The American Tunnels area has a long and continuing history of small-scale, artisanal gold mining. Gold is mined from a honeycombing of shallow (5 to 20 meters deep) underground workings, estimated to total more than a kilometer in extent, within an area of about 200 m by 225 m at American Tunnels. Free gold is also present in streams draining ultramafic cap rocks several hundred m north of American Tunnels; a possible extension of the mineralization. There are also dozens of artisanal gold workings within other erosional windows to the south, principally at the Assmicor prospect. The miners follow narrow high-grade veins, vein stock-works and fracture-filled zones near the top of the intrusive complex.

Given the primitive mining and recovery methods, break-even is estimated at about 2 g/t gold - a general rule of thumb in Mindanao at current gold price. Bonanza gold zones were not unusual during the high-grading in the 1980's and 1990's, and are still encountered.

Artisanal miners provided some grade information, of varying degrees of reliability, from the more recent workings. Unfortunately, most information has been lost. In general, recovered gold grades are reportedly in a wide range from about 1 g/t gold to as high as plus 1,000 g/t gold. Mindoro's wall rock sampling does not reflect the true mineralization grades since the mineralized veins, stockworks and fractures have already been stoped-out where sampled.

Continuous rock chip sampling of accessible underground artisanal gold workings gave the following results:

• 26 m of 1.94 g/t gold
• 24 m of 2.48 g/t gold
• 29.4 m of 2.60 g/t gold
• 15.3 m of 1.31 g/t gold

Preliminary Drilling

An initial test of 830 m of drilling at American Tunnels was done in 2009 (with an additional 336 m drilled in the North Porphyry Target). The program was designed to test both gold mineralization and an underlying porphyry copper-gold target. Eight holes were drilled for this program. The drilling was focused on an erosional window through ultramafic cap rocks, where mineralized intrusives are exposed and where artisanal miners are carrying out near-surface, small-scale gold and copper mining.

Holes three to seven encountered thick sections of anomalous copper, as well as copper-mineralized veins, both associated with porphyry-style alteration. Mineralization and alteration indicate close proximity to the main potassic mineralized zone and form a sound basis for later drill programs using a larger capacity rig.

Hole No.	From (m)	To (m)	Length (m)	Gold g/t	Copper ppm
AmT-1	2.00	10.40	8.40		2259
AmT-2	16.90	40.40	23.50		417
AmT-3	9.30	24.30	15.00	2.32	199
AmT-3	47.30	91.70	44.40		272
AmT-3	109.20	136.75	27.55		385
AmT-4	13.60	15.00	1.40	0.61	330
AmT-4	15.00	16.05	1.05	stope
AmT-4	16.05	18.10	2.05		348
AmT-4	29.40	112.90	83.50		367
AmT-5	12.40	43.7	31.30		387
including	35.30	37.30	2.00	1.60	1530
AmT-5	41.80	46.20	4.40	2.44
AmT-6	1.60	51.60	50.00		611
including	26.60	27.90	1.30		3820
AmT-6	79.10	81.25	2.15	0.38	226
AmT-6	87.00	90.80	3.80	0.44
AmT-7	1.10	3.20	2.10	0/35	227
AmT-7	15.30	69.10	53.80		306
including	20.30	24.50	4.20	1.04	187
AmT-7	75.40	107.50	32.10		328

Drilling at American Tunnels

NEWS RELEASES

January 22, 2010	Final Drill and Undergound Sample Results from American Tunnels
October 27, 2009	Initital Drill Results Confirm Gold and Porphyry Copper-Gold Mineralization Potential at American Tunnels

TECHNICAL REPORTS

April 25, 2005

Independent Geological Report on the Surigao Property Group