INTERNAL & CONFIDENTIAL

INTERNAL ASSESSMENT of the TRES

CHORRERAS OPEN PIT MINING POTENTIAL
`The 3C MINE´
including the
3C BRECCIA DEPOSIT (Au-Mo-Cu-Ag)
and the
EPITHERMAL DEPOSIT (Au-Ag)

2009.03.30

Note: Not Completed Pursuant to NI 43-101 Criteria

Completed by: Leslie A. Smith, P.Geol. (Alta)

Donald G. Allen, P. Eng. (BC)
With Contributions by: Moose Mountain Technical Services
&
Hoffert Process Solutions Ltd.

Leslie A. Smith, P. Geol. (Alta) Donald G. Allen, P. Eng. (BC)

Phone: 593 2 226 9767 Fax: 593 2 224 7489

Av. Los Shyris N36-188 y Naciones Unidas
Piso 3 Depto 7
Quito Ecuador
INTERNAL ASSESSMENT OF TRES CHORRERAS
OPEN PIT MINING POTENTIAL

TABLE OF CONTENTS

1 INTRODUCTION....................................................................................................1
1.1 Purchase from Atlas Minerals Inc.....................................................................1
1.2 Current Tres Chorreras Property Control..........................................................1
1.3 Report Objective and Aspects Included in the Internal Assessment.................2
2. BACKGROUND INFORMATION...........................................................................3
2.1 Existing NI 43-101 Reports...............................................................................3
2.2 Location, Access................................................................................................3
2.3 Physical and Social Characteristics...................................................................3
2.4 Environmental Management.............................................................................4
2.5 Title, Ecuadorian shareholders and local partner obligations............................5
2.6 New Mining Law / Political Management by Atlas..........................................5
2.7 Adjacent Properties...........................................................................................6
3 GEOLOGY, EXPLORATION & PREVIOUS PRODUCTION..................................7
3.1 History and Previous Production.......................................................................7
3.2 Exploration & Geology.....................................................................................8
3.2.1 Historical Data...........................................................................................8
3.2.2 Regional Geology......................................................................................8
3.2.3 Local Geology.........................................................................................10
3.2.4 Geology of the Tres Chorreras Concession.............................................10
3.2.5 Deposit Types..........................................................................................12
3.2.6 Porphyry Related Breccia Pipe Deposits – ANALOGIES......................12
3.2.7 Epithermal Deposits Associated with Diatremes....................................13
3.3 Mineralization..................................................................................................14
3.3.1 3C Breccia Deposit..................................................................................15
3.3.2 Epithermal Deposit.................................................................................16
3.4 Alteration.........................................................................................................17
3.5 Exploration – Soil Geochemistry....................................................................17
3.6 Magnetometry......................................................................................................18
4 RESOURCES & GRADES...................................................................................19
4.1 Database..........................................................................................................19
4.2 The 3C Breccia Deposit...................................................................................19
4.2.1 Mineralization.........................................................................................19
4.2.2 Resource Calculation Cutoffs.................................................................19
4.2.3 3C Breccia Resource Calculation...........................................................19
4.3 Epithermal Deposit.........................................................................................20
4.3.1 Mineralization.........................................................................................20
4.3.2 Resource Calculation Cutoffs.................................................................20
4.3.3 Resource Calculation..............................................................................20
4.4 Combined Deposit In-situ Resources..............................................................21
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5 COMBINED DEPOSITS AMENABLE TO OPEN PIT MINING...........................22
5.1 Introduction.....................................................................................................22
5.2 Economic Pit Limits Design Basis..................................................................22
5.3 Economic Pit Limit Results.............................................................................24
5.4 Potential LG Pits.............................................................................................26
5.5 Production Scenarios.......................................................................................27
6. MINERAL PROCESSING & RECOVERY............................................................28
7 DEVELOPMENT PLAN.......................................................................................29
7.1 General Description.........................................................................................29
7.2 Road Access and Transport of Product............................................................29
7.3 Minesite & Mill Location................................................................................29
7.4 Assumptions....................................................................................................29
7.5 Electricity........................................................................................................30
7.6 Camp & Infrastructure.....................................................................................30
7.7 Capital Expenses (CapEx) for Mining............................................................31
7.8 Mine Operating Expenses (Mine OpEx).........................................................31
7.9 Mineral Processing Capital Costs....................................................................32
7.10 Mineral Processing Operating Costs...............................................................32
8. COMBINED MINESITE CAPITAL AND OPERATING COSTS............................33
8.1 Capital Costs (CapEx).....................................................................................33
8.2 Operating Expenses (OpEx)................................................................................34
9. PROJECT ECONOMIC PARAMETERS..............................................................35
9.1 Mine Financials & Produced Metal Statistics.................................................35
9.2 Sensitivity Analyses.........................................................................................36
10. NEXT RECOMMENDED ACTIVITIES.................................................................37
10.1 Upgrade the Internal Mine Evaluation to an NI 43-101 standard Preliminary
Assessment..................................................................................................................37
10.2 Exploration........................................................................................................37
10.3 Mining Analysis.................................................................................................37
10.4 Metallurgical studies and Mill Design & Costing............................................38
10.5 Additional studies required (at a minimum)....................................................38
10.6 Complete a Pre-Feasibility Study for the 3C Mine........................................38

MAPS

Map 1. Location and Access to Tres Chorreras.................................................................4

Map 2. Geological Map of Ecuador (#5 is the Tres Chorreras Deposits).........................9
Map 3. Geology of the Tres Chorreras Concession.........................................................11

PHOTOGRAPHS

Photo 1. Epithermal Deposit............................................................................................14

Photo 2. 3C Breccia Deposit...........................................................................................16

FIGURES

Figure 1. Economic Pit Limit Results.............................................................................24

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Figure 2. Starter LG (Small Pit) Orthographic view from the Southeast........................25
Figure 3. Final LG (Larger LG Pit) Orthographic view from the Southeast...................25
Figure 4. NS Cross Section at Row 280 – 3DBM cutoff by NSR...................................26

TABLES

Table 1. History of Exploration and Previous Mining Production at Tres Chorreras.....7

Table 2. 3C Breccia Deposit In-situ Resource Calculation............................................20
Table 3. Epithermal Deposit In-situ Resource Calculation............................................21
Table 4. Combined Deposit In-situ Resource Calculation.............................................21
Table 5.: NSP’s for each LG Price Case.........................................................................23
Table 6. Tres Chorreras LG Pit Delineated Resource (Indicated and Inferred).............26
Table 7. Production Scenarios........................................................................................27
Table 8. Grades and metal prices....................................................................................30
Table 9. Capital Expenses (CapEx) for Mining..............................................................31
Table 10. CapEx estimated 4000 tpd HG*....................................................................33
Table 11. Operating expenses.........................................................................................34
Table 12. Overall Project Economics.............................................................................35
Table 13. Sensitivity to Key Factors...............................................................................36

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 INTERNAL ASSESSMENT of TRES CHORRERAS
OPEN PIT MINING POTENTIAL

1 INTRODUCTION

The Tres Chorreras Concession in Azuay province of Ecuador, registered in the name
of Atlas Moly SA, has been clearly identified as a significant polymetallic deposit.
Artisanal mining activity over 25 years has demonstrated significant gold values (near
surface). Commercial exploration in the mid 90´s clearly demonstrated the other metals
present in significant quantities ( Mo, Cu and Ag ). Atlas Moly´s extensive geologic
analysis of both the artisanal tunneling, the ‘90´s drilling and its own 6,000 metre
drilling program to depths exceeding 600 metres resulted in the very promising
resource calculation announced publicly mid 2008. Ecuadors´s political conflicts
regarding mining and misunderstanding of the economic importance of mining resulted
in the suspension of mineral exploration activity since April 2008, but with the creation
of a new Mining Law and the Presidents clear message that commercial mining is a
necessity for the country, these are now coming to resolution and Atlas anticipates to
be able to return to work on the concession by mid 2009.

These are potentially economic deposits at their present size. When political conditions
allow for its development, the Tres Chorreras polymetallic deposits should therefore be
of considerable importance to Ecuador. Given the deposit is currently open (to the
north, south and to depth), this conclusion will be further strengthened when further
exploration expands the deposit size.

The data compiled to date is summarized and utilized to establish an internal report
inclusive of an open pit mine evaluation which considers multiple factors combining to
determine the practical reality of economic open pit mining at Tres Chorreras.

1.1 Purchase from Atlas Minerals Inc.

A private group, led by existing Atlas Moly SA officers, under an agreement announced
by Atlas Minerals Inc. on 19th November 2008, is in the process of earning up to 100%
shareholding in Atlas Moly Investment Corporation BVI which is the 100% owner of
Atlas Moly SA in Ecuador.

1.2 Current Tres Chorreras Property Control

At time of writing this document, the Tres Chorreras Property is owned 100% by Atlas
Moly SA of Ecuador. Atlas Moly SA is 100% owned by Atlas Moly Investments Corp of
the British Virgin Islands (hereinafter AMIC).

AMIC is 100% owned by Atlas Minerals Inc, a Canadian public company listed on the
Toronto stock Exchange. Late in 2008 management of Atlas Minerals Inc. announced
their acceptance of a proposal to purchase all their shares and hence control of AMIC
and therefore the Ecuadorian assets including the Tres Chorreras concession. This
proposal, by a private group called Quito Joint Venture (hereinafter QJV) led by Andy
Taunton, former Atlas Minerals COO and present President of Atlas Moly SA and Leslie
Smith, P.Geol., the present General Manager of Atlas Moly SA. As a part of the
sale/purchase agreement, full operational control of the Ecuador operations was

1
relinquished to the new group. This confidential In-house Mining Assessment has been
commissioned, funded and managed by QJV. The information is confidential and for
the express use of QJV only.

The intention of the new group (continuing to manage Atlas Moly SA and its assets) is
to develop the Tres Chorreras concession to a pre-feasibility level as rapidly as
possible.

1.3 Report Objective and Aspects Included in the Internal Assessment

This report provides the results of the findings of an in-house economic evaluation of
the mining potential of the Tres Chorreras mineral deposits, including the 3C Breccia
Deposit (Mo-Au-Cu-Ag) and the Epithermal Deposit (Au-Ag, minor Cu-Mo). These two
deposits lie parallel to one another and are separated by as little as 40-metres of
intervening rock. The potential mine analysis includes extraction of both deposits from
a combined W-shaped pit with the 3C Breccia deposit extracted on the west side, the
Epithermal deposit extracted along the east side of the pit.

Independent recognized consultants were included as follows:

i) Moose Mountain Technical Services of Calgary, Canada provided computer
simulated pit limits, measurements of waste rock and mill feed and potential
mill feed values, and
ii) Hoffert Process Solutions of Kamloops, Canada for process considerations
and assistance with the economic analysis.

Additionally this report compiles all other identified key factors which could determine
(or limit) the ability to put this project into production. The authors have attempted to
include each and every factor which could affect the successful construction of an
economic open pit mine including the 3c Breccia Deposit and the Epithermal Deposit.

For this In-house Mining Assessment for the proposed 3C Mine, economics are
evaluated and presented utilizing the following criteria:
i) an open pit mine is utilized for plant feed recovery;
ii) The milling and mineral separation will be completed locally in a project
owned mill;
iii) all required facilities (roads, water, electricity) will be completed as required
for a successful mine operation;
iv) Full environmental and social considerations and post-mining closure is
included in both capital and operational costs as is applicable;
v) Costing includes transport and smelting charges;
vi) Losses are considered in pit extraction, milling and smelting.

IT IS NOTED THAT THIS IS A CONFIDENTIAL IN-HOUSE ASSESSMENT OF

MINING POTENTIAL ONLY AND CANNOT BE CONSIDERED COMPLIANT TO THE
REQUIREMENTS OF AN NI 43-101 PRELIMINARY ASSESSMENT.

2
2. BACKGROUND INFORMATION

2.1 Existing NI 43-101 Reports

Several of the following items have been reported in greater detail in the NI 43-101
reports listed on http://www.sedar.com under the company name of Atlas Minerals Inc.
(AMR). The report dated November 27th, 2007 is the initial NI 43-101 report on the Tres
Chorreras project; the second dated September 11 th 2008 is the Resource Calculation
compiled as a result of the data obtained from the extensive geological analysis and
drilling program carried out by Atlas Moly. The data presented here is a synopsis and
update where appropriate, and uses the database of the Resource Calculation as the
basis for the determination of the potential economic viability of an open pit mine
(herein called the 3C Mine.

2.2 Location, Access

The Tres-Chorreras Project (663500 E, 9650200 N) is located in the western part of the
Province of Azuay, in south-western Ecuador, 55 km east of the coastal city of Machala
and 70 km southwest of the city of Cuenca The project, following the application of
articles of the Ecuador Mining Mandate of April 2008, now consists of one registered
concession “Tres Chorreras”.

Current access to the concession is via pavement from Cuenca or Machala, a third-
order dirt road to near the property boundary, and then by a mule trail for the final 3
Km. Construction of road access has been planned since late 2007 but sufficient funds
were never secured to implement this. To complete the Advanced Exploration,
improved road access is not essential, however will become a logistical priority for the
development of any production facilities and for additional exploration as may be
warranted dependent upon successfully increasing the area of exploration surrounding
Tres Chorreras (under discussion with the Ministry of Mines and Petroleum at this
time).

2.3 Physical and Social Characteristics

The property lies on the western slopes of the Western Andean Cordillera and
elevations in the region range from 280 to 3680 m. Locally, on the Tres-Chorreras
concession, the topography is rugged with steep slopes and elevations ranging
between 2,800 m and 3,300 m. To the south and west the topography becomes more
subdued. The topography slopes to the south is lightly treed, well drained and has
several creeks with waterfalls common (some up to 40 m high). Low brush and scrub
forest covers 50-60% of the area. The area is lightly farmed, with small pasture areas
having been cleared locally for cattle grazing and grain crops.

Good social relations are enjoyed within the County by Atlas Moly. In addition to
providing employment opportunities the company’s activities have created for the local
population, several social assistance programs have been undertaken, such as
assisting existing institutions to provide additional services (in areas involving medical,
internet, education, transportation, computer services) for the population, as well as
maximizing our purchases of goods and services locally.

The Mining Mandate has severely hit our ability to help the locals with jobs and they too
are pushing government for a return to activity. This self-initiated activity by the local

3
communities supports the company in its long term plans conducted by Atlas to provide
continual employment in the region. During a recent environmental and social audit the
auditor found the community eager for the return of our exploration activities.

The company has insisted on correct tax and invoicing paperwork by all suppliers and
has transformed an informal payment system into a tax compliant operation as required
by the tax authorities.

Map 1. Location and Access to Tres Chorreras

2.4 Environmental Management

Atlas has developed an excellent social and environmental management framework at

Tres Chorreras. We have solid support of the local communities and recent
Government contact has generated interest for the future development of Tres
Chorreras. A recently completed environmental audit for the 2008 exploration work has
been completed and submitted to Government agencies. During the audit, discussions
with locals indicated the Community is anxious for the return of active exploration at
Tres Chorreras. Atlas expects no serious difficulties in renewing field operations once
the Approval to Continue Activities is received and related reporting to Government
Agencies has been completed. It is anticipated that a period of less than two months
4
will be required from receipt of the Approval for approval of continued exploration
activities.

2.5 Title, Ecuadorian shareholders and local partner obligations

The Tres-Chorreras concession has an area of 49 ha and mineral title rights were
purchased by Atlas Moly S.A. from the Asociacion de Mineros Autonomos La Chorrera
(3C Socios) on September 6th 2006. The concession was registered in the name of
Atlas Moly S.A. on October 8, 2006 with the Dirección Nacional de Minería. The
remaining term of the concession is 295 months effective April 30, 2006 after which it
can be renewed. Full title is secured.

In the September 2006 sale/purchase document, a number, but not all of the local
mining Societies retained the right to continue mining operations for up to 6 months
from the time an Estudio de Impacto Ambiental para Producción (EIAP) and Manifiesto
de Producción would be approved to permit mining production. In 2008, as part of the
final Atlas Moly S.A. payment and concluding transfer documents to the Societies, Atlas
Moly obtained those specific Societies agreement at Atlas´ unique option, to
alternatively make a payment to each Society in lieu of actual mining activity. The
precise values have not been formally agreed at this date however an estimate would
be in the order of US$500,000 to US$1,000,000 depending on the timing of such
payments. It is important to note in this context that the continuing involvement of the
former miners in the project is a very positive factor in social relations within the county.

2.6 New Mining Law / Political Management by Atlas

The company has complied with all government requirements since initiation of
activities in 2006 and was disappointed that the application of the Mining Mandate in
April 2008 arbitrarily cancelled so many of the mineral title applications it had in
progress and for which it has spent several hundred thousand dollars. The suspension
of mining activities also dictated by that same Mandate directly impacted the ability of
Atlas Minerals Inc. to raise funds on the TSX.

Publication of a new Mining Law in January 2009 has created renewed expectations
that the mining suspension will soon be lifted and companies can return to normal
activities.

President Correa has recently publicly acknowledged the importance of getting the
mining industry back to work as soon as possible. He has also indicated publicly that
Canada has a great deal to offer Ecuador in developing a mining industry and we have
already seen that these statements have created a positive environment with regard to
continuing our activities at Tres Chorreras. The Under Secretary of Mining, Dr. Jose
Serrano, made a specific presentation at PDAC 2008 in Toronto and encouraged
investors to re-consider Ecuador as a developing mining country. His presentation at
PDAC has already stimulated activity from an investment viewpoint. Dr. Serrano also
specifically named Atlas Moly SA as a company which would receive a letter permitting
re-start of activities within weeks.

Atlas Moly SA is one of the original members of CONMIN, the Mining Industry
Committee set up following the Mining Mandate of April 2008. CONMIN is short for
Responsible Mining in Ecuador and is principally made up of Canadian companies.

5
Atlas Moly SA President Andy Taunton has played a prominent role representing a
group of smaller companies in CONMIN.

Andy has also participated in several Canadian Government meetings regarding the
future of Canadian companies interests in mining in Ecuador. He has been involved in
meetings with Canada’s Minister for Foreign Trade, the NRCan and Foreign Investment
Protection Act Team from Ottawa and the Director General for Latin America Affairs, as
well as multiple meetings with Canadian Embassy staff in Ecuador. The net result of all
these meetings is that Canadian / Ecuadorian corporate and diplomatic contact has
increased and the Ecuadorian government now sees Canadian involvement in mining
as highly positive for the country and is creating a positive environment for greater
investment as a result.

The New Mining Law increases costs for mineral title rights, initial and advanced
exploration. Atlas Moly, however, has a small holding and will focus on pre-
development exploration at Tres Chorreras. Our expenditures in regard to these items
will not be significantly affected by the new mineral title holding costs.

2.7 Adjacent Properties

The Narihuiña-1 concession application surrounds the Tres-Chorreras Concession and

has an area of 190 ha. An application for this concession and others (Dabale 1 & 2 and
Ledaba 2 & 4) prior to the Mandate was registered in the name of Atlas Moly S.A. The
company prepared preliminary Environmental Impact Assessment (EPIA) studies for
these properties and submitted them. The Mandate archived this application and an
appeal has been filed regarding this action. The appeal process has been accepted by
the Government. The company continues to discuss with the Mining Ministry the
potential of regaining these concessions.

The open pit mine evaluation presented within this report utilizes only mineral deposits
lying within the Tres Chorreras Concession. None of identified mining resources lie
within Narihuiña. The Narihuiña area does, however, contain ground that has been
identified by Atlas with potential for extensions to the 3c Breccia Deposit and the
Narihuiña Deposit and the identified open pit walls will encroach onto Narihuiña. For
this reason, Narihiuña would be used as part of the pit area and to further determine
the extension of the deposits onto Narihuina 1 is of priority interest to Atlas Moly.

6
3 GEOLOGY, EXPLORATION & PREVIOUS PRODUCTION

3.1 History and Previous Production

The gold mineralization was first discovered in 1983 by schoolchildren on a day hike.
The following activities have occurred since discovery:

Table 0. History of Exploration and Previous Mining Production at Tres

Chorreras

Year Activity Gold

Production
1983 Discovery by school hiking group 0 Oz
1987 - Small scale underground mining activities resulting in Believed to be
1995 the development of a small (temporary) town. >50,000 oz
1995 Property farmed out to EMIDEL (now International 0 oz
Minerals Corp) who completed mapping and the drilling
of 15 ( see below) shallow drill holes which identified the
3C Breccia Deposit
1996 - Property reverted to local owners and small mining <10,000 oz
1998 resumed with 2 Chileno mills and one stamp mill (est.)
operating. At this time there were an estimated 3000-
metres of tunnels completed.
1998 - Property was sold, with a three payments schedule over 0 oz
1999 1 year to Grantham Mining. Grantham completed
mapping, trenching, adit sampling and a geochemistry
survey which indicated several major gold zones
occurring to the east of the 3C Breccia deposit. The
deposit reverted to the previous owners when the
purchaser could not complete the payments.
2000 - The mine reverted to the small miners who made Believed to be
2006 aggressive inroads on the existing tunneling system and >50,000 oz
extended the tunneling to over 5,000 m total with at
least 13 mine operators and seven operating mills.
2006 - The project was once again sold, this time to Atlas Moly 0 0z
2008 S.A. which provided the basis for the public listing of
the parent company Atlas Minerals Inc. on the TSX-V.
Atlas filed a NI43-101 report on the property, completed
6,000-metres of drilling, over 4500 metres of
underground sampling, soil geochemistry, a
magnetometer survey, completed and subsequently
submitted an NI 43-101 resource calculation to the TSX-
V.
Nov The project was taken over by Principals and Founders of 0 Oz
2008 - Atlas Moly SA who are in the process of consolidation
present and analysis of all data, and detailed completion of this
in-house review to:
i) further demonstrate the clear potential for future
development of an economic mine at Tres Chorreras,
and
ii) to secure finance in the coming months to move the
project to a Pre-feasibility Study by year-end 2009.

7
3.2 Exploration & Geology

3.2.1 Historical Data

Geological data available to Atlas Moly S.A. at this report date includes:
 Regional Government Geology
 EMIDEL exploration data (15 holes)
 Grantmining exploration data
 Altas Moly 2008 exploration data (work directed by NI 43-101 qualified
professionals D.R.Melling, D.Schultz & D.G.Allen with technical input by
L.A.Smith). This work involved 27 drill holes and surface and underground
exploration.
 Information from local miners passed on to Atlas Moly S.A.

3.2.2 Regional Geology

Ecuador consists of several terranes (Piñon, Macuchi, Chaucha, Tahuin, Alao, Loja and
Salado) that were formed during the Triassic separation of the North and South
American plates and the subsequent subduction of the Farallon–Nazca plate under the
South American continent. These terranes have been accreted on to the Amazon
craton from the Early Cretaceous to the Eocene. After complete accretion of the
Ecuadorian crust, Tertiary continental arc magmatism resulted from the subduction of
the Farallon–Nazca plate. The collage of basement terranes is overlain in the
southwest by an Eocene to Recent calc-alkaline volcanic arc (Saraguro Group) with
numerous Tertiary granitoid intrusions.

Eocene to Late Miocene rocks (ELM, ~50-9 Ma) represent a period of intense
ignimbritic volcanic activity in southern Ecuador, and is also characterized by the
presence of crustal-scale, arc-normal east–west- to northeast–southwest trending
faults and sutures of the Huancabamba deflection, representing the transition between
the central and northern Andes. A number of important Au-bearing porphyry and
epithermal deposits are associated with this episode. The Late Miocene to Recent
rocks (LMR ~8-0 Ma), which crop out mostly in northern Ecuador and east of the ELM
rocks in southern Ecuador, in a crustal domain characterized by the presence of arc-
parallel, NNE-trending suture zones and by the absence of arc-normal structures. Only
one known major ore deposit is associated (Quimsacocha, high sulphidation Au+/-Ag)
with this episode.

The Tres Chorreras deposit, along with Chaucha (porphyry Cu-Mo +/- Au-Ag) and Rio Blanco
(low sulphidation epithermal Au-Ag), lies close to the projected Calacali-Pallatanga-Palenque fault.

Nearly all of Ecuador's current and historical gold production has come from informal,
artesanal underground and placer operations which makes it difficult to estimate true gold
production for Ecuador. Few professional precious metal mines have been operated in
Ecuador and no large scale mining projects have been developed to date.

8
Map 2. Geotectonic Map of Ecuador (#5 is the Tres Chorreras Deposits)

9
3.2.3 Local Geology

The geology of the area encompassing most of the Tres Chorreras Project was
mapped by Pratt, Figueroa and Flores at a scale of 1:200,000 and published in 1997.

The Tres Chorreras Project is located on the western flank the Miocene to Oligocene
Jubones Caldera. The oldest rocks exposed mainly south of the Jubones fault are part
of the Triassic-Jurassic El Oro Metamorphic Complex. This complex is interpreted to
underlie most of the area and consists primarily of metamorphosed sedimentary rocks
which range from sub to lower greenschist facies. The El Oro Metamorphic Complex is
exposed in structural panels in the southern and northern parts of the concession.

The Cretaceous rocks northwest of the CPF fault consist of oceanic basalts (ophiolites)
and turbidites which are best exposed over a large area to the northwest of the
concessions. Towards the east, but not exposed within the map area is an island arc
sequence known as the Paleocene-Eocene Sacapalca Unit.

Oligocene volcanic rocks (Saraguro Group) represent the first product of large scale,
voluminous, explosive dacitic to rhyolitic volcanism. The final stages of these eruptive
events resulted in the formation of the Jubones Caldera, a circular volcanic feature
some 15 to 20 km in diameter. Rhyolitic phases (stocks, domes and flows) associated
with the final stages of the Jubones Caldera have are present. The entire stratigraphic
package is cut by various intrusive phases including granodiorite, quartz diorite, diorite
and gabbros.

The north-northeast trending CPF fault system and related structures are interpreted as
a suture where oceanic crust has accreted to continental terrane. The east-west
trending Jubones Fault System traverses the southern part of the map area. This fault
system is interpreted as a reverse fault juxtaposing the Triassic-Jurassic El Oro
Metamorphic Complex onto the Oligocene volcanic rocks of the Saraguro Group.

3.2.4 Geology of the Tres Chorreras Concession

The Tres Chorreras concession is underlain by Eocene to Oligocene Saraguro Group

which at the regional scale is comprised of andesitic flows, tuff breccias, and lesser
quartz latites and dacitic tuffs. Locally, these rocks have been mapped as a welded
ignimbrite sequence consisting of compact, cream, grey or purplish, dacitic to rhyolitic,
poorly sorted tuff breccias, with lithic and pumice fragments up to 4 cm in length in a
ash/crystal matrix. Eutaxitic textures are common. In general these rocks strike
northeast and dip moderately to the southeast.

These volcanic rocks are cut by several small (200-300 m), diorite plugs and dykes.
The rock is feldspar-phyric with amphibole and lesser quartz eyes. The diorite is fine to
medium-grained, grey to green grey in color, inequigranular to porphyritic with
plagioclase phenocrysts to 4 mm in a groundmass of plagioclase and chloritized biotite.
Contacts with host rhyolite and dacitic volcanic rocks are usually diffuse and in places
the rock is difficult to distinguish from volcanic rock of intermediate composition.

10
Also cutting the volcanic rocks are at least 2 bodies of hydrovolcanic breccias. The
oldest and contemporaneous or slightly younger that the diorite, is a phreatic
microbreccia/breccia that hosts most of the 3C polymetallic mineralization. Cutting the
phreatic breccia is a sub-circular body of breccia about 600 m in diameter. This breccia,
interpreted as a phreatomagmatic diatreme breccia, has cut off and apparently
removed part of the 3C deposit, but in part, it hosts the epithermal Au-Ag
mineralization.

Map 3. Geology of the Tres Chorreras Concession

The breccia hosting the 3C deposit is a steeply dipping elongate body, about 250 m
long by 50 to 125 m wide. The breccia is dominantly a fine-grained microbreccia of rock
flour and sand sized clasts, locally with bedding or flow banding, that grades into zones
of coarser breccias over several to 10s of metres. These may be pipe-like bodies within
the main body. These coarse breccias contain angular to rounded clasts supported in a
matrix of either pulverized rock or massive mineralization. Fine disseminated pyrite,
chalcopyrite and molybdenite often seen in the fine grained phases, suggest that the
rock indeed is a microbreccia, where sulphides and tourmaline were introduced in a
relatively permeable rock, or else metal rich fluids accompanied intrusion of a fluidized
11
mass of pulverized rock and rock fragments. All types of breccias styles are observed
from crackle breccias in the wall rock, imbricate and mosaic breccias with slabs with
little rotation, to pebble, cobble and boulder breccia with well rounded clasts. Stockwork
type sulphide-filled fractures are also present in the rhyolitic volcanic host rock. Breccia
clasts are rhyolite, commonly silicified and with disseminated patches of tourmaline.

The diatreme breccia varies from light green to white, yellow and brown in colour. The
breccia clasts are typically rhyolite and brecciated rhyolite with minor amounts of more
basic volcanics, supported in a sand sized matrix of quartz and argillized (illite-sericite)
feldspar, with finely disseminated pyrite. They are sub-rounded to round and occur up
to a metre in size. Internal stratification has been observed locally. These rocks are
friable, porous and host at least one third of the mineralization of the Epithermal
deposit.

Two principle fault directions have either been mapped or interpreted. The principle
structure trends 030º and dips about 60o SE and is the locus of the polymetallic)
mineralization on the Tres Chorreras concession. The north-northwest contact between
the diorite and the diatreme/ignimbrite is commonly faulted and mineralized. The
second structural trend is represented by the transverse Galena fault that strikes 130º.

3.2.5 Deposit Types

Two styles of mineralization have been identified on the Tres Chorreras concession.
These include an early porphyry style, polymetallic Cu-Mo-Au-Ag and a later, low
sulphidation epithermal Au-Ag mineralization. Both types are associated with
hydrovolcanic breccias (hydrovolcanism refers to volcanic phenomena produced by the
interaction of magma or magmatic heat with an external source of water, such as a
surface body or an aquifer). Two end member types of hydrovolcanic breccias are
generally accepted: phreatomagmatic and phreatic. Due to their specific characteristics
generated during the brecciation and characteristics that control the ore deposition,
these breccias represent favourable hosts for mineralization. The deposit types related
to these two styles of brecciation and mineralization are summarized below.

3.2.6 Porphyry Related Breccia Pipe Deposits – ANALOGIES

Breccia pipes, in general, are widespread in the Andes and elsewhere, and it is well
known that copper breccias occur within regions that are highly prospective for
porphyry deposits. Typically breccia pipes are circular to oval in plan and cylindrical to
carrot shaped in vertical cross section. They are formed where hydrothermal fluids
have concentrated at high point in an igneous intrusion and as a result of magmatic
pulsations, have forced their way explosively towards the surface. They are comprised
of angular to subrounded rock fragments, infilled or cemented with varying proportions
of pulverized rock, hydrothermally deposited silica, and sulfide and oxide minerals.
They can be barren or mineralized, and in many cases can host world class ore
deposits such as El Teniente and Los Bronces-Rio Blanco in Chile.

El Teniente Megabreccia deposit is the youngest porphyry deposit of the Chilean Andes
and the largest Cu-Mo deposit in the world. Hydrothermal breccias that display
tourmaline-chlorite-quartz sericite alteration average 0.9% Cu. The Braden Breccia is a

12
conspicuous diatreme in the center of the El Teniente deposit. It is poorly mineralized
(~0.3-0.5% Cu), and has partly obliterated the main porphyry deposit, but it is
surrounded by the copper-rich Marginal Breccia, a discontinuous rim of tourmaline
matrix hydrothermal breccia. Los Bronces is a breccia complex comprised of 7 different
breccias types on the west side of a major porphyry copper system. The Rio Blanco
mine currently exploits this porphyry deposit as well as a large copper bearing
tourmaline breccias. Grades at Los Bronces-Rio Blanco grade close to 1% Cu or
better.

The abundant molybdenite in the 3C breccia suggests that a geologic comparison can
also be made with the Mount Emmons – Redwell basin deposits in Colorado (Thomas
and Galey, 1982). At Redwell a breccia pipe approximately 300 by 450 metres in
diameter extends from surface to a depth of about 600 metres where it thins and fades
out in the upper reaches of a molybdenum bearing rhyolite stock. The breccia has been
mined for copper, lead and zinc, but overlapping tungsten and molybdenum
mineralization occurs in the lower part of the pipe. Three stockwork molybdenite
deposits have been discovered by drilling underneath Redwell Basin. Two are centred
directly below the breccia pipe and are low grade relative to the third, called Mount
Emmons or Lucky Jack. The top of the Mt Emmons deposit is approximately 270
metres below the surface and is centred about 1000 metres southwest of breccia.
Reserves reported for Mount Emmons are approximately 155,000,000 tons grading
0.44% MoS2 (0.26% Mo).

3.2.7 Epithermal Deposits Associated with Diatremes

Epithermal deposits often occur in a convergent tectonic setting and associated with
volcanism. They are shallow deposits (surface to 1–2 km depth) formed at low to
moderate temperature, and are genetically linked to magmatic activity.

There are two end-member styles of epithermal gold deposits, high sulphidation (HS)
and low sulphidation (LS). The two deposit styles form from fluids of distinctly different
chemical composition in contrasting volcanic environments. The mineralization in HS
deposits is hosted by leached silicic rock associated with acidic fluids generated in the
volcanic-hydrothermal environment. In contrast, the fluid responsible for formation of
LS ore veins is similar to waters tapped by drilling beneath hot springs into geothermal
systems. Theses waters are reduced and neutral-pH. Boiling of liquid in the LS
geothermal environment leads to precipitation of gold in veins, accompanied by a
variety of features such as adularia and bladed calcite cementing colloform and
brecciated quartz; silica sinters may be the surface expression of such veins, and may
be accompanied by nearby zones of surficial steam-heated acid alteration.

Examples of epithermal deposits occurring in and adjacent to diatremes, also range up

to world class size, such as Cripple Creek, Colorado; Kelian, Indonesia; Yanacocha,
Peru; Pueblo Viejo, Dominican Republic; Ladolam, Papua New Guinea; and Baguio,
Philippines.

The Cripple Creek district, for example, consists of a nested diatreme of volcanic origin
and possesses all the characteristics of breccia pipe deposits. Many of the rock
fragments have come from considerable depths. The most spectacular feature within
the center of the district is the “Cresson Blowout”. The blowout is up to 150 m in
diameter and extends to depths of over 800 m. Angular to rounded fragments of altered
basalt are cemented with sericite and iron oxides. At shallower depths, above 500 m,

13
the mineralized bodies occur along the periphery of the pipe while at depth the
mineralization merges to form a central mineralized core. The Cresson “Vug,” located
at the periphery of the pipe, consists of a mass of solid gold telluride’s. This type of
mineralization can yield assays of greater than 4,000 ounces of gold/tonne. The
stoping blocks can reach heights upwards of 100 m. Approximately, 22 million ounces
of gold have been produced from the Cripple Creek Mining District as a whole since
1891 (Heylmun, 2001).

Photo 1. Epithermal Deposit

South extension of the Epithermal Deposit. Photo looking south showing veins partly exploited by artisan
miners.

3.3 Mineralization

As mentioned above, exploration on the Tres Chorreras concession has discovered

two distinct styles of mineralized systems. The 3C deposit, located in the northwest
corner of the Tres Chorreras concession, is characterized by polymetallic Cu-Mo-Au-Ag
breccia related mineralization, whereas the Epithermal deposit, Galena and Pucara

14
prospects are characterized by low sulphidation epithermal Au-Ag+/-Pb+/-Zn veins. It is
conceivable that the breccias reflect the footprint of an underlying porphyry system.

3.3.1 3C Breccia Deposit

Mineralization in the 3C deposit has been partly defined by drilling over an area of
about 250 m by 50 to 125 m, and over a vertical range of 670 m (surface to the
deepest intersection in drill hole 08-41). The deposit apparently is open to the north,
since good grades were encountered in drill holes 07-16 and 07-17. The deposit has
been cut off by the younger diatreme breccia to the south, but may continue beyond
the diatreme to the unexplored southwest. Mineralization typically consists, in order of
abundance, of chalcopyrite, molybdenite, pyrite, specular hematite and magnetite in
variable proportions, with lesser quartz, tourmaline, scheelite, apatite, galena,
sphalerite and arsenopyrite. Minor amounts of gold and tetrahedrite have been
observed in polished sections. The mineralization ranges from massive sulphides
cementing breccias, to fracture-controlled sulphides in and around the breccia bodies.
The massive sulphide-cemented breccias were the target of the informal artisan
miners, where gold grades approach 30+ g/t. Molybdenum and copper grades range
up to several percent each in these zones that may have been vapour-rich voids with
fragments, subsequently filled with coarse sulphides and gangue minerals. Preliminary
studies on distribution of rhenium, reveal grades of up to 9 g/t, associated with high
grade molybdenite-rich zones.

A similar mineralized breccia, possibly representing a “blind” breccia pipe that never
reached the surface, was encountered at the bottom of hole 08-39 at a depth of 174 m
(9.35 m grading 0.065% Mo, 0.04% Cu).

Other breccias have been mapped by Bolaños (1996) beyond the limits of the Tres
Chorreras concession. The Tourmaline breccia shown on the accompanying map may
be the extension of the 3C Breccia to the southwest. This and other identified zones
should be examined and sampled in the near future.

15
 Photo 2. 3C Breccia Deposit

3C sulphide-rich breccia in Chorrones adit. Milled rock fragments cemented with massive chalcopyrite,
pyrite, and molybdenite.

3.3.2 Epithermal Deposit

A northeast trending gold-silver vein system containing cm-scale quartz veinlets,

disseminated pyrite and free gold, is located in the north-central part of the Tres
Chorreras concession. The system, previously described as consisting of the
Agglomerate, Cuy and Arsenic zones, has been traced by drilling for 315 m along
strike, and by surface mapping and sampling for 570m. The Cuy and Arsenic zones
occur within the diorite and the Agglomerate zone extends into the diatreme. These
three zones are interpreted to represent different areas on the same mineralized vein
system and are referred collectively as the Epithermal deposit. It extends well to the
south of the concession and has not been fully defined by drilling. The entire diatreme
and its immediate host wall-rock are considered fertile for epithermal style
mineralization. The Pucara and Galena zones are parallel zones of similar style
mineralization that have been partly defined by limited trench and adit sampling.

Mineralization consists of a swarm of sub-parallel quartz veinlets that range in size

from sub-millimetre up to 15 cm in width. The vein structures strike north-east at 030°
to 035° and dip sub-vertically. The veins are drusy quartz with coxcomb texture,
containing variable amounts of pyrite, and free gold. Sphalerite, galena, arsenopyrite,
chalcopyrite, stibnite, carbonate and adularia(?) are locally present. Grades of
individual veins can be high over very narrow intervals, and artisan miners have
partially exploited them. Potentially bulk mineable grades depend on abundance of

16
veinlets – the best overall interval encountered to date is in the Redroban adit - 22.8 g/t
Au and 21.3 g/t over 15 m true width. Individual veins are up to tens of metres in length
and are commonly separated by several metres of host rock which may be also
anomalous in gold. In drill hole 08-41, significant grades (+1 g/t) have been
encountered in pyritized and argillized diatreme breccia intervals where there is no
obvious quartz veining.

3.4 Alteration

Several types of alteration have been identified on the Tres Chorreras concession.
These include propylitic, phyllic, silicification with tourmaline +/- specularite, and
possibly potassic types. The spatial distribution of the alteration types has not yet been
mapped well in the field. Further studies, including surface geologic mapping and
relogging of drill core will be needed to define alteration patterns in detail.

Silicification occurs on the prominent ridge of diorite occurring in the hanging wall (east)
of the 3C polymetallic deposit, and in the rhyolite immediately to the northwest of the
3C breccia. Phyllic alteration (pyrite-sericite-illite-carbonate) alteration is widespread
within the diatreme breccia. Locally chlorite and epidote, both pervasive and fracture-
controlled, are present in the diorite and rhyodacitic volcanic rocks surrounding the 3C
breccia. Potassic alteration in the form of secondary biotite and k-feldspar has been
identified in preliminary thin section studies. Weak propylitic alteration occurs as a
distal alteration product.

3.5 Exploration – Soil Geochemistry

In 1997, Grantham completed a soil geochemical survey over a 550 m by 450 m area
southeast of the 3C deposit. The soils were analysed for Au, Ag, Cu, Mo, Pb and Zn by
Bondar Clegg (Vancouver). A total of 125 samples were taken on 50 m spaced, east-
west grid lines at 40 m stations.

More detailed rock and soil geochemical sampling was conducted by Atlas Moly over
the entire Tres Chorreras concession. A total of 349 soil samples and 96 rock chip
samples were collected at 25 m intervals along lines spaced at 50 m intervals. Samples
consisted of soil generally collected at the base of the “B” horizon at a depth of 10 to
100 cm, or rock, where no soil was encountered. Samples were shipped to Acme
Laboratories preparation Lab in Cuenca and subsequently to their laboratory in
Vancouver where they were analyzed by 32 element ICP-MS multi-element analysis.
The data, combined with 1997 and other sampling that had been conducted beyond
the concession area was plotted using the Geosoft Oasis program.

The most prominent feature revealed on the gold (Au 100 to 3882 ppb) and gold
pathfinder element (As, Sb, Pb, Zn, etc) plots is a broad geochemical anomaly
extending from 100 m south of the northern boundary of the concession to the southern
limit of the survey area, a distance of at least 500 m, reflecting the zone of epithermal
mineralization.

17
3.6 Magnetometry

A total of 11.5-km of magnetic surveys were conducted at 25-metre interval spacings

on grid lines spaced at 50 metres.

A strong magnetic anomaly associated with the 3C Breccia was defined. This anomaly
extends to the north (off trend to the north end of the 3C Breccia) suggesting possible
presence of 3C Breccia style mineralized breccias at depth in the northwest corner of
the Tres Chorreras concession.

Other smaller local anomalies may also indicate deeper 3C style breccias.

18
4 RESOURCES & GRADES

4.1 Database
Subsequent to the Resource Calculation for Tres Chorreras completed in 2008, Atlas
Moly has completed additional studies to identify the amounts potentially economically
recoverable by low cost open pit mining. The database for these calculations includes
 The15 hole EMIDEL drill program;
 Trench and tunnel data from Grantmining;
 Trench, tunnel and drill data from the Atlas Moly exploration program;
 Information supplied by Moose Mountain (MM) from the resource calculation
analysis, 2008.

The Moose Mountain Resource Calculation, completed in 2008, provides the following
estimate of overall in-situ resources (shown at various cut-offs using pre-financial
collapse metal prices) as shown in Table 4, Section 4.4 below.

The data suggests that the combined deposits contain, at low grade cut-off,
approximately 47-million tonnes of material containing `potentially´ economic
mineralization, and substantially lower tonnages at a higher cutoff grade.

4.2 The 3C Breccia Deposit

4.2.1 Mineralization

The 3C Breccia Deposit, located on the western part of the Tres Chorreras concession,
contains substantial molybdenum (in Molybdenite) and copper (in Chalcopyrite) as well
as free gold and silver. Some of the gold high grade shoots have been exploited by
previous artesanal mining. There are Rhenium values (likely in Molybdenite) which
could provide additional credits when the molybdenum is sold. Rhenium does occur
locally in high grade shoots (from a trace to 9 g/t).

4.2.2 Resource Calculation Cutoffs

In order to assess the potential for mining scenarios from low grade open pit mining to
high grade mining, in the resource calculation, resources were calculated for three
cutoff grades: $20/tonne, $50/tonne and $80/tonne for the 3C Breccia Deposit by
Moose Mountain. Additionally, the resources amenable to open pit mining were
calculated by Moose Mountain.

4.2.3 3C Breccia Resource Calculation

MM´s estimate of resources in the 3C Breccia is as shown below:

19
 Table 2. 3C Breccia Deposit In-situ Resource Calculation

IN-SITU Mo Equiv Au Equiv Total

CUTOFF TONNES METAL (Mo+Cu) (Au+Ag) Metals
VALUE
US$/TONNE X 1000 $/TONNE % gm/t in Au gmt
Indicated
20 14.096 52,10 0,0994 0,87 1,95
50 4.707 95,10 0,1867 0,72 2,74
80 2.065 137,60 0,2772 0,87 3,87

Inferred
20 15.223 56,10 0,1054 0,93 2,07
50 5.972 96,20 0,1834 1,36 3,35
80 2.842 133,20 0,2593 1,65 4,46
Note: Uses metal prices at pre-financial
collapse values

4.3 Epithermal Deposit

The Epithermal Deposit lies approximately 40 to 100 metres east of the 3C Breccia
Deposit, is vertical with a general strike of 0300 and parallel to the 3C Breccia Deposit.

4.3.1 Mineralization

Generally, the mineralization of this deposit is a low sulfidation epithermal system with
free gold & silver, pyrite and minor Molybdenite and chalcopyrite and very minor galena
and sphalerite. The mill recovery considers only gold, silver, copper and molybdenum.

4.3.2 Resource Calculation Cutoffs

In order to assess the potential for mining scenarios from low grade open pit mining
(open pit) to high grade mining (underground) in the resource calculation, resources
were calculated for three cutoff grades: $20/tonne, $50/tonne and $80/tonne for the
Epithermal Deposit by MM.

4.3.3 Resource Calculation

These resources as shown below indicate the Mo & Cu in the Epithermal Deposit
provide nominal (generally less than 10%) of the metal-in-the-ground values according
to the Moose Mountain analysis.

20
 Table 3. Epithermal Deposit In-situ Resource Calculation

IN-SITU
CUTOFF TONNES METAL Mo+Cu as Au+Ag as Total Metals
Mo% Equiv Au Equiv
VALUE
US$/TONNE $/TONNE % gm/T in Au gm/T
Indicated
20 6.508 30,20 0,0114 1,30 1,42
50 407 64,70 0,0198 2,90 3,11
80 38 117,20 0,0197 5,63 5,84
Inferred
20 11.865 29,10 0,0125 1,04 1,18
50 692 59,90 0,0228 2,21 2,46
80 75 91,30 0,0296 3,44 3,76
Note: calculated with metal prices at pre-2008 financial collapse

Additionally, the resources amenable to open pit mining were calculated by Moose
Mountain using a current pricing scenario and are included in section 5.2 below.

4.4 Combined Deposit In-situ Resources

Atlas Moly has calculated the following combined in-situ resource including both the 3C
Breccia and the Epithermal Deposit based upon the Resource Calculation completed
by Moose Mountain:

Table 4. Combined Deposit In-situ Resource Calculation

CUTOFF TONNES MO CU AU AG Au Equiv IN-SITU

$ IN-SITU LBS LBS OUNCES OUNCES OUNCES VALU US$M*
Indicated
1.398.75
20 20.603.768 25.973.505 57.063.731 383.239 4.158.593 5 930.563.320
50 5.113.708 16.576.332 25.874.546 114.823 1.163.760 694.862 473.896.735
80 2.103.298 11.069.949 13.603.583 49.285 532.816 417.995 288.651.792

Inferred
1.811.20
20 27.088.079 31.775.081 77.549.384 514.620 6.412.842 3 1.199.591.472
50 6.664.032 20.620.671 35.827.209 167.900 1.697.558 908.071 615.926.874
80 2.916.660 14.004.044 20.312.918 83.271 712.235 562.351 385.310.174

Indicated + Inferred
134.613.11 3.209.95
20 47.691.847 57.748.587 5 897.859 10.571.435 9 2.130.154.792
1.602.93
50 11.777.740 37.197.003 61.701.755 282.723 2.861.318 2 1.089.823.609
80 5.019.958 25.073.993 33.916.501 132.556 1.245.051 980.346 673.961.967

21
5 COMBINED DEPOSITS AMENABLE TO OPEN PIT MINING

5.1 Introduction

The Scoping level Economic Pit limit for the Tres Chorreras property in Ecuador has
been determined using the Mintec Mine Planning Software (MineSight’s Economic Pit
Limit program (MS-EP), based on the NI 43-101 compliant resource model of 2008
supplied by Moose Mountain Technical Services.

Due to the approximate association of the two deposits at Tres Chorreras, it is possible
to mine both deposits from a single pit, thus the analysis completed in this study utilizes
a single pit for extraction of material from both deposits.

5.2 Economic Pit Limits Design Basis

The MS-EP pit optimization routines in MineSight are based on the Lerchs Grossman
(LG) algorithm. The LG algorithm runs against the 3D Block model, evaluating the
costs and revenues of the blocks within potential pit shells. The routine uses input
costs, net smelter prices, plant recoveries, and overall slope angles, and expands
downwards and outwards from previous interim economic 3D surfaces, until the last
increment is at break-even economics. Additional cases are included in the analysis to
evaluate the smaller high grade pits versus larger lower grade or higher strip ratio pit
shells (by varying the Net Smelter Price) and also different slope angles.
The economic pit limits are based on cost and metal price assumptions. Since these
economic parameters are estimates, the sensitivity of the ultimate economic pit limits
need to be evaluated. This is done by varying the economic parameters in series of
cases. The pit shells from these cases are also used to select pit pushbacks or
phases. For each case being tested the series of LG pit shells are determined by
keeping mining costs constant and varying the estimated net smelter metal prices
(NSP).
Design basis assumptions for generating the LG pits are:
 Mining costs = $3.00 /tonne

 Processing + G&A costs = $12.00/tonne

 Pit Slope Cases = 45o, 50o, 55o

 Metal Prices:

o Cu = US$1.80 /lb

o Au = US$750/oz

o Ag = US$10.0/oz

o Mo = US$10.0/lb

22
  Net Smelter Price (NSP):

o Cu = C$1.70/lb

o Au = C$24.17/g

o Ag = C$0.288/g

o Mo = C$7.98/lb

Cut-off grades are determined using the Net Smelter Return (NSR) in $/tonne which is
calculated using Net Smelter Prices (NSP) as calculated in smelter schedule. The
NSR (Net of offsite concentrate and smelter charges and onsite mill recovery) is used
as a cut-off item for break-even mill feed /waste selection and for the grade bins for
cash flow optimization. The net smelter price is based on base case metal
prices, $US$ exchange rate, and offsite transportation, smelting, and refining charges.

The economic pit limit is determined using the MS-EP optimization routines in
MineSight which are based on the Lerchs Grossman (LG) algorithm. The LG algorithm
runs against the 3D Block model, evaluating the costs and revenues of the blocks
within potential pit shells. The routine uses input costs, net smelter prices, plant
recoveries, and overall slope angles, and expands downwards and outwards from
previous interim economic 3D surfaces, until the last increment is at break-even
economics. Additional cases are included in the analysis to evaluate the smaller high
grade pits versus larger lower grade or higher strip ratio pit shells (by varying the Net
Smelter Price) and also different slope angles.

NSR is coded into the 3DBM as follows:

Cu Re cCu Re cAu Re cAg Mo Re cMo
NSR    NSPCu  2204.6  Au   NSPAu  Ag   NSPAg    NSPMo 2204.6
100 100 100 100 100 100
LG Pits are generated by varying NSP as shown in the table below:

Table 5.: NSP’s for each LG Price Case

Pit# CASE NSP - Net Price for Mine, Plant, & O/H
Copper Gold Silver Moly
$C/lb $C/g $C/g $C/lb
1 50.0% $0.85 $12.1 $0.144 $3.99
2 60.0% $1.02 $14.5 $0.173 $4.79
3 70.0% $1.19 $16.9 $0.202 $5.58
4 80.0% $1.36 $19.3 $0.231 $6.38
5 90.0% $1.53 $21.8 $0.259 $7.18
6 100% $1.70 $24.2 $0.288 $7.98
7 110.0% $1.87 $26.6 $0.317 $8.78
8 120.0% $2.03 $29.0 $0.346 $9.57
9 130.0% $2.20 $31.4 $0.375 $10.37

23
 10 140.0% $2.37 $33.8 $0.404 $11.17
11 150.0% $2.54 $36.3 $0.432 $11.97

Sensitivity of economic pit limit to pit slope was tested by running 3 pit slope cases of
45o, 45o to 55o

5.3 Economic Pit Limit Results

The slope sensitivity graph below shows pit resource sensitivity to price case for the
Tres Chorreras pit area.

Figure 1. Economic Pit Limit Results

This graph shows that pit delineated resource is significant sensitivity to pit slope angle
assumption. This is due to the mining area being adjacent to steeply dipping
topography.
The economic pit limit for this study has been selected as is the 100% Price case (Pit
06). Significant increase in pit size remains possible at incrementally higher prices. A
suitably sized starter pit is evident at the 70% price case (Pit 03).
The starter LG and Final Pit Limit LG shells are illustrated in the Figures below.

24
 Figure 2. Starter LG (Small Pit) Orthographic view from the Southeast

Figure 3. Final LG (Larger LG Pit) Orthographic view from the Southeast

25
Figure 4. NS Cross Section at Row 280 – 3DBM cutoff by NSR

26
 LG Pit Limit

150% Price Case

5.4 Potential LG Pits

LG Pit delineated resources for the potential Small LG Pit (70% Case) and Large LG
Pit (100% Case) are summarized in the table below.
Table 6. Tres Chorreras LG Pit Delineated Resource (Indicated and Inferred)

M I and I Mill Feed WASTE ROM DILUTED GRADES

Pit Resources kTonne kTonne S/R NSR Mo Cu Au Ag
(50 Deg Pit
Slope Angle
Case) $/t % % g/t g/t
Small Pit 8,124 3,376 0.4 30.8 0.0709 0.160 0.850 6.406
Incremental Pit 14,691 18,404 1.3 19.3 0.0336 0.093 0.584 6.668
Total 22,815 21,780 1.0 23.4 0.0469 0.117 0.678 6.575
Note pit resource assumes 10% mining loss and 10% mining dilution and a NSR mill
feed cut off grade of $12/t
Future studies will use LG pits as guides for engineered open pits.

5.5 Production Scenarios

27
MM completed four preliminary pit scenarios as described below in order to provide
mining options for Atlas Moly:

Table 7. Production Scenarios

Initial Review of Mining Scenarios*

* EBITA and excluding royalty

Strip EBITA
Option Scenario ResourcesK Waste Ratio IRR %
1 2000 tpd 8100 3400 04 33
2 4000 tpd 22800 21800 1 27
3 2000 tpd, High grade
option 6800 4700 0.7 39
4 4000 tpd, Initial 4 years 0.73
16000 11680 35
high grade option

* EBITA – Earnings Before Interest, Taxes and Amortization

Based upon these scenarios Atlas Moly chose to carry out more in-depth mine capital
(CaPex) and operating cost (OpEx) evaluations of option 4, the 4000 tpd scenario in
which initial production years (5) are focused on high grade ore.

This open pit analysis utilizes trench and tunnel data onlu at the south end of the
Epithermal Deposit as no drill holes have been put in this area. The combination of the
three data sets (tunnel, trench and soil geochemistry) indicates the south end of the
Epithermal Deposit requires additional exploration and will, ultimately, provide
additional areas of mineralization to the ultimate pit plan.

6. MINERAL PROCESSING & RECOVERY

28
Historical work consists of optical mineral characterization by J.F. Harris of Vancouver
Petrographics Ltd. done in February 2008 on 23 samples representing various mineral
types found in the Tres Chorreras deposit. Sulphide mineralization was observed in 10
out of the 23 samples collected. Harris concluded the main sulphide mineralization was
iron in the form of pyrite, copper in the form of chalcopyrite and molybdenum in the
form of molybdenite. Trace amounts of gold, arsenopyrite, sphalerite and galena were
observed. The texture of the valuable minerals was relatively simple showing very little
particle intergrowth. Carbonates were observed in most of the samples indicating the
possibility of a low potential to form acid mine drainage in the waste dumps. Future
work is needed to determine if the samples examined by Vancouver Petrographics Ltd.
are indicative of the majority of the deposit mineralization. Also, milling and processing
test work is needed to do the metallurgical characterization for a plant design.

The conceptual plant design based on discussions with Hoffert Processing Solutions
Inc. (HPS) used for this analysis envisages a primary crusher, single mill grinding
circuit with a 4,000 tpd capacity, and a processing plant using conventional technology
to produce a bulk flotation copper concentrate containing gold and silver in conjunction
with a gravity circuit to extract the free gold. Molybdenite would be extracted from the
bulk copper concentrate using differential flotation to produce two separate marketable
products. Readers are cautioned by HPS that the assumptions made in regards to
plant design and metals recovery are conceptual only and need to be verified with a
comprehensive sampling and metallurgical test program. Any assumptions made by
the reader for the purposes of project evaluation or financial estimation are at the
reader’s own risk.

Conceptual Mineral Recoveries*

Au 80%
Ag 75%
Mo 70%
Cu 70%

*Mineral recoveries used for the financial model estimates.

7 DEVELOPMENT PLAN
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7.1 General Description

The Tres Chorreras Mine (TC Mine) is envisaged as an open pit mine of 800 X 500
metres area with locally sited waste dumps, the mill site located 1.5 Km and slightly
down slope to the south, and with moderate road grades for the access roads to each,
The tailings pond will be down slope and to the south of the treatment plant. Road
access will be to the south and down gradient from the mill. All of these facilities are in
an area of native bush and/or pasture land with no significant effects on the local fauna
and flora.

The main access to the project will be from the south with a 100-km road access to
Machala and Puerto Bolivar. Electric power will be brought in from the 69-Kva line near
Santa Isabel (34-Km). The mine camp facilities will be located to the south of the
treatment plant.

7.2 Road Access and Transport of Product

Atlas has completed a preliminary engineering analysis and determined the best road
access for the mine site will be from the south. Atlas plans to build an 8-km new road
from the Pucara access road to the mine site. When this is completed, the mine
haulage road for mine equipment and concentrate will be:
i) 8-km new construction,
ii) 24-km of county dirt road (improved) and
iii) 68-km of paved road to the international port of Puerto Bolivar, a total of
100-km.
$500,000 has been estimated to build the 8-km new road plus upgrading the 24-km
road access to the pavement.
With these improvements, Atlas would have excellent access for bringing in all plant
and equipment and for the transport of product to an established international port.

This provides an excellent low-cost transportation situation for the 3C Mine.

7.3 Minesite & Mill Location

Plant feed will be extracted from an open pit mine located within the Tres Chorreras
Concession from both the 3C Breccia Deposit and the Epithermal Deposit. The oval
shaped pit will extend 800 metres north-south and will be 500 metres east-west centred
at about 9650200N – 663600 E (see map). The waste dumps are planned to be
located to the west and southwest of the main pit area in areas with low slope angles.
The mill will be located at 9638300N - 664000E. Haul roads to these sites are planned
to have moderate inclinations (nothing over 10 percent grades).

7.4 Assumptions

The initial open pit mining scenario has been proposed by MM using Mine Site
software program with the mill feed and waste as selected using the LG modeling
routine and with the following assumptions:

 A highwall angle of 50 degrees has been selected reflecting on the fact that the
rock is very hard with minimal faulting and fracturing.

30
  The mill feed cutoff is as selected by the LG software and is approximately at
$12/tonne of mill feed.
 The strip ratio is as selected by LG
 Initial waste dump sites have been selected west of and southwest of the pit
area and represent a haul distance of less than 1.5 Km with minimal change in
elevation;
 The plant site haul road will be about 2 Km with a nominal down grade to the
plant site
 Strip ratio 0.73:1.
 10% pit loss is assumed.
 Grades and metal prices are as follows:

Table 8. Grades and metal prices

Metals Metal Grades Metal Prices Price Units

Au 0.819 g/T $ 900 g/T
Mo 0.060% $ 10 lbs
Cu 0.14% $ 1.75 lbs
Ag 7.17 g/T $12.50 g/T
Gold equivalent head
grade - g/t ($1.75/lbCu,
1.563
$10/lbMo, $900/ozAu,
$12.5/ozAg)

The mineralization open pit area has a surface area ranging in elevation from 3160
masl at the north end to 2900 masl at the south end. The pit is projected to have a
maximum highwall elevation of 3400 metres at the north end and a maximum depth of
2840 masl in the toe at the south end. The pit will ultimately be oval shaped with the
north-south length being 700 metres, the east-west width about 500 metres.

7.5 Electricity

The electricity supply/demand requirements for the 3C Mine have determined at 4500
Mw of power at peak (ie start-up periods). The nearest available substation is at Santa
Isabel, located 34-km east of the minesite. An option to connect with either 23Kv or 69
Kv to supply these electricity needs may be available. The more expensive option, the
69 Kv option at a cost of $2.03 million as determined by a local consulting firm, has
been selected and budgeted. Electricity costs, expected to be $0.115 per Kw have
been integrated into the financial analysis.

7.6 Camp & Infrastructure

The Camp will be located on the main road into the mine site. There are several
localities readily available with flat land near to major streams. The mine office and the
laboratory are planned to be integrated into the Camp site. A cost of $160,000 is
earmarked for this facility. In addition, costs are included for facilities for maintenance
and repair. These will be located near to the mill &/or mine site.

Water management will be required to ensure the slope run-off is kept away from mine
operations area and to ensure there is no contamination entering these waters as they
pass the operations area. A cost of $500,000 has been estimated for this.

7.7 Capital Expenses (CapEx) for Mining

31
The project has relatively steep terrain with the slopes consistently decreasing to the
south. Mining equipment, together with the pit equipment and the drilling, blasting,
access vehicles, surveying equipment etc. are estimated to represent an initial CapEx
cost of $5-million.
Table 9. Capital Expenses (CapEx) for Mining

Fleet Estimate

Option 4

Ore (tpd) 3,945

Waste (tpd) 2,275
Total Mined (tpd) 6,220

Shovel
shovel (m3) 5.2
example CAT 980
Estimated Loading + waiting time
(min) 3.1
loads required 580
Loading time required (min) 1.827
Estimated Shovels Required 3

Trucks
truck payload (tonnes) 40
Est Averge cycle time (min) 35
loads required 156
truck operating time required (min) 8.004
Estimated Trucks Required 10
example CAT 740

With the large availability of used equipment available in the world market, it is believed
that the mining equipment used market may provide an opportunity to lower the capital
costs substantially from the estimate above. Accordingly, the aforementioned nominal
capital cost of $5-million is used for mine capitalization.

7.8 Mine Operating Expenses (Mine OpEx)

Waste haulage and the haul to the processing plant are both relatively short haul (both
under 2 Km each way). Mining OpEx are calculated to be $1.50/tonne of material
moved and are expressed with respect to the delivered plant material and, thus the
operating cost per tonne delivered to processing is calculated to be $2.60/tonne. An
additional fee ( of ??) is added to cover waste dump management costs.

7.9 Mineral Processing Capital Costs

32
Mineral processing is described in Section 6 above. The capital costs for a plant
capable of handling 4,000 tpd cannot be determined because of the present lack of
concrete metallurgical studies and the required flow sheet determination. Instead,
comparative costs for similar sized and assumed flow sheet have been used in the
economic analysis. A capital cost for the processing facilities is estimated as follows:

 Plant facilities, installed: $35-million

 Tailings pond (initial): $7-million.

7.10 Mineral Processing Operating Costs

Mineral processing includes:

i) minesite mineral processing,
ii) ii) tailings pond management and
iii) iii) Smelting, Transportation & Marketing charges.

These total, in all, $11.29/tonne of material delivered to the mill.

8. COMBINED MINESITE CAPITAL AND OPERATING COSTS

33
8.1 Capital Costs (CapEx)

The determination of CapEx has been carried out using the following:

 Comparison with other similar sized mineral development operations ( such

as ?)
 Excellent internal knowledge (??) of the use of local fabricators and
constructors
as may be possible and practical; and,
 The in-house determination of development costs such as road access (8-km
new road requirement), electricity requirements (we assume a 69-Kv line), site
construction, camp, etc. Owners Cost:
 The cost of completion of the Pre-Feasibility and Feasibility Studies;
 The assumption that all key mining equipment will be purchased;
 Plant Site Infrastructure;
 Ancilliaries – camp, office, labs, etc.;
 Indirect Costs – this covers offsite costs, royalty payments, etc.;;
 All levels of Government taxes,
 A working capital contingency; and,
 A 10% contingency is included to cover unforeseen additions.

The total CapEx is estimated to be $86.5-million based upon the following:

Table 10. CapEx estimated 4000 tpd HG*

CaPex Description ( KUSD) 4 ktpd HG %

Mining 5,000 5.8%
Plant Site Infrastructure 2,000 2.3%
Process Plant 35,000 40.5%
Ancilliaries - road, camp, etc. 1,410 1.6%
Power Supply & Distribution 2,030 2.3%
Tailings Management Facility 9,000 10.4%
Owner's Costs 5,000 5.8%
Indirect Costs 7,300 8.4%
Contingency 8,300 9.6%
Sub-Total 75,040 86.8%
Working Capital 6,200 7.2%
IVA , non-recoverable 5,253 6.1%
TOTAL 86,493 100,0%
* 4ktpd HG = 4,000 tpd with initial 5 years developed in
high grade

8.2 Operating Expenses (OpEx)

34
Operating expenses were similarly developed utilizing:
 Comparison of mine costs with mines of similar characteristics;
 Comparison of mill costs with mills with similar types of operations; and
 Use of in-house knowledge for determination of operating expenses in the local
environment.
 Environmental and social management and mine closure are included;
 Taxes & royalties assume the present Ecuador Government tax regime.

The overall operating expenses total $26.81/tonne of plant feed delivered.

The operating expenses are estimated to be:

Table 11. Operating expenses

Operating Costs OpEx) US$/mt Feed US$ x1000 %

Smelting, Transportation &
Marketing 2.79 44.729 17%
Mining 2.60 41.639 15%
Milling 8.00 128.064 48%
Tailings 0.50 8.004 3%
G&A 1.00 16.008 6%
Environmental 0.05 800 0,3%
Taxes & Royalties 1.45 23.271 9%
Sustaining Capital 0.10 6.584 2%
Subtotal 16.81 269.099 100%
OpCost US$/oz Au in Conc
88.88
after Cu-Mo-Ag credits.

Gross Metal Value 31.87 510.149

Net Profit (Before Tax) 15.06 241.050
High Cost Mines can
operate at over $500/Oz
OpCost

9. PROJECT ECONOMIC PARAMETERS

35
9.1 Mine Financials & Produced Metal Statistics

Atlas has determined project economics as summarized below (a detailed spreadsheet

is available for examination). The project is determined to be favorable based upon the
following:
 Low strip ratio (0.73)
 Before tax IRR is over 25%; after tax IRR is over 18%;
 CapEx per Annual Copper Equivalent production is $3.08/annual pound of
copper produced
 After tax Payback is 3.5 years of operation – reasonable

Table 12. Overall Project Economics

Tres Chorreras Financial Summary
Mining 4 ktpd HG*
Mining (Ore & Waste mt*1000) 27,759
Mining (Ore mt*1000) 16,008
Nominal Milling Rate (tpd) 3,945
Mine Life (Years) 11.1
Strip Ratio 0.73

Metals Metal Grades Metal Prices Price Units

Au g/T $ 900 g/T oz
Mo % 0.060% $ 10 Lbs
Cu % 0.14% $ 1.75 Lbs
Ag g/T 7.17 $ 12.50 g/T oz
Average grade in Au g/T 7.01
Value
Metals Metal Produced ($X1000) % of Prod´n
271,0
Gold production (total payable) - oz 337,316 29 58%
119,2
Moly production (total payable) - lbs x1000 14,908 61 26%
44,8
Copper production (total payable) - lb x1000 34,135 05 10%
30,3
Silver production (total payable) - oz 2,768,784 25 7%
Gold equivalent - oz ($1,75/lbCu, $10/lbMo, 465,4
$900/ozAu, $12,5/ozAg) 607,785 100%
20

Project Financials US$ x1000

Project Capex (US$ x1000) 86,493
Capex per Annual Copper Equiv.
Production ($/lbCu) 3.08

High cost mines can operate at over $5/lb Cu

Avg. Operating Cash Flow (US$/Year x1000) 21,681
NPV (pre-taxes) @ 8% (US$ x1000) 73,404
DCF Rate of Return (pre-tax) 25.8%

NPV (after-taxes) @ 8% (US$ x1000) 39,182

DCF Rate of Return (after-taxes) 18.5%
Pay Back (Years) 3.5

9.2 Sensitivity Analyses

36
Sensitivity analyses have been carried out on the 3C Mine based upon the above
financial analysis, all on an after tax basis. Results are provided below based upon Key
Factors including Au & Mo pricing, CaPex, OpEx and variations in average feed grade.

Table 13. Sensitivity to Key Factors

Base Case
Item -10% 10%
NPV
Au Price $ 900
NPV 39,182 29,373 49,025
IRR% 18.5% 16.1% 20.7%

Mo price $ 10
NPV 39,182 33,605 44,760
IRR% 18.5% 17.1% 19.8%

CapEx 86.877
NPV 39,182 47,135 23,277
IRR% 18.5% 21.6% 15.7%

OpEx 262.515
NPV 39,182 49,152 29,213
IRR% 18.5% 20.8% 16.0%

Au Equiv
1,56
Oz
NPV 39,182 22,297 56,068
IRR% 18.5% 14.3% 22.3%

These indicate that, at variations in the above from -10% to +10%, the economic
indicators are favorable, even at select decreases of 10%.

Additional analyses up to +/- 50% indicate breakeven (ie $0 value at NPV8) were
evaluated as follows:
 Gold price breakeven @: -40% gold price decrease (to $540/0z)
 Molybdenum price breakeven @: >-50% Mo price decrease to less than $5/lb
 CapEx breakeven @: >50% - ie increase to over $130-million
 OpEx breakeven @: <40% - ie to over $23.50.
 Feed grade breakeven @: -23% grade decrease (ie to <1.2 gm/t).

This shows that the greatest sensitivity is to the project economics will be feed grade
and associated factors such as mill recoveries. If additional capital costs for improving
recoveries are necessary, the project will need to analyze these opportunities seriously
because CapEx sensitivities are lower than Feed Grade sensitivities.

10. NEXT RECOMMENDED ACTIVITIES

37
The analysis has indicated the urgent need for additional information in order to
achieve a more accurate project economic determination. Some of these are:

10.1 Upgrade the Internal Mine Evaluation to an NI 43-101 standard Preliminary

Assessment.

This requires the following:

 Metallurgical studies are required to firm up a process flow sheet, to determine
process recovery and to better determine capital and operating costs;
 Limited re-mapping of underground workings;
 Re-logging of selected cores to obtain a better understanding of the Geology of
the 3C Breccia and Epithermal Deposits;
 Additional mining evaluation to better define the open pit resources is
recommended. This should be completed using the current mine analysis
database.

10.2 Exploration

Carry out detailed exploration studies to provide required information for the
completion of a Pre-Feasibility Analysis. This requires, at a minimum:
 Additional drilling to optimize the pit material for the pre-feasibility study and
should include the use of both underground drills (Atlas has two) and contract
surface drills:
i) provide infill drilling in the defined extraction area of the mineral deposit
(this will add pit resources & lower the strip ratio);
ii) provide better information for the southern area of the Epithermal Zone
(this will add pit resources) by completing additional drilling inthis area;
iii) carry out exploration in the additional prospect zones (Tourmaline, Ram,
Galena, Quinoas zones ) to provide additional resource potential;
iv) Deepen drill hole 38 and required additional holes to establish the size
and importance of the newly discovered fracture and breccia controlled
mineralization;
v) Deepen drill holes 27, 30 and 36 to determine the significance of
fracture controlled (porphyry style) mineralization encountered at depth
in these holes.
 Carry out geochem & mag studies on the Narihuina Block (when recovered) to
provide additional drill targets for a new drilling program;
 Additional metallurgical analyses for Pre-Feasibility level plant design & product
recoveries;
 Drilling for preliminary geotechnical determination of high-wall rocks;
 Complete additional geochemical analyses to determine rhenium distribution in
the 3C Breccia Deposit and carry out metallurgical studies to determine if
rhenium values can be included in the Pre-Feasibility Study economics.

10.3 Mining Analysis

 Carry out various surface mining options to select most economic mining
scenario;
 Carry out underground block caving analyses to determine if economics
compare with surface mining costs;

38
  Evaluate the opportunity to mine, by underground methods, additional isolated
higher grade deposits;
 Complete preliminary design of pit access roads & fit to a proposed mining
extraction schedule;
 Establish location of waste dumps, design, all mine-site road access, etc. &
cost;
 Complete economic analysis of optimal mine extraction plan
 Provide write-up for Pre-Feasibility.

10.3 Metallurgical studies and Mill Design & Costing

 Complete required additional metallurgical testwork;

 Provide preliminary design analyses and costing; Milling design & costing
optimization;
 Product recovery optimization;
 Determine site location, plans & costing;
 Provide write-up for Pre-Feasibility.

10.4 Additional studies required (at a minimum)

 Surface facilities integration & optimization;

 Product marketing analysis;
 Tailings pond analysis & preliminary design and costing;
 Transportation optimization analysis (may include mine access road
construction);
 Complete additional analyses as required for completion of the Pre-Feasibility.

10.5 Complete a Pre-Feasibility Study for the 3C Mine

This will include, at a minimum:

 Selection and hiring of Pre-Feasibility Technical Manager;
 Organize all information from above, ensure all required analyses are complete
& use the Consultants from 3 above to complete the Pre-Feasibility Study to NI
standards.

39