TECHNICAL REPORT CUMARU-GRADAUS GOLD PROJECT Pará State, Brazil

Transcription

1 TECHNICAL REPORT for on the CUMARU-GRADAUS GOLD PROJECT Pará State, Brazil Chris Broili, C.P. Geo. & L.P. Geo. Mel Klohn, L.P. Geo. BK Exploration Associates Mauricio Gubert Consulting Geologist May 1, 2006

2 TABLE OF CONTENTS CHAPTER PAGE 1. SUMMARY INTRODUCTION RELIANCE ON OTHER EXPERTS PROPERTY DESCRIPTION AND LOCATION ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY HISTORY GEOLOGICAL SETTING...15 Regional Geology...15 District Geology...16 Local Geology DEPOSIT TYPE MINERALIZATION AND ALTERATION EXPLORATION DRILLING SAMPLING METHOD AND APPROACH...26 Historical Drill Samples...26 Verification Samples SAMPLE PREPARATION, ANALYSIS AND SECURITY...27 Historical Drill Samples...27 Verification Samples DATA VERIFICATION...28 Technical Data and Historical Information...28 Site Visits...28 Verification Sampling ADJACENT PROPERTIES MINERAL PROCESSING AND METALLURGICAL TESTING MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES OTHER RELEVANT DATA AND INFORMATION INTERPRETATION AND CONCLUSIONS RECOMMENDATIONS...33 Data Compilation and Analysis; Logistical Orientation...33 Project-wide Ground Assessment and Sampling...34 Follow-up Exploration and Drilling at the Gradaús Mine Area DATE REFERENCES CERTIFICATES OF QUALIFIED PERSONS

3 FIGURE LIST OF FIGURES PAGE Figure 1: Carajás Metallogenic Province Geology Map, Showing Location of Major Greenstone Belts... 7 Figure 2: Cumaru District Geology Map, Showing Cumaru-Gradaús Claims of Aura Gold...10 Figure 3: Detailed Geology of the Cumaru Granodiorite Area...19 Figure 4: Diagrammatic Exploration Model Cross Section, Cumaru-Gradaús Gold Project...25 Figure 5: Map of Mineraçaõ Gradaús Core Drill Holes...25 TABLE LIST OF TABLES PAGE Table 1: Exploration and Mining Claims... 9 Table 2: Gradaús Agreement...11 Table 3: Cumaru Agreement...11 Table 4: Federal Bank Gold Purchases at Cumaru...13 Table 5: Summary of 1990 Mineral Reserve Reported by Mineração Gradaús Ltda Table 6: Gold Assays of Verification Samples Collected for Aura Gold and Yamana Resources

4 1. SUMMARY The Cumaru-Gradaús Gold Project is located in the Carajás metallogenic province, 320 km south-southwest of the city of Marabá and 750 km south-southwest of Belém, the capital city of Pará State in northern Brazil. The Project area is situated in the Carajás metallogenic province consisting largely of Archeanage intrusives and greenstone belts and Proterozoic-age platform cover rocks, all part of the large Amazon Craton. Numerous gold occurrences and advanced projects of other metals occur within this region, which extends 560 kilometers north-south and 250 kilometers east-west. The majority of the metal deposits are associated with Archean-age greenstone belts or associated intrusives. Historically, the region was best known for its alluvial gold deposits, but within the last 25 years it has become world famous for its giant deposits of iron, manganese, bauxite, copper and nickel, as well as gold. Many of these deposits are just now starting to be mined or developed. The Cumaru-Gradaús Gold Project is in the southern part of the metallogenic province, accessible via paved highways and gravel roads. The area is low relief open country, averaging about 200 meters elevation, and consists mainly of small farms and artisanal gold operations. The native rain forest has been extensively logged, leaving open fields and only scattered remnants of forest land. The small village of Cumaru do Norte is about 8 kilometers from the principal historic mining area of Cumaru, but artisanal workings are widely scattered for 10s of kilometers west and north of the village. The project is covered by ten Exploration Claims and one Mining License, totaling 35,936 hectares, recently acquired by via separate property option agreements with Mineração Gradaús Ltda. (Mineração Gradaús) and Yamana Resources do Brasil Ltda (Yamana). The agreement with Mineração Gradaús is structured as an option to acquire 100% interest in the Gradaus claims in consideration for total cash payments of US$535,000, the issuance of 500,000 Aura Gold shares and a 3-year work commitment totaling US$1,500,000. Mineração Gradaús retains a 2.0% NSR royalty which can be purchased at any time for US$4,000,000. The agreement with Yamana is structured as an option to earn 70% in the Cumaru claims in consideration for 1,000,000 Aura Gold shares, which were issued upon execution of the agreement, and a 3-year work commitment totaling US$3,000,000. After Aura Gold earns a 70% interest, a joint venture is formed, with Aura Gold serving as the operator. A 1.5% NSR royalty which can be purchased at any time for US$1,250,000 is payable to Mineração Gradaús on the Cumaru property. In addition, the Brazil government imposes a 1.0% NSR royalty on all gold production. Geologically, the Cumaru-Gradaús region consists predominantly of Archean-age rocks, with a major portion of the properties underlain by Archean meta-volcanic and meta-sedimentary rocks belonging to the Gradaús Greenstone Belt, one of the southernmost greenstone belts in the sparsely explored southern part of the Carajás province. The lower part of the sequence is dominated by meta-volcanic rocks, the upper part contains extensive interbeds of chemical and 4

5 clastic meta-sedimentary rocks. It is intruded by an undeformed granodiorite complex of late- Archean age, consisting of several smaller late-phase granitic stocks, such as the Cumaru stock, which is hydrothermally altered and mineralized, and by a layered ultramafic complex. The Cumaru-Gradaús area is one of the two largest alluvial gold districts in the Carajás region, the other being the famous Serra Pelada district, about 200 kilometers to the north. The alluvial gold deposits of the region are largely derived from the in-situ weathering and disintegration of primary mineralization in the underlying or nearby bedrock. Aura Gold s principal exploration objective is to search for these primary gold deposits. Two types of primary gold mineralization have been identified on the properties: (a) lode gold deposits hosted by the greenstone sequence, and (b) lode and disseminated gold hosted by the Cumaru intrusive stock. The greenstone-hosted deposits quartz-carbonate veins and stockworks associated with shear zones cutting the greenstone sequence belong to the classic greenstone gold deposit model which accounts for most of the gold production in both Canada and Brazil, and for 20 percent of worldwide gold production. The intrusion-hosted mineralization is thought to represent porphyry-style gold mineralization, a lode-porphyry gold system that may be the first of its kind identified in the Archean rocks of the province. The project includes the Gradaús claims, on private land, and the Cumaru claims, which adjoin the Gradaús claims on the east. The Cumaru claims are part of the former Cumaru Garimpeiro Reserve, established 1981 after artisanal miners (garimpeiros) overran the area s coffee plantations in the wake of alluvial gold discoveries and record-high gold prices in For the next 20 years, the Cumaru district officially produced more than 1.5 million ounces of gold, mostly from artisanal workings (garimpos) and from one small formal operation, the Gradaús mine. The unofficial and unrecorded gold production is thought to be substantial, possibly equal to the official production. A limited amount of production from garimpos continues today. A number of small and large companies have examined or explored the region over the past 17 years. The first organized effort was by a local property owner who formed Mineração Gradaús Ltda. and drilled a number of core holes beneath artisanal workings on the Gradaús private ground. The company subsequently produced gold by leaching tailings from the artisanal workings and by extending and deepening the old artisanal pits. A number of larger companies Anglo-American Brasil, Cyprus Mining Company, Barrick Gold Company, Codelco Copper Company and Yamana Resources/Yamana Gold in more recent times explored the Gradaús properties or other ground adjacent to the Cumaru reserve with geologic mapping, geophysical surveys, geochemistry and some drilling, but the Cumaru reserve, including Aura Gold s current Cumaru claims, has never been officially explored by an organized mining company. In conclusion, the Cumaru-Gradaús Gold Project is an early-stage gold property of merit, occurring in an area that has undergone only a limited amount of previous exploration. It consists of extensive alluvial gold deposits derived from primary mineralization in underlying greenstones and intrusive rocks having potential for primary gold deposits of significant size. Deposit models in the greenstones are the classic Archean shear-related lode gold deposits 5

6 common throughout Brazil and elsewhere in the world, and are well-established, desirable exploration targets. Additionally, the bedrock contains intrusive-related gold mineralization, perhaps a variation of porphyry-type gold deposits which form deposits of very large tonnage at various places throughout the world, but apparently representing a new and previously unrecognized and unexplored type of deposit for the Carájas province It is recommended this project be further explored with an initial 6-month program costing about US$ 905,000. Additional exploration expenditures would be contingent on the results obtained in this initial program. 2. INTRODUCTION The Cumaru-Gradaús Gold Project is in the southern part of the Carajás Metallogenic Province, 320 kilometers south-southwest of the city of Marabá and 750 kilometers south of Belém, the capital city of Pará State in northern Brazil (Figure 1). This metallogenic province is one of the most productive regions of Brazil, containing a number of very large, world-class sized deposits of iron, manganese, aluminum, copper, nickel, zinc and gold. The province is underlain almost entirely by rocks of Precambrian-age and mineral deposits are associated principally with the Archean-age meta-volcanic and intrusive igneous components of this terrane. Cumaru, at latitude 7 50 S and longitude W (Figure 1) is one of the two largest historical artisanal gold districts in the province and the site of at least two types of primary gold occurrences that comprise excellent targets for modern exploration. Aura Gold Mineração Ltda., a wholly owned subsidiary of (name changed from Canadian Baldwin Resources Limited in March 2006), a Canadian company, recently acquired ten Exploration Claims and one Mining License, totaling 35,936 hectares, covering much of the prospective ground in this district. In February 2006, the authors were requested by Aura Gold to visit the Cumaru-Gradaús Gold Project, to review the available property data and to prepare a NI Technical Report to be used by Aura Gold in its initial filing for a public listing. Site visits were made on February 11, 2006, and March 26-27, 2006, and data reviews were made in Belém March 7-25, At the site, the authors were accompanied and assisted by various persons including Mr. Victor Bradley, President of Aura Gold, Mr. José Lenzi, Brazilian consulting geologist, and Mr. Rafael Araújo, geologist and co-owner of the Gradaús property. In Belém, translations of documents from Portuguese to English and other assistance with the voluminous project data were capably provided by Mr. Gilson Dallegrave and Mr. Mauricio Gubert. During the site visits, the old open pits at the Gradaús mine were flooded, but some non-flooded nearby small pits and cuts were examined and sampled. The information database used to prepare this Technical Report consisted of a stack of reports and other documents prepared by former property owners and by various government agencies. Sources of information used in this Technical Report are cited in the References chapter. 6

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8 Some of the more important information sources are listed below 1. UGM (Anglo American) Technical report for Gradaús, Pará State, Brazil by their staff, March, Mineração Gradaús Ltda. Technical report for Cumaru, Pará State, Brazil by L.R. Araújo, July PhD Thesis by M.D. Santos, 1995, and a published paper by M.D. Santos, et.al., 1998, on gold deposits related to the Cumaru stock. 4. CPRM 1:250,000 geologic map for Xinguara quadrangle, Pará State, Brazil by their staff, CPRM Carta Metalogenética da Província de Carajás se do Pará, Folha Araguaia (SB.22) by M.T. Faraco, J.M. Carvalho & E.L. Klein, The authors personal field notes. Much gold, mostly from alluvial deposits, has historically been recovered on the property and minor production continues today from a scattering of small artisanal operations. This report focuses on the geology, mineralization and exploration potential of the bedrock that may have provided the sources of gold in these alluvial deposits. 3. RELIANCE ON OTHER EXPERTS In preparing the present report, we (the authors) have relied heavily on the various data and reports on file in Aura Gold s administrative office in Belém, Pará state, Brazil. Existing data from previous investigators was personally reviewed in detail. We found the information to be mostly complete, comprehensive, well-compiled and well-documented. We believe the data are credible and reliable. Most of the information is presented in Portuguese, but Mr. Mauricio Gubert, co-author of this report and a consulting geologist, and Mr. Gilson Dallegrave, President of Austral AGS do Brasil, supplied what we believe are reliable translations of this information. Both of these persons are fluent in Portuguese and competent to fluent in English. None of the reports or other material used in this report were prepared by independent Qualified Persons, as defined by NI , but the information is known to have been prepared and compiled by competent technical people. We have reviewed the information and found it to be essentially correct, but disclaim the absolute accuracy of these data. Mr. Dennis Peterson, Aura Gold s attorney in Toronto, provided information concerning the property agreements included in the Property Description and Location chapters of this report. Additionally, he prepared a section on Brazil Mining Law, appended to this report, in consultation with legal counsel in Brazil (Appendix 1). Mr. Gilson Dallegrave and Mr. Rafael Araújo, a geologist and claims specialist in Belém, provided information concerning the mineral tenure of the project s mining claims. The authors have no reason to believe there are inaccuracies in this information, but we are not experts in land or legal matters, so we disclaim any inaccuracies relating to this information. 8

9 4. PROPERTY DESCRIPTION AND LOCATION The Cumaru-Gradaús Gold Project is in eastern Pará State in north Brazil at latitude 7 o 50 S and longitude 50 o 55 W (Figure 1). The project is currently covered by ten Exploration Claims and one Mining License (Figure 2), totaling 35,936 hectares, listed as follows: TABLE 1. Exploration & Mining Claims Claim no./year Status Hectares Cumaru claims acquired from Yamana Gold Inc /03 exploration license granted, taxes due July , /03 exploration license granted, taxes due July , /03 exploration license granted, taxes due July /03 exploration license granted, taxes due July , /95 transfer from Comaroo Coop. to Yamana in progress 10, /95 transfer from Comaroo Coop. to Yamana in progress 4, /95 transfer from Comaroo Coop. to Yamana in progress 7, /06 exploration license requested 1, Total Cumaru claims 34, Gradaús claims acquired from Mineracao Gradaús Ltda /83 mining license, no expiration /00 exploration license requested /01 exploration license requested Total Gradaús claims 1, TOTAL CumaruProject Area 35, The Gradaús claims lie west of, and adjoin, the Cumaru claims. Together, these contiguous claim blocks cover the Cumaru-Gradaús Gold Project prospect area discussed in this report. The Exploration Claims can be renewed by the payment of further rental fees. Surface rights for mining purposes are not included in the claims, but can be acquired by payment of a purchase fee based on the appraised value of the land. Subject to negotiation, some land use compensation fees may also be due to the local farmers if their agricultural land is disturbed by exploratory work. The Exploration Claims give the right to carry out all the exploration presently contemplated and no additional permitting is required. A Mining License is required if any major mining operation is planned. Some future major land purchases may be required for mine infrastructure purposes (processing plant, waste disposal, office and accommodations). There are no known or recognized environmental problems that might preclude or inhibit a mining operation in this area. 9

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11 The separate business contracts under which Aura Gold acquired the claims are as follows: Gradaús The agreement for the Gradaús Property is with Mineração Gradaús The agreement is structured as an option to acquire a 100% interest in consideration for total cash payments of US$535,000, the issuance of 500,000 Aura Gold shares, and a 3-year work commitment totaling US$1,500,000 as follows: TABLE 2. Gradaús agreement Cash Payments (US$) Share Issuances Work Commitment (US$) $25,000 On execution 100,000 1 Jan 2006 $25,000 1 Jul ,000 1 Jul 2006 $50,000 1 Jan ,000 1 Jan 2007 $250,000 1 Jan 2007 $50,000 1 Jul ,000 1 Jul 2007 $100,000 1 Jan ,000 1 Jan 2008 $135,000 1 Jul ,000 Total $150,000 1 Jan 2009 Cumulative $1,500,000 1 Jan 2009 $535,000 Total The property is subject to a 2.0% net smelter return (NSR) royalty which may be purchased at any time for US$4,000,000. A payment of U.S. $1.00 per ounce of proven & probable reserves, as per a positive feasibility study prepared in accordance with NI , is due and payable at the commencement of commercial production. Cumaru The Cumaru agreement is with Yamana Resources do Brasil Ltda. The agreement is structured as an option to earn a 70% interest in the property in consideration for 1,000,000 Aura Gold shares which were issued to Yamana upon execution of the agreement, and a 3-year work commitment totaling US$3,000,000 over three years as follows: TABLE 3. Cumaru Agreement (US$) $250,000 Year 1 [firm] $1,250,000 Year 2 $1,500,000 Year 3 $3,000,000 Total After Aura Gold earns a 70% interest in the Cumaru property, a joint venture is formed with Yamana on standard industry terms with Aura Gold as the operator. The property is subject to a 1.5% NSR payable to Mineração Gradaús. This royalty may be purchased at any time for US$1,250,000. In addition, Brazilian mining legislation imposes a 1.0% NSR royalty on all gold production (see Appendix I). 11

12 5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, AND PHYSIOGRAPHY The one Mining License and ten Exploration Claims of the Cumaru-Gradaús Gold Project are 320 kilometers south-southwest of the city of Marabá and 750 kilometers south-southwest of Belém, the capital city of Pará state in northern Brazil (Figure 1). The property is easily accessed from the small city of Redenção (pronounced hedensow ) 80 kilometers east of the project (Figure 2). Marabá is serviced by daily air-flights with connections to all the major cities in Brazil. Maraba also offers daily commercial flights to Redenção except on weekends. Vehicle access from Marabá is via paved highway #158 to Redençao, then west on an all-weather gravel road to Cumaru. Redençao, population 85,000, is the closest city with full facilities, such as good hotels, hospitals, restaurants and banks. The village of Cumaru do Norte, population 6,000, is only 8 kilometers from the Gradaús property and mine and is served by a rural electricity grid, telephone, hotel, clinic and restaurants. The project area, less than 8 from the equator, has a tropical climate with alternating wet and dry seasons. Annual precipitation averages about 2,000 mm, mostly occurring from December to May. The elevation ranges from less than 200 meters above sea level to more than 500 meters at the top of the highest ridges. Much of the area s original rainforest cover has been cleared for subsistence farming and organized agriculture. The local economy is based largely on agriculture and logging; mining currently plays only a subordinate role. Vegetation includes grassland, bushes, shrubs and local scattered trees and forests. Tropical diseases such as malaria are apparenthy now rare in this part of Brazil. The large Kayapó Indigenous Reservation adjoins the Cumaru-Gradaús properties on the west. The Reservation contains a number of very large alluvial gold workings (garimpos) opened by artisanal miners (garimpeiros) in the early-1980s gold rush, but the area is now off limits to mining under current Brazilian Law. 6. HISTORY The Cumaru-Gradaús Gold Project is an area of known gold mineralization and has been actively mined during the past 26 years. 1930s: The first discoveries of gold in the region were made by rubber tree sap collectors : The region was prospected by João Lanari de Val who acquired land, formed Companhia de Terras da Matal Geral, and later founded Mineração Gradaús Ltda : Some small-scale artisanal gold mining occurred during this period. 12

13 1980: Record-high gold prices coincided with the discovery of gold at Serra Pelada and Cumaru, precipitating a new gold rush with thousands of artisanal miners (garimpeiros) invading the farms and João Lanari de Val s coffee plantations at Cumaru. 1981: The 95,000-hectare Cumaru Garimpeiro Reserve was established by the Brazilian government and a special agency installed to control the mining and social activities at Cumaru; the Coomaru Cooperativa was formed to coordinate the garimpeiro claims. Brazil established buying stations in the Cumaru district, at the villages of Cumaru, Redenção and Tucumã, with garimpeiros required to sell their gold to the Federal Bank. Sales recorded for 1981 through 1986 totaled 801,377 ounces of gold (Table 4), but because of the government s low fixed gold price substantial amounts of gold were illegally sold to independent buyers. Government reports suggest the actual amount of gold produced by garimpeiros in Brazil during this period ranged from 1.3 to 2.8 times (and averaged 2.1 times) more than the official amount sold to the Federal Bank (DNPM 1988 & 1990). This suggests that the actual production from the Cumaru district during this 6-year period may actually have been as much as 1.6 million ounces of gold. TABLE 4. Federal Bank Gold Purchases at Cumaru Year Kg Au Troy Oz Au , , , , , , , , , , , , : Mineração Brumadinho Ltda., a small private Brazilian company, attempted to recover the fine gold from tailings at the Cumaru artisanal workings (garimpos) without success : Mineração Gradaús, a small private company established by João Lanari de Val in 1981, began an organized exploration and mining effort designed to mine gold beneath the Cumaru garimpos. In , 73 rotary percussion holes (967 meters) and 23 wireline core holes (2,245 meters) were drilled to define a bedrock gold resource (see the Drilling chapter of this report). Some metallurgical testwork was done by sending a quarter-split from five tonnes of oxidized vein material from the pit, averaging 26.5 g/t Au, to the Metais Especiais Lab for testing. Gold recoveries of 97% were obtained with gravity and amalgamation (see Metallurgy chapter). The Mineração Gradaús drill program is the only drilling that has been done at the Gradaús mine. Moraes and Araújo (1990) used the Mineração Gradaús drilling to calculate a mineral reserve as reported in a lengthy 2-volume report submitted to the Federal mining authorities (DNPM). We caution that the term mineral reserve and the reserve categories used in that historical report and as listed in Table 5 are 13

14 historical terms that do not comply with the CIM Standards on resource reporting as accepted by NI Further, under NI , resources categorized as inferred cannot be added to the other categories of mineral resources. The resource was calculated using polygonal methods on drill hole cross-sections spaced 50 to 100 meters apart with a mineralization cut-off of g/t Au. While these criteria appear reasonable, we do not think the methods used to define the historical resource polygon boundaries or the historical resource categories are either repeatable or reliable. Further, we are uncertain how much of the non-compliant historical mineral reserve listed in Table 5 was mined and how much remains in-place. It is reported here strictly for historical purposes. We caution that there is no indication at this time that the properties contain, or will contain, any mineral deposits of economic interest. TABLE 5. Summary of 1990 "Mineral Reserve" Reported by Mineração Gradaús Ltda. Type Tonnes Au (g/t) Contained oz. Measured (oxide + primary) 670, ,109 Indicated (oxide + primary) 299, ,766 Inferred (oxide + primary) 2,526, ,997 TOTAL (oxide + primary) 3,496, ,872 Alluvial 1,190,415* 0.30** 11,482 Measured (oxide) 110, ,033 Indicated (oxide) 74, ,594 Inferred (oxide) 162, ,396 TOTAL (oxide) 348, ,022 Measured (primary) 559, ,077 Indicated (primary) 224, ,172 Inferred (primary) 2,363, ,601 TOTAL (primary) 3,148, ,850 * cubic meters **g/cubic meter Moraes & Araújo, : Garimpeiros in the Cumaru district during this period reportedly produced an additional 1 million ounces of gold (oral communication, L.R. Araújo, 2006, a geologist who worked with both the Coomaru Cooperativa and Mineração Gradaús during this period). A government report (DNPM, 2006) officially credits the garimperios in this district with only 698,000 ounces of gold production during this period. Combining the production for this period with that previously reported for the period (with data missing for the 4-year period, ) gives the Cumaru district an official production of 1.5 million ounces of gold. The actual unofficial production as noted earlier, based on government estimates, may be twice as much (DNPM 1988 & 1990), probably 2.6 to 3.0 million ounces of gold : Exploration on the Gradaús property by Mineração Itajobi Ltda. consisted of an aerial photo interpretation study, geologic mapping, geophysical surveys (both ground magnetics and VLF-EM), soil and stream-sediment geochemistry, mapping and sampling of trenches, and auger drilling (see Exploration chapter). 14

15 : The Gradaús property was optioned from Mineração Gradaús by UGM Serviços Técnicos S/C Ltda., a subsidiary of Anglo American. Exploration consisted of geologic mapping, geophysics, soil and stream-sediment geochemistry, trenching, auger drilling (see Exploration chapter) and the drilling of 33 reverse circulation holes (see Drilling chapter). 1997: The Gradaús property was briefly optioned by Cyprus Mining Company before Cyprus globally quit pursuing gold. Exploration consisted of geologic mapping, soil geochemistry, auger sampling and ground geophysics (see Exploration chapter) : An extension of the greenstone sequence north of the Cumaru Garimpeiro Reserve was acquired by Barrick Gold Corporation. This ground includes an ultramafic rock complex and rumors suggest they discovered a nickel-copper system about 8 kilometers north of the Reserve boundary. They joint ventured the property with Codelco Chile (Corporación Nacional del Cobre de Chile) who continued to drill the property for about a year. 2003: Yamana Resources Inc. acquired exclusive exploration and mining rights to the 1,700-hectare Gradaús property the adjoining and much larger 95,000- hectare Cumaru Garimpeiro Reserve, becoming the first organized mining company ever to acquire exploration rights on the Cumaru Garimpeiro Reserve since it was established in Yamana made some minor field visits but no serious exploration was done : Yamana Gold Inc. (formerly Yamana Resources Inc.) commissioned American Geological Serivces, a Denver-based consulting company, to assemble and integrate all the geologic, geochemical, geophysical, trenching, auger and drill data. This work was only partially completed, and Yamana subsequently dropped the Gradaús claims and about one-half of the claims covering the Cumaru reserve (see Exploration chapter). 7. GEOLOGICAL SETTING 7.1. Regional Geology The Cumaru Project area is within the Carajás province, one of eight geotectonic provinces that comprise the large Amazon Craton in northern South America. The province is an Archean-age nucleus occupying an area of approximately 140,000 square kilometers (about one-half the size of the state of Nevada, USA) and is bounded on the north by the Amazon Syncline, on the west and south by Cenozoic to Recent cover and on the east by the Araguaia Mobile Belt of mid- Proterozoic age. The province is underlain by three predominant Archean-age rock assemblages: (a) an older gneiss-migmatite basement (Xingu Complex, 2,800-3,000 Ma); (b) an overlying cover assemblage of moderately metamorphosed volcano-sedimentary greenstone belt sequences (2,700-2,900 Ma); and (c) a series of post-tectonic (anorogenic) granitic plutons, gabbros and 15

16 dike swarms of latest Archean to early-proterozoic age (1,800-2,500 Ma) (Souza & Vieira, 2002; Tallarico et.al., 2000). The province is tectonically divided into distinct southern and northern blocks by a major northwest-southeast lineament (Ronzê et.al., 2002). The Carajás province is now recognized as an important metallogenic province as well as a distinct tectonic entity. The northern tectonic block, the Itacaiúnas Shear Belt, is by far the beststudied and most intensely explored part of the province and is the site of numerous mineral deposits, including giant deposits of iron, manganese, bauxite, gold, copper and nickel. The deposits are associated with the Archean greenstone belt sequences, collectively called the Itacaiúnas Supergroup. These deposits were mostly discovered within the last 25 years, and many are just now starting to be mined or developed. The southern part of the Carajás province, known as the Rio Maria Granitoid-Greenstone Terrane, includes the Cumaru Project area and many other historical alluvial gold deposits, plus several lesser-known modern bedrock discoveries. The deposits are mostly associated with Archean greenstone belt sequences, collectively called the Andorinhas Supergroup. Although generally similar in character and age to the mineral-endowed greenstone belts of the northern Carajás region, the southern part of the province by comparison remains poorly known, incompletely mapped and sparsely explored District Geology The Cumaru district informally includes an area of approximately 5,000 square kilometers, extending 60 kilometers north, northeast and east from the village of Cumaru do Norte, in the southwest part of the district (Figure 2). Bedrock is exposed sporadically, covered in most places by vegetation, soil and a varying thickness (up to 40 meters) of saprolite, which is the product of in-situ oxidation and disintegration of bedrock under tropical weathering conditions. The district is underlain almost entirely by Precambrian rocks consisting of: (a) a gneissmigmatite basement complex of Archean age; (b) slightly younger but deformed Archean volcaniclastic greenstone belt sequences containing small undeformed bodies of ultramafic rocks; (c) Archean post-tectonic (anorogenic) intrusive granitic plutons; (d) early Proterozoic platform cover rocks; and (e) mid-proterozoic granitic intrusives. The Archean greenstone sequences and intrusives are the units of greatest interest for exploration. These are summarized as follows: Greenstone belt sequences Two volcaniclastic greenstone belt sequences, regionally metamorphosed to greenschist facies, have been mapped in the district: (a) the Gradaús Group in the south part of the district, near Cumaru do Norte; and (b) the Tucumã Group to the north. Although mapped as separate belts, it is possible these sequences represent stratigraphically different parts of a single major greenstone sequence. The Tucumã Group is thought to be the lower and older of the two. It consists of mafic schists (chlorite, tremolite, actinolite), pyroxenites, amphibolites and, near the top, large amounts of shaly quartzite. The Gradaús Group consists of metamorphosed mafic to intermediate volcanic rocks (basalts and andesites) 16

17 passing upward into intermediate to felsic volcanics (andesites, dacites and rhyolites, including tuffs and ignimbrites) interbedded with chemical sediments (banded iron formation and metachert) and clastic sediments (meta-arenites and siltites). Ultramafic rock bodies Both greenstone belts in the district contain at least minor amounts of ultramafic rocks, and each belt is also associated with at least one fairly large ultramafic body: (a) the Serra Azul Intrusive Complex, approximately 2 x 10 kilometers in size, near the apparent top of the Tucumã greenstone belt, 20 kilometers north of Cumaru do Norte, and (b) the Guarapará Intrusive Suite, a body of similar size, near the apparent base of the Gradaús greenstone belt, about 6 kilometers south of Cumaru do Norte. Both bodies contain serpentinites, peridotites, pyroxenites, anorthosites, dunites and gabbros and have been interpreted as possible Archean layered ultramafic complexes. They are undeformed and apparently slightly younger than the greenstone sequences. Post-tectonic intrusives A multi-phase intrusive complex of late-archean age cuts the greenstone sequences and older, underlying basement. It consists of a series of post-tectonic (anorogenic) granitic bodies including batholith-sized complexes, such the Rio Maria Granodiorite and Xinguara Monzogranite, together with many slightly younger, smaller plutons and stocks, such as Cumaru Granodiorite stock, which is associated with gold deposits in the Gradaús mine area. Two similar stocks underly the large Maria Bonita alluvial gold workings, about 10 kilometers west of the Gradaús mine. Only a few of these smaller intrusive bodies have yet been mapped (Santos, et.al., 1998). All the Archean rocks described above are discordantly overlain by the early-proterozoic age Rio Fresco Group, a regionally extensive platform sequence of clastic sedimentary rocks. The sequence is comprised largely of pelites, quartz arenites and conglomerates, and in the Cumaru district, the base of the sequence is marked by a prominent sandstone escarpment which Serra dos Gradaús, a low mountain range northwest of Cumaru do Norte flanked by the Gradaús and Tucumã greenstone belts. The core of Serra dos Gradaús is cut by the Gradaús Batholith, one of a series of mid-proterozoic age granitic-pegmatitic intrusives spread widely throughout the region Local Geology The Cumaru Project consists of 10 contiguous exploration claims and one mining license, totaling 35,936 hectares, which cover a 30-kilometer length (about one-half) of the Gradaús greenstone belt (Figure 2). The belt forms an arc extending from the Kayapó Reservation, on the west, through the Gradaús claim block and into the Cumaru claim block, where it bends northward, extending beyond the north boundary of the claim block into the Tucumá greenstone belt. The base of the Gradaús greenstone sequence consists of metamorphosed intercalated andesites, basalts and diabases, plus actinolite and chlorite-talc schists, which grade upward and to the north into more felsic volcanic units consisting of metamorphosed dacites-rhyodacites and 17

18 andesites. The more felsic units bcome progressively interbedded upward with metamorphosed volcaniclastic tuffs (lithic crystal tuffs, lapilli tuffs), clastic sedimentary rocks (pelites and siltites), and chemical sedimentary units (cherts and banded iron-formation). The sequence is cut by post-tectonic granitic intrusions, most extensively by the Rio Maria granodiorite pluton and locally by slightly younger and smaller granitoid stocks, such as the Cumaru Granodiorite Stock. This stock underlies the extensive alluvial gold workings in the Gradaús mine area, and there are two other similar stocks beneath the large Maria Bonita alluvial gold workings on the Kayapó Indian Reservation about 10 kilometers west of the Gradaús mine. The Cumaru stock is an elliptical shaped body, extending approximately 4 kilometers in the north-south direction and approximately 2 kilometers wide (Figure 3). It is a complex multiple intrusive, consisting mainly of gray granodiorite with a number of small late-formed bodies of red monzogranite, and is classified as an I-type granitoid body. The north end of the stock is cut by a series of northeast-trending parallel faults and fractures, concordant with a major northeasttrending shear zone that crosses the property. These structures are thought to be large splays developed off the regional north-south trending Ruim Shear Zone, which crosses the greenstone belt about 10 kilometers west of the Gradaús mine (Figure 2). The stock appears to have emplaced near the end of the shearing event. The surrounding greenstones have been contact metamorphosed and local bands of skarn have developed in some of the sheared meta-volcanic units (Santos, et.al., 1998). 8. DEPOSIT TYPE Mineral deposits in the Carajás province are associated with Archean greenstone belt sequences consisting of metamorphosed volcanic-volcaniclastic-sedimentary rock units, or with slightly younger post-tectonic granitoid bodies (or, in some cases, ultramafic bodies) which intrude these sequences. The deposits occur either as primary accumulations directly associated with these sequences and intrusives, or in laterite horizons and alluvium formed from the intense tropical weathering of these rock units. The province is well-known for its variety of important mineral deposit types, including aluminum bauxite, laterite nickel, hematite banded iron formation (BIF), manganese oxide, iron oxide copper-gold ± uranium-rare earth elements, shear-related lode gold, sedimentary rockhosted gold-palladium-platinum, iron oxide-poor copper-gold, and alluvial gold. The most advanced of these deposits, some of world-class size and currently in production or development stages, are in the more intensely explored northern part of the province, but examples occur in the sparsely explored southern region as well. 18

19 19

20 Alluvial gold deposits, which occur throughout the province, are not exploration targets for Aura Gold, but these deposits are of interest because of their possible importance in helping identify bedrock target areas potentially favorable for primary gold deposits. Historically, these alluvial deposits, which have been developed almost exclusively by artisanal miners (garimpeiros), have been the most productive type of mineral deposit in the south Carajás region. The largest and most famous alluvial district in this region is Cumaru, with an official production of 1.5 million ounces gold, but actual production probably much larger, as explained in the History chapter of this report. The region s alluvial gold deposits have formed by the in-situ oxidation and disintegration of gold-bearing bedrock under tropical weathering conditions. During weathering, the gold is physically and chemically removed from its original primary bedrock source e.g., veins, disseminations, shear zones and re-concentrated in alluvial residue and weathered bedrock, known as saprolite. Individual workings (garimpos) can be many square kilometers in size and are favorite sites for exploration geologists to start their search for primary gold deposits. On the basis of geological setting, similarities to other mineral prospects in the region and published studies of primary bedrock mineralization at Cumaru, we believe the Cumaru-Gradaús Gold Project is prospective for at least two types of primary gold deposits: (a) the shear-related lode type hosted by the Gradaús greenstone sequence, and (b) vein-stockwork-disseminated gold hosted by the Cumaru stock or other granitoid stocks which intrude the sequence. Greenstone-hosted lode gold deposits Shear-related lode gold deposits, also known as greenstone gold or low-sulfide gold-quartz veins, are one of the most productive types of gold deposits in Brazil and in the world, accounting for about 20 percent or more of the world s total gold production. Examples include numerous deposits and districts throughout the world; wellknown examples in Canada include Kirkland Lake, Red Lake, and Timmins. The deposits characteristically occur in greenstone belt terranes, most commonly Archean in age, and are typically associated with regional shear zones and fault splays. Metamorphic grade varies widely and the host rocks can include almost any of the various lithologies present in the greenstone sequence, but the most lucrative deposits occur in relatively large, competent units such as felsic intrusions (Ash and Alldrick, 1996). The gold occurs in mesothermal fissure veins, veinlets, stockworks and altered wall rock. The veins generally consist of coarse quartz with lesser amounts of carbonate, albite, tourmaline, sericite and chlorite. Sulfide minerals are present, mainly pyrite with lesser amounts of arsenopyrite and less commonly pyrrhotite. The wall rocks are usually altered only close to the vein and consist of the same minerals that also occur in the veins carbonates, quartz, sericite, albite and pyrite. Much of the mineralization at Cumaru occurs in a well-developed vein system along a large shear zone which crosses the greenstone sequence and cuts the edge of the Cumaru stock. This shear zone is one of several crossing the project and many of the alluvial gold workings occur in 20

21 the greenstone terrane along or close to these structures. It is likely that the gold in these workings has been derived from shear-related gold veins in the underlying greenstone units. These structures constitute exploration targets for shear-related, greenstone-hosted lode gold deposits. Intrusion-hosted vein-stockwork-disseminated gold A significant to major part of the gold in many greenstone lode gold districts occurs in or immediately adjacent to felsic intrusives that cut the greenstone sequences. At Cumaru, the Gradaús mine and many garimpos occur within the Cumaru granodiorite stock, close to its intrusive contact with the Gradaús greenstone belt. In a detailed study of the Cumaru mineralization and stock, Santos et.al. (1998) note various features consistent with a porphyry-style gold mineralization more typically associated with intrusions of Mesozoic or Cenozoic age, for example, a Au-Cu-Bi-Mo metal association, pervasive wallrock alteration and stockwork brine inclusions in the intrusive cupola. They propose that Cumaru represents perhaps the first example of an Archean gold porphyry deposit. They note, however, that Cumaru also shares some features consistent with greenstone-hosted shear-related lode gold deposits and it may therefore be an intermediary member of the continuum between tectonic and magmatic processes, as proposed by Mason (1992). They suggest that Cumaru may represent a new type of gold deposit which they call lode-porphyry gold deposit. The model proposed by Santos et.al. (1998) appears generally similar to deposits termed intrusion-related gold deposits (Lang et.al., 2000) or porphyry gold deposits (Hollister, 1992). Deposits cited as premier examples of these types include Pogo, Alaska (USA). Regardless of the classification applied to the Cumaru deposit, we think there is strong evidence that the Cumaru stock has played an important role in the Cumaru gold mineralization. We believe the margins of this stock and other similar post-orogenic intrusives in the district should be excellent exploration targets for intrusion-hosted vein-stockwork-disseminated gold deposits. 9. MINERALIZATION AND ALTERATION Primary mineralization at Cumaru was exposed in a 600 meter x 200 meter pit developed by Mineração Gradaús during their mining operation in the early 1990s (Figure 4 and 5). This mineralization was examined and studied in detail by Marcio Santos in his unpublished Doctorate Thesis (Santos, 1995) and subsequently in a paper published in English (Santos et.al., 1998). No other detailed studies of Cumaru exist and the pit today is totally flooded and surrounding exposures mostly covered by the debris of subsequent artisanal scavenging operations. Santos observations are highly relevant in understanding and exploring the project, so we have taken the following detailed description of mineralization and alteration at Cumaru directly from his published paper (Santos et.al., 1998): The Cumaru primary ore occurs as an auriferous sulfide-bearing quartz vein swarm, chiefly within the NW margin of the Cumaru stock but also hosted by felsic volcanic 21

22 country rocks. The main lodes are cm-wide quartz veins trending N30-70 E and dipping NW, and are hosted by second order extension fractures and faults related to the Serra Ruim shear zone. Although the high grade ore shoots (>10 ppm) are usually restricted to the thicker lodes, disseminated mineralization (1-10 ppm) envelops the lodes as stockwork arrays of 1-10 mm-wide veinlets within the wallrock alteration halo. The lodes are dominantly brecciated quartz veins comprising angular quartz and pyrite fragments cemented by recrystallized quartz, sericite, calcite and late pyrite. Gold accompanies the sulfide assemblage, which is dominated by pyrite in the lodes as well as in the disseminated ore. The gold is unevenly distributed, occurring either as very tiny particles (20-80µ) within early pyrite and minor chalcopyrite and bismuthinite, or associated with quartz-filled cracks on the borders of sulfide crystals and aggregates. Interstitial aggregates of late pyrite, chalcopyrite, magnetite and hematite fill the voids between early larger pyrite fragments. Rare molybdenite occurs with quartz and pyrite along early cracks, possibly representing a higher temperature paragenesis. The wall rock alteration envelope was mainly formed by pervasive and widespread phyllic alteration, yielding a brecciated quartz-sericite rock comprising quartz fragments in a sericite matrix with minor amounts of chlorite, epidote and pyrite. Propylitic and potassic alteration are evident but are restricted to small portions of the pluton and are overprinted by the phyllic alteration. The propylitic paragenesis comprises epidote, albite, and calcite, together with carbonate-chlorite-pyrite veinlets. Potassic alteration is also restricted to hydrothermal microcline + quartz remnants, which are almost completely, replaced by phyllic alteration. Laterization and supergene enrichment of the Cumaru primary gold ores have yielded high-grade secondary ore containing 5-50 ppm gold. Free gold grains are dispersed within a brownish red gossan crust comprising iron oxide/hydroxide and sulfate (jarosite) and containing pods of kaolin and chlorite, quartz fragments and local impregnations of manganese oxides. The gossan passes downwards into partially oxidized primary veins containing relic pyrite and vuggy quartz showing cubic negative-crystal shapes formed by leaching of primary pyrite. Botryoidal gold nuggets are also found in high grade ore, yielding bonanza grades of up to 500 ppm. 10. EXPLORATION Aura Gold only recently acquired the Cumaru-Gradaús Gold Project and has therefore done no exploration work on the properties. Previous exploration on the properties was carried out by a number of different companies, both large and small. This historical work is listed below, however the results of this work have not been verified and are therefore not included in this summary: 22

23 Mineração Gradaús, ?: a. Exploration consisted of 23 core holes (2,245 meters) and 73 rotary percussion holes (967 meters) drilled before open pit mining. Mineração Itajobi, : a. 26 square kilometers of geological mapping at 1:10,000 scale in 10 areas. b. 48 thin-sections to confirm rock lithologies. c. 178 meters of trench mapping at 1:100 scale. d. 260 square kilometers of aerial photo interpretation at 1:45,000 scale. e. 115 line-kilometers of ground magnetic survey at 20-meter station spacings. f. 111 line-kilometers of ground VLF-EM16 survey, south-to-north lines at 20-meter station spacings. g. 4,372 meters of auger drilling, holes spaced 5 to 10 meters apart; 4,289 samples collected at 1-meter intervals, quarter-split to a 1 kilogram sample kg sample. h. 178 trench samples at 1-meter intervals in 5 trenches. i. 7,012 soil samples along 75 kilometers of grid lines. j. 331 rock outcrop samples. k. Sediment sampling at 11 locations, assayed or analyzed for Au, As and Cu. l. Pan concentrate sampling, 42 color count measurements. UGM Serviços Técnicos S/C Ltda. (Anglo American), : a. 1.4 square-kilometers of geologic mapping at 1:100 scale. b. 16 thin-sections to confirm rock lithologies. c. 51 rock outcrop samples analyzed for gold. d. 133 meters of shallow shafts sunk at 31 locations, depths from 1.5 to 7.9 meters (average 4.3 meters); 151 total samples. e. 320 meters of trenching in 7 trenches; sampled a 1-meter intervals. f. 1,246 soil samples covering 29 line-kilometers of grid. g. 4 stream sediment samples. h. 30 line-kilometers of ground magnetics, VLF-EM16 and radioactivity at 20-meter stations. Cyprus Mining Company, 1997 (due diligence): a. 4 auger soil sample sections over 1,700 x 3,400 meter area at 80-meter spacings, 2- kilogram samples from depths of 0.3 to 0.4 meters. b. 4 grid sections with ground magnetics and VLF at 20-meter stations. c. Geologic mapping of selected garimpos at 1:500 scale. d. Limited re-sampling and re-assays of core from the Mineracão Gradaús drilling. Yamana Resources Inc./Yamana Gold Inc., : a. Field review of geologic, geophysical and analytical data, some verification sampling. 23

24 b. Organization and compilation by consulting company of past technical data. c. Yamana dropped the Gradaús group of claims and about one-half of the ground covering the former Cumarua Garimpeiro Reserve. 11. DRILLING Aura Gold only recently acquired the Cumaru-Gradaús Gold Project and has therefore done no drilling on the properties. The Gradaús property was previously drilled, first by Mineração Gradaús and then by UGM Serviços Técnicos S/C Ltda. (Anglo American). This historical drilling is summarized below. We were able to verify some of the results of this drilling and these results are included in the summary below. The first drilling on the project, by Mineração Gradaús in , was to verify and extend the mineralization in the artisanal workings before starting the Gradaús mine operation. The drilling focused on gold-bearing quartz veins and veinlets identified in the old workings. Twenty-three (23) core holes (2,245 meters) were drilled in an area 500 meters x 1,400 meters along the NE-SW trend of the mineralization (Figure 5). The first 19 holes were drilled in a 50 meter x 50 meter grid at inclinations of -70 to -60, the last 5 holes were drilled vertically in the center of the best mineralization. Hole depths ranged from 40 to 183 meters and averaged 98 meters. The drilling consisted of wireline diamond drill core of NX-size (54.7 mm) with reduction to BX-size (42.0 mm) after drilling 5 to 10 meters into fresh rock. Two of the 23 holes were split, sampled and assayed over their entire length at 0.5-meter intervals (hole nos. F4 and F11), five holes were never split, sampled or assayed (nos. F14, F15, F17, F18, F20), and the remaining sixteen holes were split, sampled and assayed only over very narrow selected intervals, generally just intervals with conspicuous evidence of mineralization such quartz veins, abundant sulfides or visible gold. An examination of available logs indicates that many of the intervals (some quite broad) which were never sampled or assayed contain sericite and pyrite alteration. Mineração Gradaús used results of this drilling to define a resource, an unknown amount of which was subsequently mined (see History chapter). In , UGM Serviços Técnicos S/C Ltda. (Anglo American) drilled a target in the greenstone sequence northwest of the Gradaús-Cumaru open pit mine. The drilling tested an extensive linear geochemical anomaly apparently related to a NW-trending cross-structure extending into the greenstones away from the Gradaús mine. They drilled 32 reverse circulation (RC) holes totaling 2,685 meters, all inclined at -55 with depths ranging from 34.5 meters to 138 meters and averaging 83.5 meters. The holes tested two areas: Area 1, along the NW structure, with 20 holes directed to the NE and 6 to the SW, and the João Preto area, with 6 holes directed to the NE and 1 to the SW. Some of the better shallow intercepts encountered in this drilling were subsequently exploited by garimpeiros with a slot-like open cut developed along the structure. 24

25 25

26 In summary, the Mineração Gradaús drilling defined an historical gold resource in the Cumaru granodiorite near its contact with the greenstone sequence and an unknown amount of this resource was mined by Mineração Gradaús in the early 1990s. Later drilling by UGM Serviços Técnicos encountered some narrow high-grade gold mineralization along a shear zone within the greenstone terrane and as late as 2003 garimpeiros were mining some of this mineralization via a slot-cut open pit. 12. SAMPLING METHOD AND APPROACH Historical drill samples The Gradaús drill core consists of NQ and BQ size core that was split in half by sawing with a diamond saw. Cutting was done one-piece at a time, with one-half placed in the core box for archival storage and one-half placed in a labeled cotton bag to be sent to the laboratory for preparation and analysis. A geologist marked core sample intervals and a technician split and bagged the samples. The sample intervals normally ranged from 2 to 4 kilograms in size. The samples were secured and shipped to an unknown laboratory. The RC drill holes of UGM Serviços Técnicos S/C Ltda. (Anglo American) were sampled from top-to-bottom at 1.0-meter intervals. The samples were quarter split before being bagged and shipped to the lab for assay. The sample remainders were separately bagged and retained for archival storage Verification samples Verification samples collected by the authors of the current report are discussed in the Data Verification chapter of this report. Verification samples collected 3 years ago (2003) by Yamana Resources Inc. subsequent to their initial acquisition of the Cumaru-Gradaús properties, are discussed briefly below: Yamana Resources hired a consulting geologist, Matt Hughes, in 2003 to examine, sample and verify some of the gold occurrences in the Cumaru-Gradaús project area. Hughes worked under the direct supervision of Mel Klohn, one of the authors of the current report and a Qualified Person as defined by NI Hughes collected a total of 19 samples from 9 different sites over a 3-kilometer by 10-kilometer area. Locations were recorded using a Garmin GPS unit with 15-meter accuracy and were documented with digital photographs. The samples were from altered or mineralized rock exposures in garimpos which were active at the time. Some samples were taken across veins, ranging from 0.5 to 1.5 meters wide, other were panel samples taken over areas a few square meters in size. Sampled material consisted of weathered granodiorite or sheared greenstone with quartz-carbonate veins, stockwork veinlets, breccia or sheeted veins. The samples were placed in a secure large rice bag and shipped by Hughes via commercial carrier directly to the SGS analytical laboratory in Belo Horizonte, Brazil. 26

27 13. SAMPLE PREPARATION, ANALYSES, AND SECURITY Historical drill samples The Gradaús drill core samples and the RC drill hole samples of UGM Serviços Técnicos S/C Ltda. (Anglo American) were all shipped to commercial analytical laboratories in Brazil for preparation and analysis. There are few details regarding the handling of these samples, but we found no reason to think that the preparation and analyses were done using unacceptable procedures or non-standard industry methods. The drill core was examined by a geologist and sample intervals marked on the core. These intervals were split in half or quartered by sawing with a diamond saw, cutting one-piece at a time. One-half to one-quarter was bagged and sent to the laboratory for preparation and analysis, the remainder was placed back in the core box and has been retained on-site for archival reference. The core is currently stored under cover at the Gradaús mine site. The RC drill cuttings were quarter-split and bagged at the site. The remainder was also bagged and retained for reference, plus a small and carefully labeled sample retained for archival purposes and microscopic examination. All of this material is currently stored under cover at the Gradaús mine site Verification samples The verification samples collected in 2006 for purposes of the current report were collected and handled by professional geologists Chris Broili, an idependent Qualified Person as defined by NI , or José Lenzi, an independent consulting geologist. Neither Broili nor Lenzi have any direct interest in the Cumaru or Gradaús properties nor in Aura Gold. No officer, director or associate of the issuer were in contact with the samples. The 19 samples previously collected for Yamana Resources Inc. in 2003 by Matt Hughes, a consulting geologist, were under the direct supervision of Mel Klohn, one of the authors of this report and a Qualified Person as defined by NI While Klohn had no direct interest in the Cumaru or Gradaús properties, he was Exploration Vice President of Yamana Resouces Inc. at the time and was therefore not independent of Yamana Resources Inc. As part of routine laboratory procedures, logs are maintained for all sample preparation activities. In the event a problem with a prep batch is identified, logs can be referenced to trace the sample batch preparation and initiate appropriate action. In the event that any reference material or duplicate result falls outside the established control limits, an error report is automatically generated. This ensures the person evaluating the sample set for data release is made aware that a problem may exist with the data set and investigation can be initiated. Most laboratory procedures for sample preparation consist of drying, crushing and splitting a 300 g subset from the original pulp for analysis. The subset is then pulverized to 200 mesh and a 30 27

28 gm split Au is digested by a 3-hour hot aqua regia solution and fire assayed with an AA finish. For those samples >10 g/t Au the analysis uses fire assay with a gravity finish. The above routine laboratory procedures were used by SGS-Lakefield Geosol in Belo Horizonte, the lab all verification samples were sent to. The authors are confident sample preparation, security and analytical procedures are adequate. 14. DATA VERIFICATION Technical data and historical information In preparing this report, the authors spent 16 days (April 9-25, 2006) in Aura Gold s administrative office in Belém, Pará state, Brazil, reviewing a vast array of technical and other historical information on the Cumaru-Gradaús Gold Project. We were given unrestricted access to the information, which consisted of various reports, maps and other technical data of varying quality regarding geology, geophysics, and geochemistry collected by different companies from separate campaigns of trenching, drilling, augering and related surveying carried out intermittently over a 25-year period. We also obtained and reviewed related information from government agencies, specifically the DNPM. Much of the information was in Portuguese and we obtained what we believe are reliable translations of all relevant and critical items. We checked and re-checked any inconsistencies in the information until those inconsistencies were reconciled to our satisfaction. Where possible, we attempted to confirm anecdotal information against documented information and any historical information against records on file at the DNPM office. It is our opinion that the historical and technical information we present in this current Technical Report has been effectively verified for purposes of this report Site visits The authors visited the property twice for the purposes of this Technical Report, once on February 11, 2006, and again on April 26-27, We were given unrestricted access to all available information and all surface workings on the Cumaru-Gradaús Gold Project. No underground workings exist. Our on-site property verification consisted of the following: a. Collecting confirmation/verification samples for analysis (described below). b. Verifying property locations using a Garmin GPS with SAD69 reference coordinates. c. Visual inspection of the local geology. d. Visual inspection of the mineralized alteration zones. e. Visual inspection of historical drill core and RC drill cuttings. f. Visiting several active garimpos and witnessing gold being recovered by garimpeiros. g. Documenting sample sites and other features with digital photographs. 28

29 14.3. Verification sampling As part of the verification process, Chris Broili, the senior author of this report and an Independent Qualified Person as defined by NI , collected 4 samples for gold analysis. Three of the samples were from altered and apparently mineralized zones at the surface, and 1 sample collected from one of the historical Gradaús drill hole cores. The surface samples were collected as continuous chip samples, 0.2 to 2.0 meters in length, and carefully documented in the field notes; for the core sample, the entire remaining split of the core was taken. The location of each sample was carefully noted then the sample was sealed with a non-opening, color-coded plastic tie. Broili personally collected the samples and retained them in his possession until the trip was completed, at which time the samples were placed in a rice bag which was sealed with non-opening color-coded plastic tie. The samples were given to Jose Lenzi, an independent consultant, who shipped them for analysis to the SGS-Lakefield Geosol laboratory in Belo Horizonte, Brazil. Three years ago, a similar verification step was done by Mel Klohn, one of the authors of this report, who was an officer for Yamana Resources Inc. when they originally acquired the Cumaru Gradaús properties in Klohn visited the property briefly in early 2003 and commissioned an independent consulting geologist to do verification sampling during May, The consultant, Matt Hughes, reviewed historical data on May 7-19, 2003, in the Belém office then visited the property on May 12-16, Hughes collected 19 verification samples, mainly from bedrock exposed in garimpos active at the time of his visit. Except for the fact he took 19 samples compared to our 4, his verification steps were the same as our site verification steps listed previously. Together, in two separate generations of verification sampling, Broili and Hughes collected 23 total samples. In both cases, the purpose was to verify the existence of significant gold values from bedrock exposures on the property. There were no limitations for reviewing data or on the field locations selected by Broili or Hughes for the sampling. A few samples were taken from near the old Gradaús mine (and one from the Gradaús drill core) but most were taken from various artisanal workings scattered across the Cumaru-Gradaús property, specifically the Macedonia, Grota do Avião and Igarapé do Acaí garimpos. Excellent gold values were returned from the one core sample and from ten surface samples, ranging from 2.8 to g/t gold, with only 10 samples returning insignificant amounts of gold. In addition, 35% of the samples contained elevated amounts of copper (maximum 4,660 ppm in the one drill core sample and 640 ppm in the surface samples) and other trace elements such as arsenic (maximum 653 ppm), nickel (173 ppm) and cobalt (516 ppm). Gold values for both generations of verification sampling are presented in the following Table 6. 29

30 TABLE 6. Gold Assays of Verification Samples Collected for Aura Gold and Yamana Resources (analyses by SGS Lakefield Geosol Lab, Brasil) Sample # Au g/t Sample # Au g/t YAMA YAMA YAMA YAMA YAMA YAMA <0.05 YAMA YAMA YAMA YAMA YAMA <0.05 YAMA <0.05 YAMA <0.05 YAMA <0.05 YAMA <0.05 CUM YAMA <0.05 CUM YAMA <0.05 CUM YAMA <0.05 CUM YAMA The four verification samples collected by the current authors for Aura Gold are prefixed by CUM in the above table; the earlier verification samples collected by Hughes for Yamana are prefixed by YAMA. It is our opinion that these samples adequately document the presence of gold and support the veracity of the historical data within reliable tolerance levels. 15. ADJACENT PROPERTIES The mineralization on the adjacent properties described in this section largely reflects the styles of mineralization on the Cumaru-Gradaús properties which are the subject of this report. The information regarding the adjacent properties is taken from public documents translated by Aura Gold. The adjacent properties include only those that have had past production by artisanal miners (garimpeiros). Most of these artisanal operations consist of small placer or alluvial deposits with production in the range of 0.5 to 9.0 kilograms of gold per month, depending on whether there are 6 or 80 people working the operation. The most noteworthy properties are Maria Bonita and Tarzan, two large garimpos west of the Cumaru and Gradaús concessions on the Kayapó Indigenous Reservation, currently off-limits to garimpeiros and mining companies alike: Maria Bonita, 16 kilometers west of the Gradaús mine, is reached via trails through the forest. The area has been impacted by artisanal mining almost as much as has the Cumaru area, as judged from an inspection of satellite images (LANDSAT image, 1985). Gold mineralization in the Maria Bonita area is apparently associated with a granodiorite stock, virtually identical in 30

31 character and size to the Cumaru stock which is associated with the mineralization at Cumaru (Santos & Filho, 2000). The streams with active mining in the Maria Bonita area are adjacent to outcrops with very narrow flood plains. Immature sediment in these drainages produces a stained gold called ouro de mancha. The gold-producing gravels contain quartz fragments thought to be derived from underlying or nearby mineralized quartz or chert veins. Some of these streams yielded grams of gold per day. The village of Maria Bonita has secondary gold mineralization, with 20 garimpeiros in 1990 producing an estimated 1.8 kilograms of gold per month, with an average grade of 0.35 grams of gold per cubic meter (Moraes & Araújo, 1990). Tarzãn, 13 kilometers west of the Gradaús mine, is also accessed by trails throught the forest. This area occurs within a faulted synclinal-type structure thought to be favorable for gold accumulation. The streams, very similar to those at Maria Bonita, have only been partially worked Some areas have had only limited exploitation because of possible contentious issues with the natives on the reservation. Research indicates some of these areas have abundant particles of gold, but further evaluation is needed (Moraes & Araújo, 1990). In addition, Barrick and Codelco have jointly explored a property 8 kilometers north of the boundary of the Cumaru claim block (Codelco website, 2006). With Codelco serving as operator, the venture drilled for about a year on an area underlain by the Serra Azul ultramafic complex. It is thought the target is nickel-copper, not gold. 16. MINERAL PROCESSING AND METALLURGICAL TESTING The Cumaru-Gradaús Gold Project is at an early stage of exploration. No mineral processing or metallurgical test work has been carried out other than that referred to in the historical section. A brief summary of the historical metallurgical testing is as follows: In 1989, Mineração Gradaús commissioned Metais Especiais Consultoria Ltda. to conduct metallurgical tests on 4 samples representing the main known types of oxide and sulfide ore. The tests consisted of gravimetric separation, flotation, cyanidation and combinations of these different recovery methods. The results of the tests showed good recoveries for both the oxide and sulfide ore ranging from 96.0 to 99.0 percent. Details regarding sample size and other important parameters are not well-documented, so these results should be used only with great caution. 31

32 17. MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES The properties are at an early stage and contain no mineral resources reportable by CIM standards as required by NI The mineral resources mentioned in the History chapter of this report are mentioned for historical purposes only and it is uncertain at this time how much of the historical resource was mined and how much remains. We caution that there is no indication that the properties contain, or will contain, any mineral deposits of economic interest. 18. OTHER RELEVANT DATA AND INFORMATION There is no known additional relevant data or information. 19. INTERPRETATION AND CONCLUSIONS Historical information indicates that artisanal miners in the Cumaru district together with Mineração Gradaús produced at least 1.5 million ounces gold (and quite possibly significantly more) over the past 26 years. An historical drilling program at Cumaru hit numerous bedrock gold intercepts. How many of these intercepts reflect mineralization remaining in place is uncertain, but probably most of the primary mineralization encountered at depths below 40 or 50 meters has not been mined. The mineralization encountered in these historical drill holes is related to zones of alteration that in many cases were not sampled and assayed in the drill cores. At the surface, the same alteration is recognized in many of the alluvial saprolite gold occurrences exploited by the artisanal miners. Further, the historical drilling was limited to a relatively small area along the contact zone between the Cumaru stock and the greenstone sequence. This contact zone extends many kilometers beyond the drilled area and is marked by a string of shallow artisanal gold workings. Based on these observations, we believe the Cumaru-Gradaús project has good potential for hosting undiscovered gold deposits. Our verification sampling at Gradaús and in the garimpos scattered across the project area for example, Macedonia, Grota do Avião, Igarapé do Acaí confirms excellent gold values along with elevated amounts of trace elements such as arsenic, copper, nickel and cobalt in at least half of the samples we collected. The geochemical suite is similar to that of many other intrusive-greenstone gold districts. The geology and mineralization appear favorable for at least two types of mineral deposits: shear-related greenstone-hosted gold and intrusive-hosted porphyry-type gold. The first is the classic greenstone-hosted gold model having many familiar productive examples throughout the world. The common geologic ingredients of this model Archean-age greenstone sequence, regional shear zones or splays, evidence of gold, etc. are present in the Cumaru-Gradaús Gold Project. 32

33 The second model is less well-studied, containing some characteristics of the Intrusion-Related Gold Deposit model, also known as Porphyry Gold Deposits, which are mostly common in much younger rock terranes (Lang and Baker, 2001; Hollister, 1992). A detailed study of Cumaru mineralization presents strong evidence that Cumaru may be an Archean-age example of this type of gold deposit (Santos, 1995). Further, the close association between an intrusive stock and gold mineralization at Cumaru appears to be repeated in the Maria Bonita garimpo area, 16 kilometers west. For this reason, we would expect that other mineralized stocks will be discovered in the district. Finally, we note that the major portion of the Cumaru-Gradaús project is comprised of ground that was formerly part of the Cumaru Garimpeiro Reserve. From 1981, when the reserve was established, until 2003, when Yamana acquired exploration rights to the Reserve, this ground was not available for exploration by established mining companies. It has never been systematically explored and has never been drilled, yet it contains may large and widespread artisanal gold workings, mostly in greenstone terrane potentially favorable for classic greenstone-hosted gold deposits. In summary, we believe there is good potential at Cumaru-Gradaús for one or more classic greenstone-hosted gold deposits, similar to those which occur throughout the Carajás province and other Archean provinces in the world, and also perhaps for gold deposits of a less wellknown type such as intrusive-related systems, typically common in rocks of very much younger age. We believe that the possibility of having multiple types of gold targets one conventional to the Archean and one perhaps less conventional enhances the project and improves the odds of making discoveries. Cumaru-Gradaús is an early-stage project of substantial exploration merit and deserves a substantial follow-up effort to examine known areas of mineralization, delineate new areas of mineralization, and define targets for future drilling. 20. RECOMMENDATIONS Further exploration is recommended for the Cumaru Project. We recommend an initial exploration program consisting of both early-stage district-scale activities and prospect-scale follow up work. The program will consist of activities grouped into three partly overlapping categories: (1) compile and analyze existing data, (2) undertake district-wide sampling and other activities to identify possible targets of interest, and (3) initiate verification drilling at the old Gradaús mine site. We expect this program will take about 6 months to complete and cost a total of US$ 905,000. Detailed work to be done in the three categories of initial exploration work are as follows: Data compilation and analysis; logistical orientation... US$ 130,000 Activities, mostly labor costs and consulting fees, camp and equipment costs (communications, computers, etc.) necessary to establish infrastructure and data organization: 33

34 a. establish semi-permanent camp close to, or within, the project area; b. centralize, organize and consolidate voluminous historical data into a coherent GIS data base, registering previous surveys to one UTM grid; c. initiate district-scale topographical survey of relevant surface features, such as artisanal workings (garimpos), outcrop areas, access roads, etc.; d. hire consultant to acquire and analyze regional- and district-scale satellite imagery using latest high-resolution technology; e. hire consultant to evaluate existing geophysical data as a targeting tool for gold prospects at Cumaru and adjacent areas Project-wide ground assessment and sampling... US$ 395,000 Assess geologic potential and define targets of claim block outside the Gradaús mine area. Purchase a mobile, powered auger drill (US$20,000) and other equipment. Collect at least 2,000 samples (analytical costs US$60,000) from auger sampling, stream sediment and pan concentrate sampling, and trenching (backhoe costs US$50,000). Airborne geophysical survey (US$100,000): a. systematically visit and sample all garimpos and outcrop areas in the project area; b. conduct stream sediment and pan concentrate sampling survey of the greenstone sequence, Gurarapá ultramafic complex and Rio Fresco platform sequence; c. initiate a program of soil auger geochemical sampling profiles in lines crossing the Cumaru stock-gradaús greenstone contact, following the contact to the east and south of the Gradaús property on the adjacent unexplored Cumaru property; d. initiate a program of soil auger geochemical sampling profiles at wide spacing across the greenstone terrane extending both west and east-northeast of Gradaús; e. initiate ground magnetic and radiometric geophysical surveys to help characterize covered bedrock and identify possible areas of bedrock alteration in both the greenstone sequence and in the Cumaru stock; f. initiate airborne magnetic-radiometric geophysical survey to cover the previously unexplored Cumaru claim block; g. compile and analyze all geochemical and geophysical data using GIS system to identify possible future drill targets Follow-up exploration and drilling at the Gradaús mine area... US$ 380,000 Focus on Gradaús mine area to evaluate old drilling and define verification and step-out drill program. Includes labor, geological supplies and site preparation work, plus sample analyses (US$30,000) and core-drilling program (US$300,000): a. re-log the old Gradaús drill core; 34

35 b. assess the historical sampling intervals in the old core, re-sample and assay select intervals to verify; c. sample many of the broad altered intervals in the core which were never logged or sampled during the historical Gradaús drilling program; d. compile detailed map of the Gradaús pit and nearby garimpos; e. sample any existing rock exposures; f. evaluate these results in light of existing plan maps and drill sections to design a core drilling program to help verify and extend the mineralization identified in the historical Gradaús drilling program; g. undertake a 3,000-meter core drilling program. We also suggest that a low-priority effort to investate potential for three types of mineral deposits not previously discussed in the current Technical Report: (1) gold in or related to the banded iron formation present in the upper part of the Gradaús greenstone sequence; (2) iron oxide-copper-gold deposits related to the district s anorogenic granite complexes; and (3) nickelcopper (± other metals) related to the mafic-ultramafic (layered?) complexes in the area. It is our opinion that the geology of the project area may be favorable for these three deposit types, but we are not aware at this time of any discrete mineral occurrences or other diagnostic features to suggest there are viable targets for these deposit types in the project area. The exploration program suggested above should enable Aura Gold to take the Cumaru-Gradaús Gold Project to the next stage. This second-stage effort would be a 1-year program costing between US$1,500,000 to US$2,500,000, depending on the level of success obtained in the initial 6-month program detailed above. The second-stage program would consist of: (a) definition drilling at the Gradaús mine (if warranted); (b) initial drilling of several new targets along the intrusive-greenstone contact and within the greenstone sequence itself; and (c) the identification of areas to be followed with detailed contract surveys such as geophysics and geochemistry. We would also expect this program to identify other outlying properties in the district for new acquisition. 35

36 21. DATE Chris Broili Centralia, Washington, U.S.A. May 1, 2006 Chris Broili, C.P. Geo. & L.P. Geo. BK Exploration Associates Mel Klohn Spokane Valley, Washington, U.S.A. May 1, 2006 Mel Klohn, L.P. Geo. BK Exploration Associates 36

37 22. REFERENCES 1. Anonymous, 1997; Programa Nacional de Prospecção de Ouro, Area PA-11, Xinguara, Pará. Belém. CPRM, maps, scale 1:250, Araújo, L.R. 1997; Projeto Cumaru, Relatório de Pesquisa. Mineração Gradaús company report, 48 p. 3. Ash, Chris and Alldrick, Dani, 1996; Au-quartz Veins, in Selected British Columbia Mineral Deposit Profiles, Volume 2 - Metallic Deposits, Lefebure, D.V. and Hõy, T, Editors. British Columbia Ministry of Employment and Investment, Open File , p Codelco website, Costa, M.A. & Soares, A.F., 1996; Projeto Gradaús Relatório de Etapa. UGM Serviços Téchicos S/C Ltda. company report, 26 p. plus maps and drill sections. 6. Dallegrave, G.F., 1998; Cumaru Project summary for Cyprus. Cyprus company report, 6 p. plus assays. 7. DNPM/MME, 1988; Anuário Mineral Brasileiro. Vol. II. 8. DNPM/MME, 1990; Principais Minerais Brasil. Vol. II & III. 9. Duarte, J.C., Hühn, R.F, Souza, M.D & Santos A., 1997; Geologic Map Area PA-11 Xinguara Pará. CPRM Geologic Services of Brazil; four maps, 1:250,000 scale Faraco, M.T.L., Carvalho, J.M.A. & Klein, E.L. 1996; Folio Araguaia (SB-22), Metallogenic Map of the Carajás Province. CPRM Geologic Services of Brazil, 21 p. plus map, 1:1,000,000 scale. 11. Gibbs, A.K., Wirth, K.R., Hirata, W.K. & Olszewski, W.J., 1986; Age and Composition of the Grão Pará Group Volcanics, Serra dos Carajás. Revista Brasileira de Geociências, p Hollister, V.F., 1992; On a proposed porphyry gold deposit model. Nonrenewable Res 1, p LANDSAT image, Lang, J.R., Baker, T., Hart, C., and Mortensen, J.K., 2000, An exploration model for intrusion-related gold systems: Soc. Econ Geol. Newsletter, no. 40, p. 1, Luis, J.G., 1989; Levantamento Geofisico Cumaru Pa, Contratante: Mineração Gradaús. Federal Univ. of Pará State, 12 p. 16. Lunardelli, J., 1996; Technical Report, Gradhaús Project, Cumaru do Norte, Pará, Brazil. Anglo-American company report, 5 p. plus maps. 17. Martini, S.L., 1998: An overview of main auriferous regions of Brazil. Revista Brasileira de Geociências, 28(3), p Martins, R.C., 1998; Project Cumaru, geophysics. Cyprus company report, 16 p. plus appendix. 19. Moraes, L.I.J. & Araújo, L.R., 1990; Projeto Cumaru Aspectos Gerais, Reavaliação de Reservas, Plano de Aproveitamento Econômico. Mineração Gradaús company report filed with DNPM, 2 volumes, 153 p. 37

38 20. Phillips, S.K., 1990; Ensaios de Caracterização Technológica de Minério de Ouro do Projeto Cumaru. Report for Mineração Gradaús by Metais Especiais Consultoria Ltda. 21. Ronzê, P.C., Soares, A.D.V., Santos, M.G.S., and Barreira, C.F., 2000; Alemão Copper-Gold (U-REE) Deposit, Carajás, Brazil; in Porter, T.M. (Ed.), Hydrothermal Iron Oxide Copper- Gold & Related Deposits: A Global Perspective, Volume 1. PGC Publishing, Adelaide, p Santos, A. & Filho, J.I.C., 2000; Xinguara Geologic Map Folio (SB 22-Z-C). CPRM Geologic Services of Brazil, Belém, map, 1:250,000 scale. 23. Santos, M.D. & Leonardos, O.H., 1995; Sistema de Fluidos e Modelo Genético do Depósito Aurífero do Cumaru, se do Estado do Pará in Bol. Mus. Para. Emilio Goeldi, sér. Ciênc. da Terra 7, p Santos, M.D., 1995; O papel dos granitóides na gênese dos depósitos de ouro tipo lode Arqueano: Caso da jazida do Cumaru - PA. Unpub. doctorate thesis, Universidade de Brasília Instituto de Geociências: 157 p. 25. Santos, M.D., Leonardos, O.H., Foster, R.P, & Fallick, A.E., 1998; The lode-porphyry model as deduced from the Cumaru mesothermal granitoid-hosted gold deposit, Southern Para, Brazil. Revista Brasileira de Geociências, 28(3), p Silva, A.R.B., 2000; Carajás como Fator de Desenvolvimento Regional. in Associação Comercial do Bará, Belém-PA. 27. Souza, L.H. & Vieira, E.A.P., 2000; Salobo 3 Alpha Deposit: Geology and Mineralisation; in Porter, T.M. (Ed.), Hydrothermal Iron Oxide Copper-Gold & Related Deposits: A Global Perspective, Volume 1; PGC Publishing, Adelaide, p Villas, R.N., and Santos, M.D., 2001: Gold deposits of the Carajás mineral province: deposit types and metallogenesis. 38

39 CERTIFICATE OF QUALIFIED PERSON 1. I, Chris Broili, of 2104 Graf Road, Centralia, Washington, U.S.A., am currently an Exploration Geologist with BK Exploration Associates. 2. I am the primary author responsible for the preparation of the technical report titled "Technical Report 2006 for on the Cumaru-Gradaús Gold Project, Pará State, Brazil" and dated May 1, 2006 (the Technical Report ). 3. I graduated with a Bachelor s degree in Geology from Oregon State University (B.Sc.) and a Master s degree in Economic Geology from the University of Idaho, College of Mines (M.Sc.). I am a licensed Professional Geologist in the State of Washington (#547), a Certified Professional Geologist in the United States (#7937) with the American Institute of Professional Geologists, a Fellow of the Society of Economic Geologists, and a member of the American Institute of Mining and Metallurgy. My relevant experience for purposes of this Technical Report include Senior Minerals Geologist with Union Carbide Corp. and Atlas Precious Metals Inc., Vice President of Exploration for Yamana Resources Inc., Vice President of Exploration for Mines Management Inc., and Senior Geological Consultant for numerous junior and senior mining companies. I have been directly involved in mineral exploration for the past 35 years. I have read the definition of qualified person set out in National Instrument ( NI ) and certify that by reason of my education, affiliation with a professional association (as defined in NI ) and past relevant work experience, I fulfil the requirements to be a qualified person for the purposes of NI I visited the properties and reviewed data on February 11th, 2006, and April 26-27, 2006, with the management of Aura Gold and two Brazilian geologists. 5. I supervised the preparation of the entire technical report and am directly responsible for Chapters 1 6, 10 19, 21and 22 of this report. 6. I am independent of the issuer applying all of the tests in section 1.5 of National Instrument I have had no previous involvement with the Cumaru Project. I have no interest, nor do I expect to receive any interest, either directly or indirectly, in the Cumaru Project, nor in the securities of 8. I have read National Instrument and Form F1, and the Technical Report has been prepared in compliance with that instrument and form. 9. I certify that, as of the date of this Certificate, to the best of my knowledge, information and belief, this Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Dated this 1st day of May, 2006 Centralia, Washington, U.S. Chris Broili Chris Broili, C.P. Geo. & L.P. Geo. 39

40 CERTIFICATE OF QUALIFIED PERSON 1. I, Mel Klohn, of E. 48 th Ave., Spokane Valley, Washington, U.S.A., am currently a Senior Consulting Exploration Geologist for BK Exploration Associates and Vice President, Exploration for 2. I am a co-author responsible for the preparation of the technical report titled "Technical Report 2006 for on the Cumaru-Gradaús Gold Project, Pará State, Brazil" and dated May 1, 2006 (the Technical Report ). 3. I graduated with B.Sc. and M.Sc. degrees in Geology from the University of Oregon. I am a licensed Professional Geologist in the State of Washington (#830), a member of the Society of Economic Geologists, the Canadian Institute for Mining and Metallurgy and the Society for Mining Metallurgy and Exploration. I have been directly involved in resource exploration for the 39 years since my graduation. I have more than 6 years direct experience with greenstone-hosted shear-related lode gold deposits and have authored or co-authored a number of private reports and several previous NI 43-10I reports on the gold deposits or gold resources in these terranes. Further, I have several years experience exploring for porphyry and intrusion-relatedand gold systems. I served 25 years as a Senior Professional Geologist and Senior Research Geoscientist for Exxon Corporation, and as Vice President of Exploration consecutively for Yamana Resources Inc., Yamana Gold Inc., Samba Gold Inc., and most recently I have read the definition of qualified person set out in National Instrument ( NI ) and certify that by reason of my education, affiliation with a professional association (as defined in NI ) and past relevant work experience, I fulfill the requirements to be a qualified person for the purposes of NI I visited the properties and reviewed data on February 11th, 2006, and April 27, 2006, with other management of Aura Gold and two Brazilian geologists. 5. I am responsible for Chapters 7, 8, 9 and 20 of this report. 6. I am an officer of the issuer and I hold of securities of the issuer and I am therefore not independent of the issuer. 7. I have had previous involvement with the Cumaru Project for Yamana Resources Inc. but I have no interest, nor do I expect to receive any interest, either directly or indirectly, in the Cumaru Project. 8. I have read National Instrument and Form F1, and the Technical Report has been prepared in compliance with that instrument and form. 9. I certify that, as of the date of this Certificate, to the best of my knowledge, information and belief, this Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. Dated this 1st day of May, 2006 Spokane Valley, Washington, U.S.A. Mel Klohn Mel Klohn, L.P. Geo. 40

41 CONSENT OF AUTHOR TO: Toronto Stock Exchange Ontario Securities Commission British Columbia Securities Commission Alberta Securities Commission I, Chris Broili, P. Geo., of 2104 Graf Road, Centralia, Washington, U.S.A., and Mel Klohn, L.P. Geo., of E. 48th Avenue, Spokane Valley, Washington, U.S.A. do hereby consent to the filing, with the regulatory authorities referred to above, of the technical report titled "Technical Report for on the Cumaru Gradaús Gold Project, Pará State, Brazil" and dated May 2, 2006 (the "Technical Report") and to the written disclosure of the Technical Report and of extracts from the Technical Report in the written disclosure in the Annual Information Form of being filed. Dated this 1st day of May, 2006 Chris Broili, C.P. Geo. & L.P. Geo. Dated this 1st day of May, 2006 Mel Klohn, L.P. Geo. 41

42 APPENDIX 1: BRAZIL MINING LAW Brazil is one of the ten largest economies in the world, and South America's largest country in population and area. It is a constitutional democracy with a strong national policy encouraging foreign investment. Brazil ranks as one of the world's leading jurisdictions for mining investment. The country offers extensive infrastructure, a large pool of skilled technical and professional personnel, and an established legal system. Mineral resources are defined and mining rights guaranteed under Brazil's Federal Constitution, Federal Mining Code and various Executive Laws. The Federal Government collects royalties on mineral production. In addition to the government royalty, there is also a royalty to the surface landowner. Brazilian Mining Laws Under the Brazilian Constitution, mineral deposits represent a property interest separate from the surface rights and belong to the federal government. The prospecting and mining of mineral resources in Brazil may be carried out by Brazilians or by companies duly incorporated in Brazil, which hold a license or concession granted by the federal government. Certain royalties are levied on mineral production in accordance with Brazilian law. The current statutory royalty imposed by the federal government on gold properties is 1% of sales proceeds, less sales tax, transportation and insurance costs. Of this 1% royalty, 65% is payable to the municipality, 23% is payable to the state government, and 12% is payable to the federal government. The statutory royalty for copper properties is 2%. The DNPM. In Brazil, mining activity requires the grant of licenses and concessions from the Departamento Nacional da Produpao Mineral (the "DNPM"), an agency of the Brazilian federal government responsible for controlling and enforcing the Brazilian Mining Code. Agreements with landowners are also required. Government concessions consist of: (i) applications for exploration licenses; (ii) exploration licenses; and (iii) mining concessions. The area covered by mineral rights is limited to 10,000 hectares but may be smaller in area depending upon the region where the concession is situated. Applications for Exploration Licenses. An application for an exploration license must be supported by a location map, exploration plan and motivation report, and must comply with certain other requirements. Provided the area of interest is not already covered by a pre-existing application or exploration license and that all requirements are met, the DNPM would normally grant the licence on a priority of application basis. Applications are sequentially numbered and dated on filing with the DNPM. Exploration Licenses. An exploration license entitling the holder to prospect must be requested in an exploration application addressed to the DNPM which, when registered, guarantees the applicant priority if the prospect applied for is not already covered by a geological reconnaissance permit, exploration license, mining concession or mine manifest in favour of others, and if no prior application has been filed for authorization to prospect in the same area. An exploration license from the DNPM specifies the properties included within the area of prospecting and defines the latter by locality, boundaries and surface area. An exploration license is valid for up to three years, can be renewed for a further period under special conditions and may be transferred. Exploration must begin within 60 days of the issuance of the license and must not be suspended for more than three consecutive months or 120 non-consecutive days. Otherwise, the DNPM has the discretion to terminate the license. Within the term of an exploration license, the holder of an exploration license must carry out the work necessary to determine the existence and extent of a mineral deposit and to assess its exploitability in economical and technical terms. In addition, the holder of an exploration license must submit to the 42

43 DNPM an annual report on exploration expenditures and a full report of exploratory work done within the terms of the licence. Upon submission of the full exploration report, the DNPM has the right to inspect the area to confirm the accuracy of the report and shall approve the report when the existence of a mineral resource has been confirmed. Upon approval of that report, the holder of the license has one year to apply for a mining concession. In exceptional cases the extraction of mineral substances in authorized areas may be permitted before the granting of a mining concession, subject to the prior authorization of the DNPM. Mining Concessions. An application for a mining concession must be addressed to the Brazilian Mining Ministry by the holder of an approved exploration license, supported by information regarding the plan for economic development of the deposit, including a description of the mining plan, the processing plants, proof of the availability of funds or existence of financial arrangements for carrying out the economic development plan and operation of the mine. A mining concession will not be granted unless an environmental licence is issued by the environmental authority, an entity separate from the DNPM. In order to obtain an environmental licence, in most cases, the concession holder must produce an environmental impact assessment, an environmental protection plan and a revegetation plan and go through public hearings. The environmental licence, once granted, will contain terms and conditions such as those related to contamination of soil and ground water, drainage, tailings, revegetation and reforestation. Terms relating to environmental matters may include employment conditions for employees working with hazardous materials (such as periodic employee rotation), a code for mine construction (as may be necessary, for example, to avoid contamination of soil and ground water, for proper drainage and to limit erosion), tailings disposal guidelines, procedures and timetables for revegetation and reforestation, and the plan for reclamation once mining is completed. Site visits by governmental authorities to properties where mining concessions are granted occur on a regular basis (generally, the frequency of visits will depend upon the nature of the work being undertaken and the length of the prior visit) and annual progress or status reports must be submitted by the mining company that holds the mining concession. Those visits or reports may require a mining company to adopt changes to the mining plan based on the recommendations made by governmental authorities. The holder of an approved Brazilian mining concession must, among other things, start working within six months after publication of the mining concession. The mining work, once commenced, cannot be interrupted for more than six consecutive months except for proven reasons of force majeure, otherwise the concession may be revoked. The mining company is also required to file with the DNPM annually, detailed statistical reports on the mine's performance. Mining concessions are not limited in time and will remain valid until full depletion of the mineral deposit. Mining concessions can be transferred between parties qualified to hold them. The holder of a mining concession is entitled to sell or lease the concession subject to the approval of the appropriate governmental authority which will be granted if the conditions provided for in the applicable legislation are met. Once a mining concession is granted, a mining company is required to obtain an operating permit for each mine that is operated. The operating permit is renewed annually subject to compliance the conditions set forth therein and with environmental laws and regulations. No significant fees or other payments are required to be paid in connection with the issuance of an exploration licence, an application for an exploration license or mining concession, or a mining concession itself. However, surface owners must be compensated for disturbance of their farming and other activities. If compensation cannot be resolved by negotiation between the parties, then any such dispute will be resolved by the courts. The Mining Code sets the limits of the compensation to be paid to the surface owner. Foreign Investment Controls. In accordance with Brazilian laws and regulations, foreign investment must be registered at the Central Bank of Brazil (the "Central Bank"). Such registration is electronic, and no preliminary official authorization is required for equity investment. The investment to subscribe for capital or to 43

44 buy a stake in an existing Brazilian company can be remitted to Brazil through any banking establishment authorized to deal in foreign exchange. However, closing of the exchange contract is conditional on the existence of an Electronic Declaratory Registry (RDE) registration number for the foreign investor and the Brazilian investee. The RDE is part of the Central Bank Information System (SISBACEN). The registration of investments as foreign capital, as evidenced by the appropriate Central Bank electronic registration, grants the foreign investor the right to repatriate the registered investments and to remit after-tax earnings attributable to such investments. These earnings may be reinvested in Brazil, either through their capitalization in the entity which produced the earnings or their investment in another Brazilian entity. Such capitalized earnings may then be registered as foreign capital with the Central Bank in foreign currency. On the ultimate sale of an investment in Brazil, current Brazilian regulations provide that the foreign investor may remit the proceeds of the sale free of withholding tax up to the amount of the registered foreign capital of the remitter. 44