apex mining company: masara gold project, philippines

Abbey House,Wellington Way,

Brooklands Business ParkWeybridge,

Surrey KT13 0TT,United Kingdom

Telephone +44 (0)1932 268701Facsimile +44 (0)1932 268702

E-mail: [email protected]

Perth, Brisbane, London, Vancouver, Johannesburg

060718_FINAL_5353_APEX_Masara Resource_R_Au.doc

Apex Mining Company: Masara Gold Project, PhilippinesProject No. 5353

Independent review and resource estimate

31 March 2006

Prepared by:

EurGeol Dr Simon C DominyMIMMM (CEng) FGS (CGeol, CSci) MAusIMM (CPGeo) MAIGPrincipal Geological Engineer & General Manager (London)

Reviewed by:

EurGeol Dr Edmund J SidesPGeoPrincipal Resource Geologist

Masara Technical Review and Resource Estimate: March 2006060718_FINAL_5353_APEX_Masara Resource_R_Au.doc of 101

Author:

Dr Simon C DominyPrincipal Geological Engineer &General Manager (London)

Peer Reviewer:

Dr Edmund J SidesPrincipal Resource Geologist


TABLE OF CONTENTS

1. Summary…………………………………………………………………………………… 9

1.1. Introduction 9

1.2. Geology, Mineralisation and Mineralogy 9

1.3. Mining and Production Reconciliation 10

1.4. Historical Data 10

1.5. Current Resource Estimate methodology 10

1.6. Classification of Current 2006 Resource 11

2. Introduction and Terms of Reference…………………………………………………… 13

2.1. Introduction 13

2.2. Terms of Reference 13

2.3. Scope of Work 13

3. Reliance on other Experts………………………………………………………………… 14

4. Property Description and Location……………………………………………………… 14

5. Accessibility, Local Resources, Infrastructure and Physiography…………………… 17

6. History……………………………………………………………………………………… 18

6.1. Overview 18

6.2. Historical Mineral Resource Estimates 19

6.2.1. 1994 London Mining & Mineral Consultants Ltd Estimate 19

6.2.2. 1995 ACA Howe International Ltd Estimate 19

6.2.3. 2001 APEX Mining Company Estimate 23

6.2.4. 2004 Bureau of Mines and Geosciences Estimate 24

6.2.5. Comparison between the Masara post-1994 Estimates 26

6.3. Production and Reconciliation 26

7. Geological Setting………………………………………………………………………… 27

8. Deposit Types……………………………………………………………………………… 27

8.1. Generic Style of Mineralisation 27

8.2. Resource Estimation Issues in Epithermal Gold Veins 27


9. Mineralisation……………………………………………………………………………… 28


9.2. Vein Types 30

9.3. Alteration 30

9.4. Ore Controls 30

9.5. Porphyry Copper-Gold Mineralisation 30

9.6. Description of the Masara Project Veins 31

9.6.1. Introduction 31

9.6.2. Wagas Vein 32

9.6.3. Don Calixto Vein 32

9.6.4. Don Fernando Vein 33

9.6.5. Don Mario Vein 33

9.6.6. Don Joaquin Vein 33

9.6.7. Maria Inez Vein 33

9.6.8. Masara (or Maligaya) Vein 34

9.6.9. Manganese-Hitch Vein 34

9.6.10. Bonanza-Manganese Vein 34

9.6.11. Sandy Vein 34

9.6.12. St Vincent Vein 35

9.6.13. St Francis Vein 35

9.6.14. St Benedict Vein 35

9.6.15. Masarita Vein 35

9.7. Continuity and Vertical Extent 36

10. Exploration………………………………………………………………………………… 39

11. Drilling……………………………………………………………………………………… 40

12. Sampling Method and Approach………………………………………………………… 40

13. Sample Preparation, Analysis and Security…………………………………………… 40

14. Data Verification………………………………………………………………………… 40

14.1. Geological Data Verification 40

14.2. Assay Verification 42

14.2.1. Verification Data 42

14.2.2. 1995 Howe Verification 43

14.2.3. 2005 Crew Verification 45


14.2.4. Comment 49

14.3. Database Verification 50

14.4. Bulk Density Verification 50

15. Adjacent Properties……………………………………………………………………… 50

16. Mineral Processing and Metallurgical Testing………………………………………… 51

17. Mineral Resource Estimates……………………………………………………………… 52


17.2. 2006 Snowden Estimate 53

18. Resource Classification………………………………………………………………… 54

18.1. Classification of the Current 2006 Resource 54

18.2. Discussion of Classification Limitations 55

18.3. Current Resource Inventory 55

18.4. Comparison of 1995-2006 Masara Resource Estimates 57

19. Other Relevant Data and Information………………………………………………….. 57

19.1. Drilling by Crew 57


19.1.2. Drillhole Surveys 58

19.1.3. Drillhole Logging and Sampling 58

19.1.4. Sample Preparation, Analysis and Security 58

19.1.5. Summary of Recent Crew Drilling Results 59

19.2. Crew 2006 Planned Drill Campaign at Masara 61


19.2.2. Inferred Mineral Resource Definition 61

19.2.3. Defining Measured and Indicated Mineral Resources 61

and Mineral Reserves

19.3. Mining 61

19.4. Tailings Storage Facility 62

19.5. Environmental 62

19.6. Social and Health 63

20. Interpretation and Conclusions…………………………………………………………. 63

21. Recommendations……………………………………………………………………….. 66


21.1. Summary of Recommendations 66

21.1.1. Sampling 66

21.1.2. Resource Delineation 66

21.1.3. Geology 66

21.1.4. Resource Estimation 67

21.1.5. Mining and Milling 67

22. References………………………………………………………………………………… 68

Certificate of Author and Consent…………………………………………………………… 70

Appendix I………………………………………………………………………………………. 73


LIST OF TABLES AND FIGURES

Tables

Table 1.1: Snowden Inferred Resources for veins at the Masara Project

Table 1.2: Snowden Indicated Resources for veins at the Masara Project

Table 6.1: Summary of Masara Reserves defined by LMMCL in August 1994

Table 6.2: Underground resources/reserves at Apex defined by LMMCL on a vein by veinbasis

Table 6.3: Criteria for the classification of resources/reserves with the as hoc scheme asused by LMMCL (1994)

Table 6.4: Summary of Masara Reserves defined by Howe in August 1995

Table 6.5: Resources at Masara defined by Howe on a vein basis

Table 6.6: Criteria for the classification of resources/reserves with the USGS (1980)scheme as used by Howe (1995)

Table 6.7: Masara ‘reserves’ reported by Apex Mining Company as of December 2002

Table 6.8: Mines and Geosciences Bureau 2004 Mineral Reserve and Resourceestimate for Masara. Figures are quoted only for the Masara, St Benedict,Don and Malumon veins

Table 6.9: Ore Reserves for each vein included in the 2004 MGB estimate

Table 6.10: Comparison of grades and tonnages of various Mineral Resource estimatesundertaken on the Masara Gold Project between 1995 and 2005

Table 9.1: General characteristics of veins at Masara

Table 9.2: Comparison between grades above and below the 510 m Level at Masara

Table 9.3: Comparison between grades above and below the 510 Level at Masara

Table 14.1: Howe check assays at Masara in 1995 (after Howe, 1995)

Table 14.2: Crew check samples close to original Apex locations (after Crew, 2005)

Table 14.3: Crew new samples with duplicate assays from different laboratories (afterCrew 2005)

Table 18.1: Categorisation and payabilities used for Inferred and Indicated MineralResources at Masara by Snowden



Table 18.4: Comparison of grades and tonnages of various Mineral Resource estimatesundertaken on the Masara Gold Project between 1994 and 2006

Table 20.1: Risk matrix for the current Masara Project resource estimate

Table 20.2: Risk matrix for future resources, given planned resource development andtechnical improvements recommended by Snowden

Figures

Figure 4.1: Map of the Philippines and location of the Masara Gold Project

Figure 4.2: Map showing the location of the Apex tenements (in yellow). The areasmarked in red are those currently in conflict [Source: Apex Mining Company]


Figure 5.1: General view of the landscape around Masara Project [Photograph: SCDominy, November 2005]

Figure 9.1: Geological plan of the Masara Project area [Source: Apex Mining Company]

Figure 9.2: Location map of veins within the Masara Project area [Source: Apex MiningCompany]

Figure 9.3: Longitudinal section of the Don Fernando Vein. The upper historically minedworkings are shown clearly [Source: Scanned image, Apex Mining Company]

Figure 9.4 Cross section of Masara veins at position W30. The section clearly shows thecontinuance of veins to a depth, their relationship with each other and natureof vein splitting. [Source: scanned image, Apex Mining Company]

Figure 9.5 Geological and assay plan of a section of the Don Calixto Vein, 600 m Level,Masara Project [Photograph: SC Dominy, November 2005]

Figure 14.1: Exposure of the Masara Vein to the East of the 850 m Level cross-cutentrance [Photograph: SC Dominy, November, 2005]

Figure 14.2: Recent artisanal workings on the 690 m Level. Here a soft quartz-mineralisedgouge has been removed by the miners. Harder quartz shoulders are left onthe hanging and footwalls [Photograph: SC Dominy, November 2005]

Figure 14.3: Inspection of historical paper plans and sections at the Masara Project siteoffice on November 2005 [Photograph: SC Dominy]

Figure 14.1: Precision plot of the original repeat pulps assayed by Apex

Figure 14.2: Precision plot of the original versus Howe repeat Damilab samples

Figure 14.3: QQ plot showing comparison between original Masara and Howe Damilabrepeat samples

Figure 14.4: Precision plot of coarse reject duplicates assays, Crew Intertek versus CrewMcPhar

Figure 14.5: QQ plot showing comparison between Crew Intertek and Crew McPharassays

Figure 16.1: Existing plant at the Masara site [Photograph: SC Dominy, November 2005]

Figure 16.2: General layout of the refurbished Masara Mill [Source: Apex Mining Company]

Figure 19.1: Intersection in the Crew hole SB-02 into the St Benedict Vein. Here the vein isapproximately 4.5 m wide (drilled width), and comprises quartz veining andbrecciation. Core recovery is good, but core quality is poor due to excessivefragmentation. Such poor quality core is difficult to sample effectively[photograph: SC Dominy, November 2005]


1 SUMMARY

1.1 INTRODUCTION

The Masara Gold Project is owned by Apex Mining Company, and is located in EasternMindanao, the Philippines. In August 2005, Crew Gold Corporation signed a DefinitiveAgreement regarding the purchase of 72.8% shares in Apex Mining Company in consortiumwith local partners. Apex Mining Company is listed on the Philippine Stock Exchange (PSE:APX), and its principal asset is the Masara Gold Mine. The company also owns a processingplant, located near the mine site. The Masara Project comprises the plant and severalunderground mines that are being rehabilitated with a view to recommencing operations inthe near future.

The Masara Lease area includes a series of epithermal gold-vein deposits and a cluster ofporphyry-copper ore bodies located in Compostela Valley Province, which is one of the mostnoted gold belts in the Philippines. This report focuses on the gold veins only, reviewinghistorical resource estimates, and providing a current estimate based on historical data.

1.2 GEOLOGY, MINERALISATION & MINERALOGY

The two principal types of mineralisation at Masara are porphyry-copper deposits andepithermal gold-silver quartz-carbonate veins hosted in an assemblage of Cretaceous toPleistocene pelagic sediments, volcanic and volcaniclastic rocks, and hypabyssal intrusives.The mineralised veins are NW-SE to WNW-ESE striking, moderately to steeply dippingstructures developed in a left-lateral shear stress field associated with the Philippine FaultSystem.

The veins display typical epithermal features, being: 1) generally less than 2 m wide, butvarying from 0.2 m to over 10 m in width; 2) dominated by quartz and siliceous veining, oftenin a highly argillic alteration matrix with open voids and a soft gouge-like appearance; 3)structurally controlled; and 4) associated with wide and pervasive wallrock alteration. Thereis extensive occurrence of epithermal gold-silver veins throughout the Philippines.

The Masara veins are classified as either ‘clean ore’ or ‘complex ore’. The clean ore ischaracterised by low sulphide content and occurs in generally clean-walled tensionalstructures. The complex ore has higher sulphide content and often occurs in wider shearstructures. Pyrite, chalcopyrite, sphalerite and galena are the predominant sulphidesminerals and the mineralisation is often associated with appreciable amounts of manganese,occurring as oxide- and carbonate-facies.

The veins are associated with variably weak to strong wallrock alteration that often pervadesthe wallrocks many 10’s m beyond the vein wallrocks. Types present include: propylitic,sericitic, argillic and silicic alteration. Within the core of the fracture zones, the wallrocks canbear substantial economic gold grades (>60 g/t Au), and in some cases contribute to amineable zone that is considerably wider than the quartz vein.

The propylitic alteration (chlorite-epidote-carbonate-pyrite) is most extensively developed inbasic to intermediate rocks furthest from the gold veins. Silicification is closely associatedwith veins.


1.3 MINING AND PRODUCTION RECONCILIATION

During the period 1981-1989 the Masara mill is reported to have processed approximately 2Mt of ore, and recovered approximately 9.75 t of gold and 4.85 t of silver (LMMCL, 1994).This gives a recovered grade of 4.9 g/t Au, ignoring likely losses to tails and in the millcircuit.

There has been little detailed reconciliation between reserves and production on a stope bystope basis during mining. The application of mine call factors is however reported.

1.4 HISTORICAL DATA

Snowden has reviewed the historical resource data for the Masara Project. The dataincludes a large number of plans and sections, particularly vertical longitudinal projections ofworked veins. Also included were a number of resource estimates from various partiesduring the period 1995-2004. Snowden has not been able to use or manipulate the historicalassays, as none of the original digital tables or survey data has been preserved. A largenumber of old paper plans showing assay data have been retrieved on site and inspected bySnowden. The information from these is currently being compiled digitally as part of theproject evaluation. A resource estimate compiled by A C A Howe International Ltd in 1995 isbelieved to be the only study performed to internationally accepted standards. Thisassessment forms the basis for the current Snowden resource estimate.

Snowden also conducted a site visit and inspected historical operations including severalopen pits and underground development levels. It appears that considerable mining activitieshave occurred in the past, but that these activities have subsequently ceased. A singlerecently drilled core intersection was inspected by Snowden at their Masara core facility. The690 m Level was inspected, where veins and associated alteration were observed in oldworkings. Underground exposures were obscured by dirt, though in-situ mineralisation wasconfirmed.

1.5 CURRENT RESOURCE ESTIMATE METHODOLOGY

Snowden has independently reviewed the available Masara data, and undertaken a resourceestimate based on historical data. This estimate is based on the following method andparameters:

1) A VLP of each individual vein was used to project resource blocks down-dip andalong strike based on surface exposure and/or underground development;

2) A global average grade applied for each vein structure;

3) The grade defined for each vein was reported at a cut-off of 3.5 g/t Au;

4) All grades were diluted to minimum stoping width of 1.4 m;

5) The global width applied for each vein structure;

6) A density factor of 2.35 t/m3 was used;

7) A payability factor was applied to each resource block; and

8) A dip factor was used to correct the dip length of each block.

Based on the limited maps and sections (cross and long sections) available, each vein waschecked on a level-by-level basis to interpolate between occurrences along strike and down-dip on the basis of development, etc. It was assumed, where required, that the vein


extended no more than 100 m below the 510 m Level or below pre-existing mine workings.Where possible, Snowden used the presence of stoping to indicate payability and geologicalcontinuity. It is recognised that this is not necessarily a fully reliable method, but is currentlythe only method available.

Longitudinal sections of each vein were established and a total area calculated for eachresource block, and the areas of mined-out portions were subtracted where required. Theestimation method used by Snowden was effectively a polygonal estimate where a singleglobal grade and width is assigned to the entire area of each block. All vertical longitudinalprojections with resource block outlines are presented in Appendix 1.

1.6 CLASSIFICATION OF CURRENT 2006 RESOURCE

Snowden recognises that a significant amount of Measured and Indicated Resources in theprevious historical reports were derived from partially developed stopes, where remainingblocks had been included. Such blocks have been ignored in the current estimate, butSnowden recognises that there may be potential, if future mining methods allow access tothese areas.

Snowden has produced a current resource estimate based on historical data. The MineralResources were classified on the proximity to underground development and/or previouslystoped areas. Snowden has also considered issues related to sample quality, and resolutionof geological and grade continuity.

Resource blocks were defined as being either Inferred or Indicated Mineral Resources (CIM,2005). A variable ‘payability’ factor has been applied to all resource blocks to provide aconservative estimate to account for continuity. The Masara resources defined by Snowdenare given in Tables 1.1 and 1.2.

Whilst Snowden has defined Indicated Resources at Masara, it considers these to be at the‘lower end’ of confidence for this category. It is implicit in the Indicated Resource categorythat the resource has been estimated to a level that permits mine design and reservedefinition.

Given the unverifiable nature of the sampling data and lack of geological control, theresulting global estimate for block grades has a level of uncertainly only just acceptable foran Indicated Resource. The tonnage estimate also contains a level of uncertainly due to theuse of a global width figure of the block, and an unverified bulk density factor. To account forthese uncertainties, Snowden has applied a payability factor to the Indicated Resourceblocks.



MASARA INFERRED RESOURCE TOTALS

Snowden Estimate 2006

Vein GradeTrue

Width Tonnage Ounces

Masarita 5.1 1.7 327,000 54,000

Wagas 4.2 2.0 430,000 58,000

Don Calixto 5.8 1.8 222,000 41,000

Don Fernando 7.2 1.9 398,000 92,000

Don Mario 5.7 1.7 757,000 139,000

Don Joaquin 6.3 2.3 1,199,000 243,000

Maria Inez 7.5 2.2 288,000 69,000

Masara 8.5 2.0 233,000 64,000

Bonanza 6.3 1.9 36,000 7,000

Manganese 7.0 2.0 168,000 38,000

Sandy 5.4 1.4 254,000 44,000

St Vincent 5.4 1.9 503,000 87,000

St Francis 5.4 1.9 429,000 74,000

St Benedict 8.5 1.4 494,000 135,000

TOTALS 6.3 1.9 5,738,000 1,145,000

5.7 Mt at 6.3 g/t Au for 1,100,000 oz

Global grade reported at a 3.5 g/t Au cut-off grade, and MSW of 1.4 m.


MASARA INDICATED RESOURCE TOTALS


Vein GradeTrue


Don Calixto 5.8 1.8 210,000 39,000

Don Fernando 7.2 1.9 201,000 47,000

Don Mario 5.7 1.7 273,000 50,000

Don Joaquin 6.3 2.3 275,000 56,000

Maria Inez 7.5 2.2 47,000 11,000

Masara 8.5 2.0 29,000 8,000

St Francis 5.4 1.9 84,000 15,000

St Benedict 8.5 1.4 136,000 37,000

TOTALS 6.5 1.9 1,255,000 263,000

1.2 Mt at 6.5 g/t Au for 263,000 oz

Global grade reported at a 3.5 g/t Au cut-off, and MSW of 1.4 m

Snowden has made no attempt to convert resources into reserves. The resources arereported to a diluted minimum stoping width of 1.4 m.


2 INTRODUCTION AND TERMS OF REFERENCE

2.1 INTRODUCTION

The Masara Gold Project is owned by Apex Mining Company (“Apex”) through two MineralProduction Sharing Agreement’s (“MPSA”). There are two operating companies; MapulaCreek Mining Company and Theresa Crew Gold Corporation. Apex is listed on the PhilippineStock Exchange (PSE:APX).

The Masara Gold Project is located in The Philippines, and is currently at a stage ofadvanced exploration and underground mine development to define resources.

A number of historical resource estimates have been undertaken on Masara since 1994, andare reported in this review. Snowden has provided a current resource estimate that reliesheavily upon previous work and does not include any new data.

The current estimate is reported under the 2005 Canadian Institute of Mining & Metallurgy(“CIM”) Definition Standards for Mineral Resources and Mineral Reserves and is incompliance with the 2005 Canadian National Instrument 43-101 (“NI43-101”).

2.2 TERMS OF REFERENCE

Snowden Mining Industry Consultants Ltd (“Snowden”) was requested by Apex to completean independent review of historical resource estimates, and to provide a current estimate forgold veins within the Masara Lease area. This report has been prepared in compliance withNI43-101 by:

Dr Simon C Dominy, General Manager and Principal Geological Engineer with Snowden,based in the London, England Office.

Dr Dominy is deemed to be an independent Qualified Person (“QP”) under the definitions setout in NI43-101, and who takes responsibility for the information set out below. He has inexcess of twelve years experience in the evaluation and exploitation of vein gold deposits,including epithermal systems.

Dr Dominy visited the Masara site for three days in November 2005, during which time heinspected the limited underground workings and several open pits, reviewed geological data(e.g. historical reports, plans, sections, limited drillcore, etc), and held discussions withproject staff.

In accordance with Snowden internal policy, the work has been reviewed by:

Dr Edmund J Sides, Principal Resource Geologist with Snowden, based in the London,England Office.

Snowden certifies that the Mineral Resource estimate reported herein complies fully with thestandards set out in NI43-101 and the associated 2005 CIM Reporting Standards, whichhave been adopted by the Canadian Securities Administrators and the Canadian StockExchanges. Snowden has also noted the content of the CIM (2003) Estimation of MineralResources and Mineral Reserves Best Practice Guidelines.

2.3 SCOPE OF WORK

The Technical Report considers the following:


geology, structure, alteration and mineralisation;

review of the historical database as far as available;

review historical resource estimates;

provide a current resource estimate; and

a review of on-going resource development activities at the Masara Project.

3 RELIANCE ON OTHER EXPERTS

All data, except for a series of vertical longitudinal projections (“VLPs”) provided by A C AHowe International Ltd (“Howe”), were supplied by Apex. Snowden has reviewed the dataaccordingly, and this report, of necessity, makes use of information originated byprofessionals who have worked on aspects of the Masara Project over a number of years.

The report compiles and summarises the following sources of information with respect to theMasara Gold Project:

London Mining & Mineral Consultants Ltd – (LMMCL, 1994)

A C A Howe International Ltd – (Howe, 1995)

Apex Mines Ltd – (Apex, 2002)

Philippine Mines and Geosciences Bureau – (MGB, 2004)

Crew Gold Corporation – (Crew, 2005)

The relevant reports are referenced within this document, and are listed in Section 22.0.

Snowden has also discussed the Masara Project with the following professionalgeoscientists:

J S Petersen: Senior Vice President - Crew Gold Corporation (London)

L L Gana: Senior Geologist – Apex Mining Company (Masara Site)

J G Langlands: Senior Geologist – ACA Howe International Ltd (Edinburgh)

4 PROPERTY DESCRIPTION AND LOCATION

The Masara property covers an area of 26 km2 of clean title, and forms a region bounded bythe 7°21’ to 7°23’ N and 126°00’ to 126°04’ E co-ordinates (Figures 4.1 and 4.2).

An additional area of about 26 km2 surrounding the title area has also been claimed by Apex,but a later application by the North Davao Mining Company placed these areas in a titleconflict (Figure 4.2). The case currently resides with the Philippine Court of Arbitration.

The project is located in the Barangay Masara, Maco and Compostela Valley Provinces inthe south-eastern part of Mindanao Island (Region XI, Southern Mindanao), The Philippines(Figure 4.1).

Snowden has not independently verified ownership and the current standing of Masara’stenements, and is not qualified to make legal representations in this regard. Snowden hasprepared this report on the understanding that all tenements are currently in good standingand that there is no cause for concern other than that stated above.


Figure 4.1 Map of the Philippines and location of the Masara Gold Project shown bythe green star [Source: Apex Mining Company]


Figure 4.2: Map showing the location of the Apex tenements (in yellow). The areasmarked in red are those currently in conflict [Source: Apex Mining Company]


5 ACCESSIBILITY, LOCAL RESOURCES, INFRASTRUCTURE AND

PHYSIOGRAPHY

The Masara Project is located in mountainous and densely vegetated terrain in theCompostela Valley of south-east Mindanao (Figure 5.1). Elevations within the property rangefrom 500 m to 1,300 m above sea level. The area lies northeast of Davao City, and isaccessed by sealed road as far as Mawab, and then by 31 km of unsealed road. The areahas tropical climate, with around 3,300 mm of annual precipitation.

The area is sparsely populated, and includes two small settlements that owe their existenceto previous mining operations at Masara. One of these is located immediately outside theconcession in the valley below the plant site, and the other is located near the bottom of aformer open pit.

Figure 5.1 General view of the landscape around the Masara Project. View lookingeast towards the partially overgrown Don Calixto open pit [Photograph: SC Dominy,

November 2005]

The area is crossed by a high-tension electricity transmission line that supplies a substationnear the plant site. Other sources of electrical power are from small diesel poweredgenerators.

6 HISTORY

6.1 OVERVIEW

The Masara property has a history of some seventy years, and is summarised below afterLanglands (1995):


1934 Gold prospects in the Hijo River area (west of Masara) were discovered and stakedby Mineral Exploration and Development Company;

1935 Mineral Exploration and Development Company, and Elizalde and Company Inc.formed Davao Gold Mines in order to develop the Hijo River gold prospects;

1937 Discovery of gold and copper deposits in the Masara River area;

1941 Davao Gold Mine operated a 250 tpd flotation-cyanidation plant and expandedoperations into the Masara area;

1946 Elizalde and Company transferred Masara to Panaminas Masara ConsolidatedMining Company;

1952 Samar Mining Company (SAMICO), a subsidiary of Elizalde and Company,continued to develop Masara, and acquired the rights to the property in 1954.SAMICO operated a 250 tpd flotation-cyanidation plant between 1955 and 1958;

1968 SAMICO stopped operations and entered into a Mines Operating Agreement withINCO Mines;

1971 INCO Mines suspended operations at Masara following a devastating landslide;

1973 Apex Mining Company acquired the property from SAMICO;

1974 Apex closed down its copper mining due to the price collapse, and initiated a goldexploration programme;

1975 Part of the copper plant was converted into a Merrill Crowe cyanidation circuit withan initial capacity of 300 tpd. From 1982 to 1989 the plant was graduallymodernised and upgraded to a capacity of 700 tpd;

1991 Operations at Masara were suspended because of low gold prices and a prolongedlabour conflict. Local residents began small-scale mining of high-grade parts of theunderground workings;

1995 Apex Mines entered into an agreement with Base Metal Mining ResourcesCorporation (BMMRC) giving the latter an option to evaluate the property (1995assessment conducted by A C A Howe International Ltd). BMMRC rented the plantand equipment and took over marketing and selling of all products;

1997 Apex Mines - BMMRC agreement was terminated. Apex initiated development ofvein not previously worked by BMMRC

2000 Apex Mines closed after heavy losses due to falling price of gold;

2003 Apex Mines entered into separate operating agreements with the Goldridge MiningCorporation, Viclode Mining Corporation and Mintricor Incorporated. Goldridgeworked the Masara and Manganese Veins, and Viclode operated on various levelsof the Don area. Mintricor initiated plans to re-work some of the tailings, but nevercommenced operation; and

2005 On 24th August 2005, the Crew Gold Corporation and its local partners, signed theDefinitive Agreement to purchase of 72.8% shares in Apex Mining Company.

On 14th December 2005 the formal transfer of shares and ownership wascompleted.


6.2 HISTORICAL MINERAL RESOURCE ESTIMATES

6.2.1 1994 London Mining & Mineral Consultants Ltd Estimate

In 1994 the London Mining & Mineral Consultants Ltd (“LMMCL”) prepared an appraisal ofthe Apex property. They reported a global resource of 4.3 Mt at a grade of 5.9 g/t Au, basedon an estimate undertaken by the Base Metals Mineral Resources Corporation (Tables 6.1and 6.2). Snowden has sighted and reviewed the LMMCL (1994) report.

Table 6.1: Summary of Masara Reserves defined by LMMCL in August 1994

Category Tonnes Grade (g/t Au)

Proved ore 224,424 4.99

Probable ore 1,754,207 6.32

Possible ore 2,363,404 5.70

Global resource 4,342,035 5.91

Total 6.2: Underground resources/reserves at Apex defined by LMMCL on a vein byvein basis

Proven Probable Possible

Vein Tonnes(tonnes)

Grade(g/t Au)

Tonnes(tonnes)

Grade(g/t Au)

Tonnes(tonnes)

Grade(g/t Au)

Masarita 16,214 3.50 182,090 3.86 - -

Wagas 3,330 3.37 8,772 3.62 552,900 4.87

Don Calixto 82,742 4.61 168,701 4.61 201,244 4.68

Don Fernando 57,752 5.15 334,090 7.54 570,441 6.79

Don Mario 2,174 4.79 127,788 4.70 296,002 4.68

Don Joaquin 30,496 5.09 730,152 7.41 751,005 6.86

Maria Inez 6,900 5.00 31,570 8.70 79,356 8.26

Masara 41,394 5.7 41,394 5.71 - -

St Vincent 2,282 3.93 24,590 7.36 23,377 7.77

St Francis 38,748 5.67 174,564 5.10 173,172 5.05

Don Manuel 82,037 4.36 56,857 4.36 - -

Manganese 14,335 7.61 220,806 4.41 - -

TOTAL 4,342,035 t 5.91 g/t Au

Note that the total Possible Reserve tonnage was factored by 0.75 to give a lower totaltonnage. This figure is effectively a payability factor of 75%.

The estimate is based on surface and underground sampling, a few diamond drill holes, andproduction data. Block grades were estimated by averaging.

All grades were reported to a minimum stoping width of 1.5 m, and a cut-off grade of 3.5 g/tAu was used to exclude all sub-economic blocks. Vein average widths were diluted by afurther 0.35 m at a grade of 1.5 g/t Au to take account for likely dilution during mining.


Removing the mining dilution, the global grade becomes 6.8 g/t Au for a minimum stopingwidth of 1.5 m.

The classification scheme used was based on common terminology and practice at the time(Table 6.3). Proven, Probable and Possible categories are broadly the same is the currentlyused Measured, Indicated and Inferred Resource classes (e.g. CIM, 2005).

Table 6.3: Criteria for the classification of resources/reserves with the ad hoc schemeas used by LMMCL (1994)

Class Criteria for classification

Proven Ore Blocked out ore: sampled on two bounding levels and a raise

Probable Ore Partially blocked ore: sampled on a single level

Possible Ore Little to no sampling, and generally projected up or down dip from aProbable Ore block.

6.2.2 1995 ACA Howe International Ltd Estimate

The most comprehensive recent estimate at Masara was undertaken and reported by ACAHowe International Ltd in 1995 (Howe, 1995). They defined a global resource of 2.6 Mt at agrade of 6.3 g/t Au for 11 veins (Tables 6.4 and 6.5). Most of the resource blocks werelocated within or close to the previously mined areas. Snowden has sighted and reviewedthe Howe (1995) report and accompanying VLPs.

Table 6.4: Summary of Masara Reserves defined by Howe in August 1995

Category Tonnes Grade (g/t Au)

Measured Reserves 220,000 5.8

Indicated Reserves 780,000 6.4

Demonstrated (M+I) Reserves 1,000,000 6.3

Inferred Resources 1,590,000 6.2


Total 6.5: Resources at Masara defined by Howe on a vein by vein basis

Measured Indicated Inferred

Vein Tonnes(tonnes)

Grade(g/t Au)

Tonnes(tonnes)

Grade(g/t Au)

Tonnes(tonnes)

Grade(g/t Au)

Masarita - - 23,075 6.28 20,743 3.75

Wagas - - 17,736 4.18 59,286 4.18

Don Calixto 92,335 5.12 129,408 6.12 206,484 5.96

Don Fernando 48,812 6.31 53,173 7.83 135,451 7.37

Don Mario 12,374 7.21 217,299 5.87 307,301 5.61

Don Joaquin 31,434 5.99 124,749 6.81 364,474 6.16

Maria Inez 13,518 6.26 27,731 7.06 104,386 7.76

Masara - - 47,735 6.98 133,588 6.99

St Francis - - 98,918 6.86 149,320 4.83

St Vincent 21,059 5.89 24,770 4.23 40,553 4.81

Don Manuel - - 14,599 7.96 68,091 9.30

TOTAL 2,588,500 tonnes 6.21 g/t Au

Their approach to estimation was based on weighted averages of grades and widths withinblocks, and the application of a 31.1 g/t Au top-cut. All grades were reported to a minimumstoping width of 1.4 m, and a cut-off grade of 3.5 g/t Au was used to exclude all sub-economic blocks. A density factor of 2.35 t/m3 was globally applied. The Howe resourceswere defined on VLPs with blocks being within or very close to previously mined areas.

The Howe estimate was classified using the United States Geological Survey system(USGS, 1980). In agreement with usual practice, the level of resource class is dependentupon the amount of development peripheral or proximal to the block in question (Table 6.6).The USGS classification is broadly comparable to the CIM (2005) reporting code, with theprincipal difference being the apparently interchangeable use of the terms ‘resource’ and‘reserve’. The reserves as defined by Howe are effectively resources under the criteria of thecurrent CIM code (2005). Mining parameters (“the modifying factors”) such as additionaldilution and mining recovery (pillars, etc) have not been accounted for.

Howe applied a payability factor to all resource blocks. The payability factor is a subjectivemeasure of ‘stopability’, the percentage tonnage expected to be contained in a stopableblock. A payability of 100% was applied to all Measured and Indicated Resource blocks. Thepayabilities applied to the Inferred Resource blocks were based on geological inference, andranged from 5% to 85% increasing in 5% increments.


Table 6.6: Criteria for the classification of resources/reserves with the USGS (1980)scheme as used by Howe (1995)

Resource class Criteria for classification

Measured Reserves This category covers ore blocked out by two fully evaluated levels, and atleast one raise. The grade is based on exposed vein with a sample intervalno greater than 2 m. Grade is calculated, subject to assay cutting, using aweighted average of all the samples.

Tonnage is calculated by measurement from the 1:250 VLPs using blocklength, height, diluted width, specific gravity and a correction factor for theaverage dip of the vein.

Indicated Reserves This category is used for ore blocked out between two levels with no raiseexposure, and extrapolated above or below a level to a height of half theinterval between levels.

Tonnage is calculated by measurement from the 1:250 VLPs using blocklength, height, diluted width, specific gravity and a correction factor for theaverage dip of the vein.

Inferred Resources This category used for ore within areas of poor vein exposure whereinadequate sampling has not disproved the potential existence for aresource, between levels where there is inadequate sampling informationand within lower confidence envelopes. Extensions of known structures arelimited to two levels or 100 m along strike.

The Howe estimate was based on development sample assay data that was collated frompaper assay plans (Langlands, pers. comm.). Howe offered a number of important materialqualifications to its estimate, which are summarised below:

1. Location of resource blocks: the available 1:1,000 VLPs produced by APEXcontained errors and inconsistencies with regard to the extent and location ofworkings and topography. The resource/reserve block locations given on their VLPswere therefore considered to be ‘diagrammatic’.

2. Extent of development and stoping: Howe’s collation of various plans and sectionsindicated that stoping and development, both inside and outside the APEX resourceblocks was not shown on the VLPs supplied to them.

Howe staff, who visited the site in 1995, was advised that during the time of the Apexmine closure mining continued without direction or reliable surveying. Howe thereforestated that there was a strong possibility that further unrecorded stoping anddevelopment existed, and that some of the resource blocks identified in their studymay be either mined or rendered inaccessible.

3. Mining activity at or near surface: past and recent artisanal workings in high-gradezones appeared to be largely unrecorded. Although the mining methods wereprimitive, they were noted as being effective and that there appeared to be nodefinition of the extent of resource depletion.

4. Grade Estimation: Howe noted that there was no evidence of serious bias resultingfrom the sampling and assaying procedures used at Apex. However, there was apractice of averaging re-assayed samples due to poor repeatability that wasexplained away by the nugget effect and sub-optimal sample preparation protocols.There was no QA/QC system in operation. Howe stated that “historical assay datamust, therefore, be regarded with a degree of circumspection and interpretation whenselecting ore intercepts”.


5. Dip and strike of structures: the tonnages calculated by Howe used 1:250 VLPs, andan assumed average dip to compensate for vertical height and true thicknessmeasurements. Local variations in dip and/or strike will have created variability inmineable tonnage.

6. Bulk density: Howe applied a global bulk density of 2.35 t/m³. They reported thatvalues of 2.45 t/m3 and 2.67 t/m3 were applied in previous estimates. Other datasighted by Howe ranged between 2.24 t/m3and 2.43 t/m3 for underground ore.

7. Immediate host rock stope fill, sill and crown pillars: Howe made no allowance forgold-bearing stope fill derived from locally mineralised wall rock. Similarly, noallowance was made for crown or sill pillars.

8. Data availability: Howe based their estimate on what was made available to them atthe time. They stated that “Our assessment and recalculation is based on availabledata. Every effort, within reasonable time constraints, has been made to locatepertinent information. There remains an uncertainty as to the location or continuingexistence of some primary, large scale assay plans and sections”.

Having reviewed the Howe (1995) estimate, Snowden concurs with the qualificationsprovided. In the opinion of Snowden, the Howe (1995) estimate is the most reliable of therecent resource studies. Their approach was one of transparency, given the difficulties ofdata reliability, etc.

Snowden also questions the application of a cut-off grade to ore blocks of different sizes.Whilst such practice is relatively commonplace, the issue of change of support between thedifferent blocks is likely to lead to unreliable grade-tonnage curves.

6.2.3 2001 Apex Mining Company Estimate

In late 2001, Apex Mining Company Incorporated quoted a total geologic ore reserve forMasara of 5.9 Mt at a grade of 7.1 g/t Au (Table 6.7). Snowden has sighted and reviewedthe Apex (2001) report and associated summary tabulations and sections.

The grade was defined from the top-cut (1 oz/t value) weighted average grade of all sampleswithin a given block. Tonnage was estimated from the average ore widths within the block,and a density factor of 2.45 t/m3 applied.

A payability factor was applied to each block ranging from between 75% and 90% forMeasured, 65% for Indicated, and 35% for Inferred Resource blocks. Inferred Resourceblocks below the 510 m Level were given a value of 5%.

The classification system used was not stated as being based on any of the internationallyused codes, though the terms Inferred, Indicated and Measured were in broad accord withthe then JORC and CIM Codes. The estimate was quoted as being a geological ore reserve,though this was essentially a Mineral Resource.

Measured Resource blocks were developed and sampled on three sides, Indicated blockswere developed and sampled on two sides, and Inferred blocks were based upon minimaldevelopment, surface exposure, and/or diamond drill intersections.

In addition to the geologic ore reserve, a mineable reserve of 2.8 Mt at 6.1 g/t Au wasreported as being the mineable part of the geologic reserve.

A final category of Potential Resource was stated to contain 1.8 Mt at a grade of 8.3 g/t Au,and was based on geological projection away from sampled areas. This non-standardcategory would likely be included into the Inferred Resource class in any modern estimate.


Table 6.7: Masara ‘reserves’ reported by Apex Mining Company as of December 2002.Grade values reported in g/t Au

Measured Indicated InferredVein

Tonnage Grade Tonnage Grade Tonnage Grade

Wagas 3,267 4.40 5,918 5.20 266,567 5.15

Don Calixto 16,379 5.01 80,867 5.02 292,641 4.40

Don Fernando 26,296 5.96 19,293 6.03 385,525 6.23

Don Mario 10,783 8.27 104,103 5.98 403,234 5.69

Don Joaquin - - 46,962 6.44 956,673 6.61

Maria Inez 9,813 4.98 19,776 6.98 405,166 5.87

Masara 15,933 17.42 - - - -

Sandy - - 4,414 5.25 85,682 5.72

St Vincent 11,341 7.52 2,316 6.63 227,062 6.17

St Francis - - 50,395 5.59 234,471 6.97

St Benedict 180,502 8.57 513,854 8.55 1,530,048 8.82

TOTAL 274,314 8.40 847,898 7.48 4,787,069 6.92

GRAND TOTAL 5.9 Mt at 7.1 g/t Au for 1.3 Moz Au

Mineable Reserve(included in the totalresource)

2.8 Mt at 6.1 g/t Au for 0.5 Moz Au

Potential Resource(exclusive of the totalresource)

1.8 Mt at 8.3 g/t Au for 0.5 Moz Au

6.2.4 2004 Bureau of Mines and Geosciences Estimate

The Philippine Government Mines and Geosciences Bureau (“MGB”) undertook a resourceestimate at Masara during 2001 and 2004 for the Philippines Stock Exchange (Tables 6.8and 6.9). The estimates included sections of vein, which were developed by the Base MetalsGroup during 1995-1998 through to 2000. Snowden has sighted and reviewed the MGB(2004) report.

Snowden has not seen the raw grade database used for the estimate. The grade estimationtechnique was based on weighted averages. The data used for the estimate were the sameas the Apex 2001 resource, though the grade-tonnage outcomes were different.

Table 6.8: Mines and Geosciences Bureau 2004 Mineral Reserve and Resourceestimate for Masara. Figures are quoted only for the Masara, St Benedict, Don and

Malumon Veins

Category Tonnes Grade (g/t Au) Ounces

Proved Reserve 274,314 8.06 71,100

Probable Reserve 254,370 7.52 61,500


Table 6.9: Ore Reserves for each vein included in the 2004 MGB estimate

Tonnes (t) Grade (g/t Au) Contained ounces

St Benedict Vein

Proved Ore Reserve 180,502 8.57 49,800

Probable Ore Reserve 154,156 8.55 42,400

Total 334,658 8.56 92,200

Masara Vein


Probable Ore Reserve - - -

Total 15,933 17.42 8,900

Don & Malumon Veins


Probable Ore Reserve 100,213 5.94 19,100

Total 178,092 5.52 31,600

Total Reserves

GRAND TOTAL 528,683 7.80 132,700

According to the MGB report the ‘reserves’ were estimated using longitudinal sections (i.e.VLPs). They stated that “check samples were also taken by the evaluating team on the faceof the present working at St Benedict where an open-end vein length of 1 m is projected.The channel sampling was made across the vein”. Snowden has not seen either the rawsample or check sample data. It appears that the MGB estimate is based upon similarmethodologies to those used by Apex (Apex, 2001).

The MGB report does not provide the criteria used for defining their Proved and ProbableReserve blocks. Snowden believes that they used similar criteria to the Apex estimate withMeasured (Proved) blocks being developed and sampled on three sides, and the Indicated(Probable) blocks developed and sampled on two sides.

The MGB report stated that “for the purpose of the calculation of the ore reserves andmineral resources, MGB has employed the Joint Ore Reserve Committee [JORC Code]where Proved and Probable Reserves of the company were only considered”. The MGBreport was not JORC compliant, as it did not provide suitable detail of technical issues (i.e.JORC Table 1 issues).

The main MGB report was produced in March 2004 by L M Castillo and E I Soriano. Thedocument reported the Ore Reserve estimate given in Table 6.9, though the global grade forall reserves was stated to be 9.15 g/t Au. Snowden checked the figures in the MGBdocumentation provided by Crew, and found the global grade to be 7.8 g/t Au and not 9.15g/t Au.

In addition, two letters dated 10th March 2004 signed by E L Arreza of the MGB were sightedby Snowden. One confirmed the Ore Reserve estimate quoted above, and included thegrade error previously discussed, and the second letter disclosed an ‘estimated mineralresource’ of 6,128,745 t at a grade of 9.48 g/t Au. The MGB report does not provide thedetailed source of this resource figure, but Snowden believes that it is likely to be a variant ofthe combined Measured, Indicated, and Inferred Resources quoted by Apex in 2001 (seeTable 6.7).


6.2.5 Comparison between the Masara post-1994 Estimates

Table 6.10 shows a comparison between the recent resource estimates at Masara. There ishigh variability between the resource tonnages, and this can be explained by the differentapproaches used to extrapolate vein continuity along strike and down dip.

The grades show relatively good agreement, particularly when the erroneous high gradefrom the MGB 2004 estimate is considered. The LMMCL grade is slightly lower, as this hashad a higher level of dilution applied to it.

Table 6.10: Comparison of grades and tonnages of various Mineral Resourceestimates undertaken on the Masara Gold Project between 1995 and 2005

Estimate Number ofveins includedin the resource

Global ResourceTonnage

Grade(g/t Au)

Proportion ofInferred Resource

category

MGB, 2004 11 6.1 Mt 7.8 (unclassified)

Apex, 2002 11 5.9 Mt 7.1 81%

Howe, 1995 11 2.6 Mt 6.2 61%

LMMCL, 1994 12 4.3 Mt 5.9 53%

Snowden considers that the Howe resource estimate is the most reliable and transparentdocumentation on the resource at Masara available. As noted previously, the estimaterequires a number of qualifications, which Snowden fully endorses.

Howe (1995) pointed out in their assessment that the vein structures are often open-endedin two or more directions parallel to the planes of the veins, and, due to the braided andsplayed nature of the vein system, must also be regarded as open to some extentperpendicular to the veins.

The small-scale mining conducted since the beginning of the 1990s is not believed to havesignificantly reduced the resources, as the extraction was done mostly by hand and limited toore amenable to crude mechanical and manual processing, thus avoiding the more massiveveins (Petersen, pers comm). Moreover, no significant new drifts were constructed and thework seemingly consisted of stripping remaining pillars in limited, accessible parts of the oldworkings. The underground resources as estimated by Howe (1995) are believed to bepotentially intact.

6.3 PRODUCTION AND RECONCILIATION

During the period 1981-1989 the Masara mill is reported to have processed approximately 2Mt of ore, and recovered approximately 9.75 t of gold and 4.85 t of silver (LMMCL, 1994).This yields a recovered grade of 4.9 g/t Au, ignoring likely losses in the mill and to tails.

In a photocopied memorandum by F R Cooper (dated July 1995) appended to the Howe(1995) report, a record of underground production was for 5,000 t at a grade of 4.5 g/t Au.This figure includes both development and stope ore, with stope ore reporting a grade ofbetween 5 g/t Au and 6 g/t Au. The reported grades are based upon stope samples, and notmill recovered grade.

According to Howe (1995), there had been little reconciliation of reserve and production on astope by stope basis. Apex mine staff whom Howe interviewed during their site visit reporteda mine call factor of 76%, given as the ratio of mill feed grade divided by mine head grade.


The explanation for this large discrepancy in grade was given as being related to dilution,sampling errors and truck weight errors. Whatever the cause, this figure reflects variousuncertainties in the historical Apex resource process (e.g. issues with sample/assay quality,estimation methodology, dilution allowance, etc). Snowden notes that this discrepancy isalso likely to be caused by poor mill recovery at the time, and that such a large mine callfactor is unlikely to be applicable to any modern operation.

7 GEOLOGICAL SETTING

The Masara Project lies on the Philippine Fault System, which has been active from Mioceneto recent times. The fault system and its many splays pass from south-southeast to north-northwest through an island arc assemblage of Cretaceous to Pleistocene pelagicsediments, volcanic and volcaniclastic rocks, and hypabyssal intrusives. Numerousporphyry-copper-gold deposits and epithermal gold vein systems are associated with thePhilippine Fault System throughout most of the archipelago (Mitchell & Leach, 1991).

The stratigraphy of the area comprises a Cretaceous to Lower Miocene sequence of pelagicsediments, and volcanic and volcaniclastic rocks (Masara Formation) intruded or overlain byMiddle Miocene dioritic and quartz-dioritic plutonic rocks, Upper Miocene to Lower Pliocenedioritic and andesitic plugs and dykes with numerous associated porphyry-copper systems.Pliocene to Pleistocene andesitic to dacitic flows, flow domes, plugs and pyroclastic rocksappear to be associated with the most intense period of gold mineralisation.

The two principal types of mineralisation found are 1) copper-gold porphyry stocks and 2)northwest-southeast trending epithermal gold-silver quartz-carbonate veins (Lodrigueza &Estoque, 1976; Mercasdo et al, 1986). The porphyry quartz-sulphide network vein-stylemineralisation is associated with the Middle Miocene dioritic intrusions located in the westernpart of the property. The epithermal gold veins cut and thus post-date the porphyrymineralisation. The mineralised veins are northwest-southeast to westnorthwest-eastsoutheast striking and moderately to steeply dipping structures.

8 DEPOSIT TYPES

8.1 GENERIC STYLE OF MINERALISATION

Masara can be classified as a vein-style epithermal system. It displays typical features,being: 1) a veined and altered zone up to 10 m in width (generally less than 5 m); 2)dominated by quartz veining and silicification; 3) structurally controlled; and 4) associatedwith wide and pervasive wallrock alteration. Mitchell & Leach (1991) documents theextensive occurrence of epithermal veins throughout the Philippines.

Other examples of this style of vein-gold mineralisation include the Cracow and PajingoSystems in Queensland, Australia, and the Mt Muro and Kainantu Deposits in Indonesia.

8.2 RESOURCE ESTIMATION ISSUES IN EPITHERMAL GOLD VEINS

Epithermal gold systems are generally characterised by a low to high nugget effect (25-100%), and sometimes the presence of coarse gold particles (>100 µm in size). They areoften challenging to evaluate, though this is dependent on the severity of the nugget effect,presence or absence of coarse gold, and geological continuity/controls (Dominy & Annels,2001; Dominy et al, 1999).


Their effective evaluation is often difficult because of the relatively low concentrationsinvolved and erratic nature of the gold distribution. Grade continuity is usually less consistentthan gross geological continuity, and is typified by the localisation of high grades withindiscrete oreshoots.

In many cases drilling, particularly diamond drilling is an effective measure of globalgeological continuity, whereas grade can only be reliably resolved from undergrounddevelopment and sampling. Depending upon drill density and geology, it is unlikely thatanything above an Indicated Mineral Resource can be estimated from surface drilling alone.Other similar systems know to Snowden generally require drilling down to between 20 m by20 m or 30 m by 30 m to define Indicated Resources.

Underground development and in-fill drilling will be required to delineate Measured MineralResources and subsequent Proven Mineral Reserves.

9 MINERALISATION

9.1 INTRODUCTION

Some 40 gold veins are known within the Masara property, and 11 are included in the 1995resource estimate (Figure 9.1). In addition, 8 porphyry copper systems are known to occur.

Mitchell & Leach (1991) summarise the Masara veins thus: “They are up to a kilometre longwith a vertical depth of at least 400 m. Discrete veins at depth splay and horsetail upwardsand locally pass into stockworks. Braiding, comb textures, and quartz-carbonate andsulphide bands with globular marcasite are present. Early fine-grained quartz is cut by veinsof later coarse translucent quartz, calcite and sulphides; breccia is confined to fault zones.Increase in base metal sulphides below the top 150 m is accompanied by a decrease ingold:silver ratios from 8:1 to 2:1. A wide propylitic alteration zone is reported buthydrothermal alteration is not described in detail”.


Figure 9.1: Geological plan of the Masara area [Source: Apex Mining Company]


9.2 VEIN TYPES

The Masara veins are classified as either ‘clean ore’ or ‘complex ore’:

Clean ore is characterised by low sulphide content and occurs in generally clean-walled tensional structures. Clean ore is characteristic of the veins Don Fernando,Don Joaquin, Don Mario, St Vincent, Don Calixto and St Benedict.

Complex ore has higher sulphide content and often occurs in wider shear structures.Complex ore characterises the veins along the main Masara trend and include MariaInez, Sandy, Masara, Manganese and St Francis Veins. Pyrite, chalcopyrite,sphalerite and galena are the predominant sulphides minerals and the mineralisationis often associated with appreciable amounts of manganese both occurring as oxide-and carbonate-facies.

9.3 ALTERATION

The veins are associated with variably weak to strong wallrock alteration that often pervadesthe wallrocks many 10’s m beyond the vein walls. Types present include: propylitic, sericitic,argillic and silicic alteration. Within the core of the fracture zones, the wallrocks can beareconomic gold grades, and in some cases contribute to a mineable zone that is wider thanthe quartz vein.

The propylitic alteration (chlorite-epidote-carbonate-pyrite) is most extensively developed inbasic to intermediate rocks furthest from the gold veins (Howe, 1995). Silicification is closelyassociated with veins. The combined silicic-sericitic-argillic type is normally accompaniedand/or overprinted by carbonate replacement.

9.4 ORE CONTROLS

Economic zones extend over substantial strike lengths and in various orientations. It is likelythat the different orientations of veins reflect the time at which open fractures were opened inresponse to different stress regimes and associated hydrothermal events.

The vein host rocks are Masara Formation (sediments with intercalated volcanics) anddioritic intrusive rocks. Howe (1995) note that economic mineralisation is best developed inthe Masara Formation, but that this may be a function of the proportion of the study areaoccupied by Masara Formation. That veins with economic grades and widths occur in dioritichosts cannot be disputed (e.g. Maria Inez, Sandy and St Benedict Veins).

The veins contain irregular oreshoots that range in size up to 1,000 m along strike and 400m down dip. Gold grades are reported to increase with sulphide content towards the core ofthe mineralised zones. Gold-silver ratios of up to 8:1 from upper levels, and ratios down to2:1 in lower levels in the mine have been reported (Howe, 1995). Such zonation is likely torelate to multistage mineralisation events.

Both fine- and coarse-grained native gold and electrum occur in the massive quartz-calciteveins and in crystalline and dendritic form in vuggy quartz.

9.5 PORPHYRY COPPER-GOLD MINERALISATION

The porphyry copper-gold deposits in the central-western part of the property are associatedwith small dioritic stocks that have intruded the Masara Formation. Hydrothermal alterationtypes found include propylitic, phyllic, sericite-clay-chlorite, argillic and potassic. Mapula is by


far the largest porphyry deposit, with a reported size of 78 Mt with 0.40% copper and 0.37 g/tAu (Howe, 1995).

9.6 DESCRIPTION OF THE MASARA PROJECT VEINS

9.6.1 Introduction

The Masara resource estimates since 1994 have included a number veins that have all beenpreviously mined. Table 9.1 summarises their general characteristics, and Figure 9.2 givestheir locations within the Masara Project area.

Table 9.1: General characteristics of veins at Masara

Vein

*Averagetrue

width(m)

*Averagegrade

(g/t Au)

Dip of vein Depth minedbelow

surface(m)

Extent of minedstrike

length/development(m)

Masarita 1.7 5.1 75° 120 1,200$

Wagas 2.0 4.2 75° 200 800

Don Calixto 1.8 5.8 70° 180 850

Don Fernando 1.9 7.2 75° 340 750

Don Mario 1.7 5.7 75° 300 1,300

Don Joaquin 2.3 6.3 75° 250 1,200

Maria Inez 2.2 7.5 75° 100 600

Masara 2.0 7.0 65° 130 1,000

Bonanza 1.9 6.2 75° 100 130

Manganese 2.0 7.0 65° 100 700$

Sandy 1.4 5.4 75° 60 750

St Vincent 1.9 5.4 75° 250 500

St Francis 1.9 5.4 75° 200 620

St Benedict 1.4 8.5 75° 200 300

*The average ‘orebody’ true width, grade and dip are based on the global averages reported in theHowe (1995) estimate. The St Benedict grade is based on figures from the Apex (2001) and MGB

(2004) estimates. The Bonanza grade is based on the global grade and width for the entire MasaraProject veins, given that no specific data exists except that the structure has been mined and with ‘high

grades’. $Veins have not been extensively mined, with lateral development only.


Figure 9.2: Plan showing the location of veins within the Masara Project area [Source:Apex Mining Company]

9.6.2 Wagas Vein

The Wagas Vein strikes N80°W and dips 75°SW, and is traceable for at least 800 m alongstrike. The 2 m wide quartz-calcite vein averages 5 to 6 g/t Au, and is accompanied by arestricted argillic alteration halo on the hangingwall. The vein is one of the less developedsystems at Masara. Like Don Calixto, Wagas has also been mined partially by open pit.

9.6.3 Don Calixto Vein

Don Calixto Vein has been worked along its 850 m strike length, and for 180 m down dip. Itdips about 70-75°SE, and has been extensively developed and mined between the 690 mand 510 m Levels. Calixto has been mined via surface open pits.

The massive quartz vein varies in width up to 2 m, and is accompanied by argillic alterationof its wallrocks. Locally there are high grades within the wallrocks. The vein averages 1.8 min width, and grades 5.8 g/t Au.


Snowden inspected a geological assay plan of Don Calixto (600 m Level) and observed thatthe mineralisation was continuous along the mapped section (250 m). However the quartzvein was relatively discontinuous and was restricted to runs of up 50 m along strike. Thealteration zone locally contained more grade than the quartz vein, even when the vein wasabsent. It appears that late strike parallel faulting within the mineralised zone leads to veinreduction and development of gold-bearing gouge. This is a notable feature of a number ofMasara veins.

9.6.4 Don Fernando Vein

The Don Fernando Vein strikes N65°W and dips 75°NE. It has been developed for over 750m along its strike length, and to a vertical depth of 340 m from the surface.

The structure comprises a central massive quartz vein, with silicified diorite wallrocks thatcarry minor galena, sphalerite and chalcopyrite. A fault gouge zone was reported on thehangingwall of the vein that carried notable gold grades. The 1.9 m wide ore zone averages6.2 g/t Au.

The Don Fernando Vein is a major system splitting into the Don Mario and Don JoaquinVeins. The northwestern extension of Don Fernando along with Don Alberto Vein, intersectthe Central Pagasa porphyry copper-gold System were the veins break into narrowdiscontinuous quartz-sulphide veinlets.

9.6.5 Don Mario Vein

Don Mario Vein strikes N70-80°W and dips 80-85°NE. Don Mario forms a cymoid loop withthe Don Joaquin Vein as the footwall structure. Like Don Joaquin, it has been minedextensively for over 1,300 m along strike and 300 m vertically.

Don Mario is a narrower quartz vein of 1.3 m to 1.4 m, though the mineralised zone is closerto 1.7 m in width. The vein is hosted within diorites that show argillic alteration. The massivequartz vein averages 5.7 g/t Au.

To the west, it joins with Don Fernando Vein. The southeastern portion of Don Mario Vein iscalled Maria Inez Vein.

9.6.6 Don Joaquin Vein

Don Joaquin Vein strikes N70-80°W and dips 80-85°NE. It is traceable for over 1.2 km alongstrike. It forms a cymoid loop with Don Mario.

The structure comprises a central massive quartz vein, with silicified diorite wallrocks thatcarry minor galena, sphalerite and chalcopyrite. A fault gouge zone was noted on thehangingwall of the vein that carried viable gold grades. The 2.3 m wide ore zone averages6.3 g/t Au.

Don Joaquin has been extensively stoped from the 690 m Level up to the surface, about 500m. It has been identified at depth on the 510 m Level.

9.6.7 Maria Inez Vein

Maria Inez strikes N70-80°W and dips 70-75°SW and is the southeastern extension of theDon Mario Vein.


The 2.2 m massive quartz-sulphide vein has an average grade of about 6 g/t Au. Like StFrancis, Maria Inez has a high sulphide content, marked by the presence of chalcopyrite,galena and sphalerite in the vein. The main resource potential for this vein system is belowthe 850 m Level.

9.6.8 Masara (or Maligaya) Vein

The Masara Vein is probably the most significant structure within the Masara Project area. Itstrikes N35°W and dips 70-85°NE. The quartz-calcite-sulphide breccia vein pinches andswells along its >1,500 m strike length, though is generally around 2 m in width. All othervein systems appear to converge toward the Masara Zone in the southeast of claim area.Masara shows repeated brecciation and mineralisation.

It was extensively mined by the Samar Mining Company during the 1950’s, when the cut-offwas reportedly 15 g/t Au. The Masara Vein has been extensively developed and stoped forover 1,000 m, and only about 200 m down dip. It occurs in what appears to be a more than70 m wide alteration zone, together with the Bonanza-Manganese Vein, which may be asecond vein in it own right or a splay structure off the Masara vein.

9.6.9 Manganese-Hitch Vein

The NE-trending Manganese Vein dips approximately 65°NE, and is part of a fault systemthat branches and braids in the NW part of the Masara Lease area. The continuation of theManganese vein to the NW of the Manganese 570 m Level portal has been known asManganese-Hitch and Lumangang-Hitch. The vein has been developed for approximately 80m along strike on the 530 m Level, with one raise and one vent raise.

Very limited data available give vein widths of 1-2 m and gold values of 3.6-11.4 g/t Au.Surface outcrops show brecciated, sheeted, fine-grained grey quartz and strongly silicifiedveining, similar to the Bonanza vein.

9.6.10 Bonanza-Manganese Vein

The portal of Manganese Vein is located 65 m N of the Maligaya 570 m Level portal, and atthe same level. It is an exploratory drive developed approximately 60 m along strike, with twoshort raises. The Manganese tunnel lies in the projected continuation of the mined part ofthe Bonanza Vein, 265 m NW of its last development face. Vein widths reported areapproximately 1.5 m with 4 g/t Au.

The Bonanza Vein proper (the mined part) has been developed approximately 150 m alongstrike on levels 100 m down-dip. Typical vein widths above the 570 m Level were 1-1.8 m,with ore block grades in the range 7.5-11.2 g/t Au. Levels below the 570 m Level, havereported vein widths of approximately 1.4 m with 8.5 g/t Au, with sections locally reaching 4m width. The mined structures were highly silicified fault breccias and sheeted grey to white,vuggy quartz-calcite veins with disseminated fine-grained pyrite, chalcopyrite, sphalerite andgalena.

9.6.11 Sandy Vein

The Sandy Vein strikes N70-80°W and dips 70-75°SW.


The 1.4 m quartz-sulphide vein has an average grade of 5.4 g/t Au, and bears highlysilicified wallrocks. The vein is traceable along strike for 900 m, and is open at depth belowthe 850 m Level.

9.6.12 St Vincent Vein

The St Vincent vein strikes N70-80°W and dips 80-85°NE. It is the hangingwall split of the StFrancis Vein.

The 1.4 m quartz-sulphide vein averages 6.2 to 6.5 g/t Au, and is seen to typically pinch andswell in some sections. The mineralised zone historically mined, approached 1.9 m in width.

Apex worked the St Vincent initially through an open pit.

9.6.13 St Francis Vein

The St Francis Vein strikes N65°W and dips steeply to the northeast. It has been extensivelydeveloped and stoped over a strike length of 450 m, and over 200 m above the 740 m Level.

The 1.5 m quartz-sulphide breccia has an average grade of 6 g/t Au, and elevated sulphidecontent. The central vein is associated with argillic wallrocks, and economic gold grades inthe hangingwall.

The vein merges with the St Vincent structure at 60W, and cuts the South Pagasa porphyrysystem. Snowden inspected a geological assay plan of the St Francis Vein on the 780 mLevel where it merges with the St Vincent. In the merge zone the structure is up to 3.5 m inwidth, and bears grades in excess of 100 g/t Au.

St Francis was the first vein to be developed on the Masara Property.

9.6.14 St Benedict Vein

St Benedict Vein strikes N80°W and dips 75°SW, and is traceable for at least 800 m alongstrike and 200 m down dip.

The 1 to 1.5 m wide quartz-calcite vein averages 8 to 9 g/t Au, and is accompanied byquartz-breccia gouge material on both its hanging- and foot-walls. The hangingwall alterationzone is reputedly of economic grade.

The St Benedict Vein is likely to be the southeastern extension of the Don Fernando andDon Joaquin veins. The main potential of the St. Benedict Vein is below the 850 m Level.

9.6.15 Masarita Vein

The Masarita Vein strikes to the northwest, and dips 75°SW. It has been developeddiscontinuously over a strike length of some 1,250 m.

Some stoping has taken place above the 510 m Level along with some near surfaceartisanal workings. The average vein width is approximately 1.1 m, but locally up to 2.2 m,and with average gold values to 3 g/t. The mineralisation appears to be grey semi-transparent quartz with a high content of chalcopyrite, galena and occasional sphalerite


9.7 CONTINUITY AND VERTICAL EXTENT

Understanding the continuity and extent of the Masara vein systems is of importance to thedefinition of further resources, and effective estimation procedures. The lack of currentgeological data leads to a necessarily preliminary view of the system as a whole. However,the following characteristics form a foundation on which to develop the geological model ofthe system, the:

individual veins can be traced along strike for in excess of 1,000 m;

deepest workings in the area are on the Don Fernando Vein, which extend to 340 mbelow surface. The other veins were generally worked to 100 m and 300 m fromsurface;

veins branch and re-join along strike, giving additional vein ‘resource potential’;

laterally continuous host fault structures are believed to be related to wrenchmovement, and hence sub-vertical elongate oreshoots are inferred in well-mineralised zones; and

veins are related to multiple stages of mineralisation that is likely to result intelescoped zones of gold deposition.

Figure 9.3: Longitudinal section of the Don Fernando Vein. The upper historically minedworkings are shown clearly [Source: Scanned image, Crew Gold Corporation]

NB: average distance between levels is 50 m.


Figures 9.3 and 9.4 show the dip extent of Masara veins on the Don Fernando and throughthe W30 section. Note that the veins converge with depth between the 0 and 400 m datumlevels.

Figure 9.4: Cross section of Masara veins at position W30. The section clearly shows thecontinuance of veins to a depth, their relationship with each other and nature of vein

splitting [Source: Scanned image, Crew Gold Corporation]

According to Howe (1995) there is potential for grade and payability to reduce below the 510m Level. In their report they state that “There is a real reduction in grade and payability withdepth within the major vein structures which indicates that exploration and developmentbelow the 510 level is unlikely to prove large reserves in every vein”.

There is no compelling evidence to prove or refute the above comment by Howe, thoughtheir resource estimate shows a reduction in grade with depth on three veins (Table 9.2).The later estimate by Apex (2002) shows a decrease in grade on Don Calixto and DonFernando Veins (Table 9.3). Whilst the figures show a tendency for grade reduction belowthe 510 m Level, Snowden does not find this compelling evidence to condemn resourcesbelow this level.

It is likely that the veins will continue for a reasonable distance below the 510 m Level. Theliterature on epithermal systems suggest that it is possible for mineralised veins to extend upto 1,500 m below the original land surface (Henley, 1991; Hedenquist, Arribas & Gonzalez-Urien, 2000), through the presence of base metals may complicate matters. Mitchell & Leach(1991) discussed the Baguio District of North Luzon, where epithermal veins are reported toextend up to 1,500 m below surface, though no reference was made to vein payability.

The deepest workings at Masara are on the Don Joaquin Vein (about 500 m from hilltop),with shallow workings on the Sandy and Wagas Veins (<200 m). Based on its experience ofother epithermal systems, Snowden believes that it is likely that that the Masara veins willcontinue beyond the current lowest mining horizon at the 510 m Level and that payability islikely to continue, albeit potentially reducing with depth. Snowden strongly recommends that


the planned 2006 drilling programme, includes a number of deep holes to prove grosscontinuity with depth.

Table 9.2: Comparison between grades above and below the 510 m Level at Masara.The figures are taken from the Howe (1995) resource estimate. Note that these are

average block grades reported at a 3.5 g/t Au cut-off

Vein +510 m Level(g/t Au)

-510 m Level(g/t Au)

Change

Masarita 6.8 4.8 Decrease

Don Calixto 5.6 5.8 Increase

Don Fernando 7.3 6.0 Decrease

Don Joaquin 8.6 6.0 Decrease

Table 9.3: Comparison between grades above and below the 510 m Level at Masara.The figures are taken from the APEX (2002) resource estimate. Note that these are

average block grades reported at a 3 g/t Au cut-off

Vein +510 m Level(g/t Au)

-510 m Level(g/t Au)

Change

Don Calixto 4.7 4.4 Decrease

Don Fernando 6.3 6.1 Decrease

Don Joaquin 6.6 6.7 Increase

Surface exposure shows that the gross continuity of the Masara veins are good, and on thescale of 1,000’s m. From a mining perspective, it is the small-scale local geological andgrade continuity that is important (Dominy, Platten & Raine, 2003). A provisional inspectionof geological and assay plans held at the site office, showed, at least for the Don CalixtoVein, that the quartz veins are laterally variable. They display branching, and pinch and swellfeatures within development (Figure 9.5). The vein-hosting alteration zone, can in manycases, contain notable gold grades when no vein is present.

It is also understood that medium-scale (10s m displacement) cross-faulting exists atMasara. This locally dislocates veins into staggered segments, which will provide somechallenges during evaluation and mining.


Figure 9.5: Geological and assay plan of a section of the Don Calixto Vein, 600 mLevel, Masara Project [Photograph: SC Dominy, November 2005]

10 EXPLORATION

Exploration in the Masara Property appears to be limited to the drilling of the porphyrytargets in the area. No record of drilling in the vein systems has been reported and itappears that all veins have been developed as they were mined, with drifting along strike invisible structures. Most of the known veins have outcrops, and these veins appear to havebeen developed from these outcrops at various horizons.

A few cross-cut levels have been established in the area at lower levels than mine workings,and used as haulages. These include the 510 m Level, which intersect the Wagas, DonCalixto, Don Mario, Don Fernando, St Francis and St Vincent veins, and this establishes thepresence of these veins at depth. In the St Benedict system, 850 m Level intercepts theMaria Inez, Sandy and St Benedict Veins, and finally the 570 m Level cuts the Masara,Manganese and Bonanza Veins.

No records of the gold vein exploration programs are available, while a detailed account forthe porphyry copper drilling is available.

A major task for the current Apex rehabilitation program is to conduct systematic drilling inthe vein systems to establish not only the position, but also characterise the nature of themineralisation. The Apex exploration on the Masara property has only recently beencommenced, and includes surface and underground drilling as well as undergrounddevelopment on mineralised structure.


11 DRILLING

No drilling has been reported from the veins included in the historical data. A discussion ofthe current drilling programme by Apex is presented in Section 19.1.

12 SAMPLING METHOD AND APPROACH

The reported presence of visible gold (>250 microns) and the potential for 30% gravityrecoverable gold in the mill suggests the presence of coarse gold particles in the MasaraVeins (gold particles >100 microns). The challenges and issues related to sampling andsample preparation in a coarse gold environment are well known and documented (Dominyet al, 2000).

Whilst coarse gold is unlikely to be a chronic problem at Masara, as seen in manymesothermal gold veins, Snowden recommends that Crew undertake a study to define thecoarse gold issues. This should include systematic screen fire assay of core anddevelopment samples, and heterogeneity testing.

The historical resources are based on development sampling around stope blocks. Noinformation exists pertaining to the sampling method, though it is safe to assume thatsamples were collected from either drive and/or raise backs or faces by channelling.

13 SAMPLE PREPARATION, ANALYSIS AND SECURITY

No protocol or QA/QC information exists on sample preparation and assay of the historicaldata. An on site laboratory existed during the last period of operation.

A discussion of historical data quality based on the work of Howe (1995) is given in Section14.2.

No information is available for the historical samples. During the last period of operation,1981 to 1989, an on site laboratory was in operation.

14 DATA VERIFICATION

14.1 GEOLOGICAL DATA VERIFICATION

During its visit, Snowden toured the project area, and was shown a number of sites wheremineralisation outcropped (Figure 14.1). Snowden also visited the 690 m Level, where veinsand associated alteration were viewed in old workings (Figure 14.2). Exposures wereextremely dirty, though in-situ mineralisation was confirmed.


Figure 14.1: Exposure of the Masara Vein to the East of the 850 m Level cross-cutentrance [Photograph: SC Dominy, November, 2005]

Figure 14.2: Recent artisanal workings on the 690 m Level. Here a soft quartz-mineralised gouge has been removed by the miners. Harder quartz shoulders are left

on the hanging and footwalls [Photograph: SC Dominy, November 2005]


Snowden was unable to verify the historical geological data. No core or associated core logsexist.

A single, new, mineralised core intersection drilled by Apex into the St Benedict Vein wasinspected by Snowden (Figure 11.1).

Copies of most vein VLPs and a series of sections were inspected (Figures 9.1, 9.2 and14.3), and Snowden has subsequently acquired AutoCAD format VLPs from A C A Howe inLondon. These sections show Howe’s resource blocks and historical workings.

Snowden was shown a collection of plans and sections from Apex. Importantly, thiscollection includes geological and assay plans, which Apex is currently compiling into digitalformat. This material forms a critical record of past production, and will permit Apex to gain aclearer picture of the nature of the veins and alteration, and grade distribution.

Figure 14.3: Inspection of historical paper plans and sections at the Masara Projectsite office on November 2005 [Photograph: SC Dominy]

14.2 ASSAY VERIFICATION

14.2.1 Verification Data

There is limited assay verification data for Masara, except for small datasets relating to theHowe estimate in 1995, and a Crew due diligence study in 2005.

Snowden did not undertake any independent sampling during its visit to Masara. Given therestricted underground access with poor exposure, check sampling was consideredunnecessary and a safety risk, as any samples collected will have had little impact on thequality of the resources.


14.2.2 1995 Howe Verification

During 1995, Howe selected 17 samples from Masara, and resubmitted them for bothinternal and external laboratory analysis.

The samples chosen ranged in grade from 0.15 g/t Au to 16 g/t Au. For each sample, aduplicate sample from the original pulp was submitted to the Masara Laboratory. In addition,the coarse reject for each sample was taken, pulverised, and coned and quartered into threesub-samples that were submitted to the Masara, Damilab and VMI Laboratories. TheDamilab and VMI Laboratories were external to Masara. The results are shown in Table14.1.

Table 14.1: Howe check assays at Masara in 1995 (after Howe, 1995)

Sample No. Original Masaraassay

(g/t Au)

Pulp duplicateMasara assay

(g/t Au)

Check Masaraassay

(g/t Au)

Check Damilabassay

(g/t Au)

Check VMI assay(g/t Au)

1001 9.28 13.50 19.07 26.27 18.80

1002 16.60 17.10 19.27 25.87 33.87

1003 0.15 0.20 0.20 0.47 0.20

1004 3.53 12.10 3.50 4.00 3.73

1005 2.97 2.43 2.80 3.27 2.60

1006 1.13 n/a 1.67 0.27 2.47

1007 4.33 2.33 3.30 3.53 3.93

1008 2.10 1.97 3.10 4.13 3.47

1009 14.88 15.90 18.63 29.73 25.53

1010 13.25 1.87 2.03 1.80 2.87

1011 9.85 n/a 0.27 0.53 0.13

1012 4.74 0.07 0.30 1.13 0.67

1013 11.90 12.23 12.80 21.33 14.00

1014 5.37 5.43 2.23 3.33 3.40

1015 7.05 5.80 14.10 12.80 12.80

1016 8.17 6.30 12.50 12.80 12.67

1017 11.12 9.77 11.17 12.27 11.20

Mean 7.44 7.13 7.47 9.62 8.96

Variance 24.64 34.09 51.91 104.74 94.23

COV 67% 82% 96% 106% 108%

Figure 14.1 shows the variability between the original Masara and Howe duplicate pulpgrades. Sixty-six percent of pairs were within ±15% of each other, revealing a high variability.


Figure 14.1: Precision plot of the original repeat pulps assayed by Apex

Precision PlotCREW_APEX MASARA2005 Duplicate Samples

0.001

0.01

0.1

1

10

0.001 0.01 0.1 1 10 100mean of paired values (g/t)

half

abso

lute

diff

eren

ceof

the

pai

red

val

ues

Sample Pairs 10% 15% 20% Line of Significance Graph Limit

Number of sample pairs0-10% 710-15% 315-20% 120-100% 4

Total 15

Figure 14.2: Precision plot of original versus Howe repeat Damilab samples

Precision PlotMasara 1995 Repeats

0.001

0.01

0.1

1

10


hal

fab

solu

tedi

ffer

enc

eo

fthe

pai

red

valu

es


Number of sample pairs0-10% 310-15% 115-20% 0

20-100% 13Total 17


Figure 14.3: QQ plot showing comparison between original Masara and Howe Damilabrepeat samples

Log Scale QQ PlotMasara 1995 Repeats

0.01

0.1

1

10

100

0.01 0.1 1 10 100

ascending Original Masara (g/t)

asc

end

ing

Rep

eatD

amila

b19

95(g

/t)

+/- 15%

Figures 14.2 and 14.3 show precision and QQ plots comparing the original Masara versusthe Howe Damilab repeat pulps. Twenty-three percent of samples are within ±15%, showingan extreme variability. The QQ plot shows that above about 9 g/t Au, the repeat pulpsoverstate the original assays. Below 9 g/t Au, the reverse is true.

Whilst a dataset of 17 samples has limitations in its interpretation, it is clear that there arerepeatability issues with the historical Masara samples. In the above cases, the individualpairs of samples compared have show a high to extreme variability. It is likely that thisvariability is caused by the natural variability in the ore, and the potential presence of coarsegold particles in the pulps.

14.2.3 2005 Crew Verification

During their 2005 due diligence programme Crew undertook two small sampling verificationexercises. They collected:

1) 15 new samples close to sites previously sampled by Apex. The Crew sampleswere submitted to two off-site laboratories for analysis (Table 14.2). The samples were nottrue field duplicates, and thus only provide an indication of the local grade at the original site;and

2) 35 new samples from various locations across Masara, and submitted them to twooff-site laboratories for analysis (Table 14.3) The samples aimed to verify grade at theselocations and test inter-laboratory variability.


Table 14.2: Crew check samples close to original Apex locations (after Crew, 2005)Sample No Vein

sampledLevel

samplecollected

from

Apexoriginalgrade

(g/t Au)

CrewsampleMcPharassay

(g/t Au)

Crew sampleVICLODE

assay(g/t Au)

41951 Don Joaquin 810 9.2 28.3 16.741952 Don Joaquin 810 5.0 12.1 7.141953 Don Joaquin 810 31.4 27.5 19.041954 Don Joaquin 810 22.8 15.6 12.241955 Don Fernando 690 3.0 10.2 17.841956 Don Fernando 690 10.2 3.7 5.141957 Don Fernando 690 15.6 1.0 3.041958 Don Fernando 690 4.2 1.3 2.441959 Don Fernando 690 11.5 1.4 3.941960 Don Fernando 690 36.2 5.8 8.241963 Don Joaquin 690 15.2 2.3 4.741964 Don Joaquin 690 14.1 4.6 1.741965 Don Joaquin 690 70.7 10.2 10.341966 Don Joaquin 690 6.3 3.1 5.041967 Don Joaquin 690 3.6 2.2 5.4Mean - - 17.3 8.6 8.2

Variance - - 317.2 81.2 33.2COV - - 103% 105% 70%


Table 14.3: Crew new samples with duplicate assays from different laboratories (afterCrew, 2005). All samples were channelled from the backs, floors or walls of drives.

Samples marked * were grab samples from broken rock materialSample No Vein sampled Source of

sampleCrew sample

McPharassay (g/t

Au)

Crew sampleIntertekassay

(g/t Au)41651 Jessie Road cut 0.1 0.141652 Jessie Road cut 0.4 0.641653 Sandy Road cut 3.1 3.241654 Don Fernando 850 Level 10.4 9.141655 Don Joaquin 850 Level 7.6 7.541656 Don Joaquin 850 Level 1.3 1.241657 Don Joaquin 850 Level 8.3 8.341658 St Benedict 1043 Level 24.2 22.241659 St Benedict 1000 Level 11.0 10.441660 Don Calixto Open pit 0.2 0.241661 Don Calixto Open pit 0.2 0.341662 Don Calixto Open pit 0.2 0.541663 Don Calixto Open pit 0.1 0.1*41664 Don Calixto Open pit 2.5 2.241665 Don Alberto 740 Level 7.4 7.441666 Don Alberto 740 Level 2.2 2.041667 St Francis 890 Level 7.4 7.441668 St Francis 890 Level 6.0 6.141669 St Francis Open pit 1.9 1.741670 St Vincent Open pit 0.2 0.341671 St Vincent Open pit 0.8 1.241672 St Vincent Open pit 0.0 0.141673 Don Fernando 690 Level 0.7 0.841674 Don Fernando 690 Level 5.1 4.2*41675 Don Joaquin 850 Level 1.4 1.241676 Maria Inez 960 Level 4.8 4.341677 Masara 690 Level 13.6 12.941678 St Francis 790 Level 3.0 2.841679 St Francis 790 Level 3.6 3.5*41680 Don Joaquin 850 Level 2.3 2.2*41681 Maria Inez 850 Level 5.3 4.641682 Don Calixto (not reported) 6.3 5.841683 Kurayao Open pit 0.1 0.141684 Kurayao Open pit 0.1 0.141685 Theresa Open pit 0.1 0.1Mean - - 4.1 3.8

Variance - - 25.5 22.0COV - - 125% 122%

Note that the Jessie, Don Alberto, Theresa and Kurayao Veins are not included in thecurrent resource estimate.


The 15 samples collected close to original Apex sample sites display a high variability, whichis to be expected given the difficulty of locating the original Apex sample site exactly. The sethowever provides a useful confirmation of economic gold grades at Masara, and doesindicate that field samples are likely to show some variability. This feature is to be expectedin all styles of gold vein deposit.

The two assay data sets from the Crew field samples display remarkably little variability(Figures 14.15 and 14.16). Some 86% of pairs are within ±15%, and there is no discernablebias between the two different laboratories. The samples submitted to the laboratories werecoarse crush duplicates. The lack of variability (hence good precision) indicates that 1)variability within a single sample may not be high, and 2) that the effective pulverisation ofthe gold particles present to produce a relatively ‘homogeneous’ pulp. The lack of biasbetween the two laboratories indicates good internal practices, though Snowden has notsighted detailed protocols or QA/QC data. Not withstanding this observation, it is importantthat a sample characterisation study be undertaken at Masara, to check for the possibleimpact of coarse gold particles.

Figure 14.4: Precision plot of coarse reject duplicate assays, Crew Intertek versusCrew McPhar

Precision PlotCREW_APEX MASARA2005 Duplicate Samples

0.001

0.01

0.1

1


hal

fabs

olu

tedi

ffer

enc

eof

the

pai

red

valu

es


Number of sample pairs0-10% 2710-15% 315-20% 220-100% 3

Total 35


Figure 14.5: QQ plot showing comparison between Crew Intertek and Crew McPharassays

Log Scale QQ PlotCREW_APEX MASARA2005 Duplicate Samples

0.01

0.1

1

10

100

0.01 0.1 1 10 100

ascending McPhar Assay (g/t)

asc

end

ing

Inte

rtek

Ass

ay(g

/t)

+/- 15%

14.2.4 Comment

Historical and recent assay verification data at Masara is restricted to two small datasetscollected by A C A Howe in 1995 and Crew in 2005. Snowden has reviewed the data, andmakes the following comments:

the duplicate pulp samples reported in Howe (1995) show a high level of sample pairvariability, and bias between the different laboratories used;

the re-sampling of 15 locations by Crew does not provide a practical comparison offield duplicates, however the data do give a clear confirmation of economic grades atMasara and that variability is present;

the thirty-five in-situ samples taken by Crew show a good correlation between pairsof coarse duplicate samples assayed at two different laboratories.

Howe (1995) makes the following statement with regard to Apex samples and procedures:“Low and high first assays are only re-assayed at the discretion of senior laboratory staff atMasara. There is no other routine method of estimation of assay repeatability, accuracy orprecision. A limited programme of repeat assaying at Masara and two local laboratories of asuite of seventeen exploration samples over a wide range of gold contents has been carriedout as part of the present study. This information and filed reports from the mid 1980's hasshown that widely discrepant values occur in a proportion of the re-assay data. The studyshowed that the Masara lab assays have no discernible bias but are, over a wide range,20% lower than the results of the other labs. Masara data must therefore be regarded with adegree of circumspection and interpretation when selecting more intercepts containing asmall number of sample points. This reservation is equally applicable to mining control whencoupled with the erratic distribution of very high values”.

Snowden concurs with this statement, and concludes that there is likely to be reasonableuncertainty related to the original Apex samples. These data formed the base for the Howe(1995) resource estimate, which has also been used by Snowden for the current estimate(see Section 17.2).


Any variability in samples will be related to the following factors:

1) natural ‘nugget’ variability of the mineralisation;

2) size and deportment of gold particles;

3) field sample collection method and quality; and

4) laboratory sample preparation and assay quality.

In all instances factors (1) and (2) will be at play, whereas factors (3) and (4) are likely tohave the highest impact in the Apex samples.

Given these issues, Snowden recommends that Apex undertake a sampling and assayingtest programme. This should include a series heterogeneity tests, supported by screen fireassays on a selection of core and development samples, as well as mineralogical work todetermine the deportment of gold particles. Such a study will permit ore characterisation withrespect of sampling, and permit optimised sampling and sample preparation protocols to bedevised.

14.3 DATABASE VERIFICATION

There is no assay database to verify at Masara. Snowden contacted A C A Howe to recoverthe original 1995 data files; however they were no longer available.

Apex is currently producing a digital database from historical paper plans and sections,which will contain in excess of 10,000 sample points from many of the veins on the MasaraLease.

14.4 BULK DENSITY VERIFICATION

No bulk density data exists or suitable material on which to base determination. Snowdenhas used the value of 2.35 t/m3 applied by Howe (1995). Snowden believes that this is aconservative value, and is likely to understate the true value. The ‘complex ore’ veinsdominated by sulphides are likely to have much higher values.

Snowden stresses the need for the urgent verification of bulk density based on its currentdrilling programme. Each vein must be determined individually, and quartz and alteredwallrocks considered independently.

15 ADJACENT PROPERTIES

The Masara Gold Property is located in a known gold district in the Compostela Valleyprovince of eastern Mindanao. The area includes renowned sites like the Diwalwal andCompostela gold-rush areas, which have been worked by 20,000 to 30,000 small-scaleminers since the early 1980s. The abandoned Hijo and Lost Horizon gold deposits, whichare located immediately south of the Masara property, were also worked in the late 1980swhere some 600,000 t of ore grading 5.5 g/t Au was retrieved from an open pit. The Manatproperty, located 10 km NE of the Masara property, hosts a major gold-silver/base metalepithermal vein with over 1 km strike length and discontinuous structure over 3 km to 4 km.In addition to these prospects and former mines, the area hosts a large number of recordedgold vein occurrences, many of which are being mined by small-scale operators.


The area also contains a number of porphyry copper systems. These include the King-Kingporphyry copper-gold deposit that located 20 km SW of Masara. King-King is considered amajor deposit containing over 1 billion tonnes at a grade of 0.31% Cu and 0.41 g/t Au. Theabandoned Amacan porphyry copper mine, which suspended mining operations in 1985, islocated 3 km from the mill site, still containing some 100 Mt of 0.3% Cu and 0.4 g/t Au.Within the Masara property itself, the Mapula porphyry-copper deposit together with satelliteoccurrences, are estimated to contain 85 Mt with 0.4% Cu and 0.4 g/t Au (Howe, 1995).

16 MINERAL PROCESSING AND METALLURGICAL TESTING

A recent study of the existing plant concluded that its infrastructure and equipment could berefurbished and reused to achieve the planned 2,000 t/d operation (Figure 16.1). The finaldesign of the plant, including the detailed flow-sheet would, however, is the subject ofdetailed metallurgical testing and evaluation programme (Figure 16.2).

Figure 16.1: Existing plant at the Masara site [Photograph: SC Dominy, November2005]

Apex is currently completing plans to rehabilitate the plant for an initial production rate ofbetween 300 and 550 t/d. Capacity will be expanded to 1,200 t/d, and subsequently to 2,000t/d. The necessary test work to optimize the flow sheet is expected to be completed within afew months. The initial operation will be based on existing equipment, which will be modifiedto meet the new flow sheet requirements.

It is estimated that about 12 months are needed for site clean up, equipment refurbishment,installation of new equipment and commissioning of a 2,000 t/d facility. In the meantime, aportion of the existing plant will be reconstructed to handle about 500 t/d using existing millswith CIL and thickener tank facilities. The plan is to free most of the plant site forrefurbishment while only the existing ball mills and the smaller CIL facility will be used for the


initial operation. Crushing will be conducted with a mobile crusher unit to be placed near themine site while cleanup and rebuilding occurs at the mill site.

The proposed refurbished ‘new’ plant will be based on gravity separation, flotation and CIPprocessing, with separate leach and carbon absorption. A SAG mill has been sourced and iscurrently being refurbished for transfer to site in July 2006. A new gold room is underconstruction, together with an on-site assay laboratory.

Figure 16.2: General layout of the refurbished Masara Mill [Source: Apex MiningCompany]

17 MINERAL RESOURCE ESTIMATES

17.1 INTRODUCTION

Resource estimation within the epithermal gold vein environment has to potentially considerhighly skewed and often multi-modal populations, extreme values, and a medium to highnugget effect with low geostatistical ranges (Dominy et al, 2003).

There are a number of characteristics that should be considered during the resourceestimation of epithermal vein-gold deposits:

1) gold distribution is geologically controlled;2) there is often a good relative correlation between the average sample and block

grade, i.e. high-grade blocks are reflected by high-grade samples that often indicatean oreshoot;


3) there is often a complex orebody geometry, which varies as the cut-off gradeincreases;

4) mineralisation can often be narrow (<3 m true thickness) and tabular in form;5) gold grades are highly skewed and display a high coefficient of variation;6) a medium to high nugget effect;7) gold may be present as coarse gold; and8) gold may be present in wallrocks in economic quantities.

The foregoing features are generally applicable to Masara, however given the lack ofgeological and grade data, it is impossible to consider these issues effectively in the currentestimate.

17.2 2006 SNOWDEN ESTIMATE

Snowden has independently reviewed the available Masara Project data, and undertaken acurrent resource estimate based on historical data.

As reported previously, Snowden has not been able to access or verify the historicaldatabase. As a result, its current resource estimate relies heavily on the facts and globalgrade/width data provided in the estimate of Howe (1995). Snowden has estimated blocksproximal to previously mined out areas. It has not attempted to include isolated blocks withinthese areas as they are unlikely to be practically extractable.

This estimate is based on the following method and parameters:

1) VLP (long section) approach with projection of resource blocks down-dip and alongstrike based on surface exposure and/or underground development. Discussions withCrew geological staff were held to ensure that projections were sensible in the light oftheir more detailed geological knowledge of Masara.

2) The global grade applied to each vein structure was based on the grade defined forthat vein by Howe (1995). Snowden was not able to sight the raw grade data used byHowe, therefore has applied their global grade estimate for each vein.

3) The grade defined to each vein by Howe (1995) was reported at a cut-off of 3.5 g/tAu. Therefore the grade reported by Snowden is effectively at a cut-off of 3.5 g/t Au.This cut-off grade value may not be relevant with the current gold price and expectedcost structure at Masara.

4) All grades were diluted to minimum stoping width of 1.4 m. Howe (1995) diluted allsamples to include 0.35 m of dilution at a grade of 1 g/t Au.

5) The global width applied for each vein structure was based on the width defined forthat vein by Howe (1995).

6) A density factor of 2.35 t/m3 was used. Snowden was unable to identify raw bulkdensity data, and has applied the conservative value that was used by Howe (1995).

7) Resource blocks were defined as being either Inferred or Indicated MineralResources (CIM, 2005) based on the level of data informing each block. A ‘payability’factor was applied to all Inferred resource blocks.

8) A factor is also applied to each block to correct the true dip length, given thedistortion of dip on the VLPs.

Based on the limited maps and sections (cross-sections and VLPs) available, each vein waschecked on a level-by-level basis to interpolate between occurrences along strike and down-dip on the basis of development, etc. It was assumed, where required, that the veinextended no more than 100 m below the 510 m Level. It should be noted that the VLPsprovided no indication of local geological continuity, though with the support of stoped outareas provided a reasonable indication of gross geological continuity.


Where possible, Snowden used the proximity of stoping and/or Howe (1995) resource blocksto indicate payability. It is recognised that this is not necessarily a reliable method todetermine payability, but is currently the only method available.

Longitudinal sections of each vein were established and a total area calculated for eachresource block, and the areas of mined-out portions were subtracted where required. Theestimation method used by Snowden is effectively a polygonal estimate where a singleglobal grade is assigned to the entire area of each block.

Grade and tonnage figures are provided for each vein (Table 18.3 and 18.4). Appendix 1includes a tabulation of all resource blocks for all veins, and gives their location on a seriesof VLPs.

18 RESOURCE CLASSIFICATION

18.1 CLASSIFICATION OF THE CURRENT 2006 RESOURCE

Categories for resource blocks were assigned using a scheme based on the proportion ofdevelopment present within, or proximal to the block (Table 18.1). The 2005 CIM reportingcode has been used.

Table 18.1: Categorisation and payabilities used for Inferred and Indicated MineralResources at Masara by Snowden. Note that the quoted Inferred Resource is reported

as a single Inferred Resources and is not sub-divided as below

Category Category Criteria Payability factor

Indicated A block must have at least two, or preferably three sidesof development, and evidence from previous proximalstoping that payability is likely based upon a reasonableprojection down dip or along strike. The proximity ofIndicated and/or Measured Resource blocks defined inthe Howe (1995) estimate was also considered.

70-80%

Inferred A A block that is in contact with an Indicated Resourceblock and has some level of development in it. In somecases surface exposure is used as a supporting factor.The block is generally only projected along strike for thesame distance as the supporting Indicated block ordevelopment. Projection down-dip depends upon up-dipextent and development. Evidence of previous mining isrequired to assume the higher payability factor.

80%

Inferred B A block that is in contact with minimal or nodevelopment. Projection along strike is controlled bystrike extent of previous workings, and the down dipprojection is generally less than 100 m.

66%

Inferred C An isolated block distant from development. The block ispotentially quite large, in excess of 50,000 m2. Projectionalong strike is controlled by strike extent of previousworkings, and the down dip projection is generally 100 mor less.

33%

In some instances, additional supporting data was available for the Indicated MineralResource blocks through the presence or close proximity to Measured or Indicated Resourceblocks as defined in the 1995 Howe estimate. Given that the blocks defined by Howe werebased on raw sampling data, their presence within or close to Snowden blocks providedadditional confidence in the classification.


The Inferred Mineral Resources are defined as three different classes (A, B and C), baseddirectly upon the levels of development present (Tables 18.1 and 18.2). This sub-division isnot part of the CIM Code (2005), and Inferred Resources are quoted as the total of thesesub-categories.

Each sub-category has a payability factor applied to its tonnage. The factor is effectively ameasure of confidence and reflects the amount of tonnage that is likely to be mineable givenfurther delineation. The payability factor values are based on the experience of Snowden invein-gold deposits. The factor is used to account for levels of uncertainty within the estimatethrough the projection of blocks based on limited data; data of questionable reliability; andthe inherent geological and grade variability.

18.2 DISCUSSION OF CLASSIFICATION LIMITATIONS

Whilst Snowden has defined Indicated Resources at Masara, it considers these to be at the‘lower end’ of confidence for this category. It is implicit in the Indicated Resource categorythat the resource has been estimated to a level that permits mine design and reservedefinition. The CIM Code (CIM, 2005) states:

“An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, gradeor quality, densities, shape and physical characteristics, can be estimated with a level ofconfidence sufficient to allow the appropriate application of technical and economicparameters to support mine planning and evaluation of the economic viability of the deposit.The estimate is based on detailed and reliable exploration and testing information gatheredthrough appropriate techniques from locations such as outcrops, trenches, pits, workings,and drill holes that are spaced closely enough for geological and grade continuity to bereasonably assumed”.

Given the currently unverifiable nature of the original sampling data and lack of geologicalcontrol, the resulting global estimate for block grades has a level of uncertainly only justacceptable for an Indicated Resource. The tonnage estimate also contains a level ofuncertainly due to the use of a global width figure for each block, and an unverified bulkdensity factor. To account for these uncertainties, Snowden has applied a payability factor of70% to the Indicated Resource blocks.

An Indicated Resource requires the estimate to be based on “detailed and reliableexploration and testing information”. As stated previously, Snowden has not been unable tosight the original development assay data from Masara. Given the high level of historicalproduction from the veins, Snowden considers that stoping records represent an effective‘bulk sample’, and thus takes this as providing suitable supporting information. Given thelack of verifiable data, Snowden has relied on the Howe (1995) estimate to provide globalgrades for each vein. This reliance is based on the fact that Snowden believes the Howe(1995) estimate to have been undertaken and reported in an effective and transparentmanner, and provides a reasonable basis for Indicated Resources. The resource gradesreported by Howe (1995) were based on the analysis of the original development sampleassay data. Howe defined Measured and/or Indicated Resources for each vein (see Section6.2.2, Tables 6.4 and 6.5). Whilst Howe (1995) flagged a number of issues with the sampledata (see Section 14.0), they are not believed to represent a fatal flaw to the resource.

18.3 CURRENT RESOURCE INVENTORY

Tables 18.2 and 18.3 give the global resource figures for each vein system; the detailedbreakdown of blocks for each vein is given in Appendix 1. All grades are reported as a globalblock grade at a cut-off of 3.5 g/t Au, and diluted to a 1.4 m minimum stoping width.



MASARA INFERRED RESOURCE TOTALS


Vein GradeTrue


Masarita 5.1 1.7 327,000 54,000

Wagas 4.2 2.0 430,000 58,000

Don Calixto 5.8 1.8 222,000 41,000

Don Fernando 7.2 1.9 398,000 92,000

Don Mario 5.7 1.7 757,000 139,000

Don Joaquin 6.3 2.3 1,199,000 243,000

Maria Inez 7.5 2.2 288,000 69,000

Masara 7.0 2.0 233,000 64,000

Bonanza 6.3 1.9 36,000 7,000

Manganese 7.0 2.0 168,000 38,000

Sandy 5.4 1.4 254,000 44,000

St Vincent 5.4 1.9 503,000 87,000

St Francis 5.4 1.9 429,000 74,000

St Benedict 8.5 1.4 494,000 135,000

TOTALS 6.3 1.9 5,738,000 1,145,000

5.7 Mt at 6.3 g/t Au for 1,100,000 oz

Global grade reported at a 3.5 g/t Au cut-off grade, and MSW of 1.4 m.


MASARA INDICATED RESOURCE TOTALS


Vein GradeTrue


Don Calixto 5.8 1.8 210,000 39,000

Don Fernando 7.2 1.9 201,000 47,000

Don Mario 5.7 1.7 273,000 50,000

Don Joaquin 6.3 2.3 275,000 56,000

Maria Inez 7.5 2.2 47,000 11,000

Masara 8.5 2.0 29,000 8,000

St Francis 5.4 1.9 84,000 15,000

St Benedict 8.5 1.4 136,000 37,000

TOTALS 6.5 1.9 1,255,000 263,000

1.2 Mt at 6.5 g/t Au for 263,000 oz

Global grade reported at a 3.5 g/t Au cut-off, and MSW of 1.4 m

Snowden has made no attempt to convert resources into reserves.


18.4 COMPARISON OF 1995-2006 MASARA RESOURCE ESTIMATES

Table 18.5 gives a comparison between the previous estimates at the Masara Project, andthe current Snowden estimate.

Table 18.5: Comparison of grades and tonnages of various Mineral Resourceestimates undertaken on the Masara Gold Project between 1994 and 2006

Estimate Number ofveins includedin the resource

Global ResourceTonnage

Grade(g/t Au)

Proportion ofInferred Resource

category

Snowden, 2006 14 6.9 Mt 6.3 82%

MGB, 2004 11 6.1 Mt 7.8 (unclassified)

Apex, 2002 11 5.9 Mt 7.1 81%

Howe, 1995 11 2.6 Mt 6.2 61%

LMMCL, 1994 12 4.3 Mt 5.9 53%

Previous estimates such as LMMCL (1994), Howe (1995), Apex (2002) and MGB (2004)have concentrated their resource blocks within and proximal to, the worked areas withvariable quantities of projection away from workings.

The Snowden estimate has generally not projected along strike for more than 100 m, andhas only defined Indicated Resource blocks adjacent to pre-existing development andproximal to old workings. Snowden has not estimated blocks within worked out areas (i.e.remnant blocks, pillars, stope fill, etc).

The 2.6 times increase in resource between the Snowden and Howe estimates is explainedby the concentration of the Howe resource blocks to very close proximity to or within theworked areas. Snowden has projected some Inferred Resource blocks along strike from theworked areas, thus increasing the global tonnage. The Snowden estimate included anadditional four veins (e.g. Bonanza, Manganese, Sandy and St Benedict), and did notinclude the Don Manuel.

19 OTHER RELEVANT DATA AND INFORMATION

19.1 DRILLING BY APEX

19.1.1 Introduction

During 2005 and 2006, a limited number of NQ diamond drill holes have intersected the DonFernando and St Benedict Veins. Whilst not extensive, it is material to this report in that it isrecent information that proves the location and nature of the relevant veins (e.g. St Benedictand Don Fernando), thus providing local confidence in projections. Such data are unlikely tobe material to the current resource estimate.


19.1.2 Drillhole Surveys

Apex surveys all drill hole collars, and undertakes down-hole surveys at approximately 50 mintervals using a Reflex E-Z Shot digital survey instrument from Ausmine (Australia).

19.1.3 Drillcore Logging and Sampling

All drillcore is logged for geology and geotechnical parameters at the secure core facility onthe Masara Site. The geologists mark the sampling intervals during the logging process. Anelectric saw is used for cutting competent core, and a hammer chisel for highly altered rock.One half of the core is taken for the sample, while the other half is retained for reference.The assay sample is removed from site and submitted to a laboratory in Davao. Core boxesare lined with plastic or metal sheet to avoid losses of fines in the highly altered portions ofthe core.

The mineralised intervals are divided by geological criteria, though individual intervals are notless than 0.5 m or over 1.5 m. Less intensely mineralised intersections are sampled in 2 mintervals, based on geological criteria.

Snowden inspected one mineralised intersection from the St Benedict Vein (Figure 11.1).The total core recovery (TCR) in the mineralised zone appeared to be good (>90%),however this masked an underlying issue of poor quality due to excessive fragmentation (i.e.poor solid core recovery – SCR; Annels & Dominy, 2003). Zones of poor quality core maycontain a severe grade bias due to material loss. The grade quoted from such anintersection should be reported with a comment on its uncertainty.

Snowden stresses that this was only one observation of poor core quality, and that it is notlikely be representative of other intersections at Masara.

Figure 19.1: Intersection in the Crew hole SB-02 into the St Benedict Vein. Here thevein is approximately 4.5 m wide (drilled width), and comprises quartz veining and

brecciation. Core recovery is good, but core quality is poor due to excessivefragmentation. Such poor quality core is difficult to sample effectively [Photograph:

SC Dominy, November 2005]


19.1.4 Sample Preparation, Analysis and Security

All samples for analysis are placed in a plastic bag, which is closed off using a self-sealinguniquely numbered tag. The samples are freighted to by road to the McPhar Laboratory inDavao City, where sample preparation is undertaken. All samples are assayed at theMcPhar Laboratory in Manila.

All samples are dried, crushed and pulverised in their entirety. A 50 g split is taken from eachpulp for a fire assay. A second pulp is split off at a rate of 1 in 10, and sent to a secondexternal laboratory in Jakarta, Indonesia (Intertec). All samples with more than 5 g/t Au arere-assayed. A rigorous QA/QC programme is currently being implemented in collaborationwith Snowden.

19.1.5 Summary of Recent Apex Drilling Results

Apex has launched a substantive drilling program to verify the historical data and get a fullerunderstanding of the nature of the vein systems at Masara. The drilling also serves to guidethe underground drifting into areas with no previous underground development.

To date, the diamond core drilling has completed some 5,650 m in 17 holes. The drilling hasfocused on the Bonanza-Maligaya, St Benedict-Maria Inez and the Don Fernando-JoaquinVein systems.

Due to the steep topography and an unusually wet season, the drilling has suffered somesetbacks because of frequent landslides, and several drill sites had to be abandoned orstopped prematurely. The best progress has been made in the Bonanza-Maligaya Veinsystem, where 10 holes have been completed and a further 2 are ongoing. In the StBenedict Vein, 4 holes have been competed and 2 are ongoing. Three holes were competedin the Don Fernando Vein, but intercepted the porphyry-Cu system at the western extensionof the vein system. Finally, 1 drill hole has been completed in the Maria Inez Vein, and afurther 1 is ongoing.

The preliminary results demonstrate that the veins generally consist of siliceous veins andquartz breccias set in an argillic alteration selvage, which is often rimmed by a wide sericite-pyrite zone. The veins are hosted both in Eocene diorite intrusives and in basic andintermediate volcanics of the Masara formation. The data suggest that the argillic-siliceouscore of the vein systems is the main host for gold, whereas elevated base metals andmanganese content define successively wider halos, several 10 m’s wide. The summarydata for the completed and ongoing drilling is shown in Table 19.1.

The results thus far are insufficient to allow meaningful interpretations; however, theysuggest that the vein structures are consistently mineralised, and that overall results arewithin the range reported from historical data.


Table 19.1: Summary of recent Apex drilling results. Assays pending. Key – BM:Bonanza Vein; DF: Don Fernando Vein; MI: Maria Inez Vein; SB: St Benedict Vein; py:

pyrite; cpy: chalcopyrite; gn: galena; sph: sphalerite; mt: magnetiteDrill-hole Intersections

DDH_ID Azim.(°)

Inclination(°)

EOH (m) No. Intersection at(m)

Intersectionwidth (m)

Description

BM-01 50 -50 352.6 1 282.5 7.2 Silicified, brecciated quartz-carbonate vein with>2% py, >1% cpy, <1% gn, sph

BM-02 50 -50 113.4 1 52.4 10.5 Brecciated silicified vein, with dominant greyquartz, >1% py, >1% cpy, <1% gn

2 93.4 1.3 Brecciated vein with silicified andesitic fragmentsand white quartz, specks of py, cpy

BM-03 50 -45 115.8 1 105.1 0.5 Pyrite and sericite alteration zone

BM-05 50 -70 170.0 1 153.8 3.0 Fault breccia with gouge and silicified fragmentsof andesite and finely disseminated py (>10%)

BM-06 230 -70 359.9 3 21.5 8.0 Clay-silica altered zone with finely disseminatedpy and quartz veinlets

BM-07 230 -70 125.2 1 60.4 1.3 Intensely silicified breccia zone and footwallalteration in andesite porphyry, specks of gn, sph,py, cpy

2 93.2 1.0 Silicified zone in andesite with quartz-carbonateveinlets, >2% py, >1% cpy, <1% gn, sph

BM-08 230 -50 377.8 5 311.9 1.1 Partly vuggy, smoky white quartz vein in dioriteporphyry with >1% py, >5% cpy, >1% gn, sph

6 316.1 1.3 Intensely silicified zone in diorite porphyry withclots of py, >5% cpy

BM-09 230 -65 313.0 1 42.0 14.3 Hydrothermal breccia in andesite with fragmentsof silicified diorite and andesite, minor cpy, finelydisseminated py (5-10%)

2 63.8 1.0 Hydrothermal breccia in andesite with fragmentsof silicified diorite and andesite, minor cpy, finelydisseminated py

3 190.3 6.0 Quartz-carbonate vein in brecciated zone inandesite with intense silification, <1% py 1-2%cpy

4 222.5 11.0 Strongly epidotised skarn with mt lenses andmassive sulphide veins, 1-2% py, >1% cpy, >50%mt

BM-10 230 -75 303.9 1 127.4 5.1 Intensely silicified zone in andesite porphyry withwhite quartz and carbonate, >2 % fine-grained py,minor cpy, >1% gn. Sph

2 176.3 4.7 Intensely brecciated and silicified vein in andesitewith white quartz-carbonate veinlets, >2 % py,>1% cpy, >1% gn, sph

3 198.0 2.8 Strongly epidotised skarn with finely disseminatedpy (>5%)

BM-11 230 -80 279.1 1 241.9 5.6 Intensely silicified and brecciated zone in andesitewith carbobate veinlets and >2% py, >3% cpy;>1% gn, sph

BM-12 230 -55 241.8 1 51.9 5.4 Fault breccia with silicified, brecciated fragmentsof andesite and >2% py, minor cpy, >1% gn, sph

3 191.8 7.0 Intensely brecciated and silicified zone in andesitewith quartz and carbonate veinlets, minor py, cpy

DF-01 200 -65 182.7 1 161.0 1.0 Massive white quartz vein in andesite with py, cpy

DF-02 200 -45 151.6 1 134.6 7.0 Quartz stringers in andesite with 5-10% py, >2%cpy, minor gn, sph

DF-03 200 -90 201.0 1 48.0 5.0 Highly silicified andesite with vuggy quartzveinlets, >1% finely disseminated py, >1% cpy,minor gn, sph

MI-01 200 -45 335.5 1 174.6 2.2 Intensely silicified, brecciated structure withquartz-carbonate veinlets, vuggy grey and whitequartz, minor py, >2% cpy; >1% sph, gn

2 197.1 1.7 Brecciated and intensely silicified zone in dioritewith quartz and carbonate stringers, minor py, cpy

SB-01 200 -85 249.0 1 189.0 1.0 Fault breccia in diorite, 5-10% py, minor gn, sph

SB-02 200 -90 215.6 1 182.0 6.1 Quartz vein in diorite with >5% py, <1% cpy, 1%gn, sph

2 206.3 5.2 Quartz-carbonate stringers in diorite with >2% py,minor cpy, gn, sph

SB-03 200 -83 420.1 1 355.5 2.7 Argillised zone in diorite with quartz veinlets >1%py, >2% cpy, minor gn, sph


19.2 APEX 2006 PLANNED DRILL CAMPAIGN AT MASARA

19.2.1 Introduction

The 2006 drilling programme planned by Apex has three key objectives:

1) to upgrade Inferred Resources to Indicated Resources;

2) to establish Mineral Reserves; and

3) to define new Inferred Resources.

The resources will be defined by a drilling programme of 40,000 m. Apex has contractedthree drill operators to conduct the programme using four CS1000 drill rigs, plus three oldersurface drills available on site, and 1 or 2 underground drill rigs. The target is to drill 3,300 mper month, and to compile and release the results for each quarter period (10,000 m).

19.2.2 Inferred Mineral Resource Definition

The programme is based on vertical fan drilling ideally providing intercepts at 60 m intervalsdown dip in known structures. Each drill section will contain three holes designed to interceptat 30 m, 90 m and 150 m below the lowest point of previous workings. A single drill sectionwill on average require some 800 m combined drilling length (200 m, 250 m and 350 m) orless.

Given a drilling capacity of 3,300 m per month and a 100 m by 60 m drill spacing, theprogramme will cover four sections (or 400 m strike-length) in a month, to defineapproximately 72,000 m2 of mineralisation.

In order to replace mined-out resources, when the mine is operating, an area of 500 m by 30m will be required per month, equivalent to a total of 180,000 m2 per year. In order to expandon resources in future, the outlined program of 10,000 m per quarter will be maintained for2007.

19.2.3 Defining Measured and Indicated Mineral Resources, and Mineral Reserves

As development for mining will be on-going, sublevel development and continuous samplingof faces will provide new data that will be used define to Measured and Indicated Resources,and subsequent Mineral Reserves.

The current underground development plan aims at initially provide 3,000 m of sublevels infirst half of 2006. Each metre of drive will define approximately 120 t of in-situ resource(excludes development material). Three levels, 30 m apart, each of 1,000 m length willexpose 90,000 m2 of vein area.

In the second half of 2006, ten simultaneously driven sublevels are projected to providesome 6,000 m of development in 6 months, which will allow the definition of Measured andIndicated Resources within an 180,000 m2 vein area.

19.3 MINING

The commencement of mining at Masara requires substantial new undergrounddevelopment. Most of the historical workings are between surface and to a depth of 200 m,and are now inaccessible, mined out and dangerous to re-access.


Resources that occur immediately below the historic workings, and further down dip, can beaccessed relatively easily. Also, several potentially open pit resource areas are available forshort-term scheduling, together with some surface stockpiled ore (not included in the currentresource estimate). This material may be utilised while pre-mining underground developmentis being completed.

The production ramp-up will be dependent on a number of factors, most notably theavailability of mining equipment, the rate of underground development and the granting ofnecessary operational permits.

The primary objective of the proposed mine plan is to deliver 2,000 tpd to the mill on asteady-state basis. This will be achieved by aggregate production from several veins, at arate of 500 tpd from four underground operations. Because of the distribution of presentlyknown deposits, it is envisaged that about half of the production will come from the DonFernando/Don Joaquin Veins, and the other half would come from the St Benedict andBonanza Veins. The distance to the plant is about 5-6 km from each of the mine areas.

In the Don Fernando/Don Joaquin vein area an access drift is already available at the 690 mLevel, but requires some expansion and modification of the portal. It is expected that accessto the vein for sublevel drifting can be established within the first quarter of 2006, while adecline to lower levels is continued.

In the St Benedict area, a new portal has been established aiming to access at the 990 mLevel through a 300 m cross-cut. At the same time, an existing portal and cross-cut at the850 m Level is being rehabilitated and expanded to provide a main haulage exit from the StBenedict area. An ore pass from the 990 m Level will be established. The 990 m Levelcross-cut is expected to be complete by end of March 2006, allowing for the start of veindevelopment. In its passage towards the St Benedict Vein, the 850 m Level cross-cut willpass through the Maria Inez Vein where drifting will commence in two directions.

In the Bonanza-Maligaya (Masara) Vein system, access to two sublevels has already beenestablished on the 570 m Level. Drifting on the vein is due to commence shortly in twodirections. A short cross cut from the Maligaya haulage drift will allow opening of twoadditional drift faces in this structure. Finally, a new portal in the southern extension of theBonanza Vein at the 820 m Level will be established to open further drift faces.

The previously mentioned structures are currently the focus for the on-going explorationdrilling programme. Where possible, drilling will be completed ahead of drifting and serve asa guide for development.

19.4 TAILINGS STORAGE FACILITY

A new tailings storage facility will be required. The old tailings are dry and appear stable,although the slopes are quite steep and are partially vegetated. The EnvironmentalDepartment of the regional MGB office conduct regular inspections and assessments of theexisting facilities, and have issued satisfactory reports.

A new tailings storage site has been identified within the concession area, and approved foruse. Planning of design and construction of this facility is now on going. The dam will initiallybe designed for a two-year capacity, but will be expanded to accommodate futureproduction.

19.5 ENVIRONMENTAL

Apex conducted a comprehensive environmental review including a partial base line study aspart of its 2005 due diligence. Water and sediment samples were collected from a number ofsites within, and in the immediate vicinity of the Apex property. These aimed to determine


the level of effluent concentrations and their sources. The sampling sites were selected withconsideration to the presence of possible effluent sources along the watercourse, andincluded waste dumps (both mine and domestic), small-scale mining operations, old Apexmine workings and the processing plant. Aside from the rivers and streams, samples werealso taken from the discharge points of the mill plant and tailings tanks, as well as floodedopen pits, natural hot springs and springs used for drinking water and domestic purposes inthe communities down stream from the mill and mine site.

The environmental study showed that there is enough evidence to demonstrate that themajority of contamination identified comes from small-scale workings and process facilitiesoutside of the Apex property. The authorities have been provided with the results of Crew’senvironmental findings. The Company will as part of its rehabilitation program providemeasures to reduce or eliminate the identified sources of unacceptable effluentconcentrations in co-operation with the national and local agencies.

19.6 SOCIAL AND HEALTH

A number of Occupational Health and Safety (“OH&S”) issues at the mine and mill site havebeen identified, and are being addressed. Housekeeping at the existing plant site is beingprogressively improved, along with much improved safety standards and equipmentupgrading.

Positive views on the re-establishment of mining have been expressed from the localcommunities both outside and inside the Masara Lease area, and from local politicians andadministrators. However, there are some grievances lingering due to past administrative,financial and socio-political problems relating to Apex Mining. These need to be addressed inthe future. It is realised than many of the observed problems relate to the poor financialsituation the company was facing during its final years of operation.

20 INTERPRETATION AND CONCLUSIONS

Masara is an advanced exploration and resource development project that possesses asubstantial Inferred Resource (82% of total resource inventory). Given the lack of recentdrilling and development, and thus the over reliance on unverifiable historical data, this is notan unreasonable or unusual situation for a vein-gold deposit.

It is common for vein-gold vein operations to contain substantial Inferred Resources aheadof underground development. Once underground development and mining commences, it islikely that only 18 to 24 months of Indicated and Measured Resources (e.g. MineralReserves) will be defined prior to mining. This level of reserves is highly dependent upon thelevels of definition drilling and exploratory development that are undertaken during eachyear.

Snowden believes that the veins in the Masara Lease have the potential to containsubstantial resources in addition to the 1.4 Moz resource base defined here. The drilling anddevelopment programme already underway will form a critical foundation on which to addadditional Inferred Resource tonnages, and subsequently define Measured and IndicatedResources.

The current resource is characterised by a number of uncertainties that led Snowden todefine dominantly (82%) Inferred Resources (Table 20.1). However, given the currentresource development programme, and adherence to Snowden’s recommendations fortechnical compliance, this risk can be lowered to reasonable levels for future resourceestimates (Table 20.2).


Table 20.1: Risk matrix for the current Masara Project resource estimateFactor Risk Comment

Bulk density High The current value of 2.35 t/m3 is a default value andnot based of verified determinations. This valuehowever, is likely to be conservative.

Sample collection, preparation,assay and QA/QC system

High Historical sampling methods and protocols are notverifiable, and the small quantity of duplicate datashows variability. No rigorous QA/QC programmewas in operation. Should coarse gold be present innotable quantities, then sampling uncertainty and riskwill be high.

Geological data and model Med-High General geological control is reasonable, thoughthere is a lack of detailed understanding of thegeology, in particular small-scale local continuityissues.

Grade estimate High The grade estimate bears a high uncertainty due tosampling uncertainties. Snowden has not been ableto verify the original assay database used by Howe(1995). The current estimate relies on the Howeglobal grade for each vein, applied to an essentiallypolygonal model. Grades are thus smeared overlarge areas. There is currently no indication as to thelikely ‘nugget effect’ value. The application of a 3.5g/t Au cut-off grade by Howe has some limitations,which affects resource uncertainty.

Tonnage estimate High Snowden has not been able to verify the vein widthdatabase used by Howe (1995). The current estimaterelies on the Howe global width for each vein, appliedto an essentially polygonal model. Vein widths aresmeared over large areas, and do not take intoaccount any variations.

Resource up-rating andextension

Med Given the current global resource base, the up ratingand extension of this resource is likely to be relativelystraightforward. There is some risk in the up-rating ofcurrent Inferred blocks to Indicated/Measured giventhe global nature of the polygonal model. This haspartially been accounted for by the application of apayability factor to all resource blocks.

Overall rating High The current resource estimate carries a highuncertainty and risk. This risk is principallyrelated to the unverifiable nature of the historicaldata, and lack of geological control. This rating isreflected by the high level of Inferred MineralResource defined (82% of total resource).


Table 20.2: Risk matrix for future resources, given planned resource development andtechnical improvements recommended by Snowden

Factor Risk Requirement for risk reductionCore data (logging, survey, etc) Low Requires implementation of effective standards for

practice and reporting. In particular, requiresconsistency in lithological recognition, use of drillcollar and downhole surveying, and standardmethodologies for core quality monitoring andreporting (e.g. recovery issues).

Bulk density Low Requires comprehensive bulk density testingprogramme for different veins and wallrock and veinstyles. Consideration should be given to producing abulk density block model.

Sample collection Low Requires implementation of effective standards forpractice and reporting. In particular consistentpractice for sampling strategy.

Sample preparation, assay andQA/QC system

Low Requires implementation of effective standards forpractice and reporting. A sample characterisationstudy must be undertaken to optimise protocols, anda rigorous QA/QC implemented.

Geological data and model Low-Med Acquisition of new drill core and undergrounddevelopment geological data, and compilation ofhistorical plan and sections. Development of acomprehensive, serviceable and verifiable databasesystem. Proper geological mapping and standardsystem for interpretation and use. Building of a 3Dgeological model for each vein in the resource.

Grade estimate Low-Med Development of a comprehensive, serviceable andverifiable database system (as for geology) basedupon high quality assay data. Integration of gradedata and geological information to devise a suitablegrade estimation methodology. To include use of the3D geological models, and statistical and spatialanalysis.

Tonnage estimate Low-Med Effective orebody width determination to producereliable volume estimates. Tonnage estimation will bedependent upon bulk density determination (seeprevious comment).

Resource extension Low Effective drilling and underground developmentstrategy, designed to maximise information gain andsubsequent resource extension and up-rating.

Overall rating Low-Med Any further resource at Masara has the potentialto have a lower risk profile than the currenthistorically-based estimate. Given the currentstatus of the project, the above requirements forrisk reduction should be part of the technicalprogression of the project over the next 12months.


21 RECOMMENDATIONS

21.1 SUMMARY OF RECOMMENDATIONS

21.1.1 Sampling

Given the potential sample variability, Snowden recommends that a samplecharacterisation study be undertaken to properly assess the ‘samplability’ of Masaraore. The study should involve a number of heterogeneity tests, accompanied byscreen fire assaying and a mineralogical deportment study.

The sampling strategy for drill core and development faces should be geologicallycontrolled and accompanied by logging/face mapping and digital photography.

Specific attention should be paid to highly fragmented core intersections, andguidelines issued to maximise sample quality.

A rigorous QA system should be established that sets QC action levels to monitorand react to data quality.

The entire sample collection, sample preparation and assaying process should befully documented, and staff given the appropriate training to undertake theprocedures effectively and safely.

21.1.2 Resource Delineation

Diamond core drilling will be required to effectively determine and verify InferredMineral Resources. It is likely that Indicated Mineral Resources could also be definedfrom drilling, though the drill spacing will probably need to be at a spacing of 20 m by20 m or less. Resolution by drilling will depend upon vein architecture and post-mineralisation modification (e.g. cross-faults, etc).

Core drilling must be accompanied by consistent logging and effective hole surveys.Good drilling practice to maximise core recovery (TCR >90%) and quality (SCR >90%) is critical.

Underground development will probably be required to define Indicated MineralResources, and definitely Measured Mineral Resources. Once a block has beendeveloped on four sides and fully sampled, Snowden believes that Measured MineralResources could be defined. As the nature of the veins becomes better understood,this requirement is likely to change. Resolution by development will depend upon veinarchitecture and post-mineralisation modification (e.g. cross-faults, etc).

21.1.3 Geology

As drill core and underground development become available for study, it is importantthat Apex instigate a programme of mapping to investigate the structural controls tothe mineralisation. In particular the small- to medium-scale (10’s to few 100’s m)nature of the ore zone should be investigated to elucidate the local controls togeological and grade continuity.


Following the digitisation of historical data, and integration of this and new data into aoperational database, 3D geological modelling is recommended to assist withstructural interpretation and to form the basis of a new resource model.

21.1.4 Resource Estimation

A programme of bulk density determination is urgently required to optimise tonnagedetermination at the Masara Project. Drill core should be used to determine bulkdensities of all veins, and should cover different mineralisation styles within the veinsand wallrocks.

An integrated database should be installed to manage the large quantity of data thatwill be produced during the development of Masara. The database must be verifiable.

Statistical and spatial analysis of width, grade and metal accumulation is required asa basis to develop a robust and precise resource estimation process. Such analysiswill be required to determine effective top-cut strategies, search neighbourhoods, andestimation methods. The estimation process at Masara will need to be part of adynamic system, with constant review and revision as more data become availableand as geological knowledge increases.

21.1.5 Mining and Milling

Once Indicated and Measured Resource status is achieved, it is important to applythe modifying factors to produce a Mineral Reserve. In particular, the issue of dilution(e.g. planned versus unplanned) and recovery (e.g. pillars, etc) must be considered.

Geotechnical data collected from core, and augmented by underground mappingshould be used to assess the potential for dilution during mining.

In addition, geotechnical data should be collected on a regular basis from allunderground workings to monitor ground control issues. Apex should develop aGround Control Management Plan (“GCMP”) at Masara.

A strategy and methodology for grade control are required given the immediateunderground development plan at Masara. This should tie in with the samplingstrategy, and include geological mapping as a matter of priority.

On the commencement of production a reconciliation system will be required. Initiallythis will be based on a fairly basic reserve estimate via blocking out, though asdevelopment and exploration proceed a more computer based estimate is likely (e.g.block model). Proper determination of tonnage will be required through the use ofweightometers, truck counts should be avoided. As part of the mine survey process,Snowden recommends the use of a cavity monitoring system (“CMS”) to determinereliable stope volumes.

A fully integrated OH&S system is required for all aspects of the operation at Masara.Given the level of activity on site already, this should be developed and implementedas a matter of priority.


22 REFERENCES

Annels, A E and Dominy, S C, 2003. Core recovery and quality: important factors in mineralresource estimation. Transactions of the Institution of Mining and Metallurgy (SectionB: Applied Earth Sciences), 112, pp 305-312.

Apex, 2001. Resource Estimate. Various papers and tables.

CIM, 2003. Estimation of Mineral Resources and Mineral Reserves – Best PracticeGuidelines. Canadian Institute of Mining & Metallurgy. p 53

CIM, 2005. CIM Definition Standards on Mineral Resources and Mineral Reserves. CanadianInstitute of Mining & Metallurgy Standing Committee on Reserve Definitions. p 10

Crew, 2005. 2005 Apex Due Diligence. Crew Minerals (Phil) Inc. Volumes I and II containingvarious photographs, sections and text.

Dominy S C, Annels, A E, Camm, G S, Cuffley, B W and Hodkinson, I P, 1999. Resourceevaluation of narrow gold bearing veins: problems and methods of grade estimation.Transactions of the Institution of Mining and Metallurgy, 108, pp A52-A70.

Dominy, S C, Johansen, G F, Annels, A E and Cuffley, B W, 2000. General considerationsof sampling and assaying in a coarse gold environment. Transactions of the Institutionof Mining & Metallurgy, 109, pp B145-B167.

Dominy, S C and Annels, A E, 2001. Estimation of gold deposits I: a review of mineralresource estimation methodology applied to fault and fracture-related systems.Transactions of the Institution of Mining & Metallurgy, 110, pp B145-B166.

Hedenquist, J W, Arribas, A and Gonzalez-Urien, E, 2000. Exploration for epithermal golddeposits, in Gold in 2000 (Eds, Hagemann, S G & Brown, P E). Reviews in EconomicGeology Volume 13. Society of Economic Geologists, Boulder, CO. 560 p

Henley, R W, 1991. Epithermal gold deposits in volcanic terrains, in Gold Metallogeny andExploration (Ed, Foster, R P). Blackie & Son Ltd, Glasgow. 432 p

Howe, 1995, Masara Gold Mine Project, Philippines - Assessment and Recalculation of OreReserves. Independent Technical Report, ACA Howe International, 31 p

LMMCL, 1994, An Appraisal of the Apex Gold Project on Mindanao, Philippine Republic.Independent Technical Report, London Mining and Mineral Consultants Ltd., 14 p wAppendices.

Lodrigueza, L A, and Estoque, J C, 1976, Geological Report on the Masara Gold andCopper Deposits. Apex Technical Report, 11 p.

Mercado, A C, Estoque, L C, Lodrigueza, L A and Rebellon, F C, 1986, Geology and OreDeposits of Masara Mine, Maco, Davao del Norte, Mindanao, Philippines. ApexTechnical Report, 56 p

MGB, 2004. 2004 MGB Evaluation Report on Apex Mining Company Inc, Bo. Masara, Maco,Compostela Valley, Philippines. Republic of the Philippines, Department ofEnvironment and Natural Resources R-XI, Mines and Geosciences Bureau. 20 p

Mitchell, A H G and Leach, T M, 1991. Epithermal Gold in the Philippines: Island ArcMetallogenesis, Geothermal Systems & Geology. Academic Press, London. 457 p

USGS, 1980. Principals of a Resource/Reserve Classification for Minerals.


CERTIFICATE AND CONSENT


CERTIFICATE OF AUTHOR AND CONSENT

1. I, Simon Charles Dominy do hereby certify that:

I am a Principal Geological Engineer and General Manager of:

Snowden Mining Industry Consultants Ltd, Abbey House, Wellington Way, BrooklandsBusiness Park, Weybridge, Surrey KT13 0TT, England, United Kingdom

2. I graduated with the following degrees:

BSc(Hons) - Applied Geology - London City, UK, 1987 MSc - Mining - Camborne School of Mines, UK, 1990 PhD - Resource Geology - Kingston University, UK, 1993

3. I hold the following professional qualifications, and remain in good standing with thefollowing bodies:

Member of the Australasian Institute of Mining & MetallurgyChartered Professional Geologist (CPGeo)

Fellow of the Geological Society of LondonChartered Geologist (CGeol)Chartered Scientist (CSci)European Geologist (EurGeol)

Member of the Australian Institute of Geoscientists Member of the Institution of Materials, Mining & Metallurgy, UK

Chartered Engineer (CEng)

4. I have worked as a mining geologist/geological engineer, in academia, operations andconsulting, for a total of 18 years since graduation. I have particular experience and skillsin the evaluation and exploitation of vein-gold deposits spanning over 12 years.

5. I have read the definition of “Qualified Person” set out in National Instrument 43-101 (“NI43-101”) and certify that by reason of my education, affiliation with a professionalassociation (as defined in NI 43-101) and past relevant work experience, that I fulfil therequirements to be a “Qualified Person” for the purposes of NI 43-101.

6. I am responsible for the authorship/compilation of the technical report titled ‘Masara GoldProject, Philippines: Independent Review and Resource Estimate’, and dated 31 March2006 (the “Technical Report”) relating to the Masara property. I visited the Masaraproperty in November 2005 for 3 days, during which time I inspected the limitedunderground workings, viewed plans and sections, and held discussions with projectstaff.

7. I have had no prior involvement with the Masara Gold Project that is included in this, orany other Technical Report.


8. I am not aware of any material fact or material change with respect to the subject matterof the Technical Report that is not reflected in the Technical Report, the omission todisclose which makes the Technical Report misleading.

9. I am independent of the issuer applying all of the tests in section 1.5 of NationalInstrument 43-101.

10. I have read National Instrument 43-101 and Form 43-101F1, and the Technical Reporthas been prepared in compliance with that instrument and form.

11. I consent to the filing of the Technical Report with any stock exchange and otherregulatory authority and any publication by them for regulatory purposes, includingelectronic publication in the public company files on their websites accessible by thepublic, of the Technical Report.

12. A copy of this report is submitted as a computer readable file in Adobe Acrobat PDFformat. The requirements of electronic filing require submitting the report as an unlocked,editable file. The author accepts no responsibility for any changes made to the documentafter it leaves his control.

Dated at London, England, 31 March 2006

Dr Simon C Dominy


APPENDIX I

Resource Vertical Longitudinal Projections

&

Block Resource Tables


Masarita Vein

Block ID Tonnage (t) Grade (g/t Au) ContainedOunces

Payabilityfactor applied

Inferred Mineral Resources

NW Upper 62,000 5.1 10,200 0.66

NW Lower 39,000 5.1 6,400 0.33

Central 58,000 5.1 9,600 0.80

SE Upper 112,000 5.1 18,300 0.66

SE Lower 56,000 5.1 9,200 0.33

Total Inferred 327,000 5.1 53,700 -


Wagas Vein




Upper 75,000 4.2 10,100 0.66

Middle 231,000 4.2 31,200 0.66

Lower 124,000 4.2 16,800 0.33

Total Inferred 430,000 4.2 58,100 -


Don Calixto Vein




Upper 01 84,000 5.8 15,700 0.66

Lower 138,000 5.8 25,700 0.66

Total Inferred 222,000 5.8 41,400 -

Indicated Mineral Resources

Upper 02 127,000 5.8 23,700 0.80

Middle 82,700 5.8 15,400 0.80

Total Indicated 210,000 5.8 39,100 -


Don Fernando Vein




Middle 192,000 7.2 44,500 0.80

Lower 206,000 7.2 47,600 0.66

Total Inferred 398,000 7.2 92,100 -


Upper 01 87,000 7.2 20,100 0.80

Upper 02 38,000 7.2 8,900 0.80

SE 75,000 7.2 17,400 0.80

Total Indicated 200,000 7.2 46,400 -


Don Mario Vein




Middle Central 02L 88,000 5.7 16,200 0.80

Lower Central 81,000 5.7 14,800 0.33

Middle Central 02R 432,000 5.7 79,000 0.66

Upper Central 01 64,000 5.7 11,800 0.66

SE Upper 67,000 5.7 12,400 0.66

SE Middle 24,000 5.7 4,400 0.33

Total Inferred 756,000 5.7 138,600 -


Upper Central 02 54,000 5.7 9,900 0.80

Upper Central 03 124,000 5.7 22,800 0.80

Middle Central 01 95,000 5.7 17,400 0.80

Total Indicated 273,000 5.7 50,100 -


Don Joaquin Vein

Block ID Tonnage (t) Grade (g/t Au) Containedounces

Payability factorapplied


Middle 02 768,000 6.3 155,500 0.80

Lower 432,000 6.3 87,500 0.66

Total Inferred 1,200,000 6.3 243,000 -


Upper 147,200 6.3 29,800 0.80

Middle 01 128,000 6.3 25,000 0.80

Total Indicated 275,000 6.3 54,800 -


Maria Inez Vein




NW Central 36,000 7.5 8,700 0.66

NW 32,000 7.5 7,700 0.33

Upper Central 77,000 7.5 18,600 0.80

Lower Central 110,000 7.5 26,600 0.66

SE 32,000 7.5 7,700 0.33

Total Inferred 287,000 7.5 69,300 -


Middle Central 47,000 7.5 11,400 0.80

Total Indicated 47,000 7.5 11,400 -


Masara (Maligaya) Vein




Upper 01 64,000 8.5 17,400 0.66

Middle 01 59,000 8.5 16,100 0.66

Lower 110,000 8.5 30,200 0.33

Total Inferred 233,000 8.5 63,700 -


Middle 02 29,000 8.5 8,000 0.80



Manganese Vein




Upper 15,000 7.0 3,500 0.66

Middle 69,000 7.0 15,500 0.66

Lower 83,000 7.0 18,800 0.33

Total Inferred 167,000 7.0 37,800 -


Bonanza Vein




SE 8,000 6.2 1,500 0.33

Central 20,000 6.2 4,000 0.66

NW 8,000 6.2 1,500 0.33

Total Inferred 36,000 6.2 7,000 -


Sandy Vein




Upper Central 124,000 5.4 21,500 0.80

Lower Central 98,000 5.4 17,000 0.33

SE Upper 11,000 5.4 1,900 0.33

SE Lower 11,000 5.4 1,900 0.33

NW Block 11,000 5.4 1,900 0.33

Total Inferred 255,000 5.4 44,200 -


St Vincent Vein




Upper 01 37,000 5.4 6,500 0.80

Upper 02 124,000 5.4 21,600 0.80

Middle 197,000 5.4 34,200 0.80

Lower 144,000 5.4 25,000 0.66

Total Inferred 502,000 5.4 87,300 -


St Francis Vein




NW Upper 58,000 5.4 10,000 0.66

NW Lower 29,000 5.4 5,000 0.33

Upper Central 02 80,000 5.4 14,000 0.80

Middle Central 163,000 5.4 28,300 0.33

SE Upper 70,000 5.4 12,100 0.80

SE Lower 29,000 5.4 5,000 0.33

Total Inferred 429,000 5.4 74,400 -


Upper Central 01 18,000 5.4 3,100 0.80

Upper Central 03 66,000 5.4 11,500 0.80



St Benedict Vein




NW Upper 01 33,000 8.5 8,900 0.80

NW Upper 02 65,000 8.5 17,600 0.66

NW Lower 12,000 8.5 3,400 0.33

Central NW 26,000 8.5 7,200 0.80

Central Lower 54,000 8.5 14,600 0.66

SE Upper 43,000 8.5 11,900 0.66

SE Lower 248,000 8.5 3,400 0.33

Total Inferred 494,000 8.5 135,000 -


Central Upper 01 87,000 8.5 13,300 0.70

Central Upper 02 49,000 8.5 23,700 0.80

Total Indicated 136,000 8.5 37,000 -

apex mining company: masara gold project, philippines

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