t and 96 grams Ag/t)

Other significant Chilean producing gold mines include: El Guanaco (Amax Gold); El Hueso (Homestake); San Cristobal (Battle Mountain), Can Can (Minera Can Can), Minera Alhue (Minera Maipo), El Bronce (Coeur d’Alene), and El Toqui (Breakwater) (Mineria Chilena, June, 1999).

The intense level of exploration over the past 30 years in Chile has vastly improved Chile’s technological and service capabilities, as well as the related infrastructure (roads, metallurgical plants, smelters, port facilities, etc). Currently there are seven operating smelters in Chile which process about 1.4 Mt of copper each year, and this is expected to increase 25% by the year 2003. The refineries are: Chuquicamata and El Teniente (operated by Codelco); Paipote, Ventanas, Potrerillos (operated by Enami); Alnorte (operated by Noranda); and Chagres (operated by Disputada) (Mining Magazine, April 2000).

4. GEOLOGICAL SETTING

4.1 TECTONIC SETTING OF CENTRAL AND NORTHERN CHILE

The following summary by Haynes, 1995 describes the tectonic setting of central and northern Chile.

"Northern and central Chile comprises a continental consuming plate margin beneath which oceanic crust has been subducting eastward from an offshore oceanic trench since Jurassic time. This subduction has resulted in the formation of magmatic volcanic and plutonic arcs that have migrated eastward with time from the region of the present coast (Jurassic) to the high Cordillera (present day). This, in turn, has led to formation of the three major tectonic features of Chile: the Coast Range; the Central Valley; and, the Andean Cordillera."

"The Coast Range between 25º S and 35º S (which encompasses the Lipangue and Dos Marias Properties at about 33º S) comprises Jurassic granitoids cutting Paleozoic granitoids and metamorphic schists and phyllites as well as isolated areas of Jurassic andesitic volcanism and marine sedimentary sequences. Toward the close of the Jurassic, marine regression resulted in evaporite deposition to the east of the Coast Ranges. This regression resulted from uplift of the Coast Range as horsts bounded by north-south and east-west block faults that accompanied intrusion of Upper Jurassic granitoid batholithic intrusions in a north-south belt near the present coast (Haynes, 1975). At the close of the Jurassic, the sea transgressed northward over the area."

"During the Early Cretaceous an extensive north-south magmatic volcanic-plutonic arc covered the western part of northern Chile. North of 32º S, the western part of this arc was characterized by continental sediments and volcanics, intruded by early and mid-Cretaceous Batholiths, whereas the eastern part was filled with shallow marine sediments and volcanics."

"The Central Valley is a depressed elongate structure that is developed from Arica (18º S) to the Taitao Peninsula (47º S), except for a segment between Latitudes 27º S and 33º S where transverse ridges connect the Coast Ranges to the Andean Cordillera. The Central Valley proper appears to be a down-faulted graben structure bounded by longitudinal normal and strike-slip faults. Between 27º S and 33º S, faulting changes to east-facing (west dipping) north-south thrust faults present throughout the early Cretaceous volcanic-sedimentary arc and marking its eastern boundary. Of interest to metallotectonics is that the disappearance of the Central Valley is accompanied by two other tectonic features between 27º S and 33º S (Haynes, 1975):

A zone of east-west lineations between 28º S and 32º S, which continues into Argentina to at least Longitude 65º W;
A non-volcanic gap in the north-south line of Pliocene-Quaternary volcanoes that marks the Andean chain."

"Of considerable importance is the recent recognition (Davidson and Mpodozis, 1991) that this zone is marked by a shallow subducting plate (flat-slab segment of the Chilean Andes) that corresponds approximately (Latitudes 26º S to 31º S) with the largest number of known epithermal precious metal deposits in Chile (the Miocene Maricunga and El Indio belts of the Andean Cordillera; see, below). Furthermore, the zone between 26º S and 33º S was marked in the Jurassic and Early Cretaceous by the Central Chile volcanic back-arc basin in the Andean Cordillera, immediately east of the Early Cretaceous magmatic arc."

"During the Late Cretaceous change of westward oceanic plate subduction, north of La Serena, from a low-stress Marian-type to a high-stress Chilean-type caused closure of the back-arc Central Chile basin and its eastward thrust over the Anconcagua platform (Davidson and Mpodozis, 1991) to form the Domeyko Proto Cordillera. No Late Cretaceous granitoid intrusions are known in northern and central Chile. During the Upper Cretaceous and Lower Tertiary, the rocks were folded and faulted, the Andean mobile belt uplifted, and an elongate continental basin formed east of the Coast Range between 22º S to 31º S that was filled with Late Cretaceous-Early Tertiary continental volcanic rocks (tuffs, ashflows and ignimbrites) and fresh-water limestones and sediments of the Cerrillos Formation and the overlying Hornitos Formation (which contains also evaporitic gypsum units). After folding and faulting (normal and reverse) along north or north-northeast axes, the western part of the basin from 16º S to 30º S was intruded by a north-south belt of Paleocene granitoid plutons (about 60 ma), locally with subvolcanic porphyry centres or breccia pipes that are now often deeply eroded."

"The Early Eocene is marked by deposition of silicic pyroclastic (ignimbrites) and rhyolitic flows from isolated volcanic centres in the eastern part of the basin, such as Cerro de La Peinta (53 Ma) east of Copiapó and at El Salvador (45-50 Ma). These silicic pyroclastic flows overlie aggradation gravels (molasse) deposited by pediplantion of the deformed Hornitos Formation. This Eocene aggradation surface is preserved only vestigially today as remnants on higher peaks in the pre-Cordillera. However, this erosion surface may have removed many high-level Paleocene porphyritic or epithermal centres."

"The Late Eocene-Early Oligocene was marked by granitoid magmatism to the east of the Paleocene belt, which comprised plutonic stocks (about 40 Ma) in the Copiapó area and a North-south belt of high-level porphyritic sub-volcanic centres (41-28 Ma) in northern Chile along the Domeyko Fault Zone from 20º S, to its possible extension to 27º S. These sub-volcanic porphyries are the main porphyry copper belt of northern Chile."

"No Oligocene sedimentary rocks have been reported in central and northern Chile. During this period the landscape was subdued by pediplanation. The resultant aggradation surface (termed, "the Atacama Pediplain", by Sillitoe, Mortimer and Clark, 1968), and its overlying thick deposits of aggradation molasse gravels, is the dominant landform of the western flanks of the Andean Cordillera from Southern Peru to the Rio Choapa (Lat. 32º S). In the Coast Ranges it is only poorly developed. In the High Cordillera, it is concealed by younger volcanic cones. The upper age of the gravels is probably Late Miocene as ages of 12-9 Ma have been obtained from ignimbrites overlying the gravels in Atacama Province."

"The Late Oligocene-Miocene geology of the High Cordillera of central and northern Chile has been the subject of intensive investigations over the past 15 years, as this previously largely unexplored area contains significant new Au-Ag-Cu epithermal deposits (see, below). This time period (Davidson and Mpodozis, 1991) is characterized between 26º S and 31º S by volcanism which began (33-17 Ma) with eruption of rhyolitic ignimbrites and andesitic flows and breccias. At about 18 ma horizontal crustal shortening (30-40 Km) along high-angle reverse faults allowed intrusion of subvolcanic plutons and porphyry stocks (16.7 Ma) along north-south horst and graben structures. This was followed by eruption of large, Middle Miocene andesite-dacite volcanic complexes (16.6-10 Ma) which mark the last major volcanic event between 28º S and 31º S."

"In the Late Miocene-Quaternary, the High Cordillera of Chile north of 27º S was marked by extensive eruption of andesitic strato-volcanoes (including Ojos del Salado, at 6,885 m the highest volcano in the world), termed the Central Volcanic Zone. Between 27º S and 33º S volcanoes are absent, probably due to the shallow subduction zone in this region, although Late Miocene sub-volcanic porphyries (e.g., Bajo de la Alumbrera) are present to the east in Argentina at about Longitude 67º W). South of 33º, the belt of strato-volcanoes reappears as the Southern Volcanic Zone. Late Miocene (10-5 Ma) porphyry stocks (including three porphyry copper deposits) cluster around the 33º S transition."

"The Late Oligocene-Quaternary volcanism was deposited over Palaeozoic to Jurassic sediments and granitoid plutons of the Argentine platform upthrust in the Earl Tertiary as horsts. The Flat Slab Segment is underlain principally by granitoids and silicic volcanics of Late Palaeozoic age, which may be related to the prevalence of porphyry-epithermal gold deposits in this segment (Davidson and Mpodozis, 1991)."

5.0 HISTORY

5.1 LIPANGUE PROPERTY – HISTORY AND PREVIOUS EXPLORATION WORK

It is believed that portions of the Lipangue breccia may have actually been worked by the early indigenous people and Spanish colonialists as several "lavaderos" or crushing and washing areas can be found near the outcrops and trenches. In addition, an extensive area of breccia float and quartz crystals in the same area could be interpreted as old tailings piles from the processing areas (House, 1999a). Although several "pirquineiro style" mining operations started in the area about the turn of the century, the first well documented mining activities were in the Fortuna de Lampa mine, just east of the Lipangue property boundary. This mine was active over approximately a 30 year period between the early 1940’s and the late 1960’s, during which time the property saw intermittent, small scale, mining activity on a narrow vein style gold deposit. The Fortuna Mine reportedly produced almost 2,000 tonnes of vein style mineralization grading 63.9 grams gold/tonne, 51.2 grams silver/tonne, and 0.2% copper.

The first documented exploration program over the Lipangue Property, that Howe is aware of, was completed by Shell (La Division Metales de Shell Chile S.A.) in 1985 as part of a regional exploration program over the Altos de Lipangue plateau. Shell’s project covered a northeast elongate area of about 7 to 8 kilometres by 2 kilometres wide and included ground presently covered by Medinah’s Lipangue and Dos Marias Properties, as well as the nearby Fortuna Property (now held by Cerro Dorado Inc.), and the Fenix, San Manuel, and Juan Jose claims. Shell had optioned all of the ground from Quijano, the owner at that time.

The Shell property review was completed by Alejandro Faunes ("Faunes") over a 5 day period using 1:25,000 topography maps and 1:10,000 air photos as a mapping base. During the study 56 rock chip and/or grab samples and 5 soil samples were collected from various parts of the project area. Soil samples were collected from pits dug to a depth of 30-50 centimetres. All samples were sent to Geolab, presumably in Santiago, where they were believed to be analysed for gold by 100 gram fire assay and for copper, silver, lead, zinc, molybdenum, arsenic, and antimony by atomic absorption (Note: only the locations of the 10 samples collected from the Lipangue Property were documented on a sketch style map and no analytical certificates documenting preparation techniques or sample descriptions were included in the report reviewed by Howe).

In the area of the Lipangue Property Faunes identified a topographical depression which was covered with limonitic and silica rich regolith soil. Initial soil and/or rock sampling (10 samples) yielded anomalous values of gold (trace to 2.61 ppm), copper (9 to 376 ppm), silver (trace to 5.9 ppm), molybdenum (2 to 17 ppm), along with minor zinc and lead anomalies over an area covering about 300 metres (east-west) by 70 metres. Further investigation uncovered a roughly east northeast elongate area with subcrops and boulder rubble of intensely oxidized hydrothermal breccia consisting of fragments of heavily altered granodiorite, cemented with quartz and limonitized sulphides. Faunes suggested that even though this breccia remained for all intent and purpose, unexplored and had unknown strike and depth potential, it represented an excellent precious and base metal target that could host a significant resource. Based on its elongated shape, Faunes suggested that it has a strong northeast trending structural control. Additional sampling south of the breccia along the southeast edge of the plateau yielded additional anomalies of gold, copper and silver, but the values and locations of these samples were not documented in the report reviewed by Howe.

At the end of his report Faunes concluded that the area surrounding the Altos de Lipangue Plateau was host to a several under explored vein, manto, breccia, and disseminated style targets that are predominantly mineralized with gold-silver-copper. Many of these targets are structurally controlled by a series of northeast, northwest, and east-west faults and/or shear zones. Faunes recommended that following work program be initiated:

	a program of mapping and sampling at a scale of 1:10,000 using an orthophoto map base; as part of this work program, systematic stream sediment samples should be collected from the main drainages in the area;
	a program of systematic trenching and mapping to locate the main vein trends; the accessible underground working should also be mapped and sampled;
	a systematic geochemical sampling grid should be constructed over the Lipangue breccia; samples should be gathered from pits or shallow plugger style holes; based on these results a series of trenches should be excavated over the zone to determine its surface extent, and;
	any targets from the above work program that yield positive results should be further explored by underground drifting and bulk samples collected for metallurgical testing.

(Faunes, 1986)

It is not known if Shell completed any further exploration on any of these targets.

Shortly thereafter Shell dropped the option on the Lipangue property and the owner, Quijano completed a program of bulldozer trenches in an attempt to trace the surface extent of the breccia and search for new high grade "La Fortuna" style auriferous quartz veins. At least 15 trenches ranging in length between approximately 20 and 100 metres were completed over the plateau and extending northeast towards the La Fortuna Mine. It is unknown if these trenches were ever detail mapped or systematically sampled by Quijano. About the same time, Quijano attempted to drill a small diameter diamond drill hole close to the present location of Trench #3. Recent mapping by Medinah in this trench indicates that the hole was collared in hydrothermally altered granodiorite. Quijano experienced difficulties with the drilling and was only able to complete the hole to a depth of 37 metres, however a piece of core from this hole reviewed by House showed altered, sub-rounded granodiorite fragments up to 20 centimetres across surrounded by quartz crystals in a matrix of pyrite and chalcopyrite (House, 1998d). It is unknown if any logging or analysis was completed on the core.

Evidence of a second, reverse circulation drill hole exists, near the northwest end of Trench #1. Piles of the drill chips among small shards of the long decomposed plastic sample bags can be seen on surface close to the collar of the large diameter reverse circulation hole. It is uncertain who completed this drilling, or when, and whether any drill logs or analytical data documenting the results are still in existence.

5.2 LAS DOS MARIAS PROPERTY – HISTORY AND PREVIOUS EXPLORATION WORK

Numerous old adits, shafts, and pits are located along the Quebrada Durazno and surrounding hillsides in the vicinity of the old Dos Marias Mine. The workings on the west side of the creek are the oldest and most extensive and appear to have had their own mill site and tailings disposal site. The timing of this work is unknown, but early diggings and gold placer operations further north down the creek, may date back hundreds of years, possibly to Spanish colonial times. No data regarding these mining activities were made available to Medinah and it is unknown as to the amount of gold (+/-copper?) mined and processed, the average grade, or the extent of the workings. More recent adits have been excavated into the hillside on the east side of the creek following several copper +/-gold mineralized manto horizons. Based on the limited amount of dumps, it appears that this material may have been hand cobbed and hauled to a plant for milling. Similar to the other workings, no data documenting this previous mining activity was forwarded to Medinah.

The first documented exploration program over the Dos Marias Property, that Howe is aware of, was completed by Shell (La Division Metales de Shell Chile S.A.) in 1985 as part of a regional exploration program over the Altos de Lipangue plateau (see Section 5.1). Although Shell’s project covered a large regional area and concentrated mainly on the area of the Lipangue and Fortuna Gold Properties, a short visit was made to the Dos Marias Property by their geologist, Faunes, during which time he completed a very early stage reconnaissance review of the property. Several copper-silver +/- gold mineralized massive, and disseminated sulphide manto horizons, each about 1 or 2 metres in thickness were mapped and sampled, however the results of the analysis were not included in the report reviewed by Howe. Faunes noted that the several separate mineralized horizons are hosted in interbedded volcanic, sandstone, and limestone units of the Prado Formation. On the steep slopes west of the Quebrada Durazno and in front of the Dos Marias Mine main shaft, Faunes mapped an area of intensely argillized and limonitized rock, which probably corresponds with the area of workings on the west side of the creek. Previous sampling by Quijano in the shafts around this zone had reportedly yielded values of 30 and 4.2 grams gold/tonne. (Note: no maps or analytical certificates documenting the locations of these samples, or sampling and analytical methods were attached to the report reviewed by Howe).

It is unknown if Shell completed any further work on this property, however several reverse circulation drill holes were located by Medinah at the Dos Marias property during their recent mapping program. These holes may have been drilled at the same time, and by the same company, that drilled the reverse circulation hole found at Lipangue (see section 5.1). Collars from 5 large diameter, vertical holes were located by Medinah at the following locations:

	station 450, just south of line 4 (at the portal to the adit);
	station 1050, between lines 3 and 4;
	station 600, on line 5;
	station 350, between lines 4 and 5 (at the collapsed glory hole above the declined shaft);
	station 425, between lines 4 and 5.

Similar to the drill hole at Lipangue, Medinah has no data documenting the results of these holes (final depths, analytical results, geological logs, etc).

5.3 MEDINAH EXPLORATION PROGRAMS - LIPANGUE

5.3.1 PHASE I – Reconnaissance Over The Lipangue (and Dos Marias) Property

The first phase of exploration over the Lipangue and Dos Marias Properties by Medinah took place in July 1998 during which time they had optioned a total of 1,178 mining claims throughout Chile from Quijano. The majority of these claims were located within a 75 kilometre radius of Santiago and collectively, were part of Medinah’s "Santiago Project". The claims were grouped into 10 individual hard rock mining properties (463 claims) and 2 placer properties (437 claims) and included the Lipangue and Dos Marias Properties. Medinah retained the services of Gordon House ("House"), a consulting geologist from Vancouver, to complete a preliminary review and prioritize the properties for further exploration.

House’s field review took place over a 12 day period during which time each of the 10 properties were subject to a reconnaissance mapping and sampling program. The visit to the Lipangue Property confirmed the existence of a what House mapped as a hydrothermal diatreme breccia consisting of rounded and altered clasts of volcanic tuff and granodiorite cemented by a matrix of crystalline quartz and sulphide minerals. House noted abundant Cu-oxide mineralization in the breccia rubble and estimated that the breccia could extend over an area of 450 metres by 150 metres, but this could not be confirmed due to poor outcrop exposure, and many of the previously excavated trenches being covered by slumped material. (House, 1998a).

House took two grab samples at Lipangue; one of the breccia, and a second of the volcanic wall rock. Both samples were submitted for analytical analysis at ITS- Bondar Clegg Laboratories in La Serena, Chile where they were analysed for gold by 30 gram fire assay and silver, copper, lead, zinc, and molybdenum by ICP, and mercury by cold vapour AA. The assay results for the breccia and the wall rock yielded weakly anomalous values of 58 and 61 ppb gold/tonne, and 170 and 127 ppm copper/tonne, respectively; and insignificant or weakly anomalous values for the other elements analysed.

House recommended that the Lipangue breccia be further evaluated by geological mapping and geochemical soil sampling to outline its surface dimensions, followed by an I.P. geophysical survey to determine the depth and extent of mineralization. He concluded that any of the resulting anomalies should then be tested by approximately 2,000 metres of diamond drilling. House also recommended that the access road be upgraded so that drills and support vehicles could easily reach the summit of the plateau. The approximate cost for this next phase of exploration was estimated to be US$287,500.

The visit to the Dos Marias Property by House outlined a series of east dipping, stratiform copper +/- gold mineralized horizons on the east side of north trending Quebrada Durazno, which had been intermittently mined in the past at several different stratigraphic horizons. Based on the limited extent of the workings House suggested that these may be purely exploration tunnels and that the majority of the previous mining activity actually took place on the west side of the creek. These "western" workings appeared to be much older and were reportedly mined by the Spanish for gold several hundred years ago. A declined shaft which follows a 48 degree, west dipping, pyritic mineralized horizon, was apparently the main access point for the mining operations. Significant sized dumps and tailings piles were noted by House in the vicinity of this shaft, however no maps or production records exist which document the extent of the workings, or the amount or grades of the material mined. According to House, an attempt by the property vendor (Quijano) to dewater the shaft about 10 years prior to House’s visit was abandoned after the water level was only lowered by 35 meters. Two samples gathered by Quijano in the shaft during the dewatering program reportedly yielded 2.8 and 34 grams gold per tonne (Note: the sampling and analytical method was not documented).

House concluded that the mineralization in the eastern portion of Dos Marias, is related to stratiform replacement horizons that may be related to the intrusion of the Lipangue Breccia zone, 2,000 metres to the east. Copper and minor gold mineralization occurred along favourable, gently east dipping, volcanic and/or sedimentary host lithologies. The mineralization along the western part of the claim, in comparison, is west dipping, and may be structurally related to a north trending fault/shear zone which roughly follows the orientation of the creek (House, 1998a).

House recommended that the Dos Marias properties be further explored by geological mapping and rock and/or soil sampling with the main objective being to outline the mineralized horizons on both sides of the creek and to determine any structural controls. House also suggested that during the mapping an emphasis should be placed on determining the relationship, if any exists, between the replacement manto style mineralization at Dos Marias and the intrusive hydrothermal breccia at Lipangue. Based on the results of this work, House recommended that additional ground should be acquired between the two properties. In addition, gridding and an IP/resistivity survey should be completed over both sides of the creek covering any geochemical soil anomalies obtained from the soil survey. Finally, approximately 1,600 metres of diamond drilling was recommended to test any resulting geophysical anomalies. The approximate cost for this next phase of exploration was estimated to be US$234,000 (House, 1998a).

House also recommended that some of the other properties, optioned as part of the Santiago Project, be further explored, however Howe is not aware of the results of these other exploration programs, nor whether they remain part of Medinah’s Chilean property position.

In August of 1998, House submitted another report to Medinah which detailed the possible relationship between the Lipangue Breccia and the Dos Marias mineralization. House suggests that the Lipangue breccia could represent the top of a late stage, mineralized intrusive event with a larger, copper-molybdenum-gold porphyry system occurring at depth. This presumed porphyry, or the lower parts of the breccia, could have been the driving force that supplied the mineralized hydrothermal fluids that percolated through selective favourable volcanic and sedimentary horizons and deposited copper and gold mineralization at Dos Marias (House, 1998b). House hoped to further substantiate this concept during the next phase of exploration.

5.3.2 PHASE II - LIPANGUE

The second phase of exploration at Lipangue was completed by Medinah between September 13, and October 8, 1998. The program was coordinated by House and during this time Howe Chile was retained to have a geologist on site to assist in the completion of the program. The exploration program consisted of the following:

	a surveyed grid was established by the geophysical contractor, Geodatos (based out of Santiago); the grid consisted of 9 north-south oriented, 1,200 metre long lines, spaced 200 metres apart, with individual stations on each line spaced 100 metres apart;
	an IP/resistivity survey was completed by Geodatos over the gridded area using a dipole-dipole configuration; the survey covered a total of 16.8 line kilometres with dipole length of 100 metres along the lines, and N spacing of 1 to 6 dipoles giving an effective depth of exploration of approximately 200 metres; pseudosections of the resistivity, raw phase and decoupled phase were presented in the report, and in addition the results were inverted to give depth sections using Interpex software (RESIX 2DI). (Note: the individual pseudo sections have not been reproduced by Howe for this report, but are well documented in Geodatos, 1998, and in House, 1998d);
	a portion of the previously excavated bulldozer trenches were deepened by a bulldozer and geologically mapped; only one sample was collected by Medinah near trench #3 which yielded 0.12 grams gold/tonne and 67 ppm copper; three of the mapped trenches were reproduced by House in his report, and;
	the gridded area was geologically mapped at a scale of 1:5,000.

The results of the 1998 mapping program indicated that the breccia occurs at the north-south oriented contact zone between propylitically altered massive lavas of the Veta Negro Formation and granodiorite of the central batholith. The breccia outcrops in a topographic depression on the plateau which is covered by a thin (approximately 1 metre) layer of regolith, composed of limonitic soil and oxidized breccia fragments. The surface extent of breccia float material was originally thought to roughly represent the outline of the underlying breccia (covering an area of approximately 600 metres (east-west) by 300 metres), however based on the recent mapping the true surface extent of the breccia is actually much smaller, extending over an area of about 200 metres (east-west) by 150 metres. In February 1999, the IP/resistivity data collected and processed by Geodatos was reviewed by a second geophysical consulting firm in Santiago (PGW S.A.). The results of their review corresponded with those obtained from Geodatos. The results of the geophysical survey indicated three main areas of anomalies.

	The first anomalous area is located over 3 consecutive lines, E, F, and G between stations 600 S and 800S and likely corresponds with surface and subsurface eastward continuation of the Lipangue breccia. On line E the modeling shows that the top of the anomaly is at 50 metres depth (however mapping shows a good correlation with the surface outcrop of the breccia at this point). The Line F anomaly was also modeled indicating the top of the anomaly also occurs at 50 metres, while on Line G the depth was about 120 metres. This indicates that the breccia likely continues east of its mapped outcrop extent, but it plunges below the outcropping granodiorite east of Line E, and becomes progressively deeper to the east. If the breccia continues past Line H with the same steep plunge, the depth of penetration of the IP survey would have been insufficient to detect it on this line.
	The second anomaly occurs on Line A between 600S and 800S and modeling indicates that the top of the anomaly occurs at a depth of about 50 to 100 metres. Surface geology in this area was mapped as massive propylitically altered andesite with varying amounts of disseminated magnetite.
	The third anomaly occurs on Line I between 600S and 1000S. Modeling indicates a rather flat lying broad anomaly that could correlate with units recently mapped by Medinah which consist of disseminated magnetite and/or sulphides in propylitically altered granodiorite.

(Ugalde, 1998)

At the conclusion of his report, House states that based on the results of the IP/resistivity survey, a polarized body (which likely corresponds with the subsurface east extension of the Lipangue breccia) can be traced over a strike length of more than 400 metres (between Lines E and G), and across a width of at least 200 metres. Geological mapping in the trenches above the east to southeast plunging breccia have uncovered phyllic altered granodiorite with relict pyrite clasts, which may be representative of wall rock alteration on the margins of the breccia. House recommended that a program of diamond drilling be initiated, testing the full 400 metre strike extension of the breccia with 6 drill holes, each to a minimum depth of 250 meters, and at least one to be drilled to a depth of about 400 metres. In addition, House recommended that at least one hole be drilled on Line A at station 700S to determine if the IP anomaly is a result of silicification and magnetite, or sulphide mineralization. Similarly, the anomaly on Line I at station 500S should also be drill tested. The approximate cost for this program was estimated to be US$440,000

5.3.3 PHASE III - LIPANGUE

The third phase of exploration at Lipangue took place between February 8 and April 18, 1999 and consisted of a diamond drill program to test the anomalies outlined by the IP/resistivity survey completed during Phase II. This drill program consisted of the following activities.

	Widening and general rehabilitation of the Lampa to Lipangue access road.
	A total of 1,652 metres of diamond drilling in 7 drill holes which ranged in depth between approximately 70 and 348 metres; all drilling was completed by PerfoAndes S.A. from Chile using a Boyles 56 drill rig and holes were collared vertically (except for one hole at –60º) with HQ diameter core which was reduced to NQ at depths ranging between approximately 18 and 86 metres; none of the final collar coordinates were surveyed and down hole deviation tests were not completed; at the end of each hole, PVC tubing was left in the collar and a cement block placed around it as a permanent marker; based on the core reviewed by Howe, the core recovery generally appeared very good, however percent recovery logs were not included in the logs; all logs prepared by Medinah are included in Appendix II.
	A total of 907 half core samples, each 1 metre in length were taken from mineralized sections of the core using a "hammer and wheel" style core splitter; samples were collected by a trained student assistant, but under the supervision of House; once labeled and bagged the samples were under the control of House at all times, until about a shipment was ready (50 to 100 samples) and then these were taken directly by Medinah to the laboratory for analysis; the remaining unsplit and halved core is stored in a secure locked storage facility in Santiago; all samples were analysed at ACME Analytical Laboratories S.A. ("ACME") in Santiago for gold by 30 gram fire assay and copper by AAS. The pulps were then shipped directly by ACME to their associated laboratory in Vancouver, Canada where they were further analysed for 30 elements by ICP method; as part of their in-house quality assurance program, ACME reported the results of their own blank, standard, and duplicate samples on the assay certificates (a full list of the ACME assay certificates were included as Appendix III in House, 1999a, and therefore have not been reproduced by Howe, however a list of the certificate numbers included in his report is shown in Appendix IV of this report); approximate general ranges of the gold, silver, and copper values returned from the recent drilling program shown on Table 5.2 and a table showing the significant drilling weighted average analytical results is shown on Table 5.3.

Table 5.1: Lipangue Diamond Drill Holes – (First Phase of Drilling, 1999)

Drill Hole	Approx. Elevation (m)	Approximate UTM Location of Collars		Azimuth	Dip		Depth (m)	Samples Numbers (total #)
		Easting	Northing
L99-01	2,005	315085	6314063	----	-90º		70.00	332151-332178 (28)
L99-02	2,005	315292	6314057	----	-90º		250.30	332179-332218 (40)
L99-03	2,000	315070	6313922	----	-90º		297.50	332219-332423 (205)
L99-04	2,005	315192	6314019	180º	-60º		210.70	332425-332538 (114)
L99-05	2,000	315095	6313922	----	-90º		348.35	332541-332650, 346950-347020 (182)
L99-06	2,000	315070	6313957	----	-90º		293.30	347021-347149, 346300-346367 (197)
L99-07	2,003	315070	6313982	----	-90º		181.85	347632-347772 (141)
TOTAL						1652 m			907 samples

Table 5.2: Lipangue Property – General Range of Gold, Silver, and Copper Values Returned from the 1999 Diamond Drilling Program:

Sample Location in Drill Hole	Gold (g/t)	Silver (g/t)	Copper (%)
Total Range of Values	0.01 – 33.67	0.10 – 103.4	0.001 – 3.71
Approximate Average Range of Values in "Low Grade Breccia"	0.10 – 0.60	1.0 – 7.0	0.02 – 0.20
Approximate Average Range of Values in "High Grade Breccia"	1.0 – 4.0	10.0 – 50.0	0.50 – 1.0
Approximate Average Range of Values in Granodiorite	0.01 – 0.05	0.10 – 1.0	0.001 – 0.03

Table 5.3: Lipangue Property - Significant Diamond Drilling Analytical Results

DDH	Depth (m)			Weighted Averages
	From	To	Interval	Au (g/t)	Ag (g/t)	Cu (%)
L99-01	no	significant	results	----	----	----
L99-02	110	124	15	0.18	1.98	0.18
L99-03	92 incl. 92 and 155 187	176 121 158 223	84 29 3 36	1.72 2.59 12.86 0.37	10.07 20.84 19.3 2.88	0.40 0.85 0.89 0.04
L99-04	no	significant	results	----	----	----
L99-05	103 incl. 110 130 206 264	113 113 131 246 288	10 3 1 40 24	7.92 20.02 33.67 0.23 0.47	23.42 56.06 5.5 1.35 2.11	0.86 2.24 0.13 0.07 0.10
L99-06	40 incl. 40 and 62	194 48 81	154 8 19	0.60 1.6 1.39	13.7 34.45 44.16	0.39 0.66 1.25
L99-07	19 incl. 54 and 112 and 135	143 82 124 143	124 28 12 9	0.49 1.26 0.36 0.87	9.68 18.11 14.81 31.36	0.31 0.49 0.56 1.45

The results of the drilling program were extremely favourable, and even though the two step out holes to the east (L99-02 and 04) failed to intersect the breccia, the remaining 5 holes did confirm the earlier hopes that a significant gold-copper-silver prospect occurs on the property. The drilling did not outline a significant strike or down-plunge extent of the breccia, however on one section the breccia was traced approximately 200 metres down the apparent dip of the breccia, and at the end of the drilling program the breccia remained open in all directions. In addition it was discovered that the breccia hosts a 10 to 20 metre wide higher grade zone near its upper contact with the granodiorite. House recommended that the breccia be further tested by approximately 16 additional (results driven) drill holes totaling 5,000 metres which would trace the breccia to the west and south. In addition, it was suggested that a new IP/resisitivity survey should be completed using 200 metre dipoles. Although the first survey was considered to be a success, the wider dipoles would in theory be able to detect the breccia at much deeper levels than the first survey. The approximate cost for this program was estimated to be US$904,100.

5.3.4 PHASE IV - LIPANGUE

The fourth and most recent phase of exploration at Lipangue was completed by Medinah between August 1999 and April 2000, and consisted of gridding, geophysical surveys, geological mapping, and diamond drilling. Similar to the earlier programs, the program was coordinated by, and all work was completed by House. A much smaller drill program was completed, than originally budgeted, presumably due to the cost. The details of the exploration program are summarized below.

	Several lines were added to the existing surveyed grid by the geophysical contractor, Geodatos (based out of Santiago); the new grid lines consisted of 3 north-south oriented, 2,000 metre long, "fill-in" lines, spaced 200 metres apart, with individual stations on each line spaced 200 metres apart, and 2 east-west oriented, 2,000 metre long lines, spaced 150 metres apart, with individual stations spaced 200 metres apart.
	An IP/resistivity survey was completed by Geodatos between August 3 and 19, 1999 and October 10 and 11, 1999 over the new gridded area using a dipole-dipole configuration; the survey covered a total of 10 line kilometres with dipole length of 200 metres along the lines, and N spacing of 1 to 6 dipoles giving an effective depth of exploration of approximately 500 metres; pseudosections of the resistivity, raw phase and decoupled phase were presented in the report, and in addition the results were inverted to give depth sections using Interpex software (RESIX 2DI). (Note: the individual pseudo sections have not been reproduced by Howe for this report, but are well documented in Geodatos, 1999).
	The gridded area (including the 1998 grid) was geologically mapped.

A total of approximately 1,181 metres of diamond drilling was completed in 5 drill holes which ranged in depth between approximately 112 and 325 metres (see Table 5.4); all drilling was completed by PerfoAndes S.A. from Chile using a Boyles 56 drill rig and holes were collared at –70º, oriented north; drilling was completed with HQ diameter core which was reduced to NQ at depths ranging between approximately 89 and 114 metres; none of the final collar coordinates were surveyed and down hole deviation tests were not completed; at the end of each hole, PVC tubing was left in the collar and a cement block placed around it as a permanent marker; based on the core recovery logs and the portions of the holes reviewed by Howe, the core recovery generally appeared very good; all diamond drill logs prepared by Medinah are included in Appendix II.

A total of 360 half core samples, each 1 metre in length were taken from mineralized sections of the core using a "hammer and wheel" style core splitter; samples were collected by a trained assistant, but under the supervision of House; once labeled and bagged the samples were under the control of House at all times, until about a shipment was ready (50 to 100 samples) and then these were taken directly by House to the laboratory for analysis; the remaining unsplit and halved core is currently stored in a secure locked storage facility in Lampa; all samples were analysed at ACME Analytical Laboratories S.A. ("ACME") in Santiago for gold by 30 gram fire assay and copper by AAS. The pulps were then shipped directly by ACME to their associated laboratory in Vancouver, Canada where they were further analysed for 30 elements by ICP method; as part of their in-house quality assurance program, ACME reported the results of their own blank, standard, and duplicate samples on the assay certificates (a full list of the ACME assay certificates were included as Appendix IV in House, 2000a, and therefore have not been reproduced by Howe, however a list of the certificate numbers included in his report is shown in Appendix IV of this report); approximate general ranges of the gold, silver, and copper values returned from the recent drilling program is shown on Table 5.5 and the significant drilling weighted averages are shown on Table 5.6.

Note: According to new guidelines set out by the TSE Mining Standards Task Force Final Report, January 1999, and similar "international guidelines" put out by various regulatory bodies worldwide, a stringent quality control program is essential for compiling reliable exploration data, especially during drilling programs. For all future work, Medinah should ensure that sample preparation and quality control procedures are well organized to monitor the accuracy and precision of analytical results, to detect possible sample contamination, and to add confidence to future resource estimates. In addition to the laboratories’ in-house quality assurance program, each sample batch sent to a laboratory should include: sample duplicates (1 in 20 samples), assay duplicates (at least 1 per batch), multi-element standards (at least 1 per batch), and blank standards (at least 1 per batch). In addition inter-laboratory preparation and analytical checks should be completed through the sampling phase of the drill program. Also, during the core logging process all core should be photographed prior to cutting and the geological logging should be preceded by geotechnical logging (percent recovery, RQD, fractures, etc.). In addition, to assist in future resource estimates, specific gravity measurements should be taken at representative intervals along the length of the hole.

The 1999 mapping program concentrated in the southern portion of the grid, covering the area above the breccia’s east southeast plunge, and over the contact area between the andesite and granodiorite. In addition, traverses were made over old workings at the southern extent of the grid along the steep east slopes of the Lipangue Plateau. These workings were mostly on quartz veins and shears, that House feels are leakage anomalies from the hydrothermal system that formed the Lipangue breccia pipe. House collected four samples of the veins and dumps in this area which yielded slightly anomalous values of gold (0.08 to 2.53 grams/tonne), copper (185 to 650 ppm), and arsenic (103 to 953 ppm). The results of the mapping program did not change the overall geological picture from the previous mapping program, but did refine the locations of the contacts.

The results of the IP/resistivity survey were interpreted by Geodatos and submitted as part of their report (see Geodatos, 1999a), is summarized below.

	The report mentions that anomalous polarized bodies have been recognized in lines DE, EF, FG, and P-850 which are related to resistive rocks. Line DE and EF revealed a polarized body between stations 700 and 900 at a depth of approximately 200 metres. According to Geodatos this polarized body could be related to sulphide mineralization in silicified rocks. The location of this anomaly corresponds with the projected plunge of the Lipangue breccia.
	The northern extent of lines DE and EF (between stations 200 and 300 at a depth of about 200 metres) also uncovered additional anomalous zones related to polarized bodies in highly resistive (silicified) rocks. These areas remain untested by drilling and could be indicating additional mineralized zones (breccias?) at depth, or as suggested by House, (2000a) a deeper expression of quartz vein mineralization found at surface at the Veta Espanola prospect within the boundaries of the Lipangue Property.
	Line FG shows an anomalous polarized body at approximately 200 metres depth centered at around station 300. This anomaly is hosted in very resistive rocks.
	Line P-850 shows a very resistive anomalous body between stations 400 and 800 at a depth of about 200 to 300 metres.
	Line P-1000 shows some high resistivity values at depth along the western edge of the line, which could correlate, with the anomalies located on line P-850.

At the conclusion of their report, Geodatos recommended that the following anomalies be tested by drilling:

	Line DE between stations 700 and 1000 metres at a depth of 200 metres, and;
	Line P-850 between stations 500 and 800 at a depth of 200 metres.

House states in his report that Geodatos’s first recommended drill target indicates that the breccia pipe appears to extend further to the west than expected and may follow the contact of the andesite more closely than previously thought. According to House, the second recommended anomaly underlies an area which has been mapped as propylitized andesite and in fact the anomaly could be a result of disseminated magnetite within this unit, rather than the breccia pipe. House goes on to say that based on the results of the IP/resistivity survey, the Lipangue breccia pipe and/or its silicified and pyritic haloes have successfully been traced down plunge to the south, and that the pipe appears to extend further west than expected. House also feels that although the results were not as clear as the previous survey, probably due to the much wider dipole spacing, there was sufficient data to plan the recent drill program.

The drill program was successful in that four of the five drill holes intersected the breccia pipe roughly defining the western boundary of the pipe, tracing it an additional 50 metres to the east. The breccia still remains open at depth, and to the east, and more drilling will be required to more accurately define the western boundary. At the end of his report House recommended that another program of diamond drilling be initiated, testing the eastern and depth extent of the breccia. The program would include 6 drill holes, totaling approximately 2,250 metres. The approximate cost for this program was estimated to be approximately US$275,000.

Table 5.4: Lipangue Diamond Drill Holes (Second Drilling Program)

Drill Hole	Approx. Elevation (m)	Approximate UTM Location of Collars		Azimuth	Dip		Depth (m)	Samples Numbers (total #)
		Easting	Northing
L99-08	1,990	315075	6313870	360º	-70º		260.15	348500-348613 (114)
L00-09	1,985	315025	6313870	360º	-70º		209.00	348614-348628 (15)
L00-10	1,985	315025	6313920	360º	-70º		111.55	348629-348631 (3)
L00-11	1,985	315075	6314820	360º	-70º		325.00	348632-348729 (98)
L00-12	1,980	315125	6313870	360º	-70º		275.00	349324-439452, and 349453 (130)
TOTAL						1180.7 m			360 samples

Table 5.5: Lipangue Property – General Range of Gold, Silver, and Copper Values Returned from the Recent Diamond Drilling Program:

Sample Location in Drill Hole	Gold (g/t)	Silver (g/t)	Copper (%)
Total Range of Values	0.01 – 61.00	0.10 – 234.70	0.001 – 3.88
Approximate Average Range of Values in "Low Grade Breccia"	0.10 – 0.60	1.0 – 7.0	0.02 – 0.20
Approximate Average Range of Values in "High Grade Breccia"	1.0 – 4.0	10.0 – 50.0	0.50 – 1.0
Approximate Average Range of Values in Granodiorite	0.01 – 0.05	0.10 – 1.0	0.001 – 0.03

Table 5.6: Lipangue Property - Significant Diamond Drilling Analytical Results (Second Drilling Program)

DDH	Depth (m)			Weighted Averages
	From	To	Interval	Au (g/t)	Ag (g/t)	Cu (%)
L99-08	126 incl. 130 and 150	158 133 153	32 3 3	6.69 15.61 40.41	39.10 99.57 154.17	0.63 0.91 2.41
L00-09		124	6	5.93	23.60	0.81
L00-10	no	significant	results	(did not	intersect	breccia)
L00-11	199 incl. 205	211 209	12 4	0.23 0.34	3.47 7.95	0.17 0.39
L00-12	158 incl. 176 244	183 183 251	25 7 7	2.23 3.39 1.43	16.16 31.9 5.64	0.55 1.50 0.33

5.4 MEDINAH EXPLORATION PROGRAMS – DOS MARIAS

5.4.1 PHASE I – Reconnaissance Over The Dos Marias (and Lipangue) Property

See section 5.3.1

5.4.2 PHASE II - DOS MARIAS

The second phase of exploration at Dos Marias was completed by Medinah between September 8 and October 16, 1998. The program was coordinated by House and Howe Chile was retained to have a geologist on site during this period to assist in the completion of the program. The exploration program consisted of the following activities.

	A surveyed grid was established by the geophysical contractor, Geodatos (based out of Santiago); the grid consisted of 6 east-west oriented, 1,000 metre long lines (lines 3 to 8), spaced 200 metres apart, with individual stations on each line spaced 100 metres apart.
	An IP/resistivity survey was completed by Geodatos over the gridded area using a dipole-dipole configuration; the survey covered a total of 6 line kilometres with dipole length of 100 metres along the lines, and N spacing of 1 to 6 dipoles giving an effective depth of exploration of approximately 200 metres; pseudosections of the resistivity, raw phase and decoupled phase were presented in the report, and in addition the results were inverted to give depth sections using Interpex software (RESIX 2DI); (Note: the individual pseudo sections have not been reproduced by Howe for this report, but are well documented in Geodatos, 1998, and in House, 1998c).
	The adit into the manto style mineralization on the east side of the creek was mapped at a scale of approximately 1:500 using chain and compass method (raises were not mapped due to unsafe conditions); no systematic sampling was completed as part of the mapping, however two grab samples collected from a 27 centimetre wide "manto horizon" and 20 to 30 centimetre wide underlying unit of magnetite rich siliceous tuff, at the northeast corner of the mapped workings, yielded 0.01grams gold/tonne and 0.53% copper, and 0.12 grams gold/tonne and 0.33% copper, respectively (House, 1999b).
	The gridded area was geologically mapped at a scale of 1:10,000.
	Almost no surface sampling was completed as part of this exploration phase, however a sample taken over an approximately 20 metre interval over one of the tailings pile in front of the main adit, yielded 5.39 grams gold/tonne (Note: it is not stated if this is a continuous channel sample, or a composite grab).

(House, 1998c)

The results of the 1998 mapping program indicated that the property is much more structurally and mineralogically complicated than originally thought. Two distinct styles of gold and/or copper mineralization have been identified by Medinah at Dos Marias.

Shear zone hosted gold: this type of mineralization occurs in a 340º to 350º striking, 65º to 75º west dipping, 50 to 100 metre wide shear zone which can be traced over a strike length of about 700 metres (traced through surface outcrops and extrapolated along strike through IP/resistivity results). The strike of the shear roughly follows the base of the Quebrada Durazno. The dip of the shear zone cross-cuts the east dipping host lithology. Mineralization occurs as fine disseminated pyrite and quartz-sulphide (pyrite-arsenopyrite) stringers, 2 to 5 centimetres wide, and spaced 15-25 centimetres apart, which is mainly hosted in siliceous and pyritic ash tuff and tuff, but also in the underlying porphyritic andesite flows. The shear has been intruded by a granodiorite dike at the southern end of the property which may have introduced, or re-mobilized and enriched some of the gold mineralization. The shear zone remains open both to the north and south (House, 1998c).
Manto style copper mineralization: this type of mineralization consists of a series of stratrabound, generally north striking, east dipping manto horizons, hosted within the tuff horizons on the east side of the creek. The individual mantos are not more than a few metres in thickness, but are vertically "stacked" throughout the stratigraphic sequence. Mineralization consists of semi-massive to massive pyrite and chalcopyrite, however many of the exposures are well oxidized and consist of varying copper oxides, limonite, and iron oxides (House, 1998c).

In February 1999, the IP/resistivity data collected and processed by Geodatos was reviewed by a second geophysical consulting firm in Santiago (PGW S.A.). The results of their review roughly corresponded with the conclusions obtained from Geodatos. The results of the geophysical survey indicated that the units on the west side of the survey area are highly resistive and likely correlate with the porphyritic andesite unit mapped by Medinah. The volcanic sequence in the middle of the survey area had a medium to low resistive response. Several anomalous areas were uncovered during the survey.

The main anomalous area consists of polarized bodies located on all 6 lines between stations 400 and 600. The report states that the anomaly occurs in the medium to low resistive unit (volcanic sequence) at the contact with the highly resistive unit (porphyritic andesite). The anomaly is best defined on lines 6 to 8, but here it may be related to the granodiorite intrusive. Modeling indicates that the top of the anomaly is shallow (less than 40 metres depth) on each of the sections.

A second anomaly occurs on Line 5 between stations 300 and 500. This anomaly occurs at a very shallow depth and modeling shows it to have an east dip, similar to the manto style mineralization which occurs in the area.

(Ugalde, 1998)

At the conclusion of his report, House states that the granodiorite dike may be related to both the manto style and shear zone hosted mineralization, however this relationship has not yet been clearly defined. In addition, uncertainty remained concerning the relationship between the three main stratigraphic sequences mapped on the property (House,1998c).

House recommended that a program of diamond drilling be initiated, testing the IP/resistivity anomalies obtained over the manto style, and shear zone hosted gold mineralization. House suggested that 3 drill holes, located near Station 600 on lines 4 and 5, should be drilled to depths of at least 200 metres to intersect the full sequence of manto mineralization. In addition, House recommended that at least two drill holes be collared to intersect the shear zone and possibly the granodiorite dike at depth, on Line 4 about station 300. These holes should be drilled to a depth of at least 150 metres. Finally, the intersection of the granodiorite dike and the shear zone between Lines 5 and 6, at stations 400 to 500, should be tested with at least 3 drill holes, each to a minimum depth of about 200 metres. The approximate cost for this program, which included road upgrading was estimated to be US$278,000

5.4.3 PHASE III - DOS MARIAS

The third phase of exploration at Dos Marias took place between March 30 and April 11, 1999 and consisted of a diamond drill program to test the anomalies outlined by the IP/resistivity survey completed during Phase II (even though House recommended that Medinah complete a drill program with at least 8 diamond drill holes, a much smaller program was completed, presumably for budget reasons). The drill program consisted of the following.

	Widening and general rehabilitation of the Lampa to Dos Marias access road.
	A total of approximately 456 metres of diamond drilling in 2 drill holes which were 155.55 and 300.7 metres in depth, respectively (see Table 5.7 and Figure 5.6); all drilling was completed by PerfoAndes S.A. from Chile using a Boyles 56 drill rig and holes were collared vertically with HQ diameter core which was reduced to NQ at depths of approximately 57 and 66 metres, respectively; none of the final collar coordinates were surveyed and down hole deviation tests were not completed; at the end of each hole, PVC tubing was left in the collar and a cement block placed around it as a permanent marker; based on the core reviewed by Howe, the core recovery generally appeared very good (except in a few restricted areas of intense faulting), however percent recovery logs were not included in the logs; all Medinah drill logs are included in Appendix III of this report.
	A total of 314 half core samples, each 1 metre in length were taken from mineralized sections of the core using a "hammer and wheel" style core splitter; samples were collected by a trained assistant, but under the supervision of House; once labeled and bagged the samples were under the control of House at all times, until a shipment was ready (about 50 to 100 samples) and then these were taken by House directly to the laboratory for analysis; the remaining unsplit and halved core is stored in a secure locked storage facility in Santiago; all samples were analysed at ACME Analytical Laboratories S.A. ("ACME") in Santiago for gold by 30 gram fire assay and copper by AAS. The pulps were then shipped directly by ACME to their associated laboratory in Vancouver, Canada where they were further analysed for 30 elements by ICP method; as part of their in-house quality assurance program, ACME reported the results of their own blank, standard, and duplicate samples on the assay certificates (a full list of the ACME assay certificates were included as Appendix III in House, 1999b, and therefore have not been reproduced by Howe, however a list of the certificate numbers included in House’s report are shown in Appendix IV of this report); approximate general ranges of the gold values returned from the recent drilling program are shown on Table 5.8 ( although isolated anomalies of copper and silver were returned, these were generally not considered to be significant); significant drilling weighted average analytical results are shown on Table 5.9

Table 5.7: Dos Marias Property Diamond Drill Holes - 1999

Drill Hole	Approx. Elevation (m)	Approximate UTM Location (collars not surveyed)		Azimuth	Dip		Depth (m)	Samples Numbers (total #)
		Easting	Northing
DM99-01	1,385	311980	6313285	----	-90º		155.55	346368-346399, 341700-341749 (82)
DM99-02	1,455	311986	6313150	----	-90º		300.70	347150-347199, 23501-23600, 347550-347631 (232)
TOTAL						456.25 m			314 samples

Table 5.8: Dos Marias Property – General Range of Gold Values from the 1999 Diamond Drilling Program:

Sample Location in Drill Hole	Gold (g/t)
Total Range of Values	0.01 – 122.2
Approximate Average Range of Values in "High Grade" Mineralized Zones	1.0 – 5.0*
Approximate Average Range of Values Weakly Mineralized Zones	0.10 – 0.80

*Note: one extremely high grade, 2 metre interval with individual samples yielding 61.77 and 122.2 grams gold/tonne, respectively was returned from hole DM99-02 between 68 and 70 metres. A Howe re-assay of the second sample in this interval yielded 455 grams gold/tonne across 1 metre, indicating the probable nuggety nature of the gold mineralization in this interval. Prior to starting any future drilling programs, Medinah should consider completing some early stage mineralogical tests, using samples from the existing core, to determine the general characteristics of the gold grains. This will ensure that the most appropriate preparation and analytical techniques are used for future phases of exploration.

Table 5.9: Dos Marias Property - Significant Diamond Drilling Analytical Results

DDH	Depth (m)			Weighted Averages
	From	To	Interval	Au (g/t)
DM99-01	11 23.5 50	13 29.5 103	2 6 53	6.48 0.64 0.50
DM99-02	37 68 150	42 70 173	5 2 23	2.44 91.99* 0.36

*including 46.2 grams silver across the same interval

The Phase III exploration program over the Dos Marias Property was considered successful as both of the drill holes intersected narrow, but moderate-to-high grade gold intercepts, as well as wide, but highly anomalous shear zone related gold bearing zones. Based on this Medinah believed that the potential still existed for large tonnage, low grade shear zone hosted gold. The shear zone, which is around 50 to 100 metres wide, can be traced for over 700 metres within the Dos Marias Property boundary, and remains open in all directions. House recommended that a CSAMT geophysical survey be conducted over the property followed by several drill fences of east northeast oriented, inclined diamond drill holes, collared on the west side of the valley and crossing the entire shear zone. A total of 5,000 metres of drilling was recommended and the total cost of the proposed program was approximately US$722,300.

5.4.4 PHASE IV - DOS MARIAS

The fourth and most recent phase of exploration at Dos Marias was completed by Medinah between September 22, 1999 and March 29, 2000, and consisted of gridding, geophysical surveys, geological mapping and sampling, and diamond drilling. Similar to the earlier programs, the program was coordinated by, and all work was completed by House. Even though the proposed CSAMT survey was completed, only a small portion of the proposed drilling was done. The details of the exploration program are as summarized below.

	A new grid was constructed consisting of 11 east-west oriented, 500 metre long lines, spaced 100 metres apart, with individual stations on each line spaced 25 metres apart; the grid was surveyed by the geophysical contractor, Geodatos (based out of Santiago);
	A controlled source audio magneto telluric (CSAMT) geophysical survey was completed by Geodatos over 10 lines of the gridded area, which totals 5,500 line kilometres. The survey technique was actually called IMAGEM, which consists of continuous measurements of the time changing magnetic field and its corresponding induced electric field components (telluric currents), which for all intent and purpose is the same as the typical CSAMT survey, however working over a slightly different bandwidth (10Hz to 100KHz), and supplemented by a non-grounded, portable, low power, two component, high frequency transmitter (Geodatos, 1999b). Readings were taken every 20 metres along each line. The results of the survey are shown on apparent resistivity versus depth sections. (Note: the individual sections have not been reproduced by Howe for this report, but are well documented in Geodatos, 1999b).
	The gridded area was geologically mapped at a scale of 1:2,000. A total of 19 channel chip samples were collected along road cuts near drill hole DM00-1, and near the grid location Line D 4+75, yielding only a few scattered anomalies.

A total of approximately 780 metres of diamond drilling in 3 drill holes, plus one aborted hole, hole DM-005 (Note: hole DM00-05 was drilled to 136.25 metres, but was deviated during hole re-entry at 85 metres, therefore hole DM00-05a is a deviation from this original hole at this point and continues to the planned depth of 196 metres); the holes range in depth between 196 and 250 metres (see Table 5.10); all drilling was completed by PerfoAndes S.A. from Chile using a Boyles 56 drill rig and holes were collared at a dip -65º and at an azimuth of 75º, with HQ diameter core which was reduced to NQ at depths ranging between approximately 76 and 106 metres; none of the final collar coordinates were surveyed and down hole deviation tests were not completed; at the end of each hole, PVC tubing was left in the collar and a cement block placed around it as a permanent marker; based on the core recovery logs and the portions of the holes reviewed by Howe, the core recovery generally appeared very good (except in a few restricted areas of intense faulting); all diamond drill logs prepared by Medinah are included in Appendix III.

A total of 541 half core samples, each 1 metre in length were taken from mineralized sections of the core using a "hammer and wheel" style core splitter; samples were collected by a trained assistant, but under the supervision of House; once labeled and bagged the samples were under the control of House at all times, until a shipment was ready (about 50 to 100 samples) and then these were taken by House directly to the laboratory for analysis; the remaining unsplit and halved core is stored in a secure locked storage facility in Lampa; all samples were analysed at ACME Analytical Laboratories S.A. ("ACME") in Santiago for gold by 30 gram fire assay and copper by AAS. The pulps were then shipped directly by ACME to their associated laboratory in Vancouver, Canada where they were further analysed for 30 elements by ICP method; as part of their in-house quality assurance program, ACME reported the results of their own blank, standard, and duplicate samples on the assay certificates (a full list of the ACME assay certificates were included as Appendix III in House, 2000b and therefore have not been reproduced by Howe, however a list of the certificate numbers included in House’s report are shown in Appendix IV of this report); approximate general ranges of the gold values returned from the recent drilling program are shown on Table 5.11 ( although isolated anomalies of copper and silver were returned, these were generally not considered to be significant); significant drilling weighted average analytical results are shown on Table 5.12.

Note: According to new guidelines set out by the TSE Mining Standards Task Force Final Report, January 1999, and similar "international guidelines" put out by various regulatory bodies worldwide, a stringent quality control program is essential for compiling reliable exploration data, especially during drilling programs.. For all future work, Medinah should ensure that sample preparation and quality control procedures are well organized to monitor the accuracy and precision of analytical results, to detect possible sample contamination, and to add confidence to future resource estimates. In addition to the laboratories in-house quality assurance program, each sample batch sent to a laboratory: sample duplicates (1 in 20 samples), assay duplicates (at least 1 per batch), multi-element standards (at least 1 per batch), and blank standards (at least 1 per batch). In addition inter-laboratory preparation and analytical checks should be completed through the sampling phase of the drill program. Also, during the core logging process all core should be photographed prior to cutting and the geological logging should be preceded by geotechnical logging (percent recovery, RQD, fractures, etc.). In addition, to assist in future resource estimates, specific gravity measurements should be taken at representative intervals along the length of the hole.

Table 5.10: Dos Marias Property Diamond Drill Holes – (Second Phase of Drilling)

Drill Hole	Approx. Elevation (m)	Approximate UTM Location (collars not surveyed)		Azimuth	Dip		Depth (m)	Samples Numbers (total #)
		Easting	Northing
DM00-03	1,400	311892	6313188	75º	-65º		250.00	348730-348899 348951-348967 (186)
DM00-04	1,375	311898	6313295	75º	-65º		197.75	348968-349164 (197)
DM00-05	1,385	311858	6313405	75º	-65º		136.25	349165-349231 (67)
DM00-5a	1,385	311858	6313405	75º	-65º		196.10	349232-349323 (92)
TOTAL						780.1 m			541 samples

Table 5.11: Dos Marias Property – General Range of Gold Values from the Second Phase of Drilling:

Sample Location in Drill Hole	Gold (g/t)
Total Range of Values	0.01 – 2.33
Approximate Average Range of Values in Weakly Mineralized Zones	0.10 – 0.80

Table 5.12: Dos Marias Property - Significant Diamond Drilling Analytical Results

DDH	Depth (m)			Weighted Averages
	From	To	Interval	Au (g/t)
DM00-03	177 178	187 181	10 3	0.80 1.49
DM00-04	57 67 79 93 128 164	58 73 85 101 141 168	1 6 6 8 13 4	1.18 0.30 0.35 0.39 0.52 0.41
DM00-05	127	131	4	0.73
DM00-05a	160	169	9	0.48

The geological mapping program covered the entire new gridded area and although the results from this program did not change the overall geological picture, it provided a great deal of information regarding the structure, and relationships between the various geological units. House points out that the property is much more structurally complicated than originally thought, and that the structural controls for the gold mineralization are still not fully understood. The mapping showed that many of the old pits and workings, especially in the northwest corner of the property are aligned along northeast trending structures. This may imply that the main gold bearing structures at Dos Marias might actually be north northeast trending, rather than north northwest trending.

Geodatos provided Medinah with an interpretive report on the CSAMT survey, the main conclusions of which are summarized below:

	the volcanic sequence showed up on all 10 lines as a resistive unit with a response of over 1,000 ohm-m;
	most lines showed highly resistive vertical structures, that could be interpreted as silicified portions of the shear zone;
	conductive zones were uncovered in Line B around station 10; lines D, E, and F in the mid portion of the line; and lines J and K below stations 8 and 17, respectively;
	all lines south of line E showed a conductive body extending from surface to a depth of 100 to 200 metres which was interpreted as being a result of conductive overburden. This layer has apparently affected the resolution of the survey, and;
	no specific drill targets were suggested by Geodatos, however they remarked that all ten lines uncovered good targets for potential gold mineralization.

The second phase drill program was a disappointment as none of the 3 holes that were drilled to test the width of the north northwest trending shear zone, intersected any areas of strong gold mineralization. Several weaker zones carrying, weakly anomalous gold values were crossed indicating that the shear zone is auriferous, however it is now clear that the gold hosted within this shear is much more structurally complex and possibly concentrated in plunging shoots, the geometry of which remain to be outlined, or in north northeast trending structures which trend oblique or perpendicular to the main shear zone (as confirmed by the surface mapping). The CSAMT survey outlined numerous high resistivity anomalies at depth and which appear to be aligned in a north-south direction, however these did not appear to be associated directly with the main shear zone. House recommends that a small diamond drill program be initiated to test the high grade gold values returned from holes DM99-01 and 02 by several holes drilled from east to west, below these intercepts. This would also test the north northeast trending veins and the inferred north-south fault zone. In addition, House suggested that at least one hole be drilled into the copper bearing manto deposits. The estimated cost for this program would be approximately US$ 102,550.

6.0 PROPERTY GEOLOGY AND MINERALIZATION

The "Altos de Lipangue" is a relatively flat, northeast elongate plateau covering an area approximately 4 kilometres long and 1 to 2 kilometres wide. The plateau is located on top of the first range of mountains west of Santiago, which are part of the north-south oriented coastal range. The plateau, and its western flanks (which include the Lipangue and Dos Marias Properties), are underlain by a volcanic sequence, intercalated with continental and marine sediments which is intruded by plutonic and hypabyssal rocks of the central batholith. The volcano-sedimentary sequences consist of: the Lower Cretaceous aged Veta Negro Formation, which is primarily composed of andesitic lavas intercalated with continental sediments; and the underlying Lo Prado Formation (also of Lower Cretaceous age), which consists mainly of marine sediments with intercalated volcanics. The sedimentary units in the Lo Prado Formation include: limestone, shales, sandstones, calcareous and fossiliferous sandstones, breccias, and conglomerates; while the volcanics units are primarily andesitic and rhyolitic flows, brecciated flows, and tuffs. The central batholith, in the vicinity of the two properties is mainly Upper Cretaceous aged and chemically is classified as calcalkaline, Type I. It is quite variable in composition, and includes several varieties of amphibole-biotite+/-pyroxene granodiorite, tonalite, and quartz monzodiorite; and minor porphyritic andesite. The granodiorite that hosts the Lipangue property, and outcrops a few kilometres south of the Dos Marias Property has been mapped as an amphibole-biotite granodiorite with granular magnetite and varying intensity of clay-sericite-chlorite-epidote-pyrite alteration (Gana, et. al., 1996)

This area is host to several diverse types of metallic mineralization such as veins, stratiform, stockwork/ breccias, skarns, and shear zone hosted copper/gold/silver mineralization which occur in several geological environments.

	Au +/- Cu-Ag veins: hosted in the Cretaceous batholith (i.e./ La Fortuna) and in stratified Mesozoic rocks (i.e./ Ramayana); also Au, Fe-Cu, Pb-Zn and Pb-Cu-Au veins which occur hosted in stratified units and intrusives of the Lower Cretaceous age.
	Stratiform Cu, Cu-Au, and Cu-Ag-Au: hosted in volcano-sedimentary formations of Lower Cretaceous age (i.e./ Los Amarillos).
	Stockwork Au-Cu (i.e./ Rose Marie) and Au-Cu contact metamorphism related and structurally controlled mineralization : hosted in volcano-sedimentary units of Lower Cretaceous age (i.e./ Colliguay).
	Cu Skarns: hosted in stratified rock of Lower Cretaceous age (i.e./ Dos Marias).
	Placer Au: hosted in Quaternary sediments (i.e./ Estero Curacuvi).

(Gana, et. al., 1996)

In addition, in the volcanosedimentary rocks surrounding the batholith, or close to its contact, occur several copper deposits such as the Lo Aguirre (stratabound exhalative) and La Africana (vein) deposits both currently held by Soc. Minera Pudahuel. The locations of some of these prospects and deposits is shown on Figure 2.1. Even though most of the old mines and showings in the area have seen intermittent mining activities over the past hundred years or so, they remain relatively under explored and today are only present as prospects. The Lo Aguirre Mine is currently in production and produces 4,000 tonnes per day from a newly developed underground operation replacing a depleted open pit operation (Compendio de la Mineria Chilena, 1998).

6.1 LIPANGUE PROPERTY GEOLOGY

The western portion of the Lipangue Property is underlain by a generally north striking, east dipping volcano-sedimentary sequence of rocks which corresponds with the Ocoa and Purehue Members of the Veta Negro Formation, and which, to the east, is intruded by granodiorite of the central batholith. In the areas mapped by Medinah, the andesite consists of massive and feldspar porphyritic andesite, with a matrix of quartz, amphibole, biotite, and minor hematite and magnetite. Generally they are variably propylitized and silicified and are mineralized with accessory epidote, hematite and magnetite. The contact zone with the granodiorite runs roughly north-south through the central portion the property, between the Lo Amarillo and Cerro Negro knolls. Andesite close to this contact is generally hornfelsed and silicified. The granodiorite which underlies the eastern two thirds of the plateau consists of gray, fine-to-medium grained, hypidiomorphic rock. In most places it is variably propylitized with chlorite, epidote, and carbonate common. In addition, amphiboles within the granodiorite are commonly replaced by biotite and fine magnetite (House, 1999a).

A small gabbro stock, measuring about 100 metres in diameter intrudes the andesite near the peak of the Cerro Negro knoll. Its contacts with the andesite are not exposed and therefore its relationship to the andesite and granodiorite remains unclear (House, 1999a).

6.1.1 LIPANGUE PROPERTY MINERALIZATION

6.1.1.1 Lipangue Breccia

The main gold and copper (+/-silver) mineralization at Lipangue is hosted in the Lipangue hydrothermal breccia pipe, which on surface occurs as an east-west elongate, ovoid shaped body that outcrops over an area measuring roughly 150 to 200 metres (east-west) and up to 100 metres wide. Float material of the breccia is widely dispersed and covers a much larger area (400 metres by 250 metres). The breccia is hosted within granodiorite of the central batholith, at the contact with massive andesite. On surface the breccia is well exposed in only two trenches where it is heavily oxidized and consists of rounded to subangular clasts of intensely altered granodiorite, cemented by a matrix of crystalline quartz and limonite and iron-oxides.

To date all of the drilling completed by Medinah (holes L99-01 to L00-12) has been in a fairly restricted area, with all of the holes occurring within a 350 metres radius of each other. Nine of the 12 holes have intersected the breccia and these 9 holes have been drilled on 4, north-south oriented, irregular spaced sections (separated by 25 to 50 metres) which cover a 100 metre east-west distance. Two of the early holes from the previous program (L99-02 and L99-04) that were drilled 100 to 200 metres further to the east in an attempt to trace the breccia along strike in that direction, failed to intersect it. The first IP/resistivity survey, completed in 1998 clearly indicates that a polarized body continues to the east, at least 400 metres past line E, and that it also plunges steeply in this direction (see Section 5.3.2). Modeling also indicates that by Line G, the top of the anomaly occurs at a depth of about 120 metres. The breccia may have a strong east to east northeast structural control, and therefore could evolve into a narrower breccia-dike along strike to the east. This is supported by the narrower shape of the IP anomaly on line G and could explain why both of the two eastern holes failed to intersect the mineralization.

Hole L99-02 may have been collared north of the breccia structure (see Figure 6.8), and therefore only intersected propylitized and weakly fractured and mineralized granodiorite in the footwall of the breccia, some of which could be related to sheeted veining and stockwork fracturing commonly associated with the contact regions of a breccia. This feature was noted by Howe on surface in Trench #1 in the granodiorite, within 10 or 15 metres southeast of the breccia contact. The diamond drill hole completed by Quijano several years ago apparently intersected some breccia mineralization and was collared in the same general location as L99-02. Its exact location is not shown on any of the Medinah maps, however if it was drilled say, 15 or 20 metres south of L99-02, it could have clipped the top of the breccia, whereas the Medinah hole missed it.

Hole L99-04 may have been collared south of the up-dip projection of the breccia and since the hole was angled south, at -60º, it remained parallel to the dip of the breccia and never intersected it. Similar to hole L99-02, it intersected variably propylitized and weakly fractured and mineralized granodiorite peripheral to the breccia. Had L99-04 been collared vertically, it may have intersected the target.

On surface, to the west, the breccia appears to abut against the contact with the massive andesite. At depth, it is thought that the breccia likely follows this contact, which appears to dip steeply to the east. The 1998 IP/resistivity survey on Line D, approximately 100 metres west of the mapped surface breccia contact, failed to reveal any anomalies, indicating that the breccia probably does not continue in this direction. Three additional "fill-in" geophysical lines from the 1999 survey, Lines DE, P-850 and P-1000 section 5.3.4), were completed in the area of the breccias western contact in hopes of acquiring more information about its geometry. Line DE uncovered a significant polarized body between stations 700 and 900 at a depth of around 200 metres, while Line P-850 revealed a significant anomaly between stations 500 and 800 at about 200 metres depth. The anomaly on Line DE indicates that even though the breccia likely does not extend as far as line D, it still appears to be quite strong on line DE.

Drill holes L00-09 and L00-10 were drilled 50 metres east of Line DE and form the westernmost drill section, Section DE +50. These holes were drilled to test the breccias western extent and hole L00-09 intersected a narrow, poorly defined, 6 metre wide breccia/altered granodiorite interval between 168 and 174 metres that yielded 5.93 grams gold/tonne, 23.6 grams silver/tonne, and 0.81% copper across 6 metres, including 14.56 grams gold/tonne, 50.4 grams silver/tonne, and 1.84% copper across 2 metres. The relatively narrow intercept indicates that this is probably close to the western contact of the breccia. A quarter core repeat sample by Howe of a one metre interval within this 6 metre mineralized zone (sample of the same interval covered by Medinah sample 348618, between 168 and 169 metres), yielded 0.02 grams gold/tonne, 30 grams silver/ tonne and 1.01 % copper of which the last two elements roughly correspond with the results obtained by Medinah, however the gold result is very different (see Table 6.2). During the sample collection, Howe noted numerous smokey quartz veins in the interval and possibly the coarse nuggety gold is hosted in these veins, possibly explaining this difference in the two samples.

Hole L00-10 was drilled about 60 metres up the inferred apparent dip of the breccia, above hole 9, and failed to intersect the breccia or any significant mineralization, but instead went directly from the hanging wall granodiorite into the footwall andesite. The breccia appears to have pinched out at this point, but surface mapping indicates that it has a very significant 50 metre width on surface, about 100 metres "up-dip" from hole L00-10. The strong geophysical anomaly returned from Line DE, 50 metres west of here indicates that the breccia should occur below (and possibly widen) and to the west of hole P00-09 at about 200 metres depth. This indicates that the western contact of the breccia with the andesite is probably an undulating contact and that the width and intensity of the breccia mineralization could increase at depth on this section, below hole P00-09.

Drill section "Line E" crosses the breccia at its widest point where it is approximately 75 to 90 metes in width and has an apparent dip of approximately –60º to the south. Along this section, the breccia has been traced from surface, approximately 250 metres down its apparent dip by drill holes L99-07, 6, 3, 8, and 00-11. Below the oxidation level (which ranges between 20 and 50 metres in depth) the breccia consists of rounded and sub-angular clast and matrix supported fragments of altered granodiorite (varying amounts of fine disseminated and coarse "earthy" chlorite, along with sericite, silica, clay +/-pyrophyllite and alunite?). The fragments are set in a matrix of finer grained fragments and flour, along with coarse crystalline vuggy quartz, 1 to 15% coarse anhedral blebs of pyrite, chalcopyrite, and in places chalcocite (replacing chalcopyrite), sphalerite, and galena. Fine disseminated pyrite (trace to 5%), and lesser amounts of chalcopyrite are common throughout the granodiorite fragments. Late quartz veinlets, generally less than a centimetre in width, cut the breccia in places, and are mineralized with pyrite, chalcopyrite, and at times chalcocite, sphalerite and galena. Although the breccia is almost continually mineralized across its width, the intensity of both alteration and sulphide mineralization is variable. The most intense sulphide mineralization usually occurs near the hanging wall contact.

Analysis completed by Medinah indicate that within the Section E, the breccia is anomalously mineralized over most of its entire width, with significant weighted averages of gold, silver, and copper as shown below, and on Figure 6.4.

	0.49 grams gold/tonne, 9.68 grams silver/tonne, and 0.31 % copper across 124 metres from hole L99-07.
	0.60 grams gold/tonne, 13.7 grams silver/tonne, and 0.39 % copper across 154 metres from hole L99-06.
	1.72 grams gold/tonne, 10.07 grams silver/tonne, and 0.40 % copper across 84 metres, and 0.37 grams gold/tonne, 2.88 grams silver/tonne, and 0.04 % copper across 36 metres both from hole L99-03.

	3.83 grams gold/tonne, 27.2 grams silver/tonne, and 0.40 % copper across 56 metres from hole L99-08 (which includes several higher grade sections including 3 metres grading 15.61 grams gold/tonne, 99.56 grams silver/tonne, and 0.90 % copper, and 9 metres grading 14.76 grams gold/tonne, 56.9 grams silver/tonne, and 1.01 % copper.
	0.23 grams gold/tonne, 3.47 grams silver/tonne, and 0.17 % copper across 12 metres, and 0.22 grams gold/tonne, 0.66 grams silver/tonne, and 0.06 % copper across 9 metres both from hole L00-11.

An approximately 15 to 20 metre wide zone of higher grade mineralization occurs at, or close to the hanging wall contact with the granodiorite on this section. The zone does not appear to continue into the oxide zone, and becomes almost flat lying at a depth of about 50 metres vertical. Although the width and grade of the high grade zone appears to decrease at the deepest hole (P00-11), which occurs at a "down-dip" depth of about 225 metres, the grade of the zone above this point appears to average roughly 2.5 to 3.0 grams gold/tonne, 25 to 35 grams silver/tonne, and 0.7 to 0.8% copper over a 150 to 175 metre "down-dip" distance. It is not certain at this time if the higher grades are a result of: supergene enrichment; structural control; a function of porosity and permeability within the pipe; or most likely a combination of several of these factors. Often margins of a pipe can host higher grade zones where imbricated breccia fragments with a vertical orientation are abundant (Baker et. al, 1986). In addition, many pipes are originally emplaced along a zone of structural weakness such as a fault zone, or intersection or two faults and repeated pulses of hydrothermal activity can continue along these same conduits thereby creating more intensely altered and/or mineralized zones. Further more detailed structural and thin section studies of the existing core and from future drill programs should assist in determining this control. Significant weighted averages across this high grade zone include:

	2.59 grams gold/tonne, 20.84 grams silver/tonne, and 0.85 % copper across 29 metres from hole L99-03.
	1.6 grams gold/tonne, 34.45 grams silver/tonne, and 0.66 % copper across 8 metres, and 1.39 grams gold/tonne, 44.16 grams silver/tonne, and 1.25 % copper across 19 metres from hole L99-06.

	1.26 grams gold/tonne, 18.11 grams silver/tonne, and 0.49 % copper across 28 metres from hole L99-07.
	6.49 grams gold/tonne, 10.07 grams silver/tonne, and 0.63 % copper across 32 metres from hole L99-08.

Drill section "Line E+25 metres" is located just 25 metres east of section Line E, however the top of the breccia is less well defined in this location. The true breccia is significantly thinner at this point, being reduced to approximately 40 metres true width. Hole L99-05, which was drilled on this section approximately 25 metres east of hole L99-03, intersected the top of the "true breccia" over 100 metres deeper than on section E. In the hanging wall of the breccia intersected in hole L99-05 (between 131 and 206 metres, drilled distance), a 20 metre wide zone of granodiorite igneous breccia and variably silicified, chloritized, and carbonatized granodiorite with minor fracturing and disseminated magnetite and pyrite was intersected. This may represent "poorly developed breccia" that lacked permeability and porosity therefore reducing the flow of hydrothermal fluids and the deposition of sulphide mineralization. No significant mineralization was intersected in this zone of poorly developed breccia, however above this interval, between 103 and 113 metres, a zone of intensely "chloritized granodiorite" was intersected which yielded 7.92 grams gold/tonne, 23.42 grams silver/tonne and 0.86% copper across 10 metres. The final 3 metres of this zone were logged by Medinah as an intensely altered "granodiorite dike" and yielded 20.02 grams gold/tonne, 56.06 grams silver/tonne and 2.24% copper. A thin section report, which was commissioned by Medinah (no name or company was attached to the report) on a sample of the "dike" at 110.10 metres depth, states that the sample is devoid of silica and is primarily mineralized with 20-25% K-feldspar, 15-20% pyrophyllite, and 7-10% chlorite, along with 10-15% chalcopyrite, 5-7% magnetite, 5-7% pyrite, and minor marcasite, sphalerite, chalcocite, and gold (hosted within the chalcopyrite). The lack of quartz in the sample is curious and reduces the possibility of the feature being related to a felsic intrusion. A quarter core repeat sample by Howe (sample of the same interval covered by Medinah sample 332553 (between 111 and 112 metres) yielded 9.80 grams gold/tonne, 19.3 grams silver/ tonne and 1.20 % copper which roughly corresponds with the results obtained by Medinah (see Table 6.1).

The location of this high grade interval (the zone of intensely "chloritized granodiorite") in hole L99-05 coincides with the location of the high grade zone in the previous drill section 25 metres to the west (Section E), and even though in this hole the mineralization occurs above the breccia, it may actually be related to the high grade zone in Section E and form a continuous mineralized sheet.

Lower in hole L99-05 typical breccia type mineralization (see description of drill Section E) was intersected yielding the following significant weighted average intervals:

Hole L99-01 was drilled on the same section as hole L99-05 and was the only hole to date that has been collared in the breccia. The hole continued in oxidized breccia for about 34 metres, before entering into massive andesite in the footwall. No significant analytical results were returned from this hole, which corresponds with previous observations made by House and recent Howe samples taken from surface exposures in the trenches. It appears that a significant amount of surface leaching has occurred in the breccia and that the oxidized portions only contain very weakly anomalous values of gold and copper. Two separate samples were collected on surface by Howe (sample number 51872, which was a 1 metre square panel sample, and 51873 which was a grab sample) which yielded 0.19 grams gold/tonne, 0.05% copper and 0.08 grams gold/tonne, 0.03% copper, respectively (see Table 6.1).

The easternmost drill section that has intersected the breccia is Section E + 50. Hole 00-12 was drilled on this section, approximately 50 metres east of hole L99-08. The hole crossed through propylitically altered granodiorite from surface, with an increase in silica and chlorite alteration and disseminated magnetite below 100 metres. At about 146 metres a narrow (2 metre wide) zone of igneous breccia was intersected, which might correlate with the much thicker igneous breccia from the hanging wall of the breccia in hole P99-05. Although disseminated pyrite, chalcopyrite and traces of chalcocite were noted in the igneous breccia and surrounding granodiorite, no significant assays were returned until 158 metres depth, 3 metres above the main breccia contact. This intersection point occurs at a vertical depth of about 150 metres (almost 200 metres down the apparent dip of the breccia) and the hole remained in the breccia until a drilled depth of 254 metres (true width of about 75 metres). Although the mineralogy of the breccia was more or less similar to the other holes, a series of 1 to 7 metre wide (drilled width), fine grained, intensely sericitized and carbonatized granodioritic dikes were crossed in the lower half of the breccia. The orientation of these dikes it not certain but it indicates that there was repeated intrusive activity in the area.

The size and geometry of the breccia intersected in hole L00-12 is very similar to that on Section E, 50 metres to the west, but quite different from that in drill hole L99-05 on the previous section. It is possible that additional late, subvertical granodioritic dikes and intrusives, similar to those in hole L00-12, have intruded the breccia in hanging wall portion of hole L99-05 therefore disrupting its geometry.

Hole L00-12 intersected a good hanging wall high grade zone which yielded the following analytical results:

0.23 grams gold/tonne, 1.35 grams silver/tonne, and 0.07 % copper across 40 metres, and 0.47 grams gold/tonne, 2.11 grams silver/tonne, and 0.10 % copper across 24 metres.

2.23 grams gold/tonne, 16.16 grams silver/tonne, and 0.55 % copper across 25 metres (approximately 20 meters true width), between 158 and 183 metres.

Below this, two additional, but much lower grade zones were intersected, which included:

	0.33 grams gold/tonne, 3.06 grams silver/tonne, and 0.07 % copper across 11 metres, between 199 and 210 metres, and;
	0.56 grams gold/tonne, 2.33 grams silver/tonne, and 0.14 % copper across 28 metres, between 226 and 254 metres.

Three quarter core repeat samples were collected by Howe along this hole, at 176 to 177 metres, 200-201 metres, and 229-230 metres, each replicating the same interval covered by the corresponding Medinah sample (see Table 6.2). Similar to the other duplicate samples collected from the earlier holes the values roughly corresponded with the results obtained by Medinah, and any differences could be explained by the coarse nuggety nature of the sulphide mineralization in the breccia (see Table 6.2).

Along the southern edge of the area mapped by Medinah, two isolated outcrops of breccia were mapped. Although these outcrops are less than a few metres in size, and are spaced almost 600 metres apart, they outcrop in areas which are predominantly covered by rubble and overburden and it was thought that their actual size could be larger. Both of these outcrops occur beyond the southern extent of the first IP/resistivity survey, however the second IP/resisitivity survey cover this area and failed to uncover any significant anomalies, In addition, mapping by House has indicated that these are shear zone related br