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Minera Valle Central Summary

Several former members of Codelco management established MVC in 1990/1991 with the financial backing of Fe Grande S.A., a major Chilean private construction group.  The project was too small to interest Codelco, and was eventually sold to Amerigo in 2003 because it was not considered to form part of Fe Grande S.A.’s "core business".  Since taking over MVC, Amerigo has undertaken a significant expansion of the facilities, including the addition of a molybdenum plant, with the result that Codelco now receives millions of dollars in royalties from Amerigo with no expenditures and excellent management.

The MVC site is located 8 kilometers east of the city of Rancagua and 90 kilometers south of Santiago at 700 meters elevation.  MVC currently treats approximately 140,000 to 155,000 tonnes per day of fresh and old tailings from the El Teniente Copper Mine, and produced 34.63 million pounds of copper and 769,142 pounds of molybdenum in 2008.

Fresh tailings are transported to MVC along a 36 kilometer launder, reprocessed, and returned to the tailings launder that deposits into Codelco's Caren tailings deposit 50 kilometers west of MVC.  In addition, nearby is the Colihues tailings pond covering 368 hectares and containing an estimated 200 million tonnes of higher-grade old tailings. It is located 1 kilometer south of the plant.  Amerigo has the right to process these old tailings from Colihues.  There are two additional tailings deposits, including the Cauquenes tailings deposit which contains an estimated 500 million tonnes of additional higher-grade tailings and is adjacent to Colihues, and Barahona, which is similar in size to Colihues and located close to the El Teniente mine.  Discussions are ongoing with respect to Amerigo obtaining the rights to process tailings from these additional deposits.

MVC has negotiated the right to increase the treatment rate of Colihues tailings to 45,000 tpd from the originally contracted 10,000 tpd, and continues to review other opportunities to increase copper and molybdenum recoveries and to decrease costs.  The Company's goal is to increase annualized production to 60 million pounds of copper and 1 million pounds of molybdenum.