Leyte Copper Project Leyte Province, Philippines Philippine ......2009/10/22 · Technical Report: Leyte Copper Project Philippines 22 October 2009 page 3 In 2009 Philippine Metals

Technical Report

and Proposed Exploration Program

for the

Leyte Copper Project Leyte Province, Philippines

prepared for

Philippine Metals Corporation Calgary AB

and

New Meridian Mining Corp. Calgary AB

by Daniel A. Beauchamp, P.Geol., M.B.A.

Consulting Geologist

Bill Dynes, P.Geol. Sierra Geological Corp.

Longitude: 124°56’18” E Latitude: 11°14'42” N Region: Eastern Visayas Province: Leyte Date: 22 October 2009

Technical Report: Leyte Copper Project

Philippines

22 October 2009 page i

Table of Contents

1. Executive Summary ................................................................................ 1 2. Introduction ............................................................................................. 4 3. Reliance on Other Experts ...................................................................... 5 4. Property Description and Location .......................................................... 5 Mineral Exploration in the Philippines ................................................ 5 Mining Rights held by Philippine Metals Corporation ........................ 9 Leyte Copper Project....................................................................... 12 5. Access, Climate, Resources, Infrastructure and Physiography ...................................................... 17 6. History .................................................................................................. 23 7. Geological Setting ................................................................................. 27 Regional Geology ............................................................................ 27 Local Geology ................................................................................. 30 8. Deposit Types ....................................................................................... 38 9. Mineralization ........................................................................................ 40 10. Exploration ............................................................................................ 48 Geological Mapping ......................................................................... 48 Rock Sampling ................................................................................ 51 11. Drilling ................................................................................................... 62 12. Sampling Method and Approach ........................................................... 63 13. Sample Preparation, Analysis and Security .......................................... 63 14. Data Verification .................................................................................... 64 15. Adjacent Properties ............................................................................... 66 16. Mineral Processing and Metallurgical Testing ....................................... 66 17. Mineral Resources and Mineral Reserve Estimates .............................. 67 18. Other Relevant Data and Information .................................................... 67 19. Interpretation and Conclusions .............................................................. 68 20. Recommendations ................................................................................ 69 21. References ............................................................................................ 73 22. Date and Signature Page ...................................................................... 77


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22 October 2009 page ii

List of Tables

Table 1. Mineral Rights in the Philippines ................................................... 6 Table 2. Property Holdings ....................................................................... 12 Table 3. Table of Formations ................................................................... 31 Table 4. Summary of Characteristics of Cyprus-type Mineralization ........ 50 Table 5. Sample Distribution .................................................................... 63 Table 6. Proposed Budget – Leyte Copper Project .................................. 72

List of Figures Figure 1. Project Location Map .................................................................. 11 Figure 2. Property Location Map ............................................................... 13 Figure 3. Zones of Mineralization .............................................................. 14 Figure 4. Road and Trail Access ............................................................... 19 Figure 5. Topography ................................................................................ 22 Figure 6. Geology - Philippines .................................................................. 28 Figure 7. Cross-Section of an Ophiolite Suite ............................................ 29 Figure 8. Local Geology............................................................................. 32 Figure 9. Schematic Section of the Tacloban Ophiolite Suite .................. 33 Figure 10. Cross Section of Cyprus-Type Mineralization ............................. 38 Figure 11. Palo - Curajo Area, Barangay San Jose, Mineralized Areas ...... 53 Figure 12. Plan Map - Palo Area ................................................................. 54 Figure 13. Cross-section - Palo Area A ....................................................... 55 Figure 14. Buen Suerte - Kambalantong Area ............................................. 57 Figure 15. Salvacion Area ........................................................................... 61 Figure 16. Proposed Geophysical Grid ........................................................ 70

Appendix Appendix Verification Analyses .................................................................. 81


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22 October 2009 page 1

1. Executive Summary

At the request of Philippine Metals Corporation and New Meridian Mining Corp. Daniel A. Beauchamp and Bill Dynes were commissioned to write an independent Technical Report to the standards of National Instrument 43-101 on the company’s Leyte Copper Project in the Philippines. The report is prepared for an anticipated reverse takeover of New Meridian Mining Corp by Philippine Metals Corporation (New Meridian Mining Corp, 2009a and 2009b). D.A. Beauchamp visited the property on May 25-26, 2009 and Bill Dynes visited the property on December 1-2, 2007.

The Leyte Copper Project is located about 600 km southeast of Manila and is composed of three blocks: the Taurus Block covers an area of 3606 ha on which the company was granted an Exploration Permit, and the Suhi 0059 and 0096 Blocks, that cover 6289 ha, for which applications for Exploration Permits have been submitted. Philippine Metals Corporation acquired the Leyte Copper Project, along with the Dilong Project and the Malitao Project, respectively located 280 and 380 km north of Manila in the Luzon Region, from companies based in the Philippines.

In the Philippines, all mineral rights are owned by the state and mineral exploration cannot proceed before an Exploration Permit has been issued. After a feasibility study the company can apply for one of several agreements with the government whereby the government can take a share in the property through an excise tax, participation in a joint venture or a co-production agreement.

The Leyte Copper Project is located five kilometres west of Tacloban City on Leyte Island which is accessible by daily flights from Manila, and also by road and ferry. A network of roads leads from Tacloban City where several trails provide good access to most parts of the property.

Several large industrial plants are present on Leyte Island within a two-hour driving distance from Tacloban City including a geothermal plant and one of Asia’s largest copper smelters. The average literacy rate in the country is 92.6%.

The topography on the property is rugged and the elevations rise from about 15m on the east side to 600m asl in the northern part of the project area. The area is covered by growth forest and the depth of weathering is estimated at 10-20m.


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Copper sulphide mineralization has been known in the area since the 1930s and ore was mined from several areas. Many pits, trenches and adits, extending for 5-100m, were excavated on the property in the early 1970s. Government geologists performed geophysical surveys over small areas using earlier instruments and a soil survey was completed in one area. Resources have been calculated for a few areas but these are not to the standards of NI 43-101.

At least nine areas of sulphide mineralization have been identified over a strike length of about 17 km along several structures.

From 1968 to 1972 several geologists from the Bureau of Mines and Geology mapped parts of the area and characterized the area as an ophiolite suite that contains Cyprus-type copper mineralization.

The entire project area is underlain by an ophiolite suite consisting of ultramafic rocks that have been intruded by gabbro and sheeted diabase dykes, over which pillowed and massive basalt flows were later extruded. Marine pelagic sedimentary rocks, now metamorphosed to phyllite, occur along with the basalt.

The sulphide mineralization consists of chalcopyrite with associated bornite, covellite and chalcocite, all in association with pyrite in steeply-dipping fractures, breccia and fault zones that strike north-northwest. The mineralization is often massive and many channel samples report grades of 2-10% Cu and up to 1.7% Zn over 1-10m. A correlation between copper and zinc has not been established.

Disseminated sulphide mineralization often occurs as envelopes surrounding the massive sulphides and can extend for 5-10m in the country rock basalt and phyllite. Analyses of 0.2-0.9% Cu over 2-20m have been reported from this style of occurrence.

Massive sulphides are also present in subsidiary fault zones that strike to the east and that appear to have been active at a later time. Although the copper sulphide minerals are the same, the presence of hematite and marcasite indicate that the massive sulphide mineralization from these structures may have remobilized from the massive sulphides in structures that strike northwest.


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In 2009 Philippine Metals Canada Philippines Inc., a wholly-owned subsidiary of Philippine Metals Corporation, undertook a six week field program on the Taurus Block of the Leyte Copper Project. The program consisted of geological mapping and channel sampling of adits, pits, trenches and stockpiles of ore in five known zones of mineralization, over a strike length of 12 km, to better characterize and understand the type of mineralization on the property.

Massive sulphide mineralization is present as lenses up to five metres wide that can extend for several tens of metres in length. The mineralization appears to pinch and swell along the major faults that strike northwest and east. The trace of the mineralization has been followed for at least six kilometres along strike.

The widespread occurrences of massive sulphides and the limited extent of exploration of the property using modern techniques of mineral exploration make the Leyte Copper Project a property of merit.

As part of Phase 1, a ground geophysical survey over an area 500m×1500m is recommended over the Kambalantong-Malayahay area to better assess the extent and size of the massive sulphide occurrences that have been identified in this corridor. The electromagnetic (EM) survey will identify the depth and extent massive sulphide zones while the magnetometer survey will outline structures and possible zones of alteration. A first round of diamond drilling to test the existing zones of mineralization that will have been better delineated is proposed for 2000m in ten drill holes. The total cost of the geophysical survey and the drilling is budgeted at CA$427,000.

Upon approval of the Exploration Permits on the Suhi Projects, a helicopter-borne EM and magnetometer survey should be carried out over the entire Leyte Project area to explore the property at a line spacing of 100m. The budgeted cost of this survey is estimated at CA$613,000. The total cost of Phase 1 is estimated at CA$1,040,000.

Upon the return of encouraging results from the first phase of drilling and of the airborne geophysical survey, a Phase 2 program is recommended, consisting of 4000m of drilling in 20 holes to further define the zones of mineralization in the Kambalantong-Malayahay corridor or in other parts of the property. The cost of Phase 2 drilling is budgeted at CA$760,000.

The total cost of Phase 1 and Phase 2 are budgeted at CA$1,800,000.


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2. Introduction

Mr. Feisal Somji, Chief Executive Officer, President and Director of Philippine

Metals Corporation, of Calgary Alberta, contracted Daniel Beauchamp, P.Geol.

and Bill Dynes, P.Geol. to write this Technical Report for Philippine Metals

Corporation and for New Meridian Mining Corp.

This Technical Report is prepared in compliance with National Instrument 43-101

(NI 43-101), regulations published by the Canadian Securities Administrators, for

an anticipated reverse takeover by Philippine Metals Corporation of New

Meridian Mining Corp. of Calgary, Alberta.

The data in this report was compiled from a detailed review of historical

assessment and geological reports, and maps by companies and government

agencies, and from the recent exploration program carried out on the property by

Philippine Metals Canada Philippines Inc., a wholly-owned subsidiary of

Philippine Metals Corporation. The project was also discussed with other

geologists. This report includes a proposed exploration program and budget to

evaluate the mineral potential of the property.

As Qualified Person, D.A. Beauchamp has worked in mineral exploration for

more than 25 years. The author has worked as a geologist throughout Canada

and has supervised and managed projects in the field in many geological

environments including volcanogenic massive sulphides from the Archean to the

Phanerozoic carrying out geological mapping, geochemical and geophysical

surveys, diamond drilling and core logging.

D. Beauchamp carried out a property site visit from May 25 to May 28 2009. This

site inspection included the following:

May 25 Palanog area, Leyte Copper Project, Leyte Island May 26 Palo area, Leyte Copper Project, Leyte Island May 27 Malitao Project, Luzon Region May 28 Visit to McPhar Geoservices (Phil.), Inc. laboratory in Manila.


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As Qualified Person to the Leyte Copper Project in contract with Philippine

Metals Corporation, Bill Dynes, P Geol carried out a property site visit to various

areas of the Leyte Copper Project on December 1st and 2nd, 2007 and has

overseen, in the capacity of a Qualified Person, the subsequent work program

completed on the Leyte Copper Project in 2009, as described in Section 10

herein. Bill Dynes is a director of New Meridian Mining Corp.

3. Reliance on Other Experts

This Technical Report contains information from government documents,

company reports, public documents and other technical reports. Most of these

reports are historic in nature and may not have been written by Qualified Persons

as currently defined by NI 43-101. The pertinent information has been reviewed

by the authors and although there do not appear to be significant discrepancies

in the information, the authors have not verified the assays or other technical

data from these reports by carrying out independent sampling.

Although the authors have visited the Leyte Copper Project site, not all sites

referred to in this report have been examined in the field.

The authors relied on Tom Vaillancourt, VP Operations for Philippine Metals

Corp. and on Jose S. Garcia, VP Exploration for Philippine Metals Corp. for

additional details and information on the legislation and operating environment in

the Philippines.

4. Property Description and Location

Mineral Exploration in the Philippines

The 1987 Philippine Constitution states that all natural resources in the

Philippines are owned by the state, and that the exploration, development and

use of these natural resources are under the control and supervision of the state.

Mineral rights in the Philippines are governed by The Philippine Mining Act of

1995, and of its partial revisions in 1996 and 1999, which describes the rules and


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regulations whereby individuals and corporations can acquire mineral rights and

carry out mineral exploration in the country. In December 2004, in response to a

challenge, the Supreme Court of the Philippines confirmed the legality of the

1995 Philippine Mining Act, including the Financial Technical Assistance

Agreement (FTAA).

The Mining Act allows for several types of mining rights in the country (Table1).

The first is an Exploration Permit (EP) valid for a period of 2 years and is

renewable in two-year periods to a maximum of 8 years. The holder can then

apply for either one of the other mining rights, namely a Financial Technical

Assistance Agreement (FTAA) or a Mineral Production-Sharing Agreement

(MPSA).

Stage Title

Exploration Exploration Permit

Mining Financial Technical Assistance AgreementMineral Production‐Sharing Agreement (MPSA)Joint Venture Agreement (JVA)Co‐ProductionnAgreement (CPA)

Table 1Mineral rights in the Philippines

Both the Financial Technical Assistance Agreement (FTAA) and the Mineral

Production-Sharing Agreement (MPSA) are valid for a period of 25 years and can

be renewed for another 25 years.

Exploration Permits and the subsequent Financial Technical Assistance

Agreement or Mineral Production-Sharing Agreement are granted on condition

that the mining activities are managed in a technically, financially, socially,

culturally and environmentally responsible manner to enhance the national

growth and welfare of the Philippines.


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Exploration Permits must be acquired by a Qualified Person or Entity prior to

carrying out mineral exploration. Qualified Persons are Filipino citizens and

Qualified Entities are domestic or foreign-owned corporations. The maximum

area that corporations as Qualified Entities can apply for or hold at any time

onshore is 16,200 ha in a province and a maximum of 32,400 ha in the country.

The latest posted list shows that there were 43 active of Exploration Permits

covering a total of 117,942 ha in the country in of June 2008.

An Exploration Permit Application must include location maps, a two-year

exploration work program with a corresponding two-year environmental

component, proofs of technical competence and financial capability, proof of the

articles of incorporation and an affidavit of undertaking from the corporation.

The Qualified Person or Entity is then subject to providing certification from the

National Commission of Indigenous Peoples attesting that the permit does not

infringe on ancestral land claims and that indigenous communities have given

their consent to the permit.

As part of the terms of the Exploration Permit the holder must provide a surety

bond equivalent to the expenditure requirement of the Exploration and

Environmental Work Program, and must submit reports within 30 days of the end

of each semester outlining the results of the exploration program including an

accounting of the costs incurred and proof that the proposed Exploration and

Environmental Work Program has been implemented.

If the original permit area is greater than 5000 ha, a minimum of 20% of the

permit area must be relinquished within the first two years, and then at least 10%

of the remaining permit area every year of the remaining exploration period.

Detailed geological reports, results of analyses and expenditures must be

submitted on the relinquished area. There is no requirement for relinquishing any

area if the original permit area is less than 5000 ha.

Upon relinquishing an Exploration Permit or at the time of conversion to a Mineral

Agreement, or a Financial or Technical Assistance Agreement, the holder must


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submit a detailed geological report including the results of all analyses and

surveys, and of expenditures. For drilling programs, a quarter of the core

samples must be deposited in the Regional Office Core Library.

If the project is worthwhile, a feasibility study must be carried out in the term of

the Exploration Permit.

Upon the discovery of a mineral deposit that is technically and economically

mineable the holder of an Exploration Permit will have the exclusive right to enter

into a Mineral Production Sharing Agreement (MPSA), or in a Financial Technical

Assistance Agreement that can take the form of a Joint Venture Agreement

(JVA) or a Co-Production Agreement (CPA) with the Philippine government to

develop and mine the deposit. Certain conditions and terms apply to these

agreements. These agreements are valid for a period of 25 years and may be

renewed for another 25-year period.

Under a Mineral Production Sharing Agreement (MPSA), the government grants

the company an exclusive right to a mining operation over the project area. The

company provides the financing, technology, management and personnel

necessary for the implementation of the MPSA and the government of the

Philippines takes a share of the gross output of the mining operation as a 1%

excise tax, rising to 2% by the sixth year on all metallic minerals, except for gold

and for coal where it is 2% from the first year of operation.

This agreement can also take the form of a Co-Production Agreement where the

government provides inputs to the mining operation other than mineral resources

or a Joint Venture Agreement where the government and the company

participate in a joint venture, each of them owning equity in the project, to

develop and mine the deposit.


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Mining Rights held by Philippine Metals Corporation

Philippine Metals Corporation has acquired the rights to three project areas in the

Philippines (see Figure 1):

1. The Leyte Copper Project located in Leyte Province in the East Visayas

region;

2. The Malitao Project, in the municipality of Calanasan, Province of Apayao,

Luzon Region;

3. The Dilong Project in the municipality of Tubo, Province of Abra, Luzon

Region.

The Leyte Copper Project is composed of three blocks, the Suhi 059 and 096

blocks and the Taurus block. The rights to the Suhi 059 and 096 blocks were

acquired from Canaan Richfield Inc., of Metro Manila, Philippines. The rights to

the Taurus block were acquired from Metex Mineral Resources Corporation and

from Citigroup Philippines Corporation, both based in Metro Manila, Philippines.

The rights to the Malitao Project were acquired from Al Magan Mining Exploration

Corporation, of Baguio City, Philippines, and from Metex Mineral Resources

Corporation of Metro Manila, Philippines. The Malitao Project covers an area of

972 ha. The property is accessible by a series of trails in a sparsely populated

area of northern Luzon.

The Malitao Project is underlain by basinal sedimentary rocks of shallow marine

origin and by volcaniclastic rocks of andesitic composition. A limestone cap

unconformably overlies all rocks. Extensive near-vertical dykes of diorite and

andesite composition are accompanied by sulphide alteration and replacement

over widths of tens of metres at the contact with the sedimentary rocks (Lueck .

2007a). Although the area was explored in the 1960s and several property visits

have been carried out since then, no exploration work has been carried out on

the property in about 35 years. An historical chip sample reported 3.5% Cu and


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0.556 g/t Au in a 93.29m long, and recent chip sampling reported 14.8-34% Cu,

1.4-26.4% Zn, 1.18-1.57 g/t Au and 303-534 g/t Ag over about 8m (Lueck

2007a). Other historical work shows a sinuous anomaly of unknown intensity for

copper in soils has been outlined over an area of about 400×800m and seven

holes were drilled but there is no report of assays. Geological models of manto-

type and porphyry mineralization have been proposed for the property.

The rights to the Dilong Project were acquired from Metex Mineral Resources

Corporation Metro Manila, Philippines and the property has a surface area of

324 ha. The property is underlain by Late Cretaceous to Paleogene volcanic and

sedimentary rocks that have been intruded by dykes, stocks and plutons of

diorite and granodiorite, followed by later dykes of basalt, andesite and dacite

composition. Extensive faulting and fracturing have four general orientations.

Porphyry copper mineralization is reported in a quartz stockwork within diorite

and in nearby Cretaceous sedimentary rocks.

The Dilong Project was explored from 1970 to 1974 by geological surveys

including alteration mapping, by soil, stream and biogeochemical surveys, by an

induced polarization survey and 6160m of drilling in 29 holes. A resource of

45.35 million tonnes grading 0.5% Cu, 0.5 g/t Au and 0.006% Mo was estimated

(Motton, 2008). This resource was not calculated according to National

Instrument 43-101 regulations and should not be relied upon.

The object of this report is the Leyte Copper Project.

PhilippinesPhilippinesPhilippinesPhilippinesPhilippinesPhilippinesPhilippinesPhilippinesPhilippinesPhilippinesVietNam

Thailand

Cambodia

BruneiMalaysia

Laos

Taiwan

China130

E

125°E

120°E

115°E

110°E

105°E

Leyte CopperLeyte CopperLeyte CopperLeyte CopperLeyte CopperLeyte CopperLeyte CopperLeyte CopperLeyte CopperLeyte Copper

Malitao ProjectMalitao ProjectMalitao ProjectMalitao ProjectMalitao ProjectMalitao ProjectMalitao ProjectMalitao ProjectMalitao ProjectMalitao ProjectDilong ProjectDilong ProjectDilong ProjectDilong ProjectDilong ProjectDilong ProjectDilong ProjectDilong ProjectDilong ProjectDilong Project

15°N

10°N

5°N

20°N

25°N

135°E

130°E

r Projectr Projectr Projectr Projectr Projectr Projectr Projectr Projectr Projectr Project

Indonesia

400 0 400 800 1200

Kilometres

Date: 2009.09.21

Property Lo

Philippine Met

Philip

Revised: 2009.09.21

0°N

ocation Map

tals Corporation

ppines

By: D.A. Beauchamp, P.Geol.

Figure: 1


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Leyte Copper Project

The Leyte Copper Property is composed of three contiguous mineral blocks

located in the northern part of Leyte Island in the East Visayas region (Figure 2).

The three blocks are covered by parts of Tacloban City, and the municipalities of

Babatngon, San Miguel, Alang-Alang, Santa Fe and Palo. Municipalities are

further subdivided into barangays, or local villages. A barangay is the current

term for what was known as a barrio. The properties include the Taurus block,

Suhi 0059 block and the Suhi 0096 block. The property boundaries are

determined by latitude and longitude and the total area of the properties is shown

in Table 2.

The Taurus Property is approximately 12 km long and 3 km wide and covers an

area of 3606.5 ha. The property hosts several zones of mineralization including

Palo, Palanog-Kambalantong, Salvacion A and B, Malayahay and San Roque

Prospect (Figure 3).

Property Parcel

Taurus 0049 3606.50 ha3606.50 ha

Suhi 0059 5031.44 ha5031.44 ha

Suhi 0096 North 503.13 haCentral 419.35 haSouth 335.52 ha

1258.00 ha9895.94 haTotal Area

Table 2Property Holdings

Area Total Area

125°00'E

124°50'E

SAN MIGUEL

ALANGALANG

TACLOBAN

BABATNGON

BABATNGON

TACLOBAN C

Taguite

Bagahupi

BagacayTaurusTaurusTaurusTaurusTaurusTaurusTaurusTaurusTaurusTaurus

0049004900490049004900490049004900490049ProjectProjectProjectProjectProjectProjectProjectProjectProjectProject

Suhi 0059Suhi 0059Suhi 0059Suhi 0059Suhi 0059Suhi 0059Suhi 0059Suhi 0059Suhi 0059Suhi 0059ProjectProjectProjectProjectProjectProjectProjectProjectProjectProject

Suhi 0096Suhi 0096Suhi 0096Suhi 0096Suhi 0096Suhi 0096Suhi 0096Suhi 0096Suhi 0096Suhi 0096ProjectProjectProjectProjectProjectProjectProjectProjectProjectProject

Samar IslaLeyte Island

11°20'N

CITY

and

SANTA FE

PALO

PALO

TANAU

Date: 2009.09.21

Revised: 2009.09.21

Philippine Met

Property Lo

Leyte Copper Pro

2 0 2 4 6

Kilometres

Legend

Road

Municipality/Barangay

11°10'N

UANtals Corporation

ocation Map

oject, Philippines


Figure: 2

Alangalang

San Miguel

Babatngon

2. Salvacion2. Salvacion2. Salvacion2. Salvacion2. Salvacion2. Salvacion2. Salvacion2. Salvacion2. Salvacion

3. Palanog - Kambalantong3. Palanog - Kambalantong3. Palanog - Kambalantong3. Palanog - Kambalantong3. Palanog - Kambalantong3. Palanog - Kambalantong3. Palanog - Kambalantong3. Palanog - Kambalantong3. Palanog - Kambalantong

7. Suhi Bacagay7. Suhi Bacagay7. Suhi Bacagay7. Suhi Bacagay7. Suhi Bacagay7. Suhi Bacagay7. Suhi Bacagay7. Suhi Bacagay7. Suhi Bacagay

5. San Roque Prospect5. San Roque Prospect5. San Roque Prospect5. San Roque Prospect5. San Roque Prospect5. San Roque Prospect5. San Roque Prospect5. San Roque Prospect5. San Roque Prospect

8. Cabalawan-Barrio Suhi8. Cabalawan-Barrio Suhi8. Cabalawan-Barrio Suhi8. Cabalawan-Barrio Suhi8. Cabalawan-Barrio Suhi8. Cabalawan-Barrio Suhi8. Cabalawan-Barrio Suhi8. Cabalawan-Barrio Suhi8. Cabalawan-Barrio Suhi

6. Caibaan6. Caibaan6. Caibaan6. Caibaan6. Caibaan6. Caibaan6. Caibaan6. Caibaan6. Caibaan

4. Malayahay4. Malayahay4. Malayahay4. Malayahay4. Malayahay4. Malayahay4. Malayahay4. Malayahay4. Malayahay

Tacloban

TACLOBAN CITY

Santa Fe

Palo

1. Palo - Curajo1. Palo - Curajo1. Palo - Curajo1. Palo - Curajo1. Palo - Curajo1. Palo - Curajo1. Palo - Curajo1. Palo - Curajo1. Palo - Curajo

2 0 2 4 6

Kilometres

Date: 2009.09.21

Revised: 2009.09.21

Leyte Copper Pr

Philippine Meta

Zones of Mi

Legend


Mineral Occurrence

Tacloban

Figure: 3

roject, Philippines

als Corporation


ineralization


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The property was the object of a prior agreement between Citigroup Philippines

Corporation and Metex Minerals Resources Corporation (“Metex”) dated

15 March 2007, which Philippine Metals Corporation took over on 31 January

2008. Exploration Permit No. 00049-VIII on the Taurus property was approved on

17 April 2009. The terms of the agreement with Philippine Metals Corporation are

as follows:

Payable to Metex for the Taurus Block:

• 2,500,000 shares of Philippine Metals Corporation to be issued to Metex upon the approval of the Exploration Permit on Taurus;

• US$100,000 payable upon completion of the Initial Public Offering (IPO) by Philippine Metals Corporation on the Taurus Project;

Philippine Metals Corporation must also take over the responsibility for the

following payments to Citigroup for the Taurus Block:

• US$75,000 upon signing the deed of assignment on January 31, 2008;

• US$100,000 payable within 30 days of signing the deed of assignment;

• US$200,000 at each of the first three anniversary dates of the signing of the deed of assignment, less the cumulative US$5,000 in monthly payments made in that year;

• US$1,500,000 upon commencement of mining activities;

• NSR royalty 1.5% payable on production.


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The two Suhi blocks extend over a length of about 20 km to the northwest, cover

6289.44 ha, and lie to the immediate east and north of the Taurus block. The

current known zones of mineralization include the Caibaan, Suhi Bagacay, San

and Cabalawan-Barrio Suhi areas. Exploration Permit Applications EXPA 00059-

VIII and EXPA 000096-VIII have been submitted for these properties but are not

yet approved. The properties were acquired from Canaan Richfield Inc. on

November 5, 2008 under the following terms:

• Total initial cash payments of US$75,000;

• US$37,500 payable and 46,875 shares of Philippine Metals Corporation to be issued to Canaan Richfield Inc. within 30 days from the from signing the deed of assignment on November 5, 2008; the current monthly payments of US$2500 will be deducted from the anniversary payment

• US$62,500 payable and 78,125 shares of Philippine Metals Corporation to be issued to Canaan Richfield Inc. at the one-year anniversary of the deed of assignment on November 5, 2009; the current monthly payments of US$2500 will be deducted from the anniversary payment;

• $100,000 payable and 125,000 shares of Philippine Metals Corporation to be issued on November 5, 2010 and again on November 5, 2011; monthly payments of US$2500 will be deducted from the anniversary payment;

• $1,500,000 to be paid upon the commencement of mining activities;

• 1.50% Net Smelter Royalty (NSR). Information on the payments required was provided by Philippine Metals Corp. There are currently no known environmental liability issues that are pending or foreseen for any of the three properties on the Leyte Copper Project.


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5. Access, Climate, Resources, Infrastructure and Physiography

The Republic of the Philippines (“Philippines”) is a country located in the western

Pacific Ocean. It is now a self-governing commonwealth that became

independent in 1946. The population is estimated at 98,000,000 and the country

is composed of 7107 islands. At 300,000 km2 the total land area of the country is

slightly less than half the size of Manitoba, but dispersed over a much larger

area. The median age of the population is 22.5 years and the literacy rate was

estimated at 92.6% in 2000. Although there are many dialects spoken in the

country, the official languages are English and Filipino (Tagalog).

Access

The project area is located near Tacloban City, about 600 km southeast of

Manila, the capital. Tacloban City can be reached from Manila by the daily one-

hour flights made by Philippine Airlines, Air Philippines or Cebu Pacific Air. The

airport can accommodate aircraft up to the size of a Boeing 737 and is currently

undergoing an expansion.

Road access from Manila is along the Pan Philippine Highway, also known as

Asian Highway 26, from Manila toward the southeast; a ferry crosses 15

kilometres from Matnog, Province of Sorsogon on the Southern tip of the Luzon

Region to Allen, on Samar Island and from there the San Juanico Bridge crosses

over to Leyte Island. Travel time from Manila to Tacloban City by road is about

22 hours.

A national seaport, Tacloban City can also be accessed by ship from Manila in

36 hours, three days per week.

In the region the local road system is relatively good with pavement and

concrete-cement for the covered roads. Access to the eastern and southern

boundaries of the property is by a partly concrete-covered road 6 km west of

Tacloban City, from which several trails can be used to reach many areas on the

property.


Philippines


A well-developed network of paths and trails is present in the southern and

central parts of the property (Figure 4). Some of these were used as roads in the

past and could be rehabilitated to bring machinery such as excavators or

diamond drilling equipment to areas of mineralization.

Climate

The region is classified as Type 2 climate which means that precipitation is fairly

evenly distributed throughout the year, although from November to January,

typhoons and cyclones are frequent. Average yearly precipitation is 247 cm. The

temperature ranges from 25°C to 28.8°C year round and the relative humidity is

usually 57% to 75%

Local Resources

Tacloban City, population 217,000, is the capital of Leyte Island and is located

3.5 km due east of the property boundary. Also the city of Ormoc, located a two-

hour drive to the southwest has a population of 180,000. The total population of

Leyte Island is about 1.5 million, averaging about 264 persons per square

kilometre.

The Tacloban City government ceased to be under the supervision of the

provincial government after it became a Highly Urbanized City in 2008 and is now

under the direct supervision of the national government.

Several major industrial developments, within 2½ hours by road from Tacloban

City, make the Leyte one of the more resource-rich provinces in the Philippines.

The Greater Tongonan Geothermal Field, located about 50 km southwest of

Tacloban City is operated by the Philippine National Oil Corporation’s Energy

Development Corporation division and generates about 700 MW of electricity.

This power represents 38% of the entire Philippine geothermal power capacity of

1,850 MW and is the source of the electricity for the province of Leyte.

Alangalang

Babatngon

San Miguel








SI

LeyteIsland

Legend

Outline of Taurus and Suhi blocksOutline of Taurus and Suhi blocksOutline of Taurus and Suhi blocksOutline of Taurus and Suhi blocksOutline of Taurus and Suhi blocksOutline of Taurus and Suhi blocksOutline of Taurus and Suhi blocksOutline of Taurus and Suhi blocksOutline of Taurus and Suhi blocks

Bridge toBridge toBridge toBridge toBridge toBridge toBridge toBridge toBridge toSamar IslandSamar IslandSamar IslandSamar IslandSamar IslandSamar IslandSamar IslandSamar IslandSamar Island

Tacloban

TaclobanTaclobanTaclobanTaclobanTaclobanTaclobanTaclobanTaclobanTaclobanCityCityCityCityCityCityCityCityCity

SamarIsland

majormajormajormajormajormajormajormajormajorport cityport cityport cityport cityport cityport cityport cityport cityport city

Santa Fe

Palo


2 0 2 4 6

Kilometres

Leyte Copper Pr

Philippine Meta

Date: 2009.09.21

Revised: 2009.09.21

Road and T

Legend

Road

Trail


Mineral Occurrence

Tacloban

roject, Philippines

als Corporation


rail Access

Figure: 4


Philippines


Located in the Leyte Industrial Development Estate (LIDE), near Isabella about

70 km southwest of Tacloban City, is the largest phosphatic fertilizer

manufacturing complex plant in Asia. Operated by the Philippine Phosphate

Fertilizer Corporation, known as PHILPHOS, the plant started as a 50-50 joint

venture between the Philippines and the Republic of Nauru but was later

privatized in 2000. On a yearly basis it produces 1,000,000 tonnes of granulated

phosphate, 1500 tonnes of sulphuric acid, 12,000 tonnes of phosphoric acid and

172,000 tonnes of ammonium sulphate.

LIDE is also host to one of the largest copper smelters in the world. The PASAR

(Philippine Associated Smelting and Refining) smelter was originally built by the

government through the National Development Company (42%) and a

consortium of private companies, but in June 1999, a group of Philippine

investors and the Swiss metals trader Glencore International AG, purchased 90%

of the Philippine Government's shareholding, transforming the company into a

privately-owned corporation.

The smelter and refinery complex employs 1030 people. The refinery’s capacity

of Grade A electrolytic copper cathodes was expanded to 215,000 tonnes per

year in 2007. The plant produces electrolytic copper cathode, refined copper

anode, copper wire, doré metal, granulated slag, iron concentrate, selenium

powder and sulphuric acid.

In the Tacloban area the local labour produces raw material from the forest to be

used in industrial products such as rattan, bamboo, buri palm, wild vines and

ferns. In the northeastern part of the island the economy of Leyte Island is based

mostly on agriculture. Rice is farmed in the lower flat areas near Tacloban, and

coconut for coconut oil is the most important crop in the hills and mountainous

areas, but corn, sugar cane and pineapples are also produced. The provincial

government is making efforts to increase the processing of coconut and other

products in the area to raise employment.


Philippines


Exports from the region include copra (the dried kernel of the coconut), rice,

maize, sugar cane and abacá, a type of banana native to the Philippines from

which fibre is extracted to make rope, but is now also used in specialty papers.

Fishing for shrimp and prawn is also an important source for the livelihood of

residents.

Local industrial occupations include small scale furniture making, ceramic

moulding, food preservation, various metal crafts and handicrafts such as toy

making, gift making and souvenirs.

Infrastructure

Tacloban City is the site of several large state-run educational institutions such

as the University of the Philippines Tacloban, Leyte Normal University, and the

Leyte Institute of Technology.

Other post-secondary educational institutions in the region are at Palo,

population 42,000, the site of UP Manila School of Health Sciences, St. Paul's

School of Business and Law, and the AMA St. Augustine School of Nursing.

Road access throughout the region is excellent and electricity is available

throughout the region.

Physiography

The island of Leyte shows generally flat to gently rolling hills with mountains

toward the centre that extend to the north northwest of the island. The property is

located in the northeastern part of the island where the Babatngon-Guindapunan

Range, about 32 km long and 8-10 km wide, extends to the north-northwest. On

the property the elevations are about 15m asl on the eastern edge rising to a

maximum of 600m asl at Bagahupi Peak in the northern part of the project area

(Figure 5).

Alangalang

Babatngon

San Miguel








Legend

Leyte Island

Tacloban

TACLOBAN CITY

Samar Island

Santa Fe

Palo


2 0 2 4 6

Kilometres

Date: 2009.09.21

Revised: 2009.09.21

Topog

Leyte Copper Pr

Philippine Meta

Legend

Road


Mineral Occurrence

Minor contours at 20m intervalsMajor contours at 100m intervals

Tacloban

graphy

roject, Philippines

als Corporation


Figure: 5


Philippines


Topography is relatively steep and several rivers draining east and west have

deep v-shaped cross-sections indicating that they are relatively recent. The

Mainit, Palo and Sapanton rivers flow mainly to the west and then to the

northwest toward Santa Cruz. On the east the Barugwan, Diit and Tigbao rivers

flow a short distance to the San Juanico Straight that separates Leyte Island from

Samar Island to the east. The Palo River is somewhat wider and drains off the

property to the south.

Parts of the property are covered by thick vegetation consisting of palm trees,

and underbrush.

6. History

Mineralization was known in the area prior to the 1940s. In 1936 several test pits

and adits were excavated in the search for gold.

In 1961, near Caibaan, on the Suhi 0059 Block, the area was prospected and

staked by prospectors. The claims were transferred to Palo Consolidated Mines

Inc. on June 26, 1963. The company carried out 17 X-Ray drill holes at 10m

spacing for a total of 487.7m on the property and made three shipments of ore, of

approximately 1000 tons each, from three test pits. The rocks are intensely

faulted at 340°NW strike 80°NE dip. One tunnel was estimated to contain 51,000

tonnes of ore grading 5.09% Cu. This resource was not calculated according to

National Instrument 43-101 regulations and should not be relied upon.

In late 1963, Palo’s claims were transferred to Marcelino Collado who carried out

rock sampling of the Caibaan claims and also of the Palanog, San Jose and

Bagacay areas. He reported values of 0.13-11.2% copper from these samples.

He also reported 1.0 g/t Au and 78.5 g/t Ag from the sample that contained

11.2% Cu (Fortanos and Fajando, 1964).

In 1964, Mr. Collado requested an evaluation of the copper deposit at Caibaan

by Domingo Fajando, of the Mines Bureau in Manila, who recommended


Philippines


additional work including detailed sampling of wall rock, and additional analyses

for silver.

In 1968 Francisco Garcia staked 168 claims in the Palanog area of the Taurus

Block and later sold them to Minero Chemical Corporation, which later turned its

rights over to Taurus Minerals and Oils Corporation in early 1970. Taurus

Minerals carried out geophysical and geological surveys and drilled several

holes. Test pits and trenches outlined significant sulphide mineralization.

In 1968, E. Gamus and J. Lauron, geologists with the Bureau of Mines in Manila,

carried out field investigations of the eight claims owned by Leyte Base Metals, at

Cabalawan, in the Barrio Suhi area. They reported copper mineralization in pods

and lenses or disseminated in veins, mainly as replacement along disturbed

zones in the green schist underlying the property. Mineralized sulphide bodies

were exposed by trenches and several lenses measuring 0.1m × 1m were

encountered. The rocks are faulted by two structural systems striking northeast

and northwest. In one section, the lenticular veins, sheets and pods of pyrite and

chalcopyrite contain an average of 0.45% Cu. One outcrop 0.35m × 6m averages

4.48% Cu, another schist area grades 1.07% Cu and in a third area a trench

grades 5.95% Cu (Gamus and Lauron, 1968).

In 1970 Taurus Minerals and Oils Corp. applied for a listing on the Philippine

Stock Exchange with its main asset being a resource of 4.5 million tonnes

grading 2.2% Cu at the Kambalantong area of the property. This resource has

not been mined and is still in place. This resource was not calculated according

to National Instrument 43-101 regulations and should not be relied upon.

Armando Paderes, Senior Geologist with the Bureau of Mines and Geology in

Manila, carried out a rapid surface geological mapping of the region in 1971 and

early 1972. He reported that at elevations above 200m, an ophiolite sequence is

present as dykes, sills and small bodies of ophiolitic intrusive rocks.

He reported that the property is underlain by a thick sequence of dynamo-

thermally mafic volcanic flows interbedded with metamorphosed sedimentary


Philippines


rocks consisting of shale, sandstone and conglomerate. Porphyritic, variolitic and

veined spilite with meta-andesite, chert, greywacke, slate and phyllite are

extensively permeated by crisscrossing veinlets of quartz, chlorite and less

commonly epidote. The ophiolite consists of gabbro porphyry and diabase, with

cataclastic texture, cut in part by veinlets of epidote and carbonate.

Mineralization at Barrio Suhi occurs mostly in fractures striking 055° with

irregularly-shaped high grade sulphide bodies including a lens-shaped pod

4m × 1m that contains massive copper-bearing specular hematite enclosed in a

strongly pyritized host rock. The grade of the rock is 0.40-1.84% Cu (Paderes,

1972)

In early 1974, Rafael Zerda, Senior Geologist at the Bureau of Mines and

Geology in Manila carried out an appraisal of the Leyte Base Metal claims of the

Barrio Suhi area at the request of Argonaut Mineral Exploration Inc in connection

with its applications for a listing on the Philippine stock Exchange and reported

the presence of high grade copper mineralization in lenses and pods at the

intersections of fractures in the gabbro.

He reported that the property is underlain by an undifferentiated sequence of

metamorphosed sedimentary and volcanic rocks and minor gabbro that have

been metamorphosed to greenschist facies. Massive pyrite and chalcopyrite with

minor bornite, covellite and chalcocite occur as pods and lenticular bodies in

schistose sedimentary rocks. The resource was estimated at 2,025,000 tonnes

grading 2-3% Cu (Zerda, 1974). This resource was not mined and is still in place.

This resource was not calculated according to National Instrument 43-101

regulations and should not be relied upon.

Although the mineralization at Palo is along major faults striking northwest, at the

Leyte Base Metals property the mineralization is along structures that strike

northeast and east and are proposed as complementary faults to the main

northwest structures. Assay results of 2.2% Cu over 4m, and a grab sample of

8.37% Cu were obtained from a stockpile of ore visually estimated at 20 tonnes.


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In 1979 the Bureau of Mines and Geology performed an electromagnetic dip

angle, ShootbackTM survey at 50m coil separation over 9075 line metres at the

Curajo Copper Prospect in Palo using a Crone EM instrument (Morante and

Ignacio, 1979). The depth of penetration was about 33m and several conductors

striking north and northwest were identified. The authors noted that although the

conductors could represent water-filled structures, several of the anomalies

coincide well with mineralized outcrops, geochemical anomalies and trace

mineralization in outcrop and one of them extends for 500m to the north and

north-northeast.

In 1981, a review of the geophysical results showed that only two of the five drill

holes showed an anomalous cross-over at a depth of 13m, whereas the core

intersected disseminated pyrite-chalcopyrite mineralization at a depth of 5-9m.

The mineralization was identified along fractures that trend northwest with

weaker northeastern components.

In 1997, L. Solkoski carried out a brief field visit of the Barrio Suhi area for

Homestake Mining, Canada. Although he noted ultramafic rocks, he believed that

rather than being of Cyprus-type origin, the mineralization appeared to be likely

of volcanogenic massive sulphide origin but was redeposited by faulting and

folding. He reported results of 149-22,600 ppm Cu from 12 rocks, rock-chips and

pyritic sand from stockpiled ore samples. Relatively high values of 170-580 ppb

Au were obtained from three of these samples (Solkoski, 1997).

In 2007, Brian Lueck wrote a summary report on the Taurus property for Metex

Mineral Resources Corporation. He reported that at Kambalantong the

mineralization appears to be syngenetic, but that it had been later sheared,

brecciated and steeply faulted into breccia-vein faults. The best exploration

targets for high grade mineralization are the intersection of structures that are a

few metres wide, up to 1.5 km long and strike 060°. He recommended a fence of

ten drill holes from five collars at an azimuth of 270° and at 40m spacing, to

minimum depths of 120m (Lueck, 2007b).


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In 2009, Philippine Metals Corporation carried out a six-week field program

consisting of geological mapping, prospecting and rock sampling at five areas of

the Taurus Property (Paloma and Garcia, 2009). The results from this program

are documented and detailed later in this report in Section 10 Exploration.

7. Geological Setting

Regional Geology

The Philippines is part of a large volcanogenic and ophiolitic island arc located on

the western edge of the area known as the Circum-Pacific Rim of Fire.

The Philippines are a structurally complex combination of metamorphic terrains,

ophiolitic complexes, magmatic arcs, continental rocks and sedimentary basins

that have been subjected to collision, subduction and strike-slip faulting. Major

strike-slip faults trend mostly northwest and north-northwest.

On the eastern edge of the archipelago, the Philippine Trench dips west beneath

most of the country, except in the north where it extends as the East Luzon

Trench (see figure 6). On the western side of the country, from north to south, the

Manila, Negros and Cotabato trenches dip to the east. The Palawan and Sulu

trenches strike southwest and dip to the southeast but are inactive.

The North Palawan Block represents the continental rocks that have been dated

from late Permian to Jurassic in age. The remainder of the island is part of the

younger Philippine Mobile Belt.

Many areas of the Philippine Mobile Belt are composed of ophiolite complexes, of

Jurassic to early Paleogene age, that occur with pre-Cenozoic schist and phyllite.

At the base, the ophiolite complexes are usually composed of peridotite changing

to layered and isotropic gabbro, sheeted dyke complex, pillow basalts and finally

covered by pelagic sedimentary rocks. The ultramafic units contain chromite and

nickel occurrences, and the laterite soils that developed over the ultramafic rocks

may also contain lateritic nickel deposits.

P H I L I P P I

Man

ila T

renc

h

East

Luz

on T

renc

h

Palaw

an T

renc

h (in

activ

e)

Negros Trench

Malitao ProjectMalitao ProjectMalitao ProjectMalitao ProjectMalitao ProjectMalitao ProjectMalitao ProjectMalitao ProjectMalitao Project

Dilong ProjectDilong ProjectDilong ProjectDilong ProjectDilong ProjectDilong ProjectDilong ProjectDilong ProjectDilong Project

Philippine Fault

Philippine Fault

Philippine Fault

Philippine Fault

Philippine Fault

Philippine Fault

Philippine Fault

Philippine Fault

Philippine Fault

FaultFaultFaultFaultFaultFaultFaultFaultFault

FaultFaultFaultFaultFaultFaultFaultFaultFault

I N E

S E A

Philippine Trench

Leyte CopperLeyte CopperLeyte CopperLeyte CopperLeyte CopperLeyte CopperLeyte CopperLeyte CopperLeyte CopperProjectProjectProjectProjectProjectProjectProjectProjectProject

C E L E B E S S E A

S U L U S E A

Cotabato Trench

Sulu Tren

ch (in

activ

e)

Legend

Recent

Quaternary

Jurassic

Cretaceous

Basement Complex

Neogene

Paleocene to Eocene

Upper Miocene to Pliocene

Igneous rocks

Volcanic rocks

OligoceneVolcanic, sedimentaryand metamorphic rocks

Volcanic rocks

Sedimentary rocks

Volcanic, sedimentaryand metamorphic rocks

Sedimentary andvolcanic rocks

Sedimentary andmetamorphic rocks

Sedimentary andmetamorphic rocks

Leyte Copper Proje

Philippine Metals

Date: 2009.09.21

ByRevised: 2009.09.21

GeologPhilippin

Fi

100 0 100 200 300

Kilometres ect, Philippines

Corporation

y: D.A. Beauchamp, P.Geol.

gynes

gure: 6


Philippines


The stratigraphic sequence observed in an ophiolite suite corresponds to the

lithosphere-forming processes at mid-oceanic ridges (see Figures 7). From

bottom to top, these units are as follows:

• Tectonized ultramafic rocks: harzburgite- and lherzolite-rich mantle rock, cumulate peridotite: dunite-rich layers that settled from a magma chamber;

• Layered isotropic gabbro high level intrusions, plagiogranite; • Sheeted dykes: vertical, parallel dykes which fed the pillow lavas below; • Extrusive sequence: basalt flows and pillow lava at magma/seawater

contact; • Massive sulphide mineralization occurs at this level; • Sedimentary rocks: mudstone and chert deposited after the crust formed. • Intermixed basalt flows, pillow lava, and pelagic sedimentary rocks.

Figure 7. Cross-section of an ophiolite suite


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The sheeted diabase dykes and overlying basalts are formed along spreading

mid-oceanic ridges that, along with the rest of the ophiolite sequence are

obducted onto continental or island arc settings.

Other rock suites within the Philippine Mobile Belt include magmatic arcs that

contain thick sequences of volcanic flows and associated pyroclastic and

sedimentary rocks, and intrusions of diorite composition. More recent volcanic

flows and intrusions are the result of the active subduction event. Several

sedimentary basins have developed within the Philippines’ volcanic arcs.

Many large-scale faults strike north and northwest Including the Philippine Fault,

a major strike-slip left-lateral fault that is related to oblique subduction of the

Philippine Sea plate beneath the Philippine island arc. The fault zone extends

along the entire length of the country, for about 1300 km, from Luzon Island in

the north, southward to the island of Mindanao. The fault is currently active and

in the last 100 years there have been at least ten major earthquakes of more

than magnitude 7.0 on the Richter scale associated with it.

On Luzon Island, the Philippine Fault consists of four en-echelon fault strands

where a left-lateral slip rate of 8-13 mm/yr has been calculated. The Philippine

Fault trends north northwest along the central part of Leyte Island about 30 km

west of the Taurus Property.


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Local Geology

The area to the west of Tacloban is underlain by part of a detached oceanic

crustal fragment known as the Tacloban Ophiolite consisting of gabbroic and

volcanic rocks (Figure 8 and 9).

In a geological report, Quiwa et al. (1978) described in some detail the

stratigraphy and geology of the area. Balce and Cabantog (2001) reviewed the

geology of the area and consolidated the units into a sequence that corresponds

to that of an ophiolite suite that has been overlain by a series of sedimentary

rocks. Much of the following description is based on their review (See Table 3).

Cretaceous: Tacloban Ophiolite Suite

The Tacloban Ophiolite Suite is the oldest package of rocks on the property and

underlies most of the Project area. Differential erosion has exposed the deep

parts of the ophiolite in the north part of the area since the rocks appear to be

tilted slightly to the south.

Quaternary ‐ HoloceneAlluvium

Late Miocene to Early PlioceneBagahupi Formation ‐ sedimentary rocks

Late MioceneTanauan ‐ ultramafic diapir

Middle to Upper MioceneSan Ricardo Formation ‐ sedimentary rocks

CretaceousPalanog ‐ pelagic sedimentary rocks

Ophiolite SuiteCaibaan ‐ pillow basaltPaglaum ‐ sheeted dykesTigbao ‐ gabbroTigawili ‐ ultramafic rocks

Table 3Table of Formations

Bagahupi

Bagacay

PALO

TACLOBAN CITY

LegendQuaternary - Holocen

Pliocene to Quaternar

Middle to Upper Mioc

A

Vo

TaclobanTaclobanTaclobanTaclobanTaclobanTaclobanTaclobanTaclobanTaclobanOphioliteOphioliteOphioliteOphioliteOphioliteOphioliteOphioliteOphioliteOphioliteSuiteSuiteSuiteSuiteSuiteSuiteSuiteSuiteSuite

Samar IsSamar IsSamar IsSamar IsSamar IsSamar IsSamar IsSamar IsSamar Is

ne

ry

cene

Alluvium

olcanic rocks

slandslandslandslandslandslandslandslandsland

Leyte Copper Pr

Philippine Meta

Date: 2009.09.21

Revised: 2009.09.21

GeoLeyte Coppe

Philippine Fault Zone









5 0 5 10 15

Kilometres

Fa

Cretaceous

Miocene to Pliocene

Oligocene to Miocene

Ro

Ta

Se

Vo

Sa

Mi

Se

Leyte IslandLeyte IslandLeyte IslandLeyte IslandLeyte IslandLeyte IslandLeyte IslandLeyte IslandLeyte Island

roject, Philippines

als Corporation


ologyr Project Area

Figure: 8

ult

e

oad

acloban Ophiolite Suite and Palanog Formation

edimentary and volcanic rocks

olcanic rocks

an Ricardo Formation Sedimentary rocks

neral occurrence

edimentary and volcanic rocks


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• The Tigawili ultramafic rock occurs at the base of the Tacloban Ophiolite

Suite and is only exposed in the northern part of the area and is

composed of harzburgite and of occasional dunite lenses and bands of

pyroxenite.

• The Tigbao gabbro occurs as dykes, and as detached fragments within

the remobilized ultramafic bodies. It is isotropic near the upper part and

pegmatitic in the lower sections, where cumulate phases are present. It is

generally light-coloured but may be nearly black near the contact with the

underlying ultramafic rocks. Forming an elongated mass striking

northwest, gabbro intrudes the older formations and exhibits chilled

borders along the contact zones. It occurs as dark green to light-grey

sheeted dykes and pods and is dark brown on weathered surfaces. The

massive gabbro contains pyroxene and olivine and is chloritized,

sericitized and clay-altered.

• The Paglaum sheeted dykes of fine- to medium-grained gabbro, diabase

and minor basaltic dykes are generally 15-30 cm wide. The unit can be as

much as 500-800m thick, although thrust faulting may have thickened the

sequence. The foliation is parallel to the main orientation of the dykes but

the chill zones have been obliterated by tectonic deformation. The dykes

are composed of hornblende, plagioclase and minor pyroxene and have

been slightly altered to greenschist facies consisting of epidote, chlorite

and illite.

• The Caibaan basalts are predominantly basaltic and andesitic flows and

pillowed units that usually show layering parallel to the sedimentary

bedding of the overlying rocks. The flows are highly chloritized, epidotized

and cut by calcite veinlets.


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Cretaceous Palanog pelagic sedimentary rocks

The pelagic sedimentary rocks are conformable to the underlying Caibaan basalt

and are composed of chert, red mudstone, shale, sandstone and possibly vitric

tuff but have been mostly eroded. Volcanic fragments make up a significant part

of all sedimentary rocks. They are in beds 0.5-10m thick and may extend laterally

for as much as several hundred metres.

The presence of these sedimentary rocks usually indicates the a termination of

the volcanic activity and a period of local quiescence in hydrothermal activity

Upper to Middle Miocene San Ricardo Formation

Unconformable to the ophiolite suite is a sequence of pelagic sedimentary rocks

composed of conglomerate, sandstone, dark orange to red radiolarian chert,

reddish mudstone and shale with occasional limestone beds that dip steeply

(Balce and Velchez, 2001).

On the property, the San Ricardo Formation has been mostly eroded and is now

exposed only on the eastern side of the Ophiolite Suite in low valleys but has

also been mapped in Tacloban City itself. The granule- to cobble-conglomerate

is highly compacted and composed of subangular to subrounded blocks of schist,

volcanic rock, limestone, shale, sandstone and andesite in a coarse-grained

matrix. These rocks are occasionally traversed by quartz veinlets 5-15cm wide.

This sequence may have been deposited in a shallow marine environment.

Late Miocene Tanauan ultramafic diapir

Ultramafic bodies, as cold diapiric intrusions of remobilized serpentinized

ultramafic rocks, have intruded along major faults from depth. As a result of

alteration from circulating fluids along deep penetrating faults, the medium-

grained ultramafic rocks have been serpentinized, decreasing their density

allowing them to rise along the lower pressure fault zones. They occur


Philippines


elsewhere in northern Leyte along major fault zones such as the Philippine Fault

to the west but have not been recognized in the immediate project area.

Figure 9. Schematic section of the Tacloban Ophiolite Suite (Balce and

Cabantong, 1998)


Philippines


Late Miocene to Early Pliocene Bagahupi Formation

Lying unconformably on the San Ricardo Formation, the Bagahupi Formation is

composed of pebble conglomerate, sandstone and marly tuffaceous shale. The

rounded to subrounded pebbles in the conglomerate are 1-10 cm and are

composed of andesite, basalt, schist, gabbro and limestone. The sandstone is

coarse and arkosic, and is present in the middle part of the formation.

The Bagahupi Formation may have been deposited in a shallow marine or

lacustrine environment.

Holocene Alluvium

West of the ophiolite suite, unconsolidated alluvial sediments are present on the

gentle slopes that dip west and north. The sediments consist of eroded

fragments from the Ophiolite Suite and are composed of clay, silt, sand, mud and

gravel in river beds and on valley floor and are derived from the weathering of the

surrounding rocks.

Structural Geology

The area has been strongly dissected by deep-seated faults and shear zones

that transect all lithologies. The faults are left-handed and strike 330-340°, dip

35-50°SW, mostly parallel to the Philippine Fault Zone that traverses the central

part of Leyte Island about 30 km to the west. The movement is accompanied by

extensive shearing and fracturing, and the faults appear to be thrust and shear

zones, possibly listric type, that host sulphide mineralization in several areas

including the Kambalantong and Salvacion prospects (see Figure 4). Another

parallel fault zone is located to the east on the island of Samar.

A certain number of sympathetic faults striking 050-090° and dipping 50-80°SE

have been mapped on the property. These structures may have been the feeder

zones for the early mineralizing fluids. They are the principal control for

mineralization at Barrio Suhi area.


Philippines


The two major fault systems may be related to a change in the direction of the

primary stress from the west to the northwest when the Philippine Fault Zone

developed. They are characterized by intense brecciation and accompanied by

epidotization and chloritization. Both fault sets appear to have been active during

mineralization events and may have been reactivated to remobilize the

mineralization.

Metamorphism and Alteration

Intense dynamothermal alteration has affected most of the mafic and ultramafic

rocks on the property including the basaltic flows as a result of pressure

distributed along faults and shear zones.

Spilitic metamorphism affects most of the mafic rocks of the Tacloban Ophiolite

Suite and ranges from zeolite to greenschist and to amphibolitic facies. The

greenschist metamorphism has intensely altered the mafic sheeted dyke

complex in particular and appears in the assemblage of epidote-calcite-tremolite-

actinolite-albite.

Silicification is also common in association with the massive sulphide

mineralization whereas chloritization is more associated with the disseminated

mineralization and forms a broad halo around the massive sulphide horizon,

ranging from a few metres or more.

From work at the Troodos ophiolite complex in Cyprus there is evidence that low-

temperature silicification, from hydrothermal activity, continues late in the

process, even after the manganese- and iron-rich sediments have precipitated

some distance away from oceanic spreading axes and that gold may be

precipitated at that time (Prichard and Maliotis, 1998).


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8. Deposit Type

In 2001, Balce and Velchez carried out an extensive literature search and field

studies, and proposed that the type of mineralization at the Leyte Copper Project

as Cyprus-type massive sulphide mineralization, the volcanogenic sulphide

deposit type found in ophiolite rocks.

An ophiolite is an assemblage of mafic and ultramafic rock from the ocean crust

that has been tectonically obducted onto a continental margin or island. It is

usually characterized by ultramafic rocks at the base that have been intruded by

gabbro and sheeted dikes and then overlain by pillow lavas, and deep-sea

sediments.

Cyprus-type massive sulphide mineralization is typically composed of one or

more lenses of massive pyrite and chalcopyrite that are hosted by mafic volcanic

rocks. These lenses are often underlain by a well-developed pipe-shaped

stockwork feeder zone (Figure 10).

Figure 10. Cross Section of Cyprus-type mineralization


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The lenses of sulphides are often in marine pillowed basalts near the transition to

the overlying argillaceous marine sediments. Many of the lenses are structurally

controlled and are oriented parallel to steeply dipping normal faults. The

concordant massive sulphide lenses often overlie cross-cutting zones of intense

alteration with associated stockwork and disseminated mineralization. The ore is

usually composed of massive, occasionally brecciated, pyrite and chalcopyrite

and other associated copper sulphides. The overlying brecciated chert layers

often contain disseminated sulphides.

The ore lenses are structurally controlled and usually cluster or align along the

normal faults near the transition from mafic pillow basalts to the overlying

sedimentary rocks.

In geophysical surveys, the lenses of massive sulphides usually show an

electromagnetic signature while the disseminated sulphides can be identified in

induced polarization surveys (Hõy, 1995).

There is no particular characteristic age for these types of deposits. Other than in

Cyprus where they formed from the Triassic to the mid-Cretaceous, the deposits

have been identified in rocks of Ordovician to Recent age.

Cyprus-type deposits are present in Canada at Tilt Cove, Newfoundland and in

several locations such as at Chu Chua in British Columbia, at the Ice property in

the Yukon, and also at Turner-Albright in Oregon and in the East Pacific Rise off

the west coast of Mexico (Francheteau et al., 1979).

Although the median size of Cyprus-type deposits is reported to be 1.6 Mt

grading 1.7 % Cu, they can also contain 0-33 g/t Ag; 0-1.9 g/t Au and 0-2.1 % Zn

(Cox and Singer, 1986). Certain deposits contain larger resources such as the

Turner Albright area in Oregon where 3 million tonnes of ore grade 1.46% Cu,

3.33% Zn, 15 g/t Ag, 3.77 g/t Au and 0.06% Co (Kuhns and Baitis, 1987) and at

Tilt Cove in Newfoundland, where 6.7 million tonnes of ore grading 1.24% Cu

were extracted (Sangster, 1988). In Cyprus, 33 deposits have been documented


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that range from 50,000 tonnes to 16 million tonnes, for a cumulative total of 105

million tonnes of ore (Hannington et al., 1998). These resources are not

compliant with NI 43-101 regulations and are not located on the Leyte Island

Copper Project. There is no guarantee that economic resources can be

discovered on the Leyte Island Copper Project.

9. Mineralization

Sulphide mineralization in the area west of Tacloban City and within the Leyte

Copper Project has been known since at least the 1930s. At least eight mineral

occurrences of copper sulphide mineralization have been documented over a

strike length of 17 km in this area (Figure 3).

Palo – Curajo, Barangay San Jose

C. Fortanos and D. Fajando (1964), Mining Engineers with the Mines and

Geosciences Bureau, described the presence of a mineralized vein, 0.1-1.2m

wide, from which a sample reported 11.52% Cu, 1.0 g/t Au and 78.5 g/t Ag. The

mineralization is reported to strike 290°SW.

Palo Consolidated Mines extracted some ore from an adit about 70m in length

and in an area 100m to the east, drilled 17 X-Ray drill holes, excavated three test

pits and two adits with lengths of 6m and 27m. A third occurrence is located

about 140m to the north.

In all areas, massive, blocky, dark green basalt, often sheared and described as

mafic schist in the field, is cross-cut by occasional quartz-epidote veinlets and is

intercalated with metasedimentary rocks usually described as phyllite but

represented by sandstone, conglomerate, shale and ferruginous chert. Much of

the mineralization is within fractures in the sedimentary rocks; the fractures are

filled with clay and breccia, and the wall rocks are chloritized.

A soil survey carried out in 1978 in the area showed that from 165 samples

collected, the background values are 120 ppm Cu and 130 ppm Zn and that


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anomalous values are above of 290 ppm Cu and 280 ppm Zn (Quiwa et al.,

1978).

In 1997, Lawrence Solkoski quickly examined the Palo area in the search for gold

prospects for the account of Homestake Mining Canada. He was of the opinion

that the area resembled Kuroko-type volcanogenic massive sulphides rather than

Cyprus-type mineralization. Of 12 rock samples analyzed, four from the Palo

area reported 0.1-22.6% Cu and 110-580 ppb Au. The other eight samples with

background values for gold reported 0.01-0.33% Cu (Solkoski, 1997).

Sulphides include pyrite, chalcopyrite, bornite, chalcocite and covellite (Fortanos

and Fajando, 1964).

Salvacion Area

The Salvacion area is located about two kilometres northeast of Kambalantong

where an exploration adit is oriented at 065°. The numerous moderately- to

steeply-dipping faults present may have served as channel ways for mineralizing

fluids.

Where pyrite and chalcopyrite occur as disseminations and clustered aggregates

the rocks are intensely argillized and chloritized. Chloritization is extensive and is

also associated with post-ore faults, so should be used cautiously as a guide to

ore.

Mineralization is in the basalt, and copper-rich pyrite occurs with significant

specular hematite, magnetite and marcasite along the foliation planes or as

mineralization replacing the host rock.

Paderes (1970) noted that the mineralization at Salvacion is somewhat different

from other areas in that the pyrite occurs with marcasite along the foliation

planes, or occasionally as replacement along the host rock. The copper sulphide

content of these occurrences is low.


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Palanog-Kambalantong

This area is underlain by rocks of the Tacloban Ophiolite Suite that have been

partially covered by the Palanog Formation. Intense silicification, chloritization

and epidotization are present at the contact between the volcanic and

sedimentary rocks.

Several exploratory tunnels and trenches are present at Palanog. As part of their

study of the area, Fortanos and Fajando (1964) reported the presence of a vein

about 2.0×23.0m which averaged 1.4% Cu and 12 g/t Ag, from samples of

massive sulphides composed of chalcopyrite, bornite, and chalcocite.

The area hosts two sulphide veins that strike 296° dip 25°N and strike 070° dip

15°SE and subsidiary faults that strike 065° with a dip of 50°SE and strike 350°

with dip of 90°. Highly silicified mafic schist, consisting of sheared volcanic rocks,

contains pyrite, chalcopyrite and chalcocite. (Quiwa et al, 1978).

The sulphides occur as infillings in breccias and as replacements of breccia

fragments. About 80% of the mineralization is spongy-textured chalcopyrite, 10%

is represented by pyrite, and gangue minerals represent the other 10%.

The copper mineralization on surface appears to be concentrated within the

mafic sections of the ophiolite and particularly the basaltic rocks. The

mineralization was emplaced at low to moderate temperature and consists of

chalcopyrite, chalcocite, covellite, bornite and pyrite-marcasite as fracture-filling

along faults and fractures that trend predominantly northwest. Minor replacement

occurs along the wallrock.

Sulphide mineralization was reported in the Kambalantong as early as in the

1930s. Surface prospecting was carried out, and test pits and adits were

excavated.


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In 1970, Armando Paderes, a geologist with the Bureau of Mines and Geology

examined the occurrence in Kambalantong where it had been explored by test

pits, trenches and an adit at a bearing of about 060°. Paderes (1970) and Balce

and Velchez (2001) reported a resource of 4,530,000 tonnes of ore grading 2.2%

Cu. Although this resource is located on the Taurus Block of the Leyte Copper

Project, it was not calculated according to the standards of NI 43-101 and should

not be relied upon.

The mineralization is hosted by breccias consisting of coarse breccia fragments

in major faults that strike 320-340° and dip steeply to the southwest. Two

important, parallel, breccia-filled anastomosing structures are more than 30m

wide and the trend is traceable for at least 6 kilometres along strike to the south

toward the Palo–Barangay San Jose–Curajo region (Balce and Velchez, 2001).

Additional steeply-dipping tension fractures strike 060 to 070° and range from

two to four metres in width appear to be related to the major structures and

localize high grade fissure-filled replacement mineralization. They often occur as

tabular bodies but also occur as irregularly-shaped bodies. This structure is

accompanied by many steeply-dipping parallel faults that may have acted as

pathways for the mineralizing fluids.

The mineralization consists of low- to moderate temperature sulphides,

composed mostly of chalcopyrite, chalcocite, covellite and bornite. Quartz,

epidote, calcite and chlorite are the gangue minerals.

The orange to rusty red gossan associated with the mineralized faults is 10-20

metres thick and immediately below the gossan is a supergene sulphide

enrichment zone of chalcocite and covellite, partly or wholly replacing primary

sulphide minerals. A channel sample across one of the belts at Kambalantong

averaged 2.26% Cu (Paderes, 1970).

The country rock is composed of basalt and metamorphosed sedimentary rocks

including cyclically interbedded shale, limestone, graywacke, chert and possible


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thin lenses of limestone that have been intensely sheared, brecciated and

mylonitized by tectonic periods since their deposition. Massive, thick and fine- to

medium-grained andesitic flows are occasionally identified within the sedimentary

sequence. Gabbro occurs in several varieties, from fine-grained, to ophitic to

pegmatitic. Hornblende andesite dykes are thought to be feeder zones for the

gabbro bodies.

The sulphides occur as infillings in the breccia interstices and as replacements of

breccia fragments, but also disseminated in the country rock.

Malayahay – Paglaum

The Malayahay prospect was explored with an adit by Taurus Mines in the early

1970s. The adit trends about 022° and extends about 37m to explore the

northwestern extension of vein from the Kambalantong area.

Massive to blocky basalt and the overlying strongly sheared phyllite are in

steeply dipping zones 0.1-4.0m wide. Limonite and hematite outline the breccia

fragments of the basalt.

The orientation of the shearing trends about 340°, but with associated steeply

dipping veins striking about 070°. A structure dips 25-35°W near the portal and

the copper-bearing sulphide zones range from 1 to 10 metres in width.

The 2-3% sulphide content occurs as interstitial filling and as disseminations in

the breccia and is composed of pyrite, and lesser quantities of chalcopyrite and

traces of bornite and covellite.

San Roque Prospect

This area was explored in the 1970s by Palo Mines Inc. which excavated four

adits and three test pits in a radius of 150m. Of the three adits that are still

accessible, one is oriented at 140°, the other at 320° and the third at 085°.

The area is underlain by basalt that is partially covered by Palanog chert and

phyllite. The adits were excavated along the contact between sheared phyllite

and basalt. Sulphides are represented by pyrite and minor chalcopyrite. A


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stockpile of massive sulphide was noted a few metres from the adit. Quartz veins

contain few sulphides but contain hematite, chlorite and epidote.

Caibaan

The Caibaan area is part of the Suhi 0059 permit application. In the 1950s an

adit in the Caibaan area was high-graded and the sulphides were shipped

directly to the smelter. C. Fortanos and D. Fajando (1964) examined two

mineralized veins and three pits at Caibaan although only one vein had been

excavated at the time. They indicated that that they thought that there could be

more veins.

Six X-Ray drill holes intercepted one vein over a 100m strike length. The vein

strikes 080°, dips 55°N and is 1.5-4.5m wide. Three test pits did not expose the

full width of the vein. Mineralization consists of pyrite, chalcopyrite, bornite,

galena and quartz. Wall rocks assay 0.20% Cu (Fortanos and Fajando, 1964).

The area is underlain by the Tacloban Ophiolite Suite and by the later San

Ricardo Formation. The area has been sheared by two faults that trend

northwest and dip 30-40°SW. The volcanic sequence of the ophiolite suite is

highly chloritized and is intercalated with sandstone, shale and ferruginous chert.

Although Fortanos and Fajando could see no mineralization in outcrop, massive

copper mineralization consisting of fine-grained pyrite, chalcopyrite, chalcocite

and covellite was observed in the core and in a stockpile. The copper

mineralization at surface and in the shallow pits is supergene. Occasional

crystals of galena and quartz were also observed. In the drill core, sulphides

consist of pyrite, chalcopyrite, chalcocite and covellite

A group from the Geosciences Bureau re-examined the area in 1978 and

sampled the stockpile of ore near the adit and reported 7.47% Cu. A soil survey

in the area showed that from 69 samples collected, the background values are

130 ppm Cu and 90 ppm Zn, and anomalous values are above of 320 ppm Cu

and 230 ppm Zn (Quiwa et al., 1978).


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Suhi Bacagay

In 1972, Armando Paderes carried out a geological verification of sulphide

mineralization at the Bagacay occurrence for Francisco Garcia the claim owner.

He reported that the test pits and trenches were unsystematically laid out and

sparsely distributed (Paderes, 1972).

The area is underlain by the Tacloban Ophiolite Suite; in the topographic lows on

the eastern side of the Leyte Copper Project Property the ophiolite suite is

covered by sedimentary rocks of the San Ricardo Formation consisting of chert,

greywacke, slate and phyllite. All rocks are tightly folded and structurally faulted,

sheared and fractured.

The mineralization occurs along a structure that strikes 055° and dips moderately

to the southeast. The sulphide mineralization was exposed by a series of test pits

and occurs disseminated and as irregularly-spaced stringers and lenses of pyrite,

hematite and chalcopyrite. Calcite, quartz and epidote occur as veinlets in the

host rock.

Analyses of the mineralized rock reported values of 0.40%, 1.52%, 1.84% and

5.39% Cu. Molybdenum was not detected in the rocks (Paderes, 1972).

Cabalawan-Barrio Suhi

Eleuterio Gamus, Supervising Geologist, and Jovito Lauron, Geologist, of the

Bureau of Mines in Manila, carried out a verification report on the Barrio Suhi

copper occurrences in 1968 for Leyte Base Metals. The Barrio Suhi area is

underlain by a complex assemblage of metamorphosed rocks with fine to coarse

clastic rocks that have been folded and faulted with accompanying volcanism.

The sedimentary rocks are composed of sandstone and tuffaceous shale.

Although difficult to establish because of the disturbed nature of the rocks, the

predominant trends in primary sedimentary bedding appear to be to the northeast

and northwest. The inferred folds appear to be asymmetric. Mineralization

consists of pyrite and chalcopyrite in veins, sheets, lenses and in erratic pod-


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shaped bodies along the faults. The exposures were revealed by pits and

trenches. Seven outcrops are described in detail. One lens measures up to

0.35m × 6.0m grading 4.48% Cu and another lens is 0.5m × 8.0m with

5.95% Cu.

Additional work was recommended by Gamus and Lauron including geochemical

and geophysical surveys to identify additional occurrences in the area (Gamus

and Lauron, 1968).


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10. Exploration

In 2009, Philippine Metals Canada Philippines, Inc., a subsidiary of Philippine

Metals Corporation, carried out a field exploration program of geological mapping

and rock and soil geochemical sampling on the Taurus Exploration Permit.

The principal objective was to document and confirm the mineralization in the

historical workings and to characterize the type of mineralization on the property.

The geological mapping is based on field examination of five areas on the

property.

Geological Mapping

The region is part of a complex geological environment that has undergone

extensive structural displacement, some of which is still ongoing.

The Tacloban Ophiolite suite has been classified as a Supra-Subduction Zone

(SSZ) type that has the geochemical characteristics of island arcs but has the

structure of oceanic crust. They are thought to form by sea-floor spreading

directly above a subducted oceanic lithosphere. SSZ ophiolite suites are more

common than the Mid-Ocean Ridge Basalt (MORB) ophiolite suite that has a

different origin and geochemistry (Pearce et al., 1984).

The SSZ ophiolite suites form during the early stage of subduction but prior to the

development of the volcanic arc. They are often associated with chromite

mineralization, with volcanic- and ultramafic-hosted nickel-copper sulphides and

with platinum group elements (Balce and Cabantog, 1998).

The exploration program has confirmed that massive sulphide mineralization is

present in many areas of the property. In general, the sulphide mineralization

encountered on the property occurs in faults, fractures and shear zones, and is

spatially associated with the basalt and the overlying sedimentary rocks of

pelagic origin.


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Diligent geological work has identified and classified four types of mineralization

on the property (Paloma and Garcia, 2009). These types can be grouped in the

following categories:

Type 1: Disseminated and breccia fillings: stockwork and boxwork sulphide mineralization containing chalcopyrite, pyrite and occasionally bornite, chalcocite, covellite in silica-sulphide breccias and phyllite breccias.

This type is present at Kambalantong, Palo-Curajo and Malayahay. It represents higher grade mineralization and is associated with the footwall side of the geologic structures and largely controlled by faults with low to moderate dip and shear zones.

Type 2: Massive sulphides: as irregular pods or lenses that pinch and swell along a fault. Probably the most important economic mineralization.

Occurs at Kambalantong, Palo-Curajo and at Salvacion B. Chalcopyrite represents 60-80% of the sulphide by volume, pyrite about 10-30% and gangue at 10-20%; often surrounded by disseminated mineralization.

Type 3: Sheeted and fissure filling sulphide veins: in phyllite breccias, and occasionally in basalt in moderately- to steeply-dipping sulphide fractures; widths range from a few centimetres to more than 2 metres. Characterized by dark, thin sulphide bands along the shear plane. Fractures are filled with clay, crushed rock fragments and considerable amounts of ilmenite and hematite with copper and pyrite. The wall rock is chloritized, pyritic, and metamorphosed.

Typical ore zones are observed at Malayahay, Kambalantong and Palo-Curajo and form near major shear structures. This type sometimes overlaps with Type 1 at Palo-Curajo and at Kambalantong.

Type 4: Shear and fracture-filling sulphides in low- angled thrust faults.

Common at Palo-Curajo but may be of limited extent. Copper sulphide is restricted within the main shear zone, occurring as disseminations and fillings within the massive, competent host rock basalt.

This classification of the styles of mineralization can be compared with the

summary for Cyprus-type that Balce and Velchez (2001) prepared for the

Tacloban area (Table 4).


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Genesis Magmatic

FumarolicOxidationSedimentary

Ore type Sulphidesand ironmudstones

Massive sulphides

Hydrothermal

Stockwork, cavity,fracture-fillingdisseminations

Mode of formation

Mode of deposition

Exhalative-sedimentary

Ore zone

Zone

1

Zone

2

Zone

2a

Orig

inal

lava

surfa

ce

Zone

3

Type

1

Type

2

Type

3

Type

4

Type

5

Type

of

min

eral

izat

ion

Min

eral

s ot

her t

han

pyrit

e

Mar

casi

te, s

phal

erite

, pyr

rhot

ite (v

. rar

e),

born

ite, (

v. ra

re),

gale

na (v

. rar

e), c

halc

opyr

ite

Mar

casi

te (r

are)

, cha

lcop

yrite

, sph

aler

ite (r

are)

,py

rrhot

ite (v

. rar

e), q

uartz

, jas

per,

chal

cedo

ny

Cha

lcop

yrite

, sph

aler

ite, q

uartz

, illi

te, j

aspe

r,ch

lorit

e

Cha

lcop

yrite

(rar

e), s

phal

erite

(v. r

are)

,ru

tile

(rare

), qu

artz

, illi

te, j

aspe

r, ch

lorit

e

Aver

age

ore

grad

e

%S

Frag

men

tary

ore

con

sist

ing

of a

ngul

aran

d ha

rd b

lock

s of

yel

low

ore

in a

mat

rix o

f bla

ck s

andy

ore

.

%C

u

0.5-

1.5

45-5

0

40-4

51.

0-4.

0

5-15

0.2-

0.5

15-3

00.

4-1.

2

30-4

00.

5-1.

5

Sedi

men

tary

rock

s: g

oeth

ite, s

ilica

, mon

tmor

illon

iteSu

lphi

des:

cov

ellit

e, s

phal

erite

, cha

lcop

yrite

,m

arca

site

Iron-

rich

and

silic

eous

mud

ston

e,

oxid

atio

n of

sul

phid

es; l

ense

s of

fria

ble

blac

k or

e. G

rade

d be

ddin

g w

ith g

rain

sof

pyr

ite a

nd s

lum

ping

. Bou

lder

s of

collo

form

sul

phid

e

Frag

men

tary

sul

phid

e, b

lock

s of

pyr

itein

sili

ceou

s m

atrix

with

dec

reas

ing

amou

nt o

f bla

ck fr

iabl

e su

lphi

de.

Mor

e co

arse

ly c

ryst

allin

e py

rite

asca

vity

-filli

ng w

ith m

uch

quar

tz a

ndja

sper

.

Dis

cret

e fra

ctur

e-fil

ling

with

pyr

ite,

quar

tz a

nd ja

sper

.D

isse

min

atio

ns o

f pyr

ite in

ves

icle

san

d cr

acks

.

Tabl

e 4.

Sum

mar

y of

cha

ract

eris

tics

of C

ypru

s-ty

pe m

iner

aliz

atio

n (B

alce

and

Vel

chez

, 200

1)

Des

crip

tion


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Although there have been several phases of faulting, two or more important near-

parallel mineralized structures striking mostly 340-350° and dipping 40-60°W are

present on the property. The westernmost of these extends for at least six

kilometres from Palo northwest to Kambalantong and to Malayahay. Although

there may have been some tilting of the units to the south, the mineralization

could have a vertical extent of at least 135m, as measured from the difference in

elevation between Malayahay and the adit at Don Juan in the Kambalantong

area.

Mineralization also occurs in breccia along fractures and faults that strike

generally 045-075° and dip steeply. These faults are thought to be late in the

structural development of the area and may be sympathetic faults related to left-

handed movement along the Philippine Fault to the west. Major remobilization of

mineralization may have occurred along these structures, along which the

sulphides and gangue minerals appear to have been deposited at lower

temperature than along the major structure striking northwest.

The width of the mineralized structures ranges from less than one metre to

upwards of 20m at Kambalantong although it is possible that low-angled thrusting

may have duplicated the ore zones.

Low-grade greenschist metamorphism has affected the sheeted dyke complex

which has altered to calcite, epidote, actinolite and calcite. Epidote has also been

noted around the pyrite mineralization at Palo. Extensive silicification and

chloritization have been observed around some of the pyrite-chalcopyrite

mineralization.

Rock Sampling

A rock sampling program was carried out in five areas of the Taurus property.

The sampling consisted of chip sampling the rock face of many adits and

trenches.


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Palo Area

Three areas of the Palo prospect were examined (Figure 11). Area 1 is the site of

an adit where mining occurred in the early 1970s. Mineralization occurs in widths

of 1-15m along a fault structure that trends 350-010° and dips 70-80°W. Of the

67 samples taken in this area, 15 were from one channel inside the adit where

results of 1.30% Cu and 0.11% Zn were reported over 9.3m from a sample of

fractured and sheared sulphide breccia. Other significant channel samples in the

adit reported 0.82% Cu over 2.5m from sulphide breccia, 0.30% Cu over 13.4m

from dark green basalt that contains no visible sulphides, and 0.23% Cu and

2.50% Zn over 11.4m from sheared phyllite that contains disseminated sulphides

(Figures 12 and 13).

Outside the adit, several trenches were excavated from which a total of 52

samples were sent for analysis. One series of chip samples average 0.60% Cu

over 9.3m from sheared metasedimentary rocks. This interval includes 1.17% Cu

over 1.9m where no visible sulphides were observed. Other intervals include

0.38% Cu over 7.6m, 1.32% Cu and 0.28% Zn over 0.9m and 0.11% Cu and

1.68% Zn over 3.4m.

In Area 2 to the east the five chip samples returned background values of 72-140

ppm Cu.

Located 140m further north, Area 3 may be an extension of Area 1 and was

tested with an exploratory tunnel. Seven chip samples were taken from two

trenches. Values of up to 0.40% Cu were reported over 1.7m from grey massive

siliceous sulphide. Another chip sample with no other adjoining sample reported

0.95% Cu and 1.70% Zn over 0.5m from a sample described as massive

sulphide in basalt. Several other occurrences of copper sulphides are present in

the area (Paloma and Garcia, 2009).

Area 2

Area 3

Municipality

of Palo

Municipality

of Santa Fe

Area 1Open Cast Mining

Area 2

Leyte Copper Pr

Philippine Meta

Date: 2009.09.21

Revised: 2009.09.21

Palo AMineralize

50 0 50 100 150

Metres

roject, Philippines

als Corporation


Areaed Areas

Figure: 11

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Cross-section

MassiveSulphides

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Basalt

Basalt

PhylliteMetasedimentary rocks


10m

Date: 2009.09.21

Revised: 2009.09.21

Leyte Copper Proj

Philippine Meta

Palo ArGeology and sam

modified from Paloma and Garcia, 2009

Figure: 12

oject, Philippines

als Corporation


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Salvacion Area

At Salvacion, the mineralization occurs as fissure-filling and to a lesser extent as

selective replacement of breccia fragments and certain wallrock areas.

Several test pits, collapsed adits and stockpiles of massive sulphides were

identified. The area is underlain by basalt that is capped by cherty sedimentary

rocks. Epidote and chlorite occur in veins filled with chalcedony.

Mineralization occurs as brecciated massive sulphides, finely-disseminated

sulphides and local replacement along shear zones trending 030° and dipping

50°NW.

At Salvacion A, three channel samples were collected, one of which returned a

value of 0.27% Cu over 1.5m from light green to grey phyllite that contains

hematite along fracture planes.

At Salvacion B eight separate channel samples were taken over widths of 1-2m.

At the northern pit where a massive sulphide lens was excavated, the 2009

exploration program reported significant assays of 0.98% Cu, 6.20% Cu and

5.65% Cu over 1m in three separate samples taken. A grab sample also reported

0.98% Cu .Other samples reported 0.98% Cu over 2.0m and 0.59% Cu over 1m,

both from sheared phyllite containing disseminated sulphides, and a grab sample

that reported 1.37% Cu from dark grey massive sulphides from a test pit.

At Salvacion B an open cut area 10m in diameter and several test pits were

identified. The area is underlain by the same massive basalt flows and

occasional metasedimentary rocks that are capped by thin beds of cherty

sedimentary rocks (Figure 14). Mineralization consists of finely disseminated

sulphide and sulphide replacement along the shear zones.

Basalt

Schis




Structurally-controlledsulphidemineralization

Adit

st

Adit

Stockpiledore

10m Buen Kambalan

Plan

Date: 2009.09.21

Revised: 2009.09.21

Leyte Copper Pro

Philippine Met


Stockpiledore

Suertentong Area View

oject, Philippines

tals Corporation


Figure: 14


Philippines


Palanog – Kambalantong Area

Several areas of the Palanog-Kambalantong area were sampled and a total of

154 rock and channel samples were submitted for analysis from this area. The

mineralization extends over a length of at least 1200m along a structure that

strikes 335°.

At the Palanog East area, five rock samples and one grab sample were

submitted for analysis. All are from massive sulphides in breccia near a contact

with basalt. Results show values of 2.6% Cu and 5.4% Cu over one metre and a

grab sample from a muck pile reported 3.1% Cu. One sample from the footwall of

the fault zone near the contact with basalt reported 13.7% Cu over 2.2m in

massive sulphides.

Don Amado Adits

The Don Amado area contains three interconnected adits that were excavated by

Taurus Mineral and Oil Corporation. Two of the adits trend 270° and the third one

is at 010°. The three adits have a cumulative length of about 200m and average

2.5m in height and 2m in width.

The area is underlain by generally massive, chloritized, dark green to grey basalt

flows that have been chloritized and epidotized, and by sheared, brecciated and

fragmented sedimentary rocks that have been metamorphosed to phyllite.

The two shear zones have widths of 3-20m along low-angle possible thrust faults

that dip west. The massive sulphide lenses strike 020-030° and dip 35-50°W.

Mineralization appears to favour the areas of competency contrast at the contact

between the basalt and sedimentary rocks.

The sulphide mineralization occurs as infilling among the breccia fragments,

along the foliation and shear planes, and is disseminated in the breccia clast,

matrix and country rock. The copper sulphide is mostly chalcopyrite and minor

amounts of covellite and bornite are present. Limonite, hematite and jarosite are

present along the fractures.


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A total of 80 samples were submitted for analysis from inside the adits and 16

from surface workings. Most of the surface samples reported values of 100-800

ppm Cu but three samples described as “intermixed oxidized and sulphide-

bearing muck material from historical workings” reported 0.56%Cu, 3.52% Cu

and 0.17% Zn, and 4.11% Cu and 0.35% Zn.

The samples from the underground workings are mostly from sulphide breccia

with occasional phyllite. The samples were taken from throughout the workings

but are mostly non-continous. The results show many intervals of 0.32-0.35% Cu

over 1m and several at 0.85-2.00% Cu over 2.0m. Several of the samples

contain 0.15-0.22% Zn over 1.1-1.6m and three samples from one area contain

0.40%, 0.52% and 1.44% Zn over 1.7-2.0m. Although some samples have high

contents of copper and zinc, there appears to be no correlation between the two

metals.

Buen Suerte Adit

The Buen Suerte adit was excavated to mine the northern extension of the Don

Amado zone of mineralization about 80m to the north. The mineralized widths for

the massive sulphides are 4-10m, principally aligned along the northwest

structures that strike 330-340° and dip 45°W.

The geology is very similar to the Don Amado area and is underlain by massive,

dark green to grey basalt and sedimentary rocks that have been metamorphosed

to phyllite. The sulphide mineralization is predominantly located in the more

competent sedimentary units, particularly along the shear zones and fractures.

The metasedimentary rocks are brecciated and fragmented.

The two principal directions of the structures are oriented at about 045° with a

steep dip and at 330-340° with dips of 40-45°SW.

Of the 49 rock samples submitted for analysis, 13 are from the muck pile,

consisting of oxidized sulphide-rich rock. Nine of the samples from the muck pile

reported 0.13-0.28% Cu.


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The adit extends about 40m toward the north-northwest along one of the major

faults: the north extension of structure identified in the workings at the Don

Amado area. Most of the samples taken from the adit are from massive sulphide

breccia near the contact between basalt and sheared phyllite. The samples often

contain 0.2-0.95% Cu over 1.5-2.4m, and two contain 1.30% and 1.49% Cu over

1.5m. Two nearby samples reported 4.4% Cu over 5.4m and 10.8% Cu over

3.0m (Figure 14).

Overlying the breccia zone is a lens-shaped massive sulphide body, about 1.5m

thick, dipping gently and containing up to 60-70% sulphides represented by

chalcopyrite, pyrite, bornite and covellite.

Grades of mineralization encountered in the adit include several channel samples

with 0.11-0.95% Cu over 1.5-2.4m but also important intervals of 1.49% Cu over

1.5m, 4.40% over 5.4m and 10.83% Cu over 3.0m.

Don Juan Adit

At the Don Juan area three samples were submitted from the near the end of the

adit that extends for 105m. This adit may have been driven to intersect the

extension at depth of the Don Amado to the southwest. Results show 61, 64 and

380 ppm Cu over 1.2-1.8m from basalt and phyllite.

Located about 200m northeast of the Don Amado adits at an elevation of

61m asl, the Don Juan adit was oriented at 250° and extended for a distance of

105m. It may have been dug out to intersect the downdip extension of the

mineralized zone at Don Amado. The tunnel was excavated in pillowed basalt

that is overlain by metasedimentary rocks that have been metamorphosed to

phyllite and chert. No mineralization was identified in the adit.

BasaltPhylliteSedimentary rocks

PhylliteSedimentary rocks

Massivesulphidelens Disseminated

Sulphides


10m

Date: 2009.09.21

Revised: 2009.09.21

SalvacioPlan

Leyte Copper Proj

Philippine Meta

Su p des


on B Arean View

ject, Philippines

als Corporation


Figure: 15


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Malayahay Area

All of the samples from Malayahay are from the adit that extends for 37m that

extends through phyllite and basalt. Of the 16 samples taken, two are field

duplicates. Four channel samples taken two on each side of the adit have

reported values 0.37% Cu and 0.54% Cu over 5.3m in sheared, brecciated and

oxidized phyllite.

San Roque Area

Eight channel samples and one grab sample were taken from the area. Four of

these channel samples were taken from the stockpile from the nearby adit and

reported 0.22-0.42% Cu over 5.8m but the channel sample from about ten

metres within the adit reported only 145 ppm Cu.

The other four samples taken from an abandoned exploratory tunnel in basaltic

lava and returned 0.16-0.36% Cu over 1-3m.

11. Drilling

Historical drilling was reported for some mineral occurrences mostly in the

Caibaan and Palo area. This drilling was carried out in the 1960s and early 1970s

with X-Ray core size and neither the drill logs nor the core is available. A map

showing the location of several of the drill holes in the Palo area is available.

Diamond drilling has not been carried out on the Leyte Copper Project since that

time.


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12. Sampling Method and Approach

Philippine Metals has re-sampled several mineral occurrences on which historical

documents have reported anomalous values for copper, but also for a few

elements such as gold and silver. Every one of these re-sampled areas has

confirmed the mineralization originally identified.

A few grab samples were taken, but most samples are representative channel

samples that were chipped along tunnel faces or in trenches over 0.1-10.0m with

a few of them over as much as 14.0m. Including field duplicate samples, the

distribution of the samples is as shown in Table 4:

All sampling was carried out by field personnel hired by Philippine Metals Canada

and supervised in the field by the company project geologist.

13. Sampling Preparation, Analyses and Security

The samples were collected in the field by field employees of the company and

were carried out to the field office. The samples were then boxed and packaged

and shipped by truck directly to the laboratory in Manila. The security of the

handling of the rock samples is acceptable.

The samples were analyzed by McPhar Geoservices (Phil.) Inc. in Manila. The

laboratory has been in operation for more than 30 years. It was accredited under

ISO 9001 in 2000 and ISO 17025 accreditation is in progress. It was visited by

D.A Beauchamp and found to be clean, efficient and well-organized.

Area Number of samples

Palo 80Salvacion 15Palanog 154Malayahay 16San Roque 9Total 274

Table 5Sample Distribution


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Laboratory Procedures

Upon arrival at the laboratory the samples are sorted, dried and crushed to -1/4”

to 1/8”. A pulp of the sample is then created by mixing, splitting and pulverizing

the rock fragments.

A sample of 0.25g of the pulp is digested in aqua regia, a combination of HNO3

and HCl acids to dissolve the minerals including sulphides. The sample is then

analyzed by Inductively Coupled Plasma (ICP).

Gold analysis is performed by fire assay. The pulp is weighed and mixed with a

flux. A reducing or oxidizing agent is added and the sample is fused at 1090°C.

The lead button is separated from the slag and a doré bead is prepared after

cupellation at 860-900°C. Parting of the gold occurs after adding HNO3 and the

prill is annealed at 800°. The prill is weighed to an accuracy of 0.001mg,

dissolved and analyzed in an Atomic Absorption Spectrometer (AAS).

14. Data Verification

Quality Assurance and Quality Control Program

As part of its rock sampling program, Philippine Metals Canada Philippines

implemented a Quality Assurance and Quality Control (QA/QC) Program. The

program consisted in adding analytical standard samples, requesting duplicate

analyses and inserting standard blank samples so that the accuracy and

precision of the results from the laboratory could be verified.

In addition to the 274 rock samples that the company submitted for analysis, 14

samples from three analytical standards were submitted at regular intervals to

verify that the results returned from the laboratory are accurate.

These standard samples were purchased from CDN Resource Laboratories Ltd.,

of Delta, BC. Standard samples are created, pulverized and homogenized by the

laboratory from rock samples which are then analyzed in 10-12 laboratories, from

which recommended values are established for certain elements such as copper,

gold, lead, zinc, etc. To be acceptable, it is recommended that the results from


Philippines


the laboratory preferably be within the mean plus two standard deviations. Barry

Smee, Ph.D. consulting geochemist has suggested that the mean plus three

standard deviations is also acceptable (Pers. Comm. 2005).

Standard sample CDN-CGS-21 has been tested as a standard for copper and

gold. The four samples submitted for analysis were within the recommended

norms of mean plus or minus two standard deviations for these two elements.

Standard sample CDN-HZ-3 has been approved as a standard sample for gold,

silver, copper, lead and zinc and all four samples analyzed in this program

reported results within the mean plus two standard deviations.

Standard sample CDN-HC-2 is a standard for silver, copper, lead and zinc. All of

these were within the mean plus two or minus two standard deviations, except for

the results for lead, which were within the mean minus three standard deviations.

Since lead is not an important element in this type of mineralization and that the

results for lead from standard sample CDN-HZ-3 were acceptable, we can

accept the results for the other elements of this standard.

A total of 33 rock samples were analysed a second time to verify the repeatability

of the results. All repeated analyses correspond very well with the results of first

for all elements identified. Nine duplicate samples were also submitted. A

comparison between the original and the duplicate sample compared well for all

elements analyzed

To verify that the instrument and equipment were cleaned thoroughly between

samples and that there was no contamination from one analysis to another ten

blank samples were inserted in the series of rock samples. Of the elements

analyzed, only gold had a recommended value and only three of the standard

samples were analyzed for gold. The results are within the mean plus two

standard deviations for this sample. Of the other elements of interest, the results

for copper, lead, zinc and silver are very low, near background level and reported

very consistently. We can acknowledge with a certain confidence that the results

are within acceptable ranges and that there is little contamination from one

sample with another.


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The QA/QC program implemented was carried out appropriately and interpreted

according to industry standards.

Independent verification

To verify independently the mineralization on the property at the Leyte Copper

Project, D.A. Beauchamp had two rock samples independently analyzed by

Loring Laboratories, a geochemical laboratory certified ISO 9001 that is located

in Calgary Alberta. PMC-1 is a sample of massive sulphide from the Palanog

area and PMC-2 is from the disseminated sulphides at the Palo area

The two samples were analyzed for 30 elements by ICP (Inductively Coupled

Plasma). PMC-1 reported more than the limit of 10,000 ppm Cu and was

assayed to obtain an accurate value.

Among the more significant results, PMC-1 reported 8.04% Cu, 2720 ppm Zn,

544 ppm Co, 16.9 ppm Ag and <1 ppb Au.

PMC-2 reported 5590 ppm Cu (0.56% Cu) 546 ppm Zn, 166 ppm Co, 3.4 ppm

Ag and <1 ppm Au. To verify the results PMC-2 was reanalyzed and gave similar

results for all elements.

These results are consistent with what was expected from these samples and

show geochemical profiles that are characteristic of Cyprus-type mineralization.

See Appendix 1 for the entire listing of results..

15. Adjacent Properties

There are no known properties in the area that are currently being explored or

over which applications for exploration permits have been requested at this time.

16. Mineral Processing and Metallurgical Testing

Not applicable to this property.


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17. Mineral Resources and Mineral Reserve Estimates

Although some resource calculations have been made for a few areas on the

property, these are not compliant with the standards of NI 43-101 and are

therefore not reliable.

18. Other Relevant Data and Information

Not applicable to this property.


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19. Interpretation and Conclusions

The Leyte Copper Project is underlain by an ophiolite suite that has been

overlain by later metasedimentary rocks. The ophiolite suite has been sheared

and structurally displaced.

From the 1930s to the 1970s, the area was explored intermittently. The

exploration consisted in prospecting and minor geological mapping, and a few

basic ground geophysical surveys were carried out on select areas of the

property. A few diamond drilling projects with X-Ray-size core were carried out

but the drill logs and core are not available. Massive sulphides were extracted

from a series of adits and pits and the ore was shipped directly from the property

without processing to smelters.

The outcrop exposure is generally poor in the region, and the terrain has

undergone surface weathering that has been estimated at 10-20m. Since the

massive sulphide mineralization often occurs along fractures and major shear

zones these areas are more difficult to identify in the field. The terrain is relatively

rugged and the forest cover, along with the weathering horizon, could severely

decrease the effectiveness of geochemical surveys.

The mineralization on the Leyte Copper Project exhibits many of the important

characteristics of the Cyprus-Type copper deposits whose type deposit is located

in Cyprus. Similar deposits have been discovered in older oceanic terrain in

many areas including Newfoundland, Oregon, Iran and in the Pacific Ocean off

the west coast of Mexico.

These deposits contain mostly copper as an economic resource but also contain

anomalous quantities of zinc and cobalt. The economic deposits are usually in

range of a few million tonnes grading 1.6-2.5% Cu and they often occur in

clusters (Cox and Singer, 1986).


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The objective of the work carried out by Philippine Metals Canada Philippines

Inc. in 2009 was to re-sample and to confirm the mineralization and to develop a

better understanding of the geology and the mineralization on the property. This

objective has been achieved. The work was carried out competently and the

results are reliable.

The geology of the area and the work carried out in 2009 show that the Leyte

Copper Project is a property of merit that deserves additional work to further

explore its potential to host an orebody.

20. Recommendations

To further define and outline zones of massive sulphide mineralization on the

Leyte Copper Project it is recommended that two activities be carried out

simultaneously as part of Phase 1: a detailed evaluation of one of the corridors of

mineralization evaluated in the 2009 field program consisting of geophysics,

follow-up geological mapping and drilling, and an airborne geophysical survey

over the entire Leyte Project area. Upon the return of positive results a Phase 2

program of additional drilling is recommended. Details of the recommended

program are provided below.

Phase 1

The area from Kambalantong to Malayahay contains several zones of sulphide

mineralization that could be further defined and outlined by a ground EM and

magnetometer survey. This corridor extends over a width of 500m and a strike

length of about 1500m (Figure 16). New conductors hosting potential

mineralization should be mapped and prospected. Diamond drilling is

recommended on existing and new targets for a total of 2000m of drilling in ten

holes to better understand and define the extent of the mineralization. The cost

this part of the work is estimated at CA$427,000.

Don Amado Stope0.21% Cu over 1.7mOre stockpile 2.7 % Cu

Buen Suerte2.08% Cu40m long, 4-10m wide

MalayahayMalayahayMalayahayMalayahayMalayahayMalayahayMalayahayMalayahayMalayahayPaglaum AditPaglaum AditPaglaum AditPaglaum AditPaglaum AditPaglaum AditPaglaum AditPaglaum AditPaglaum Adit

Malayahay Tunnel 0.30 % Cuover 1.3 - 4.0m

Buen SurteBuen SurteBuen SurteBuen SurteBuen SurteBuen SurteBuen SurteBuen SurteBuen SurteTunnelTunnelTunnelTunnelTunnelTunnelTunnelTunnelTunnel

124°56'00"E

Interpreted outline of zone of mineralization

124°56'30"E

11°15'00"N

Don Amado0.37% Cu over 2.4m

Don Amado Cliff Area2.86% Cu over 3m

Don Juan TunnelDon Juan TunnelDon Juan TunnelDon Juan TunnelDon Juan TunnelDon Juan TunnelDon Juan TunnelDon Juan TunnelDon Juan Tunnel

Don AmadoDon AmadoDon AmadoDon AmadoDon AmadoDon AmadoDon AmadoDon AmadoDon AmadoTunnelsTunnelsTunnelsTunnelsTunnelsTunnelsTunnelsTunnelsTunnels

KambalantongKambalantongKambalantongKambalantongKambalantongKambalantongKambalantongKambalantongKambalantongMine AreaMine AreaMine AreaMine AreaMine AreaMine AreaMine AreaMine AreaMine Area

Don Amado Zone P0.66% Cu over 1.6m

100 0 100 200 300 400

MetresContour intervals are 20m

Revised: 2009.10.15

Date: 2009.09.21

Leyte Copper Pr

Philippine Me

Proposed GeKambalantong-M

Proposed GroundGeophysical Grid

Trail

Road

11°14'30"N

roject, Philippines

etals Corporation


Figure: 16

eophysical GridMalayahay Corridor

d


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Once the approval of the Exploration Permits on the Suhi Projects has been

received (EXPA 00059VIII and EXPA 000096-VIII), a helicopter-borne EM and

magnetometer survey should be carried out over the entire Leyte Project area to

explore the property at a line spacing of 100m for a total of about 1100 line

kilometres at an estimated cost of CA$154 per line kilometre of survey plus the

cost of the helicopter. The results of the survey should be further evaluated by an

independent geophysicist to determine and prioritize anomalies on the property.

The cost of this survey is estimated at CA$613,000. The total cost of Phase 1 is

estimated at CA$1,040,000.

Phase 2

Upon the return of positive and encouraging results from the Phase 1

geophysical surveys and drilling, a second round of drilling consisting of 4000m

of drilling in 20 holes is recommended to further refine the zones of

mineralization in the Kambalantong-Malayahay corridor and to evaluate the new

targets that may have been identified in other parts of the property. The cost of

Phase 2 drilling is estimated at CA$760,000.

The total cost of Phase 1 and Phase 2 are budgeted at CA$1,800,000 and a

summary of the estimated work and costs is presented in Table 6.


Philippines


Ground Geophysical surveyMobilization/Demobilization $2,500Line cutting and chaining $3,000Mag survey $3,600EM Survey $8,800Subtotal $17,900

Ground Geological surveyTrenching $7,500Mapping and sampling $1,750Rock analyses $1,250Subtotal $10,500

Diamond DrillingMob/Demob $30,000Drilling 2000 m @ $165 /m $330,000

Subtotal $360,000Airborne Geophysical SurveyMob/Demob $55,000Survey 1100 km @ $154 /m $169,400Helicopter 135 hrs @ $2,400 /hr $324,000Interpretation $10,000Subtotal $558,400

Contingency 10% $93,200Total $1,040,000

Diamond DrillingMob/Demob $30,000Drilling 4000 m @ $165 /m $660,000

$690,000Contingency 10% $70,000

Total $760,000

Grand Total Phase 1 and Phase 2 $1,800,000

Table 6Proposed Budget Leyte Copper ProjectPhase 1

Phase 2


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21. References

Almogela, Dominador H. 1979: Electromagnetic Dip Angle (Shootback) Survey of Curajo Copper

Prospect, Curajo Saba Basin, Palo Leyte. Internal report submitted to the Director of Mines, Manila.

Balce, Cesar L. and Cabantog, Arnulfo U. 1998: Tacloban ophiolite massif – Basement of northeast Leyte

Physiographic Province. Mines and Geosciences Bureau Regional Office No. 8, Tacloban City, January 1998.

Balce, Cesar L. and Velchez, Alfred Ryan R. 2001: Copper Deposits of Tacloban City: Revisited. Mines and Geosciences

Bureau Regional Office No. 8, Nipa Hut Compound, Tacloban City. Constantinou, G. and Govett, J.G.S. 1973: Geology, Geochemistry and Genesis of Cyprus Sulfide Deposits.

Economic Geology, v. 68, pp. 843-858. Cox, D.P. and Singer, D.A., Editors 1986: Mineral Deposit Models; U.S. Geological Survey, Bulletin 1693, 379

pages. Fortanos, Conrado and Fajando, Domingo P. 1964: Report on the Evaluation of the Copper Deposit at Barrio Caibaan,

Tacloban City, Island of Leyte. Unpublished report. Francheteau, J. , Needham, H. D., Choukroune, P., , Juteau, T., Séguret, M, Ballard, R.D., Fox, P.J., Normark, W., Carranza, A., Cordoba, D., Guerrero, J., Ranguin, C., Bougault, H., Cambon, P., Hekinian, R. 1979: Massive deep-sea sulphide ore deposits discovered on the East

Pacific Rise, Nature v. 277, No. 5697, February 1979. Franklin, J.M., Lydon, J.W. and Sangster, D.F. 1981: Volcanic-Associated Massive Sulphide Deposits; Economic Geology,

75th Anniversary Volume, p. 485-627. Gamus, Eleuterio and Lauron, Jovito 1968: Report on Copper Occurrences at Barrio Suhi, Tacloban City, for

Leyte Base Metals. Internal report submitted to the Director of Mines, Manila.


Philippines


Hannington, Mark D., Galley, Alan G., Herzig, Peter M., and Petersen, Sven 1998: Comparison of the Tag Mound and Stockwork Complex with Cyprus-

Type Massive Sulfide Deposits; in Proceedings of the Ocean Drilling Program, Scientific Results, Vol. 158 Herzig, P.M., Humphris, S.E., Miller, D.J., and Zierenberg, R.A. (editors).

Hõy, Trygve 1995: Cyprus Massive Sulphide Cu (Zn), in Selected British Columbia

Mineral Deposit Profiles, Volume 1 - Metallics and Coal, Lefebure, D.V. and Ray, G.E., Editors, British Columbia Ministry of Energy of Employment and Investment, Open File 1995-20, pages 51-52.

Huliganga, Segismundo 1963: Report on the investigation of the Economic Possibilities of the Sulfur

Deposits located at Barrio Caibibihan, Municipality of Caibiren, Biliran Island, Leyte. Internal unpublished report submitted to the Director of Mines, Manila.

Kuhns, Roger J. and Baitis, Hart W. 1987: Preliminary Study of the Turner Albright Zn-Cu-Ag-Au-Co massive

sulfide deposit, Josephine County, Oregon. Economic Geology v. 82, p. 1362-1676.

Lueck, B. 2007a: Summary report on the geology of the Malitao Massive Sulphide

Prospect, Municipality of Calanasan, Kalinga-Apayao Province, Northern Luzon , Philippines. Internal unpublished company report.

2007b: Summary report on the Taurus Massive Sulphide Project, EPA –

0049, Region VIII. Internal unpublished company report. Morante, Edgar M. and Gasano, Gorgonio B. 1981: A review on the Crone Dip Angle Electromagnetic Survey of the

Curajo Prospect, Curajo, Palo Leyte. Internal report to the Director, Bureau of Mines and Geo-sciences, Metro-Manila.

Morante, Edgar M. and Ignacio, Romeo J. 1979: Electromagnetic Dip Angle (Shootback) of Curajo Copper Prospect,

Curajo, Palo Leyte. Internal report to the Director, Bureau of Mines and Geo-sciences, Metro-Manila.

Motton, N.T. & Associates 2008: Dilong Project, Abra/Ilocos Sur Provinces, Luzon, Philippines: A

summary of the history and exploration potential of the area; Internal company report.


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New Meridian Mining Corp. 2009a: New Meridian enters into letter of intent to purchase all of the shares

of Philippine Metals Corp. Press release 28 May 2009. http:\\www.sedar.com; accessed October 1, 2009.

2009b: New Meridian further defines the letter of intent to purchase all of the

shares of Philippine Metals Corp. Press release 29 July 2009. http:\\www.sedar.com; accessed October 1, 2009.

Paderes, Armando E. 1970: Mineral verification and geological appraisal of the Taurus copper

claims at Barrios Palanog and Salvacion, Tacloban City in Connection with their application for listing in the stock market. Geology, Bureau of Mines, Regional office VIII, Tacloban City.

1972: Memorandum for the director, thru the Chief geologist, Bureau of

Mines, Manila. Internal report submitted to the Director of Mines, Manila.

Paloma, Reinhold-Bobby M. and Garcia, J.S. 2009: Final Report for Leyte Copper Project (EP- 2009-0008-VIII) Fast Track

Exploration Program (FTEP); internal company report to Philippine Metals Corporation.

Pearce , J. A., Lippard, S. J. and Roberts, S. 1984: Characteristics and tectonic significance of supra-subduction zone

ophiolites. Geological Society, London, Special Publications; 1984; v. 16; p. 77-94

Prichard, H.M. and Maliotis, G. 1998: Gold mineralization associated with low-temperature, off-axis, fluid

activity in the Troodos ophiolite, Cyprus. Journal of the Geological Society; April 1998; v. 155; no. 2; p. 223-231

Quiwa, N.D., Javelosa, R.S., Danaynghirang, C.D., Jimenez, G.D.J. 1978: Semi-annual report on the detailed geological and geochemical survey

of the copper prospects situated within the territorial jurisdiction of SAB-A Basin, Tacloban City, Northern Leyte; internal government report.

Sangster, A.L. 1988: Mineral occurrences of the Betts Cove Complex Baie Verte Peninsula,

Newfoundland, Geological Survey of Canada; online paper http://cgc.rncan.gc.ca/mindep/metallogeny/gold/baieverte/pdf/metallogeny.gold.baie_verte.sangster.pdf accessed 2009.09.01.


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Singer, D.A. 1968: Descriptive Model of Cyprus Massive Sulfide, Model 24a in Cox, D.P.

and Singer, D.A., (Editors), Mineral Deposit Models; U.S. Geological Survey, Bulletin 1693, p. 131-135.

Solkoski, Lawrence 1997: Property Examination of the Suhi Copper Prospect, Leyte Island –

Region VIII, Philippines. Copper Gold Silver. Unpublished report. Upadhyay H. D. and Strong D. F. 1973: Geological Setting of the Betts Cove Copper Deposits, Newfoundland:

An Example of Ophiolite Sulfide Mineralization. Economic Geology v.68, pp. 161-167.

Zerda, Rafael R. 1974: Report on the Verification and Geological Appraisal of the Leyte Base

Metal Copper Claims at Barrio Suhi, Tacloban City in connection with their application for Licensing and Listing in the Securities Exchange Commission. Report for the Director, thru the Chief geologist, Bureau of Mines, Manila. Internal report submitted to the Director of Mines, Manila.

Dated in Calgary AB, this 22nd of October 2009, ______________________________ Daniel A. Beauchamp, P.Geol., M.B.A. 24 Malibou Road SW Calgary AB T2V 1W6 ______________________________ Bill Dynes, P.Geol. Sierra Geological Corp. 2749 Douglasdale Blvd. SE Calgary AB T2Z 2A4


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22. Date and Signature Page

I, Daniel A. Beauchamp of 24 Malibou Road SW, Calgary, AB, hereby certify

that:

1. I am an independent consulting geologist; 2. I graduated from the University of Ottawa in 1974 with an Honours B.Sc.

from the University of Ottawa; 3. I graduated from the University of Calgary in 1984 with a M.B.A. (Masters

in Business Administration) with specialization in finance; 4. I have been a registered member of the Association of Professional

Engineers Geologists and Geophysicists of Alberta (APEGGA) since 1980 and my membership number is M29299;

5. Except for two years of post-graduate studies and two years of work in the oil and gas industry I have practiced my profession as a geologist since graduation from university in 1974 with companies, both as an employee and as a consultant. I have worked throughout Canada and have managed mineral exploration projects from the grass roots level to early stages of mine development;

6. I have worked as a geologist directing and managing projects in the field in many geological environments including volcanogenic massive sulphides in rocks of Archean to Phanerozoic age carrying out geological mapping, supervising geochemical and geophysical surveys, diamond drilling programs and core logging.

7. I have read the definition of “Qualified Person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association and past relevant work experience, I fulfill the requirements to be a “Qualified Person” for the purposes of NI 43-101;

8. I personally examined and studied the literature, reports and company surveys on the property for Philippine Metals Corporation and I am familiar with the project area. I visited the property on May 25 and 26, 2009;

9. I have had no prior involvement with the property that is the subject of this Technical Report;

10. I am not aware of any material fact or material change with respect to the subject matter of the Technical Report that is not reflected in the Technical Report, the omission to disclose which would make the Technical Report misleading;

11. I am independent of the issuer applying all of the tests in section 1.4 of National Instrument 43-101. I do not own, directly or indirectly, nor am I under an agreement, arrangement or understanding or expect to acquire any securities of Philippine Metals Corporation or any affiliated entity of the


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Company. I hold no interest, directly or indirectly, in the mineral properties that are the subject of the foregoing report or in any adjacent mineral properties in the area;

12. I have read the National Instrument 43-101 and Form 43-101F and this report has been prepared in accordance with these regulations;

13. I consent to the filing of the Technical Report with any Stock Exchange and other regulatory authority and any publication by them for regulatory purposes, including electronic publication in the public company files on their websites accessible by the public.

14. I am responsible for all sections of the report titled “Technical Report and Proposed Exploration Program for the Leyte Copper Project, Leyte Province, Philippines, prepared for Philippine Metals Corporation Calgary AB, and New Meridian Mining Corp. Calgary AB”, and dated 22 October 2009.

Dated in Calgary, AB, this 22nd day of October 2009, ______________________________ Daniel A. Beauchamp, P.Geol., M.B.A. 24 Malibou Road SW Calgary AB T2V 1W6


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Date and Signature Page

I, Bill Dynes, of Sierra Geological Corp., 2749 Douglasdale Blvd. SE Calgary, AB,

hereby certify that:

1. I am a geologist consulting for Philippines Metals Corp. 2. I graduated from the University of British Columbia in 1994 with an

Honours B.Sc. degree in geology. 3. I have been a registered member of the Association of Professional

Engineers Geologists and Geophysicists of Alberta (APEGGA) since 2005 and my membership number is M80402.

4. I have practiced my profession as a mineral exploration geologist since graduation from university in 1994 with various companies, both as an employee and as a consultant. I have worked in Canada, Philippines, Tanzania, Indonesia and Mexico.

5. I have read the definition of “Qualified Person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association and past relevant work experience, I fulfill the requirements to be a “Qualified Person” for the purposes of NI 43-101.

6. I visited the Leyte Copper Project property area on December 1st and 2nd 2007.

7. I am not independent of the project and its corporate entities. I am a director of New Meridian Mining Corp that is currently in negotiations with Philippine Metals Corp concerning a merger of the two companies as described in the news release dated May 28, 2009.

8. I am not aware of any material fact or material change with respect to the subject matter of this Technical Report that is not reflected in the same, or of any omission to disclose that which would make this Technical Report misleading.

9. I have read the National Instrument 43-101 and Form 43-101F and this report has been prepared in accordance with these regulations.

10. I consent to the filing of this Technical Report with any Stock Exchange and other regulatory authority and any publication by them for regulatory purposes, including electronic publication in the public company files on their websites accessible by the public.

11. I am responsible for the quality of the work conducted in 2009 on the Leyte Copper Project as described in section 10 of this report titled “Technical Report and Proposed Exploration Program for the Leyte Copper Project, Leyte Province, Philippines, prepared for Philippine Metals Corporation Calgary AB, and New Meridian Mining Corp. Calgary AB”, and dated 22 October 2009.


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Dated in Calgary, AB, this 22nd day of October 2009, ______________________________ Bill Dynes, P.Geol. Sierra Geological Corp. 2749 Douglasdale Blvd. SE Calgary AB T2Z


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Appendix 1

Verification Analyses

Loring Laboratories Ltd. 629 Beaverdam Road N.E., Calgary Alberta T2K 4W7

Tel: 274-2777 Fax: 275-0541 ISO9001:2008 [email protected]

TO: Daniel Beauchamp FILE: 5 2 1 1 9

DATE: September. 15, 2009

30 ELEMENT ICP ANALYSIS

Sample Ag Al As Au B Ba Bi Ca Cd Co Cr Cu Fe K La Mg Mn Mo Na Ni P Pb Sb Sr Th Ti U V W ZnNo. ppm % ppm ppb ppm ppm ppm % ppm ppm ppm ppm % % ppm % ppm ppm % ppm % ppm ppm ppm ppm % ppm ppm ppm ppm

PMC-1 16.9 0.08 19 <1 3 6 <1 1.58 27 544 <1 >10000 >10 <0.01 22 0.02 287 9 0.05 25 <0.01 72 35 <1 <1 <0.01 <1 3 <1 2720PMC-2 3.4 0.21 <1 <1 <1 4 <1 0.72 24 166 6 5590 >10 <0.01 15 0.13 115 5 <0.01 31 <0.01 37 6 <1 <1 <0.01 <1 7 <1 546PMC-2 check 3.0 0.26 <1 <1 2 4 <1 0.79 24 170 13 5560 >10 <0.01 17 0.14 116 5 <0.01 35 <0.01 39 4 <1 <1 0.01 <1 8 <1 574blk <0.5 <0.01 <1 <1 <1 <1 <1 <0.01 <1 <1 <1 <1 <0.01 <0.01 <1 <0.01 <1 <1 <0.01 <1 <0.01 <1 <1 <1 <1 <0.01 <1 <1 <1 <1

0.500 Gram sample is digested with Aqua Regia at 95 C for one hour and bulked to 10 ml with distilled water. Partial dissolution for Al, B, Ba, Ca, Cr, Fe, K, La, Mg, Mn, Na, P, Sr, Ti, and W.

Certified by:

Loring Laboratories Ltd. 629 Beaverdam Road N.E., Calgary Alberta T2K 4W7

Tel: 274-2777 Fax: 275-0541 ISO9001:2008 [email protected]

TO: Daniel Beauchamp FILE: 5 2 1 1 9

Tel: 403-259-6734DATE: September. 17,

Certificate of AssayCu

No. %

"Assay Analysis"

PMC-1 8.04

Methodology: 0.5 gram Assay, with AA finish

I HEREBY CERTIFY that the above results are those assays made by me upon the herein described samples:

Assayer

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