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"A little info here first for newer readers: The mine and mill are located approximately 25 kilometres ESE from the town of Choix, Sinaloa State, Mexico. This is about 520 miles South of Nogales, AZ. The mine itself is a large "rock", a single huge rock. It projects above the ground about 1/4 mile upward, about 1/3 mile long, and about 1/4 mile wide. The mill is about 4 miles from the mine. The mill is now on 5 levels. Top level is the head ore dump and the water storage tank. Second level is a large bin, that feeds the conveyor to the jaw crusher. Third level is the shaker tables. Fourth level is the flotation cells. The fifth level is far below, and has the settling tanks. I'm working on my notes and will post what's going on now, as soon as I can write it up. If you haven't looked at the myspace site, from our trip in May of '08, you should check that out now, as most of the present pictures will be changed in the next few days: http://www.myspace.com/cl99cl

Monday morning, we met up with Ramiro and 3 guys he had withhim. Two of them were mining operations consultants from Jamieson:

http://www.jamieson-group.com:80/

One lives in Denver and one in Chihuahua, they were there trying to get acontract for consulting. The third guy was a financial type from Los Angeles.

Wedrove out to the mill site and while shooting pictures, 2ea 10 tondumptrucks arrived and unloaded the first deliveries of head ore. Therewere 15employees, working on mill equipment.

Then we went tothe mine site and observed drill, blast, and loading of thehead ore.All of the equipment there, other than the dump trucks, was TARMownedequipment. There were 2 very large air compressors for thedrillingoperations, drilling the blast holes. There were 2 Eimcotype"scoops", that I call muck loaders. They are front-end loaders,about4 feet tall for removing the blasted ore from the portal, so thatthe backhoecould pick it up and load it onto the dump trucks. Thebackhoe was a nearlynew, Hyundai track laying, 160LCD-7 backhoe.

Insidethe portal, the workers had just finished drilling the explosivesboreholes and were wiring the dynamite charges, on 3 different blastfaces. Theyfired the charges, looked like they had knocked down about 6to 8 feet deep ofeach of the 3 faces. When we left the mine site, thescoops were working ontaking the head ore outside the portal, so itcould be loaded on the trucks.

Ramiro has moved his office andquarters out to very near the mill site. Whenwe left the mine site, wereturned to the mill for some showntell, then all ofus went to the newoffice and had discussions on exactly where we are ingetting the plantoperational.

<!-- /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:""; margin:0cm; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman";} @page Section1 {size:612.0pt 792.0pt; margin:72.0pt 90.0pt 72.0pt 90.0pt; mso-header-margin:36.0pt; mso-footer-margin:36.0pt; mso-paper-source:0;} div.Section1 {page:Section1;} -->The following is correct, as of Tuesday morning,June 2nd:

Therehas been no production so far. One of the three circuits is completeandready to start up. They are working on the other 2 circuits.

Ramirohad an agreement with CFE, the electricity supplier, an arm oftheMexican gvmt.t. He asked them to make the final connections andfurnishelectricity to the plant - about 2 weeks ago. They had not doneso and he wasunaware of what the holdup was. Mexicoworksdifferently than the U S and things don't always go as anticipated.Mightbe a misunderstanding or it could be the need for a "regalo"or"mordida."

They drilled a well for water, to a depth of 280meters, an expensiveproposition. When they tested it, the water waspotable, but not nearly enoughvolume to run the processes. They got apermit to extract water from the nearbyriver and had an engineercalculate the pump size to push water up to theplant. He came up with35 HP motor and pump head. They installed the pump andwhen they testedit, there was not enough volume. A 75 HP motor and pump headare on theway down there.

I think Ramiro did a great job designing andbuilding the plant, however hedoesn't feel qualified to actually runit. In addition, he spends a lot of timeworking on other deals for TARAand there's noway he could do both things. They are interviewingcandidates to fill theleadership spot. They think they have found theright guy and are sendingproposals back and forth.

IMO, the mostserious problem is not having a good metalurgist/assayer on site.Theyhired one and then he failed to show up on-site and get on with it.An assayer will have to be there to take constant readings on the gradesfor thehead ore, cons, and tails. Without those constant assays, youdon't know where to steer your miners and you can't tell if yourflotation process is working properly. You could easily be leaving yourmetals in the tails, rather than the cons. There is absolutely no wayyou can run the plant without a good,qualified assayer.

Rainyseason starts end of June, so they need to get roofs on the newconcrete block buildings and rain covers over much of the mill equipment.

Now that Rich is sitting on a pile of cash, I expect these issues will get resolved pretty quickly.

Theyhave a good geologist on board, she's taken samples all the way aroundthe mine and gotten excellent assays, from most of the samples. Many ofthem are showing 400+ grams/ton Ag, 11% zinc, and 2 to 3% Pb. If thosenumbers are present inside the mine (rock), than the profit potential ishuge, those are great numbers.

When they got ready to build theplant, they were sure that 8 months and 2mil$would get the job done.So, now it's 18 months and over 3mil$, and still notquite there yet.It's not unusual for a new plant to come on-line late andover-budget.Considering that money was a constant problem, I expect they werealldoing the best they could.

I'm not at all disappointed, with what they've gotten accomplished, and thinksome more patience will pay off handsomely."

End of my contacts' report