Mineral Resources and Geology

The Minas de Corrales goldfield is located within an in-lier of Proterozoic greenstone/granite terrain known as the Isla Cristalina. Gold mineralization is spatially associated with the San Gregorio Shear Zone (SGSZ), a regional east-west and northwest trending ductile shear zone that can be traced for approximately 110km along strike. The SGSZ is characterized by extensive ductile deformation and well-developed mylonites. The main alteration assemblage associated with gold mineralization within the SGSZ comprises chlorite-(epidote)-carbonate-sericite-silica-pyrite.

Gold mineralization at Minas de Corrales is exclusively associated with epigenetic mesothermal style alteration which is consistent with the majority of Archean and Proterozoic greenstone terrains worldwide, including the Birimian rocks of West Africa, the Yilgarn Block in Western Australia, the Lake Victoria region in Tanzania and the Atibiti Belt in Canada. This style of mineralization is generally associated with regionally metamorphosed terrains that have experienced considerable deformation. As such, the deposits are strongly structurally controlled. The most common style of mineralization in this setting is shear and vein hosted gold mineralization in zones of ductile to brittle deformation.

Gold mineralization occurs as infill of brittle fractures within favorable host rocks such as zones of silicification and mafic units. Brittle fracture has occurred within these zones in response to local extensional tectonics created by the intersection of northwest and east-northeast trending faults with the ductile SGSZ. Intense brittle fracture, silicification and quartz veining are apparent in higher grade zones.

Deposits are generally hosted within mafic units at the contact with granites. Pyrite is the dominant sulphide. Other potentially deleterious elements are in low concentrations.

The northeast trend to the mineralization is apparent within the granites to the north of the SGSZ, where the Castrill├│n and Sobresaliente deposits are located.

ARENAL

Gold mineralization is associated with a fractured zone of silicification and hydrothermal alteration generally near the contact between a relatively unaltered diorite in the hanging wall with deformed mafic and felsic igneous rocks in the footwall. The dip of the mineralized zone is consistent with the dip of the SGSZ, at approximately 45┬║ to the south.

Mineralization at Arenal has now been traced by systematic drilling programs for approximately 450m along strike to the east of the Arroyo Corrales, approximately 150m west of the Arroyo Corrales, and approximately 300m down dip. Mineralization appears to be terminated by a northwest trending structure to the west, and the grade diminishes to the east, where the controlling structure appears to widen. There is evidence that the higher grade shoots plunge to the southeast and UME is testing the down dip extension in this direction. The altered zone persists along strike and can be very wide in places.

In the central area at Arenal, the mineralized zone is geologically continuous, and gold grades also show continuity. This is the ore that is being mined during the Phase 1 open pit development. Mineralized thicknesses in this part of the deposit range from 20m to 50m.

Higher grade gold mineralization has a south-southeast plunge at Arenal, which is a reflection of the intersection of northwest trending faults with the SGSZ.

SAN GREGORIO

Most of the previous ore production was from the main San Gregorio open pit, where mineralization associated with the SGSZ mylonites occurs within zones of intense silicification, brittle fracture and quartz veining, generally at the contact between felsic (hanging wall) and mafic (footwall) igneous rocks. Higher grade gold mineralization has a west-southwest plunge at San Gregorio, which is a reflection of the intersection of northeast trending, westerly dipping faults with the SGSZ.

A relatively high grade ore shoot has been defined at the base of the San Gregorio open pit. The shoot plunges to the west-southwest below the current base of the main San Gregorio open pit at its western end, below the San Gregorio West open pit.

The San Gregorio west mineralization zones extend along strike of the SGSZ for approximately 450m, commencing in the east approximately 350m west of the main San Gregorio open pit.

Higher grade gold mineralization has a west-southwest plunge at San Gregorio west, which is a reflection of the intersection of northeast trending faults with the SGSZ. The style of alteration and mineralization is essentially the same as for the San Gregorio deposit.

SANTA TERESA

The Santa Teresa deposit is located to the west of San Gregorio along the strike of the SGSZ, and has been mined from 3 open pits. The style of alteration and mineralization is essentially the same as for the San Gregorio deposit.

The Santa Teresa mineralization is of relatively low grade, and UME reports a Measured and Indicated Resource for this deposit. Part of the current Santa Teresa resource has been utilized to determine a Probable Reserve comprising 0.74Mt at 1.15g/t Au.

SOBRESALIENTE

Gold mineralization at Sobresaliente is relatively low grade and is associated with zones of silicification and alteration containing northwest trending quartz veins and stockwork zones within the regional northeast trending mineralized corridor. Mineralization is associated with pyrite and zones of brittle fracture within the deformed and altered granites. Alteration comprises quartz-hematite-K-spar-pyrite-carbonate-epidote-(sericite).

ZAPUCAY

Zapucay and the nearby Argentinita deposit are located on a north-northwest trending section of the SGSZ, some 35km by road from the San Gregorio process plant.

Mineralization at Zapucay occurs within a folded segment of the SGSZ, associated with silicified mylonites and sub-horizontal quartz veins. Mineralization has been interpreted into 4 structural blocks at Zapucay and 3 structural blocks at Argentinita, each block comprising approximately 100kt of ore.

The Zapucay open pit has been excavated to Phase 3; which represents the limit of exploration data. During the past fiscal year (June 2004 to May 2005), a total of 294kt at 2.24g/t Au of Zapucay ore was transported to and processed at the process plant. The final ore tonnes of Zapucay Phase 3 (10.5kt at 2.12g/t Au) were processed in June 2005. This deposit is currently considered to be depleted.

Drilling is presently taking place at the Argentinita deposit to further define this new resource. It is planned to include part or all of this resource into an indicated and measured category by early 2007.

EXPLORATION POTENTIAL

The Isla Crystalina belt contains a number of major structures that are prospective for gold. The company has developed two mining districts in San Gregorio and Zapucay where known economic gold mineralisation exists.

Regional stream sediment sampling indicates wide spread gold mineralisation throughout the 100 km belt. Current exploration programs focus on expanding existing resources at San Gregorio, Arenal and Argentinita. Comprehensive drilling programs are in progress on these projects.

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