Near-Term Exploration Near-term exploration plans include drilling at the Sahuayacan project, where an initial drilling program returned results including 7.5 meters grading 56.01 g/t Au and 283.22 g/t Ag. The second drilling program will consist of 4,000 to 6,000 meters to test the shear zone in the Santo Nino and Santa Teresa areas of the project. A second phase of geological work is also planned at the Encino Gordo gold project, which is also expected to be moved forward to the drilling stage later this year. Concurrently, a $4 million feasibility study, funded by the Company's partner, Minera Rio Tinto, to evaluate the expansion of the Cieneguita Project operations, is well underway. As a part of that study, additional drilling will be oriented to test the structure at depth and better understand the correlation with the Piedras Blancas mineralization to the south and its potential as a larger gold-copper porphyry system. Current Operational and Start-up Statusat Cieneguita Project Management is pleased to report excellent progress at the Company's Cieneguita Project. Start-up operations have progressed as planned. All essential systems and construction for plant operations are substantially complete and are in operation currently for one 12 hour shift per day. Management expects to increase operations to two shifts, at a processing rate of 1000 tons per day, within thirty days. The gravity concentration system and the flotation circuit are fully operational, each producing concentrate that is of expected quality, with gold recovery of 92 percent for the flotation circuit and overall gold recovery of 85 percent. Processing of the 3.2 gram gold equivalent material has produced a concentrate averaging 24 grams (.75 ounces) per ton to date. The fresh water recycling/storage pond is lined and is in good order and in use on the site. An additional water well is being drilled, and with the completion of a new pipeline will be brought online for operations to achieve production at the 1,000 ton-per-day rate on a 24-hour basis. While awaiting the completion of the second water line, the mill has achieved the equivalent of a 1,000 ton-per-day production rate over the course of several hours a day during the start-up operations in preparation for full-time operations at that level.