Fourteen drill holes in two programs in 2001-2002 partially outlined the Valderama Prospect, defining a flat-lying, near-surface sheet of massive pyritic sulphides, which replace a dacitic tuff unit. Based on drilling, mapping and geophysical expression, Valderama is up to 200 m wide and extends for about 800 m along strike. The massive sulphide body is typically between 10 to 40 m thick and consists of nearly pure pyrite which, where assayed to date, contains from 36 to 42 % sulphur. Promising copper, gold, silver and zinc values were encountered at shallow depths; for example 37.1 m of 0.82 percent copper, 1.88 g/t gold; and 40.25 m of 0.69 % copper, 1.21 g/t gold, 4.34 g/t silver, and 0.63 % zinc (true thicknesses).

The Phase 1 drill holes were not assayed for sulphur. The massive pyritic sulphide is defined as greater than 90 % pyrite. There were also numerous intersections of semi-massive sulphide (between 40 and 90 % pyrite), which have also not yet been assayed. Significant gold, silver, copper and zinc values are associated (see long section Valderama Prospect below). Intersections of massive pyritic sulphide include:

Summary of significant intercepts:

Hole No.	From (m)	To (m)	Thickness (m)	Cu %	Au g/t	S %
PDA 2001-01	8.30	19.30	11.00	*	0.69	Phase 1 Drilling - not assayed
PDA 2001-03	16.30	53.40	37.10	0.82	1.88
PDA 2001-06	13.50	47.50	34.00	0.15	0.95
PDA 2001-08	55.75	113.20	57.45	0.52	1.04
PDA 2002-12	46.82	79.08	32.26	*	0.59	36.24
PDA 2002-14	70.70	78.50	7.80	*	*	42.08
PDA 2002-14	87.40	90.95	3.55	0.12	*	40.85

No significant result



Valderama: Development Concept for Sulphuric Acid Plant

If sulphur prices return to high levels seen in recent years then Valderama will likely form an increasingly important component of Mindoro's future strategy for the Agata nickel laterite development, as noted under Agata Development Concept. Sulphuric acid is derived from the processing of either sulphur or pyrite and is used to produce ammonium sulphate-and phosphate fertilizers. The pyrite conversion process also produces excess power that could be sold into the national grid. Sulphur and sulphuric acid prices and supply have been volatile over 2006 to early 2008; both were in short supply, and at record price levels. The shortage and high price were critically affecting the economics of both the fertilizer industry and nickel (and other metals) processing. Sulphur price was as high as US$ 800 a tonne in June 2008, and since then, decreasing markedly to under US$100 a tonne currently (Jan. 2010).

Mindoro management believes that sulphur and sulphuric acid prices will recover to price levels supportive of this concept, as other commodity prices rise with the inevitable resumption of Asian growth (but probably not as high as the extremes seen in 2008). In addition, demands of the fertilizer industry in a region of looming agricultural under-supply will likely contribute to sulphur and sulphuric acid price increases.

Scenarios that will be evaluated by Mindoro include; in the short term to establish early cash flow via the direct shipping (DSO) of pyrite and sale to fertilizer producers and nickel laterite processing operations; and in the near to medium term, the establishment of a stand-alone sulphuric acid production plant to supply low-cost sulphuric acid to the Agata nickel laterite project, currently being evaluated by Mindoro; with excess product sold on to other nickel laterite processing operations and to the fertilizer industry.