The Bolsa del Diablo project in Peru is the main asset of the Company. The project covers an area of nearly 225

km2 located near the border with Ecuador. The Company owns 100% of 24 concessions and has the right to

acquire 100% of 2 more concessions through option agreements. All the concessions are located on surface land

owned by the Pampa Larga and San Sebastian communities.

All concessions are in good standing for the year 2011, mining rights have been paid in June 2011.

In June 2010, an agreement was signed with Trece Barras S.A.C. whereby mineral rights were granted to provide

exploration services and exploitation of gold veins present on the Bolsa del Diablo project. The agreement has a 10

year duration. In return, a 2% Net Smelter royalty will be paid to Plexmar as well as revenues sharing from any

eventual future exploitation. Trece Barras will comply with the Mining Law and obtain all necessary permits to allow

exploration and exploitation. Trece Barras SAC is a prominent Peruvian mining Company with 30 years of

experience in precious metals processing and dealing with mining communities. The Hans XX and Angolos

concessions are not part of this agreement. .

On the Bolsa del Diablo group of properties, the Company does not have a NI 43-101 compliant resource

calculation and no economic analysis was done. The terms used to describe the deal with Trece Barras are

conceptual at this time.

After the end of the second quarter, on August 16th, 2011, in Las Lomas, Peru, a meeting was held between

leaders and authorities from the Pampa Larga community and representatives of Trece Barras. The purpose of the

meeting was to debate and, if deemed appropriate, approve the formation of a social enterprise to form a

partnership with the community of Pampa Larga to induce structural projects in the sector of small scale artisanal

mining, bio agriculture and handicraft. The formation of a social enterprise in which Trece Barras and the

community of Pampa Larga will be shareholders is the corner stone of a new agreement between Trece Barras,

Plexmar Resources and the local communities that should lead to the establishment and the adoption of a

permanent land access protocol that will allow a full fledge exploration program on Bolsa Del Diablo. According to a

vote call and recorded by an attorney-at-law, the incorporation of the social enterprise was unanimously approved

by the participants.

For the past year, and more specifically for the past 6 months, Trece Barras has been very active in the Pampa

Larga community working together with all the stakeholders, community interest groups, informal miners and local

representatives to create a sustainable and mutually beneficial development model. Community leaders,

stakeholders, local representatives and residents are supportive of the Trece Barras proposition which incorporates

firm commitments for infrastructure development and social sustainability and benefits to the local community. The

short term goal is to obtain community approval granting surface access rights to allow the exploration program.

To complement its proposition, Trece Barras and Plexmar have recently developed a project allowing the

integration of the local community interests by proposing the creation of a social enterprise to be co-owned with

the Pampa Larga community. On both the social and economic fronts, this project will rally the community towards

one common objective: sustainable development, poverty and social inequities reduction by the implementation

and operation of a social enterprise in which the majority of the community residents will participate. This

partnership approach which targets sustainable development will focus on production of added value products

aimed at the export markets. Ultimately, the enterprise will allow the Pampa Larga community access to auto

determination while reinforcing its economic and social capabilities by creating employment, the setup of an

infrastructure fund and access to micro credit.

The funding of the social enterprise is conditional upon the community approving the surface access and allowing

the exploration program to be carried out and the execution of a pilot project. The pilot project will be

implemented in the small scale mining sector. The enterprise will employ a number of local miners; provide them

with the necessary equipment and technical tools to mine in a safe and efficient way while respecting the

environment and mining regulations. The pilot project's objective is to demonstrate the economic viability of the

enterprise and create a long term working relationship.

(The foregoing disclosure regarding the Bolsa del Diablo project contains forward-looking statements that are

based on a number of assumptions which may prove to be incorrect, including but not limited to: a surface rights

agreement with the local communities to allow exploration, availability of financing of the Company’s Bolsa del

Diablo project and proposed social enterprise; the timing of the receipt of regulatory and governmental approvals;

market competition; the Company’s ongoing relations with its employees and local communities; and general

business and economic conditions.)

The Company signed an option agreement in November 2009 to acquire 100 per cent of the mining rights for the

Hans XX concession located in the San Sebastian community.

To acquire a 100-per-cent interest, the Company has to spend a total of $1-million (U.S.) in exploration work after

receiving the social license to explore from the local community, over a five-year period, with $100,000 during the

first year and $200,000 during the second. It must make payments totalling $1.6-million over the same period,

with $300,000 during the first year (already paid) and $250,000 during the second year ($100,000 paid). A 1.7-

per-cent net smelter royalty is also payable to the owner when commercial production is reached. Plexmar has a

right of first refusal on the royalty.

The Company has recently started a first exploration program on the Marilia group of properties located 4 km north

east of the Shahuindo deposit being explored by Sulliden Gold. The work program will consist of large scale

mapping and sampling focusing on delineating structure similar to the gold bearing structures found on Shahuindo.

More work could follow should initial results warrant it.

The Company owns a milling plant facilities located in the La Libertad department in Northern Peru close to the Oro

del Norte, Grand Chimu and Lucma concessions. It is located some 125 km northeast of Trujillo. The plant was

bought from the Peruvian government at the time when the Company was exploring the Cascajal project. The plant

is now fully operational and is expected to begin operations in the 2nd quarter of 2011 after completing a series of

metallurgical test runs. Production reports will be issued in 2011 on a quarterly basis.

In December 2009, the Company signed a 50-50 joint venture agreement to operate the Malin Plant with J&M

Business, an important Peruvian producer and exporter of precious and base metals.

The joint venture will produce copper, silver and gold from properties owned by J&M Business and Plexmar and

from local sources using the Malin plant. The flotation circuit of the plant was rehabilitated and a carbon in pulp

circuit has been added to process gold ores.

In November 2010, the joint venture received a resolution signed by the La Libertad regional government

confirming the approval of the Environmental Impact Study (EIS). This resolution is the base requisite to fully start

the operations at the Malin Plant. All social licenses and permits required to obtain the approval of the EIS have

been obtained from local communities.

From February to the end of June 2011, the production at the Malin plant was limited to small quantities of

polymetallic ores as a result of delays to receive the permits for transport and storing of chemicals. These have

now been issued by the Regional Government During that period, two additional tailing ponds with a capacity of

12,000 cubic meters were built and 4,800 m2 of geomembrane were installed and certified as compliant by local

government officials.

By the end of June, the plant had processed 680 tons of polymetallic and 120 tons of copper ores. It is currently

processing an average of 30-40 tons per day of copper/polymetallic ores in the flotation line.

The third quarter will see the completion of the installation of a second 5ft x 8ft ball mill so as to increase the

capacity of the polymetallic circuit to 125 tons per day. Combined with the Gold circuit this will result in a total

treatment capacity of approximately 200 tons per day (polymetallic-floatation and Gold) during the fourth quarter

of 2011.

The gold circuit began its operation on July 8th at a rate of 60 tons per day and will originally process the 1,000

tonnes of gold bearing ores that have been purchased and stockpiled at the plant for the past eight months. Gold

and silver ores will be alternately processed with polymetallic ores until the second ball mill is installed and in

operation later in the quarter. The joint venture is buying gold and polymetallic ores on a daily basis.

The Malin plant is being operated through a 50-50 joint venture with J&M Business SAC.

(The foregoing disclosure regarding the Malin processing plant contains forward-looking statements that are based

on a number of assumptions which may prove to be incorrect, including but not limited to: the availability of ore to

feed the plant; financing of the Company’s share of the Main plant project; the Company’s ability to attract and

retain skilled staff; the estimated timeline for the modification to the equipment resulting in a capacity increase; the

supply and demand for, and the level and volatility of the price of gold, silver, copper, antimony lead and zinc; the

timing of the receipt of regulatory and governmental approvals, the supply and availability of consumables and

services; the grade and recoverability of purchased ores or custom mill ores; operational and price assumptions on

which the operating parameters may be based; market competition; the Company’s ongoing relations with its joint

venture partner, employees and local communities; and general business and economic conditions. Should one or

more of the risks or uncertainties involved in forward-looking statements relating to the operation of the Malin

plant study materialize, actual results may vary materially from those anticipated, believed, estimate or expected.)

We are confident that 2011 should be a turnaround year for the Company. The Malin plant is expected to shortly

become fully operational providing cash to support the exploration expenses. The goal of the plant is to become

the custom milling plant of choice for small mining producers in northern Peru. Management believes that there is

enough high grade ores transiting to the south and passing near the Malin plant to support easily a much larger

capacity than the actual capacity of the plant. An expansion to 350 tonnes per day is contemplated.

At the Bolsa and Hans XX projects, major progress has been made by Trece Barras with the objective of obtaining

the social permit for exploration on communities owned land. In 2011 a first drill program should be undertaken by

the Company on these projects.

Professional and maintenance fees 96,097 50,211 148,297 90,895

Management fees 76,998 65,879 134,998 119,757

Stock-based compensation costs 75,375 83,368 207,322 193,778

Travelling 14,367 25,972 33,945 28,633

Recovery of written off costs on a mining prope

abandoned (128,967) - (128,967) -

Other revenues and expenses 70,194 81,942 136,773 135,663