43-101 2008 Technical Report On The La Fortuna Project, Durango ...

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Neither Howe nor the author of this Report (nor family members or associates) have any business relationship with Castle Gold or any associated company, nor with any company mentioned in this Report, which is likely to materially influence their impartiality or create a perception that the credibility of this Report could be compromised or biased in any way. The views expressed herein are genuinely held and deemed independent of Castle Gold. Moreover, neither Howe nor the authors of this Report (nor family members or associates) have any financial interest in the outcome of any transaction involving the Property other than the payment of normal professional fees for the work undertaken in the preparation of this Report (which is based upon hourly charge-out rates and reimbursement of expenses). The payment of such fees is not dependent upon the content or conclusions of either this Report or consequences of any proposed transaction. Castle Gold has reviewed draft copies of the Report for factual errors. Hence, the statement and opinions expressed in this document are given in good faith and in the belief that such statements and opinions are not false and misleading at the date of this Report. Howe’s opinion is provided solely for the purposes outlined in Section 1.1 of this Report and Howe consents to the use of the Report for this purpose. Howe reserves the right to, but will not be obligated to, revise this Report and conclusions thereto if additional information becomes known to Howe subsequent to the date of this report. 1.5 Units and Currency All units of measurement used in this report are metric unless otherwise stated. Tonnages are reported as metric tonnes (“t”) and base metal values (copper, lead and zinc are reported in weight percent (“%”) or parts per million (“ppm”). Precious metals values (silver and gold) are recorded as grams per metric tonne (“g/t”). Other references to geochemical analysis are in ppm or parts per billion (“ppb”) as reported by the originating laboratories. Currency is expressed in US dollars unless stated otherwise. The exchange rate for the conversion of Mexican Pesos to US dollars is US$1 = 11 Pesos. 6
2.0 PROPERTY DESCRIPTION, LOCATION, ACCESSIBILITY, CLIMATE, PHYSIOGRAPHY, LOCAL RESOURCES AND INFRASTRUCTURE 2.1 PROPERTY DESCRIPTION AND LOCATION 2.1.1 Location The Property is located in the State of Durango, Mexico approximately 100 km north of the city of Durango at the approximate UTM coordinates of 2,751,115N and 547,460 (24 o 52’27” latitude and 104 o 31’48” longitude) (Figure 1). The elevation of the area containing the bulk of the known mineralization ranges from 1,720 m to 1,800 m above mean sea level. 2.1.2 Land Tenure The Property consists of four contiguous mining concessions totaling approximately 216.05 hectares (“Ha”) (Table 1 and Figure 2). The concessions are located in the municipality of San Juan del Rios in central Durango. Table 1. Castle Gold concession titles for the El Castillo Property. NAME OF TITLE AREA DATE OF EXPIRATION CONCESSION NUMBER (Ha) TITLE DATE OWNER El Cairo 220073 25.0000 5 June 2003 4 June 2053 Minera Real Del Oro S.A. de C.V. Justicia 220074 20.9000 5 June 2003 4 June 2053 Minera Real Del Oro S.A. de C.V. El Cairo 220075 95.1487 5 June 2003 4 June 2053 Minera Real Del Oro S.A. de C.V. El Oro 220076 75.0000 5 June 2003 4 June 2053 Minera Real Del Oro S.A. de C.V. TOTAL 216.0487 2.1.2.1 Mineral Rights Castle Gold owns all four of these concessions outright. The smaller of the two El Cairo concessions (title number 220073) was acquired from the Mexican government in a lottery for the cost of entry in the lottery, which is minimal. The larger El Cairo concession (title number 220075) was acquired on 12 June 2004 from Explominerals S.A. de C.V. for a one-time payment of US$ 20,000, 500,000 shares in Castle Gold and a 2.0% Net Smelter Royalty. This concession is located to the east of the known mineralized area and is not presently known to contain mineralization. The El Oro and Justicia concessions were acquired on 5 November 2004 from five individuals: Eduardo Núñez Medina, Pedro Fraga Medina, Roberto Sitten Ayala, Rafael Fernando Gutiérrez Badilla and Luis Antonio Martínez Macias. Payments totaling US$255,150 were made to these individuals in 2002 and 2003. A payment of US$201,750 was made upon signing followed by three payments of US$330,026.40 on 30 March 2005, US$330,026.40 on 30 September 2005 and US$527,947.20 on 30 March 2006. Castle Gold reports that all payments have been made and that they now own all concessions outright, subject to the 2% NSR on the larger El Cairo concession (title number 220075). 2.1.2.2 Surface Rights Castle Gold also controls 835 Ha of surface rights in the El Castillo area (Table 2) (Figure 2). This is substantially larger than the area covered by Castle Gold’s mineral rights and overlaps onto mineral rights controlled by Compñía Minera La Parreña S.A. de C.V., a subsidiary of Industrias Peñoles. At the present time, Castle Gold is planning to install mine infrastructure (at least one leach pad) on ground for which they control the surface rights but not the mineral rights. 7
Page 1 and 2: TECHNICAL REPORT ON THE EL CASTILLO
Page 3 and 4: SUMMARY Introduction At the request
Page 5 and 6: Castillo Remaining Mineral Resource
Page 7 and 8: Undiluted Reserves at $550 per Ounc
Page 9 and 10: epresent an incremental increase in
Page 11 and 12: TABLE OF CONTENTS 1.0 INTRODUCTION
Page 13 and 14: Table 4. Driving distances from Dur
Page 15: Castle Gold has accepted that the q
Page 19 and 20: Figure 2. Map showing mining conces
Page 21 and 22: 2.1.2.3 Property Taxes The property
Page 23 and 24: Table 5. Maximum precipitation in a
Page 25 and 26: 3.0 HISTORY The El Castillo Project
Page 27 and 28: commonly reach elevations of 2,500
Page 29 and 30: Figure 4. Cross-section through the
Page 31 and 32: At El Castillo, the presence of cha
Page 33 and 34: Toward the center of the mineralize
Page 35 and 36: 7.0 EXPLORATION In 2006, Castle Gol
Page 37 and 38: 9.0 SAMPLING METHOD AND APPROACH Th
Page 39 and 40: 11.0 DATA VERIFICATION 11.1 INTRODU
Page 41 and 42: Morgain Minerals Inc. El Cairo Gold
Page 43 and 44: 13.0 MINERAL PROCESSING AND METALLU
Page 45 and 46: Table 9. Castle Gold test heap leac
Page 47 and 48: material is relatively consistent a
Page 49 and 50: Plate 6. View of the El Castillo si
Page 51 and 52: 14.2.1 Methods A shift of -500,000
Page 53 and 54: 14.2.4 Pit Optimization Parameters
Page 55 and 56: Undiluted Reserves at $600 per Ounc
Page 57 and 58: Table 13. Comparison of Howe 2003 a
Page 59 and 60: 15.2.2 Change of Land Use The Compa
Page 61 and 62: 16.2.1 Capital and Operating Cost E
Page 63 and 64: Table 15. Operating Cost Summary (U
Page 65 and 66: will be operating the mine indirect
Page 67:
Table 17. Sensitivity Analysis - Gr
Page 70 and 71:
16.2.2 Economic Evaluation The Base
Page 72 and 73:
Table 23. US$ - Mexican Peso Exchan
Page 74 and 75:
• Castle Gold should complete geo
Page 76 and 77:
Panteleyev, A., 1996, Epithermal Au
Page 78 and 79:
9. To the best of my knowledge, inf
Page 80 and 81:
CERTIFICATE OF AUTHOR dated July 31
Page 82 and 83:
Appendix A Pit Optimization Level P
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