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Diamond Drilling and Sampling

During October 2007 through April 2008 HDG completed 5,011.05 m of drilling in 33 diamond core holes (HQ-diameter) that tested four main target areas on the Canasta Dorada property, as shown in the two figures below. . The drill holes located in the Big Pit area were generally sited to test the surface extent, true thickness, and projection to the southwest under surface cover. This mineralized zone consists of a gently-dipping, strongly brecciated and silicified structural zone, that contains areas of >1.0 g/t gold values from surface rock chip sampling. The drill holes (Tables 3 and 4) located in the Placer and Pique Viejo areas targeted potentially mineralized bedrock and high-angle structural zones, respectively, that extend beneath alluvial cover.

Drill Hole Locations in the Big Pit Area showing the
location of drill holes, and the location of the cross sections.

A summary of the diamond drill holes is shown in Tables 3 and 4.
Table 3: 2007-2008 Diamond Drill Holes
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The results from the HDG diamond drilling program demonstrate that gold mineralization is present at the Big Pit, Pique Viejo, and Placer areas, and that the gold values are of economic grades to warrant further exploration. Table 4 below, is a summary of significant gold intercepts from the diamond drilling program completed by HDG.

Table 4: Significant gold intercepts from the 2007-2008 diamond drilling program
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During 2006-2008 drilling by HDG at the Big Pit target area explored an extension of the mineralized zone, approximately 400 m by 150 m in surface extent (long axis in an east-northeast direction), that extends towards the southwest under alluvial cover. The Big Pit surface exposures are characterized by a gently-dipping, strongly brecciated and silicified structural zone, approximately 15.5 m in true thickness, and this forms the core to this geochemical anomaly, as defined by drill holes CD-07-001, CD-07-006, CD-07-008, CD-07-011, CD-07-012, CD-07-013, CD-07-013A and CD-07-014. The gold values shown in Table 10-4 range from 100-200 ppb gold up to 13,750 ppb (13.750 g/t) gold, with the majority of individual samples in the range of 300 to 800 ppb Au. The interval of mineralization in the Big Pit area was further refined by Highvista’s drilling in 2010, and the core to mineralization appears to be approximately 10.5 m thick.

Significant higher-grade drill intercepts in the Big Pit area averaging over 1 g/t gold are shown in Table 4 and include: 1 m @ 3.799 g/t in hole CD-07-001, 5 m @ 3.243 g/t in hole CD-07-006, 7 m @ 1.138 g/t in hole CD-07-008, 4 m @ 1.158 g/t in hole CD-07-010, 2 m @ 2.725 g/t in hole CD-07-011, 2 m @ 1.570 g/t in hole CD-07-012, 1 m @ 1.335 g/t in hole CD-07-013, 25.5 m @ 1.087 g/t in hole CD-07-013A, 4.5 m @ 2.828 g/t in hole CD-07-014, and 4 m @ 1.385 g/t & 1 m @ 1.265 in hole CD-08-027. The location and intercepts in and around the Big Pit target area suggest a southwestward gently-dipping structure, with local high-grade intervals of gold mineralization.

Approximately one kilometre to the southeast of the Big Pit area is the Placer target area. This area is characterized by numerous pits dug in surface alluvium, which have been dry washed by locals to recover placer gold. Outcrops of bedrock in the area consist of fine to medium-grained granodiorite and feldspathic sandstone, which are generally stained intensely red-orange by interpreted carbonate (ankeritic) alteration and appear to be intruded by a relatively fresh dioritic plug. Much of this area lies buried beneath a veneer of alluvial cover. During 2008 HDG drilled three diamond drill holes that intercepted intervals of geochemically significant gold mineralization. The results of this drilling is shown in Tables 3 and 4, with one interval in DDH-08-016 that intercepted 2.0 meters of 1.0 g/t gold Mineralization intercepted during drilling appears to be associated with high angle, locally closely-spaced, sheeted to stockwork quartz veinlets. Veinlets are commonly up to 2-5 cm wide and are surrounded by a carbonate/ankerite alteration in the granodiorite and sandstone host rock. Some silicification is observed adjacent to the veinlets, but is generally not extensive or pervasive. The veins and veinlets consist of quartz-ankerite-calcite along with various iron oxides. Dolomite, pyrite and rarely arsenopyrite was observed in the veins, and appears to be similar to that described at the nearby El Chanate mine. At a depth of approximately 50 to 60 m below surface at the Placer area, a low-angle regional detachment fault zone was intercepted that consisted of a relatively unaltered sheared and brecciated rock in a matrix of graphitic clays. The gold mineralization in the Placer area intercepted in drilling occurs above the low-angle fault.

Drill Hole Locations in the Amarillas (Placer and Pique Viejo) Area showing the drill holes completed by HDG.

The Pique Viejo target area is located approximately one-half (0.5) kilometre southwest of the Placer area. The area contains several gold- and copper-enriched quartz veins, which have been prospected by underground mining in the past. Production from these historic workings is unknown, however, they were explored for some distances along strike and below the surface. The veins typically are hosted within high angle, northwest-trending dilational faults and are up to 1.5 m wide, but they appear to have limited strike length of between 50 to 100 m, but may be part of a larger en echelon system of structures that are more laterally extensive. Several grab samples of vein material from rock chip sampling showed grades of over 10 g/t gold and 1% copper. These structures commonly are surrounded by bright orange-red carbonate (ankeritic) altered granodiorite and sandstone similar to that observed in the Placer target area described above. During 2008, HDG drilled three diamond drill holes in the Pique Viejo area as shown in Table 4, which targeted both the high-angle quartz veins and sheeted/stockwork zones that cut granodiorite and sandstone. Geochemically significant gold mineralization was intercepted in these three holes, above a regional low-angle fault that was encountered from 100 to 150 m from surface. Gold mineralization consisted typically of thin intervals associatd with quartz stockwork veining,and carbonate-alteration in the sandstone and granodiorite. Drill intercepts range from 1 to 6 m thick with values of 0.113 g/t to 3.060 g/t in gold. Below the low-angle fault, no significant gold mineralization was intercepted in any of the drill holes.

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