Cerro Jumil Project

Preliminary Economic Assessment 2011

The recently completed PEA study has updated and expanded the previous PEA (2009). The study evaluated two options for open-pit mining and heap-leach gold recovery. The first option considers two stages of crushing prior to heap-leach treatment and is considered the Base Case. The second option considers direct heap-leach treatment of run-of-mine (ROM) ore without crushing.

Key results from PEA are highlighted below (all amounts are in US Dollars):

The Base Case assumes a conventional open-pit, heap-leach operation using company-owned mining equipment. Mined rock will be hauled to a stock-pile prior to two stages of crushing to reduce the size to a nominal top size of 55mm (~ 2”). From there it will be conveyed to the leach pad and irrigated with recovery solutions. Gold will be recovered from pregnant solutions utilizing carbon adsorption and subsequent electrowinning and on-site smelting to produce a doré. This will be shipped off-site for final refining.

The run-of-mine alternative models a direct mine-feed of assumed top-size of 610 mm (24”). This is directly fed to the heap leach pads without crushing by mine haul trucks. Material is then distributed on the pad by bull dozers. The mine plan and gold recovery process from pregnant solutions is the same as the Base Case alternative.

The property is easily accessed and has excellent infrastructure. A hydrological study conducted for the Company has determined that the underlying acquifer is under-utilized and that sufficient water can be easily developed by establishing a well system.

Highlights of the Base Case and the ROM alternatives are presented as follows:

The preliminary economic assessment is preliminary in nature, and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized.

Initial capital expenditures for the Base Case are expected to be $114 million including waste pre-stripping. These capital costs are considered to have an accuracy of +/- 35% and include a contingency 20-25% for processing, pad construction and infrastructure. Cash operating costs net of silver credits are estimated to be $499 and $477 per ounce of gold produced for the Base Case and ROM alternatives respectively.

The table below provides a summary of operating and capital costs:

The 2011 Preliminary Economic Assessment was prepared by Golder Associates.

Further Exploration Potential

Mapping/sampling of the greater Cerro Jumil concession area (15,025 hectares) reveals ten target areas that warrant further exploration. All areas have been mapped and sampled, at least on a reconnaissance basis. Most are perceived to be drill-ready, pending appropriate permissions and permits. There are four target areas adjacent to or in close proximity to the known resource, which could conceivably be included within its direct operations: Maize, Northern Contact, NE Intrusive Contact, and Colotepec. In addition, there are six target areas outboard of the known Cerro Jumil resource. These areas, in their perceived order of priority, are as follows: Coatetelco, Alpuyeca, Pluma Negra, Mercury Mines, La Vibora, and Jasperoid de Toros (see Exploration Target Map).

Drilling has begun on the close proximity targets.

Excellent Access and Infrastructure

The Cerro Jumil gold-silver project was acquired by the Company in May 2003. The property is located south of Cuernavaca in the State of Morelos, Mexico. There is excellent access and nearby infrastructure.

A New Gold Discovery

In March 2005, the Company announced the discovery of gold and silver mineralization in drill holes in the what is now known as the West Zone. This was followed in July 2005 by the discovery of extensive surface gold mineralization in the Southeast Zone. Drilling began here in November 2005. As of July 2011 over 45,000 meters in274 drill holes have been completed. Mineralization is now found in three contiguous zones known as West, Southeast and Las Calabazas zones. Currently the average discovery cost at Cerro Jumil has bee less than $10 per ouce of gold.

Gold and silver are associated with a variety of altered rocks around the periphery of a granitic stock that intruded into overlying limestones. The mineralized suite of rocks, collectively known as skarn, is well exposed at surface along the southern, eastern and western margins of the granite/limestone contact.

Cerro Jumil Resource Estimate 2010

The newly calculated independent estimate includes 935,000 gold equivalent ounces in the measured and indicated categories and 252,000 gold equivalent ounces in the inferred category. Esperanzahas receiveddrill permits for new exploration adjacent to the defined resource zones to test for extensions of mineralization.

Feasibility Studies Advancing

The project has now entered the feasibility stage of development and expects completion in 2012.A 15,000 meter drillprogram is underway and will focus on expanding and upgrading the currently defined goldresource,primarily in theLas Calabazas zone.

Progressing on a parallel track, the Company has begun the work necessary for an Environmental Impact Statement. Although completion of this document is dependent on completion of the Feasibility Study as much background information as possible is now being collected including hydrology, flora and fauna characterization, socio-economic studies, etc.

Involving All Stake Holders

The project is located on land owned by the San Agustin of Tetlama Community. Esperanza has had an open and productive relationship with the community and will continue to work to assure that it benefits directly from the project. In addition, Esperanza recognizes that there are additional stakeholders, a larger public who must be involved and must also benefit from the project. Esperanza has worked hard to identify these stakeholders and welcomes their participation as the project develops.

Esperanza believes that success of the project demands both management by Mexican nationals and local participation. It has assembled an experienced and dynamic national team to advance the project towards production and is confident that under their leadership this endeavor will be successful.

Footnotes

1 - The Cerro Jumil geologic and resource models were based upon an independent field review of the property as well as checks on and assessment of the drilling data, quality assurance/quality control results, and geologic interpretation of the gold-silver mineralized and skarn altered zones. The modeling procedures, grade estimation parameters, and resulting mineral resource estimate and classification were based upon 1) 41,713 total meters of drilling in 251 drill holes, 2) a three-dimensional geologically constrained grade block model, 3) drill hole defined grade continuity verified through variogram analysis, 4) capping of assay grades over 10 grams/tonne gold and 125 grams/tonne silver, 5) a gold equivalent cutoff grade of 0.3 grams/tonne, and 6) gold grade estimation by ordinary kriging and silver grade estimation by inverse distance interpolation. The independent resource estimate complies with N.I. 43-101 and Canadian Institute of Mining (CIM) guidelines for reporting mineral resources. Dean Turner, P.Geo., a Qualified Person as defined by National Instrument 43-101 and an independent consulting geologist, is responsible for the Cerro Jumil mineral resource estimate.

2 - The Qualified Person (QP), as defined by NI 43-101, for the Cerro Jumil project is William D. Bond, VP Exploration of Esperanza.