COPPER RESOURCES CORPORATIONpratclif.com/mines/kamoto/CRC%20AIM%20Admission... · contents contents 2 key information 3 expected timetable and placing statistics 4 directors, secretary

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt aboutthe contents of this document you should consult a person authorised under the Financial Services and Markets Act 2000 whospecialises in advising on the acquisition of shares and other securities before taking any action.

An investment in Copper Resources Corporation involves a high degree of risk and, in particular, your attention is drawn to theRisk Factors set out in Part 2 of this document. The whole of the text of this document should be read.

This document is an admission document in relation to the AIM market of the London Stock Exchange plc (“AIM”). A copyof this document (which comprises a prospectus which has been drawn up in accordance with the requirements of the PublicOffers of Securities Regulations 1995 (as amended) (“POS Regulations”)) has been delivered to the Registrar of Companies inEngland and Wales for registration in accordance with Regulation 4(2) of the POS Regulations.

The Directors of Copper Resources Corporation, whose names, business address and functions appear on page 5, acceptresponsibility, individually and collectively, for the information contained in this document. To the best of the knowledge andbelief of the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in thisdocument is in accordance with the facts and does not omit anything likely to affect the import of such information.

Application will be made for the whole of the common share capital of Copper Resources Corporation in issue immediatelyfollowing the Placing to be admitted to trading on AIM.

AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached thanto larger or more established companies. AIM securities are not admitted to the Official List of the United Kingdom ListingAuthority (“UKLA”).

A prospective investor should be aware of the risks of investing in such companies and should make the decision to invest only aftercareful consideration and, if appropriate, consultation with an independent financial adviser. Neither UKLA nor London StockExchange plc has itself examined or approved the contents of this document. The rules of AIM are less demanding than those ofthe Official List of the UKLA.

It is emphasised that no application is being made for admission of these securities to the Official List of the UKLA. The CommonShares are not dealt in on any other recognised investment exchange and no other such applications have been made.

It is expected that Admission will become effective and dealings in the Common Shares will commence on AIM on 21 April 2005.

COPPER RESOURCES CORPORATION(Incorporated and registered in the British Virgin Islands with registered number 626550)

Placing of 4,000,000 new Common Shares at 100p per shareAdmission to trading on AIM

Nominated Adviser BrokerNabarro Wells & Co. Limited ODL Securities Limited

Share capital following the Placingconsisting of Common Shares of no par value

Authorised Issued500,000,000 27,756,600

Nabarro Wells & Co. Limited and ODL Securities Limited, which are each regulated by the Financial Services Authority, areacting as Nominated Adviser and Broker (respectively) for the Company in relation to the Placing and Admission, and will notbe responsible to any other person for providing the protections afforded to customers of each of them or for providing advicein relation to the Placing or the contents of this document or any matter referred to herein. Neither Nabarro Wells & Co.Limited nor ODL Securities Limited has authorised the contents of any part of this document for the purposes of regulation13(1) of the POS Regulations.

This document does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for shares in any jurisdictionin which such offer or solicitation is unlawful. In particular, this document is not for distribution in or into the United States,Canada, Australia, South Africa, the Republic of Ireland or Japan or to any national, resident or citizen of the United States,Canada, Australia, South Africa, the Republic of Ireland or Japan except pursuant to a valid exemption. The Common Shareshave not been and will not be registered under the applicable securities laws of the United States, any province or territory ofCanada, Australia, South Africa, the Republic of Ireland or Japan. The distribution of this document in other jurisdictionsmay be restricted by law and therefore persons into whose possession this document comes should inform themselves aboutand observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities lawof any such jurisdiction.

CONTENTS

CONTENTS 2

KEY INFORMATION 3

EXPECTED TIMETABLE AND PLACING STATISTICS 4

DIRECTORS, SECRETARY AND ADVISERS 5

PART 1 INFORMATION ON COPPER RESOURCES 7

INTRODUCTION 7

THE GROUP 7

GROUP STRATEGY 8

THE HINOBA-AN PROJECT 8

THE COPPER MARKET 12

DIRECTORS AND MANAGEMENT 14

CORPORATE GOVERNANCE 16

DIVIDENDS 16

SHARE OPTION SCHEME 16

RECENT FUNDING, PROSPECTS AND FINANCIAL INFORMATION 16

REASONS FOR ADMISSION, PLACING AND USE OF PROCEEDS 16

THE PLACING 17

LOCK-IN ARRANGEMENTS 17

TAXATION 17

DEALING ARRANGEMENTS AND CREST 17

FURTHER INFORMATION 17

PART 2 RISK FACTORS 18

PART 3 CONSULTANTS’ REPORT 23

PART 4 ACCOUNTANTS’ REPORT 99

PART 5 ADDITIONAL INFORMATION 127

DEFINITIONS 140

GLOSSARY OF TERMS 144

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KEY INFORMATION

The following information is derived from and should be read in conjunction with the full text of thisdocument.

Business

The Copper Resources Group, through a subsidiary, acquired the rights to the Hinoba-an PorphyryCopper Project (the “Hinoba-an Project” or the “Project”) in 2001. The Group effectively has a 92.5per cent economic interest in the Hinoba-an Project, subject to a 3 per cent Net Benefits Royalty. TheProject is located on Negros Island in the Republic of the Philippines, approximately 700 km south ofManila.

The Group’s interest in the Project is held under the Integrated Mining and Operating Agreement withColet, which holds mining leases over 90 hectares and approximately 2,900 hectares of mineral claims(collectively, the “Colet Claims”). The Colet Claims cover two known porphyry copper deposits, theDon Jose deposit and the A1 deposit, which comprise the Hinoba-an Property.

Previous owners of the Project have conducted significant exploration and metallurgical testwork onthe property, including the completion of two feasibility studies, with C$14.7 million having been spentto date. The Hinoba-an Property has been subject to approximately 48,000m of diamond drilling and11,000m of reverse circulation drilling. Pre-feasibility studies indicate that the two deposits arereasonably well drilled and that all due attention has been paid to core handling, sampling andassaying. These studies also indicate that the Hinoba-an Project has approximately 2 billion pounds ofrecoverable copper which could be profitably mined by open pit method and processed in aconventional flotation milling operation to recover copper concentrate and other by-products.

The estimated parameters of the Hinoba-an Project based upon a scoping study undertaken by HinobaHoldings (Philippines), Inc. in 1998 are as follows:

Geological Resources: 254 million tonnes at 0.46 per cent copperRecoverable Copper: 2.26 billion lbsMine Life: 15 yearsTreatment Rate: 15 million tonnes per annumConcentrate Production: 236,000 tonnes per annumCopper Production: 56,000 tonnes per annumCapital Costs: $268 millionCash Operating Costs: $0.48/lb of copper

The Hinoba-an Project is currently at the pre-feasibility stage. Following the Placing, the Group willfocus on the development of the Hinoba-an Project and ongoing exploration. The net proceeds of thePlacing, together with the net proceeds of $10.5 million from a recent private placement, will be appliedto additional infill core drilling on the property and completion of a feasibility study within the next18 months. Upon completion of the feasibility study, and assuming favourable economics, the Groupplans to develop a potential 15 million tonnes per annum open pit copper mine on the Hinoba-anProperty. The development of the Project will be dependent on obtaining future financing.

In addition, the Copper Resources Group owns 23 unpatented lode claims covering approximately 186hectares in the state of Colorado. The copper deposit on the property where these claims are locatedhas been mined in the past by underground mining. The Group plans to undertake exploration anddrilling on the Copper Spur Claims within the next twelve months.

Risk Factors

The business of the Copper Resources Group is subject to a number of risk factors and your attentionis drawn to the principal of these as identified by the Directors which are set out in Part 2 of thisdocument.

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EXPECTED TIMETABLE AND PLACING STATISTICS

EXPECTED TIMETABLE

Admission and dealings in the Common Shares to commence 8.00 a.m. 21 April 2005

CREST accounts credited in respect of Depositary Interests 21 April 2005

Where applicable, despatch of definitive share certificates in respect of the Placing Shares to Placees by no later than 28 April 2005

PLACING STATISTICS

Placing Price 100p per share

Number of Placing Shares 4,000,000

Number of Common Shares in issue following the Placing 27,756,600

Percentage of the enlarged issued share capital subject to the Placing 14.4 per cent

Estimated net proceeds of the Placing £3.4 million

Market capitalisation following Admission at the Placing Price £27.8 million

Number of Options outstanding on Admission 2,628,175

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DIRECTORS, SECRETARY AND ADVISERS

Directors Mitchell Alland, Executive ChairmanChristopher Terence Jordinson, Chief Executive OfficerElia Maria Crespo, Vice President & SecretaryJames Daniel Frank, Non-executive DirectorRebecca Helen Taylor, Non-executive Director

All of Craigmuir Chambers, PO Box 71, Road Town, Tortola, BritishVirgin Islands

Company Secretary Elia Maria Crespo

Registered Office Craigmuir ChambersPO Box 71Road TownTortolaBritish Virgin Islands

Registered Agent HWR Services LimitedCraigmuir ChambersPO Box 71 Road TownTortola British Virgin Islands

Nominated Adviser Nabarro Wells & Co. LimitedSaddlers HouseGutter LaneLondon EC2V 6HS

Broker ODL Securities Limited6th FloorSalisbury HouseLondon WallLondon EC2M 5QQ

Baker Tilly2 Bloomsbury StreetLondon WC1B 3ST

Smith, Nixon & Co. LLPSuite 1900 390 Bay StreetToronto, OntarioCanada M5H 2Y2

Pinsent MasonsDashwood House69 Old Broad StreetLondon EC2M 1NR

Harney Westwood & RiegelsCraigmuir ChambersPO Box 71Road TownTortolaBritish Virgin Islands

BVI Solicitors to theCompany

UK Solicitors to theCompany

Auditors to theSubsidiaries

Reporting Accountantsand auditors to theCompany

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Solicitors to the Placing Faegre & Benson LLP7 Pilgrim StreetLondon EC4V 6LB

Consultants OreQuest Consultants Ltd.306-595 Howe StreetVancouver, BC Canada V6C 2T5

Bankers Royal Bank of Canada200 Bay StreetMain FloorToronto, OntarioCanada M5J 2J5

Registrars Computershare Investor Services (Channel Islands) LimitedPO Box 83Ordnance House31 Pier RoadSt HelierJersey JE4 8PWChannel Islands

Computershare Investor Services PLCPO Box 82The PavilionsBridgwater RoadBristol BS99 7NH

Registrars to theDepositary InterestArrangement

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PART 1

INFORMATION ON COPPER RESOURCES

INTRODUCTION

Copper Resources is the holding company of a group of mineral exploration and developmentcompanies. The Group effectively has a 92.5 per cent economic interest in the Hinoba-an PorphyryCopper Project, subject to a 3 per cent Net Benefits Royalty. The Project is located on Negros Islandin the Republic of the Philippines, approximately 700 km south of Manila. The Group’s interest in theProject is held under the Integrated Mining and Operating Agreement with Colet, which holds miningleases over 90 hectares and approximately 2,900 hectares of mineral claims (collectively, the “ColetClaims”). The Colet Claims cover two known porphyry copper deposits, the Don Jose deposit and theA1 deposit, which comprise the Hinoba-an Property.

Over the years, a significant amount of exploration and metallurgical testwork has been performed onthe Hinoba-an Property with its previous owners having spent approximately C$14.7 million. Previousexploration work included approximately 48,000m of diamond drilling and 11,000m of reversecirculation drilling. Pre-feasibility studies indicate that the two deposits are reasonably well drilled andthat all due attention has been paid to core handling, sampling and assaying.

These studies also indicate that the Hinoba-an Project has approximately 2 billion pounds ofrecoverable copper which could be profitably mined by open pit method and processed in aconventional flotation milling operation to recover copper concentrate and other by-products.

THE GROUP

FIGURE 1: GROUP ORGANIZATION CHART

100%

Copper Resources Corporation(British Virgin Islands)

100%

Copper Spur Mining Corporation(Colorado)

100%

Hinoba-an Project

Selenga Mining Corporation(Philippines)

Colet Mining and Development Corporation(Philippines)

as original claimowner, entitled to 3 per cent Net

Benefits Royalty

40% of voting shares

Hinoba-an & Sipalay Holdings, Inc. (HSHI)(Philippines)

92.5%

7.5%

100%

100% economic interest

Hinoba Holdings (Philippines), Inc.

(Philippines)(1,000 Class A Shares in HSHI)

Hinoba Holdings Ltd(Bahamas)

100%


100%


100%

Hinoba-an Project




Benefits Royalty



92.5%

7.5%

100%





Philippine Investors1,500 Class B Shares in HSHI:

Philippine Investors(1,500 Class B Shares in HSHI)


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The rights to the Hinoba-an Project are held by Selenga under the Integrated Mining and OperatingAgreement with Colet. Under the agreement, Selenga has a 100 per cent working interest in theHinoba-an Project, subject to the 3 per cent Net Benefits Royalty payable to Colet as the tenementholder. The 3 per cent Net Benefits Royalty can be extinguished in exchange for payments totalling $7million, comprised of $4.4 million in cash and $2.6 million in Common Shares. Selenga is owned 92.5per cent by HSHI and 7.5 per cent by Colet.

HSHI is a Philippine company with Class A shares (ordinary shares) and Class B shares (preferredshares). Class B shares are entitled to receive cumulative dividends equal to 10 per cent of the par valueof the Class B shares from the unrestricted retained earnings of HSHI. Class A shares are entitled toreceive any remaining dividends. Of the shares issued and outstanding, 40 per cent are Class A sharesand 60 per cent are Class B shares. HHPI, a wholly-owned subsidiary of Copper Resources, owns the1,000 issued Class A shares and three Filipino citizens, who are directors of HSHI, own the 1,500issued Class B shares. Based upon its holding of all of the issued Class A shares, HHPI is entitled to100 per cent of any dividends of HSHI after dividends not exceeding 1,500 Philippine pesos per annumhave been distributed to the Class B shareholders. HHPI is a wholly-owned subsidiary of HinobaHoldings, which is a wholly-owned subsidiary of Copper Resources; thereby giving the Group a 92.5per cent economic interest in the Hinoba-an Project, subject to the 3 per cent Net Benefits Royalty, ifthe limited dividend rights of the Class B shares are excluded.

GROUP STRATEGY

The Hinoba-an Project is currently at the pre-feasibility stage. Following the Placing, the Group willfocus on the development of the Hinoba-an Project and ongoing exploration at the Colet Claims. Thenet proceeds of the Placing, together with the net proceeds of $10.5 million from a recent privateplacement, will be applied to additional infill core drilling on the property and completion of afeasibility study within the next 18 months. Upon completion of the feasibility study, and assumingfavourable economics, the Group plans to develop a potential 15 million tonnes per annum open pitcopper mine on the Hinoba-an Property. The development of the Project will be dependent onobtaining future financing.

In addition, the Group, through Copper Spur, owns 23 unpatented lode claims covering approximately186 hectares in the state of Colorado. The copper deposit on the property where these claims arelocated has been mined in the past by underground mining. The Group plans to undertake explorationand drilling on the Copper Spur Claims within the next twelve months.

The Directors will also continue to identify and evaluate other possible opportunities for theacquisition of mineral properties.

THE HINOBA-AN PROJECT

Location

The Project is located in the municipality of Hinoba-an, in the province of Negros Occidental in thePhilippines, approximately 700 km south of Manila. The project area is situated approximately 17 kmfrom the coast and covers an area of approximately 2,990 hectares. The area is rugged, ranging from200m to 565m above sea level.

Access to the area is good with paved roads from the airport at Bacolod City located 120 km to thenorth and from Dumaguete to the east; and then by a well-maintained dirt road for 17 km to theproject area.

The climate is tropical and humid with a dry season and a wet season. Rainfall averages 3,300millimetres per year.

The Philippines

The Philippines comprises 7,107 islands with a land area of approximately 300,000 km2, spanning 1,840km from north to south. Of these only around 2,000 islands are inhabited and only 500 are larger than

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1 km2. The population is 86 million with the majority of people of Indo-Malay, Chinese and Spanishdecent. The national language is Filipino with English as the second spoken language. All business,governmental and legal transactions are conducted in English.

The Hinoba-an Project is located on Negros Island, which is comprised of the provinces of NegrosOccidental (west) and Negros Oriental (east) and is part of the Western Visayas Region. NegrosOccidental has a land area of 7,926 km2 and a population of approximately 2.6 million. Farming,predominantly sugar plantations, and fishing are the main occupations.

Regional Geology

In the early 1980s, the Philippines ranked as high as seventh amongst the world’s copper producingcountries at around 300,000 tonnes per annum. The geology of the Negros zone forms part of the“Ring of Fire” from Chile to Indonesia which hosts 55 per cent of the world’s known copper resources.The area, comprised predominantly of favourable intrusive and volcanic rocks, hosts several deposits,some of which are presently producing and others which have recently been depleted.

The Bulawan gold mine, an underground mine owned by Philex Gold Inc., is located 6 km west of theProject. The Bulawan gold mine began commercial production in January 1996 and had produced over465,000 ounces of gold over its lifetime before being decommissioned in May 2002 due to the high costof development and a low gold price at the time. The Maricalum Mining Corporation’s Sipalay openpit porphyry copper mine is located 15 km northwest of the Project. The operation was based on aninitial resource of approximately 500 million tonnes at 0.40 per cent copper and was shutdown in 2002due to operational cash flow problems. Located 15 km to the south of the Project is the now dormantBasay copper mine, which was based on an initial resource of 262 million tonnes at 0.44 per centcopper.

It is believed that this environment will provide all the basic necessities for a mining operation such asthe Hinoba-an Project. In addition, there is strong support from the local community to see theHinoba-an Project developed given the recent closure of two local mines.

History of the Project

The history of the property dates back to the mid 1960s when the Insular Lumber Company discoveredwhat is now referred to as the Don Jose ore body during the construction of its logging roads. LepantoConsolidated Mining Company (Lepanto) optioned the property and undertook exploration,including reconnaissance and detailed geological mapping from 1971 to 1975. A 276m crosscut wasdriven across the centre of the orebody to collect bulk samples for metallurgical testing. 117 diamonddrillholes were drilled in the immediate vicinity of the Don Jose deposit for a total of around 24,580m.This work defined a resource of approximately 92 million tonnes at 0.47 per cent copper, includingsome 6.5 million tonnes at 0.65 per cent copper of supergene mineralisation.

In 1980, Lepanto, through the joint venture company Negros Occidental Copperfields Mines, Inc.,conducted further exploration on the property. In 1982, the joint venture engaged Pincock, Allen andHolt (PAH) to undertake a feasibility study on a 14,000 tpd open pit operation. The study showed thedeposit to be economically viable and construction commenced later that same year. However, in late1983, after site levelling, laying of foundations and the installation of mining equipment, the projectwas halted due to a decline in copper prices. As a result, the property reverted back to Colet.

In December 1991, Colet entered into an operating agreement with Selenga. In 1993 and 1994, Selengadid confirmation drilling (four holes) at the Don Jose deposit as well as steam and soil geochemicalprospecting in the whole area. This resulted in the delineation of the A1 geochemical anomalies andfurther geologic mapping resulted in the discovery of the A1 mineralisation (subsequently called theA1 deposit) located southeast of the Don Jose deposit.

In April 1995, Tequila, which had a 40 per cent interest in Selenga and an option to purchase theremaining shares at the time, formed a joint venture with Pursuit to develop the Colet Claims. Throughits subsidiary, HHPI, Pursuit undertook additional drilling at Don Jose comprising 50 holes for 6,973m

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and regional exploration including geochemical survey, IP survey, radiometrics, magnetometer survey,and radarsat and Landsat imagery interpretation. Drilling at Don Jose was on 100m sections withspacing across strike being 60m in the north and 50 to 150m in the south. Drilling at A1, comprising56 holes for 12,617m, established a potentially mineable resource. Drill spacing at A1 ranges from 100to 150m both along and across the strike of the body. HHPI also drilled 10,906m in 111 RC holes onthe Colet Claims, mostly at A1.

Later in 1995, HHPI entered into a joint venture agreement with Vulcan Industrial and MiningCorporation (Vulcan) to develop Vulcan’s claims (Manlupo and Luz) in the area on a 60:40 basis,respectively; however, this agreement was eventually terminated in July 1998.

Diamond drilling stopped in February 1998 to coincide with the completion of a scoping study report(HHPI Scoping Study). In July 1998, Pursuit decided to put the project on care and maintenancefollowing the unsuccessful conclusion of negotiations with Minoro Mining and ExplorationCorporation to provide the funding required for completion of a feasibility study. All exploration wassuspended and personnel was reduced to a minimum of nine people in order to ensure protection ofsamples and equipment maintained on site.

In 2003, Apollo Gold Corporation, the company which resulted from the merger of Pursuit andNevoro Gold Corporation in 2002, sold its interests in the property to Hinoba Holdings. CopperResources acquired Hinoba Holdings in January 2005.

Mineral Rights

Under the Philippine Constitution of 1987, the State owns all natural resources in the Philippines andhas full control and supervision over the exploration, development and utilisation of these naturalresources. The State may, however, enter into co-production, joint venture or production sharingarrangements with Philippine citizens or corporations whose capital is owned at least 60 per cent byPhilippine citizens.

In 1995, the President signed into law the Republic Act No. 7942, which is commonly referred to as thePhilippine Mining Act of 1995 (the Mining Act). The Mining Act instituted a new system for theexploration, development, utilisation and conservation of mineral resources. The act allows companiesto obtain an exploration permit granting rights to explore for all minerals within a specified area forup to six years. Upon locating a viable deposit the Mining Act provides for four basic types ofproduction agreements, of which the following two are of interest to foreign companies:

• Mineral Production Sharing Agreement (MPSA), in which the Government grants to acontractor the exclusive right to conduct mining operations within, but not hold title over, aparticular area known as the contract area. A contractor must be a “qualified person” which isdefined as a citizen of the Philippines of legal age and with the capacity, technically andfinancially, to undertake mineral resource development, and must be duly registered inaccordance with law, and, in the case of a company, at least 60 per cent of the capital of thecompany must be held by citizens of the Philippines; and

• Financial or Technical Assistance Agreement (FTAA), which was designed to encourage largescale projects requiring investment of at least $50 million. An FTAA allows 100 per cent foreignownership.

An application for an MPSA, covering the approximately 2,990 hectares of the Colet Claims, iscurrently in place and an FTAA has been applied for covering 81,000 hectares, including this samearea.

On 1 December 2004, the Philippine Supreme Court confirmed that the Mining Act, including FTAAs,is constitutional. The ruling reversed an earlier decision in January 2004 in which the court haddeclared certain provisions of the Mining Act as unconstitutional and that FTAAs were servicecontracts and prohibited by the Constitution. After the earlier decision, the Department ofEnvironment and Natural Resources (DENR) and the Chamber of Mines filed motions for

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reconsideration. The recent decision noted that the Constitution expressly allows service contracts inthe large-scale exploration, development and utilisation of minerals, petroleum and mineral oils,thereby permitting 100 per cent foreign ownership of mining projects and removing any uncertaintyregarding foreign ownership and previous barriers to foreign investment.

The economic potential of the recent court ruling is expected to be significant for the Philippines, acountry that the secretary of the National Economic and Development Authority (NEDA) estimatescontains $840 billion of mineral wealth. In the 1980s, the Philippines ranked as the fifth largestproducer of gold and ninth largest producer of copper in the world, contributing more than 2 per centto the country’s gross domestic product (GDP) and making up 21.3 per cent of the country’s totalexports. By 2003, the mining industry contributed only 1.5 per cent to GDP and made up only 1.8 percent of total exports. The NEDA indicated that the Supreme Court decision has the potential to attract$4 to $6 billion in new foreign investments and to create 240,000 jobs over the next six years.

Estimated Resources

Over the years, the Hinoba-an Property has been subject to extensive drilling and exploration including48,244m of diamond drilling, 10,906m of RC drilling, metallurgical testwork and preliminaryengineering and design analysis. Pre-feasibility studies indicate that the two deposits are reasonablywell drilled and that all due attention has been paid to core handling, sampling and assaying. Also,geological constraints to mineralisation are well defined which has allowed good interpretation of thebodies and hence reasonable resource definition.

In 1998, the HHPI Scoping Study estimated geological resources at the Don Jose and A1 deposits tobe 254 million tonnes grading 0.46 per cent copper at a cut-off grade of 0.30 per cent. The most recentmineral resource calculation was completed by ZCCA in 2001 and estimated the deposits to containindicated resources of 240.6 million tonnes grading 0.37 per cent at a 0.25 per cent copper cut-off,equivalent to approximately 2 billion pounds of contained copper. Metallurgical tests indicate a copperrecovery of 88 per cent producing a concentrate grade of 24 per cent copper is achievable.

A limited amount of metallurgical testwork has been performed to assess the additional upside fromgold, silver and molybdenum by-product credits. Preliminary work indicates that there may beappreciable credits; however, additional drilling and testwork needs to be carried out to determine iftheir content and recovery can be confirmed and properly quantified.

Although both deposits have been extensively drilled by previous owners, additional diamond drillingwill be required to infill portions of the deposits so that, in some areas, resource classification can beupgraded. Further metallurgical testwork will also be required to determine whether improvements canbe made to the proposed copper recovery rate and to assess the possibility of recovering preciousmetals and molybdenum.

HHPI Scoping Study

In February 1998, HHPI completed a scoping study on the Hinoba-an Project with the objective ofevaluating the project and selecting the most appropriate approach to proceed with a detailedfeasibility study. Although this study was compiled by HHPI, it was almost totally reliant on studiesand reports by well-recognised, independent consultants and engineering companies. The section onmining was the only part of the report prepared internally and it was prepared with the aid ofMINTEC, one of the most widely used companies providing mine design computer programmes andservices.

The study envisioned a 15 year mine life for the Colet Claims based on a geological resource of 254million tonnes at 0.46 per cent copper at a 0.30 per cent copper cut-off. Metallurgical tests indicated an88 per cent recovery for copper and stripping ratios were expected to be 1.1:1 (waste:ore).

The study showed that the deposits could be mined by open pit and processed in a conventionalflotation milling operation to recover the copper metal and other by-products. The proposed treatmentplant included a primary gyratory crusher, semi-autogenous grinding (SAG) and ball mill grinding,

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followed by rougher flotation, concentrate regrind, cleaner flotation, cleaner tail regrind and scavangerflotation. It was envisaged that tailings from the concentrator would be thickened in three conventionalthickeners and would flow by gravity to the process water tank and thickener underflow would flow bygravity approximately 20 km to the coast to a submarine tailings disposal system. Power for alloperations would be drawn directly from the regional grid located 20 km from the mine site.

At the time of the HHPI Scoping Study, HHPI was still evaluating the economics of two satellitedeposits, the Vulcan properties. As a result, the project economics included production from the Vulcanproperties, in which the Group no longer has an interest. However, since these deposits were assumedto be mined in the last five years of the proposed twenty year mine life, the Directors believe they hada minimal impact on the project economics.

Initial capital costs were estimated at $268 million. The study assumed a throughput of approximately15 million tonnes per annum and included ore from the two Vulcan properties, which have beensubsequently relinquished. Annual production was estimated at 56,000 tonnes of recoverable copperwith an average cash cost (including smelting, refining and by-product credits) of $0.48/lb of copperover the 20 year mine life. Moreover, the first 800 million pounds of copper, which were part of theColet Claims and produced in the first four years, had a cash cost of $0.40/lb and the Colet Claims hada cash cost of $0.44/lb over their entire 15 year mine life.

Precious metal values were estimated to contribute $0.10/lb of copper to the revenue but not enoughwork had been completed to determine the grades of the precious metals or if their recovery waspossible. In addition, the study assumed daily production of 2,000 tonnes of pyrite concentrate havinga net contribution of approximately $0.10/lb of copper.

The HHPI Scoping Study estimated that the project had a discounted net present value (NPV) of $243million at a 10 per cent discount rate using a copper price of $1.00/lb. The internal rate of return (IRR)of the project was estimated at 28 per cent.

THE COPPER MARKET

Copper has been one of the most important materials in the development of civilisation and continuesto play a vital role in society today. Copper's chemical, physical and aesthetic properties make it amaterial of choice in a wide range of applications. It is ductile, corrosion resistant, malleable and anexcellent conductor of heat and electricity. Because of these properties, copper has become a majorindustrial metal, ranking third after iron and aluminium in terms of quantities consumed. Buildingconstruction is the largest market for copper, followed by electronics, transportation, industrialmachinery and consumer products. The majority of demand comes from the United States, Europeand China which in 2004 together accounted for over 55 per cent of worldwide consumption.

Demand for copper continues to be strong given high levels of global industrial production with globalindustrial production growth levels in 2004 at their highest since 1976. However, mine production hasbeen unable to meet demand due to constraints from mine depletions, declining ore grades, and tighterenvironmental standards. In addition, a dearth in exploration and development expenditures over thepast decade and increased difficulty in finding and permitting new discoveries have contributed tosupply side constraints.

As a result, over the past few years, consumption of copper has grown on average more than copperproduction. The International Copper Study Group (ICSG) estimated copper usage in 2004 at 16.5million tonnes, which is a 5.7 per cent increase over the previous year; however, refined copperproduction was estimated at 15.8 million, which is only a 3.7 per cent increase over the previous year.Overall, industry experts estimated a copper deficit of between 600,000 and 1 million tonnes for 2004which will be met by drawdown of inventories. The combination of stronger world demand and lowerproduction has resulted in a deficit in the copper market since the beginning of 2003.

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FIGURE 2: WORLD REFINED COPPER PRODUCTION AND USAGE FROM ICSG

In response to the shortage of copper, inventories held at international warehouses declined in 2004 ascopper prices rose. By the end of the year, the London Metal Exchange (LME) stock level was at 49,000tonnes of copper, an 88 per cent reduction from its level at the end of 2003 and its lowest level in 16years.

FIGURE 3: LME COPPER INVENTORY AND PRICE

Potential Markets

China is the world’s largest user of refined copper and its largest importer, with its share of globalcopper consumption in 2004 estimated at 21 per cent. Refined copper consumption in China has grown

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13

by an average of 13.7 per cent a year since 1990 compared with only 2 per cent for the rest of the world.The ICSG has estimated that, if China’s rate of consumption growth continues, China’s need forcopper by 2050 will exceed the entire amount required by the world today. Demand in China isexpected to continue to rise with increasing infrastructure requirements, especially power generation,and demand for consumer goods.

Historically, China has relied on imports to meet its high level of copper consumption whichsignificantly exceeds its domestic production, with this trend expected to continue for the foreseeablefuture. Given its close proximity to China, the Directors believe the Hinoba-an Project is ideallysituated to help meet this growing demand.

DIRECTORS AND MANAGEMENT

The management of Copper Resources has extensive experience in the mining industry, in particularthe exploration, financing, development and management of copper projects. Both Mr. Frank and Mr.Prescott, a consultant to the Company, have previously completed feasibility studies on copper projectsand have overseen the development of those projects into production.

Mitchell Alland (aged 65), B.A., M.B.A., Executive Chairman

Mr. Alland had a distinguished 23 year career at the World Bank and the International FinanceCorporation (IFC). During this time, he was involved in the review, lending and equity financing, aswell as supervision, of a wide range of industries, with a particular emphasis on and extensiveexperience with mining projects. His involvement in the mining industry included early attempts in the1970s to develop the major Tenge-Fungurume copper project in the Democratic Republic of the Congo(then Zaire) and, from 1975 to 1986, financing of major projects by Zambia Consolidated CopperMines (then Nchanga Consolidated Copper Mines). Subsequent experience included involvement inthe LAMCO iron ore project in Liberia, the MIBA diamond project and Kili-moto gold project in theDemocratic Republic of the Congo (then Zaire), and financing of the Alucam (Pechiney) aluminiumsmelter in Cameroon. He has also been involved with mining projects in South America includingMinera Escondida (copper) in Chile; Compañia Minera de Sur (Comsur), the largest private miningcompany in Bolivia; and Yanacocha (gold) and Southern Peru Copper in Peru. Mr. Alland was adirector of Comsur and an alternate director of Escondida. Prior to joining IFC in 1975, Mr. Allandworked for five years at the World Bank, financing industrial development banks in Latin America,managed a company in Thailand for two years, was an economist for one year with the InternationalMonetary Fund and was Assistant Secretary of the Ministry of Commerce and Industry in Ugandafor two years. Mr. Alland has an M.B.A. from Harvard Business School and a B.A. from HarvardCollege. He speaks English, French, German, Polish, Portuguese, Spanish, Swedish and Thai.

Christopher Jordinson (aged 41), BCom, Chief Executive Officer

Mr. Jordinson has over ten years experience as a financial controller for various Australian publiccompanies in the mining industry. Since 2001, Mr. Jordinson has worked as a financial controller forADE Management Pty Limited. Prior thereto, he was the financial controller and the corporateadvisor for Jabula Consulting Pty Limited, a consulting firm that provides financial and technicalexpertise in the mining industry. During this time, Mr. Jordinson advised public companies such asCopper Mines and Metals Limited, Danae Resources Limited, Hargraves Resources NL and Zinc andCopper Corporation of Australia Limited. Prior thereto, he was employed by Wesfarmers Limited asthe financial and operations accountant (1994 to 1995) and as a group accountant for Imperial LeisureCentres Limited (1989 to 1994). In addition, he also worked as an audit clerk for Rothman Pantall &Co. in the United Kingdom from 1988 to 1989 and for KPMG in Durban, South Africa from 1983 to1988. Mr. Jordinson has a BCom degree from the University of South Africa.

Elia Crespo (aged 47), Law Degree, Vice President and Company Secretary

Ms. Crespo has been vice president of Griffis International Limited (GIL) since 1986. GIL is amanagement consulting and venture capital firm, which focuses its activities on the structuring,financing and management of emerging companies, in particular in the natural resource and high tech

14

sectors. Ms. Crespo has considerable experience in the raising of equity and project finance in supportof mining projects. Prior to working at GIL, she worked at the Interesco International MarketingCorporation (1984 to 1986) and the Canadian International Development Agency (1983 to 1984). Shehas also been a consultant for the Commercial Office of the Embassy of Ecuador in Ottawa, Canada;attaché to Honduras Embassy in Ottawa, Canada; and a director at the Domestic Tourism Office,Ministry of Culture and Tourism, Tegucigalpa, Honduras. Ms. Crespo has a law degree from theUniversity Complutense, Madrid, Spain.

James Frank (aged 56), B.S., Non-executive Director

Mr. Frank has held various positions at mining companies over the last thirty years includingpresident, chief executive officer, chief financial officer, vice president of business development,consultant, auditor, accountant and manager of information systems. Since 2002, he has worked as aconsultant on financings, restructurings, feasibility studies, heap leach simulations, managementreviews and due diligences for various companies, such as Marathon PGM Corporation. In addition,he is currently the president of Cactus Precious Metals LLC, a private gold company with a goldproperty in Kern County, California. Prior to becoming a consultant, Mr. Frank was employed bySummo Minerals Corporation (renamed Constellation Copper Corporation) as vice president ofbusiness development (2000 to 2001) and chief financial officer (1996 to 2000). During this time, hecompleted a feasibility study on a 40 million lb/yr, open pit, heap leach, SX/EW copper project. From1986 to 1994, he worked as the chief financial officer for Consolidated Nevada Goldfields Corporation,where he was responsible for establishing all of the accounting and financial reporting systems andassisted in the completion of feasibility studies on three gold mines that went into production. He hasalso worked for Sunshine Mining Company (1980 to 1986) and Hecla Mining Company (1971 to 1979).He is also currently the treasurer and director of Northwest Mining Association. Mr. Frank has a B.S.in economics from the University of Idaho.

Rebecca Taylor (aged 46), B.A., CPE, Non-executive Director

For the last seven years, Ms. Taylor has served as a director for diverse capital management companiesincluding MIR Management Limited, Croesus Emerging Markets Resources Fund LLC, Select CapitalLimited and UCAV Asset Management Limited. Most recently, she sat on the board of the petroleumexploration company, Equator Exploration Limited. From 1995 to 1996, Ms. Taylor worked fromChancery Chambers in London as a barrister, specialising in criminal, family and land law. A fluentItalian speaker, she currently lives in Italy and acts as adviser to the Fondazione Floriani, a charitablefoundation based in Milan. Ms. Taylor holds a B.A. (Honours) from the University of London, is amember of the Inner Temple and was called to the bar of England and Wales.

Robert Prescott (aged 66), M.S.M., B.S., Consultant

Mr. Prescott is a metallurgical engineer with over 25 years experience in the management of miningand metallurgical operations and development projects. He has extensive experience in open pit andunderground mining and specific knowledge in copper solvent extraction, electrowinning, flotation,smelting, refining and rod fabrication. He is currently the vice president of operations at CactusPrecious Metals LLC. Prior thereto, he was vice president of operations at Summo USA Corporation,where he managed the design, engineering and permitting of Lisbon Valley open pit copper mine andheap leach SX/EW operation in Utah and managed the completion of a feasibility study on theJohnson Camp copper mine in Arizona. Previously, Mr. Prescott was general manager of the CopperFlat Project of Alta Gold Company, an open pit copper mine and mill in New Mexico (1993 to 1995)and a general manager for the advanced gold projects of Gold Fields Mining Company (1992 to 1993).He has also worked for Inspiration Resources Corporation (1981 to 1992) and Kennecott CopperCorporation (1962 to 1981). Mr. Prescott has a Master of Science in management from theMassachusetts Institute of Technology and a B.S. in metallurgical engineering from the ColoradoSchool of Mines.

15

CORPORATE GOVERNANCE

The Directors intend, where practicable for a company of Copper Resources’ size and nature, tocomply with the Combined Code. The Directors have established terms for audit and remunerationcommittees.

The remuneration committee, comprising the non-executive Directors and Mitchell Alland and chairedby Rebecca Taylor, determines the terms and conditions of service, including the remuneration andgrant of options to Directors (both executive and non-executive) and others under the Share OptionScheme and any other future share option schemes and arrangements adopted by the Company. Theaudit committee, comprising the non-executive Directors and chaired by James Frank, has primaryresponsibility for monitoring the quality of internal control and ensuring that the financialperformance of the Company is properly measured and reported on and for reviewing reports from theCompany's auditors relating to the Company's accounting and internal controls.

The Company has adopted a code for Directors’ dealings appropriate for a company whose shares areadmitted to trading on AIM and will take all reasonable steps to ensure compliance by the Directorsand any relevant employees. The form of this code is substantially the same as the Model Codepreviously appended to the AIM Rules.

DIVIDENDS

The nature of the Group’s business means that it is unlikely that the Directors will recommend adividend in the early years following Admission. The Directors believe the Company should seek togenerate capital growth for its Shareholders and may recommend distributions at some future date,depending upon the generation of sustainable profits, when it becomes commercially prudent to do so.

SHARE OPTION SCHEME

The Company operates the Share Option Scheme to motivate and retain its employees and others whocontribute to the Group’s success. Further details of the Share Option Scheme are set out in paragraph5 of Part 5 of this document.

RECENT FUNDING, PROSPECTS AND FINANCIAL INFORMATION

Since its incorporation in 2004, the Company has raised approximately $11.3 million in gross proceedsfrom the issuance of shares. The Directors believe that the Group is well placed to develop its interestsin the Hinoba-an Project in the Philippines.

The Accountants’ Report on Copper Resources for the period from incorporation to 28 February 2005and for Hinoba Holdings for the three years ended 31 December 2004 is set out in Part 4 of thisdocument.

REASONS FOR ADMISSION, PLACING AND USE OF PROCEEDS

Copper Resources is seeking Admission to AIM in order to widen its investor base and to have accessto equity capital markets.

The net proceeds of the Placing, together with the proceeds from a recent private placement, will beapplied over the next 18 months to the Group’s planned expenditures on its interests in the Hinoba-anProject amounting to approximately $4.7 million. These expenditures include additional infill coredrilling on the Hinoba-an Property and completion of a feasibility study. The Group also plans toundertake exploration and drilling on the Copper Spur Claims within the next twelve months. Inaddition, the net proceeds will be used for general corporate expenses.

Upon completion of a feasibility study, development of the Hinoba-an Project will require furtherfunding, for which the Directors will consider a range of options, including debt financing and furtherequity issues.

16

The Directors consider that, taking into account the net proceeds of the Placing, the Company willhave sufficient resources for its present requirements, that is for at least the next twelve months fromAdmission.

THE PLACING

The Company and the Directors have entered into the Placing Agreement with ODL Securities andNabarro Wells whereby ODL Securities has agreed to use its reasonable endeavours to procuresubscribers for the Placing Shares. The Placing Shares have been conditionally placed with institutionaland other investors at the Placing Price. The Placing will raise £4 million before expenses.

The Placing is conditional, inter alia, on Admission. The Placing Shares allotted pursuant to thePlacing will rank pari passu in all respects with the existing Common Shares of the Company. Furtherdetails of the Placing Agreement are set out in paragraph 10.1 of Part 5 of this document.

LOCK-IN ARRANGEMENTS

The Directors have undertaken not to dispose of any interest in their Common Shares for a minimumperiod of twelve months following Admission except in the very limited circumstances allowed by theAIM Rules.

TAXATION

The attention of prospective investors is drawn to the taxation section in paragraph 9 of Part 5 of thisdocument.

DEALING ARRANGEMENTS AND CREST

CREST is a UK computerised paperless share transfer and settlement system, which allows shares andother securities, including depositary interests, to be held in electronic form rather than in paper form.

The Company, through Computershare Investor Services PLC, is in the process of establishing afacility whereby Depositary Interests may be issued to investors who wish to hold Common Shares inelectronic form within the CREST system. This will be done pursuant to a deed poll which has beenexecuted by Computershare Investor Services PLC, acting as Depositary. Application has been madefor the Depositary Interests, representing Common Shares, to be admitted to CREST with effect fromAdmission. Accordingly, settlement of transactions in Common Shares following Admission may takeplace within the CREST system if the relevant Shareholder so wishes.

The Depositary will, pursuant to its obligations under the above-mentioned deed poll, pass on to therelevant Shareholders all rights and entitlements which it receives in respect of deposited CommonShares. The entitlements which are to be passed on to the relevant Shareholders include entitlementsto cash distributions, entitlements to information to make choices and elections and the rights to attendand vote at general meetings.

CREST is a voluntary system and holders of Common Shares who wish to receive and obtain sharecertificates will be able to do so. Shareholders of the Company who elect to hold their Common Sharesin uncertificated form through the Depositary Interest facility will be bound by the terms of the above-mentioned deed poll, the terms of which are summarised at paragraph 10.2 of Part 5 of this document.

It is expected that CREST accounts will be credited in respect of Depositary Interests on 21 April 2005and, where applicable, definitive share certificates will be despatched on or before 28 April 2005.

FURTHER INFORMATION

Your attention is drawn to the additional information set out in Parts 2 to 5 of this document.

17

PART 2

RISK FACTORS

Before deciding whether to invest in the Company’s Common Shares, prospective investors should carefullyconsider the risks described below together with all other information contained in this document. If anyof the following risks actually occur, the Group’s business, financial condition, results of operations and/orthe scope of its operations and anticipated expansion could be materially and adversely affected. In suchcase, an investor may lose all or part of his or her investment. Additional risks and uncertainties notcurrently known to the Directors may also have an adverse effect on the Group’s business and theinformation set out below does not purport to be an exhaustive summary of the risks affecting the CopperResources Group.

An investment in the Company is suitable only for financially sophisticated investors who are capable ofevaluating the merits and risks of such an investment and who have sufficient resources to be able to bearany losses which may arise therefrom and which may be equal to the whole amount invested.

Operating history

Despite the operating history of some of its Subsidiaries, Copper Resources is a recently formedcorporation with a limited operating history in the mineral exploration and development business.There can be no assurance that the Company will produce revenue, operate profitably or provide areturn on investment.

Mineral properties

The Hinoba-an Property and the Copper Spur Claims are the only mineral properties in which theGroup currently has an interest. Any adverse development affecting these properties could have amaterial and adverse effect on the Group and could materially and adversely affect its future copperproduction, profitability, financial performance and results of operations.

Stage of development

Following the Placing, the Group will focus on the development of the Hinoba-an Project; however,there can be no assurance that the Project will be brought into production, or that it will ever beprofitable. The commercial viability of mineral deposits of the kind located and believed to be locatedon the Hinoba-an Property, is dependent upon a number of factors, including, but not limited to, themarket price of copper, the quality, size, grade and other attributes of the deposits and the proximityto, and availability of, infrastructure necessary to develop and exploit minerals on a commercial scale.

The Consultants’ Report, as set out in Part 3 of this document, constitutes an independent review ofthe data available on the Hinoba-an Project and its potential. The Consultants’ Report is based in partupon observations and conclusions on information contained in pre-existing reports prepared by thirdparties and previous owners of the Hinoba-an Property.

Exploration and development risks

Mineral exploration and development involves a high degree of risk. Few properties which are exploredare ultimately developed into producing mines. Success in increasing mineral resources and reserves isthe result of a number of factors, including the level of geological and technical expertise, the qualityof land available for exploration and other factors. Once mineralisation is discovered, it may takeseveral years of drilling and development until production is possible during which time the economicfeasibility of production may change. The economics of developing mineral properties are affected bymany factors including the cost of operations, variations in the grade of ore mined, fluctuations in theprice of copper, fluctuations in exchange rates or other minerals produced, costs of development,infrastructure and processing equipment and such other factors as government regulations, includingregulations relating to royalties, allowable production, importing and exporting of minerals andenvironmental protection. In addition, the grade of mineralisation ultimately mined may differ from

18

that indicated by drilling results and such differences could be material. As a result of theseuncertainties, there can be no assurance that mineral exploration and development of the Group’sproperties will result in profitable commercial operations.

Operating risks

The activities of the Group are subject to all of the hazards and risks normally incidental to exploringand developing natural resource projects. These risks and uncertainties include, but are not limited to,environmental hazards, industrial accidents, labour disputes, encountering unusual or unexpectedgeologic formations or other geological or grade problems, unanticipated changes in metallurgicalcharacteristics and mineral recovery, encountering unanticipated ground or water conditions, cave-ins,pit wall failures, flooding, rock bursts, periodic interruptions due to inclement or hazardous weatherconditions and other acts of God or unfavourable operating conditions and losses. Should any of theserisks and hazards affect the Group’s exploration, development or mining activities, it may cause thecost of production to increase to a point where it would no longer be economic to produce mineralresources from the Group’s reserves, require the Group to write-down the carrying value of one ormore mineral projects, cause delays or a stoppage of mining and processing, result in the destructionof mineral properties or processing facilities, cause death or personal injury and related legal liability;any and all of which may have a material adverse effect on the Group.

It is not always possible to fully insure against such risks as a result of high premiums or other reasons.Should such liabilities arise, they could reduce or eliminate any future profitability, result in increasingcosts or the loss of its assets and a decline in the value of the Company’s securities.

Estimates of mineral reserves and resources

Mineral reserves and resources estimates for development projects are, to a large extent, based on theinterpretation of geological data obtained from drill holes and other sampling techniques andfeasibility studies which derive estimates of costs based upon anticipated tonnage and grades of oresto be mined and processed, the configuration of the orebody, expected recovery rates from the ore,estimated operating costs, anticipated climatic conditions and other factors. The mineral reserves andresources estimates referred to in this document are estimates only and no assurance can be given thatany particular grade, stripping ratio or grade of minerals will in fact be realized or that an identifiedreserve or resource will ever qualify as a commercially mineable (or viable) deposit which can be legallyand economically exploited. Market fluctuations in the price of copper may also render mineralreserves uneconomic. As a result of these uncertainties, there can be no assurance that the Group’sexploration programmes (including those proposed with respect to the Hinoba-an Project) will resultin profitable commercial mining operations.

The Group has engaged independent technical consultants to advise it with respect to mineral reservesand resources and project engineering, among other things. The Company believes that those expertsare competent and that they have carried out their work in accordance with all internationallyrecognised industry standards. However, if the work conducted by those experts is ultimately found tobe incorrect or inadequate in any material respect, the Group may experience delays and/or increasedcosts in developing the Hinoba-an Project.

Government regulation and political risk

The Group’s operating activities are subject to laws and regulations governing expropriation ofproperty, health and worker safety, employment standards, waste disposal, protection of theenvironment, mine development, land and water use, prospecting, mineral production, exports, taxes,toxic wastes, the protection of endangered and protected species and other matters. While the Groupbelieves that it is in substantial compliance with all material current laws and regulations affecting itsactivities, future changes in applicable laws, regulations, agreements or changes in their enforcement orregulatory interpretation could result in changes in legal requirements or in the terms of existingpermits and agreements applicable to the Group or its properties, which could have a material adverseimpact on the Group’s current operations or planned development projects. Where required, obtaining

19

necessary permits and licences can be a complex, time consuming process and the Company cannotassure whether any necessary permits will be obtainable on acceptable terms, in a timely manner or atall. The costs and delays associated with obtaining necessary permits and complying with these permitsand applicable laws and regulations could stop or materially delay or restrict the Group fromproceeding with any future exploration or development of its properties. Any failure to comply withapplicable laws and regulations or permits, even if inadvertent, could result in interruption or closureof exploration, development or mining operations or material fines, penalties or other liabilities.

The Hinoba-an Project is located in the Republic of the Philippines. The Group’s activities may beaffected in varying degrees by political stability and governmental regulations. Any changes inregulations or shifts in political attitudes in the Philippines are beyond the control of the Group andmay adversely affect its operations.

Title to properties

Copper Resources is satisfied it has taken reasonable measures to ensure an unencumbered right toexploit the Colet Claims, which include the Hinoba-an Property, and the Copper Spur Claims. Noassurance can be given, however, that such claims are not subject to prior unregistered agreements ortransfers and title may be affected by undetected defects that could be material and adverse to theGroup.

Pending FTAA and MPSA applications

The Group has interests in two types of production agreements allowed under the Mining Act withregards to the Hinoba-an Project. They are the FTAA application of HHPI and the MPSA applicationof Colet, which Colet has agreed to assign to Selenga upon its approval. In light of the recentfavourable ruling by the Philippine Supreme Court with regards to the Mining Act, the Companyanticipates that approval will be forthcoming from the Government, in a timely manner, for thepending FTAA or MPSA application. Without such approval, the Group’s ability to develop theHinoba-an Project will be impaired. In order to mitigate this risk, the Group plans to delay thespending of any development capital on the Project, beyond completion of a feasibility study, untilapproval of either the FTAA or MPSA application.

There is a risk that the MPSA application is approved but not the FTAA application. A favourabledecision by the DENR Secretary on the FTAA application would allow the Group to hold a direct 92.5per cent interest in the Hinoba-an Project. However if the FTAA application is not approved, theGroup’s shareholding in the company developing the project would be limited to 40 per cent under anMPSA. While the current Group structure provides for this situation and the Group’s 92.5 per centeconomic interest in the Hinoba-an Project would remain the same, it subjects the Group to the risksassociated with being a minority shareholder in the Hinoba-an Project. In this event, the Group wouldseek certain minority protection rights prior to proceeding with development of the Hinoba-an Project,e.g. the right to elect a minimum number of directors, rights of veto, etc. There can be no certainty thatsuch protections would be granted.

Environmental regulation

Environmental and safety legislation (e.g. in relation to reclamation, disposal of waste products,protection of wildlife and otherwise relating to environmental protection) may change in a manner thatmay require stricter or additional standards than those now in effect, a heightened degree ofresponsibility for companies and their directors and employees and more stringent enforcement ofexisting laws and regulations. There may also be unforeseen environmental liabilities resulting frommining activities, which may be costly to remedy. If the Group is unable to fully remedy anenvironmental problem, it may be required to stop or suspend operations or enter into interimcompliance measures pending completion of the required remedy. The potential exposure may besignificant and could have a material adverse effect on the Group. The Group has not purchasedinsurance for environmental risks (including potential liability for pollution or other hazards as a result

20

of the disposal of waste products occurring from exploration and production) as it is not generallyavailable at a price which the Company regards as reasonable.

Legal systems

The Philippines and other jurisdictions in which the Group might operate in the future may have lessdeveloped legal systems than more established economies which could result in risks such as (i) effectivelegal redress in the courts of such jurisdictions, whether in respect of a breach of law or regulation, orin an ownership dispute, being more difficult to obtain; (ii) a higher degree of discretion on the part ofgovernmental authorities; (iii) the lack of judicial or administrative guidance on interpreting applicablerules and regulations; (iv) inconsistencies or conflicts between and within various laws, regulations,decrees, orders and resolutions; or (v) relative inexperience of the judiciary and courts in such matters.In certain jurisdictions the commitment of local business people, government officials and agencies andthe judicial system to abide by legal requirements and negotiated agreements may be more uncertain,creating particular concerns with respect to the Group’s licences and agreements for business. Thesemay be susceptible to revision or cancellation and legal redress may be uncertain or delayed. There canbe no assurance that joint ventures, licences, licence applications or other legal arrangements will notbe adversely affected by the actions of government authorities or others and the effectiveness of andenforcement of such arrangements in these jurisdictions cannot be assured.

Currency risk

While the sale of copper is principally in US dollars throughout the world, a significant portion of theGroup’s expenses incurred in connection with the Hinoba-an Project will be in Philippine pesos. As aresult, fluctuations in currency exchange rates could have a material adverse effect on the financialcondition, results of operation or cash flow of the Group. The Group does not currently intend to enterinto any hedging arrangements with respect to foreign currencies.

Reliance on strategic relationships

In conducting its business, the Group will rely on continuing existing strategic relationships andforming new ones with other entities in the copper industry and the Philippines and also certainregulatory and governmental departments. While the Directors have no reason to believe otherwise,there can be no assurance that its existing relationships will continue to be maintained or that new oneswill be successfully formed.

Competition

The mining industry is competitive in all of its phases. The Group faces strong competition from othermining companies in connection with the acquisition of mineral properties as well as for therecruitment and retention of qualified employees. Larger companies, in particular, may have access togreater financial resources, operational experience and technical capabilities than the Group which maygive them a competitive advantage.

Volatility of copper prices

The future profitability of the Company and the Group’s ability to develop the Hinoba-an Project orany other mineral deposit, if subsequently shown to be commercially viable, will depend on the marketprice and worldwide consumption (particularly by China) of copper. Copper prices fluctuate widelyand are affected by numerous factors beyond the Company’s control, including global supply anddemand, political and economic conditions, speculative activities, expectations of inflation, interestrates, and currency exchange fluctuations. The effect of these factors on the price of copper cannotaccurately be predicted. In addition, given the current environment of low inventories at internationalwarehouses, the copper price is extremely sensitive to changes in both supply and demand.

Dependence on key personnel

Copper Resources has a small management team and the loss of a key individual could affect theGroup's business. While the Company has entered into service agreements with certain of its key

21

executives as set out in paragraph 8.1 of Part 5 of this document, the retention of their services cannotbe guaranteed. Accordingly, the loss of any key executive or manager of the Group may have anadverse effect on the future of the Group’s business.

The Group’s future success will also depend in large part upon its ability to attract and retain highlyskilled personnel. There can be no assurance that the Group will be successful in attracting andretaining such personnel.

Results to date and additional requirement for capital

Copper Resources is likely to remain cash flow negative for some time and, although the Directors haveconfidence in the future revenue earning potential of the Company from its interest in the Hinoba-anProject, there can be no certainty that Copper Resources will achieve or sustain profitability or positivecash flow from the Group’s operating activities. The Directors are satisfied that the working capitalavailable to the Group will be sufficient for its present requirements. However, it is highly likely that theCompany will need to raise additional capital in the future to fund the development of the Hinoba-anProject and other activities and future copper prices, revenues, taxes, capital expenditures and operatingexpenses and geological success will all be factors which will have an impact on the amount ofadditional capital required. Any additional equity financing may be dilutive to Shareholders and debtfinancing, if available, may involve restrictions on financing and operating activities. If CopperResources is unable to obtain additional financing as and when needed, it could result in a delay orindefinite postponement of exploration and development activities.

Conflicts of interest

Certain Directors and officers of Copper Resources also serve as directors and/or officers of othercompanies involved in mineral exploration and development and consequently there exists thepossibility for such Directors and officers to be in a position of conflict. The Company expects that anydecision made by any of such Directors and officers involving the Group will be made in accordancewith their duties and obligations to deal fairly and in good faith with a view to the best interests of theCompany and its Shareholders, but there can be no assurance in this regard.

Liquidity of the Common Shares

Admission to AIM should not be taken as implying that there will be a liquid market for the CommonShares. It may be more difficult for an investor to realise his or her investment on AIM than to realisean investment in a company whose shares are quoted on the Official List. The share price of publiclytraded emerging companies can be highly volatile. The price at which the Common Shares will betraded and the price at which investors may realise their investments will be influenced by a largenumber of factors, some specific to the Group and its operations and some which may affect juniormining companies or quoted companies generally. The market perception of junior mining companiesmay change which could impact the value of investors’ holdings and the ability of the Company toraise funds by the issuance of further Common Shares. Prospective investors should be aware that thevalue of the Common Shares can go down as well as up.

22

PART 3

CONSULTANTS’ REPORT

Set out below is the full text of a report on the Hinoba-an Project prepared by OreQuest ConsultantsLtd.


ON THE

HINOBA-AN PROJECT

NEGROS OCCIDENTAL, REPUBLIC OF THE PHILIPPINES

FOR

COPPER RESOURCES CORPORATION

by:

A. Border, M.AusIMMG. Cavey, P.Geo.

D. Gunning, P.Eng.

14 April 2005

23


The Directors Copper Resources CorporationCraigmuir ChambersPO Box 71Road TownTortolaBritish Virgin Islands

and

The DirectorsNabarro Wells & Co. LimitedSaddlers HouseGutter LaneLondon EC2V 6HS

and

The DirectorsODL Securities LimitedSalisbury HouseLondon WallLondonEC2M 5QQ

SUMMARY

At the request of the Directors of Copper Resources Corporation (“Copper Resources” or the“Company”), OreQuest Consultants Ltd. (“OreQuest”) has reviewed the technical information relatingto the Hinoba-an porphyry copper project (the “Hinoba-an Project” or the “Project”), located on theisland of Negros in the Republic of the Philippines. This report presents an independent technicalreview of the geology and resources at the Hinoba-an Project and has been prepared by OreQuest forinclusion in the Company’s admission document dated April 14, 2005 in connection with the proposedAdmission to trading on AIM and the associated equity fund raising.

Copper Resources and its subsidiaries (together “the Group”) own a 92.5 per cent economic interest inthe Hinoba-an Project, located in the southwest of Negros Occidental on Negros Island in the Republicof the Philippines approximately 700 km south of Manila (Figure 1). The project area is situatedapproximately 17 km from the coast and covers an area of approximately 2,990 hectares. Access to thearea is good with paved roads from the airport at Bacolod City 120 km to the north, and fromDumaguete to the east, to Hinoba-an and thence by well maintained dirt road for 17 km to the projectarea.

The interests in the Hinoba-an Project are currently held by Selenga Mining Corporation (“Selenga”)through an Integrated Mining and Operating Agreement between Selenga and Colet Mining and

24i

Development Corporation (“Colet”). Colet holds mining leases over 90 hectares and approximately2,900 hectares of mineral claims covering two known porphyry copper deposits, the Don Jose (DJ)deposit and the A1 deposit. An application for a Mineral Production Sharing Agreement (“MPSA”) iscurrently in place covering the same area. Selenga has a 100 per cent working interest in the Hinoba-an Project, subject to a three per cent Net Benefits Royalty (the “3 per cent Net Benefits Royalty”)payable to Colet. The 3 per cent Net Benefits Royalty can be extinguished in exchange for payments ofUS$7 million, US$4.4 million in cash and US$2.6 million in equity. Selenga is owned 92.5 per cent byHinoba-an & Sipalay Holdings, Inc. (“HSHI”) and 7.5 per cent by Colet.

HSHI is a Philippine company with Class A shares (ordinary shares) and Class B shares (preferredshares). Class B shares are entitled to receive cumulative dividends equal to 10 per cent of the par valueof the Class B shares from the unrestricted retained earnings of HSHI. Class A shares are entitled toreceive any remaining dividends. Of the shares issued and outstanding of HSHI, 40 per cent are ClassA shares and 60 per cent are Class B shares. Hinoba Holdings (Philippines), Inc. (“HHPI”) owns the1,000 issued Class A shares and three Filipino citizens, who are directors of HSHI, own the 1,500issued Class B shares. Based upon its holding of 1,000 Class A shares, HHPI is entitled to 100 per centof any dividends declared by the board of directors of HSHI, after dividends have been distributed tothe Class B shareholders, which is limited to 1,500 Philippine pesos per annum.

The Don Jose deposit was discovered in the early 1960s by logging interests. In the early 1970sexploration was completed including reconnaissance and detailed geological mapping, reconnaissancestream sediment and grid soil sampling, induced polarization (IP), resistivity, magnetic surveys anddiamond drilling. A 276m long crosscut was driven across the centre of the mineralized body to collectbulk samples for metallurgical testing. A resource of approximately 92 million tonnes at 0.47 per centcopper, including some 6.5 million tonnes at 0.65 per cent copper of supergene mineralization wasdefined by Lepanto from this work (historic resource estimate, now updated with new resourceestimates).

In 1982 Pincock, Allen and Holt (“PAH”) of Denver was contracted to undertake a detailed feasibilitystudy based on a 14,000 tpd mining and milling operation. The PAH report showed the deposit to beeconomically viable and in 1982 construction commenced. A slump in the copper price, however,caused the project to be abandoned in 1983. In between 1990 and 1995 exploration work includedgeological mapping, grid stream and soil geochemical sampling, IP surveys, magnetometer survey, testpicking and further diamond drilling. Starting in April 1995, International Pursuit Corporation(“Pursuit”), through its subsidiary HHPI (formerly named International Pursuit (Philippines), Inc.),undertook additional drilling at DJ comprising 58 holes for 9,294m, and drilled 72 holes for 16,950mat the A1 deposit. HHPI also undertook regional exploration including geochemical survey, IP survey,radiometrics, magnetometer survey, and radarsat and landsat imagery interpretation. Drilling at DJ ison 100m sections with spacing across strike being 60m in the north and 50-150m in the south. Drillspacing at A1 ranges from 100-150m both along and across the strike of the body.

The DJ deposit is hosted by a north-northwest trending phyllic-altered quartz diorite/hornblendequartz diorite porphyry, some 2,500m long and 250-350m wide. The deposit is cut by intra-mineralhornblende diorite porphyry and post-mineral hornblende andesite porphyry dykes. The majorcontrols include a northwest trending low angle fault, a northwest trending post copper-mineralizationdacite diatreme and a north-south trending fault. The low angle fault acts as the base of mineralization,and the dacite diatreme acts as a sharp boundary to the east side of the deposit. The A1 deposit ishosted dominantly by a north-northwest trending quartz diorite porphyry characterized by phyllicalteration. The body is cut by 10-40m wide intra-mineral northwest trending hornblende dioriteporphyry dykes. The body is 1,200m long and 175m wide.

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Based on the work completed by HHPI from 1995 to 1997, an inferred resource was calculated for thetwo deposits of the Hinoba-an Project at various cut-off grades.

Zone Cutoff grade Grade % Cu Tonnes

DJ 0.20% Cu 0.362 175,493,175DJ 0.25% Cu 0.372 163,641,225DJ 0.30% Cu 0.399 127,576,350

A1 0.20% Cu 0.357 118,403,175A1 0.25% Cu 0.359 116,244,150A1 0.30% Cu 0.377 94,313,175

Combining the DJ and A1 pits results in the following inferred resource for the Project.


DJ+A1 0.20% Cu 0.360 293,896,350DJ+A1 0.25% Cu 0.367 279,885,375DJ+A1 0.30% Cu 0.390 221,889,525

In 2001 Zinc and Copper Corporation of Australia Limited (“ZCCA”) performed some preliminarymine design criteria and estimated an indicated mineral resource for the two deposits. The A1 depositwas estimated to contain 82.7 million tonnes at 0.374 per cent copper with the DJ containing 157.9million tonnes at 0.372 per cent copper for a total of 240.6 million tonnes at 0.373 per cent copper. Intheir estimate, ZCCA used a cutoff grade of 0.25 per cent copper and a pit wall slope of 420.Overburden and waste were estimated to total 73.2 million tonnes and 207.9 million tonnes respectivelyresulting in an overall waste to ore stripping ratio of 1.2 to 1.

A Phase I budget of US$2,497,000 is proposed consisting primarily of infill core drilling that willincrease the hole density in parts of the deposit as well as provide data on various deposit parametersthat are not currently well enough defined for preliminary feasibility studies. These parameters includebut are not limited to:

• depth of oxidation and densities of oxidized rock;

• grade and mineralogy of the top 15 metres;

• by product contents of gold, silver and molybdenum along with their metallurgical recoveries;and

• additional metallurgical testing.

Phase II work to complete a feasibility study contingent upon success in Phase I, will consist of:

• drainage surveys;

• geotechnical surveys;

• hydrological studies;

• Environmental Impact Assessment Study;

• permitting;

• mine engineering; and

• fill-in drilling (as required based on Phase I results).

The recommended Phase II program is estimated to cost US$2,046,000.

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27iv


Figure 1HINOBA-AN COPPER PROJECT

LOCATION MAP

NEGROS OCCIDENTALREPUBLIC OF THE PHILIPPINES

APRIL 2005 XY3

TABLE OF CONTENTS

Summary i

Table of Contents v

Introduction and Terms of Reference 1

Disclaimer 1

Property Description and Location 2

Accessibility, Climate, Local Resources, Infrastructure and Physiography 5

History 6

Geological Setting 9

Deposit Types 14

Mineralization 15

Exploration 17

Drilling 20

Sampling Method, Approach and Security 22

Sample Preparation and Analysis 23

Data Verification 23

Mineral Resource and Mineral Reserve Estimation 25

Discussion of the Resources 29

Drilling 29

Data 29

Specific Gravity 29

Molybdenum Content 30

Precious Metal Content 30

Discussion of Hinoba-an Resource Estimates 31

Mineral Processing and Metallurgical Testing 31

Environmental Considerations 32

Biological Environment 32

Permits 32

Adjacent Properties 33

Other Relevant Data 33

Interpretation and Conclusions 34

Recommendations 36

Cost Estimates 39

Certificate of Author – Andrew Border, M.AusIMM. 40

Certificate of Author – George Cavey, P.Geo. 41

Certificate of Author – David Gunning, P.Eng. 42

References 43

28v

LIST OF FIGURES

Figure 1 Location Map iv

Figure 2 Tenement Map 3

Figure 3 Regional Geology 10

Figure 4 Local Geology 11

Figure 5 Typical Cross-section Through DJ Deposit 12

Figure 6 Typical Cross-section Through A1 Deposit 13

Figure 7 IP Survey 18

Figure 8 Copper Soil Geochemistry 19

Figure 9 Drillhole Collar Locations 21

Figure 10 End of Mine Life Status 35

LIST OF TABLES

Table I Mintec Hinoba-an Resource Estimate 8

Table II Largest Porphyry Copper Deposits in the Philippines 14

Table III Porphyry Copper Deposits on Negros Island 16

Table IV Significant Intersections Within the MPSA & Outside the Proposed DJ & A1Pits 20

Table V Drillhole Summary 22

Table VI Data Verification 24

Table VII Inferred Resources, ZCCA 2001 27

Table VIII ZCCA Indicated Resource Estimate, 2001 28

Table IX Overburden and Waste Tonnage Estimates, ZCCA 2001 28

LIST OF APPENDICES

Appendix I Sections of Report and Corresponding Responsible Author 44

Appendix II Copper Resources Corporation – Title Summary 46

Appendix III Copper Resources Corporation – Legal Opinion 54

Appendix IV World’s Largest Porphyry Copper-Gold Deposits 66

Appendix V TeckCominco (Global Discovery Labs) Analytical Results 68

29vi

INTRODUCTION AND TERMS OF REFERENCE

This report presents an independent technical review of the geology and resources at the Hinoba-anProject, located on the island of Negros, Philippines (Figure 1) in which Copper Resources and itssubsidiaries (together “the Group”) own a 92.5 per cent economic interest. This report has beenprepared by OreQuest for Copper Resources in connection with the Company’s listing on AIM and theassociated equity fund raising. The rights to the Hinoba-an Project are held by Selenga, which is asubsidiary company of HSHI, through which Copper Resources holds its interest in the Project.

The information herein is derived from a review of the documents listed in the References and frominformation provided by the Group and ZCCA. A complete list of the reports available to the authorsis found in the References section of this report. G. Cavey visited the project site from 13-15th ofAugust, 2003 and completed a thorough review of the available technical data. A. Border visited theproject site in January 2001. No work has been completed since the date of that visit. The resourceswere prepared by author A. Border and ZCCA. D. Gunning has not been to the property. Appendix Icontains a list of the responsible author for each section of this report.

The material found in this technical report is an amalgamation of previous reports, program updates,consultant reports, and corporate press releases available for review. There were no limitations put onthe authors in preparation of this report with respect to information from the Group or ZCCA.

All references to currency in this report are in US dollars. All units in this report are metric unlessotherwise stated. Pursuit from 1995-1998 completed much of the most recent work. Pursuit mergedwith Nevoro Gold Corporation on June 25th, 2002 to form Apollo Gold Corporation. This reportmakes constant reference to the work completed by HHPI, which was a subsidiary of Pursuit until2003.

DISCLAIMER

OreQuest has prepared this report based upon information believed to be accurate at the time ofcompletion, but which is not guaranteed. The authors have relied on two principle sources ofinformation for the data contained in this report as follows: Copper Resources and ZCCA. Therefore,in writing this technical paper the authors have relied on the truth and accuracy presented to them fromthe sources listed in the Reference section of this report but have also performed checks againsthistorical data in order to provide comfort that the data is reliable. In addition, information in thisreport was obtained from recent press releases authorized for distribution into the public domain fromthe participating companies. The data for this report is principally contained in three reports:

• the report titled “Environmental Section of the Prefeasibility Study for the Hinoba-an CopperProject” created for HHPI by Dames and Moore dated 20 August 1997;

• the report titled “Hinoba-an Copper Project, Scoping Study” prepared by HHPI dated February1998; and

• the report titled “Hinoba-an Porphyry Copper Project, Negros Occidental, Republic of thePhilippines, Information Memorandum” prepared by ZCCA dated October 2001.

Attorney Roberto O. Parel from the firm Belo Gozon Elma Parel Asuncion & Lucila (BGELAW) ofManila, Philippines, the Company’s attorney, has provided a compilation on legal title of the Project.Copper Resources has provided the authors with a detailed list of the individual concession particulars(Appendix II). BGELAW who, in a letter to Copper Resources dated April 14, 2005, states that theclaims and licences currently exist and that they are satisfied that Selenga owns rights to the concession(Appendix III).

Although no limitations were placed on the authors by Copper Resources, the authors were limited intheir review by not being able to access all of the drill logs or drill core from drill programs prior to1995. The authors rely on the truth and accuracy of the data resulting from this work but cannot verifyit.

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PROPERTY DESCRIPTION AND LOCATION

The Hinoba-an Project is located on the island of Negros some 700 km south of Manila, Republic ofthe Philippines (Figure 1). The island comprises the provinces of Negros Occidental (west) and NegrosOriental (east), and is part of the Western Visayas Region. Negros Occidental has a land area of 7,926km2 and a population of 2.6 million.

The Colet Claims comprise 90 hectares of mining leases and approximately 2,900 hectares of mineralclaims (the “Colet Claims”). The tenements were granted in the early 1960s to three groups of claimholders – Colet Mining Company, Sta. Barbara Mining Company and Southern Negros MiningCompany. These three groups consolidated their claims in the late 1970s to form Colet Mining andDevelopment Corporation (Colet). Together, the three groups hold title to a total of 311 mineralclaims, which now comprise the Hinoba-an Project. The Colet Claims cover the two porphyry copperdeposits which comprise the Hinoba-an Project, namely the Don Jose (DJ) and A1 deposits (Figure 2).The claim block has not been surveyed.

It is the constitutional policy in the Philippines that the State has full control and supervision of theexploration, development and utilization of natural resources. The State may undertake these activitiesdirectly, or it may enter into co-production, joint venture or production sharing agreements withFilipino citizens or corporations or associations of which 60 per cent of the capital is owned byFilipino citizens.

On March 3rd, 1995 the President of the Philippines signed the Republic Act No. 7942 into law, an actinstituting a new system of mineral resources, exploration and conservation. This Act is commonlyreferred to as the Philippine Mining Act of 1995 (the “Mining Act”). The Mining Act allowscompanies to obtain an exploration permit granting rights to explore for all minerals within a specifiedarea for up to six years. Upon locating a viable deposit the Mining Act provides four basic types ofproduction agreements, with duration of up to 50 years. Of these, two are of interest to foreigncompanies being:

• Mineral Production Sharing Agreement (MPSA), the application for which is an APSA. Underan MPSA the government grants to a contractor the exclusive right to conduct miningoperations within, but not hold title over, a particular area known as the contract area. Thecontractor provides all financing, technology, personnel and management, and the Governmentreceives a share of the gross output as excise tax revenue on mineral products as provided for inthe Mining Act, otherwise known as “An Act Reducing the Excise Tax Rates on Metallic andNon-Metallic Minerals”. A contractor must be a “qualified person” which is defined as aFilipino citizen of legal age and with the capacity, technically and financially, to undertakemineral resource development, and, in the case of a company, at least 60 per cent of the capitalof the company must be held by Filipino citizens.

• Financial or Technical Assistance Agreement (FTAA). The FTAA was designed to encouragelarge scale projects requiring investment of at least US$50 million. The FTAA allows 100 percent foreign ownership.

The Mining Act also provided a number of incentives to encourage mining, including a 4-year incometax holiday, tax- and duty-free capital equipment imports, value-added tax exemptions, income taxdeductions where operations are posting losses, and accelerated depreciation. In addition, theGovernment has guaranteed the right of repatriation of the entire proceeds of the investment as wellas freedom from expropriation. There is an excise tax payable to the Philippine government of two percent of Net Smelter Revenues.

Pursuant to the provisions of the Mining Act, Colet filed an application to convert its mining claimsinto an MPSA (Figure 2). The proposed MPSA agreement was filed on September 2nd, 1997 and hasnot been approved to date. Once the MPSA has been granted, the underlying claims essentiallydisappear and any maintenance requirements are no longer necessary. The MPSA and conditionsrelated to the MPSA supersede the claims. The Hinoba-an property is considered an “Application forMineral Production Sharing Agreement”.

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323



TENEMENT MAP


APRIL 2005 XY3

In July 1995 application was made under the Mining Act for an FTAA over an area of 81,000 hectares(Figure 2), including the area of the Colet Claims. To date, the Philippine government has not grantedthe FTAA, in fact no FTAA application by any mining company has been approved since 1995 whilethe legislation was being reviewed by the Government.

Title information has been provided by Copper Resources; the authors have not completed a titlesearch. A detailed list of the concession particulars was provided by the Company and appears inAppendix II.

Selenga has entered into the Integrated Mining and Operating Agreement covering the MineralProperties of the Hinoba-an Project, on the island of Negros in the Philippines. According to theagreement, Selenga has the right to possession, occupancy, use and enjoyment, for purposes ofexploring, developing, mining and operating for production and for marketing the marketable productsof the Mineral Properties. In exchange, Colet, as the holder of the Mineral Properties, is entitled to a3 per cent Net Benefits Royalty. The 3 per cent Net Benefits Royalty can be extinguished in exchangefor payments of US$7 million, US$4.4 million in cash and US$2.6 million in equity.

The Mineral Properties include mining leases covering 90 hectares and approximately 2,900 hectares ofmineral claims covering two known porphyry copper deposits, the Don Jose (DJ) deposit and the A1deposit. An application for an MPSA is currently in place covering the same area. Selenga has a 100per cent working interest in the Hinoba-an Project, subject to the 3 per cent Net Benefits Royaltypayable to Colet. Selenga is owned 92.5 per cent by HSHI and 7.5 per cent by Colet.

HSHI is a Philippine company with Class A shares (ordinary shares) and Class B shares (preferredshares). Class B shares are entitled to receive cumulative dividends equal to 10 per cent of the par valueof the Class B shares from the unrestricted retained earnings of HSHI. Class A shares are entitled toreceive any remaining dividends. Of the shares issued and outstanding of HSHI, 40 per cent are ClassA shares and 60 percent are Class B shares. HHPI owns the 1,000 issued Class A shares and threeFilipino citizens, who are directors of HSHI, own the 1,500 issued Class B shares. Based upon itsholding of 1,000 Class A shares, HHPI is entitled to 100 per cent of any dividends declared by theboard of directors of HSHI, after dividends have been distributed to the Class B shareholders, whichis limited to 1,500 Philippine pesos per annum. Full details of the title are found in Appendix II andAppendix III.

There are no known environmental liabilities at the Hinoba-an Project to date based on pastexploration work although in 1982 the site clearing episode during the ill fated false productiondecision created a silting problem into the local streams. The authors are unaware of the extent of thisproblem at this time and may not be able to fully answer it prior to additional environmental studies.The Group has started the process of planting trees on the site; new grasses and shrubs were notedduring the site visit. The local community seems to be in favour of a new mine in the area, generatingincome and jobs desperately needed since the closure of two local mines, Sipalay-Maricalum coppermine and Bulawan gold mine. However, future mining endeavors will have to overcome certain localcommunity concerns generated by poor mining practices at the Sipalay-Maricalum mine when it shutdown its operations due to operational cash flow problems. Poor planning and lack of money resultedin the mine not building sufficient tails containment area while it was in production. The existingtailings pond was allowed to be filled to over capacity. The result was that in the summer the tails driedup to non-toxic dust that settled in the city which became a visible and annoying reminder to the locals.In addition, during rainy season the dam overflowed and non-toxic silt was allowed to spill into thenearby rice paddy-fields and choke the river causing local floods. The town was required, at its ownexpense due to the mining company having no money, to remediate the rice paddy-fields and to buy adredge to clean out the river.

A small sliver of open ground west of the A1 deposit lies outside the Hinoba-an claims block (Figure2) but is within the MPSA application area. Although this does not affect the A1 deposit, it lies in anarea of a proposed waste rock pile. In addition, the property border passes through certain areas wherethe proposed two tailings ponds will be placed (Figure 2). Under section 75 (Chapter XII) of thePhilippine Mining Act of 1995 easement rights are discussed. Section 75 states:

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“When mining areas are so situated that for purposes of more convenient mining operations it isnecessary to build, construct or install on the mining areas or lands owned, occupied or leased byother persons, such infrastructure as roads, railroads, mills, waste dump sites, tailings ponds,warehouses staging or storage areas and port facilities, tramways runways airports, electrictransmission, telephone or telegraph lines, damns and their normal flood and catchment areas, sitesfor water wells, ditches, canals, new riverbeds, pipelines, flumes, cuts, shafts, tunnels, or mills, thecontractor, upon payment of just compensation, shall be entitled to enter and occupy said miningareas or lands.”

The only identifiable stakeholders in the affected areas on the Hinoba-an property appear to be localfarmers who have some rice paddy’s in the area of the northerly proposed tailings pond site. TheCompany will be required to compensate the owner of the land if mining commences. The Mining Actprovides for the settlement of conflicts (Chapter XIII) to insure that compensation is fair for bothparties.

There are no known issues related to native ancestral sites or archaeological sensitive areas. Anancestral site known as a Certificate of Ancestral Domain Claim (CADC) lies approximately fivekilometres to the south of the Project and it has been reported that it will not be a factor in anyexploration within the Hinoba-an Project (Figure 2).

Permits will be required to put the Hinoba-an Project into production and are discussed in theEnvironmental Considerations section of this report.

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE ANDPHYSIOGRAPHY

The Republic of the Philippines comprises 7,107 islands with a land area of approximately 300,000km2, spanning 1,840 km from north to south. Of these only around 2,000 islands are inhabited and only500 are larger than one km2. The population is around 86 million (July 2004), with an annual growthrate of 1.88 per cent. The majority of the population is of Indo-Malay, Chinese and Spanish decent.Approximately 40 per cent of the population lives in cities, with 13 per cent living in the metropolis ofMetro Manila, an area of around 630 km2 comprising Manila, Quezon City, Caloocan City, Pasay City,Makati City, Mandaluyong City and Pasig City.

The climate in the Philippines is tropical and humid with a hot, dry season from November to June anda wet season from July to October. Average temperatures are around 25

oC, with May being the hottest

month with temperatures reaching 35o-40

oC.

Twenty-one per cent of the population are members of about 60 tribal ethnological groups, includingat least four million Muslims in the south. The country is largely Roman Catholic (83 per cent), withProtestants (9 per cent), Muslims (5 per cent), and Buddhists and others (3 per cent). Literacy rates areamongst the highest in Asia, being estimated at 92.6 per cent in 2002. There are more than 100 regionallanguages in existence, with the national language being Filipino, which is derived from the Tagologlanguage. English is the second spoken language, and is most likely to be used in the provinces as asecond language after native dialect, and ahead of Filipino. All business, governmental and legaltransactions are conducted in English.

The Philippine government is divided into three co-equal branches: the executive, the legislative, andthe judicial. The executive branch consists of the President and the cabinet, whose main task is toadminister the functions of government. The legislative branch consists of the Senate and the Houseof Representatives, and is responsible for the enactment of laws. The judiciary, the branch that ensuresadministration of justice, consists of a system of courts the highest of which is the Supreme Court.

The Hinoba-an Project is located on the island of Negros some 700 km south of Manila. The islandcomprises the provinces of Negros Occidental (west) and Negros Oriental (east), and is part of theWestern Visayas Region. Negros Occidental has a land area of 7,926 km2 and a population of 2.6million (2000 survey). Farming, predominantly sugar plantations, and fishing are the mainoccupations. The capital of Negros Occidental is Bacolod City. There are daily flights with Philippines

345

Air to Bacolod from Manila, a flight of approximately one hour. Bacolod City had a population ofover 429,000 as of the year 2000.

The Hinoba-an area of interest is located in Barangay Manlucahoc, near the city of Sipalay. The cityof Sipalay is located approximately 170 km south of Bacolod along the main, paved, single-lane coastalhighway. In 2000, the community of Sipalay had a population of just over 62,000. In the employmentsector, approximately nine per cent were employed in the mining industry, with Sipalay previously beinghost to two major mining operations, the Maricalum (Sipalay) Mining Corporation’s copper mine andthe Philex Gold Inc.’s Bulawan gold mine. Both communities of Sipalay and Hinoba-an derive theirpower supply from the extra generating capacity of Maricalum Mining Corporation’s own powergenerating unit through an Electric Co-operative.

Most of the bridges from Bacolod to Sipalay have a load limit of 20t, although several were noted tohave limits of between 10-15t. The main road access to the Hinoba-an property is an additional 15 kmfurther south along the coastal highway, then easterly 21 km along dirt roads inland to the property.Fourteen kilometres of the inland road is currently maintained by Philex to maintain access for theremediation efforts currently ongoing at its Bulawan operation. Philex maintains an airstrip at Bulawancapable of handling light aircraft. It is possible that a mining operation at Hinoba-an could have accessto this airstrip under some sort of maintenance cost-sharing agreement with Philex.

The rainy season in Negros Occidental runs from May to January with the heaviest falls in August andSeptember and the lowest temperatures in December and January. The dry season is from February toApril, with April being the hottest month. Typhoons are frequent during the monsoon season. Averagerainfall is 3300mm per year. Exploration and mining activities can be carried out all year around. Thearea is rugged, ranging from 20m to 565m above sea level. The major drainage is to the northwest andwest into tributaries of the Sipalay River. Natural erosion of the slopes creates abundant sediment intothe river system.

The area has been actively logged in the 1960-80 period such that little marketable timber exists. Theslopes are generally devoid of any trees due to slash and burn methods employed in the area after thelogging was completed. This is subject to high erosion with the heavy rainfall. Tropical rain forest lefton Negros Island is about five per cent of its original coverage and extremely few forests remain belowthe 800m level on the island. Typical vegetation on the project area includes grasslands and smallscrubs.

The Hinoba-an area is classified as seismic zone six, which means that the project area could experiencean earthquake of a strong intensity, with enough force to damage certain structures, once every 4.4years. The project area has received one very strong earthquake during the 1850-1979 earthquakemonitoring period. Advanced exploration and mining will have to consider the potential ofearthquakes when designing permanent structures. Mining has been ongoing on the island from manyyears so the effects of earthquakes are well known and the companies in operation generally wellprepared.

The island of Negros is dominantly Catholic and as such enjoys a religious stability unlike certain areasof the Philippines where Muslim fundamentalists present a problem.

The property has the sufficiency of surface rights for future exploration or mining operations includingpotential tailings storage areas, potential waste disposal areas, heap leach pad areas and potentialprocessing plant sites. The major drainage is to the northwest and west into tributaries of the SipalayRiver that provide enough water for all future uses. The city of Sipalay is a mining centre in NegrosOccidental; all mining personnel, equipment and supplies can easily be accessed from the city.

HISTORY

The Philippines has a rich and varied mineral wealth that has attracted significant international interestover many years. By 1995, however, the minerals industry was employing only 400,000 people, or 1.5per cent of the total labour force. Of these an estimated 300,000 people were engaged in small-scalemining and panning activities, chiefly in artisanal gold workings. Of the dozen or so major mining

356

companies involved in metal mining in 1995, six produced copper, gold and silver from variousoperations (one of these also produced refractory chrome ore); three companies operated gold andsilver mines; and the remaining three produced nickel ore.

In the early 1980s the Philippines ranked as high as seventh amongst the world’s copper producers ataround 300,000 tonnes per annum. The bulk of this production was derived from porphyry deposits.The first large-scale operation was the Lutopan orebody at Atlas on Cebu Island which commencedoperations in 1955. The Mariculam (Sipalay) mine on Negros, 40 km northwest of the Hinoba-anProject, commenced production soon afterwards. More than 20 such deposits have been mined in therecent past.

More than 60 per cent of the Philippine’s copper concentrate production in 1995 was exported toJapan, with the remainder smelted by the Philippine Associated Smelting and Refining Corporation(PASAR) at its operation at Isabel, Leyte Province, Philippines. Copper cathodes produced by PASARwere also exported, primarily to Japan.

Regular gold production commenced in the Philippines in 1907 with gold sourced from primarydeposits and as a by-product of porphyry copper deposits. In 1999 the Philippines ranked 15th in worldgold output with production of just over 30 tonnes (964,600 oz.). The main producers were LepantoConsolidated’s Victoria gold project yielding 3.94 tonnes (126,700 oz.) and a Mining Corporationmine, which produced 2 tonnes (64,000 oz.). The bulk of the remainder was derived from smallproducers, predominantly those around Baguio and at Davao.

The only recent additions to the gold mining area were the opening of the Philex Gold Inc.’s Bulawanunderground gold mine, six kilometres to the west of the Hinoba-an Project in Negros Occidental in1996, and a smaller Philex operation at Sibutad.

The Don Jose porphyry copper deposit (now known as the DJ deposit), one of the two mineral bodiesidentified to date on the Hinoba-an property, was discovered in the early 1960s when the InsularLumber Company developed logging through the area. Mineral claims were applied for and granted tothree local groups who later joined together to form Colet.

In the early 1970s Lepanto Consolidated Mining Company, in joint venture with Negros OccidentalCopperfields Mines, Inc (NOCOMIN) undertook exploration including reconnaissance and detailedgeological mapping, reconnaissance stream sediment and grid soil sampling, induced polarization (IP),resistivity, magnetic surveys and diamond drilling. A 276m long crosscut was driven across the centreof the DJ orebody to collect bulk samples for metallurgical testing. The crosscut is no longer accessible.Two drives were developed along the strike of the orebody and a raise was developed. 117 diamonddrillholes were drilled in the immediate vicinity of the DJ deposit for a total of around 24,580m.

A resource of approximately 92 million tonnes at 0.47 per cent copper, including some 6.5 milliontonnes at 0.65 per cent copper of supergene mineralization was defined at the DJ deposit. This historicresource estimate has now been replaced with more current resource estimates. These reserve estimateshave been obtained from sources believed reliable but cannot be verified and are included only todemonstrate the progression of development on the property. It is also considered relevant, as theLepanto resource estimate for the supergene zone remains the only report that contains a separateestimate for this component of the DJ copper deposit. It was during this period of exploration that acopper stream geochemical anomaly of 1,950 ppm in the Mantoboy River was followed up withprospecting and finally ten drill holes. These holes intersected copper mineralization, which later wasdeveloped as the A1 deposit, but was not followed up until 1995 due to Lepanto’s focus with the DJdeposit.

In 1980-1982 the joint venture engaged Pincock, Allen and Holt (PAH) of Denver to undertake adetailed feasibility study. A total of 108 holes were drilled to define the DJ ore body. Based on anInverse Distance Squared method of grade estimation and a cut-off grade of 0.25 per cent copper, atotal resource of 128 million tonnes grading 0.42 per cent copper was outlined using a density of 2.67million tonnes per cubic metre. After pit optimization, an ore reserve of 94.7 million tonnes of 0.45 per

367

cent copper was defined with a waste-to-ore ratio of 1.04. This resource estimate and supportingeconomic analysis is now outdated. These reserve estimates have now been replaced with more currentresource estimates. These historic figures have been obtained from sources believed reliable but cannotbe verified and are included only to demonstrate the progression of development on the property. ThePAH report showed the deposit to be economically viable based on a 14,000 tpd mining and millingoperation and in 1982 construction commenced. A slump in the copper price, however, caused theproject to be abandoned in 1983.

In 1991, Colet entered into an operating agreement with Selenga, a Philippine registered company.Selenga also undertook significant geophysical and geochemical surveys within the Colet Claims. Thiswork lead to the recognition of three follow-up areas labeled A-1, A-2 and A-3. Exploration workincluded geological mapping, grid stream and soil geochemical sampling, IP survey, magnetometersurvey and test pitting. The IP survey delineated three large Induced Polarization zones (Southwest,Western and Northern) that were considered excellent exploration targets. These IP anomalies andcoincident copper geochemical anomalies have not been followed up in detail to date and remaintargets for future exploration on the Hinoba-an property. Selenga drilled an additional four diamonddrillholes at DJ totaling around 1,000m in 1992-93.

In April 1995, Pursuit entered into a joint venture with Tequila Copper Corporation (“Tequila”) ofToronto, which had a 40 per cent interest in Selenga and an option to acquire the remaining shares.Pursuit, through its subsidiary HHPI, undertook additional exploration on the Hinoba-an property.The HHPI work remains the most recent work on the property and will be discussed in the Explorationsection of this report.

MINTEC undertook resource evaluation on behalf of HHPI in 1998, calculating global resources atvarious cut-off grades as shown in Table I:

TABLE I - MINTEC HINOBA-AN RESOURCE ESTIMATE, 1998

Cut-Off Grade (% Cu) Resources Grade (% Cu)

0.20 432,987,000 0.3670.25 325,585,000 0.4150.30 254,108,000 0.456

MINTEC undertook a variography study on both of the prospects to establish parameters for theblock model used in the above resource estimation. The resources were estimated using MINTEC’sproprietary MEDSYSTEM resource estimation software. A polygonal method was used for gradeinterpolation that had proved successful for the resource estimation in 1969 at the Atlas Mine on CebuIsland. Tonnages were calculated using a S.G. of 2.75. No top cutting of grades was used.

These historic resources were categorized according to the Australian JORC (Joint Ore ReservesCommittee) reserve and resource guidelines. These resource estimate have now been replaced with morecurrent resource estimates. These reserve estimates have been obtained from sources believed reliablebut cannot be verified and are included only to demonstrate the progression of development on theproperty.

The development of mineable reserves and a mining schedule was carried out by MINTEC using theMEDSYSTEM program to support the HHPI Scoping Study. A sequenced mining plan for thedevelopment of the DJ and A1 deposits was established for a 15 year project to reach the ultimate pitdesign. The capital and operating costs estimated in the HHPI Scoping Study are now considered outof date by the authors.

Most recently ZCCA has re-estimated the resources for the Colet Claims using a different set ofassumptions than MINTEC which are discussed in detail in the Reserves and Resources section of thisreport.

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GEOLOGICAL SETTING

The Cretaceous to Eocene rocks of southwest Negros consist of a belt of northwest trending foldedvolcanic, pyroclastic and volcanoclastic units, the Basak Formation, and the unconformably overlyingLate Eocene Isio Limestone, intruded along NW-trending structures by an Early Oligocene dioritecomplex or batholith of the Pagatban Intrusive Complex (Figure 3 and Figure 4). Subsequently, MidOligocene quartz diorite stocks were intruded along structurally favourable zones generating anorthwesterly trending corridor of porphyry copper-molybdenum deposits, including the Hinoba-andeposits.

Crystallization of the Mid Oligocene parent intrusion led to fracturing of its apex. The resultingpressure reduction led to gas-rich vapours ascending through favourable structures to discharge asfumaroles or to mix with meteoric waters and cause extensive advanced argillic alteration. With thecooling and continuing collapse of the magmatic system, overprinting of the earlier potassic/propyliticalteration by zones of phyllic and argillic alteration occurred. During this stage the earlier quartzveining and wall rocks were subjected to extensive sheeted fracturing and brecciation.

Deposition of copper sulphides occurred at this stage in association with quartz-pyrite-sericitealteration. The copper bearing units were then intruded by intra-mineral hornblende-diorite porphyriesand post-mineral hornblende-andesite-porphyry dykes.

It is inferred that this series of plutonic intrusives, coupled with localized block-faulting, resulted inuplift of the area, which was followed by an extensive period of erosion considered to be in the orderof 1-2 km. This erosion exposed the porphyry bodies at Sipalay, Basay, and at Hinoba-an. It is alsoinferred that the low-angle fault was initiated at about that time and that it resulted in the relativedisplacement of the DJ and A1 bodies. The mineralization between the two bodies was smeared outand is termed the DJ South drag mineralization.

In addition, thrusting may have occurred at relatively shallow depth (less than 2 km) below the thenland surface, where relatively low pressure conditions allowed the development of a thick, relativelyflat-lying brecciated zone between the two bodies. In the Early (?) Miocene the Tabu Clastics weredeposited. During the Middle Miocene, a gold-related event of dacite magmatism occurred. Thisresulted in the emplacement of the NE-trending dacite porphyry which hosts the Bulawan gold deposit,and the NW-trending dacite at the eastern edge of the DJ deposit.

Potentially economic ore grades at Hinoba-an were formed through the enrichment of lower gradeprograde mineralization in the potassic altered zone by collapsing retrograde phyllic alteration. Coppergrades drop off dramatically at the base of the phyllic-altered zone, passing into low-grade progradepotassic alteration.

The DJ deposit is hosted by a north-northwest trending phyllic-altered quartz diorite/hornblendequartz diorite porphyry, some 2,500m long and 250-350m wide. The deposit is cut by intra-mineral(?)hornblende diorite porphyry and post-mineral hornblende andesite porphyry dykes. The majorcontrols include a northwest trending low angle fault, a northwest trending post copper-mineralizationdacite diatreme and a north-south trending fault. The low angle fault acts as the base of mineralization,and the dacite diatreme acts as a sharp boundary to the east side of the deposit. A typical cross-sectionof the interpreted mineralization at DJ is shown in Figure 5.

The A1 deposit, which is also known as the Mantoboy deposit, is hosted dominantly by a north-northwest trending quartz diorite porphyry characterized by phyllic alteration. The body is cut by 10-40m wide intra-mineral northwest trending hornblende diorite porphyry dykes. The body is 1,200mlong and 175m wide. A typical cross-section of the interpreted mineralization at A1 is shown inFigure 6.

Density measurements on whole core from both deposits average 2.78.

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LOCAL GEOLOGY


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TYPICAL DJ CROSS SECTIONSECTION 11800 NORTH

LOCAL GRID LOOKING NORTHNEGROS OCCIDENTAL

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TYPICAL A1 CROSS SECTIONWITH PROPOSED A1 PIT

9200 NORTH (LOCAL GRID) 9200N LOOKING NWNEGROS OCCIDENTAL

REPUBLIC OF THE PHILIPPINES

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DEPOSIT TYPES

The Hinoba-an deposits are classified as porphyry copper deposits with associated gold, silver andmolybdenum credits. Porphyry copper deposits provide more than 50 per cent of the world’s copperfrom over 100 producing mines. Appendix IV contains a list of some of the largest (by tonnage)porphyry copper (plus/minus molybdenum, silver or gold) deposits of the world. Hinoba-an rates asnumber 48 on the list. The following table summarizes the largest porphyry copper deposits(plus/minus molybdenum, silver or gold) in the Philippines (sorted by tonnage), Hinoba-an rates asnumber eleven on the list.

TABLE II – LARGEST PORPHYRY COPPER DEPOSITS IN THE PHILIPPINES *

Age Tonnage Cu Mo Ag Au

Deposit State Discovery Startup (million (million grade grade grade grade

Name Province Date Date years) tonnes) (%) (%) (g/t) (g/t)

Tampakan 2500 0.480 0.20

Atlas/Toledo CEBU Island 1930s 1955 108 1420 0.448 0.018 1.80 0.24

Sipalay Negros Island 1957 30 807 0.473 0.014 1.50 0.05

Luzon Island 1.35 650 0.650 0.93 1.30

Luzon Island 1970s 3.5 500 0.400 0.00 0.40

Luzon Island 1957 1.5 449 0.375 0.001 1.50 0.70

Kingking 10 400 0.350 5.00 0.60

Marcopper 1930s 1969 20.5 372 0.550 0.004 0.70 0.11

Taysan Luzon Island 1968 20.5 336 0.310 0.003 1.20 0.35

San Fabian Luzon Island 1966 20.6 314 0.270 0.00 0.21

Hinoba-an 17.5 293 0.360 3.0+ 0.016+

Santo Ni–o Luzon Island 1972 1.5 286 0.345 0.008 1.70 0.20

Basay Negros Island 1972 1979 30 262 0.440 0.008 1.50 0.29

Table Modified from Singer, Berger, and Moring 2002, USGS OFR 02-268

* Note: These resource estimates have been obtained from sources believed reliable but cannot be verified.

+ Note: silver and gold grades have not recently been included in any recent resource estimates for the Hinoba-an Project. The gradesin this table have been obtained from a search of the historic literature and can only be considered as approximate estimates to be usedfor comparison purposes in this Table II.

Typical porphyry copper deposits are cylindrical, stock-like composite bodies having elongate outcrops1.5 x 2 km in diameter and containing an outer shell of medium to coarse-grained equigranular rockwith a porphyritic core of similar composition. The most common ore hosts are quartz monzonite togranodiorite felsic plutonic rocks. In addition, a second population of deposits occurs in more maficintrusive rocks of syenitic to dioritic composition.

The first to document the alteration associated with porphyry copper deposits were Lowell andGuilbert in 1970, who suggested that four alteration halos were often present roughly centered on theporphyry stock:

Before1972

NegrosIsland

MarinduqueIsland

MindanaoIsland

Santo TomasII Philex

Guinaoang-Tirad

13thcentury,por Cuin 1978

FarSoutheast-Bato Tabio

MindanaoIsland

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15

44

• Potassic Zone – this zone was always present and characterized by secondary potassium feldspar(K-spar), biotite and/or chlorite replacing primary K-spar, plagioclase and mafics. Minor sericitemay be present.

• Phyllic Zone - not always present and characterized by vein quartz, sericite and pyrite with minorchlorite, illite and rutile replacing the K-spar and biotite.

• Argillic Zone – was not always present. It is identified by the clay minerals kaolinite andmontmorillonite with minor disseminated pyrite. Plagioclase is strongly altered, K-sparunaffected and biotite chloritized.

• Propylitic Zone – always present and contains chlorite, calcite and minor epidote. The maficminerals are highly altered while the plagioclase is less altered.

At depth all zones are thought to coalesce into a single, large K-spar-quartz- chlorite-sericite unit.

Ore in the porphyry copper deposits is found in three settings; totally within the host stock, acombination of partially in the stock and partially within the country rocks, or totally within thecountry rocks. The ore bodies themselves tend to be shaped like steep walled cylinders, althoughtabular to flat conical deposits are not uncommon. The ore occurs as stockwork veins ordisseminations with typical grades of 0.4-1 per cent copper. Mineralization is strongly zoned, the zoneshave been characterized by Lowell and Guilbert as follows:

• Inner Zone – this lies coincident with the potassic alteration zone. Usually it is several hundredmetres in diameter. It has a relatively low sulphide content, although molybdenum is higher inthis zone than anywhere else in the deposit. Pyrite varies from 2-5 per cent and thechalcopyrite/pyrite (cpy/py) ratio about 1:3. Mineralization is generally disseminated rather thanstockwork.

• Ore Zone – this lies roughly at the potassic-phyllic alteration boundary. Pyrite varies from 5-10per cent and the cpy/py ratio about 1:2.5. The main ore mineral is chalcopyrite, which occurs instockwork quartz veinlets. Other common ore minerals include bornite, enargite and chalcocite.

• Pyrite Zone – this zone includes much of the phyllic and plus/minus the argillic zones. Pyritemineralization is the highest (ranging 10-15 per cent) and cpy/py ratio about 1:15. Mineralizationoccurs as both veins and disseminations. Other additional unusual sulphide phases begin to showup.

• Outer Zone – this zone coincides with the propylitic zone. Pyrite mineralization is minor, andcopper mineralization is rare. Sphalerite and galena mineralization more common, but usuallyare not of ore grade. Mineralization appears more like true veins.

Breccia zones are important in the porphyry system, often containing significant ore. These brecciazones can have very high grades (2-5 per cent copper) and can occur both in the porphyry or thecountry rock. They may have been be formed by subsequent hydrothermal activity, gravitationalcollapse or later explosive volcanism.

MINERALIZATION

Mineralization at the Hinoba-an Project is typical of porphyry deposits. Low grade coppermineralization (plus/minus molybdenum, gold or silver) has been deposited as steeply dipping tovertical sheeted fractures or veinlets/veins within the NW trending structural corridor. Copper isdeposited as fracture controlled chalcopyrite and bornite in veins, veinlets and quartz stockworks.Pyrite is the predominant sulphide mineral averaging 9.3 per cent at DJ and 7.4 per cent at A1, withconcentrations of up to 12 per cent as fracture fillings and disseminations. Chalcopyrite is thedominant copper mineral at 95 per cent of all copper mineralization at Hinoba-an with minor bornite(4 per cent) and chalcocite/covellite (1 per cent).

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Based on other porphyry copper belts in the Philippines, the average gold content in a copperconcentrate might be expected to be 1-2 g/t while the average silver content might be expected to be 30-40 g/t. Various studies have indicated that the average gold grade at the DJ is 0.015 g/t and 0.019 g/t atthe A1. Gold is found predominately as free gold. HHPI and others have considered pyrite as amarketable by-product. Molybdenite is present as a minor constituent. A thin surface leached zoneoverlies a variably developed layer of secondarily enriched chalcocite, up to 15m thick.

According to Corbett (1995), the DJ and A1 ore was:

“formed through the enrichment of lower grade prograde copper mineralization in potassic alteredintrusives by collapsing retrograde phyllic alteration associated with shear-hosted clay matrixbreccias. Chalcopyrite, locally rim earlier pyrite, bornite, and hypogene covellite characterise theore, as in other similar SW Pacific porphyry systems. The Ore Zone therefore occurs as a cigarshaped body aligned along NW structures. Copper grades drop off dramatically at the base of thephyllic alteration as the drilling passes into the lower grade prograde potassic alteration.”

The following table summarizes the minerals identified and host rocks present at the Hinoba-anProperty and compares the Project with the other known porphyry copper deposits on Negros Island.

TABLE III – PORPHYRY COPPER DEPOSITS ON NEGROS ISLAND **Tonnage Cu Mo Ag Au

Name Discovery Age (million grade grade grade grade Rocks InDeposit Date MY tonnes) (%) (%) (g/t) (g/t) Minerals Deposit

Aya Aya 1971 19.5 40 0.3 0.022 1.5 0.08

Basay 1972 30 262 0.44 0.008 1.5 0.29

Before 1972 17.5 293 0.360 3.0+ 0.016+ breccia,dioriteporphyry,quartzdioriteporphyry

alunite,anhydrite/gypsum,azurite/malachite,biotite, bornite,chalcanthite,chalcocite,chalcopyrite, chlorite,covellite, epidote,gold,hematite/specularite,jarosite,kaolinite/dickite,magnetite,molybdenite, pyrite,sericite

Hinoba-an

andesiteporphyry,breccia,daciteporphyry,quartzdioriteporphyry,monzo-niteporphyry

actinolite,anhydrite/gypsum,azurite/malachite,biotite, bornite,chalcocite,chalcopyrite, chlorite,chrysocolla, covellite,epidote, galena, gold,hematite/specularite,jarosite, magnetite,molybdenite,phlogopite, pyrite,sericite, sphalerite,tetrahedrite, zeolite

quartzdioriteporphyry

actinolite, biotite,bornite, chalcopyrite,hematite, limonite,magnetite, malachite,molybdenite,neotocite, pyrite

17

Tonnage Cu Mo Ag AuName Discovery Age (million grade grade grade grade Rocks InDeposit Date MY tonnes) (%) (%) (g/t) (g/t) Minerals Deposit

Sipalay 30 807 0.473 0.0139 1.5 0.05

Luz 1971 33.4 0.38

Manlupo 81.5 0.41

Saguibon 1973 26 0.35 0.015


** Note: These resource estimates have been obtained from sources believed reliable but cannot be verified.

+ Note: silver and gold grades have not recently been included in any recent resource estimates for the Hinoba-an Project. The gradesin this table have been obtained from a search of the historic literature and can only be considered as approximate estimates to be usedfor comparison purposes in this Table III.

EXPLORATION

In April 1995, Pursuit entered into a joint venture with Tequila and, through its subsidiary HHPI,undertook the most recent phase of exploration on the Hinoba-an property. Its work consisted ofdrilling at DJ and regional exploration including geochemical survey, IP survey, radiometrics,magnetometer survey, and radarsat and Landsat imagery interpretation. Drilling at DJ is on 100msections with spacing across strike being 60m in the north and 50-150m in the south. The IP outlineda number of anomalies (Figure 7). Two of the anomalies are associated with the known mineralizationof the DJ and A1 deposits. Other IP anomalies exist within the claim block but have not been properlydrill tested. Further drill testing of these anomalies is recommended.

In addition to the IP anomalies, the HHPI work also outlined a number of linear northwest trendingcopper soil geochemical anomalies (Figure 8). The anomalies also are associated with the knownmineralization of the DJ and A1 deposits. Additional soil geochemical anomalies associated with theIP anomalies also remain untested. Further work is required on the soil/IP anomalies.

During the regional work HHPI, following up work done by Lepanto in 1970s, outlined the A1 depositto the south-southwest of DJ. Intensive drilling of A1 established a potentially mineable resource.HHPI also drilled 10,906m in 111 RC holes on the Colet claims, mostly at A1, and an additional 36diamond holes (8,102m) tested various other targets. Drill spacing at A1 ranges from 100-150m bothalong and across the strike of the body.

HHPI also entered a joint venture to explore tenements to the north and south of the Colet/proposedMPSA claims, with drilling establishing resources at the Manlupo deposit (additional discussion found

quartzdioriteporphyry

bornite, chalcopyrite,molybdenite, pyrite

dioriteporphyry,quartzdioriteporphyry


dioriteporphyry,quartzdioriteporphyry


aplite,breccia,granodiorite,daciteporphyry

azurite/malachite,bornite, calcite,chalcocite,chalcopyrite, chlorite,chrysocolla, covellite,cuprite, epidote,kaolinite, limonite,magnetite, malachite,molybdenite, pyrite,sericite

46

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SOIL COPPER GEOCHEMISTYPIT OUTLINES & DH COLLARS


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in the Adjacent Properties section of this report). This joint venture has subsequently been allowed tolapse and the resources are outside the current area of interest.

Exploration potential remains within the area of the Colet Claims/proposed MPSA. Numerous otherundrilled porphyry targets exist within the FTAA area. In addition, the FTAA area has potential tohost gold deposits of the Bulawan-style, associated with dacite intrusives. The potential for skarn andsediment-hosted gold mineralization remain untested but is a valid exploration target.

In 1998, HHPI completed an in-house Scoping Study of the Hinoba-an Project. The metallurgical andtreatment section was undertaken by TBM Mining Metallurgical Services Inc., an independentPhilippine company that undertook the metallurgical testwork for HHPI. The block model and pitdesign were undertaken by MINTEC of Tucson, Arizona. For the discussion of all issues related to theenvironment, HHPI contacted Dames and Moore to complete the environmental review. The aboveprogram relates to the advancement of the known deposits, DJ and A1, to bankable feasibility studystatus.

Regional exploration work within the Colet Claims by Lepanto, Selenga, and most particularly HHPI,has identified a number of targets within this area but outside the boundaries of the known DJ and A1bodies. HHPI drill-tested a number of these targets, see Figure 9 for drillhole collar locations.Encouraging intersections were returned from drilling to the south of the A1 zone, to the east of theA1 zone, and to the west of the DJ zone. Best results are shown in Table IV.

TABLE IV - SIGNIFICANT INTERSECTIONS WITHIN THE MPSA & OUTSIDE THEPROPOSED DJ & A1 PITS

From To Interval GradeArea Hole Number (m) (m) (m) (% Cu)

A1 South A1-21 48 84 36 0.263A1-25 72 135 63 0.364A1-26 + 150 201 51 0.305A1-45 108 147 39 0.252A1-52 123 156 33 0.324A1-RC15 18 27 9 0.353

A1 East A1-70 153 228 75 0.515A1-RCD10 88 115 27 0.283DT-RC76 21 30 9 0.427

DJ West A1-8N116W 45 66 21 0.349A1N-RC103 42 87 45 0.260

+ - A1-26 was also notable for its molybdenum average grade of 135ppm Mo over the 51m interval.

DRILLING

The DJ deposit has been drilled by Lepanto, Selenga and HHPI. The A1 deposit, although identifiedby Lepanto, has only been drilled by HHPI. These holes were drilled in the period between June 1995and June 1997. No core remains from any of the drilling undertaken prior to HHPI’s involvement inthe Project and its drill programs. The holes from the various drill programs have been located onFigure 9. Table V summarizes the holes that have been drilled to define the two deposits:

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TABLE V - DRILLHOLE SUMMARY

Area Company No of holes Metres

DJ Lepanto 95 21,000Selenga 4 1,000HHPI 58 9,294Total 157 31,294

A1 HHPI 72 16,950

Overall Total 229 48,244

In addition, HHPI completed 10,906m of reverse circulation (RC) drilling in 111 holes within the ColetClaims. Three of these RC holes were finished with diamond-drilled tails. These holes were drilled inthe period January to September 1997. HHPI noted that, where drilled, twinned diamond holes haveinvariably returned significantly different results to the RC drilling indicating contamination downhole. HHPI subsequently recommended that these holes be disregarded for resource calculations. SomeRC holes at DJ remain to be twinned by diamond drilling. HHPI used a limited number of the RCresults to augment diamond drilling in the southern portion of the DJ deposit. These holes have notbeen used in any resource evaluations.

The majority of the HHPI diamond drillholes at A1 were pre-collared to generally 15m depth with atri-cone bit. Information regarding the possible supergene mineralization in this area is therefore notrecorded from these holes. At A1, diamond holes are generally spaced at 50-100m intervals acrossstrike, on 100-150m spaced lines along strike. Average diamond drill hole depth at the A1 was 235m.At DJ diamond holes are generally spaced at 60m intervals across strike, on 100m spaced lines alongstrike. At the southern end of DJ (DJ South), the across strike spacing ranges from 50m to 150m.Average diamond drill hole depth at the DJ was 160m. Of the 130 diamond drill holes on the two orebodies, 110 holes were drilled at 800-900 inclination while the remainder was drilled between 500-790.

Ninety-eight percent of the ore grade intersections within the DJ deposit to the north of the 11300Nsection and 85 per cent of the intersections within the DJ deposit to the south of that section werecompleted with HQ size drill core. The remainder of the diamond drill holes were completed with NQsized drill core. At A1, 68 per cent of ore grade intersections have been with HQ size core, 28 per centwith NQ size and 4 per cent with BQ.

HHPI also drilled 36 diamond holes (8,100m) into various other targets within the Colet Claims. Theseholes have not been used in any resource evaluations. The collar locations of the various drill programsare shown in Figure 9.

Most of the drilling was completed with Longyear 34 or Longyear 38 drills with wireline technologyfor core retrieval. Certain sections of the deposits required the use of triple-tube assemblies and/or theuse of drilling additives to help maintain good core recovery. Core recovery was said to be good,averaging 83 per cent at the DJ and 82 per cent at the A1 deposits. All sections of core were reviewedand in addition to geological logging, Rock Quality Determinations (RQD) were recorded for all thedrill core.

Some work is required to determine what material is being lost in the unrecovered core. There is a 20per cent omission from the assayed sample when recovery is 80 per cent and depending whethermineralized or unmineralized material is omitted can have a significant effect on resource estimation.

SAMPLING METHOD, APPROACH AND SECURITY

The sample method for drill core varied from the earlier work (1970- 1995) to the latter work programcompleted by HHPI in 1995-1997. Lepanto and Selenga used variable sample widths for selection ofcore sampling intervals based on geology and the presence of sulphides. HHPI selected a standardthree meter core sampling interval to test porphyry copper targets but reduced the sample interval totwo metres when testing gold targets. HHPI used a six meter sampling interval for testing obviouslyunmineralized (of visible copper mineralization) core. Solid core was split using a manual splitter

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initially followed by the use of a mechanical splitter part way through the HHPI program. Broken corewas split manually using an impact core splitter. One half of the core was bagged and sent for assay,the remainder was saved in wooden core boxes and stored on site for future reference and review.

No particular specific security measures were in place during the various drilling programs, typical ofthe time and typical of drilling a lower grade porphyry target.

SAMPLE PREPARATION AND ANALYSIS

In June 1996 HHPI commissioned its in-house analytical laboratory in Hinoba-an. This laboratory waslater extended to undertake gold assaying in July 1997. The decision to establish the in-houselaboratory was made in order to provide early and reliable assay information for decision-makingpurposes. The site laboratory would also act as a filtering laboratory to reduce the number of samplesto be sent out to accredited laboratories. Only samples assaying greater than 0.2 per cent copper weredispatched offsite. These samples were sent to Amdel Limited Mineral Services Laboratory (Amdel),which has a NATA accreditation, in Australia to confirm the site laboratory assays. Amdel’s copperanalysis is done using Inductively Coupled Plasma-Optical Emission Spectrometry (Method IC2E)which includes the analysis of various elements including silver, molybdenum, bismuth, arsenic andcadmium. In the case of gold, analysis is done using fire assay with AAS finish (Method FA3). McPharGeoservices Inc., an independent lab in the Philippines, completed routine duplicate analysis of theAmdel samples using the same techniques. In addition to interlaboratory duplicates, HHPI wereinserting blind control sample standards, prepared by Gannet Holdings Pty. of Australia, into thesample stream.

In 1997, HHPI retained an external independent Australian based consultant to review the HHPIprocedures and results. The consultant, David Lea, completed a detailed statistical review of the HHPI,Amdel and McPhar results (Lea, 1997). The following are his conclusions of the inter-laboratoryduplicate sampling:

“Interlaboratory control samples were submitted to check the analytical proficiency of thelaboratories over the range of materials and concentrations encountered during the project.

436 Pairs of results as reported by HHPI and McPhar, 1027 pairs of results as reported by HHPIand Amdel as well as 84 pairs of samples as reported by Amdel and McPhar were statisticallyevaluated.

The interlaboratory evaluation indicated that the HHPI copper results were higher than those ofMcPhar (as the grade increased there was a tendency for the McPhar results to becomeincreasingly lower than the HHPI results).

The Amdel results were very similar to those reported by HHPI and tend to back up those figures.”

In addition, he completed a statistical analysis of the Gannet control samples. The following are hisconclusions related to the standards:

“Five standard reference samples were purchased from Gannet Holdings in Western Australia andanalysed. As blind control samples, for copper by HHPI and McPhar…. The results so far receivedindicate that the copper analysis results reported by the HHPI laboratory are accurate and precise(when statistically evaluated against the stated Gannet contents) the elevated results indicate thatthe McPhar was reporting results that were biased low and more variable than HHPI.”

In conclusion, the sampling and assaying procedures and protocols established by HHPI have beenreviewed by external consultants and reports from their work have been reviewed by the authors. Theyappear to comply with accepted international standards for sample preparation and assaying, includingthe use of assay standards, sample duplicates and check assays at third party laboratories.

DATA VERIFICATION

Data verification has been completed in two manners. Initially, a review was completed of the externalconsultants’ reports for sample preparation and assaying, including the use of assay standards, sampleduplicates and check assays at third party laboratories. Original assay certificate were not available for

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review for this report since the owner does not have readily accessible copies in their office. The authorshave had to rely on the detailed discussion of the procedures outlined in the HHPI report that includesthe MINTEC review of the original data. In addition, all drill logs show the results of the checkanalysis completed at the independent Australian Amdel commercial laboratory at the time of thedrilling.

Secondly, selected sampling was completed on 16 sections of the drill core remaining on site. The drillcore at Hinoba-an has been adequately stored on site in covered sheds located directly on top of theA1 deposit. Unfortunately, the core has been exposed to the humidity and as such all the sulphides havenow oxidized and the clays have decomposed. Sections of core that reported 100 per cent recovery inthe initial drilling have now weathered to rubble. This was a problem recognized in several of the earlierreports, especially some of the engineering studies related to acid rock drainage. No core splitterremains at the site, so small pieces of core were collected over previously defined sample intervals. Anattempt was made to be as representative as possible but the combination of not being able to collectexactly the same amount of rock coupled with the rock now being oxidized, has resulted in samplingdifferences between the original core sampling and the data verification sampling completed for thisreport.

A total of 16 samples were collected on August 14th, 2003. G.Cavey collected the samples andpersonally delivered the samples to TeckCominco Research Laboratory (Global Discovery Labs) forprocessing. Sample locations for 12 of the samples can be seen on Figures 5 and 6. The following table(Table VI) summarizes the results of recent sampling (Columns labeled “2003”) and compares theresults to the original analyses (columns titled “HHPI” and “Amdel”). A complete summary of theanalytical results can be located in Appendix V.

TABLE VI - DATA VERIFICATION

Core Cu Au Au Ag Ag Mo Mo

DJ Zone From To Recovery Cu (%) (ppm) (ppm) (ppm) (ppm) (ppm) (ppm) (ppm) ROCK TYPE

Hole (m) (m) (%) HHPI Amdel 2003 Amdel 2003 Amdel 2003 Amdel 2003

DJ 02 75.00 78.00 100% 0.76 0.85 8138 0.110 0.122 1.5 0.8 15 14 Andesite168.00 171.00 100% 0.51 0.54 5248 0.024 0.075 1.00 0.6 28 2 Andesite

DJ 04 12.00 15.00 75% 1.45 1.66 11670 0.063 0.053 1.5 0.4 48 123 Soil/Diorite57.00 60.00 78% 0.26 0.32 1854 0.013 <0.034 <0.5 <.4 4 2 Diorite

DJ 17 120.00 123.00 100% 0.44 0.67 3365 0.023 0.035 1.0 <.4 13 10 HDP/QD201.00 204.00 100% 0.73 0.60 5392 0.029 0.045 1.5 0.9 10 14 HDP/QD

DJ 28 33.00 36.00 90% 0.37 0.37 3164 0.028 <0.034 1.0 0.4 98 95 QDP

DJ 32 27.00 30.00 66% 0.32 0.27 2541 0.007 <0.034 2 1.5 67 57 QDP/HDP

Core Cu Au Au Ag Ag Mo Mo

A1 Zone From To Recovery Cu (%) (ppm) (ppm) (ppm) (ppm) (ppm) (ppm) (ppm) ROCK TYPE

Hole (m) (m) (%) HHPI Amdel 2003 Amdel 2003 Amdel 2003 Amdel 2003

A1 36 30.00 33.00 70% 0.39 0.36 2077 0.016 0.060 1.0 0.5 41 45 QDP102.00 105.00 49% 0.36 0.35 2788 0.014 0.334 0.5 0.9 61 49 QDP/HQDP

A1 49 78.00 81.00 100% 0.88 0.97 7376 0.032 0.037 2.5 0.7 93 98 QDP

A1 51 129.00 132.00 84% 0.73 0.72 5011 0.035 0.055 1.0 0.4 20 <2 QDP237.00 240.00 92% 0.51 0.52 4845 0.015 0.158 1.0 <.4 92 83 QDP

A1 66 39.00 42.00 94% 0.68 0.63 4956 0.018 0.060 1.5 0.9 12 <2 QDP51.00 54.00 98% 0.29 0.26 2042 0.007 <0.034 1.0 0.5 39 36 QDP

A1 69 81.00 84.00 100% 0.72 0.83 7150 0.012 <0.034 3.5 2.7 40 30 QDP

The oxidation of the core over time has appeared to affect the assay values from the samples collectedduring the site visit. The copper assay for 14 of the 16 samples taken is lower than that of either theHHPI or Amdel assay for the same sample. In two of the samples the 2003 assay is between the HHPIand Amdel assay. Interestingly the gold assays are almost all higher than those performed previouslyby Amdel with only one exception. Some of the individual gold assays are ten and twenty times higherthan those previously reported.

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The reduced copper assays may be attributed to dissolution caused by acid generation during theoxidation process. The oxidation of the core would also result in a lower rock density of the sampleand higher gold values might result when contained gold did not dissolve in the generated acid. Slightlylower silver and molybdenum values also tend to verify this theory. This theory does not explain theorder of magnitude variation in two of the gold assays. This can only be explained by nugget effect ordata entry errors but casts further question as to the actual gold content of the deposit.

MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

An internal memorandum from Mark Gordon on July 26th, 2001 summarizes the copper resourceestimations carried out on the DJ and A1 porphyry copper systems at the Hinoba-an Project byZCCA.

The majority of the steps in the estimations were carried out using “Vulcan” software, on datasupplied in digital format by HHPI and Mintec.

The following steps were followed in the estimations:

• Digitising of grade boundary polygons using the drillhole assay data as a guide,

• Triangulation of the polygons,

• Bench composting of drillhole data using grade triangulations as boundaries, and employingtop cuts as necessary,

• Construction of an initial block model, with sub-blocking to fit grade triangulations,

• IVD2 grade estimation within grade triangulations, restricting searches to data inside theboundaries,

• Design of proposed annual pits,

• Construction of final block models, with sub-blocking to fit both the grade envelopes andproposed pits,

• IVD2 grade estimation of the final block models.

Grade Interpretations and Triangulations

Grade polygons were constructed on 50m local grid E-W (local grid north is 320º UTM) sectionsusing the drillhole data, with these generally using 0.25 per cent downhole copper cutoffs. Incarrying out the interpretations previous interpretations and interpreted geological boundaries wereused as a guide. A further explanation of previous interpretations and geological boundaries ispresented in the HHPI scoping study.

The polygons were triangulated, with eight triangulations being constructed for A1, and four for DJ.

All triangulations were cut to a maximum RL of 15m below the surface. This was due largely tomost HHPI holes not being assayed until they were 15m deep, and also a large number of otherholes were lacking assay data at shallow depths. This 15m skin has been classified as overburden inthe resource estimations.

Composite Database

The drillhole data used in the estimations was composited on 15m benches, and was also cut at thegrade triangulation boundaries.

Not all drillholes were used, and different topcuts were applied for the different systems. The topcutsused are as follows:

• A1 - 0.84 per cent copper, which excludes 56 (1 per cent) of the assay samples, and,

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• DJ – 0.98 per cent copper, which excludes 29 (1.3 per cent) of the assay samples.

A 1996 report by Snowdon suggested top cuts of 0.83 per cent and 0.77 per cent copper for DJ andA1 respectively based on a cut at the 97.5 percentile, whereas work carried out by Mintec suggestedthat top cuts were not necessary due to the lack of significant outliers on the cumulative frequencyplots. The work by Mintec included a larger drillhole database than that used by Snowdon.

At DJ, 179 drillholes were used in the estimation, and 72 were used in the A1 estimation. All holes,both RC and diamond were included in the A1 estimation, whereas early RC holes at DJ wereomitted. The A1 drilling was carried out by HHPI, and statistical analysis of the relative gradesbetween the two drilling types indicated no quality control problems. Although the early RC drillingat DJ supports the interpretation and estimations, they were omitted due to concerns with possiblequality control problems with early percussion drilling.

Missing data, non-logged data and non-sampled data were all assigned a value of 0.005 per centcopper prior to compositing.

Block Modelling

Separate block models were built for the A1 and DJ systems. The models were orientated along thelocal grid, with a block size of 50x50x15m, and a minimum sub-block size of 10x10x3m. Initiallythe models were sub-blocked to the boundaries of the grade triangulations, and after the proposedpits were designed they were rebuilt and sub-blocked to both the grade envelopes and pit boundaries.

Three main material types are included in the block models. These are:

• Ore, being material within the grade envelopes,

• Overburden, which is the material within 15m of the surface, and

• Waste, which is all other material.

Authors note: The use of the word ore above is only to differentiate separate categories ofmaterial within the resource. There is not a current feasibility study for the Project todemonstrate that this material is actually “Ore”, that is rock containing minerals that can beextracted at a profit.

Bench levels in the block models are identical to those used in the drillhole compositing.

Grade Estimations

Estimations were run using IVD2 methodology. Only those blocks within the grade envelopes (iematerial type “ore”) were estimated. The estimation used “hard” boundaries, with only compositeswithin grade boundaries being used for the estimations. However, composites from adjacent gradeenvelopes were accessed in some cases for the estimation of a particular envelope. This was the casewhere the contact between envelopes was interpreted to be faulted, and the envelopes wereconsidered to be part of the same original block of mineralisation.

Details for the different orebodies and grade envelopes are listed below. This includes ellipseparameters, and a listing of grade envelopes that composite samples within were accessed for theindividual envelope estimations.

Ellipse orientation(Local grid coordinates) Search Distance

Grade envelope Bearing Plunge Dip Major Semi Minor

A1_1&3-8 180 0 -63 200 150 50

A1_2 160 0 -60 200 150 100

DJN_1&2 DJS_1& 2 0 0 0 238 172 135

Samples: Minimum of 1, maximum of 10Not octant based search.

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The search ellipse for DJ was based on the variography results of Mintec, who had prepared anearlier resource estimate. At A1 no variography has been carried out, and ellipses were based ontwice the average drilling spacing, with an orientation that appeared to suit the interpreted ore bodyshapes.

The number of blocks estimated for each triangulation is listed below.

Grade Envelope Number of Blocks Blocks Estimated % Est.

A1_1 887 877 98.9

A1_2 through A1_8 8647 8647 100

DJN_1&2 DJS_1&2 Total of 12500 Total of 12500 100

A default specific gravity of 2.75 was used for all estimations, and no account was taken of whethermaterial was oxidised or fresh.

Results

• Both “global” and in-pit resources are given below; all calculated using various cutoff grades.The “global” resources include only the resources inside the grade envelopes, as all materialoutside the envelopes was not estimated.

The following table summarizes the global resource estimated by ZCCA on the two deposits at variouscutoff grades. This inferred resource can be further subdivided into the two deposits:

TABLE VII - INFERRED RESOURCES, ZCCA 2001


DJ 0.20% Cu 0.362 175,493,175

DJ 0.25% Cu 0.372 163,641,225

DJ 0.30% Cu 0.399 127,576,350

A1 0.20% Cu 0.357 118,403,175

A1 0.25% Cu 0.359 116,244,150

A1 0.30% Cu 0.377 94,313,175

Combining the DJ and A1 pits results in the following inferred resource for the Project.


DJ+A1 0.20% Cu 0.360 293,896,350

DJ+A1 0.25% Cu 0.367 279,885,375

DJ+A1 0.30% Cu 0.390 221,889,525

In addition to estimating the above inferred resource, ZCCA embarked on a program of preliminarymine design and resource estimation within the pit limits described below. ZCCA also selected anarbitrary mine production rate and calculated annual production grades in order to assess the accuracyof the HHPI Scoping Study but these are not included in this report as they are not entirely pertinentto the actual resource at this time. ZCCA did not use production rate parameters based on a currentfeasibility study and at best would be considered a preliminary estimate only and will need to beupdated to reflect current economic conditions. The assessment is preliminary in nature, as it includesinferred mineral resources that are considered too speculative geologically to have the economicconsiderations applied to them that would enable them to be categorized as mineral reserves, and thereis no certainty that the preliminary assessment will be realized.

Pit Designs

No optimisation was carried out on the block models, and pits were designed manually. Independentmining consultant, Brian Speechly initially designed the final pits, and these were then used to

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develop the mineable resource figures. The pits were designed using a block cut-off grade of 0.25 percent copper. Pits were constructed using a batter angle of 55º, a batter height of 15m and a bermwidth of 5m giving an overall slope angle of 42.5º.

In-Pit Resources

The in-pit resources include the following material types:

• Ore, being material within the grade envelopes, and above the cut-off,

• Low Grade Ore, within the envelopes and below the cut-off grade,

• Overburden, which is the material within 15m of the surface, and has not had a gradeassigned.

• Waste, which is all other material inside the pits, and has not had a grade assigned.

Using the definitions of terms and procedures discussed above ZCCA has estimated what they callpotentially mineable resources for the two deposits as shown in Table VIII. A more accurate categoryis an indicated resource.

TABLE VIII - ZCCA INDICATED RESOURCE ESTIMATE, 2001

A1 82.7 million tonnes at 0.374% Cu

DJ 157.9 million tonnes at 0.372% Cu

TOTAL 240.6 million tonnes at 0.373% Cu

This resource calculation has been based entirely on data provided by others and which has beenverified by the authors as discussed in the data verification section of this report. The authors assumethat data provided by previous operators is truthful but cannot guarantee it.

Although certain portions of the deposits have been drilled sufficiently to be in the measured categorythere are portions that are only indicated. The combination of the differential drill spacing along withthe concerns of the authors with the data base regarding by-product grades, oxidation levels and corerecoveries require ZCCA’s “in-pit” resource to be categorized as indicated at this time. These indicatedresources were estimated at a cutoff grade of 0.25 per cent copper. Because of the dimensions of thedeposit, no external dilution and 100 per cent recovery of resources from within the pit limits has beenassumed in the estimation and at this time is considered reasonable.

There is little difference between the inferred and indicated resource for the DJ deposit due to itsfaulted base with little mineralization existing below the base of the pit.

Overburden and waste estimates for the two pits from the preliminary manual pit designs are shown inTable IX.

TABLE IX - OVERBURDEN AND WASTE TONNAGE ESTIMATES, ZCCA 2001

Overburden Waste

A1 20.2 million tonnes 54.3 million tonnes

DJ 53.0 million tonnes 153.6 million tonnes

TOTAL 73.2 million tonnes 207.9 million tonnes

Overall stripping ratios combining waste and overburden, are 0.9:1 for A1, 1.3:1 for DJ and 1.2:1overall. These tonnages have been estimated using the block model used for the resource using the samerock density and are included to provide a numerical “picture” of the deposits. They have beenestimated without a feasibility study or pit optimization and are as indicated as the resource. Changesin the cut-off grade will change the volume and tonnage of waste but given the current data base, theassumptions used to produce the above overburden and waste estimates seem reasonable.

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The above waste volumes contain blocks within the grade envelopes with estimated grades below thecutoff grade of 0.25 per cent copper. ZCCA has totaled these blocks and called them “Low Grade Ore”assuming that there may be some point in time when the material may be processed. The A1 depositwaste is estimated to contain 1.2 million tonnes of this “low grade ore” grading 0.216 per cent copperand the DJ waste is estimated to contain 11.9 million tonnes grading 0.226 per cent copper. The abilityto process this material would reduce the stripping ratio but the oxidation of the material over timewould occur and further investigation is required to determine how to deal with this material.

Discussion of the Resources

Drilling

Recovery in diamond drill holes has been relatively poor, averaging only 83 per cent. This poor recoveryintroduces significant uncertainty into the estimation. Some study should be done to try to determineif copper mineralization is preferentially lost from the core or not. If all of the lost core is gangue thenthe estimated grade may be too high. On the other hand if copper minerals are lost preferentially to thegangue then an upgrade to the average copper grade estimated would result. Future drillers must attainbetter core recoveries to minimize these potential errors. Alternatively the collection and assay ofsludge samples may be useful in providing confidence that the core represents all of the material drilled.

The drill hole spacing in parts of both deposits is sufficient in the range of 50m but is nearer to 100min peripheral areas. Hole spacing of 100m is not sufficient to project geology and grade confidently.

Data

Data verification for some of the core has been done by the authors and found that the copper assayfor 14 of the 16 samples taken is lower than that of either the HHPI or Amdel assay for the samesample. The reduced copper assays may be due to the dissolution of copper in acid generated duringthe oxidation process. Further study of the core is warranted to determine if in fact the previous assaysare accurate. There are also stored rejects on site that might be less exposed to the humidity and maybe better used to verify the previous analyses.

There has been no effort to define the depth of oxidation in the core and hence there is no knowledgeof the amount of copper oxides present at certain depths. This is important information as the presenceof oxide minerals will generally result in lower metallurgical recoveries. Oxidized rock has a lowerdensity, which will affect block tonnages, stripping ratios and mine life. The rate of oxidation is alsoreported to be very rapid at Hinoba-an, which may affect the way that the pits are mined and that lowgrade ore is treated. Some investigation of the oxidation rate of the rock and current oxidation level ofminerals within the deposit is required.

Much more information is required regarding the grade and mineralogy of the top 15m covering thedeposits. In the resource estimate this material represents roughly one quarter of the waste and there isevidence in places that there is copper mineralization above the cutoff grade within 15m of surface. Theinclusion of parts of this cap into the resource would increase the resource tonnage and reduce thestripping ratio both factors that could impact the net present value in a future feasibility study. Aprevious study by MINTEC did not omit this cap resulting in a larger estimated resource.

The topcutting of assays introduces a degree of conservatism to the estimate of the grade. Anadditional estimate of the grade should be done without the topcuts to see the effect of this practice.

There has not been enough work to determine by-product contents of the resource. Gold, silver andmolybdenum all occur in the deposit but many of the holes have not been analyzed for these otherelements and hence the estimation of the average grade of these other metals requires a lot ofprojection and assumptions. Further work is required to determine by-product credits.

Specific Gravity

The resource estimate uses a specific gravity of 2.75 for all material. This will result in slightly highertonnages for volumes of oxidized material that might actually have a specific gravity of 2.4.

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Overburden specific gravity’s may also be closer to 2.0 meaning that their estimate at 2.75 overstatesthe overburden tonnage.

No optimization of the pit designs were done by ZCCA but the pit limits shown on the plans appearreasonable at this time with 70 per cent of the inferred resource being within the pit limits. During thenext phase of project evaluation, optimization studies should be undertaken to confirm pit designs.

Molybdenum Content

ZCCA has calculated average molybdenum contents of the two deposits as 72ppm at A1 and 53ppmat DJ. These figures are based on the weighted average of intersections obtained during HHPI’s drillingphase representing about one third of the total diamond drill holes. This data set may be biased by thelocation of the HHPI drill holes which are generally located in the periphery of the DJ deposit therebyomitting much of the higher grade copper mineralization.

There is no mention in reports of any metallurgical testwork regarding the recovery of molybdenum.Molybdenite is a naturally hydrophobic mineral and normally easily recovered but without testing it itsdifficult to estimate the recovery, grade of concentrate and recovery of precious metals within themolybdenum concentrate. This testwork will be required in order to determine any potentialcontribution to the project cash flow.

Precious Metal Content

As with molybdenum there is only data available on gold and silver content of the deposit from theHHPI drill holes and some of this data is not complete. Unlike molybdenum, there has been someattempt to determine the metallurgical properties of the precious metals within the deposit. The resultof early testwork shows that whatever precious metals are present will not report at a high recovery rateto the copper concentrate.

A 1997 report by TBM Mining Metallurgical Services Inc. (TBM) notes that the precious metalcontent of samples tested by TBM from the DJ deposit average 0.06g/t Au and 3g/t Ag, with samplestested by TBM from A1 averaging 0.05g/t Au and 4g/t Ag. These figures, however, are very different tofigures quoted by C.J. Cinco Jr., also in 1997. Cinco undertook a statistical evaluation of drilling resultsfrom the two deposits and concluded that the average gold grade within the mineralized zone (whichhe equated to the phyllic zone) was 0.019g/t Au at DJ and 0.015g/t Au at A1.

The grade distribution of precious metals within the two deposits is a high priority of the proposeddrilling and metallurgical testwork program. The gold assays from the 2003 OreQuest sampling arealmost all higher than those performed previously by Amdel with only one exception. Some of theindividual gold assays are ten and twenty times higher than those previously reported. The oxidationof the core with associated acid generation during the oxidation process would result in a lower rockdensity of the sample and higher gold values might result when contained gold did not dissolve in thegenerated acid. This theory does not explain the order of magnitude variation in two of the gold assayswhich can only be explained by nugget effect or data entry errors but casts further question as to theactual gold content of the deposit.

ZCCA discussed with TBM personnel concerns regarding the recovery of precious metals and TBMhas shown that the potential does exist to recover some of this material. TBM has suggested testing thepotential to produce a pyrite concentrate from the current tailings stream, and to assess whether aprecious-metal rich gravity concentrate could then be produced for smelting on site to produce dore.TBM suggests that most gold is free, and a simple gravity extraction ahead of flotation might proveviable depending on the liberation size of the gold particles. These options will be assessed in the nextphase of work.

All future drilling will be analyzed systematically for precious metals and molybdenum. In addition,some further metallurgical testwork will be carried out to determine the distribution of precious metalsin the deposits. The results of this work may allow some estimation of precious metal content to bemade, and likely recoveries through the plant to be incorporated into financial evaluations.

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Discussion of Hinoba-an Resource Estimates

As stated previously the latest reported ore resource estimation dated October 2001 for the Hinoba-anProject has been managed by Mr. A. Border, M.AusIMM, geologist who is considered a competentperson as defined by JORC, who has been directly responsible for the estimation of these resources. Mr.Border is not independent since he is a shareholder of Copper Resources. Therefore, Mr. D. Gunning,P.Eng., who is independent has reviewed his work.

MINERAL PROCESSING AND METALLURGICAL TESTING

Metallurgical testwork was undertaken by Pincock, Allen and Holt (PAH) in its 1982 feasibility studyon behalf of Lepanto, and subsequently by TBM Mining Metallurgical Services Inc. (TBM) in thePhilippines, and Orway Mineral Consultants and Amdel in Australia in the late 1990s. PAH’s work hasbeen used to develop the proposed process design criteria and flowsheets, while the later work hasfocused on the areas of grinding and flotation as well as pyrite recovery.

Mineralogical studies by Amdel showed chalcopyrite to be the dominant copper mineral with minorbornite, chalcocite and covellite. Pyrite is by far the dominant sulphide mineral (7-10 per cent) withminor molybdenite and sphalerite.

In the DJ deposit gold is largely found in free native form with only 8 per cent associated with pyrite,and a lesser amount in copper sulphides, with 79 per cent of the gold found in silicates. The size of thegold particles in the silicates will determine the ability to liberate it and then recover it. In general, littlework has been carried out regarding the precious metal or molybdenum contents of the deposits andno account of their possible value is taken in this document. Further investigations are warrantedhowever, and should be undertaken during the proposed next phase of drilling.

In addition to the mineralogical studies, Amdel performed some grinding testwork on the deposits. TheAmdel sample consisted of material from three diamond drill holes from each of the A1 and DJdeposits. The average Bond ball mill index is 14.2kWh/t although a range from 10.0 to 16.8kWh/t isnoted from testwork by Amdel. The lower work index was from A1 with more work required to grindthe deeper and harder DJ material. Amdel concluded that the ore would be amenable to conventionalcrushing, semi-autogenous grinding (SAG) and ball mill grinding.

Flotation testwork indicated a rougher recovery of over 90 per cent and was successful in producingsaleable concentrate grades of 24-25 per cent copper by regrinding to 80 per cent minus 40 microns.Terry Malisce, President of TBM, has stated that the samples on which the flotation tests wereundertaken included a representative portion of supergene material. The recovery figure can thereforebe considered to be representative of the whole of the two deposits. No mention is made of oxideminerals and further study on the presence of copper oxides and their effect on recovery is needed.

Although no testwork has been undertaken to date, ZCCA believes that an 85 per cent recovery ofmolybdenum by flotation should be achievable.

HHPI conducted several tests on the concentration of a pyrite concentrate, which was presumably tocontain most of the gold. They state that using a hydrocyclone it was possible to separate a 60 per centpyrite concentrate from the tailings stream containing 45 per cent sulfur. The purpose of this exercisewas to sell the pyrite for acid and iron/steel production. It is unknown to the author if this concentratecould compete with the low cost elemental sulfur available from the treatment of sour gas.

In addition to the above findings metallurgical studies have found several other characteristics of thedeposit. Tests were unable to recover magnetite to a concentrate that met market specifications.Flotation tailings were slow settling. No ultimate density of tailings is mentioned which should bedetermined so that tailings impoundments can be designed to have adequate capacity. Tests did notshow any deleterious elemental concentrations from either an environmental or processing perspective.Testwork did verify the acid generating potential of the deposits. It is not mentioned whether or notwaste material was used for these tests or if only ore samples were used.

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ENVIRONMENTAL CONSIDERATIONS

The data for this Hinoba-an Project environmental discussion is principally contained in three reportscited in the Disclaimer section of this report. The authors have relied heavily on the technical expertiseof the companies and professionals responsible for these reports, in particular the Dames and Moorereport in describing the environmental conditions that exist at the Hinoba-an property. Ongoingstudies, by trained environmental experts, of the potential environmental issues related to the futureadvanced exploration activities are necessary and are recommended in this report.

Biological Environment

The Hinoba-an project area is characterized by advanced erosion due to high rainfall and the absenceof primary vegetation caused by earlier logging and slash-and-burn farming activities. The area is nowmainly grassland, with small patches of secondary vegetation generally localized in gullies. The tropicalrainforest of Negros Island has been reduced to 5 per cent of its original volume. Very few forestsremain on the island at altitudes below 800m, as logging concessions were permitted to exploit thelowland marketable forests.

In the Hinoba-an project area, the only vegetation is grassland/shrub land with very limitedbiodiversity in either flora or fauna. A 1996 study carried out by the previous explorer identified 85species of wildlife in the project area. Four of the bird species identified are endangered or threatened(Philippine Cockatoo, Bluenapped Parrot, Tarictic Hornbill, and Green-faced Parrotfinch) as are twoof the mammal species (Visayan Warty-Pig and Red-Spotted Deer). Undoubtedly other seasonalmigrant species would transit the area.

The Hinoba-an area is one of significant poverty due in large part to the almost complete loss offorestry reserves, and the lack of alternative farming or industrial opportunities in the area. Theindigenous population has become used to the boom-or-bust cycles of forestry and mining in the area,and with the recent closures of the Mariculam mine and the Bulawan mine a significant number ofskilled miners have recently been added to the potential situation. The main areas of concern for thelocal population are siltation of the creeks, compensation for crop losses, and employmentopportunities.

The National Museum’s Archaeology Division reports that finds of archaeological material andartifacts have been found in the Hinoba-an, Sipalay and Candoni areas. A survey of the specific projectarea by the Museum is required. In the area south of the Hinoba-an property, a Certificate of AncestralDomain Claims (CADC) has been granted to the Bukidnon/Magahat Tribes (Figure 2). The area iswell outside the Hinoba-an property and the area of any potential mining operations on the property.

Permits

The primary regulatory requirements for the Hinoba-an Project are associated with the Mines andGeosciences Bureau and the Environmental Management Bureau (EMB) of the Department ofEnvironment and Natural Resources. At this point, the property is covered by a form of title called an“Application for an MPSA.” The only required permit at this stage necessary prior to thecommencement of exploration is a “Temporary Exploration Permit” (TEP) which allows explorationactivities, including drilling, to be carried out for a period of one year with no extensions.

The critical permit for construction and operation of a major development is the EnvironmentalCompliance Certificate (ECC) issued by EMB. Being a major mining project, Hinoba-an will beconsidered as an Environmentally Critical Project and will hence require a full Environmental ImpactAssessment (EIA), the results of which will be submitted as an Environmental Risk Assessment (ERA)as the required steps to obtain the ECC.

Some ancillary aspects of any mining operation, such as port and power plant operation, will requirepermitting from the relevant agencies. A number of local government permits will also be required forwater rights and sanitation. A detailed list of such permits is beyond the scope of this report; such alist will be developed as part of the feasibility study.

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ADJACENT PROPERTIES

Several gold and base metal deposits are located in the immediate vicinity of the property within theSouthwest Negros Mineral District (Figures 2 and 3). The mineralization outlined on these propertiesis not necessarily indicative of the mineralization on the Hinoba-an property. The following resourceestimates have been obtained from sources believed reliable but cannot be verified.

The mineralized corridor of porphyry deposits is approximately 60 km long and 25 km wide, and istermed the Southwest Negros Mineral District. Five principal, advanced properties are located withinthe Southwest Negros Mineral District near the Hinoba-an property.

Philex Gold Inc. (listed on the Toronto Stock Exchange) operated the Bulawan underground gold minesome 6 km to the west of the Hinoba-an deposits. The Bulawan deposit is hosted by dacite porphyryintrusives that are younger than the host units to the Hinoba-an deposits. The mine produced over465,000 ounces of gold from a block-caving operation over its lifetime.

Fifteen kilometres to the northwest of the Hinoba-an Project, the Sipalay-Maricalum porphyry coppermine shut down in 2002 with resources remaining. The mine needed to complete a number of expensiveinfrastructure upgrades including building a new tailings dam, moving the plant to access theremaining mineralization, and solving ongoing metallurgical and slope stability problems that it couldnot afford at the time. This operation was based on an initial resource of around 500 million tonnes at0.40 per cent copper (Singer et al, 2002).

The now dormant Basay porphyry copper mine is located 15 km to the south of the Hinoba-an Projectarea. This mine was reported to have operated from 1972-1979 based on a reserve of 262 million tonnesof 0.44 per cent copper (Singer et al, 2002). The project is now owned by the Philippine National Bankdue to a default of loan agreements several years ago. Remaining resources at Basay are not known. Itis only being included to help demonstrate that the belt of rock hosting the Hinoba-an deposits containa number of other mineralized bodies.

Approximately two kilometres to the northwest of the DJ deposit, the Luz deposit comprises a drilledinferred resource of 33.4 million tonnes at 0.38 per cent copper based on 36 diamond holes (10,323m)drilled by Societe Miniere et Metallurgique de Penarroya in 1973-1975. Approximately five kilometresto the south-southeast of the A1 deposit the Manlupo deposit hosts a drill-inferred resource of 81.5million tonnes at 0.41 per cent copper based on 45 diamond holes (9,074m) drilled by HHPI in 1995-1997.

In addition to Philex, the only other know Canadian mining companies working in the Philippines arePlacer Dome, TVI Pacific (listed on the Toronto Stock Exchange), Mindoro Resources (TSX-V) andSur American Gold (TSX-V). None of these companies have reported on exploration activities on theisland of Negros.

OTHER RELEVANT DATA

In 1998, HHPI completed a scoping study (the “HHPI Scoping Study”) on the Hinoba-an porphyrycopper deposits. In summary, the study envisioned a 15-year mine life based on a “geological resource”of 254 million tonnes at 0.46 per cent copper at a 0.30 per cent copper cut-off. Metallurgical testsindicated an 88 per cent recovery for copper. Stripping ratios were expected to be 1.1:1 (waste:ore).These resources were generated by HHPI and were categorized as positive and probable by MINTECunder the JORC code. Newer versions of these resources have been estimated compliant with theCanadian CIM reserve and resource code (Canadian Institute of Mining and Metallurgy) and areincluded in this report. The inclusion of these older HHPI resources at this time has been done in orderto put the results of the HHPI Scoping Study in the context of the time of the study. The HHPIScoping Study is preliminary in nature, and includes inferred mineral resources that are considered toospeculative geologically to have the economic considerations applied to them that would enable themto be categorized as mineral reserves. There is no certainty that the preliminary assessment of theHHPI Scoping Study will be realized. All cost estimates are considered out of date and not reliable, andno attempt has been made by the authors to update any aspect of this scoping study.

6233

The HHPI Scoping Study was based on a throughput of approximately 15 million tonnes per annumand included ore from two satellite deposits not a part of the Colet Claims (Figure 10). Initial capitalcosts were estimated at US$268 million. HHPI anticipated an average annual production of 56,000tonnes (annual copper production varies from 35,000 t/yr to 95,000 t/yr. over the mine life) of recoveredcopper at a cash operating cost of US$0.48/lb of copper. Precious metal values were expected tocontribute US$0.10/lb of copper to the revenue but not enough work had been completed to determinethe grades of the precious metals or if their recovery was possible. In addition, the study assumed dailyproduction of 2,000 tonnes of pyrite concentrate having a net contribution of approximatelyUS$0.10/lb of copper.

The HHPI Scoping Study estimated that the project had a discounted net present value (NPV) ofUS$243 million at a 10 per cent discount rate using a copper price of US$1.00/lb. The internal rate ofreturn (IRR) of the project was estimated at 28 per cent. These economics include production from twosatellite deposits not part of the Colet Claims; however, these deposits were assumed to be mined in thelast five years of the proposed twenty year mine life in the HHPI Scoping Study. These economicprojections are out of date and are only provided to show the conclusions derived at the time of theHHPI Scoping Study.

The HHPI Scoping Study now provides a reasonable template for the update of all costs andproduction estimates in order to assess the viability of the deposit. The authors feel that the data usedin the HHPI Scoping Study cannot be relied upon sufficiently to be confident in the financialconclusions of the study.

INTERPRETATION AND CONCLUSIONS

The Hinoba-an Project with an indicated resource of 240 million tonnes grading 0.37 per cent copperrepresents a large copper resource mineable by low cost open pit methods. At an indicated grade of 0.37per cent copper, Hinoba-an is one of the lower grade porphyry copper deposits in the Philippines. Thedeposit has a relatively low striping ratio of 1.1 to 1, which is an additional cost advantage.

Data verification by the authors (detailed in that section of this report) has indicated copper valuesbelow those previously reported. Although this may be due to the process of oxidation of the core dueto the humid conditions at the property, it may also be that previous assays overstated copper contents.Converse to this are the gold assays received by the authors, which are all higher than those of previousoperators.

The DJ deposit is currently drilled on 100m sections along strike with holes spaced at 60m across strikein the northern portion and between 50m and 150m across strike in the southern portion. At A1existing drilling is spaced at between 100m and 150m both along and across strike. This spacing shouldbe tightened to 50m to provide upgrading to the measured category which will provide sufficientconfidence in the resource for an updated scoping study. The HHPI Scoping Study will provide a usefulframework for the updated version.

The resource estimate is based on a crude data set, which is in need of updating. There is the potentialto further reduce the strip ratio if part of the overburden in the resource estimate is actually copperbearing. Core recovery averaging 83 per cent may have inadvertently reduced the grade (of course theinverse of this is also true). The deposit does contain potential by-products of gold, silver andmolybdenum that due to insufficient data have not been included in resource estimates.

The deposit is favourably located in the Philippines where several large porphyry copper deposits havebeen exploited for numerous years. There should exist a fairly skilled labor force that can be hiredlocally to operate most facets of any future operation. Power and water are readily available on or nearthe property and there do not appear to be any socio-political factors in the area that might hinderdevelopment.

6334

6435



END OF MINE LIFE STATUS


APRIL 2005 XY3

RECOMMENDATIONS

Additional sampling of the HHPI core and rejects should be done to confirm that the variation of theauthor’s samples from the previous work can reasonably be explained. Recommendations for theProject have been broken down into two phases with the phase one program designed to provide greaterconfidence in the data set and phase two involving the utilizing of the data to update the resourceestimate and complete a feasibility study.

Phase I is intended to fill in gaps in the information as well as provide greater detail in some aspects ofthe data. In Phase I, an approximately 60 hole infill diamond drill program is recommended that willprovide information on the following aspects of the Project:

1) Greater hole density in key parts of the deposits. Although an exact drill hole plan has not beenplanned it is thought that sixty 200m holes will place significant portions of both the DJ and A1deposits within the measured resource category (50m hole spacing).

2) The drill program will be performed in such a way to conclude the adequacy of the corerecoveries obtained in previous work.

3) These holes will sample and assay the top 15m of the deposit which was previously classed asoverburden but which may have some copper values.

4) Assaying will be done to determine the oxidation level of the copper minerals within the deposit.

5) Assaying will also be done to determine potential by-product contents of the deposit.

In order to fulfill these objectives the drillers will need to obtain accurate samples from the top 15m,ensure that better core recoveries are obtained, and may need to collect sludge samples.

Also in Phase I further metallurgical testing is warranted to determine precious metal recoveries.Metallurgical tests should be performed on representative well-defined samples and include tests onpotential recovery of molybdenum and the grade of concentrate produced. The effect of oxide mineralswithin the ore on recovery should be investigated and a few tests should be done to determine theultimate settled flotation tailings density.

Upon completion of Phase I, the Copper Resources Group will have to evaluate the adequacy ofcertain aspects of the data such as the potential effects of past recovery rates and the overallmolybdenum and precious metal grades and try to extrapolate the known data to the entire deposits.

All core will be logged geologically and geotechnically with care taken to minimize exposure due to therapid surface oxidation of the sulphides. In order to save time in Phase II initial baseline environmentalstudies may need to be initiated in Phase I so that conditions can be observed/sampled in each of theseasons.

Holes drilled for metallurgical testwork will be halved initially with one half bagged immediately.Bagged samples will be placed in drums and oxygen removed by nitrogen charging, prior to transfer tothe selected metallurgical test group. The other half will be halved with one quarter proceeding forsample preparation prior to dispatch for assay, and the other quarter stored.

Sample preparation will be carried out at the company laboratory facilities at Hinoba-an. Assays willbe carried out by a reputable laboratory in Australia for total copper, acid and water soluble copper,gold, silver, and molybdenum.

Previous metallurgical testwork has shown that an average 88 per cent copper recovery to a 24 per centcopper concentrate can be achieved. This figure reportedly is based on testwork that included aproportionally representative sample of supergene material. Further testwork is required to determinewhether improvements can be achieved by testing separate samples from these zones. In addition, thepossible recovery of precious metals needs to be evaluated. Only limited work has been carried out todate on this topic.

6536

Independent consultants will be used to determine the scope of the required definitive testworkprogram; to co-ordinate, manage and supervise the laboratory testwork to be undertaken by sub-consultants; to interpret the results of the testwork and establish that all possible options have beenassessed; and prepare the final testwork report to the required level.

The potential for high acid mine and dump drainage is currently indicated at Hinoba-an and will beassessed during Phase II with mitigative measures defined to reduce these to reasonable levels.

Since mid 1996, all core has been geotechnically logged using the Laubcher RMR System. This data istherefore invaluable for input into the geotechnical reporting of the Project. All proposed holes will belogged using the same (or similar) system. In addition to the 11,000m of drilling planned for resourcedefinition and metallurgical purposes, 1,000m of diamond drilling has been budgeted to enable specificgeotechnical drilling to be undertaken in untested areas.

Geotechnical programs will be managed and in-part supervised by independent geotechnicalconsultants. Core samples will be sent for laboratory testing as required. All results will feed intoanalysis of rock mass properties using 2D/3D stress analysis techniques, the results of which will assistin pit slope design.

One of the major factors leading to slope instability in the area is the degree of water saturation. A fullhydrological study may be warranted as a part of Phase II to model groundwater flow patterns, and toestablish a cost effective strategy to reduce the degree of water saturation in pit walls. Similarly methodsto minimize instability risks in all mine dumps and tailings ponds will be sought.

One of the key factors for the development of the Project will be the Environmental ImpactAssessment Study (EIS). The Philippine government has a policy to attain and maintain a rational andorderly balance between socio-economic growth and environmental protection through the sustainableuse, development, management, renewal and conservation of the country’s natural resources.

The procedural flow of the process commences with a formal scoping study exercise involving the localcommunity and representatives of the Department of Environment and Natural Resources (DENR),which concludes with a formal scoping report which is presented to the EMB. The EIS parameters areset out on the basis of this initial study which is recommended as a part of Phase II.

Additional drilling is a part of Phase II in order to fill any gaps in the information found after PhaseI. Most of the rest of the costs will be associated with the preparation of the feasibility study and thevarious technical studies required such as metallurgy, environmental, geotechnical and mineengineering.

It will be necessary to address some of the critical environmental decisions with little cost during thePhase II program. The critical decisions will be ARD (acid rock drainage) mitigation, the method oftailings disposal (submarine versus dam storage), the siltation of drainages during construction andoperations, and concentrate pipeline to loadout facility. The work performed on these issues early onshould greatly reduce the cost and time required to prepare the EIS as a part of a full feasibility study.

Significant exploration potential remains within the area of the Colet Claims/proposed MPSA. At thisstage no budget is included for this exploration.

We hereby irrevocably consent to the issue of the admission document with the inclusion therein of thisreport and our name in the form and context in which they appear.

6637

Dated at Vancouver, British Columbia, this 14th day of April 2005.

/s/ George Cavey /s/ David Gunning11111111 111111112

George Cavey, P.Geo. David Gunning, P.Eng.

Dated at Sydney, Australia this 14th day of April 2005.

/s/ A.J.M.Border111111123

Andrew Border, MAusIMM

6738

COST ESTIMATES

Phase I (US Dollars)

Diamond Drilling (12,000 metres @ $100/m) 1,200,000Geological Supervision (incl. Project management) 100,000Sample Analysis (13,000 samples @ $20/sample) 260,000Camp costs (18 months @ $10,000 per month) 180,000Metallurgical Testing 200,000Geotechnical (incl. Hydrology) 50,000Environmental and Permitting (mainly baseline data collection) 50,000Marketing and Reporting 30,000Engineering 100,000Travel and Accommodation 100,000

11111

Subtotal Phase I Total 2,270,000Contingency at 10% 227,000

11111

PHASE I TOTAL $2,497,00011111aaaaa

Phase II (US Dollars)

Diamond Drilling (6,000 metres @ $100/m) 600,000Geological Supervision (incl. Project management) 100,000Sample Analysis (4,000 samples @ $20/sample) 80,000Camp costs (6 months @ $10,000 per month) 60,000Metallurgical Testing 200,000Geotechnical (incl. Hydrology) 100,000Environmental and Permitting 150,000Marketing and Reporting 120,000Engineering 350,000Travel and Accommodation 100,000

11111

Subtotal Phase II Total 1,860,000Contingency at 10% 186,000

11111

PHASE II TOTAL $2,046,00011111aaaaa

GRAND TOTAL FOR PHASES I AND II (US Dollars) $4,543,00011111aaaaa

6839

CERTIFICATE OF AUTHOR

I, Andrew James Murray Border, of Suite 21, 21-25 Knox Street, Double Bay, NSW 2028, Australia,hereby certify that:

1. I am a graduate of the University of Cardiff, Wales (1975) and hold a B.Sc. (Honours) degree inmineral exploitation.

2. I am presently employed by Australian Diatomaceous Earth Pty Limited of Suite 21, 21-25Knox Street, Double Bay, NSW 2028, Australia.

3. I am a Member of the Australasian Institute of Mining and Metallurgy and have been registeredsince 1982.

4. I have read the definition of “qualified person” set out in Canadian National Instrument 43-101(“NI 43-101”) and certify that by reason of my education, affiliation with a professionalassociation (as defined in N1 43-101) and past relevant work experience, I fulfill the requirementsto be a “qualified person” for the purposes of N1 43-101.

5. I have been involved in the evaluation of porphyry copper mineralization at various times from1995 to the present. I have been involved in reserve and resource estimations for numerouscompanies on various deposit types and commodities since 1982.

6. During 2001 I was working as an independent consultant for Zinc and Copper Corporation ofAustralia Limited (ZCCA) which was preparing an Information Memorandum for the Hinoba-an Project in the Philippines. I was responsible for the preparation of the resource estimation forthe Oct 2001 ZCCA Information Memorandum.

7. I am responsible for preparation of certain sections of this report utilizing data summarized inthe References section of this report. A detailed description of the responsible author for eachsection of this report is found in Appendix I.

8. I visited the Hinoba-an Project site in January 2001.

9. I am not aware of any material fact or material change that might impact on the informationcontained in the ZCCA Information Memorandum of October 2001.

10. Through RMG Group, I am a shareholder in Copper Resources Corporation and therefore amnot independent applying all the tests in Section 1.5 of NI 43-101.

11. I have read NI 43-101 and NI 43-101F1 and the technical report has been prepared incompliance with that instrument and form.

12. I consent to the inclusion of references to myself herein in the form and context in which theyappear and to the inclusion of this report in the admission document of Copper ResourcesCorporation dated April 14, 2005 in connection with the proposed Admission to trading onAIM.

/s/ A.J.M.Border111111123

Andrew Border, MAusIMM

DATED at Sydney, Australia, this 14th day of April 2005.

6940


I, George Cavey, of 306-595 Howe Street, Vancouver British Columbia, hereby certify:

1. I am a graduate of the University of British Columbia (1976) and hold a B.Sc. degree in geology.

2. I am presently employed as a consulting geologist with OreQuest Consultants Ltd. of #306-595Howe Street, Vancouver, British Columbia.

3. I have been employed in my profession by various mining companies since graduation, withOreQuest Consultants Ltd. since 1982.

4. I am a member of the Association of Professional Engineers and Geoscientists of BritishColumbia, and have been a member since 1992. I am also a member of the Association ofProfessional Engineers, Geologists and Geophysicists of Alberta, Association of ProfessionalEngineers and Geoscientists of Manitoba and the Association of Professional Engineers andGeoscientists of Ontario.



7. I visited the Hinoba-an Project on Aug 13-15th, 2003. I have had no direct involvement withCopper Resources Corporation or its subsidiaries.

8. I am not aware of any material fact or material change with respect to the subject matter of thetechnical report that is not reflected in the technical report, the omission to disclose which makesthe technical report misleading.

9. I am independent of Copper Resources Corporation and its subsidiaries applying all the tests inSection 1.5 of NI 43-101.



/s/ George Cavey11111111

George Cavey, P.Geo.

DATED at Vancouver, British Columbia, this 14th day of April 2005.

7041


I, David R. Gunning, of 20356 42A Avenue, Langley British Columbia, hereby certify:

1. I am a graduate of the University of British Columbia (1983) and hold a B.A.Sc. degree inMining and Mineral Process Engineering (mining option).

2. I am presently self-employed as a consulting mining engineer.

3. I have been employed in my profession by various mining companies since graduation, and selfemployed as a consultant since 1996.

4. I am a member of the Association of Professional Engineers and Geoscientists of BritishColumbia, and have been registered since 1989.



7. I have not visited the property. I have had no direct involvement with the Copper ResourcesCorporation or its subsidiaries.

8. I am not aware of any material fact or material change with respect to the subject matter of thetechnical report that is not reflected in the technical report, the omission to disclose which makesthe technical report misleading.

9. I am independent of Copper Resources Corporation and its subsidiaries applying all the tests inSection 1.5 of NI 43-101.



/s/ David Gunning11111111

David Gunning, P.Eng.

DATED at Vancouver, British Columbia, this 14th day of April 2005.

7142

REFERENCES

ALBURO, I.1998: HHPI Memo to Mr. Madamba re: Amdel vs McPhar Assay Comparison, Feb 28, 1998.ANDREAS LIMITED1999: Preliminary Due Diligence and Site Visit Report, Hinoba-an Copper Project, Negros

Occidental, Philippines for Xystus Limited, July 1999.BURTON, C.1983: Observations on the Geology of the Porphyry Copper Sub-province of Southwest Negros,

Philippines, Geological Society of Malaysia Bulletin #16, Dec. 1983.CINCO, J.1997: HHPI Memo to Brian Hill re: Gold Statistics in the Mantoboy and DJ Porphyry Copper

Deposits, July 1, 1997.CORBETT, G.1995: Comments on the Structural Controls to Cu/Au Mineralization at the Hinoba-an Prospect,

Southern Negros, Philippines, July 1995.DAMES and MOORE 1997: Environmental Section of the Prefeasibility Study for the Hinoba-an Core Project for

International Pursuit Philippines Inc., Aug 29, 1997.HINOBA HOLDINGS (PHILIPPINES) INC.1998: Hinoba-an Copper Project, Scoping Study, Version 3.0, Volumes I and II, February 1998.LEA, D.1996: Audit/Review of Sampling and Analysis Procedure at Hinoba-an, report by David Lea Sampling

& Analysis Consultants for International Pursuit, Aug 27, 1996.LEA, D.1997: Statistical Evaluation of Copper Analysis Results of Control (Gannet) Samples and

Interlaboratory Duplicates as Reported by HHPI, McPhar and Amdel, report by David LeaSampling & Analysis Consultants for International Pursuit, Sept 22, 1997.

LLORCA, J.1996: Preliminary Data Management, Review and Optimum Drill Spacing Study of Hinoba-an

Copper Project, Negros Island Philippines, March 1996LOWELL, J.D., and GUILBERT, J.M.,1970: Lateral and vertical alteration-mineralization zoning in porphyry copper deposits: Economic

Geology, v. 65, p. 363-408.MALICSE, T., CHIU, A., and UY, A.1997: Metallurgical Report No 3 for International Pursuit, by TBM Mining Metallurgical Services

May 28, 1997.MALICSE, T., CHIU, A., and UY, A.1997: Mantoboy Ore-Gold Investigation Report by TBM Mining Metallurgical Services, Metallurgical

Report No 4 for International Pursuit, Aug 14, 1997 NORTHERN MINER NEWSPAPER2003: “Juniors advance Philippine projects” and “Sur eyes gold in the Philippines”, Vol. 89, No. 26,

Aug 18-24, 2003PINCOCK, W., ROSE, W., and WELHENER, H.1981: Preliminary mining Feasibility Study of Hinoba-an Project, Negros Occidental, Philippines,

prepared for Lepanto Consolidated Mining Co. by Pincock, Allen and Holt, May 1981.SINGER, D., BERGER, V., and MORING, B.2002: Porphyry Copper Deposits of the World: Database, Maps, and Preliminary Analysis, U.S.

Geological Survey Open-File Report 02–268WEBSITES2003: Apollo Gold Corporation, Lepanto Consolidated Mining Corp., Philex Mining Corp., Aug 15,

2003.ZINC AND COPPER CORPORATION OF AUSTRALIA LIMITED2001: Hinoba-an Porphyry Project, Negros Occidental, Republic of the Philippines, Information

Memorandum, October 2001.

7243

APPENDIX I

SECTIONS OF REPORT AND CORRESPONDING RESPONSIBLE AUTHOR

7344

APPENDIX I - SECTIONS OF REPORT AND CORRESPONDING RESPONSIBLE AUTHOR

Summary Cavey, Gunning

Table of Contents Cavey, Gunning

Introduction and Terms of Reference Cavey

Disclaimer Cavey, Gunning

Property Description and Location Cavey

Accessibility, Climate, Local Resources, Infrastructure and Physiography Cavey

History Cavey

Geological Setting Cavey

Deposit Types Cavey

Mineralization Cavey

Exploration Cavey

Drilling Cavey

Sampling Method, Approach and Security Cavey

Sample Preparation and Analysis Cavey

Data Verification Cavey, Gunning

Mineral Resource and Mineral Reserve Estimates Cavey, Gunning, Border

Mineral Processing and Metallurgical Testing Cavey, Gunning

Environmental Considerations Cavey

Biological Environment Cavey

Permits Cavey

Adjacent Properties Cavey

Other Relevant Data Cavey

Interpretation and Conclusions Cavey, Gunning

Recommendations Cavey, Gunning

7445

APPENDIX II

COPPER RESOURCES CORPORATION – TITLE SUMMARY

7546

APPENDIX II – COPPER RESOURCES CORPORATION – TITLE SUMMARY

Mineral Production Sharing Agreement (MPSA)

The Application for an MPSA was made on 31 August 1997 in the name of Colet. The applicationnumber is APSA-000087-V1, and this application was recorded as having been received by the RegionalDirector of Mines and Geosciences Bureau – Region VI in Iloilo City on September 2nd, 1997.

The proposed MPSA covers a total area of 2,991.804 hectares and the location of the property issituated at Barangay Manlucahoc, Municipality of Sipalay, Negros. The property itself is centered 16km North East of the town of Hinoba-an. The proposed MPSA has a term of twenty five years fromEffective Date (date the MPSA is granted) and may be renewed thereafter for another term notexceeding twenty five years. The renewal of this agreement as well as the changes and terms ofconditions shall be on mutual consent by the parties. In the event the government decides to allowmining operations thereafter by another contractor, this must be through competitive public bidding.After due publication of notice, the contractor shall have the right to equal the highest bid uponreimbursement of all reasonable expenses of the highest bidder. As at the date of this report the MPSAhas not been granted.

7647

The proposed MPSA encompasses the following claims:

Mining Lease Contract/Application Number Name of Claims Area (ha)

HLC No. HRD 377 Colet 1,2,6,7,18 45

HLC No. HRD 377 Caiwanan 1,6,7,8,17 45

LLA V – 11511 Amd. Colet 8,9,10,11,13,14,15,16,17,19,23,24,25,26,27,

28,29,30,31,32,33,34,35 207

LLA V – 11511 Amd. Caiwanan 2,3,4,5,9,11,12,13,14,16,19,20,21,22,26,27,28,29 162

LLA V – 11511 Amd. Hin 2,3,4 27

LLA V – 11511 Amd. Hiling 3 9

LLA V – 11511 Amd. Jennifer 4,5,6,7,8 45

V 11511 Amd.. A Colet 4,5 18

V11511 AMD.B Colet 21 9

LLA V- 14202 Amd. DO 8,9,10,11,12 36.7044

V 14202 Amd. A RE 13,14,15,16,17,18,19,20,21,22,23,24,25,26 117.5304

V – 14202 Amd. B HI 15,16,17,18,19,20,21,22,23,24,25,26 100.5726

V – 14202 Amd. B PA 13,14,15,16,17,18 45.4381

V – 14202 Amd. B BER 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15,16,17,18,19,20 166.0115

V – 14202 Amd. B LAH 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15,16,17 135.3204

V – 14202 Amd. B O 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15,16,17,18 162.0

V – 14202 Amd. B N 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15,16 139.085

V – 14202 Amd. B G 1,2,3,4,5,6,7,8,9 75.5221

V – 14202 Amd. C NI 5,6,7,8,9,10 16.7071

V – 14202 Amd. C FA 2,3,4,6,7,8,9,10,11 43.6605

V – 14202 Amd. C C 1,2,3,4,5,6,7,8,9,10 72.8638

V – 14202 Amd. C R 1,2,3,4,5,6,7,8,9,10 81.8407

V – 14202 Amd. C H 1,2,3,4,5,6,7,9,10 70.1382

V – 14202 Amd. C B 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15,16,17,18,19,20 164.4776

V – 14202 Amd. C E 1,2,3,4,5,6,7,8,9,10,11,12,13 117.0

V – 14202 Amd. D H1 12,13 6.7988

V – 14202 Amd. D FA 1,12 2.2011

V – 14202 Amd. E RE 6,7 8.4696

V – 14202 Amd. F DO 5 4.6892

V – 14202 Amd. G RIL 1,2,3,4,5,6,7,8,9,10,11,12,13 116.8776

V – 14202 Amd. G AR 7,8,9,10,11,12 27.3574

V – 14202 Amd. H DO 16,17,18,19,20,21,22,23 54.1748

V – 13435 OOLU 14,18 18.0

HLA – 344 (3) HAC 1,2,4,5,7 FR,8,10 FR,11FR,13FR,14FR,16FR,17FR 558.3

HLA – 344 (3) RAR 7 FR, 17, FR 17.4

HLA – 345 (3) RAR 12 0.7426

misc 10

TOTAL Number of Claims- 311 2,936.8835

7748

Group Structure

Title Summary

As noted from the above diagram, interests in the Hinoba-an Project are currently held by Selenga,which is owned 92.5 per cent by HSHI and 7.5 per cent by Colet.

HSHI is a Philippine company with Class A shares (ordinary shares) and Class B shares (preferredshares). Class B shares are entitled to receive cumulative dividends equal to 10 percent of the par valueof the Class B shares from the unrestricted retained earnings of HSHI. Class A shares are entitled toreceive any remaining dividends. Of the shares issued and outstanding of HSHI, 40 per cent are ClassA shares and 60 per cent are Class B shares. HHPI owns the 1,000 issued Class A shares and threeFilipino citizens, who are directors of HSHI, own the 1,500 issued Class B shares. Based upon itsholding of 1,000 Class A shares, HHPI is entitled to 100 per cent of any dividends declared by theboard of directors of HSHI, after dividends have been distributed to the Class B shareholders, whichis limited to 1,500 Philippine pesos per annum. HHPI is a wholly-owned subsidiary of HinobaHoldings, which is a wholly-owned subsidiary of Copper Resources.

A number of agreements have been entered into which set out the structure of the ownership of theHinoba-an Project. They are the following:

(i) 7 December 1991, Colet and Selenga entered into the Operating Agreement.

(ii) 9 December 1991, Colet and Selenga entered into the Supplemental Operating Agreement.

(iii) 28 April 1995, Pursuit, Tequila and Selenga entered into the Venture Agreement.

(iv) 12 July 1995, Pursuit, HHPI, Tequila and Selenga entered into the Supplemental and ConsentAgreement.

(v) 12 July 1995, Selenga, HHPI, Pursuit and Colet entered into a letter of Agreement.

(vi) 18 November 1995, Pursuit, HHPI, Selenga, Tequila and Colet executed an agreement.

100%


100%


100%

Hinoba-an Project




Benefits Royalty



92.5%

7.5%

100%





100%


100%


100%

Hinoba-an Project




Benefits Royalty



92.5%

7.5%

100%





Philippine Investors1,500 Class B Shares in HSHI:

Philippine Investors(1,500 Class B Shares in HSHI)


7849

(vii) 29 September 1998, Pursuit, HHPI, Selenga and Colet entered into the Compromise Agreement.

(viii) 19 August 1999, Segal & Partners Inc. (as trustee of Tequila) and HHPI entered into thePurchase and Sale Agreement.

(ix) 9 December 1999, Roberto. O. Parel and Felipe. L. Gozon, HHPI and Pursuit entered into theAssignable Option to Purchase Agreement.

(x) 1 November 2001, Hinoba Holdings, Pursuit and HHPI entered into the Purchase and OptionAgreement.

(xi) 27 October 2003, Apollo Gold Corporation (formerly Pursuit), HHPI and Hinoba Holdingsentered into the Agreement for Termination of the Purchase and Option Agreement.

(xii) 8 December 2003, HHPI, Selenga and Colet entered into the Royalty Reduction Agreement.

(xiii) 17 December 2004, Selenga and Colet entered into the Integrated Mining and OperatingAgreement.

(xiv) 11 January 2005, Elco (Nominee) Ltd. and Elco (Trustee) Ltd., as trustee for the shareholders ofHinoba Holdings, and Copper Resources entered into the Share Purchase and Sale Agreement.

A summary of the pertinent points in each agreement, and their relevant clauses are below.

Operating Agreement – 7 December 1991

• Colet transfers rights over the Mineral Properties in Hinoba-an and Sipalay, Negros Occidentalto Selenga.

• Selenga shall pay Colet Php2.0 million upon signing of the agreement.

• Selenga shall pay Colet a further Php3.0 million within one year to date of the agreement.

• Colet shall be entitled to 3 per cent of Net Benefits as a royalty (the “3 per cent Net BenefitsRoyalty”).

• Colet shall have a right to subscribe to 7.5 per cent of the authorised capital stock of Selenga.

– Selenga shall advance amount needed to convey 7.5 per cent of Selenga to Colet.

– Colet shall have right to subscribe to 7.5 per cent in any increase in capital in Selenga.

– Rights to 7.5 per cent are confined to Colet, but not to transferees or assignees.

– Right to 7.5 per cent may be withdrawn, subject to payment of fair marker value toColet.

• Operating Agreement is effective for 25 years, renewable for another 25 years.

• No assignment of rights without prior written consent of the other party.

Supplemental Operating Agreement – 9 December 1991

• Selenga can buy out Colet’s 3 per cent Net Benefits Royalty under the Operating Agreement forUS$6,000,000 within six months following the start of commercial production.

Venture Agreement – 28 April 1995

• Pursuit, Tequila and Selenga form a joint venture to explore and develop the Mineral Properties,with Selenga granting full rights to Pursuit over the properties.

• Pursuit will pay Tequila Can$100,000 upon signing of the agreement.

7950

• From April 1995 to April 1996, Pursuit will spend Can$1.5 million on the project. However, afterCan$700,000 Pursuit may withdraw from project and be entitled to a refund of Can$50,000.

• If Pursuit spends the Can$1.5 million by April 1996, and pay Tequila Can$100,000 on March1996, March 1997 and March 1998, and spends another Can$3.1 million by September 1998,Pursuit shall have earned a 25 per cent working interest in the Mineral Properties.

• Pursuit shall have the right to earn a further 25 per cent working interest by spending Can$5million by March 2000.

• Pursuit shall have the remaining 50 per cent working interest (except as to the sulphide orerecovery) by September 30, 2000 or twelve months after production start-up by payment ofadditional Can$15 million.

• Upon production start-up of the sulphide ore recovery, Selenga shall receive over a three yearperiod from the production start-up the lesser of Can$5 million a year for three years or 2 percent net smelter return from production from sulphide ore body.

Supplemental and Consent Agreement - 12 July 1995

• Pursuit designates HHPI to perform its obligations under the Venture Agreement, with Pursuitremaining liable in all respects.

• Selenga and HHPI will jointly file an FTAA, with HHPI to be the Contractor and Selenga assubstitute in the event of withdrawal.

Letter Agreement – 12 July 1995

• Pursuit will negotiate to buyout Colet’s interest in the Operating Agreement upon grant of anFTAA.

• Selenga will assign to Pursuit the right to buyout the 3 per cent Net Benefits Royalty of Coletunder the Operating Agreement.

Agreement – 18 November 1995

• Pursuit pays Colet US$35,000.

• Pursuit agrees to pay Colet further sum of US$50,000 on 1 December 1995 and US$50,000within five days of entering into an FTAA.

• If Pursuit gives notice to Tequila and Selenga that it wishes to earn up to a 50 per cent workinginterest in the Mineral Properties by 1 March 1997 or the date of filing a satisfactory bankablefeasibility study under the FTAA, whichever date comes later under Article 3.2(d) of the VentureAgreement, the 3 per cent Net Benefits Royalty due Colet under the Operating Agreement shallbe reduced to 2 per cent.

• Upon giving notice of the reduction to 2 per cent, Pursuit shall pay Colet US$1,340,000 in cashand US$660,000 in Pursuit stock.

• The remaining 2 per cent entitlement to Net Benefits may be bought out for US$6 million.

Compromise Agreement – 29 September 1998

• Colet irrevocably consented to (i) the grant of an FTAA to HHPI and (ii) the assignment of itsAPSA or granted MPSA to HHPI (if qualified) or to HHPI’s designated nominee.

Purchase and Sale Agreement - 19 August 1999

• Tequila transferred its 40 per cent share in Selenga to HHPI.

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Assignable Option to Purchase Agreement - 9 December 1999

• HHPI will pay Parel and Gozon the sum of US$100 for the option to purchase the option sharesat the specified price.

• The option may be exercised at any time by HHPI during the option period by delivering thesums as follows:

– US$60,000 shall be paid to Parel and Gozon upon signing this agreement.

– Various payments were due in accordance with the definitive agreement. However, thedefinitive agreement was never satisfied.

• This agreement is for a period of five years and HHPI had the right to renew at that date.

Purchase and Option Agreement - 1 November 2001

• International Pursuit Incorporated will transfer shares in HHPI to Pursuit.

• Pursuit to cause election of Hinoba Holdings nominees as directors of HHPI and Selenga.

• Hinoba Holdings will pay Pursuit US$10 and issue treasury shares to Pursuit equivalent to 7.5per cent of Hinoba Holdings’ outstanding shares.

• Hinoba Holdings had four years from the time the MPSA is transferred to Selenga or the grantof the FTAA to HHPI to complete the feasibility study. This is extendable by two years uponpayment of US$1.0 million to Pursuit.

• Within one year of completion of the feasibility study Hinoba Holdings can exercise the option.

• HHPI will obtain all necessary government approvals, permits, comments, authorisationsinclusive of the MPSA or FTAA.

• Purchase price is US$5.0 million payable as follows: US$2.5 million after six months from thestart of commercial production, and US$2.5 million on the first eighteen month anniversary ofthe start of commercial production.

• Upon closing date, Pursuit will use best efforts in transferring Tequila shares in Selenga toPursuit’s names, free of encumbrances.

• Hinoba Holdings will be responsible for extending the Selenga option.

• Pursuit will register as transferee to Tequila’s 40 per cent share in Selenga.

Agreement for Termination of Purchase and Option Agreement - 27 October 2003

• A settlement sum of Can$100,000 has been agreed and all rights under the purchase and optionagreement have been transferred to Hinoba Holdings.

Royalty Reduction Agreement - 8 December 2003

• HHPI will pay US$30,000 to Colet upon execution of the agreement.

• HHPI agrees to pay US$48,000 to Colet upon the transfer or assignment of the MPSA toSelenga.

• HHPI agrees to pay a further US$105,000 to Colet upon completion of a bankable feasibilitystudy.

• HHPI may give notice to Colet to reduce its 3 per cent Net Benefits Royalty to 2 per cent inexchange for the payment of US$2 million, of which up to US$600,000 may be satisfied with theissuance of shares of the legal entity HHPI designates to develop the Hinoba-an Project. The

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US$2 million shall be considered an advance to Colet against future Net Benefits due to thecompany.

• The 2 per cent Net Benefits Royalty may then be bought by HHPI for US$4 million.

Integrated Mining and Operating Agreement - 17 December 2004

• Selenga and Colet entered into the agreement in order to rationalize and govern theirrelationship insofar as the exploration, development and utilization of the Mineral Propertiesunder previous agreements.

• Colet to be paid US$48,000 upon transfer of MPSA from Colet to Selenga.

• Colet to be paid US$105,000 upon completion of a bankable feasibility study.

• Colet’s 3 per cent Net Benefits Royalty may be bought out by Selenga or its nominee.

– Notice may be given to Colet to reduce its 3 per cent Net Benefits Royalty to 2 per centin exchange for the payment of US$2 million, of which up to US$600,000 may besatisfied with the issuance of shares of the legal entity HHPI designates to develop theHinoba-an Project. This amount shall be considered an advance to Colet against futureNet Benefits due to the company.

– The 2 per cent Net Benefits Royalty may then be bought by HHPI for US$6 million, ofwhich US$4 million shall be in cash and US$2 million in shares of the legal entity HHPIdesignees.

• Colet shall be entitled to 7.5 per cent of the outstanding capital stock of Selenga which can alsobe bought out by Selenga or its nominee.

Share Purchase and Sale Agreement - 11 January 2005

• Copper Resources acquires 100 per cent of the issued and outstanding shares and options ofHinoba Holdings.

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APPENDIX III

COPPER RESOURCES CORPORATION – LEGAL OPINION

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APPENDIX III - COPPER RESOURCES CORPORATION - LEGAL OPINION

ENRIQUE M. BELO BELO GOZON ELMA P.O. Box 2346,FELIPE L. GOZON PAREL ASUNCION & LUCILA Makati Central Post OfficeMAGDANGAL B. ELMA ATTORNEYS-AT-LAW Makati City 1200ROBERTO O. PAREL (BGE LAW) PhilippinesGENER E. ASUNCION

ROBERTO RAFAEL V. LUCILA

ERIC VINCENT A. ESTOESTA 15th Floor, Sagittarius CondiminiumsANNA-TERESA M. GOZON-ABROGAR H.V. dela Costa Street, Salcedo VillagePIERRE M. CANTARA Makati City 1227

REGINO A. MORENO

NIEL C. TUPAS, JR.YVONNE ANGELI L. TUPAS

CECILE G. YUMUL

CRISELDA M. FUNELAS

MARIA TERESA E. DE MESA

April 14, 2005

THE BOARD OF DIRECTORSCopper Resources CorporationCraigmuir ChambersPO Box 71Road TownTortolaBritish Virgin Islands

Report on Mining Claims/Tenements Status

Sirs:

This report (the “Report”) has been prepared for inclusion in the admission document (the “AdmissionDocument”) to be issued by Copper Resources Corporation (the “Company”) in relation to theadmission of the Company to the Alternative Investment Market of the London Stock Exchange plcand the associated equity fund raising.

We consent to and authorise the inclusion of this Report in the Admission Document in the form andcontext in which it appears.

1. Scope of Report and Definitions

For the purpose of this Report, our inquiries:

(a) relate only to the laws, rules and regulations of the Philippines which are in force on the date ofthis Report and which we have deemed necessary to render this Report;

(b) are based upon publicly available records and those provided by the Group to us as listed in theschedule to this Report; and,

(c) are strictly limited to the matters dealt with herein and do not extend by implication or otherwiseto any other matter.

Telephones :816-3716 to 19:812-4496 to 97:814-0606 to 09

Fax Phones :(632) 817-0696:(632) 812-0008

E-mail Address:[email protected]

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In this Report the following definitions are used:

Colet Colet Mining and Development Corporation, a company incorporatedin the Philippines

Company Copper Resources Corporation, a company incorporated in the BritishVirgin Islands

Constitution Philippine Constitution of 1987

DENR the Department of Environment and Natural Resources

FTAA Financial or Technical Assistance Agreement, details of which are insection 6.b.

Government Government of the Philippines

Group the Company, Hinoba Holdings, HHPI, HSHI and Selenga

HHPI Hinoba Holdings (Philippines), Inc. (formerly named InternationalPursuit (Philippines), Inc. until 7 October 2004), a companyincorporated in the Philippines

Hinoba Holdings Hinoba Holdings Ltd, a company incorporated in the Commonwealthof the Bahamas

HSHI Hinoba-an & Sipalay Holdings, Inc., a company incorporated in thePhilippines

the Integrated Mining and Operating Agreement referred to insection 11

Mineral Properties the mineral properties discussed in section 5

Mining Act Republic Act No. 7942, otherwise known as the “Philippine MiningAct of 1995”

MPSA Mineral Production Sharing Agreement, details of which are insection 6.a.

NCIP National Commission on Indigenous Peoples

Pursuit International Pursuit Corporation, a company incorporated under thelaws of Ontario, Canada

Qualified Person has the meaning in section 7

Related Mining Interests the interests discussed in section 11

Selenga Selenga Mining Corporation, a company incorporated in thePhilippines

Tequila Tequila Copper Corporation, a company incorporated under the lawsof Ontario, Canada

the 3 per cent net benefits royalty payable to Colet by Selenga pursuantto the Integrated Mining and Operating Agreement

3 per cent Net BenefitsRoyalty

Integrated Mining andOperating Agreement

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2. Assumptions

For the purpose of giving this Report, we have assumed:

(a) that the information provided by the Group and the public officials concerned are correct andup to date as of the date in which this Report was rendered;

(b) the authenticity of all signatures, seals and dates, and of any stamp or marking, if any;

(c) the completeness and conformity to the originals of all copies of documents submitted to us;and,

(d) the accuracy and authenticity of all matters of fact material to this Report as certified by officersof the Group or those of the companies with Related Mining Interests as hereinafter discussed,or as may be represented by the Group or the parties in the various agreements covering theRelated Mining Interests as hereinafter discussed.

3. Qualifications

This Report is subject to the following qualifications:

(a) We have only made the inquiries described in section 1 above and this Report is strictly limitedto the matters stated in it and does not extend by implication to any other matter; and,

(b) The FTAA and the MPSA are currently at the application stages and will be granted andapproved upon compliance with the requirements of the Mining Act and its Implementing Rulesand Regulations (DENR Administrative Order No. 96-40), Republic Act No. 8371 otherwiseknown as “The Indigenous Peoples Rights Act” (the “IPRA”), and the pertinent rules andregulations issued by the DENR. However, HHPI or Selenga enjoys priority rights in theexploration and exploitation of the subject Mineral Properties as discussed hereinafter.

4. Introduction

The Constitution and the Mining Act govern the exploration, development and utilization of mineralresources in the Philippines. The Constitution allows the Government to enter into various agreementswith private parties for the exploitation of mineral deposits. These agreements are: MPSAs, co-production agreements and joint-venture agreements. For these agreements, the privateparty/Contractor must be a Filipino citizen, or, if a juridical person, one that is owned at least 60 percent by Filipino citizens. All the foregoing mineral agreements grant to the Contractor the exclusiveright to conduct mining operations and to extract all mineral resources found in the contract area. TheContractor may convert its mineral agreement into any of the other types of mineral agreements orinto an FTAA, subject to the approval of the Secretary of the DENR. Under the Mining Act, foreignowned corporations (being corporations with more than 50 per cent foreign ownership) are qualifiedto apply for FTAAs, exploration permits or mineral processing permits.

The Group has interests in two types of mineral agreements in the Philippines, namely the FTAAapplication of HHPI and the MPSA application of Colet, which Colet has agreed to assign to Selengaupon its approval. The FTAA application, which would permit a 100 per cent interest in the MineralProperties, has been dormant since 1997, pending a final decision of the Philippine Supreme Court inthe La Bugal B’laan Case. A final ruling by the Supreme Court was rendered on 1 December 2004. Theruling declared key provisions of FTAAs as constitutional, including those which allow corporationswhich are more than 40 per cent foreign owned to apply for exploration and mineral processingpermits. This favorable ruling clears the way for HHPI to proceed with its FTAA application. Afavorable decision by the Secretary of the DENR on the FTAA application would allow HHPI to holda direct 92.5 per cent interest in the Mineral Properties as more fully described below. An unsuccessfulapplication would limit the Group's ownership interest to a maximum of 40 per cent under the MPSAapplication and existing Group structure. While in theory this would not impact the Group's economicinterest in the Mineral Properties, it would subject the Group to the risks associated with being aminority shareholder without effective control of the Mineral Properties.

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We are not aware of any other matter material for disclosure as regards the title of the Group to therights in the Mineral Properties, nor are we aware of any reason why the MPSA or FTAA applicationsshould not be granted.

As provided or represented by the Group, the corporate structure is as follows:

Figure 1:

Corporate Structure

5. The Mineral Properties

The Mineral Properties, the subject of this Report, consist of approximately 2,991.80 hectares situatedin Barangay Manlucahoc, Municipality of Sipalay, Province of Negros Occidental, Philippines. TheMineral Properties are subject of MPSA application No. APSA-00087VI presently in the name ofColet and are also included in FTAA application No. AFTA-000002CO which is presently in the nameof HHPI.

6. The Philippine Mining Act of 1995 (the “Mining Act”)

The Constitution maintains the Regalian doctrine of natural resources ownership and provides that theexploration, development and utilization of natural resources shall be under the full control andsupervision of the State (Sec. 2, Art. XII, 1987 Constitution). Thus, the State can either directlyundertake the exploration and exploitation of natural resources or choose to undertake such activitiesthrough Qualified Persons by entering into any of the following mineral agreements: co-productionagreement, joint venture agreement, production sharing agreement, or by way of agreements involvingfinancial or technical assistance (Sec. 2, Art. XII, 1987 Constitution; Sec. 26, Chapter V, RA 7942; Sec.31, Chapter V and Chapter VII of DAO 96-40).

The Mining Act, together with its Implementing Rules and Regulations (DAO 96-40), lays down themechanics and requirements of the different mineral agreements and FTAAs.

100%


100%


100%

Hinoba-an Project




Benefits Royalty




92.5%

7.5%

100%



Philippine Investors1,500 Class B Shares in HSHI:Director – NT (749 shares)Director – RP (749 shares)Director – JM (2 shares)


100%


100%


100%

Hinoba-an Project




Benefits Royalty




92.5%

7.5%

100%



Philippine Investors1,500 Class B Shares in HSHI:Director – NT (749 shares)Director – RP (749 shares)Director – JM (2 shares)


8758

6.a. Mineral Production Sharing Agreement (“MPSA”)

In an MPSA, the Government grants the Contractor the exclusive right to conduct miningoperations within, but not title over, the contract area and shares in the production whether inkind or in value (Sec. 26, Chapter V, RA 7942). The Contractor will provide the necessaryfinancing, technology, management and personnel. This shall be for a term of twenty-five (25)years from date of execution, renewable for another term not exceeding twenty-five (25) years(Sec. 32, RA 7942). The Government’s interest in an MPSA is the excise tax on the mineralproducts as provided for in R.A. No. 7729, amending Section 151 (a) of the National InternalRevenue Code, which is 2 per cent of the market value of the gross output, as well as occupationfees and such other fees and taxes as the Local Government may be authorized to impose underthe Local Government Code. There is also a provision for the conversion of an MPSA into anFTAA, subject to the approval of the Secretary of the DENR (Sec. 26, Chapter V, RA 7942).

On 2 September 1997, Colet filed an application for an MPSA (“APSA”) with the Mines andGeosciences Bureau, Regional Office No. 6 in Iloilo covering the Mineral Properties for thepurpose of exploring and exploiting gold, copper, silver, molybdenum, etc. The applicant hassecured area clearances from the Land Management Service, Forest Management Service,Environmental Management and Protected Areas Service and Ecosystem ResearchDevelopment Service. In addition, Colet was able to procure a clearance from the Office of theSouthern Cultural Committees and a certificate of exemption from Community EnvironmentalManagement and Community Relations Record. The APSA has been published in a newspaperof general circulation, as is required as part of the approval process. Colet submitted allrequirements to the Regional Office. The Regional Office additionally requires the submission ofa certification from the NCIP (see section 10 below) and acceptable proof that Colet has anauthorized capital of Php10 million (i.e. US$181,000) with a minimum paid-in capital of Php2.5million (i.e. US$45,000). Colet has already complied with this latter requirement by submittingproof that its authorized capital is Php10 million and its paid-in capital is Php2.5 million. Oncethe certification from the NCIP is secured by Colet, the Regional Office will forward the APSA-00087VI for final approval to the Secretary of the DENR.

Under the Compromise Agreement dated 29 September 1998, Colet is obligated to transfer orassign its MPSA in favor of HHPI’s designated nominee, Selenga.

6.b. Financial and Technical Assistance Agreement (“FTAA”)

An FTAA is granted to a Contractor for the purpose of large scale exploration, developmentand utilization of mineral resources (Sec. 33, Chapter VI, RA 7942). “Large scale” refers tocommitted expenditure of at least US$50 million. FTAAs have a term of twenty-five (25) yearsfrom execution, and are renewable for another period not exceeding twenty-five (25) years (Sec.38, RA 7942). The Government’s basic share in an FTAA consists of direct taxes, fees, royaltiesand other payments to be made by the Contractor during the term of an FTAA in favor of theNational Government, Local Government and affected communities, as mentioned in DENRAdministrative Order No. 99-56 (“Guidelines Establishing the Fiscal Regime of Financial orTechnical Assistance Agreements”). The Government’s basic share will become payable after theContractor has recovered certain pre-operating expenses but not to exceed five (5) years in all.In addition, the Government is entitled to an additional Government share which is based oneither a) a fifty-fifty sharing of the cumulative present value of cash flow; or b) a percentage ofthe additional or excess profits; or c) the cumulative net mining revenue, at the option of theContractor. During the term of an FTAA, the Contractor may convert an FTAA into an MPSAsubject to compliance with the 60 per cent Filipino equity requirement and the approval of theSecretary of the DENR (Sec. 39, Chapter VI, RA 7942).

On 18 July 1995, HHPI, with Selenga as substitute, filed an application for an FTAA with theMines and Geosciences Bureau, Regional Office No. 6 in Iloilo covering 80,872 hectares(inclusive of the Mineral Properties) located in Sipalay, Cauayan and Hinoba-an, NegrosOccidental and Negros Oriental for the purpose of exploring and exploiting for minerals. The

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applicant has already obtained Area Clearances (i.e. that the area is free and open for the grantof a mineral application) from the DENR’s Land Management Service, Forest ManagementService, Environmental Management and Protected Areas Service and Ecosystems ResearchDevelopment Service. HHPI is deemed to be in compliance with the additional requirementsunder DENR Memorandum Order 99-10. However, HHPI still has to submit/comply withcertain other requirements. Hence, the FTAA application is still pending and following theSupreme Court decision mentioned below, La Bugal B’laan Case, we are not aware of any legalrestrictions that would prevent the Group from seeking approval of its pending FTAAapplication.

6.c. La Bugal B’laan Tribal Asso. Inc. et al., vs. Victor O. Ramos, Secretary Department ofEnvironment and Natural Resources, et.al. G.R. No. 127882

In a resolution promulgated on 1 December 2004, the Philippine Supreme Court reversed itsprevious decision of 27 January 2004 and declared as constitutional the Mining Act and itsimplementing DAO 96-40, insofar as they relate to FTAAs, and consequently upheld the validityof the questioned FTAA issued to Western Mining Corporation Philippines, Inc. However, itnullified two (2) provisions of the Western Mining FTAA for being contrary to public policy andgrossly disadvantageous to the Government.

A petitioners’ motion for reconsideration was denied by the Philippine Supreme Court on 1February 2005. Under the rules of the Supreme Court, no second motion for reconsiderationshall be entertained.

The recent decision removed previous uncertainty regarding the exploration, development andutilization of mineral resources under FTAAs by foreign owned corporations, which had limitedthe granting of FTAAs over the past few years. Consequently we are not aware of any legalrestrictions that would prevent the Group from seeking approval of its pending FTAAapplication.

6.d. We are not aware of any reason why the MPSA or FTAA applications should not be granted.

7. “Contractor” or “Qualified Person”

An MPSA Contractor must be a “Qualified Person” which is defined as any Filipino citizen of legalage with capacity to contract; or a corporation, partnership, association or cooperative organized forthe purpose of engaging in mining with technical and financial capability to undertake mineralresources development and duly registered in accordance with law at least 60 per cent of the capital ofwhich is owned by Filipino citizens (Pars. g and aq. Sec. 3, Chapter 1, RA 7942; pars. n and cb, Sec. 5,Chapter 1, DAO 96-40). DENR Memorandum Order No. 99-10 (“Guidelines in the Determination ofQualified Persons for Mining Applications and Mining Rights”) further requires an MPSA applicantto have a minimum authorized capital stock of Php10 million and a minimum paid up capital ofPhp2.5 million.

A legally organized foreign-owned corporation shall be deemed a Qualified Person for the purposes ofgranting an exploration permit, FTAA or mineral processing permit. “Foreign-owned corporation”means any corporation, partnership, association or cooperative duly registered in accordance with lawin which less than 50 per cent of the capital is owned by Filipino citizens (par. F, Sec. 3, Chapter 1, RA7942; par. aj, Sec.5, Chapter 1, DAO 96-40). DENR M.O. No. 99-10 further requires an FTAAapplicant to have a minimum authorized capital stock of US$4 million or its Philippine Peso equivalentafter the FTAA is approved and prior to registration.

For an MPSA, a qualified corporation shall be entitled to hold or apply for the maximum area at anyone time, as follows:

1. Onshore, in any one province: one hundred (100) blocks or approximately eight thousand onehundred (8,100) hectares.

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2. Onshore, in the entire Philippines: two hundred (200) blocks or approximately sixteen thousandtwo hundred (16,200) hectares (Sec. 33, Chapter VI, DAO 96-40).

For an FTAA, a qualified corporation shall be entitled to hold or apply for one thousand (1,000)meridional blocks or approximately eighty one thousand (81,000) hectares onshore (Sec. 51, ChapterVII, DAO 96-40).

8. Easement rights

The Mining Act grants the Contractor easement rights upon payment of just compensation to thesurface owners, occupants or concessionaries of such lands within a contract area when the miningareas are so situated such that infrastructures necessary for its operation are built, constructed orinstalled on lands owned, occupied or leased by these persons (Sec. 75 and 76, Chapter XII, RA 7942).

9. Validity of existing mining rights

The validity of all existing mining lease contracts, permits, licenses and leases which were granted priorto the enactment of the Mining Act are respected. Holders of valid and existing mining claims weregiven preferential rights to enter into any mode of mineral agreement with the Government. However,such mining lease contracts, permits, licenses and leases must comply with the applicable provisions ofthe Mining Act and its implementing rules and regulations (Sec. 112 and 113, Chapter XX, RA 7942;Sections 272 and 273, Chapter XXX, DAO 96-40).

10. The Indigenous Peoples Rights Act

The rights of Indigenous Cultural Committees/Indigenous Peoples (“ICCs/IPs”) are recognized andpromoted in the Constitution, the Mining Act, Republic Act No. 8371 (“Indigenous Peoples RightsAct of 1997”) and various administrative orders. “ICCs/IPs” refer to a group of people or homogenoussocieties identified by self-ascription and ascription by others, who have continuously lived asorganized communities on communally bounded and defined territories, and who have, under claimsof ownership since time immemorial, occupied, possessed and utilized such territories.

ICCs/IPs are given priority rights in the harvesting, extraction, development or exploitation of naturalresources within their ancestral domains. A non-member of the ICCs/IPs may be allowed to undertakethe development and utilization of natural resources, subject to the free and prior informed and writtenconsent of the ICCs/IPs concerned and a written agreement is executed with the ICCs/IPs.Consequently, no mineral agreement shall be approved unless there is a prior certification from theNCIP that the area does not overlap any ancestral domain or that the free and prior informed andwritten consent has been obtained from the ICCs/IPs concerned.

The ICCs/IPs, through their Council of Elders, may enter into an agreement for the utilization,extraction and development of natural resources within their ancestral domain. This agreement issubject to a limited term of 25 years, renewable at the option of the ICCs/IPs for another 25 years, andto visitorial and monitoring powers of the ICCs/IPs concerned and the NCIP to ensure that theICCs/IPs’ rights are adequately safeguarded and protected. The agreement shall provide, amongothers:

(a) benefits due the host ICCs/IPs;

(b) measures to protect IPs’ rights and value systems;

(c) responsibilities of the proponent as well as those of the ICC/IP community and the NCIP;

(d) in case of change of proponent, the terms and conditions of the agreement shall bind the newproponent without necessarily executing another agreement; and,

(e) penalties for non-compliance and violation of the terms and conditions.

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As mentioned in section 6.a. above, the Regional Office requires the submission of a certification fromthe NCIP in respect of the APSA. Thereafter, the Regional Office will forward the APSA-00087VI forfinal approval to the Secretary of the DENR.

11. Related Mining Interests

Colet has an exclusive and unrestricted lawful right to the occupancy, possession, and beneficial use ofvarious mineral claims and mining leases constituting the Mineral Properties. Colet entered into anOperating Agreement dated 7 December 1991 with Selenga, 60 per cent of which was then owned byFilipinos and 40 per cent by foreigners, whereby Colet transferred to Selenga the possession,occupancy, use and enjoyment, for purposes of exploring, developing, mining and operating forproduction and for marketing the marketable products of the Mineral Properties. In exchange, Coletreceived a cash payment of Php5.0 million, a 3 per cent Net Benefits Royalty and the right to subscribefor 7.5 per cent of Selenga’s outstanding capital stock. In a Supplemental Operating Agreement dated9 December 1991, Selenga was given the option to buy out Colet’s 3 per cent Net Benefits Royalty forUS$6 million within six months following the start of commercial production.

On 18 November 2004, HHPI, together with some Filipino investors, incorporated HSHI. HHPI(together with its nominees) holds 1,000 Class A shares with a par value of Php1,000 per share andFilipino investors hold 1,500 Class B shares with a par value of Php10 per share. On 16 December2004, the board of directors of HSHI authorized the acquisition by HSHI of the shares of stock ownedby HHPI in Selenga.

On 17 December 2004, Selenga and Colet entered into the Integrated Mining and OperatingAgreement in order to rationalize and govern their relationship insofar as the exploration, developmentand utilization of the subject Mineral Properties were concerned reckoned from and after the date ofthe Integrated Mining and Operating Agreement and further provided, among others:

(a) payment to Colet of US$48,000 upon transfer of the MPSA (APSA-000087-VI) from Colet toSelenga;

(b) payment to Colet of US$105,000 upon completion of a bankable feasibility study;

(c) Colet shall be entitled to a 3 per cent Net Benefits Royalty;

(d) Colet’s 3 per cent Net Benefits Royalty may be bought out by Selenga or its nominee; and,

(e) Colet shall be entitled to 7.5 per cent of the outstanding capital stock of Selenga which can alsobe bought out by Selenga or its nominee.

On 11 January 2005, the Company acquired 100 per cent of the issued and outstanding shares andoptions of Hinoba Holdings pursuant to a one-for-one share and option exchange. As a result, theCompany now owns 100 per cent of Hinoba Holdings which, in turn, owns through subsidiarycompanies majority working interests in the subject Mineral Properties.

12. Responsibility Statement

Except for this Report (for which we accept responsibility), our Law Office:

(a) has not been involved in the preparation of any part of the Admission Document;

(b) has not in any way authorized or caused the issue of the Admission Document;

(c) is not responsible for any matter included in, or omitted from the Admission Document;

(d) makes no representation or warranty, either express or implied, with respect to the completenessor accuracy of any information contained in the Admission Document; and,

(e) disclaims liability to any person in respect of any statement in the Admission Document.

9162

13. Consent

This Report is addressed to the addressee hereof for its sole benefit and may not, without prior writtenconsent, be:

1. relied upon by another person; or

2. filed with any person or quoted or referred to in public documents except the AdmissionDocument or as required by law or regulation.

Very truly yours,

BELO GOZON ELMAPAREL ASUNCION & LUCILA

By:

ERIC VINCENT A. ESTOESTA

REGINO A. MORENO

9263

SCHEDULE OF DOCUMENTS EXAMINED

1. Compromise Agreement dated 24 April 1980 among Colet, Sta. Barbara DevelopmentCorporation, South Negros Mining Exploration Co., Delta Mining and Industrial DevelopmentCorporation, Lepanto Consolidated Mining Company and Ricardo C. Silverio

2. Mining Lease Contract No. MRD-377 dated 18 July 1984 granted to Colet from the Bureau ofMines and Geo-Sciences

3. Operating Agreement dated 7 December 1991 between Selenga and Colet

4. Supplemental Operating Agreement dated 9 December 1991 between Selenga and Colet

5. Venture Agreement dated 28 April 1995 among Pursuit, Tequila and Selenga

6. Supplemental and Consent Agreement dated 12 July 1995 among Pursuit, HHPI, Selenga andTequila

7. Letter-Agreement dated 12 July 1995 from Pursuit and HHPI to Tequila and Selenga

8. FTAA Application No. AFTA-000002CO filed by HHPI, with Selenga as substitute, with theBureau of Mines and Geo-Sciences Regional Office No. 6 in Iloilo City, Philippines on 18 July1995

9. Agreement dated 18 November 1995 among Pursuit, HHPI, Selenga, Tequila and Colet

10. MPSA Application No. APSA-00087VI filed by Colet with the Mines and Geo-SciencesRegional Office No. 6 on 2 September 1997

11. Compromise Agreement dated 29 September 1998 among Pursuit, HHPI, Selenga and Colet

12. Definitive Agreement dated 8 July 1999 among Regeena Resources Inc., Pursuit, InternationalPursuit Inc. and HHPI

13. Purchase and Sale Agreement dated 19 August 1999 between Segal & Partners Inc. and HHPIand an Indenture dated 17 September 1999

14. Assignable Option to Purchase Agreement dated 9 December 1999 among R. Parel, F. Gozon,HHPI and Pursuit

15. Purchase and Option Agreement dated 1 November 2001 among Hinoba Holdings, Pursuit andHHPI

16. Agreement for Termination of the Purchase and Option Agreement dated 27 October 2003among Hinoba Holdings, HHPI and Apollo Gold Corporation

17. Deeds of Assignment dated 27 October 2003 between International Pursuit Inc. and HinobaHoldings

18. Memorandum of Understanding 8 December 2003 among Joel D. Muyco, Jocenine D. Muyco,Julieta Dolorfino Vda. Muyco, Tranquilino M. Valderama for Consuelo M. Valderama,Mercedes V. Arroyo for Eduardo Arroyo, Jr., Colet and Norman H. Tiongson

19. Royalty Reduction Agreement dated 8 December 2003 among HHPI, Selenga and Colet

20. Assignable Option to Purchase Agreement dated 13 January 2004 among F. Gozon, R. Parel,and HHPI

21. Articles of Incorporation of HSHI dated 20 October 2004

22. Certificate of Incorporation of HSHI dated 18 November 2004

9364

23. Minutes of first meeting of directors of HSHI on 16 December 2004

24. Integrated Mining and Operating Agreement dated 17 December 2004 between Selenga andColet

25. Share Purchase and Sale Agreement dated 11 January 2005 among Elco (Nominee) Ltd., Elco(Trustee) Ltd. and Copper Resources

26. Philippine Constitution of 1987

27. Republic Act No. 7942, The Philippine Mining Act of 1995

28. DENR Administrative Order No. 96-40, subject “Revised Implementing Rules and Regulationsof Republic Act No. 7942 otherwise known as the ‘Philippine Mining Act of 1995’”

29. DENR Administrative Order No. 99-56, subject “Guidelines establishing the Fiscal Regime ofFinancial or Technical Assistance Agreements”

30. DENR Memorandum Order No. 99-10, subject “Guidelines in the Determination of QualifiedPersons for Mining Applications and Mining Rights”

31. Republic Act No. 8371, The Indigenous Peoples Rights Act of 1997

32. Supreme Court Resolution dated 1 December 2004 on La Bugal B’laan Tribal Association Inc.et al., vs. Victor O. Ramos, Secretary Department of Environment and Natural Resources, et.al.G.R. No. 127882

9465

APPENDIX IV

WORLD’S LARGEST PORPHYRY COPPER-GOLD DEPOSITS***

***Note: The resource estimates quoted in Appendix IV have been obtained from sources believedreliable but cannot be verified.

+ Note: silver and gold grades have not recently been included in any recent resource estimates for theHinoba-an Project. The grades in this Appendix have been obtained from a search of the historicliterature and can only be considered as approximate estimates to be used for comparison purposes inthis Appendix.

9566

APPENDIX IV – WORLD’S LARGEST PORPHYRY COPPER-GOLD DEPOSITS***

tonnesDeposit Country (millions) Cu (%) Mo (%) Ag (g/t) Au (g/t)

Safford United States 7260 0.441 0.004 0.170Almalyk Uzbekistan 6080 0.390 0.002 2.20 0.370La Escondida Chile 4860 0.970 0.006 5.00 0.250Grasberg Indonesia 4000 0.600 2.00 0.640Tampakan Philippines 2500 0.480 0.200Batu Hijau Indonesia 1640 0.440 0.55 0.350Panguna Papua New Guinea 1420 0.465 0.005 1.10 0.570Fish Lake Canada 1150 0.220 0.002 2.30 0.410Cerro Casale Chile 1120 0.260 0.690Frieda River Papua New Guinea 1060 0.521 0.004 1.20 0.310Potrerillos Chile 1030 0.976 0.011 0.770Majdanpek Serbia 1000 0.600 0.006 0.99 0.300Pebble Copper United States 1000 0.300 0.010 0.340Bajo de la Alumbrera Argentina 806 0.530 2.50 0.640Malanjkhand India 797 0.830 0.003 6.00 0.200Oyu Tolgoi Mongolia 750 0.520 0.000 0.250Recsk Hungary 700 0.660 0.005 0.280Ok Tedi Papua New Guinea 700 0.643 0.011 0.630Far Southeast-Bato Tabio Philippines 650 0.650 0.93 1.300Minas Conga Peru 641 0.300 0.790Skouries/Fisoka Greece 568 0.350 0.470La Fortuna Chile 540 0.550 0.510Taldy-Bulak Kyrgyzstan 540 0.270 0.500Red Chris Canada 523 0.350 0.002 1.50 0.270Guinaoang-Tirad Philippines 500 0.400 0.400Bell Copper Canada 495 0.360 0.005 1.00 0.160Cadia Hill/Ridgeway Australia 472 0.180 0.740Hushamu Canada 457 0.260 0.011 0.340Bor Serbia 450 0.600 0.400Santo Tomas II Philippines 449 0.375 0.001 1.50 0.700Saindak Pakistan 412 0.375 0.002 0.150Kingking Philippines 400 0.350 5.00 0.600Sulphurets Canada 382 0.406 2.20 0.760San Jorge Argentina 381 0.390 0.150Antapaccay Peru 380 1.000 0.160Tantahuatay Peru 375 0.850 0.300Marcopper Philippines 372 0.550 0.004 0.70 0.110La Candelaria Chile 366 1.080 4.90 0.260Mt. Milligan Canada 363 0.220 0.570Kemess North Canada 360 0.150 0.300Zijinshan China 356 0.490 6.00 0.140Dash-e-Kain Pakistan 350 0.300 0.001 0.000Taysan Philippines 336 0.310 0.003 1.20 0.350Copper Mountain Canada 324 0.473 0.001 3.90 0.170Galore Creek Canada 316 0.682 0.001 7.90 0.520Monywa Myanmar 314 0.700 6.00 0.430San Fabian Philippines 314 0.270 0.210Hinoba-an Philippines 293 0.360 3.0+ 0.016+Mt.Polly Canada 293 0.230 0.001 4.00 0.300Tombulilato Indonesia 287 0.630 0.470Basay Philippines 262 0.440 0.008 1.50 0.290Kemess South Canada 250 0.220 0.620


9667

APPENDIX V

TECKCOMINCO (GLOBAL DISCOVERY LABS) ANALYTICAL RESULTS

9768

APPENDIX V – TECKCOMINCO (GLOBAL DISCOVERY LABS) ANALYTICAL RESULTS

OREQUEST CONSULTING-X03

A1-36 TO DJ-32

Report date: 11 SEPT 2003

Au(4) Cu Ag MoLAB NO FIELD NUMBER g/t ppm ppm ppm

R0312830 A1-36 30-33 0.060 2077 0.5 45R0312831 A1-36 102-105 0.334 2788 0.9 49R0312832 A1-49 78-81 0.037 7376 0.7 98R0312833 A1-51 129-132 0.055 5011 0.4 <2R0312834 A1-51 237-240 0.158 4845 <.4 83R0312835 A1-66 39-42 0.060 4956 0.9 <2R0312836 A1-66 51-54 <0.034 2042 0.5 36R0312837 A1-69 81-84 <0.034 7150 2.7 30R0312838 DJ-02 75-78 0.122 8138 0.8 14R0312839 DJ-02 168-171 0.075 5248 0.6 2R0312840 DJ-04 12-15 0.053 11670 0.4 123R0312841 DJ-04 57-60 <0.034 1854 <.4 2R0312842 DJ-17 120-123 0.035 3365 <.4 10R0312843 DJ-17 201-204 0.045 5392 0.9 14R0312844 DJ-28 33-36 <0.034 3164 0.4 95R0312845 DJ-32 27-30 <0.034 2541 1.5 57

I=insufficient sample X=small sample E=exceeds calibration C=being checked R=revised

If requested analyses are not shown, results are to follow

ANALYTICAL METHODSAu(4) Fire Assay-Lead Collection/AA Finish (low level) 1 A.T.

ANALYTICAL METHODS

ICP PACKAGE : 0.5 gram sample digested in hot reverse aqua regia (soil,silt) or hot AquaRegia(rocks).

9869

PART 4

ACCOUNTANTS’ REPORT

The following is the full text of a report on Copper Resources from Baker Tilly, the ReportingAccountants, to the Directors of Copper Resources, Nabarro Wells and ODL Securities.

2 Bloomsbury StreetLondon WC1B 3STwww.bakertilly.co.uk

The DirectorsCopper Resources CorporationCraigmuir ChambersPO Box 71Road TownTortolaBritish Virgin Islands

and

The DirectorsNabarro Wells & Co. LimitedSaddlers HouseGutter LaneLondonEC2V 6HS

and

The DirectorsODL Securities LimitedSalisbury HouseLondon WallLondonEC2M 5QQ

14 April 2005

Dear Sirs

COPPER RESOURCES CORPORATION (“THE COMPANY”)

Introduction

We report in connection with the proposed placing of common shares of the Company (“the Placing”)and admission of the common share capital of the Company to trading on the AIM market and thisreport has been prepared for inclusion in the admission document dated 14 April 2005 (“the AdmissionDocument”). We report separately on the Company (Section A) and its subsidiary undertakings,(“Subsidiaries”) (Section B) (together “the Group”).

Section A – The Company

The Company was incorporated on 25 November 2004 in the British Virgin Islands under theInternational Business Companies Act 2000. On 11 January 2005 the Company acquired the entire

99

issued share capital of Hinoba Holdings Ltd (“Hinoba Holdings”) by way of a share for shareexchange. Further, on 28 January 2005, the Company became the registered holder of the entire issuedshare capital of Copper Spur Mining Corporation (“Copper Spur”) that was previously held byHinoba Holdings. Accordingly, at 28 February 2005, the Company had two wholly owned subsidiaries.The consolidated financial results of Hinoba Holdings (including Copper Spur) are given in Section B.

Basis of preparation

The financial information set out below has been extracted from financial records of the Company forthe period ended 28 February 2005, no adjustments being considered necessary. No audited financialstatements have been prepared for submission to members in respect of any period since incorporation.

Responsibility

The financial records are the responsibility of the directors of the Company (“Directors”). TheDirectors are also responsible for the contents of the Admission Document dated 14 April 2005 inwhich this report is included.

It is our responsibility to compile the financial information set out below from the Company’s financialrecords and to make a report in accordance with paragraph 45 of Schedule 1 to the Public Offers ofSecurities Regulations 1995. Our work has been undertaken so that we might state those matters we arerequired to state in our report and for no other purpose. To the fullest extent permitted by law, we donot accept or assume responsibility to anyone for any other purpose for our work, for this report or forthe opinions we have formed.

Basis of opinion

We conducted our work in accordance with the Statements of Investment Circular ReportingStandards issued by the Auditing Practices Board. Our work included an assessment of evidencerelevant to the amounts and disclosures in the financial information. It also included an assessment ofthe significant estimates and judgements made by those responsible for the preparation of the financialrecords and whether the accounting policies are appropriate to the Company’s circumstances,consistently applied and adequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance thatthe financial information is free from material misstatement, whether caused by fraud or otherirregularity or error.

Opinion

In our opinion, the financial information set out below gives, for the purpose of the AdmissionDocument, a true and fair view of the loss and cash flow of the Company for the period fromincorporation ended 28 February 2005 and of the financial position of the Company as at 28 February2005.

100

INCOME STATEMENT

Period from incorporation ended

28 February 2005Notes $’000

General and administrative expenses (231)1111

Loss before interest and tax (231)

Interest receivable and similar income 131111

Loss before taxation (218)Income tax expense 3 –

1111

Loss after taxation (218)1111aaaa

Operating loss derives from continuing operations.

101

BALANCE SHEET

As at28 February 2005

Notes $’000

Non-current assetsInvestments 4 2,102

Current assetsReceivables and prepayments 5 25Cash and cash equivalents 6 10,554

1111

10,579Current liabilitiesTrade and other payables 7 (12,713)

1111

Net current liabilities (2,134)1111

Total assets less current liabilities (32)1111

Non-current liabilitiesLong term loans 8 (186)

1111

(218)1111aaaa

Capital and reservesCapital stock 9 –Retained earnings (218)

1111

(218)1111aaaa

102

CASH FLOW STATEMENT

Period from incorporation ended

28 February2005

$’000

Cash flow from operating activitiesOperating loss (854)Adjustment for:

Interest receivable 13Increase in receivables and prepayments (25)Increase in trade and other payables 202

1111

Net cash used by operations (664)

Cash flows from financing activitiesNet proceeds received for common shares to be issued 11,218

1111

Net cash generated by financing activities 11,2181111

Net increase in cash and cash equivalents 10,5541111

Cash and cash equivalents at end of the period 10,5541111aaaa

103

STATEMENT OF CHANGES IN EQUITY

Common Retained Shareholders’shares earnings equity$’000 $’000 $’000

Issue of common shares – – –Net loss for the period – (218) (218)

1111 1111 1111

Balance at 28 February 2005 – (218) (218)1111 1111 1111aaaa aaaa aaaa

104

NOTES TO THE FINANCIAL INFORMATION

1 Nature of operation

The Company was incorporated on 25 November 2004 in the British Virgin Islands under theInternational Business Companies Act 2000. On 11 January 2005 the Company entered into anagreement to acquire the entire issued share capital of Hinoba Holdings by way of a share forshare exchange. Further, on 28 January 2005, the Company became the registered holder of theentire issued share capital of Copper Spur that was previously held by Hinoba Holdings.

Following the acquisition of Hinoba Holdings, the Company has, through a subsidiary, acquiredthe rights to the Hinoba-an Porphyry Copper Project on Negros Island in the Republic of thePhilippines.

The principal activity of the Company is as a holding company for the Group, to pursueexploration and development of minerals.

2 Significant accounting policies

These financial statements have been prepared in accordance with International FinancialReporting Standards (“IFRS”), including International Accounting Standards (“IAS”) andInterpretations issued by the International Accounting Standards Board.

The principal accounting policies adopted in the preparation of the consolidated financialinformation are set out below:

a) Basis of presentation

The preparation of the financial information in conformity with International GAAP requiresthe use of certain critical accounting estimates. It also requires management to exercise itsjudgement in the process of applying the Group’s accounting policies.

b) Segment reporting

A business segment is a group of assets and operations engaged in providing products or servicesthat are subject to risks and returns that are different from those of other business segments. Ageographical segment is engaged in providing products or services within a particular economicenvironment that are subject to risks and returns that are different from those of segmentsoperating in other economic environments.

c) Income Taxes

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from netprofit as reported in the income statement because it excludes items of income or expense thatare taxable or deductible in other years and it further excludes items that are never taxable ordeductible. The Group's liability for current tax is calculated using tax rates that have beenenacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carryingamounts of assets and liabilities in the financial statements and the corresponding tax bases usedin the computation of taxable profit, and is accounted for using the balance sheet liabilitymethod. Deferred tax liabilities are generally recognised for all taxable temporary differences anddeferred tax assets are recognised to the extent that it is probable that taxable profits will beavailable against which deductible temporary differences can be utilised. Such assets andliabilities are not recognised if the temporary difference arises from goodwill or from the initialrecognition (other than in a business combination) of other assets and liabilities in a transactionthat affects neither the tax profit nor the accounting profit.

105

Deferred tax liabilities are recognised for taxable temporary differences arising on investments insubsidiaries and associates, except where the Company is able to control the reversal of thetemporary difference and it is probable that the temporary difference will not reverse in theforeseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reducedto the extent that it is no longer probable that sufficient taxable profits will be available to allowall or part of the assets to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when theliability is settled or the asset is realised. Deferred tax is charged or credited in the incomestatement, except when it relates to items charged or credited directly to equity, in which case thedeferred tax is also dealt with in equity.

d) Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cashflow statement, cash and cash equivalents comprise cash on hand, deposits held at call withbanks and other unrestricted short-term deposits with original maturities of three months orless.

e) Trade receivables

Trade receivables are carried at original invoice amount less provision made for impairment ofthese receivables. A provision for impairment of trade receivables is established when there isobjective evidence that the Company will not be able to collect all amounts due according to theoriginal terms of receivables.

f) Long term Investment

Long term investments are carried at their fair value which is generally considered to be marketvalue. Where there is no readily attainable market value these are carried at their fair value asdetermined by management.

g) Financial instruments

Financial assets and financial liabilities are recognised on the Company’s balance sheet when theCompany becomes a party to the contractual provisions of the instrument.

The carrying amounts of the Company's financial assets and liabilities (comprising investments,bank and cash balances, trade and other debtors, trade and other creditors and short and long-term borrowings) approximate to their fair values at the date of the transaction. Where the fairvalue of a financial asset is materially below the carrying amount, the carrying amount is writtendown to fair value.

106

3 Income tax expense

Income tax comprised the following:

Period ended 28 February

2005$’000

Current tax charge –

Deferred tax charge –1111

Income tax charge for the period –1111aaaa

4 Investments

Investment in subsidiary

undertakings$’000

Acquisitions:Acquisition of Copper Spur 84Acquisition of Hinoba Holdings 2,018

1111

As at 28 February 2005 2,1021111aaaa

The subsidiaries of the Company at 28 February 2005 are as follows:

Ownership Name of company Place of incorporation interest Principal activity

Hinoba Holdings Ltd Commonwealth of the Bahamas 100% Holding company ofHinoba Holdings(Phillipines), Inc.

Philippines 100% Mineral explorationand development

Colorado, USA 100% Mining explorationCopper Spur MiningCorporation

Hinoba Holdings(Philippines), Inc

107

The Company entered into an agreement on 11 January 2005 to acquire the entire issued sharecapital and unexercised issued share options of Hinoba Holdings, the consideration to besatisfied by the issue of 10,756,600 common shares to the shareholders of Hinoba Holdings and975,000 stock options. Details of the acquisition are as follows:

Investment in subsidiary

undertakings$’000

Net assets acquired – at fair valueCash 1,301Prepaid expenses and other current assets 6Due from the Company 34Advances to Selenga Mining Corporation 459Investment in Selenga Mining Corporation 78Tangible assets 2Mineral exploration costs 214Accounts payable and accrued liabilities (76)

1111

2,0181111aaaa

Consideration given – at fair valueCommon shares to be issued 1,911Stock options to be issued 107

1111

2,0181111aaaa

Copper Spur had been acquired by Hinoba Holdings in June 2004 resulting in net assetsacquired (at fair value) of $76,500. Following the acquisition of Hinoba Holdings by theCompany, the Company became the beneficial holder of the entire issued capital of CopperSpur. The investment in Copper Spur in the Company’s financial information has been recordedat cost, calculated based on the fair value net assets acquired by Hinoba Holdings. Theconsideration for this acquisition amounts to $84,500 and is included in liabilities as amountspayable to Hinoba Holdings.

5 Receivables and prepayments

As at 28 February

2005$’000

Prepaid expenses and accrued income 251111

251111aaaa

6 Cash and cash equivalents

As at 28 February

2005$’000

Bank – in US Dollars 10,5541111

10,5541111aaaa

108

7 Trade and other payables

As at 28 February

2005$’000

Amounts received for common shares, not yet issued (note 11) 12,697Accrued expenses 16

1111

12,7131111aaaa

8 Long term loans

As at 28 February

2005$’000

Due to subsidiary undertaking 1861111

1861111aaaa

Long term loans relate to amounts due to Hinoba Holdings in respect of the amounts payableon the acquisition of Copper Spur and amounts due for expenses paid on behalf of theCompany.

These loans are non-interest bearing and have no fixed repayment date.

9 Capital stock

The Company was incorporated with an authorised share capital of 50,000 common shares of$1.00 each.

On 16 December 2004, 1 share was issued, at par, for cash to the founder.

10 Related party transactions

During the period from incorporation Hinoba Holdings, a subsidiary of the Company, paidexpenses on behalf of the Company amounting to $102,000. These amounts are within longterm loans in note 8.

In addition, in the ordinary course of business, the Company paid consultancy fees to JamesFrank, a director, totalling $10,000.

11 Post balance sheet events

On 1 April 2005, the authorised share capital of the Company was amended so that theCompany was authorised to issue up to 500,000,000 shares of one class and one series of no parvalue.

On the same date, the Company issued 10,756,600 common shares to the shareholders of HinobaHoldings and 975,000 stock options pursuant to an agreement dated 11 January 2005 wherebythe Company agreed to purchase the entire issued share capital of Hinoba Holdings. The HinobaHoldings’ options had an exercise price of $0.25 and expired at the earlier of 3 years after thecompany is publicly listed or 30 June 2009. Management has estimated the fair value of theseoptions to be $0.11 per option, totalling $107,000. The value of these options was determinedusing the Black-Scholes option pricing model with assumptions of the risk free rate of 3.5%, theterm of 4 years, stock value at time of granting of $0.25 and volatility of 50%.

109

Further, on 1 April 2005, the Company issued 1,300,000 common shares to founders at a priceof $0.01 each for cash and 600,000 common shares pursuant to the exercise of share options atan exercise price of $0.25 each for cash consideration of $150,000.

Pursuant to a private placement carried out by the Company, the Company issued 11,100,000common shares at a price of $1.00 on 1 April 2005, for cash.

On 1 April 2005, the Company issued 1,325,000 share options. These options have an exerciseprice of $1.00 and expire on 13 February 2010. Management has estimated the fair value of theseoptions to be $0.47 per option, totalling $623,000. The value of these options was determinedusing the Black-Scholes option pricing model with assumptions of the risk free rate of 3.5%, theterm of 5 years, stock value at time of granting of $1.00 and volatility of 50%.

110

Section B – Hinoba Holdings

Basis of preparation

The financial information set out below is based on the audited consolidated financial statements ofHinoba Holdings and its subsidiary undertakings (the “Group”) for the three years ended December2004, after making such adjustments as we consider necessary. The consolidated accounts of the Groupfor the three years ended 31 December 2004 were audited by Smith, Nixon & Co. LLP, CharteredAccountants who gave unqualified reports thereon. No audited financial statements have beenprepared for the Group in respect of any subsequent period.

Responsibility

The consolidated financial statements are the responsibility of the directors of Hinoba Holdings whoapproved their issue. The Directors are responsible for the contents of the Admission Document dated14 April 2005 in which this report is included.

It is our responsibility to compile the financial information set out below from the Group’s financialrecords and to make a report in accordance with paragraphs 45 of Schedule 1 to the Public Offers ofSecurities Regulations 1995. Our work has been undertaken so that we might state those matters we arerequired to state in our report and for no other purpose. To the fullest extent permitted by law, we donot accept or assume responsibility to anyone for any other purpose for our work, for this report or forthe opinions we have formed.

Basis of opinion

We conducted our work in accordance with the Statements of Investment Circular ReportingStandards issued by the Auditing Practices Board. Our work included an assessment of evidencerelevant to the amounts and disclosures in the financial information. The evidence included thatrecorded by the auditors who audited the financial statements underlying the financial information. Italso included an assessment of the significant estimates and judgements made by those responsible forthe preparation of the financial statements underlying the financial information and whether theaccounting policies are appropriate to the Group’s circumstances, consistently applied and adequatelydisclosed.

We planned and performed our work so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance thatthe financial information is free from material misstatement, whether caused by fraud or otherirregularity or error.

Opinion

In our opinion, the financial information set out below gives, for the purpose of the AdmissionDocument, a true and fair view of the losses and cash flow of the Group for the three years ended 31December 2004 and of the financial position of the Group at the end of each of the three years.

111

INCOME STATEMENTS

Year ended 31 December2002 2003 2004

Notes $’000 $’000 $’000

RevenueInterest and other income – – 2

1111 1111 1111

ExpensesAmortization of equipment – – (1)Foreign exchange – 10 (1)Miscellaneous (2) (8) (32)Professional and advisory fees (22) (58) (770)Travel – (8) (15)

1111 1111 1111

(24) (64) (819)1111 1111 1111

Net loss for the year before taxation (24) (64) (817)Income tax expense 4 – – –

Net loss for the year (24) (64) (817)

Retained deficit brought forward (2) (26) (90)1111 1111 1111

Retained deficit carried forward (26) (90) (907)1111 1111 1111aaaa aaaa aaaa

Operating losses all derive from continuing operations.

112

BALANCE SHEETS

As at 31 December2002 2003 2004

Notes $’000 $’000 $’000

Non-current assetsInvestments 5 – 18 78Intangible assets 7 – 133 213Tangible assets 8 – 1 2

1111 1111 1111

– 152 293Current assetsCash and cash equivalents 9 36 162 1,348Accounts receivable and prepaid expenses 10 – 2 8Advances to Associate 11 3 453 448Advances to Hinoba Holdings (Philippines), Inc. 120 – –

1111 1111 1111

159 617 1,804Current liabilitiesAccounts payable and accrued liabilities 12 – (39) (70)

1111 1111 1111

Net current assets 159 578 1,7341111 1111 1111

Total assets less current liabilities 159 730 2,0271111 1111 1111aaaa aaaa aaaa

Shareholder’s EquityCapital Stock 13 5 5 10Contributed surplus 180 815 2,924Deficit (26) (90) (907)

1111 1111 1111

159 730 2,0271111 1111 1111aaaa aaaa aaaa

113

CASH FLOW STATEMENTS


$’000 $’000 $’000

Cash flows from operating activitiesNet loss for the year (24) (64) (817)Items not involving cash –

Amortisation – – 1Foreign exchange – 2 5Stock based payments – – 452

1111 1111 1111

(24) (62) (359)1111 1111 1111

Net change in non-cash working capitalAccounts receivable – (1) 1Prepaid expenses – – (9)Accounts payable and accrued liabilities – (43) 31

1111 1111 1111

– (44) 231111 1111 1111

(24) (106) (336)1111 1111 1111

Investing activitiesInvestment in associate – – (60)Acquisition of tangible assets – – (1)Investment in subsidiary company – (77) (6)Investment in mineral exploration costs – (56) (4)Advance to subsidiary company prior to acquisition (73) (271) –Cash acquired in acquisition of subsidiary company – 1 1

1111 1111 1111

(73) (403) (70)1111 1111 1111

Financing activityContributions by a shareholder 39 635 1,592

1111 1111 1111

Net change in cash during the year (58) 126 1,186

Cash – beginning of year 94 36 1621111 1111 1111

Cash – end of year 36 162 1,3481111 1111 1111aaaa aaaa aaaa

114

STATEMENT OF CHANGES IN EQUITY

Capital Contributed Retained Shareholders’stock surplus deficit equity$’000 $’000 $’000 $’000

Balance at 1 January 2002 5 141 (2) 144Additional contributions of capital – 39 – 39Net loss for the year – – (24) (24)

1111 1111 1111 1111

Balance at 31 December 2002 5 180 (26) 159

Additional contributions of capital – 635 – 635Net loss for the year – – (64) (64)

1111 1111 1111 1111

Balance at 31 December 2003 5 815 (90) 730

Additional contributions of capital 5 2,109 – 2,114Net loss for the year – – (817) (817)

1111 1111 1111 1111

Balance at 31 December 2004 10 2,924 (907) 2,0271111 1111 1111 1111aaaa aaaa aaaa aaaa

115

NOTES TO THE FINANCIAL INFORMATION

1 Nature of operation

Hinoba Holdings was incorporated on 30 August 2001 in the Commonwealth of the Bahamasunder the International Business Companies Act 2000.

Hinoba Holdings, through its subsidiary Hinoba Holdings (Philippines), Inc. ("HHPI"), and itsinterests in Selenga Mining Corporation ("Selenga"), has a working interest in certain mineralproperties located in Negros Occidental of the Philippines, referred to as the Hinoba-an Project(the "Project"). All costs and expenses incurred, net of incidental revenues, are carried as mineralexploration costs to be amortized from the start of commercial operations. The recovery of thesemineral exploration costs is dependent upon future events and the success of future explorationand development, the outcome of which cannot be determined at this time.

Effective 1 August 1998, the Project has been in a "Care and Maintenance" status. Allexploration activities were suspended and personnel was reduced to a minimum number ofpeople to ensure protection of the core samples and equipment kept at the Assay Laboratory andCore Sheds. Sufficient technical expertise has been retained on a part time basis to ensurecompliance with the rules and regulations required by concerned government agencies so as toassure the validity of HHPI's rights to the mineral properties in the area.

Due to the suspension of the exploration activities in the Project and uncertainty related toappropriate government approval as described in Note 15, there are significant uncertainties thatmay affect the recoverability of mineral exploration costs incurred and advances made toSelenga.

As described in Note 18, Hinoba Holdings was acquired by the Company in January 2005.

2 Summary of significant accounting policies

These financial statements have been prepared in accordance with International FinancialReporting Standards (“IFRS”), including International Accounting Standards (“IAS”) andInterpretations issued by the International Accounting Standards Board.

The principal accounting policies adopted in the preparation of the consolidated financialinformation are set out below:

a) Basis of presentation

The consolidated financial statements have been prepared in accordance with InternationalGAAP for the first time. The consolidated financial statements of Hinoba Holdings for the threeyears ended 31 December 2004 represent the conversion of Hinoba Holdings’ financialstatements from accounting principles generally accepted in Canada to International GAAP.

The operating companies making up the Group maintain their accounting records in accordancewith Canadian and Philippine regulations. These financial statements have been prepared fromthose accounting records and adjusted as necessary in order to comply with InternationalGAAP. The financial information has been prepared in accordance with International GAAPspecifically for inclusion in this report. The financial information does not include thedisclosures required by IFRS 1 concerning the transition from Canadian GAAP to InternationalGAAP.

The preparation of financial statements in conformity with International GAAP requires the useof certain critical accounting estimates. It also requires management to exercise its judgement inthe process of applying the Group’s accounting policies.

116

b) Translation to the presentation currency

The consolidated financial information is presented in US Dollars, which is considered bymanagement to be the most appropriate presentation currency for its consolidated financialinformation.

For current year figures all assets and liabilities are translated at the closing rate existing at thebalance sheet date. Income and expense items are translated at an average rate for the period.Equity items other than the net profit or loss for the period that is included in the balance ofaccumulated profit or loss are translated at the closing rate existing at the balance sheet date.

For comparative figures all assets and liabilities are translated at the closing rate existing at therelevant balance sheet date. Income and expense items are translated at an average rate for theperiod. Equity items other than the net profit or loss for the period that is included in the balanceof accumulated profit or loss are translated at the closing rate existing at the previous balancesheet date.

c) Basis of consolidation

The consolidated financial statements include the accounts of Hinoba Holdings and its whollyowned subsidiary companies, HHPI and Copper Spur and the company that HHPI controls,Hinoba-an & Sipalay Holdings, Inc (“HSHI”).

On acquisition and when control is achieved, the assets and liabilities and contingent liabilitiesof a subsidiary are measured at their fair values at the date of acquisition or at the date controlis achieved. Any excess of the cost of acquisition over the fair values of the identifiable net assetsacquired is recognised as goodwill.

The results of subsidiaries acquired or disposed of during the year are included in theconsolidated income statement from the effective date of acquisition or up to the effective dateof disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries in order tobring the accounting policies in line with those adopted by the Group.

All significant intra-group transactions and balances between the Group’s companies areeliminated on consolidation.

d) Segment reporting

A business segment is a group of assets and operations engaged in providing products or servicesthat are subject to risks and returns that are different from those of other business segments. Ageographical segment is engaged in providing products or services within a particular economicenvironment that are subject to risks and returns that are different from those of segmentsoperating in other economic environments.

e) Mineral Exploration Costs

Expenditures for mineral exploration work prior to and subsequent to drilling are deferred asincurred. These shall be written off if the results of the exploration work are unsuccessful. If theresults are successful, the deferred expenditures and the subsequent development cost will becapitalized and amortized from the start of commercial operations.

f) Foreign Currency Translation

Transactions occurring in a subsidiary of Hinoba Holdings, HHPI, were denominated primarilyin Philippine Pesos. Management is of the opinion that these operations were integrated foreignoperations for purposes of foreign currency translation and, accordingly, the accounts have beentranslated into US Dollars.

117

Transactions in currencies other than US Dollars are recorded at the rates of exchange prevailingon the dates of the transactions or translated at the average exchange rates for the period.Exchange differences resulting from the settlement of transactions denominated in foreigncurrency are included in the statement of income using the exchange rate ruling on that date.

At each balance sheet date, monetary assets and liabilities that are denominated in foreigncurrencies are retranslated at the rates prevailing on the balance sheet date. Foreign currencygains and losses arising from the translation of assets and liabilities are reflected in the profit andloss account as foreign exchange translation gains less losses.

Fair value adjustments arising on the acquisition of a foreign entity are treated as assets andliabilities of the foreign entity and translated at the closing rate.

The exchange rates used are as follows:

US Dollar exchange rate

($ / Peso)

As at 31 December2004 56.372003 55.762002 N/a

Average rate for the year ended 31 December2004 56.052003 55.422002 N/a

g) Equipment

Equipment is carried at cost less accumulated amortization and any impairment in value.

Amortization is computed using the straight line method over the estimated useful lives of theequipment ranging from three to five years.

h) Income Taxes

Taxation has been provided for in the financial statements in accordance with relevant legislationcurrently in force. The charge for taxation in the income statements comprise current tax andchanges in deferred tax. Current tax is calculated on the basis of the taxable profit for the year,using the tax rates in force at the balance sheet date.

Hinoba Holdings has provided for future income taxes using the balance sheet approach. Futureincome tax assets and liabilities are computed annually for temporary differences between thefinancial statements and tax bases for assets and liabilities as well as for the benefit of tax lossesavailable to be carried forward to reduce taxable income in future years that are likely to berealized. Future tax assets and liabilities are calculated using enacted tax laws and ratesapplicable to the periods in which the differences are expected to affect taxable income. Avaluation allowance is provided when some or all of the future tax asset is not expected to berealized in the future.

i) Stock based compensation

The Group has applied the requirements of IFRS 2 Share-based Payments. In accordance withthe transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7November 2002 that had not vested as at 1 January 2005.

Share-based payments are measured at fair value at the date of grant. The fair value determinedat the grant date is expensed when the options vest. Options vest immediately.

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Fair value is measured by use of the Black–Scholes model. The expected life used in the modelhas been adjusted, based on management's best estimate, for the effects of non-transferability,exercise restrictions, and behavioural consideration.

j) Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cashflow statement, cash and cash equivalents comprise cash on hand, deposits held at call withbanks and other unrestricted short-term deposits with original maturities of three months orless.

k) Investments in associates

An associate is an entity over which Hinoba Holdings is in a position to exercise significantinfluence, but not control, generally accompanying a shareholding of between 20% and 50% ofthe voting rights.

Investments in associates are accounted for using the equity method of accounting. Investmentsin associates are carried in the balance sheet at cost as adjusted by post-acquisition changes inthe company’s share of the net assets of the associate, less any impairment in the value ofindividual investments. Losses of the associates in excess of the company’s interest in thoseassociates are not recognised.

l) Financial Instruments

The carrying value of accounts receivable and accounts payable and accrued liabilitiesapproximates fair value due to the relatively short term maturity of these instruments. Fair valuerepresents the amount that would be exchanged in an arm's length transaction between willingparties and is best evidenced by a quoted market price. Fair value information about relatedparty advances is not readily obtainable.

3 Segmental analysis

The Group has only one reporting segment. It is engaged in one activity, being a miningexploration company and its operations to date have been conducted in one geographicallocation.

4 Income tax expense

Income tax comprises the following:


$’000 $’000 $’000

Current tax - – –

Deferred tax – – –1111 1111 1111

Income tax for the year – – –1111 1111 1111aaaa aaaa aaaa

119

The income tax charges can be reconciled to the loss in the income statement as follows:


$’000 $’000 $’000

Loss before tax (24) (64) (817)

Tax calculated at domestic tax rates applicable to losses in the relevant countries (8) (20) (261)

Unutilised losses 8 20 2611111 1111 1111

Tax charge – – –1111 1111 1111aaaa aaaa aaaa

The weighted average applicable tax rate was 32% (2003: 32%, 2002: 32%). The charge is basedon the changes in losses of the companies consolidated in the financial results in the respectivecountries.

The Group did not record a future income tax asset for the three years ended 31 December 2002,2003 and 2004 due to the uncertainty of their future realization.

The tax effects of HHPI's temporary differences that would give rise to significant portions ofthe future tax asset at 31 December 2002, 2003 and 2004 were as follows:


$’000 $’000 $’000

Future income tax assetsNet operating losses carried forward – 89 95Unrealized foreign exchange loss – 1,006 1,039

1111 1111 1111

– 1,095 1,134Less: Valuation allowance – 1,095 1,134

1111 1111 1111

Net future income tax asset – – –1111 1111 1111aaaa aaaa aaaa

5 Investments

Associated undertakings

$’000

Cost1 January 2002 and 31 December 2002 –

Additions 181111

As at 31 December 2003 18

Additions 601111

As at 31 December 2004 781111aaaa

Associated undertakings represent Hinoba Holdings’ share holding in Selenga MiningCorporation (“Selenga”), a company incorporated in the Philippines. Hinoba Holdings, throughits subsidiary, holds 40% of the voting rights in Selenga. On 13 January 2004, HHPI paid$60,000 to enter into an assignable option to purchase agreement allowing it the option toacquire 59.6% of the shares outstanding in Selenga for a purchase price of $150,000. This optionwas exercised on 15 January 2005 (note 18).

Selenga is engaged in the business of exploration and mining of copper and other minerals. Asat 31 December 2004, Selenga had yet to commence commercial operations.

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6 Subsidiaries

At 31 December 2004, Hinoba Holdings had the following subsidiaries:

Ownership Name of company Place of incorporation interest Principal activity

Philippines 100% Mineral exploration anddevelopment

Colorado, USA 100% Mining exploration

Hinoba Holdings acquired HHPI in October 2003. The results of operations are included inthese financial statements from the date of acquisition. Details of the acquisition are as follows:

$’000

Net assets acquired – at fair valuesNet working capital (including cash of $810) (81)Intangible assets 78Investment in Selenga 18Advances to Selenga 452Tangible fixed assets 2Payable to Hinoba Holdings (392)

1111

Net assets acquired 771111aaaa

Consideration given – at fair valueCash 77

1111aaaa

On 30 June 2004, Hinoba Holdings acquired 600,000 common shares of Copper Spur,representing 100% of the outstanding shares. The results of operations are included in thesefinancial statements from the date of acquisition. Details of the acquisition are as follows:

$’000

Net assets acquired – at fair valuesCash 1Intangible assets 76

1111

Net assets acquired 771111aaaa

Consideration given – at fair valueCash 6Stock options 33Notional shares in Hinoba Holdings 38

1111

771111aaaa

On 18 November 2004, HHPI acquired 1,000 Class A shares of HSHI, representing 40% of theoutstanding shares. Although HHPI owns 40% of the outstanding shares, the nature of theownership provides HHPI with effective control of operations. The results of operations havebeen included in the financial statements from the date of incorporation. As HHPI was one ofthe founding shareholders there was no acquisition of net assets.

Copper Spur MiningCorporation

Hinoba Holdings(Philippines), Inc

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7 Intangible assets

Mineral exploration

costs$’000

1 January 2002 and 31 December 2002 –

Additions 1331111

As at 31 December 2003 133

Additions 801111


8 Tangible assets

Transportation equipment

$’000

Cost1 January 2002 and 31 December 2002 –Additions 18

1111

As at 31 December 2003 18Additions 1

1111


Accumulated amortisation1 January 2002 and 31 December 2002 –Additions 17

1111

As at 31 December 2003 17Charge for the year –

1111


Net book value

At 31 December 2002 –1111aaaa

At 31 December 2003 11111aaaa

At 31 December 2004 21111aaaa

9 Cash and cash equivalents


$’000 $’000 $’000

Bank – in US Dollars 36 162 1,3481111 1111 1111aaaa aaaa aaaa

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10 Accounts receivable and prepaid expenses


$’000 $’000 $’000

Accounts receivable – 2 –Prepaid expenses – – 8

1111 1111 1111

– 2 81111 1111 1111aaaa aaaa aaaa

11 Advances to associate

This loan advanced to Selenga is non interest bearing and has no scheduled repayment terms.

12 Accounts payable and accrued liabilities


$’000 $’000 $’000

Accruals – 39 701111 1111 1111

– 39 701111 1111 1111aaaa aaaa aaaa

13 Capital stock


$’000 $’000 $’000

Authorized – Unlimited number of Ordinary Shares with $1 par value

Issued – 10,000 (2003: 5,000; 2002: 5,000) Ordinary Shares 5 5 10

1111 1111 1111aaaa aaaa aaaa

The 10,000 ordinary shares of Hinoba Holdings are equally held by two nominee companies,Elco (Nominee) Limited and Elco (Trustee) Limited. These are held in trust for the beneficialowners of Hinoba Holdings. The interest of each of the beneficial owners of the company isrecognised through the granting of notional shares in the company. The excess of amountsinvested by the beneficial owners over the stated legal capital has been recorded as contributedsurplus.

At 31 December 2004, the company had received $2,362,000 (2003: $820,000, 2002: $185,000),net of transaction costs, from the beneficial owners in exchange for total shares outstanding of9,094,600 (2003: 5,224,600, 2002: 2,525,000) notional shares in the company. In addition, duringthe year ended 31 December 2004 the company granted 1,512,000 (2003: nil; 2002: nil) notionalshares in exchange for advisory services with a value of $378,000 and 150,000 notional shares(2003: nil; 2002: nil) as part of the consideration for the acquisition of Copper Spur.

Share options

On 30 June 2004, the company established an option plan, under which the company may grantoptions to purchase notional shares to its employees, officers, directors or consultants. Optionsissued under the plan are non-assignable, except for limited circumstances. Under the plan, theexercise price of each option is determined by the board on the date of grant and the optionsmust be exercised no later than 5 years after the date of grant. Options vest immediately.

On 1 July 2004, the company issued 975,000 options under the option plan. These options havean exercise price of $0.25 and expire at the earlier of 3 years after the company is publicly listed

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or 30 June 2009. Management has estimated fair value of these options to be $0.11 per option,totalling $107,000. The value of these options was determined using the Black-Scholes optionpricing model with assumptions of the risk free rate of 3.5%, the term of 4 years, stock value attime of granting of $0.25 and volatility of 50%. The total value of $107,000 was recorded incontributed surplus. $33,000 was attributed to the investment in Copper Spur and $74,000 wasattributed to advisory expense.

14 Related party transactions

In the normal course of business, 150,000 notional shares were given to a director, or a companycontrolled by a director, in the year ended 31 December 2004 (2003: nil, 2002: nil) asconsideration for advisory services. The value assigned to these notional shares was $38,000.These transactions are measured at the exchange amount, which is the amount of considerationestablished and agreed by the related parties.

15 Contingencies

To assure the validity of the mineral rights of Hinoba Holdings, a Mineral Production SharingAgreement (“MPSA”) was filed by Colet Mining and Development Corporation (“Colet”) on 2September 1997. Under a compromise agreement dated 29 September 1998, Colet is obligated totransfer or assign its MPSA in favour of HHPI’s designated nominee, Selenga.

As at 28 February 2005, all documents required in relation to the application for the MPSA havebeen lodged and the application will be forwarded for approval by the secretary of theDepartment of Environment and Natural Resources.

16 Currency analysis note

This note was prepared for the year ended 31 December 2002

Philippine TotalUS Dollars Pesos 2002

$’000 $’000 $’000

AssetsCurrent assets

Cash and cash equivalents 36 – 36Advances to associate – 3 3Advances to HHPI 120 – 120

1111 1111 1111

156 3 1591111 1111 1111aaaa aaaa aaaa

124



$’000 $’000 $’000

AssetsNon-current assets

Investments – 18 18Intangible assets – 133 133Tangible assets – 1 1

Current assetsCash and cash equivalents 162 – 162Accounts receivable and prepaid expenses 2 – 2Advances to associate – 453 453

1111 1111 1111

164 605 7691111 1111 1111aaaa aaaa aaaa

LiabilitiesCurrent liabilities

Accounts payable and accrued liabilities 37 2 391111 1111 1111aaaa aaaa aaaa



$’000 $’000 $’000

AssetsNon-current assets

Investments 60 18 78Intangible assets 80 133 213Tangible assets – 2 2

Current assetsCash and cash equivalents 1,348 – 1,348Accounts receivable and prepaid expenses 8 – 8Advances to associate – 448 448

1111 1111 1111

1,496 601 2,0971111 1111 1111aaaa aaaa aaaa

LiabilitiesCurrent liabilities

Accounts payable and accrued liabilities 67 3 701111 1111 1111aaaa aaaa aaaa

17 Royalty commitments

On 17 December 2004, Selenga entered into an Integrated Mining and Operating Agreement(“IMOA”) with Colet in order to rationalise and govern their relationship with respect to mineralproperties and consolidate the terms of the Operating Agreement dated 7 December 1991 and aRoyalty Reduction Agreement dated 8 December 2003.

Under the terms of the IMOA, Selenga is committed to pay a 3% net benefits royalty to Coletin relation to the Project. Further, Selenga is committed to pay Colet $48,000 upon the transferof the MPSA to Selenga. Selenga is also committed to pay Colet $105,000 upon completion ofa bankable feasibility study. If the bankable feasability study is not completed by 17 December2006, Selenga shall pay Colet $52,500 upon demand, with the remaining $52,500 to be paid uponcompletion of the bankable feasibility study.

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On or before the date of filing a bankable feasibility study, Selenga has the option to reduce the3% net benefits royalty to 2%. In consideration for reducing the royalty, Selenga must pay toColet $2,000,000. At the election of Selenga, an amount up to $600,000 of the $2 millionpayment can be satisfied by the issuance of shares of the listed company. This 2% net benefitsroyalty may be bought out by Selenga for $6 million to be satisfied with cash of $4 million and$2 million by the issuance of shares of the listed company. In the event that Selenga buys out theremaining 2% net benefits royalty of Colet, then Colet shall be liable to repay Selenga $1 millionout of the $2 million advance paid in consideration of reducing the net benefits royalty.

Colet is also entitled to 7.5% of the outstanding par value capital stock of Selenga. Selenga is toadvance to Colet the funds needed to pay for their subscriptions. This advance will reduce thefuture net benefit royalties owing to Colet.

18 Subsequent events

On 11 January 2005, Hinoba Holdings executed a buy and sell agreement whereby 100% of theoutstanding shares and options of Hinoba Holdings were to be acquired by the Company inexchange for 10,756,600 common shares in the Company and 975,000 options of the Companyat an exercise price of $0.25, expiring 19 January 2010. On the same date, the Company cancelledthe outstanding options in Hinoba Holdings.

On 15 January 2005, HHPI exercised the assignable option dated 13 January 2004. HHPIassigned its interest in Selenga to HSHI on 15 January 2005. As a result of the above assignmentHSHI owns 92.5% of Selenga, with the remaining 7.5% interest held by Colet.

On 28 January 2005, the Company became the registered holder of 100% of the outstandingshares of Copper Spur that were previously held by Hinoba Holdings.

19 Nature of financial information

The financial information presented above in respect of the three years ended 31 December 2004does not constitute statutory accounts for each of the years. In respect of the statutory accountsfor the three years to 31 December 2004, Smith, Nixon & Co. LLP, Chartered Accountants havemade an unqualified report.

20 Consent

We consent to the inclusion of this report in the Admission Document dated 14 April 2005 andaccept responsibility for this report for the purposes of paragraph 45 of Schedule 1 to the PublicOffers of Securities Regulations 1995.

Yours faithfully

Baker TillyChartered AccountantsRegistered Auditor

126

PART 5

ADDITIONAL INFORMATION

1 Incorporation

The Company was incorporated on 25 November 2004 in the British Virgin Islands under theInternational Business Companies Act 2000 with registration number 626550 under the nameCopper Resources Corporation.

The Company’s registered office is at Craigmuir Chambers, PO Box 71, Road Town, Tortola,British Virgin Islands.

The Company’s correspondence address is 330 Bay Street, Suite 820, Toronto, Ontario M5H2S8, Canada.

The liability of the members of the Company is limited.

2 Subsidiary undertakings

The Company has two wholly-owned subsidiaries.

Hinoba Holdings Ltd was incorporated in the Commonwealth of the Bahamas on 30 August2001 under the International Business Companies Act 2000 of the Bahamas. The current soledirector of Hinoba Holdings is Elia Crespo. The registered office of Hinoba Holdings is at Suite61, Grosvenor Close, Shirley Street, Nassau, Bahamas.

Copper Spur Mining Corporation was incorporated in the state of Colorado in the UnitedStates on 14 May 2004 under the laws of Colorado. The current directors are James Frank andElia Crespo. The registered office of Copper Spur is 7773 South Oneida Court, Centennial,Colorado 80112, United States.

3 Share Capital

3.1 The Company is authorised to issue up to 500,000,000 Common Shares.

3.2 On incorporation, the Memorandum of Association stated that the Company was authorised toissue one class and one series of shares divided into 50,000 shares of $1.00 par value.

On 1 April 2005, the Memorandum was amended so that the Company was authorised to issueup to 500,000,000 shares of one class and one series of no par value.

3.3 The issued share capital (in every case the shares being fully paid) at the date of this documentis 23,756,600 Common Shares.

3.4 Immediately following the Placing and Admission, the issued share capital of the Company willbe 27,756,600 Common Shares.

3.5 Immediately following the Placing and Admission, there will be 2,628,175 Options outstanding,see paragraph 5 of this Part 5.

4 Memorandum and Articles of Association

4.1 The Memorandum of Association

The Memorandum provides, inter alia, that:

(i) the registered office of the Company is at Craigmuir Chambers, PO Box 71, Road Town,Tortola, British Virgin Islands;

(ii) the main object of the Company is to engage in any act or activity that is not prohibitedunder any law for the time being in force in the British Virgin Islands;

127127

(iii) the shares in the Company will be issued in the currency of the United States of America;

(iv) the Company has no authorised capital;

(v) the Company is authorised to issue up to 500,000,000 shares of one class and one seriesof no par value; and

(vi) the Company may amend its Memorandum of Association and Articles of Association bya resolution of members.

4.2 The Articles of Association

The Articles contain, inter alia, provisions to the following effect:

4.2.1 Voting

Subject to any special terms as to voting on which any shares may have been issued or mayfrom time to time be held, at a meeting of the members every member who is present inperson or by proxy (including any corporation present by its duly authorisedrepresentative) shall have one vote for each share of which he is a holder. In the case ofjoint holders, the vote of the senior who tenders a vote, whether in person, by proxy orduly authorised representative, shall be accepted to the exclusion of the votes of the otherjoint holders.

4.2.2 Dividends

All shares have the same rights with regard to dividends. Subject to the provisions of theBVI Companies Act and of the Articles, the Company may by resolution of Directorsdeclare dividends to be paid to members in money, shares, or other property, but dividendsshall only be declared and paid out of surplus.

Subject to the provision of the BVI Companies Act, the Board may declare and pay suchinterim dividends as appears to the Board to be justified by the profits of the Companyavailable for distribution.

All dividends unclaimed for a period of three years after having been declared shall (if theBoard so resolves) be forfeited by resolution of the Directors for the benefit of theCompany.

4.2.3 Transfer of shares

Every member may transfer all or any of his shares by instrument of transfer in writing inany usual form or in any form approved by the Board. Such instrument must be signed byor on behalf of the transferor containing the name and address of the transferee. Thetransferor is deemed to remain the holder until the transferee’s name is entered in theregister of members.

The Board may refuse to register any transfer of a share or renunciation of a renounceableletter of allotment unless:

(a) it is in respect of only one class of shares;

(b) it is in favour of not more than four joint transferees;

(c) it is duly stamped (if so required); and

(d) it is delivered for registration to the registered office for the time being of theCompany or such other place as the Board may from time to time determine,accompanied (except in the case of a transfer by a recognised person (as defined inthe Articles) where a certificate has not been issued or in the case of a renunciation)by the certificate for the shares to which it relates and such other evidence as the

128

Board may reasonably require to prove the title of the transferor or personrenouncing and the due execution of the transfer or renunciation by him or, if thetransfer or renunciation is executed by some other person on his behalf, theauthority of that person to do so.

4.2.4 Redemption, purchase or acquisition

Shares may be subject to redemption, purchase or acquisition by the Company at a pricelower than the fair value if permitted by the Memorandum and Articles or by writtenagreement.

4.2.5 Borrowing powers

The Board may exercise all the powers of the Company to borrow money and to mortgageor charge all or any part of its undertaking and property or any part thereof to issuedebentures, debenture stock and other securities, whether money is borrowed or assecurity for any debt, liability or obligation of the Company or of any third party.

4.2.6 Changes in capital

Subject to the provisions of the BVI Companies Act and any resolution of members, theBoard may, by resolution from time to time increase its share capital, consolidate,combine all or any of its share capital into shares of a larger amount and divide all or anyof its share capital into shares of smaller amount. The Company may also, subject to theprovisions of the BVI Companies Act and to any rights for the time being attached to anyshares, purchase, redeem or otherwise acquire its own shares and reduce its issued sharecapital in any way.

4.2.7 Issue of shares

Subject to the BVI Companies Act the unissued shares at the date of adoption of theArticles and any shares created thereafter shall be at the disposal of the Board.

4.2.8 Remuneration of directors

Each of the Directors shall be paid a fee at such rate as may from time to time bedetermined by the Board provided that the aggregate for such fees paid to the Directors(excluding amounts payable under any other Article and any amount payable under anyservice contract) shall not exceed $1,000,000 per annum, or such higher amount as mayfrom time to time be determined by resolution of members.

Each Director may be paid his reasonable travelling, hotel and incidental expenses ofattending and returning from meetings of the Board or committees of the Board ormeetings of members or separate meetings of the holders or any part or series of sharesor of debentures of the Company and shall be paid all expenses properly and reasonablyincurred by him in the conduct of the Company’s business or in the discharge of his dutiesas a Director. Any Director who, by request, goes or resides abroad for any purpose of theCompany or whose performance of services, in the opinion of the Board goes beyond theordinary duties of a Director may be paid such extra remuneration (whether by way ofsalary, commission, participation in profits or otherwise) as the Board may determine.

4.2.9 Directors’ interests in contracts

No agreement or transaction between the Company and one or more Directors or anypersons in which any Director has a financial interest or to whom any Director is related,including as a director of that other person, is void or voidable for this reason only or byreason only that the Director is present at the meeting of Directors or at the meeting ofthe committee of Directors approving the agreement or transaction or that the vote orconsent of the Director is counted for the purpose if the material facts of the interest of

129

each Director in the agreement or transaction and his or her interest in or relationship toany other party to the agreement or transaction are disclosed in good faith or are knownby the other Directors.

A Director who has an interest in any particular business to be considered at a meeting ofDirectors or members may be counted for the purposes of determining whether themeeting is duly constituted.

4.2.10 Number of directors

The minimum number of Directors shall be two and the maximum number shall be ten.

4.2.11 Directors’ appointment and retirement by rotation

Without prejudice to the power of a meeting of members to appoint any person to be aDirector, the Board shall have power at any time and from time to time to appoint anyperson to be a Director, either to fill a vacancy or as an addition to the existing Board.Any Director so appointed by the Board shall hold office only until the earlier to occur ofthe close of the next following annual meeting of members and someone being appointedin his stead at that meeting. Such a Director shall be eligible for re-election at that meetingbut shall not be taken into account in determining the Directors or the number ofDirectors who are to retire by rotation at such meeting.

At every annual meeting of members one third of the Directors for the time being, if theirnumber is not a multiple of 3, then the number nearest to and not exceeding one third,shall retire from office.

The Directors to retire on each occasion shall be those subject to retirement by rotationwho have been longest in office since their last election, but as between persons whobecame or who were re-elected Directors on the same day those to retire shall (unless theyotherwise agree amongst themselves) be determined by lot. The Directors to retire on eachoccasion both as to number and identity shall be determined by the composition of theBoard at the date of the notice convening the annual meeting of members, and noDirector shall be required to retire or be relieved from retiring by reason of any change ofthe number or identity of the Directors after the date of such notice but before the closeof the meeting.

A Director who retires at the annual meeting of members shall be eligible for re-election.If he is not re-elected he shall retain office until the meeting appoints someone in his place,or if it does not do so, until the end of the meeting.

Subject to the provisions of the Articles, the Company may, by a resolution of members,have a meeting at which a Director retires and may fill the vacated office by electing aperson and in default the retiring Director shall, if willing to act, be deemed to have beenre-elected, unless at such meeting it is expressly resolved not to fill such vacated office orunless a resolution for the re-election of such Director shall have been put to the meetingand lost.

4.2.12 Untraced Shareholders

When the registered address of a member appears to the Board to be incorrect or out ofdate such member may, if the Board so resolves, be treated as if he had no registeredaddress and thereafter the Company is not obliged to send cheques, warrants, notices ofmeetings or copies of the documents referred to in the Articles to that member. No suchresolution shall be proposed unless cheques or warrants sent to the registered address ofsuch member have been returned by the postal services or left uncashed on at least twoconsecutive occasions or, following one such occasion, reasonable enquiries have failed toestablish any new address of such member.

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If for a period of 12 years at least three dividends have become payable and no cheque orwarrant for such dividend has been cashed and no communication has been received fromthe member (or any person entitled to the member’s shares by transmission), the Companymay sell such shares at the best reasonably obtainable price if, after giving notice in aleading national newspaper and a newspaper circulating in the region of the member’sregistered address, it has not had any communication from the member (or anyone entitledto his shares by transmission) at the end of the three month period beginning on the dateof the notice in the newspapers referred to above.

4.2.13 CREST

The Articles are consistent with membership of CREST and allow for the holding andtransfer of shares in uncertificated form.

4.2.14 City Code

Except with the consent of the Board, when:-

(a) any person acquires, whether by a series of transactions over a period of time ornot, shares which (taken together with shares held or acquired by persons acting inconcert with him) carry 30 per cent or more of the voting rights of the Company;or

(b) any person who, together with persons acting in concert with him, holds not lessthan 30 per cent but not more than 50 per cent of the voting rights and such person,or any person acting in concert with him, acquires additional shares which increasehis percentage of the voting rights;

such person (“the offeror”) shall extend an offer, on the basis set out in the Articles andsummarised below, to the holders of all the issued shares in the Company.

Any such offer must be conditional only upon the offeror having received acceptances inrespect of shares which, together with shares acquired or agreed to be acquired before orduring the offer, will result in the offeror and any person acting in concert with it holdingshares carrying more than 50 per cent of the voting rights.

No acquisition of shares which would give rise to a requirement for any offer under theArticles may be made or registered if the making or implementation of such offer wouldor might be dependent on the passing of a resolution at any meeting of shareholders ofthe Company or upon any other conditions, consents or arrangements.

Any such offers must, in respect of each class of share capital involved, be in cash or beaccompanied by a cash alternative at not less than the highest price paid by the offeror orany person acting in concert with it for shares of that class during the offer period andwithin 12 months prior to its commencement. The cash offer or the cash alternative mustremain open after the offer has become or is declared unconditional as to acceptances fornot less than 14 days after the date on which it would otherwise have expired.

Any offer required to be made pursuant to the Articles shall be made on terms that wouldbe required by the then current United Kingdom City Code on Takeovers and Mergers(“the City Code”), save to the extent that the Board otherwise determines. In relation toany such offer, any matter which under the City Code would fall to be determined by thePanel shall be determined by the Board in its absolute discretion or by such personappointed by the Board to make such determination.

Except with the consent of the Board, members shall comply with the requirements of theCity Code and the Rules Governing Substantial Acquisitions of Shares (“the SARS”), asmay from time to time be published by the United Kingdom Panel on Takeovers andMergers, in relation to any dealings in any shares of the Company and in relation to their

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dealings with the Company in relation to all matters. Any matter which under the CityCode or the SARS would fall to be determined by the Panel shall be determined by theBoard in its absolute discretion or by such person appointed by the Board to make suchdetermination. Any notice which under the City Code or the SARS is required to be givento the Panel or any person (other than the Company) shall be given to the Company at theoffice.

If at any time the Board is satisfied that any member having incurred an obligation underthe Articles to extend an offer to the holders of all the issued shares in the Company shallhave failed so to do, or that any member is in default of any other obligation imposedupon members pursuant to the relevant Article, then the Board may, in its absolutediscretion at any time thereafter by notice (a “direction notice”) to such member and anyother member acting in concert with such member (together “the defaulters”) direct that:

(a) in respect of the shares held by the defaulters (the “default shares”) the defaultersshall not be entitled to vote at a general meeting either personally or by proxy or toexercise any other right conferred by membership in relation to meetings of theCompany;

(b) except in a liquidation of the Company, no payment shall be made of any sums duefrom the Company on the default shares, whether in respect of capital or dividendor otherwise, and the Company shall not meet any liability to pay interest on anysuch payment when it is finally paid to the member;

(c) no other distribution shall be made on the default shares.

The Board may at any time give notice cancelling a direction notice.

5 Share Option Scheme and Other Options

5.1 The Company has established a share option scheme whereby the Directors may from time totime at their discretion grant to the Directors, employees and consultants of the Group Optionsto subscribe for Common Shares. The rules of the scheme specify that:

• the subscription price of such Options shall not be less than the applicable market valueof the Common Shares at the date of grant of the relevant Option;

• the number of Common Shares over which Options may be granted is limited to 10 percent of the total Common Shares then in issue; and

• an Option is exercisable on the date it is granted and expires on the fifth anniversary ofthe grant date.

The total number of Options granted under the Share Option Scheme at present is 320,000.

5.2 In addition to Options granted under the Share Option Scheme, there are outstanding thefollowing Options in the Company:

5.2.1 375,000 Options in the Company that are exercisable until 19 January 2010 with anexercise price of $0.25 per share;

5.2.2 1,325,000 Options in the Company that are exercisable until 13 February 2010 with anexercise price of $1.00 per share;

5.2.3 On Admission, the Company will grant to NWCF LLP 208,175 assignable Options at thePlacing Price, exercisable at any time up to three years from Admission; and

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5.2.4 On Admission, the Company will grant to ODL Securities 400,000 assignable Options atthe Placing Price, exercisable at any time up to 18 months from Admission.

6 Directors’ and other interests

6.1 The interests of the Directors (all of which are beneficial unless otherwise stated) and (so far asis known to the Directors or could with reasonable diligence be ascertained by them) personsconnected with the Directors within the meaning of section 346 of the Act (a “connectedperson”) in the issued share capital of the Company as at 13 April 2005, being the latestpracticable date prior to the publication of this document and which, if the Company weresubject to the Act, would be required to be notified to the Company pursuant to sections 324and 328 of the Act or shown in the register maintained under section 325 of the Act, will be asfollows:

No. of Common Per cent of issuedDirector Shares held share capital Options

Mitchell Alland – – 50,000(1)

Christopher Jordinson 227,333(4) 1.0% 100,000(1)

150,000(2)

75,000(3)

Elia Crespo – – 50,000(1)

James Frank 100,000 0.4% 100,000(2)

100,000(3)

Rebecca Taylor – – 20,000(1)

Notes:

(1) granted under the Share Option Scheme (see paragraph 5.1 of Part 5)

(2) exercisable at $1.00 per share, expiry date of 13 February 2010 (see paragraph 5.2.2 of Part 5)

(3) exercisable at $0.25 per share, expiry date of 19 January 2010 (see paragraph 5.2.1 of Part 5)(4) of these 127,333 Common Shares are registered in the name of RMG Group, on trust for Mr. Jordinson

6.2 Following the Placing, it is believed that the following persons will be interested in 3 per cent ormore of the Common Share capital of the Company:

No. of Common Per cent of issuedName Shares held share capital

Millennium Global High Yield Fund Limited 2,500,000 9.0%Angstrom Capital Ltd. 2,240,334 8.1%The Magma Fund Limited 2,000,000 7.2%Société Privée de Gestion de Patrimoine 1,900,000 6.8%L-R Global Partners LP 1,440,000 5.2%Consilium Treuhand AG (as Trustee of Coe Trust) 1,267,557 4.6%Deutsche Bank Nederland AG 1,265,000 4.6%Forest Nominees Limited 1,250,000 4.5%RAB Capital PLC 1,220,000 4.4%GLS Capital Management LLC 1,166,000 4.2%Baker Street Capital Management 1,092,000 3.9%L-R Global Fund Ltd. 960,000 3.5%Trinity Fund Ltd. 950,000 3.4%

Save as disclosed in this paragraph 6, and in so far as the Company has the information, theDirectors are not aware of any person or persons who, either alone or, if connected, jointlyfollowing the completion of the Placing will (directly or indirectly) exercise or could exercisecontrol over the Company.

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7 Additional information on the Directors

7.1 Other than a directorship of the Company and the Subsidiaries, the directorships andpartnerships of the Directors currently held and directorships and partnerships held by themover the five years preceding the date of this document are as follows:

Director Current directorships/partnerships Past directorships/partnerships

Mitchell Alland None None

Chris Jordinson Australian Diatomaceous Earth NonePty LimitedADE Management Pty LimitedADE Marketing Pty LimitedADE Environmental Pty LimitedADE Technology Pty LimitedJabula Consulting Pty LimitedZinc and Copper Corporation ofAustralia Limited

Elia Crespo 1171777 Ontario Limited Grande Portage Resources Ltd.Rio Skyline A.V.V. High American GoldCabo Frio Investments A.V.V.EQ Resources Ltd.

James Frank JDF Consulting LLC NoneCactus Precious Metals LLCMarathon PGM CorporationNorthwest Mining Association

Rebecca Taylor None The Croesus Africa Fund LimitedThe Croesus Africa Fund SAUFG Croesus Advisors LimitedCroesus-UFG Vantage Fund SACroesus-UFG Vantage Fund LimitedCroesus Central European CorporateRestructuring Fund SACroesus Central European CorporateRestructuring Fund LimitedCroesus EMTR Fund SAThe Croesus Emerging MarketsIncome Fund LimitedThe Croesus Emerging MarketsIncome Fund SACroesus-UFG Russia Fund SACroesus Emerging Markets ResourcesFund SACroesus Emerging Markets ResourcesFund LLCMIR Management LimitedUCAV Asset Management LimitedCroesus Central European SecuritiesFund SACroesus Central European SecuritiesFund LimitedAfrican Assets LimitedSelect Capital LimitedCroesus Hedge Investments LimitedEquator Exploration Limited

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7.2 As at the date of this document none of the Directors has, or has been involved in:

(a) any unspent convictions in relation to indictable offences;

(b) any bankruptcies or individual voluntary arrangements;

(c) any receiverships, compulsory liquidations, creditors voluntary liquidations,administrations, company voluntary arrangements or any composition or arrangementwith its creditors generally or any class of its creditors of any company where suchDirector was a director at the time of or within the twelve months preceding such events;

(d) any compulsory liquidations, administrations or partnership voluntary arrangements ofany partnerships where such Director was a partner at the time of or within the twelvemonths preceding such events;

(e) receiverships of any asset of such Director or of a partnership of which the Director wasa partner at the time or within the twelve months preceding such events; and

(f) any public criticisms of such Director by statutory or regulatory authorities (includingrecognised professional bodies), or been disqualified by a court from acting as a directorof a company or from acting in the management or conduct of the affairs of any company.

8 Directors’ Service Contracts and Emoluments

8.1 The following agreements have been entered into by the Directors and the Company:

(a) Mr. Alland entered into a service agreement with the Company on 4 April 2005. Theprincipal terms of which are that his employment under this service agreementcommenced on 4 April 2005, he is entitled to a salary of $60,000 per annum and his serviceagreement is terminable on three months’ notice either way. Mr. Alland has been grantedOptions over 50,000 Common Shares pursuant to the Share Option Scheme.

(b) Mr. Jordinson entered into a service agreement with the Company on 4 April 2005. Theprincipal terms of which are that his employment under this service agreementcommenced on 4 April 2005, he is entitled to a salary of $120,000 per annum and hisservice agreement is terminable on three months’ notice either way. Mr. Jordinson hasbeen granted Options over 100,000 Common Shares pursuant to the Share OptionScheme.

(c) Ms. Crespo entered into a service agreement with the Company on 4 April 2005. Theprincipal terms of which are that her employment under this service agreementcommenced on 4 April 2005, she is entitled to a salary of $90,000 per annum and herservice agreement is terminable on three months’ notice either way. Ms. Crespo has beengranted Options over 50,000 Common Shares pursuant to the Share Option Scheme.

(d) Mr. Frank entered into an agreement with the Company on 4 April 2005 relating to hisappointment as a non-executive Director, his appointment commencing on 4 April 2005.The appointment is for an initial term of two years which may be renewed by agreementand it is currently anticipated that he will commit one day per month to the business ofthe Company. Mr. Frank is entitled to a fee of $10,000 per annum. The appointment isterminable on three months’ notice either way.

(e) Ms. Taylor entered into an agreement with the Company on 4 April 2005 relating to herappointment as a non-executive Director, her appointment commencing on 4 April 2005.The appointment is for an initial term of two years which may be renewed by agreementand it is currently anticipated that she will commit one day per month to the business ofthe Company. Ms. Taylor is entitled to a fee of $10,000 per annum. The appointment isterminable on three months’ notice either way. Ms. Taylor has been granted Options over20,000 Common Shares pursuant to the Share Option Scheme.

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8.2 Save as set out above, there are no service agreements, or contracts in the nature of services,between any Director and the Company or any company within the Group, which do not expireor cannot be determined without payment of compensation on no more than twelve monthsnotice and no such contracts are proposed.

8.3 Save as set out in this document, there are no existing or proposed agreements between any ofthe Directors and the Company.

8.4 The aggregate remuneration paid and benefits in kind granted to the Directors in the financialyear ended 31 December 2004 amounted to $Nil.

8.5 The aggregate remuneration payable and benefits in kind to be granted to the Directors underthe arrangements in force at the date of this document for the financial year ending 31 December2005 are not expected to exceed $425,000.

9 United Kingdom Taxation

The following paragraphs are intended as a general guide only for Shareholders who are residentand ordinarily resident in the United Kingdom for tax purposes, holding Common Shares of theCompany as investments and not in the course of a trade, and are based on current legislationand UK Inland Revenue practice. Owners of Common Shares who are in any doubt about theirtax position, or who are subject to taxation in a jurisdiction other than the UK, should consulttheir own professional adviser immediately.

9.1 Taxation of Chargeable Gains

If a Shareholder disposes of Common Shares, a liability to tax on chargeable gains may arise,depending on the Shareholder’s circumstances. In the case of individuals and trustees, thechargeable gain may be reduced as a result of taper relief, the amount of which depends onvarious factors, in particular the length of the period of ownership of the Common Shares.Companies are not entitled to taper relief but are due indexation allowance which may alsoreduce the chargeable gain.

9.2 Dividends

Except in the case of Common Shares held by individuals or companies dealing in shares,dividends paid by the Company will be assessable to income tax or corporation tax underSchedule D Case V.

UK corporate shareholders holding 10 per cent or more of the Company’s share capital may beentitled to claim relief against UK Corporation Tax in respect of the Company’s underlying tax.The extent to which such foreign tax may be set against a UK taxpayer’s liability in the UK willdepend on the particular circumstances of the taxpayer.

Persons who are not resident in the UK should consult their own tax advisers on the possibleapplication of relevant local tax law as to what relief or credit they may be entitled to in thejurisdiction in which they are resident.

9.3 Stamp Duty and Stamp Duty Reserve Tax

No stamp duty or stamp duty reserve tax is payable on the issue of new Common Shares by theCompany to Shareholders.

Any subsequent disposal of Common Shares by the Shareholder will generally give rise to thepayment of ad valorem stamp duty on the transfer document at the rate of 50p per £100, or part,on the amount or value of the consideration paid. Agreements for such transfers are generallysubject to stamp duty reserve tax (unless, in general, the transfer of the relevant shares is dulystamped with ad valorem duty), generally at the rate of 0.5 per cent of the amount or value ofthe consideration paid. Liability to pay any stamp duty reserve tax is generally that of thetransferee or purchaser. Where a purchase or transfer is effected through a member of the

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London Stock Exchange or a qualified dealer, the member or dealer will normally account forthe collection and payment of the tax, but in all other cases the transferee or purchaser mustaccount for the tax to the Inland Revenue.

Persons operating clearance services or depository receipt schemes may be required to accountfor stamp duty and stamp duty reserve tax at rates higher than those referred to above.

10 Material Contracts

Save as set out in this document, the following are the only contracts (being contracts otherwisethan in the ordinary course of business) which have been entered into by members of the Groupwithin the two years immediately preceding the date of this document and are or may be materialto the Group or have been entered into by any member of the Group at any time and containany provision under which any member of the Group has any obligation or entitlement which ismaterial to the Group at the date of this document:

10.1 Placing Agreement

Under an agreement made between the Company, the Directors, Nabarro Wells and ODLSecurities and dated 14 April 2005, ODL Securities has agreed to use reasonable endeavours toprocure subscribers for 4,000,000 Common Shares pursuant to the Placing. Nabarro Wells hasagreed on behalf of the Company to submit to the London Stock Exchange an application forAdmission and to act as the Company’s nominated adviser in respect of such application.

The obligations of ODL Securities and Nabarro Wells under the Placing Agreement areconditional, inter alia, on Admission occurring on 21 April 2005 or such later date (being notlater than 16 May 2005) as ODL Securities and Nabarro Wells may agree.

Subject to Admission, the Company has agreed to:

(i) pay to ODL Securities commission at the rate of 5.5 per cent of the value of the PlacingShares at the Placing Price placed with Placees by ODL Securities and at the rate of 1 percent for those Placing Shares placed by the Company itself or by third parties; and

(ii) grant to ODL Securities assignable Options to subscribe at the Placing Price at any timewithin the 18 months following Admission for such number of Common Shares as isnearest to but does not exceed 10 per cent of the aggregate amount in pounds subscribedby Placees procured by ODL Securities for Placing Shares at the Placing Price divided bythe Placing Price expressed as a fraction of a pound.

The Company has paid Nabarro Wells £15,000 and, subject to Admission, the Company hasagreed to pay a corporate finance fee of £45,000 and to grant to NWCF LLP assignable Optionsto subscribe at the Placing Price at any time prior to the third anniversary of Admission for suchnumber of Common Shares as is nearest to but does not exceed 3/4 of 1 per cent of the issuedshare capital of the Company at Admission.

The Company has also agreed to pay Nabarro Wells an annual fee of £20,000, payable quarterlyin advance, for their services as nominated adviser to the Company.

The Company has agreed to pay all the costs and expenses of and incidental to the Placing andAdmission (together with VAT on such costs and expenses where applicable).

The Company and each of the Directors have given certain warranties, representations andundertakings to ODL Securities and Nabarro Wells in relation, inter alia, to the accuracy of theinformation contained in this document, the financial position of the Group and as to othermatters in relation to the Group and its business. In addition, ODL Securities and Nabarro Wellshave the benefit of certain indemnities provided by the Company and each of the Directorsrelating to losses or liabilities incurred by ODL Securities or Nabarro Wells in the performanceof their duties, save to the extent that any such losses and liabilities arise from, inter alia, ODL

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Securities’ or Nabarro Wells’ wilful default, negligence or breach of their obligations under anexpress term of the Placing Agreement.

ODL Securities and Nabarro Wells may terminate the Placing Agreement at any time prior toAdmission in certain circumstances, including a breach of any of the warranties, representationsor undertakings contained in the Placing Agreement or upon the occurrence of certain forcemajeure events.

10.2 Depositary Interests

The Company has agreed that Computershare shall provide the Company with services asDepositary in accordance with a trust deed poll executed by Computershare dated 4 March2005, pursuant to which Computershare has determined to constitute and issue from time totime the Depositary Interests with a view to facilitating the indirect holding of, and settlement,of transactions by participants in CREST.

10.3 Lock-In Arrangements

The Directors have undertaken to the Company, Nabarro Wells, and ODL Securities, not todispose of any of their holdings of Common Shares before the first anniversary of Admission,save in specified circumstances, and not to dispose of any Common Shares thereafter otherwisethan through ODL Securities, for so long as ODL Securities remains the Company’s broker.

11 Litigation

No member of the Group is engaged in, nor has pending or threatened against it, any legal orarbitration proceedings which may have or have had during the twelve months prior to thepublication of this document a significant effect on the financial position of the Group.

12 Working Capital

The Directors are of the opinion that, having made due and careful enquiry and having takeninto account the net proceeds of the Placing, the working capital available to the Group, afterAdmission, will be sufficient for its present requirements, that is, for at least twelve months fromAdmission.

13 Contracts of Fundamental Importance

Save as set out in this document, there are no patents or other intellectual property rights,licences or particular contracts which are or may be of fundamental importance to the Group’sbusiness.

14 General

14.1 In the Directors’ opinion, there is no minimum amount which must be raised pursuant to thePlacing for the purposes of paragraph 21 of Schedule 1 to the POS Regulations.

14.2 The auditors of the Company are Baker Tilly.

14.3 The total costs, charges and expenses in connection with or incidental to the Placing andAdmission including London Stock Exchange fees, printing, advertising and distribution costs,legal and accounting fees and expenses are estimated to amount to £635,000 (exclusive of VAT)and are payable by the Company.

14.4 Baker Tilly has given and has not withdrawn its written consent to the inclusion of references toit herein in the form and context in which it appears and to the inclusion of its report set out inPart 4 of this document and accepts responsibility for its report for the purpose of regulation13(1)(d) of the POS Regulations.

14.5 ODL Securities has given and has not withdrawn its written consent to the inclusion ofreferences to it herein in the form and context in which they appear.

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14.6 Nabarro Wells has given and has not withdrawn its written consent to the inclusion of referencesto it herein in the form and context in which they appear.

14.7 OreQuest has given and has not withdrawn its written consent to the inclusion of references toit herein in the form and context in which they appear and to the inclusion of its report set outin Part 3 of this document and accepts responsibility for its report for the purpose of regulation13(1)(d) of the POS Regulations.

14.8 Save as set out in this document, there are no investments in progress which are significant.

14.9 There are no significant recent trends concerning the development of the Group’s business since28 February 2005.

14.10 Except as detailed in this document and below, no person (excluding professional advisers whosefees are included in the estimated expenses of the Placing and Admission disclosed in paragraph14.3 and any trade suppliers) has received directly or indirectly from the Group within the twelvemonths preceding the date of this document or entered into any contractual arrangementswhereby that person is entitled to receive directly or indirectly from the Group on or afterAdmission, either:

• fees totalling £10,000 or more; or

• Common Shares to the value of £10,000 or more calculated by reference to the PlacingPrice; or

• any other benefit with a value of £10,000 or more at the date of Admission.

Within twelve months preceding the date of this document, Ms. Jeanne Usonis has receivedfinancial consulting and administration fees totalling $71,500 and Regent Advisors LLC hasreceived $344,000 in financial advisory and placement fees.

14.11 Save as set out in this document no commission is payable by the Company to any person inconsideration of his agreeing to subscribe for securities to which the prospectus relates or of hisprocuring or agreeing to procure subscriptions for such securities.

14.12 The financial information contained in Part 4 does not comprise statutory accounts for thepurposes of section 240 of the Act.

14.13 The Company’s accounting reference date is 31 December.

14.14 No paying agent has been appointed by the Company.

14.15 The total proceeds which it is expected will be raised by the Placing are £4,000,000 and the netproceeds after deduction of expenses (excluding VAT), are estimated at £3,365,000.

14.16 Copies of this document will be available, free of charge, during normal business hours onweekdays, for collection from Nabarro Wells & Co. Limited, Saddlers House, Gutter Lane,London, EC2V 6HS for a period of one month from Admission.

14.17 Application has been made for the Depositary Interests to be issued pursuant to the Placing tobe admitted to CREST with effect from Admission. Accordingly, it is expected that theDepositary Interests will be enabled for settlement in CREST following Admission.

Dated: 14 April 2005

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DEFINITIONS

The following definitions apply throughout this document, unless the context otherwise requires:

“A1” or “A1 deposit” the A1 (Mantoboy) porphyry copper deposit located on theColet Claims

“Act” the UK Companies Act 1985, as amended

“Admission” the admission of the Common Shares in issue following thePlacing to trading on AIM and such admission becomingeffective in accordance with the AIM Rules

“AIM” the AIM market of the London Stock Exchange

“AIM Rules” the rules of AIM published by the London Stock Exchange

“Articles” the articles of association of the Company

“BGELAW” Belo Gozon Elma Parel Asuncion & Lucila

“Board” or “Directors” the directors of the Company

“BVI” the British Virgin Islands

“BVI Companies Act” the International Business Companies Act 1984 (Cap. 291) ofthe BVI including any modification, extension, re-enactment, orrenewal thereof and any regulations made thereunder

“CADC” Certificate of Ancestral Domain Claim

“Colet” Colet Mining and Development Corporation, a companyincorporated in the Philippines

“Colet Claims” mining leases over 90 hectares and approximately 2,900 hectaresof mineral claims in the province of Negros Occidental in thePhilippines held by Colet

“Combined Code” the combined code on corporate governance published in July2003

“Common Shares” common shares of no par value in the capital of the Company

“Computershare” or “Registrar” Computershare Investor Services (Channel Islands) Limited, theCompany’s Registrar

“Constitution” the Philippine Constitution of 1987

“Consultants’ Report” the report prepared by OreQuest dated 14 April 2005, set out inPart 3 of this document

Copper Resources Corporation

“Copper Spur” Copper Spur Mining Corporation, a company incorporated inthe state of Colorado and a wholly-owned subsidiary of theCompany

“Copper Spur Claims” the 23 unpatented lode claims in the state of Colorado in theUnited States held by Copper Spur

“Copper Resources” or the“Company”

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“CREST” the computerised settlement system to facilitate the transfer oftitle to shares in uncertificated form operated by CRESTCoLimited

“DENR” Department of Environment and Natural Resources in thePhilippines

“Depositary” Computershare Investor Services PLC

“Depositary Interests” the interests representing Common Shares issued through theDepositary

“DJ” or “Don Jose deposit” the Don Jose porphyry copper deposit located on the ColetClaims

“economic interest” in relation to the Hinoba-an Project, the economic interest ofthe Group before the limited Class B share dividend right of1,500 Philippine pesos per annum and the 3 per cent NetBenefits Royalty

“EIS” Environmental Impact Statement, which is a document requiredunder the Mining Act which aims to identify, predict, interpretand communicate information regarding changes inenvironmental quality associated with a proposed project andwhich examines the range of alternatives for the objectives ofthe proposal and their impact on the environment

“FTAA” Financial or Technical Assistance Agreement

“Government” the Government of the Philippines

Copper Resources and its Subsidiaries

“HHPI” Hinoba Holdings (Philippines), Inc., a company incorporated inthe Philippines and a subsidiary of the Company

“HHPI Scoping Study” a scoping study on the Hinoba-an Project completed by HHPIin February 1998

“Hinoba-an Project” the exploration, development and proposed mining of theHinoba-an Property

“Hinoba-an Property” the porphyry copper ore deposits, including the Don Jose andA1 deposits, which are covered by the Colet Claims

“Hinoba Holdings” Hinoba Holdings Ltd, a company incorporated in theCommonwealth of the Bahamas and a wholly-owned subsidiaryof the Company

“HSHI” Hinoba-an & Sipalay Holdings, Inc., a company incorporated inthe Philippines and an associate of the Company

“ICSG” International Copper Study Group

the agreement dated 17 December 2004 between Selenga andColet which integrated the various agreements regarding theexploration, development and utilization of the Colet Claims

“LME” London Metal Exchange

“Integrated Mining and OperatingAgreement”

“Group” or “Copper ResourcesGroup”

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“London Stock Exchange” London Stock Exchange plc

“Memorandum” the memorandum of association of the Company

“Mining Act” the Republic Act No. 7942 of the Philippines entitled “An ActInstituting a New System of Mineral Resources Exploration,Development, Utilization, and Conservation,” which is knownas the Philippine Mining Act of 1995

“MPSA” Mineral Production Sharing Agreement

“Nabarro Wells” Nabarro Wells & Co. Limited, the Company’s nominatedadviser

“NEDA” National Economic and Development Authority of thePhilippines

“Net Benefits” the smelter’s return minus smelter and mint charges, freight,marine insurance and handling expenses from the Philippines tothe smelter

“ODL Securities” ODL Securities Limited, the Company’s broker

“Options” options to subscribe for Common Shares

“OreQuest” OreQuest Consultants Ltd., the technical experts that preparedthe Consultants’ Report set out in Part 3 of this document

“PAH” Pincock, Allen and Holt

“Philippines” the Republic of the Philippines

“Placees” the subscribers for Placing Shares pursuant to the Placing

“Placing” the conditional placing of the Placing Shares at the PlacingPrice pursuant to the Placing Agreement

“Placing Agreement” the conditional agreement dated 14 April 2005 between theCompany (1), the Directors (2), ODL Securities (3) and NabarroWells (4), further details of which are set out in paragraph 10.1of Part 5 of this document

“Placing Price” 100p per Common Share

“Placing Shares” 4,000,000 new Common Shares to be issued by the Companypursuant to the Placing

“POS Regulations” Public Offers of Securities Regulations 1995

“Project” Hinoba-an Project

“Pursuit” International Pursuit Corporation, which following a mergerwith Nevoro Gold Corporation on 25 June 2002 became ApolloGold Corporation

“Selenga” Selenga Mining Corporation, a company incorporated in thePhilippines and an associate of the Company

“Shareholder” a holder of one or more Common Shares

“Share Option Scheme” the share option scheme adopted by the Company, furtherdetails of which are set out in paragraph 5 of Part 5 of thisdocument

“Subsidiaries” Copper Spur and Hinoba Holdings, both of which are wholly-owned subsidiaries of the Company, and HHPI, HSHI andSelenga which are subsidiaries or associates of the Company

“State” the Republic of the Philippines

“Tequila” Tequila Copper Corporation, a company incorporated in theProvince of Ontario, Canada

“3 per cent Net Benefits Royalty” three per cent net benefits royalty payable to Colet by Selengapursuant to the Integrated Mining and Operating Agreement

“UK” the United Kingdom of Great Britain and Northern Ireland

“ZCCA” Zinc and Copper Corporation of Australia Limited

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GLOSSARY OF TERMS

Ag silver

assay an analysis to determine the presence, absence or concentrationof one or more chemical components

Au gold

°C degrees centigrade

C$ Canadian dollars

concentrate a metal rich product from a mineral separation process in whichmost of the waste material in the ore has been separated

Cu copper

cut-off grade the minimum metal grade of which a tonne of rock can beprocessed on an economic basis

deposit a mineralised body which has been physically delineated bysufficient drilling, trenching, and/or underground work, andfound to contain a sufficient average grade of metal or metals towarrant further exploration and/or development expenditures

drilling in mineral exploration, boring a hole into prospective ground torecover core or cuttings indicative of rock types and grades ofmineralization

feasibility study a comprehensive study of a deposit in which all geological,engineering, operating, economic and other relevant factors areconsidered in sufficient detail that it could reasonably serve asthe basis for a final decision by a financial institution to financethe development of the deposit for mineral production

g gram or grammes

grade the concentration or quality of an ore or metal content

g/t grammes per metric tonne

ha hectares, a square of 100m on each side, or 2.471 acres

indicated mineral resource that part of a mineral resource for which quantity, grade orquality, densities, shape and physical characteristics can beestimated with a reasonable level of confidence. The estimate isbased on detailed and reliable exploration and testinginformation gathered through appropriate techniques fromlocations such as outcrops, trenches, pits, workings and drillholes that are spaced closely enough for geological and gradecontinuity to be reasonably assumed

inferred mineral resource that part of a mineral resource for which quantity, grade orquality, densities, shape and physical characteristics can beestimated with a low level of confidence. It is inferred fromgeological evidence and limited sampling and reasonablyassumed, but not verified, geological and grade continuity. Theestimate is based on limited information and sampling gathered

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through appropriate techniques from locations such as outcrops,trenches, pits, workings and drill holes

IP induced polarization

IRR internal rate of return

km kilometres

km2 square kilometres

lb pound

m metres

m3 cubic metres

mineral naturally occurring inorganic substance in solid, gas, liquid, orany intermediate state excluding energy materials such as coal,petroleum, natural gas, radioactive materials, and geothermalenergy

mineral claim a parcel of mineral lands containing a vein, lode, ledge, lens, ormass of ore in place which has been located in accordance withlaw

mineral reserve the estimated quantity of ore that can be economically minedand legally extracted

mineral resource a concentration or occurrence of natural, solid, inorganic orfossilised organic material in or on the Earth’s crust in such formand quantity and of such a grade or quality that it hasreasonable prospects for economic extraction. The location,quantity, grade, geological characteristics and continuity of amineral resource are known, estimated or interpreted fromspecific geological evidence and knowledge

Mo molybdenum

mt million metric tonnes

NPV net present value

open pit surface mining in which the ore is extracted from a pit or quarry

oz ounce

Php Philippine peso

ppm parts per million

pre-feasibility study a comprehensive study of the viability of a mineral project thathas advanced to a stage where the mining method, in the case ofunderground mining, or the pit configuration, in the case of anopen pit, has been established, and which, if an effective methodof mineral processing has been determined, includes a financialanalysis based on reasonable assumptions of technical,engineering, operating and economic factors and the evaluationof other relevant factors which are sufficient for a qualifiedperson, acting reasonably, to determine if all or part of themineral resource may be classified as a mineral reserve

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RC reverse circulation drilling, which is a rotary blast drillingtechnique used for exploration

recovery a term used in process metallurgy to indicate the proportion ofvaluable material obtained in the processing of an ore. It isgenerally stated as a percentage of valuable metal in the ore thatis recovered compared to the total valuable metal present in theore

RQD rock quality determinations

SAG semi-autogenous grinding

SX/EW solvent extraction/electrowinning

t a metric tonne (1,000 kilograms or 2,204.62 pounds)

tailings finely ground waste rock from which valuable minerals or metalshave been extracted

tpd tonnes per day

VAT value added tax

“£” or “pound” UK pounds sterling

“$”, “US$”, and “dollars” US dollars

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Perivan Financial Print 205206

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COPPER RESOURCES CORPORATIONpratclif.com/mines/kamoto/CRC%20AIM%20Admission... · contents contents 2 key information 3 expected timetable and placing statistics 4 directors, secretary