President's Letter

Your Company is also well financed with a treasury sufficient to the requirements in front of it. Esperanza completed a $5.6 million financing in February of this year and the treasury now stands at near $10 million. Over the past few months the share price has also responded positively. From its low of less than $0.40 per share at the end of 2008 it is now trading at $1.55 as of this writing - an increase of more than 280 percent. It is also 24% over the recent financing price.

Cerro Jumil

Our major goal for 2009 was completion of a Preliminary Economic Assessment of the Cerro Jumil project. Last year I wrote that the purposes of the PEA were to "demonstrate potential economic viability of the project...and to help our geologists and engineers more precisely define the required follow-up study." The study was completed in September of last year and pointed toward an anticipated pre-tax 28 percent rate of return using a gold price of $900 per ounce.

More importantly from an operational point of view is that the study provided a detailed set of engineering recommendations which acts as a road map to feasibility. Your Company is currently implementing the recommended work including metallurgical testing, additional drilling to better quantify and expand the deposit, and geotechnical studies to provide more precise data for project design. Our intention is to have this "feasibility database" largely collected by early 2011 and to be in a position to contract a team of feasibility engineers.

Concurrent with the technical studies, Esperanza is building its relationships with the local community and the various government organizations that will be involved in the permitting of the project. We have worked hard to identify the various stakeholders and have sought out their involvement. To that end, we have an experienced team of Mexican professionals managing the project. Esperanza has strengthened that team by contracting a new Mexican Community/Government Relations Manager. I believe that this groundwork is as necessary to the success of the project as any technical studies and will go a long way in expediting the permitting process as well as maintaining future relationships with the community and the Mexican Government.

San Luis

I wrote last year that we had expected the final feasibility study for the San Luis project by the second quarter of last year. Unfortunately, I have to report that the study is still underway. Silver Standard, the project's operator, now reports that it expects to complete the study by the second quarter of 2010. This delay is obviously disappointing for us but we continue to be confident that this is an exceptional project Silver Standard has provided all funding for the study under the terms of the earn-in agreement. Upon completion of the study Silver Standard will have earned a 70 percent interest in the project.

Project Generation

Exploration continues to be an integral part of our growth strategy. Cerro Jumil and San Luis are both grass-roots discoveries by Esperanza geologists - something of which we are all very proud. We continue with active exploration in both Peru and Mexico where we have multiple gold and silver prospects. We hope to drill at least two of them this year although this is dependent on the reaching satisfactory agreements with the local communities, full permit approvals, and availability of drill rigs. 

Changes

As you will notice in the accompanying materials Michael Halvorson is not standing for re-election to the Board of Directors. Mike has let us know that he would like to reduce his various corporate activities. To those of you who may know Mike, retire is not a word that applies to him so he will continue with your Company as an advisor to me. His contribution to the development of Esperanza is immeasurable and I thank him for all his hard work and look forward to our continued collaboration. We have been fortunate that Geoff Chater has agreed to stand for election to the Board as a replacement for Mike. Geoff is an experienced industry professional having served in various corporate positions, most recently with First Quantum Resources Ltd. and now Greystar Resources Ltd. We are fortunate he has agreed to join Esperanza and I look forward to working with him.

I'd like to close this letter, as always, by thanking you for your continued support. We are always happy to talk with you and update you on our activities. You can learn more about our activities and investor presentations on our website (www.epzresources.com), become a fan on our Facebook feed or just call the office. I look forward to hearing from you.