The preliminary economic assessment is preliminary in nature and it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized. The PEA reports conventional surface and underground mining of 18 variably-oriented distinct vein structures by a 5,000-tonnes-per-day conventional mill and cyanide leaching plant producing a silver-gold dore with an estimated average annual production of 6.8 million ounces of silver and 11,800 ounces of gold at a cash cost of $11.84 per ounce of silver, net of by-product credits and a mine life of 12 years. For additional details on the PEA, please refer to the joint press release dated August 11, 2011.

Our joint venture with Pan American dated effective April 13, 2009 ("the joint venture agreement") provides that Orko is fully-carried to commercial production. If a decision is made to build a mine at La Preciosa, 100% of the construction costs will be funded by Pan American whereas operating costs and profits will be split between the joint venture partners, with Orko receiving 45% of the profits. Under the terms of the joint venture agreement, Pan American must deliver a NI 43-101 compliant feasibility study before April 13, 2012, with the possibility of a one-time, three month extension to July 13, 2012 if there are extenuating circumstances which prevent Pan American from meeting their original deadline. The feasibility study will include a schedule for building the mine. If Pan American does not deliver a feasibility study, it will lose the right to earn a 55% interest in La Preciosa.