Nueva Esperanza (formerly the Arqueros Project and the recently acquired Esperanza Projects and Chimberos Mine) is 100% owned by Laguna Resources NL, a 70% subsidiary of Kingsgate Consolidated Limited. It is located in northern Chile in the Maricunga Gold Belt, near Copiapó, a regional mining centre). The silver-rich mineralisation is hosted by high sulphidation epithermal alteration associated with the Miocene-aged Cerro Bravo volcanic complex.

The project consists of three well-defi ned mineralised deposits and a number of undeveloped exploration targets. The main deposits are Arqueros, Chimberos and Teterita. Arqueros has been previously mined on a limited scale by underground methods and Chimberos was exploited as an open pit, delivering about 40 million ounces of silver in 1998/99. All three deposits currently have a combined Mineral Resources of about 82 million ounces of silver equivalent or 1.8 million ounces of gold equivalent (EQ45).

In October 2010, Kingsgate Consolidated Limited made an offer to acquire the shares of Laguna Resources NL. Kingsgate took control of the company and at the end of the takeover process in February 2011, held 70% of the shares in Laguna.

In June 2011, Laguna acquired the neighbouring Chimberos mine and Esperanza mining leases thus delivering to the project additional mineral resources at Chimberos and Teterita, expanded surface rights and infrastructure associated with Chimberos mine, including the Chimberos mine camp.

The combined Arqueros Chimberos/Esperanza projects were renamed Nueva Esperanza.

A feasibility study for a decision to mine the Arqueros portion of Nueva Esperanza is expected to be complete in early 2012, with expected plant commissioning in late 2013. The Chimberos and Teterita deposits are in an advanced exploration stage and will be integrated into the project when appropriate.

Geology

The mineralised deposits are hosted within Tertiary-aged volcanic units in the case of Arqueros and Teterita, and Paleozoic sediments for Chimberos. The alteration and mineralisation are all Miocene in age and associated with the Cerro Bravo paleovolcano.

Mineralisation comprises two main components. These are silver-rich horizontal units called “mantos” and a series of cross-cutting gold-rich vertical units. The mantos silver mineralisation is hosted by vuggy silica within dacitic lapilli tuffs. It occurs at Arqueros and Teterita where the mineralising process has replaced horizontal porous tuffs. At Chimberos, silver mineralisation is hosted in vuggy silica hydrothermal breccias superimposed on folded Paleozoic sediments

The vertical gold-rich mineralisation, also characterised by vuggy silica, is well-developed at Arqueros. It has been interpreted as feeders for mineralising fl uids. Nonetheless, this style of mineralisation has not yet been observed at Teterita and is poorly preserved at Chimberos.

Resource

The combined Indicated and Inferred mineral resource for the Nueva Esperanza Project (Table 1) is based on resource block modelling of Arqueros, Chimberos and Teterita, and has been estimated at a cut-off grade of 0.5g/t gold equivalent to be:

• 28.5 million tonnes at 0.25g/t gold and 78g/t silver.

This represents about 229,000 ounces of gold and 71.3 million ounces of silver. The Indicated mineral resource was estimated at 16 million tonnes at 0.32g/t gold and 81g/t silver, representing 165,000 ounces of gold and 41.7 million ounces of silver.

The Indicated and Inferred resource may be expressed in gold or silver equivalent ounces as:

• gold equivalent ounces (EQ45): 1.81 million ounces at 2.0g/t gold equivalent; and
• silver equivalent ounces (EQ45): 81.6 million ounces at 89g/t silver equivalent.

Feasibility Study

The feasibility study commenced at the end of May 2011 and is progressing steadily, with a decision to mine expected to be made in the fi rst quarter of 2012. The objective is to have this project commence production in 2013. The target is an open-pit mine producing 100,000 to 120,000 gold equivalent ounces per year, using conventional agitation cyanide leaching in tanks.

The conceptual Nueva Esperanza mining complex has four pits:,
Arqueros, Huantajaya, Chimberos and Teterita. The feasibility study only considers Arqueros, with Chimberos and Teterita yet to be integrated. Huantajaya has not yet been assessed in detail. The fi nal location of mine infrastructure has yet to be confi rmed, and will be subject to geotechnical and environmental assessment.

The feasibility study is currently only considering the Arqueros deposit with the Chimberos and Teterita deposits to be incorporated following completion of further drilling later this year. However, based on current information, it is likely that Teterita (and potentially Chimberos) will supply the mill feed for the fi rst 2 – 3 years of production given a likely lower strip ratio and the ability to defer the required pre-strip from the Arqueros deposit. Given negligible gold content in these deposits, metal production during this phase will be primarily silver.