Trilliant Exploration Corporation
10-K






Exhibit 10.3






GEOLOGICAL REPORT OF THE MULUNCAY DEPOSIT
OF THE PORTOVELO-ZARUMA-AYAPAMBA AREA




EL ORO
PROVINCE, ECUADOR








Prepared For
Ecuadorgoldcorp S.A












AUTHOR: WIMER
CASTRO




FEBRUARY,
2008















TABLE OF
CONTENTS


INTRODUCTION
                    1HISTORY
                    1DESCRIPTION AND
      LOCATION
                    4ACCESABILITY, CLIMATE, VEGETATION
      AND LOCAL FACILITIES
                    4LOCAL AND REGIONAL GEOLOGICAL
      SETTING
                    6DEPOSIT
      TYPES
                    7LOCAL AND REGIONAL
      MINERALIZATION
                    8EXPLORATION
                    10DDH
      DRILLING
                    12SAMPLING
      METHOD
                    12SAMPLE PREPARATION FOR
      TESTING
                    12ADJACENT
      CONCESSIONS
                    12EXPLORATION
      POTENTIAL
                    13CONCLUSIONS AND
      RECOMENDATIONS
                    13






i









SUMMARY




This
assessment report has been prepared by Wilmer Castro who has researched the
mining, treatment, economic analysis and further development potential of the
property. The Muluncay District comprises a total area of 343 hectares in a
readily assessable region of southern Ecuador. The gold mineralization found in
the district is associated with an extensive high grade gold and silver
epithermal vein system. This Preliminary Assessment Report was prepared by the
author at the request of Ecuador gold Corp. S A. and is based on:


- a site visit
  in January 2008;
- interviews
  with Company management and other consultants engaged to assist

I
have visited the Muluncay District numerous times and am very familiar with the
area and it’s potential.




The
writer has been requested by the Management of Ecuadogold to summarize the
geology and mineral potential of the Muluncay Project within the prospective
gold and silver-bearing vein systems in the Occidental Andean Cordillera
primarily the Gen and Cristina veins.




HISTORY




The
hills of Zaruma and Portovelo have been mined for gold and silver for centuries.
The Incas were already extracting gold and silver in the area with hydraulic
mining of the oxidized parts of veins when Mercadillo, one of Pizzarro ́s force,
followed the Rio Amarillo River upstream and encountered the Inca mine and
founded the town of Zaruma in 1549 (Billingsley, 1926). E xploitation of the Zaruma
and Portovelo districts continued during the time of Spanish colonization until
1870 when an Ecuadorian-Chilean company was established.




In
1880, Grant Zaruma Company, from England, bought controlling shares of a newly
formed






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Ecuadorian-Chilean mining
company. Operational rights were immediately endorsed to Southern American
Development Company (SADCO), an American
company, who operated the mine from 1897 to 1950 by gaining control of the
district’s main gold deposits in 1897. Exploration programs of SADCO commenced
in 1896 and brought the mine into production at 108t/day in 1905. The mine was
subsequently deepened to 13 level located at an elevation of 270m above sea
level, 800m below the uppermost workings (PRODEMINCA, 2000 in Spencer, R.M. et
al., 2002). In the 53years that followed, SADCO recovered some 3.5 million
ounces of gold and 12 million ounces of silver from 7.6 million tones of ore at
a cut-off grade of 14.4 g/t Au and 48.9 g/t Ag (Van Thournout et al.,
1996).




After the lower levels of
the Portovelo mine were flooded in 1944 and facing increasing costs, taxes and a
complicated political situation, SADCO finally withdrew from the country in 1950
and the Ecuadorian government took over the mine. A s tate-owned company, CIMA,
took over the mining operations in the area until 1980 and it is estimated to
have produced a further 375,000 oz of gold by 1965. In 1984, thousands of poverty-stricken miners
invaded the old SADCO pits and small-scale and artisan mining has been going on
in the area ever since. An additional 35,000 to 50,000 oz of gold has been
produced each year since then by informal miners, small-scale operating mining
societies and principally from the family-owned BIRA. In the 1990 ́s statistical
information, mining from the Zaruma and Portovelo areas totaled 3 million
tons.




In
the mid-1990s several overseas companies attempted to consolidate the area and
carried out systematic exploration
programs.




Current exploration by
ECUADORGOLDCORP SA involved site visits and samples of vein material were taken
from the Gen and Cristina veins. Gold values from several samples taken range up
to 10.40 g/T. Other samples taken in other workings show values of up to 58.6
g/T gold, up to 209 g/T silver, up to 4.86% copper and up to 16.85% zinc. Data
provided by the company notes that there are eight (8) mines on the concession.
The two main producing mines, Nueva Esperanza and Aguacate (in a production
stage) contain the three main major veins Cristina, Gen, and a third vein (name
unknown to the author). In these two mines development work was seen to be
carried out. This work includes advancing an additional 50 m






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beyond
the actively mined veins to a fourth mineralized vein. The two tunnels are being
advanced along this new vein to prepare it for exploitation. The tunnels are
being reconditioned to allow a more efficient mining equipment transportation,
in order to extract ore material with 10 two-tonne ore cars (20 tons) per trip
from underground to the ore stockpile or primary crusher. The processing plant
is currently operating and it contains the primary crusher, secondary crusher, a
series of Chilean grinding mills and a series of Denver floatation cells to
concentrate sulphide mineralization to capture both mineral ore and any
gold-silver associated with those sulphides. There is a 125 hectare property
less than one kilometer from the current processing plant. It is being
considered to increase the capacity of the processing plant in such property.
Company engineering and geological staff of ECUADORGOLDCORP S.A. are planning
the additional six additional mines on the concession be brought to the
production level of the two currently operating mines.




SADCO
operated mines in the Zaruma-Portovelo-Ayapamba district for 46 years. During
this time approximately 3.6 million ounces of gold and 12 million ounces of
silver were produced. Production rates at the Grand Mine, the major producer in
the district, are estimated up to a maximum of 200,000 tonnes per year, and gold
grades were approximately 20-30 g/T. Significant quantities of silver, lead and
zinc were also produced. The old SADCO operations, scattered throughout the
district, generally (with the exception of the Grand Mine) only extended to a
depth of approximately 200m below surface. The Grand Mine contains a
gold-mineralized zone which extended to a depth of at least 660 m below surface.
It was collared at an elevation 700 m below mine workings in the Muluncay
concession area. This indicates that there is significant additional potential
at depth of up to 1500 m within the Muluncay concession. A preliminary estimate
of the resource is made by the author on the Muluncay Concession, from the two
currently active veins (Gen and Cristina) with an estimated strike length of 1
km (the N-S length of the concession), an average width of 1.0 m and an average
depth of 1000 m. Using a grade of 6 g/T as the average grade, this would produce
an estimated tonnage of 400,000 T for each vein. There are presently 4 known
veins, which would give a total current resource of 1,600,000 T, for a total of
9,600,000 g (300,000 oz) gold. Additional veins will be found during ongoing
development and exploration. The tonnage estimate will very likely increase
significantly. Secondary veins, stringers, breccia and disseminated
mineralization in the wall rocks have never been exploited, or even properly
assessed. It is the author’s opinion that with the improved, more economic
mining and milling methods this resource can be taken advantage of, so that it
is probable that this resource can be increase to greater than 2.0 million tons
which would produce 9,600,000 g (375,000 oz) Au. However, this is a relatively
low grade estimate when one






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considers that the cut-off
grade for the SADCO operations was 14.6 g/ton. Using that value as an average
grade 2.0 million tons of ore would produce 29,200,000 grams (912,500 oz) of
gold. No estimate of the value derived from silver or sulphide concentrate has
been made, but it would add a significant amount to the value of this resource.
The history of the Zaruma mining operations indicates that there is a
significant opportunity to apply modern mining methods to a major resource which
has had only limited exploitation in the past.




DESCRIPTION AND
LOCATION




Ecuadorgold is doing some
development works at Muluncay concession, which is located in the
Portovelo-Zaruma mining area, situated in the cantons of Ayapamba and Paccha,
Province of El Oro of southern Ecuador and covers an area of 374 mining hectares
at Latitude 03o 36’ 30” South and Longitude 79o40’ West. The following
co-ordinates are based on a metric UTM grid system referenced to PSAD-56 datum
and geographic zone 17.






Table 1 – Muluncay Boundary
      CoordinatesEasting -
      m
                    Northing -
      m652000
                    9599400653100
                    9599400653100
                    9596800651600
                    9596800651600
                    9599000652000
                    9599000652000
                    9599400






The
project is situated about 175 kilometres southeast and 60 kilometres east of the
major Pacific port cities of Guayaquil and Machala, and lies on the cordillera
occidental of the Andes, which runs the length of the west coast of North and
South America.




ACCESSIBILITY, CLIMATE,
PHYSIOGRAPHY, LOCAL RESOURCES AND
INFRASTRUCTURE




Access to the district
from the coast is by a paved 2-lane road in good condition. It is approximately
a 2 hour
drive from the coastal city of Machala to the town of Portovelo, at the
confluence of the Rio Amarillo






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and
Rio Calera. From within the district access to most of the properties, including
the Muluncay concession, is by secondary 1- to 2-lane paved roads which often
continue to specific sites by tertiary single lane gravel roads, usually in
conditions for 4 wheel drive vehicles. Access to these sites from Portovelo
takes approximately 30 minutes.




The
climate is subtropical and humid with temperatures ranging from 18 o to 30 o C. Yearly rainfall
averages 1,341 mm, with heaviest rainfalls occurring in the months from January
to June. Within the district, topography is moderately steep with elevations
ranging from the 950 to 1650 m above sea level (ASL). The
Portovelo-Zaruma-Ayapamba district is traditionally an underground mining camp.
Those areas are not disturbed by mining activity used for farmlands and
livestock raising. Any early stages of surface exploration work such as sampling
and possible DDH drilling carried out by ECUADORGOLDCORP SA will involve minimal
disruption to current surface activities of the communities.




Plate 1 – Typical
Topography and Vegetation, area of Muluncay
Concession











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The
population within the project area is approximately 50,000. Zaruma, has a
population of 29,000, and Portovelo, with a population of 14,000 make up the
majority, but there are numerous small villages of a few hundred people each
(e.g. Ayapamba, Muluncay). The population has extensive experience in the
recognition and mining of vein high-grade gold deposits, making them a valuable
asset for future exploration, development and production throughout the entire
region. Hotels, communication resources, public security and government
institution representatives are pleased. In Pinãs, approximately 20 km distance
to the west there are high-tension power lines providing electricity and are
connected to both Zaruma and Portovelo. Cell phone use in this area allows
communication with major centres in the country. The Rio Amarillo and Rio Calera
rivers are able to supply adequate water for large scale mining operations
throughout the year.




GEOLOGICAL
SETTING




Regional




Regional geology of the
southern part of Ecuador consists of basement rocks of the Triassic age Tahuin
Series. These include San Roque Formation medium- to high-grade gneisses,
schists and amphibolites overlain by a thick sequence of Capiro Formation
low-grade mica schists, phyllites and quartzites, with a minor component of
interfingering volcanic rocks.




This
metamorphic basement is unconformably overlain by a thick sequence of Lower
Cretaceous age Celica Formation massive, homogeneous volcanic lavas and tuffs.
These are of andesite composition and are intercalated with minor sedimentary
layers. The Celica Formation is intruded by small plutons of diorite to
granodiorite composition, also Lower Cretaceous in age. This entire mass has
been interpreted as a continental volcanic arc. All of these units are capped
unconformably by Tertiary (Oligocene age) Saraguro Formation felsic volcanic
lavas and pyroclastics, by later Miocene age Chinchillo Formation (currently
referenced as Pisayambo Formation) rhyolite flows and pyroclastic.




There are two major
regional faults. These are the Pinãs Fault and the Puente Busa –Palestina Fault.
These faults
have produced three tectonic blocks which have exposed bedrock to different
depths. Between these






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two
faults exposure consists of Celica Formation mafic to intermediate volcanics.
Within the Celica Formation (Figure 4) is a thick series of andesitic lavas
termed the Portovelo Series which occurs along a central N-S trending axis.
These lavas act as host rocks to most of the vein systems in the
Portovelo-Zaruma-Ayapamba region. Recent mapping has shown that the Celica
Formation is unconformably overlain by two hydrothermally altered volcanic
series, and is crosscut by a subvolcanic feeder systems. These volcanics are
composed of intermediate pyroclastics and breccias, crosscut by younger small
rhyolite stocks, dykes and sills. These rhyolitic rocks are concentrated along
two NW trends in the central mountain ranges (Zaruma-Urco and Santa Barbara) and
are due to resistant weathering caused by regional silicification. Most of the
district vein-cavity fillings, including base and precious metals
mineralization, are closely associated with this volcanic activity.






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9 -

















Significant
structures in the district (Figure 5) include NW, NE and N-S trending high- and
low-angle faults and circular structures. The N-S trending veins, dipping
generally 70oto
90oNE,
are the dominant though not the only structures for hosting gold, silver, lead,
zinc and copper mineralization in the district. They are bound to the SW by the
NW-trending Pinas Fault. The Puente Busa –Palestina Fault lies directly NE of
the centre of the district and does not interfere with the continuity of faults,
veins or mineralization beyond it to the NE.






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11 -

















Concentric district-size
zones of propylitic, argillic, silicic and sericitic alteration cover the region
and represent the collapse of a Miocene age volcano and the formation of a
caldera. Supergene enrichment of gold mineralization is recognized in certain
areas by the presence of strong patches of argillic alteration. Silicification
represents the core of this alteration “aureole”. Silicification formed in two
stages. One type, associated with most of the gold-silver-base metals
mineralization, is related to the Portovelo-Zaruma axis. The second type is
found in the Santa Barbara Mountain and is associated with rhyolite dykes and
plugs, and with intense argillic alteration. A third type of silicification is
found as wallrock alteration haloes of
quartz-chlorite-sericite-adularia-calcite-(pyrite).




Concession




Bedrock underlying the
Muluncay concession consists of Lower Cretaceous age Celica Formation massive
volcanic lavas of andesitic composition. To the author’s knowledge no detailed
mapping has been carried out on these host rocks. Within these host rocks are a
series of sub-parallel structures. These local area structures encompass those
veins found within the Muluncay concession, such as Gen and Cristina. This
system of veins is the northern continuation of the large system of veins (e.g.
Abundancia, Portovelo) which have been so vigorously mined in the
Zaruma-Portovelo area for the last 400 years.




DEPOSIT
TYPES




Gold
mineralization within the district is considered to be a low- to intermediate
sulphidation stage epithermal (Hedenquist, 2000) to upper mesothermal
gold-silver-lead-zinc-copper system. Typically this type of mineralizing system
includes pyrite-pyrrhotite-arsenopyrite and high-Fe sphalerite. Gangue minerals
vary from vein through stockwork to disseminated forms. Gold is typically
associated with quartz-adularia ± calcite ± sericite. This contrasts with
high-sulphidation types which typically contain
gold-pyrite-enargite-luzonite-covellite hosted by a leached residual core, with
quartz-alunite, kaolin, pyrophyllite or diaspore. A subset of the
low-sulphidation stage assemblage contains
pyrite-tetrahedrite/tennantite-chalcopyrite and low-Fe sphalerite. This subset
is also silver and base metal rich compared to low-sulphidation end members.
Base metals within the Muluncay veins, as well as within much of the district
mineralization may be an indicator for this intermediate assemblage. It could
also






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indicate (especially the
presence of significant galena –(lead) that the system has reached uppermesothermal
depths.




MINERALIZATION Regional




The
gold bearing north-south trending sub-parallel systems of quartz veins occurring
within the Portovelo- Zaruma district are found
exclusively within the Cretaceous altered andesitic rocks (Portovelo
Series).




Spatially the
mineralization is arranged in three zones. In Zone 1 pyritization with little
gold is seen in stockwork, shattering and brecciation around the Santa Barbara
and Zaruma Mountains. Zone 2 contains gold-bearing quartz and quartz-adularia
veins with abundant sulphides and is found in the Portovelo-Zaruma axis and NE
of the Santa Barbara Mountains. A large aureole of gold-bearing quartz-calcite
and quartz-chlorite, with abundant sulphosalts and minor sulphides, representing
Zone 3, surrounds the core of sulphide mineralization . Muluncay lies within the
NNW continuation of the Zone 2 type of mineralization. Based on the presence of
adularia-sericite, the vein textures, the abundance of sulphides and calcite,
the mineralization is considered to be part of an adularia-sericite low- to
intermediate sulphidation epithermal gold system.




The
quartz veins are predominately fault and fracture filling structures exhibiting
pinch and swell, branching, composite
banding, braided and loop features.






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Regionally these
mineralized veins extend horizontally for at least 15 km (the
Portovelo-Zaruma-Ayapamba region), and have probable depths of at 1500 m (from
local height of land to known depth of the Casa Negra Concession SADCO Grand
Mine). Past-producing veins in the district range from 60 cm to 8 m, with an
average width of 1.3 m. “Stringers” and narrow veins, as well as silicified
wallrock, are virtually untested for their gold potential. As is typical in a
standard epithermal gold system, there are some zones of “bonanza-type”
high-grade gold mineralization (locally termed “clavos”) in the 30 to 200
g/tonne range. Clavos of this grade were reported by the owner on the Muluncay
concession on one of the major veins (Cristina or Gen).




Most
of the known gold is free-milling. Other mineralization includes silver (as
electrum, sulphosalts and with galena) and
copper-lead-zinc sulphides (chalcopyrite-galena-sphalerite).




The
dominant north-south strike of the gold bearing quartz veins shows local
variations in the proximity of cross faults. To the south of Rio Amarillo, the
veins swing in a south-east direction, sub-parallel to the Pinas-Portovelo
fault.




Three main types of gold
bearing veins are present in the district. These are: 1) Quartz veins with
disseminated pyrite, minor chlorite as streaks, bands and patches, and 2) Quartz
veins with abundant pyrite and subordinate chalcopyrite, galena and sphalerite
occurring as bands, patches and coarse disseminations, and 3) Carbonate veins
with coarse calcite and calcite-quartz gangue occasionally with coarse galena,
sphalerite and chlorite beside ubiquitous pyrite. Visible gold is not a common
occurrence within the Portovelo-Zaruma-Ayapamba district. As a general rule,
gold occurs as fine particles, often less than 100 mesh in size. According to
microscopic studies carried out in the past, gold locally replaces sphalerite.
Locally gold mineralization is present in the wall rock following north-east
trending faults and fractures.




Post
mineralization faulting along north-west striking cross faults has locally
caused displacements of up to 40 metres in several gold bearing structures.
Local detailed mapping and drilling is required to trace the continuity of this
mineralization.




Concession The two best-known and
most continuously worked veins within the southern side of the
Muluncay






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concession
include Gen and Cristina. Other veins exist parallel to these two main
structures but are not presently developed. Both the major and secondary veins
are being mined on the north half of the concession but they have not been
traced the entire length of the concession. The mineralization in the concession
area ranges from a gold:silver ratio of 1:10 near surface to 1:15 at depth.
Veins range up to 1500 m in strike length, and mines in the immediate area range
from 1650 m ASL to 950 m ASL, giving a known depth
of mineralization of at least 700 m. Vein widths range from 0.40 m to 1.40 m and
are steeply dipping (70° to 90°) to the NE.




Typical Mine-Mill
Complex, Muluncay Concession




FOTO 1:
MOLINO TRAPICHE CHILENO











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17 -



















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The
Gen and Cristina veins consist of milky quartz, being hard but brittle, and
contain chalcopyrite (copper), sphalerite (zinc) and galena (lead) sulphide
minerals. This mineralization is similar to that found in the Portovelo-Zaruma
area mines, where it is quite common. The principal mineral accompanying the
gold is pyrite (FeS 2 ), but other minerals
include safflorite (CoAs 2 ), proustite
(Ag 3 AsS 3 ), tetrahedrite
(Cu 3 SbS 3-4 ), freibergite
((CuAg 2 ZnFe)3Sb 2 S 6 ) and minor Au-Pb
telluride minerals. These are indicative of a low-temperature near-surface
environment .




EXPLORATION Historical Systematic exploration
activity closely related to mining advance was carried out by SADCO from 1897 to
1950. However, only limited information is available from that period. Detailed
underground maps and 103,657 assay result records have been recovered from local
miners and from local archives by TVX Gold Corp. and IAMGOLD. Much of the SADCO
data can be acquired from certain parties in Machala.




Modern exploration
activity within the Zaruma – Portovelo Mining District begun in 1995 when a
one-year property area consolidation and district-scale exploration was made by
TVX Gold Corporation, a Canadian-based company. During this period, over 40 km
of underground workings were surveyed and mapped on a 1:500 scale. Total amount
of underground samples collected by TVX is estimated to be over 4,000. IAMGOLD
reported 733 samples although many of these were from older maps and reports.
Following TVX ́s withdrawal from Ecuador in 1998, all information was acquired by
IAMGOLD who continued exploration. This work including surface trenching,
surface and underground sampling, surveying and diamond drilling and geological
modelling. IAMGOLD databases contained the following:




680 surface rocks channel
and chip samples 2,126 underground channel
samples 5,415 soil samples 37 diamond drill hole
results including sample assay results 1,114 DDH core samples 2,591
topographical control points survey 39 stream sediments samples 369
channel samples form surface trenching






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Current Current exploration by
ECUADORGOLDCORP SA involved a numerous visits to the Muluncay concession
visiting three separate mines within the concession. These included Fatima,
Nueva Esperanza 1 and Aguacate (see Figure 6). Numerous other workings are
present within the concession but were not investigated at these times. Several
samples of vein material were taken by the author from the various workings,
including samples from Gen, Cristina and a third vein. Assay results are shown
in Table 2 below:









Gold
values from these samples range between 0.13 and 10.40 g/T. Numerous samples
taken by the author from other workings within the concession (# 483029 to
438050) show values of up to 58.6 g/T gold, up to 209 g/T silver, up to 4.86%
copper and up to 16.85% zinc.




Personal communication
with one of the representatives of the Company notes that as of the date of this
report there are eight (8) mines on the concession. The two main producing
mines, Nueva Esperanza and Aguacate (Lopez) contain the three main major veins
Cristina and Gen, and a third vein. These two mines have had development work
carried out. This work includes advancing an additional 50 m beyond the actively
mined veins to a fourth mineralized vein. Tunnels are being advanced along this
new vein in order to remove ore. Slashing is also being carried out, to give a 3
m high by 2.5 m wide haulage tunnel in each of the two active mines. Steel track
has been installed. This now allows the use of an electric locomotive capable of
hauling 10 two-tonne ore cars (20 tons) per trip from underground to the ore
stockpile or






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primary
crusher.




The
primary crusher is located at the one currently operating processing plant. This
processing plant contains the primary crusher, secondary crusher, a series of
Chilean grinding mils being modified by the Company, and a series of Denver
floatation cells to concentrate sulphide mineralization to capture both base
metals and any gold-silver associated with those sulphides.




A
temporary tailings pond is present on site to satisfy government environmental
requirements for the current low tonnage production rate. There is a 125 hectare
property less than one kilometer from the current processing plant, which is
being studied by an independent consultant to conduct a required Environmental
Impact Study in the area. This report will determine the viability of the sites
use as along-term tailings pond and processing plant. Company engineering and
geological staff are reviewing and planning which of the additional six
additional mines on the concession should be considered to bring to the
production level of the two currently operating mines.




DRILLING Although modern diamond
drilling has been carried out on the IAMGOLD claims, the author does not
currently have access to the positions or logs of those holes. Therefore he has
no knowledge of drilling done within the Muluncay concession.




SAMPLING METHODS AND
APPROACH




As
this was a preliminary investigation of the entire district, with no specific
focus at the time of the visits on the Muluncay concession, the only intent of
these assay results was to confirm assay values presented by other groups. The
width of the vein (as well as could be seen) at each of these sample points was
measured and recorded. The average width of these veins is 1.0 m, although the
width can range up to 4 m.




The
samples were bagged and sealed on the property. They, along with several other
samples from the district, were delivered to the office of ECUADORGOLDCORP SA,
based in Machala. From that office they were transported to the ALS-Chemex lab
in Quito, Ecuador for sample preparation and analysis which weighed
approximately 1 to 2 kg each. No blanks and standards were submitted by the
author with the sample for Quality Control purposes.






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22 -







SAMPLE PREPARATION,
ANALYSES General




For
the multi-element analysis of 35 elements, Induced Coupled Plasma Mass
Spectrometry (ICP-MS) was used. Au and Ag content was determined by Fire
Assay-Atomic Absorption method from 30 g pulps. Pulps and rejects will be stored
by the lab for a minimum of 90 days.




ADJACENT
PROPERTIES The Muluncay Project lies
surrounded by the Dynasty concessions (Figure 3).
Current activities by Dynasty can
be found on their website.




EXPLORATION
POTENTIAL Measured and Indicated
Resources




I
visited 3 known operating mines Fatima, Nueva Esperanza and Aguacate, now known
as the Jaceth Ethan and Mary Jane respectively
within the Muluncay concession. Figure 6 shows numerous mine
workings.




Exploration
Potential




Like
so many veins in the district which have been exploited for centuries, the
near-surface easily accessible high-grade gold mineralization is being
exhausted. Most of the mines in the district are currently extracting ore in the
range of 3-7 g/T gold. It is the author’s opinion that new investment and
detailed exploration will show that there is continuity of historical high-grade
mineralization both along strike and at depth. The fact that ECUADORGOLDCORP SA
has 5 currently undeveloped mines and has just opened a new mineralized vein
indicates that there is excellent potential for finding new exploitable
mineralized zones within the concession. Like most of the old SADCO operations
(with the exception of the Grand Mine) workings only extended to a depth of
approximately 200 m below surface. This is not because mineralization stops at
that depth. The Grand Mine contains a gold-mineralized zone which






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23 -







extended to a depth of at
least 660 m below surface. It was collared at an elevation 700 m below mine
workings in the Muluncay concession area. This indicates that there is
significant additional potential at depth of up to 1500 m for the Muluncay
concession. A preliminary estimate of the resource is made by the author on the
Muluncay Concession, from the two currently active veins (Gen and Cristina) with
an estimated strike length of 1 km (the N-S length of the concession), an
average width of 1.0 m and an average depth of 1000 m. Using a grade of 6 g/T as
the average grade, this would produce an estimated tonnage of 400,000 T for each
vein. There are presently 4 known veins, which would give a total current resource of 1,600,000 T,
for a total of 9,600,000 g (300,000 oz) gold. Additional veins will be found
during ongoing ECUADORGOLDCORP development and exploration. Although the grade
and tonnage reserve of these new workings is not yet known the tonnage estimate
will very likely increase significantly. Secondary veins, stringers, breccia and
disseminated mineralization in the wallrocks have never been exploited, or even
properly assessed. Slashing of haulage tunnels will assist in the examination of
these zones. It is the author’s opinion that with the improved, more economic
mining and milling methods this resource can be taken advantage of, so that it
is probable that this resource can be increase to greater than 2.7 million tons
which would produce 12,960,000 g (405,000 oz) Au. However, this is a relatively
low grade estimate when one considers that the cut-off grade for the SADCO
operations was 14.6 g/ton. Using that value as an average grade 2.7 million tons
of ore would produce 39,552,000 grams (1 ́236,000 oz) of gold. No estimate of the
value derived from silver or sulphide concentrate has been made, but it would
add a significant amount to the value of this resource. The history of the
Zaruma mining operations indicates that there is a significant opportunity to
apply modern mining methods to a major resource which has had only limited
exploitation in the past.




CONCLUSIONS




Descriptions of gangue and
ore minerals, as well as the style of structures and their continuity along
strike and to significant depth, indicates that the Portovelo-Zaruma-Ayapamba
gold camp represents a low/intermediate sulphidation epithermal to upper
mesothermal gold-silver base metals system associated with the structures
related to a Miocene age collapse caldera.




The
history of the Zaruma mining operations indicates that there is a significant
opportunity to apply modern mining methods to a major resource which has had
only limited exploitation in the past. It is the author’s opinion, based on site
visits to various mines and mills in the district, and having reviewed
reports






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on
the district produced by other mining and exploration personnel, that there is
significant additional mineral potential at depth of up to 1500 m for most of
the concessions in the district. This includes those veins, both developed and
known but undeveloped, contained within the Muluncay concession.




This
data has been prepared at the request of ECUADORGOLDCORP SA and is intended to
inform about the potential of the Muluncay concession for hosting one or more
gold-silver-lead-zinc-copper deposits of sufficient grade and tonnage to be
economically viable.




This
report is a true and accurate representation of the assessment of the mineral
potential of the Muluncay Project.






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25 -












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GRANDE
Mining Company located in Canton Pasaje, El Oro province, from January 1990 to
September 1993.




Geological
exploration - Underground miner for A . GRANDA C. Mining Company in the area of
Molleturo, Azuay province, from January to April 1998.




Audit
of the Information of Mining production of LEON 1 area, code No. 2364,
corresponding to 2001 and 2002 years in February 2003.




Audit
of the Report of Mining Production of LA VIÑA area, code No. 310, corresponding
to 2002 year, in March 2003 ; in March 2004;, in March 2005; and in March
2006.




Audit
of the Report of Commercial Mining Production of the ASSOCIACIÓN MINEROS
INDEPENDIENTE AUTÓNOMOS SOCIEDADES MULUNCAY area, Code No. 338, corresponding to
the years of 2002 - 2003, in March 2004 and in 2004, in March 2005.




Audit
of the Report of Mining Production of ANDREIMA area, Code No. 700114,
corresponding to 2003, in March 2004, and in March 2005.




Audit
of the Report of Mining Production of LORRAINE area, Code No. 318, corresponding
to 2004, March 2005; March 2006, and March 2007.




Audit
of the Report of Mining Production of NUEVA ESPERANZA area, Code 152,
corresponding to 2004 year, and March 2005.




Audit
of the Report of Mining Production of LIMONCITO area, Code No. 2017,
corresponding to 2003, March 2004, and March 2005.




Audit
of the Report of Mining Production of CAROLINA J-A area, Code No. 300148,
corresponding to 2005, March 2006, and March 2007.




Audit
of the Report of Commercial Mining Production of SAN FERNANDO 1 area, code No.
6231.1, corresponding to 2005 - March 2006.




Audit
of the Report of Commercial Mining Production of AMAYA and AMAYA II areas, codes
No. 300385 and 300659, respectively corresponding to March 2006.






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