Gold and Silver Projects in Northern Peru

The Company holds 100% in several prospective gold-silver properties in Northern Peru. All the properties are within trucking distance to the Aguila Norte Plant.

Machacala Area

Peruvian Metals has a 100% interest in two highly prospective Ag-Au properties located near the historic Machacala gold-silver mine and approximately 25 kilometres northeast of Peruvian Metals Aguila Norte Plant. Historic production from Machacala mine records cannot be verified by the Company but historic records by the previous operators indicatedthat 232,645 tons of ore were mined from 1979 to 1991 with average grades of 6 g/t Au and 10 g/t Ag. Thirteen veins were identified showing typical Low Sulphidation type mineralization.

The two projects, Korimandy and Miton de Oro are both within the Tertiary- aged Calipuy volcanic complex. This volcanic unit hosts several prolific gold producers in northern Peru, including Newmont's Yanacocha and Barrick's Laguna Norte and Pierina mines. Gold-silver mineralization on the property is considered to be similar to the past-producing Machacala Au-Ag mine and the current-producing Salpo mine located in the same area to the north.

Korimandy Ag-Au – Located 11.0 kilometres East of Machacala

Peruvian Metals entered into a 10-year mineral assignment agreement with a Peruvian national for the right to explore, develop and extract mineral from the 300-hectare Korimandy concession. The concession has a mining operation certificate which allows for the extraction of mineralized material from the property. The certificate is currently being reactivated. Peruvian Metals owns two concessions totalling 727 hectares contiguous with the Korimandy concession.

A well-defined structure hosts the Au-Ag mineralization on the property. A 41-metre shaft was developed in the early 2000s and is still accessible. Underground development consists of three short drifts on different levels extending along strike totalling 86 metres. The bottom 41-metre level was not accessed.

View looking south at stockpiled ore and infrastructure

Stockpiled Au-Ag Mineral

Historic reports are available regarding previous sampling of the underground working. Ten non-systematic samples were taken in 2003 at various underground sites with a reported vein width ranging between 0.30 m and 0.80 m. Gold results were reported in the ranges between 4.16 g/t Au to 16.78 g/t Au, averaging 8.8 g/t over a weighted average width of 0.66 m. Silver results over the same average width ranged between 111 g/t Ag to 1,038 g/t Ag, averaging 412 g/t Ag. Please take caution as these results are historical in nature and should not be relied on. Sampling by a second group in late 2009 mainly focused on metallurgical work. Four samples taken at this time returned 6.8 g/t Au and 201.1 g/t Ag, with gold results ranging from 4.11 g/t Au to 7.84 g/t Au. Silver results ranged from 103.83 g/t to 279.33 g/t. One of the samples was used for metallurgical work with a head grade of 7.78 g/t Au and 233.75 g/t Ag. Two flotation metallurgical methods were used to make high grade Au-Ag concentrates. Gold and silver recoveries in the first sample returned 92.27 per cent for Ag and 59.91 per cent for Au. Results from the second sample showed improvement with recoveries of 94.97 per cent for Au and 86.59 per cent Ag. Please take caution as these results are historical in nature and should not be relied on.

Peruvian Metals plans to develop and extend the underground workings for extraction of mineralized material. The Company also plans to conduct detailed
exploration including geological mapping, geochemical and geophysical surveys, followed by diamond drilling.

Miton de Oro – Located 8.5 kilometres Southeast of Machacala

The Miton de Oro property consists of a 700-hectare concessionand is accessed from Aguila Norte by approximately 157 kilometres of mostly asphalt road. Mineralization at Miton de Oro is considered Low Sulphidation type similar to the past-producing Machacala gold-silver mine. Highlights of initial reconnaissance sampling on the Miton de Oro property of an abandoned, 22-metre-long artisanal drift located in the east of the property that exploited low sulphidation epithermal quartz veins hosted in pyroclastic rocks returned 127.1 g/t Ag with 1.15 g/t Au, 881.7 g/t Ag with 1.32 g/t Au, and 574.21 g/t Ag and 0.34 g/t Au on sample and vein widths of up to 40 centimetres. Hand-selected quartz vein material from this artisanal workings dump pile returned 660.4 g/t Ag and 1,706.6 g/t Ag. Several other areas on the property have returned strong Au-Ag mineralization and will require further follow-up. A large low sulphidation target may exist on the property.

The initial focus will be on the area of the artisanal workings. Exploration will involve reopening the historic workings where high-grade silver and gold mineralization is located. Initial exploration will comprise exploration drifts along and perpendicular to the mineralized structures. Any mineralized material from the drift will be shipped to Aguila Norte for processing.

Indio Inka

Peruvian Metals has 100% ownership of the 470-hectare Indio Inka property locatedroughly 224 kilometres by mostly asphalted road from the Aguila Norteprocessing plant. The property is located approximately five kilometresnortheast of Eloro Resources Victoria gold project in northern Ancash wherea significant drill program is underway.

The propertys principal showing consists of a high-grade gold mineralizedstructure hosted in a near vertical, silicified breccia structure that roughly parallels bedding in the host lutite. The mineralized structure reaches one totwo metres wide, and has been subject to artisanal development on two levels. Sampling within the old working, mostly from oxide/sulphide mix material, has returned results ranging from 1.48 to 13 g/t Au on 12 samples with sample lengths ranging from 0.4 to 1.0 metre. Initial metallurgical samples have shown 89-per-cent Au recovery (64 per cent passing minus 200 mesh) from a gold-silver-copper concentrate flotation test in sulphide material and 92-per-cent Au recovery (90 per cent passing minus 200 mesh) in cyanidation bottle roll tests in oxide material. The Company plans to extend the current mineralization by exploration drifting along the mineralized structures.

Pueblo de Oro

The 500-hectare Pueblo de Oro property is located in the Department of Ancash near the small town of Pueblo Libre. The property is accessed from the Aguila Norte plant by approximately 292 kilometres of mostly asphalt roads and encompasses epithermal, oxide gold-silver mineralization hosted in fractured, brecciated, and faulted quartzites of the Chimu formation. Historical mine workings are localized in a highly brecciated fault zone parallel to the hinge of an overturned, tightly folded syncline where at least two periods of exploitation have occurred including small, artisanal style tunnels and a large mechanically exploited stope measuring roughly 3,450 square metres entering the hill for 170 metres with widths of up to 30 m. Thirty six random samples were taken from the brecciated underground material underground and averaged 0.73 g/t Au and 66.9 g/t Ag. It is apparent that the Au-Ag grade depends on the brecciation intensity. The old mine dumps returned anomalous results from grab samples with individual samples assaying four g/t Au and 431 g/t Ag. Sampling from sulphide material outside the working returned values up to 34 g/t Au and +2000 g/t Ag with +5% combined Pb-Zn. The Chimu quartzites are excellent hosts for precious metal mineralization in northern Peru. Barrick's massive Alto Chicama mine and Tahoe's La Arena mines are excellent examples of this type of precious metal mineralization. The exploration target at Pueblo de Oro is underground high-grade operation similar to PPX Mining's Igor project in northern Peru.

Entrance to Underground Workings

Mineralized Brecciated Quartzite Au-Ag