PROMOTORA MINERA DE GUAYANA, C.A.

CHOCO GOLD PROJECT

FEASIBILITY STUDY
VOLUME 1

NOVEMBER 2003

MICON INTERNATIONAL LIMITED

SUITE 900 - 390 BAY STREET, TORONTO ONTARIO, CANADA M5H 2Y2
Telephone (1) (416) 362-5135 Fax (1) (416) 362 5763
 Table of Contents

1.0 EXECUTIVE SUMMARY .................................................................................. 1

2.0 INTRODUCTION................................................................................................. 9
2.1 PREPARATION OF THE FEASIBILITY STUDY......................................... 9
2.2 LOCATION, ACCESS AND CLIMATE....................................................... 10
2.3 OWNERSHIP ................................................................................................. 13

3.0 GEOLOGY AND MINERAL RESOURCES .................................................. 15

3.1 INTRODUCTION .......................................................................................... 15
3.2 PROPERTY DESCRIPTION AND LOCATION .......................................... 16
3.3 HISTORY ....................................................................................................... 16
3.3.1 Previous Exploration.............................................................................. 16
3.4 HISTORICAL MINERAL RESOURCES ..................................................... 20
3.5 GEOLOGICAL SETTING ............................................................................. 21
3.6 DEPOSIT TYPES........................................................................................... 22
3.7 MINERALIZATION ...................................................................................... 23
3.8 EXPLORATION............................................................................................. 23
3.9 DRILLING...................................................................................................... 24
3.10 SAMPLING METHOD .................................................................................. 25
3.11 SAMPLE PREPARATION, ANALYSES AND SECURITY ....................... 26
3.12 DATA VERIFICATION ................................................................................ 28
3.13 ADJACENT PROPERTIES ........................................................................... 37
3.14 MINERAL PROCESSING AND METALLURGICAL TESTING .............. 37
3.15 MINERAL RESOURCE ESTIMATE............................................................ 38
3.15.1 Interpretation.......................................................................................... 38
3.16 SOLID MODELLING .................................................................................... 39
3.17 GRADE INTERPOLATION .......................................................................... 39
3.18 COMPARISON WITH EARLIER MINERAL RESOURCE ESTIMATES. 47
3.19 OTHER RELEVANT DATA AND INFORMATION .................................. 48
3.20 INTERPRETATION AND CONCLUSIONS................................................ 49
3.21 RECOMMENDATIONS................................................................................ 50
3.22 PROPOSED DRILLING PROGRAM ........................................................... 50

4.0 MINING............................................................................................................... 55
4.1 SCOPE OF STUDY........................................................................................ 55
4.2 DATA TRANSFER AND VALIDATION .................................................... 55
4.3 GEOTECHNICAL STUDIES ........................................................................ 56
4.4 OPEN-PIT DESIGN ....................................................................................... 59
4.4.1 Pit Optimization Algorithm ................................................................... 59
4.4.2 Input Parameters for the Economic Model and LG 3D Optimization ... 59
4.4.3 Lerchs-Grossman Pit Optimization........................................................ 60
4.4.4 Detailed Pit Design ................................................................................ 60

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 4.4.5 Cut-off Grade ......................................................................................... 62
4.4.6 Evaluation of Dilution............................................................................ 72
4.4.7 Final Mineable Ore Reserves................................................................. 72
4.4.8 Inferred Ore............................................................................................ 73
4.5 MINE PLANNING......................................................................................... 73
4.5.1 Objective of Mine Planning and Sequence of Mining........................... 73
4.5.2 Rate of Mining ....................................................................................... 73
4.5.3 Mine Plan Description ........................................................................... 74
4.5.4 Annual Plans .......................................................................................... 74
4.6 WASTE DUMP .............................................................................................. 79
4.7 MINING EQUIPMENT REQUIREMENT.................................................... 80
4.7.1 Mining Equipment Selection Criteria .................................................... 80
4.7.2 Trucks and Shovels ................................................................................ 83
4.7.3 Blast Holes Drills................................................................................... 84
4.7.4 Track Dozers.......................................................................................... 84
4.7.5 Other Pit Mining Auxiliary Equipment ................................................. 85
4.7.6 Initial Mine Equipment List................................................................... 85
4.7.7 Additional and Replacement Mine Equipment List............................... 86
4.8 MINING OPERATING COSTS..................................................................... 86
4.8.1 Drilling................................................................................................... 87
4.8.2 Blasting .................................................................................................. 87
4.8.3 Loading .................................................................................................. 88
4.8.4 Hauling................................................................................................... 89
4.8.5 Support Services and Maintenance........................................................ 89
4.8.6 Other Mining Costs................................................................................ 90
4.8.7 Mine Labour........................................................................................... 90
4.8.8 Total Mining Cost Summary ................................................................. 91

5.0 PROCESSING..................................................................................................... 92
5.1 METALLURGICAL TESTWORK AND FLOWSHEET DEVELOPMENT92
5.1.1 McClelland Testwork............................................................................. 92
5.1.2 Amdel Testwork..................................................................................... 93
5.1.3 Lakefield Testwork ................................................................................ 93
5.1.4 Testwork Results.................................................................................... 93
5.1.5 Discussion of Results............................................................................. 97
5.2 PROCESS DESIGN CRITERIA .................................................................... 97
5.3 PROCESS DESCRIPTION ............................................................................ 98
5.3.1 Crushing and Ore Handling (drawing A1-22072-0201-F) .................. 100
5.3.2 Grinding Circuit (drawing A1-22072-0202-F) .................................... 100
5.3.3 Leaching Circuit (drawing A1-22072-0203-F).................................... 101
5.3.4 CIP Circuit (Drawing A1-22072-0204-F) ........................................... 102
5.3.5 Carbon Stripping Circuit (drawing A1-22072-0205-F)....................... 103
5.3.6 Carbon Reactivation Circuit (drawing A1-22072-0206-F).................. 104
5.3.7 Refinery Flowsheet (drawing A1-22072-0207-F) ............................... 105
5.3.8 Reagents and Services Flowsheet (drawing A1-22072-0208-F) ......... 105
5.3.9 Water Distribution Flowsheet (drawing A1-22072-0209-F) ............... 106

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 5.3.10 Water Distribution Flowsheet (drawing A1-22072-0210-F) ............... 107
5.4 EQUIPMENT LIST ...................................................................................... 107
5.5 DRAWINGS ................................................................................................. 107

6.0 INFRASTRUCTURE ....................................................................................... 109

6.1 SUMMARY.................................................................................................. 109
6.2 POWER SUPPLY AND DISTRIBUTION .................................................. 109
6.3 GEOTECHNICAL STUDIES ...................................................................... 109
6.4 WATER SUPPLY, STORAGE AND DISTRIBUTION ............................. 111
6.5 SITE FACILITIES AND OTHER SERVICES............................................ 114
6.5.1 Offices.................................................................................................. 114
6.5.2 Canteen and Kitchen Facilities ............................................................ 114
6.5.3 Services Building ................................................................................. 115
6.5.4 Guard House ........................................................................................ 115
6.5.5 Warehouse............................................................................................ 115
6.5.6 Laboratory............................................................................................ 116
6.5.7 Mobile Equipment Repair Facility....................................................... 117
6.5.8 Plant Workshop.................................................................................... 117
6.5.9 Telecommunications ............................................................................ 117
6.5.10 Transportation and Other Services....................................................... 118
6.6 DRAWINGS ................................................................................................. 121

7.0 TAILINGS DISPOSAL AND WATER RESERVOIR ................................. 123

7.1 DESIGN BASIS............................................................................................ 123
7.2 WATER MANAGEMENT .......................................................................... 125
7.3 DRAWINGS ................................................................................................. 126

8.0 ENVIRONMENTAL MANAGEMENT......................................................... 127

9.0 PROJECT SCHEDULE................................................................................... 129

10.0 CAPITAL COST ESTIMATE ........................................................................ 132

10.1 INTRODUCTION ........................................................................................ 132
10.2 GENERAL.................................................................................................... 133
10.3 MINE EQUIPMENT COSTS....................................................................... 133
10.4 CONSTRUCTION LABOUR COSTS......................................................... 134
10.5 CIVIL/STRUCTURAL................................................................................. 134
10.6 MECHANICAL EQUIPMENT AND PIPING ............................................ 135
10.7 ELECTRICAL AND INSTRUMENTATION ............................................. 135
10.8 INFRASTRUCTURE COSTS...................................................................... 135
10.9 INDIRECT COSTS ...................................................................................... 136
10.10 SUSTAINING CAPITAL............................................................................. 136

11.0 OPERATING COSTS ...................................................................................... 148

11.1 SUMMARY.................................................................................................. 148
11.2 MINING OPERATING COSTS................................................................... 148

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 11.2.1 Mining Labour ..................................................................................... 149
11.3 PROCESS OPERATING COSTS ................................................................ 151
11.3.1 Process Labour..................................................................................... 151
11.3.2 Power ................................................................................................... 152
11.3.3 Process Consumables........................................................................... 152
11.3.4 Maintenance Supplies .......................................................................... 153
11.4 GENERAL AND ADMINISTRATION COSTS ......................................... 153
11.5 OFF-SITE COSTS ........................................................................................ 155

12.0 ECONOMIC EVALUATION.......................................................................... 156

12.1 SUMMARY.................................................................................................. 156
12.2 BASIS OF EVALUATION .......................................................................... 157
12.3 ROYALTIES AND TAXATION ................................................................. 157
12.4 DISCOUNTED CASH FLOW ANALYSES ............................................... 158
12.5 SENSITIVITY ANALYSIS ......................................................................... 158

13.0 CONCLUSIONS AND RECOMMENDATIONS.......................................... 168

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 List of Tables

Table 1.1 Resource Estimate at October 1, 2003............................................................................ 1

Table 1.2 Diluted Mineable Reserves and Stripping Estimates...................................................... 2
Table 1.3 Mine Production and Cost .............................................................................................. 2
Table 1.4 Summary of Life of Mine Average Process Unit Operating Cost.................................. 3
Table 1.5 Project Capital Cost Estimate ......................................................................................... 6
Table 1.6 Project Operating Cost, Life-of-Mine Basis ................................................................... 6
Table 1.7 Project Economic Evaluation Summary ......................................................................... 7
Table 2.1 Choco 4 and 10 Vertices............................................................................................... 10
Table 2.2 Concession Size and Grant Dates ................................................................................. 13
Table 3.1 Choco 4 and 10 Vertices............................................................................................... 16
Table 3.2 BHPE Measured and Indicated Mineral Resources at 0.5 g/t Au Cut-Off ................... 20
Table 3.3 Choco Gold Project Mineral Resource Estimate (As of October 1, 2002)................... 21
Table 3.4 Choco Gold Project Mineral Resource Estimate (As of October 1, 2003).................. 22
Table 3.5 Summary of Choco Drilling ......................................................................................... 24
Table 3.6 Comparison of Original and Omac Gold Assays.......................................................... 29
Table 3.7 Summary of Confirmation Drilling Results – Uncut Gold Grades .............................. 30
Table 3.8 Summary of Confirmation Drilling Results – Cut Gold Grades .................................. 31
Table 3.9 Summary of Analysis of Choco A Standard 0.965 g/t Au............................................ 32
Table 3.10 Summary of Analysis of Standard Blank Samples..................................................... 32
Table 3.11 Summary of Analysis of Certified Reference Material Standards ............................. 33
Table 3.12 Summary of Analysis of Replicate Core Samples from Rock.................................... 34
Table 3.13 Summary of Analysis of Replicate Core Samples from Laterite................................ 35
Table 3.14 Summary of Analysis of Duplicate Pulp Samples from Rock.................................... 35
Table 3.15 Summary of Analysis of Duplicate Pulp Samples from Laterite................................ 36
Table 3.16 Summary of Analysis of Umpire Samples from Laterite ........................................... 37
Table 3.17 Summary of Analysis of Umpire Samples from Rock ............................................... 37
Table 3.18 Summary of Block Model Limits ............................................................................... 39
Table 3.19 Summary of Assay Data ............................................................................................. 40
Table 3.20 Summary of 2.5 m Assay Composite Data................................................................. 43
Table 3.21 Choco Gold Project Mineral Resource Estimate ........................................................ 47
Table 3.22 Choco Drilling Results Published on September 30, 2003......................................... 49
Table 3.23 Summary of Proposed Definition and Exploration Programs .................................... 50
Table 4.1 Comparison of Indicated Resources Estimates............................................................. 56
Table 4.2 Lerchs Grossman 3-D Optimization Parameters .......................................................... 59
Table 4.3 Cut-off Grades by Ore Type ......................................................................................... 62
Table 4.4 Diluted Mineable Reserves and Stripping Estimates.................................................... 72
Table 4.5 Production Schedule by Ore Types .............................................................................. 75
Table 4.6 Material characteristics ................................................................................................. 80
Table 4.7 Mechanical Availability................................................................................................ 83
Table 4.8 Drilling and Blasting Parameters................................................................................. 84
Table 4.9 Mine Equipment .......................................................................................................... 86
Table 4.10 102-mm Drill Operating Cost ..................................................................................... 87

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Table 4.11 Blasting Costs ............................................................................................................. 88
Table 4.12 7-m3 Hydraulic Shovel Operating Cost....................................................................... 88
Table 4.13 5.7-m3 Front-End Wheel Loader Operating Cost ........................................................ 88
Table 4.14 55-t Class Truck Operating Cost ................................................................................ 89
Table 4.15 14H Class Grader Operating Cost .............................................................................. 89
Table 4.16 Dozers Operating Costs .............................................................................................. 89
Table 4.17 Annual Mine Salary Labour Summary....................................................................... 90
Table 4.18 Mine Hourly Labour Requirement and Year 2 Cost................................................... 91
Table 4.19 Summary of Annual Mine Operating Cost ................................................................. 91
Table 5.1 Summary of Grinding Testwork Results ...................................................................... 94
Table 5.2 Summary of Gravity Testwork Results ........................................................................ 94
Table 5.3 Summary of McClelland Cyanidation Testwork Results ............................................. 95
Table 5.4 Summary of Amdel Cyanidation Testwork Results ..................................................... 96
Table 5.5 Summary of Lakefield Cyanidation Bottle Roll Testwork Results .............................. 97
Table 5.6 Summary of Key Process Design Criteria .................................................................... 98
Table 10.1 Choco Project Pre-production Capital Cost Estimate............................................... 132
Table 10.2 Construction Crew Unit Rates and Productivity Factors.......................................... 134
Table 11.1 Summary of Mining Unit Costs................................................................................ 148
Table 11.2 Annual Mining Operating Costs ............................................................................... 149
Table 11.3 Annual Mining Labour Costs ................................................................................... 150
Table 11.4 Summary of Life of Mine Average Process Unit Operating Cost............................ 151
Table 11.5 Annual Process Labour Costs ................................................................................... 152
Table 11.6 General and Administration Labour Costs ............................................................... 154
Table 11.7 Annual General Costs and Expenses ........................................................................ 154
Table 12.1 Economic Evaluation Summary Gold Price $US350 Per Oz ................................... 156
Table 12.2 Sensitivity of Project Life of Mine Cash Flow ($ millions) ..................................... 158

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 List of Figures

Figure 1.1 General Site Plan – Choco Project ................................................................................ 5

Figure 1.2 Sensitivity Analysis ....................................................................................................... 8
Figure 2.1 Map of Venezuela........................................................................................................ 11
Figure 2.2 Choco 4 and Choco 10 Concessions ........................................................................... 12
Figure 3.1 El Callao Mining District ............................................................................................ 18
Figure 3.2 Concession Map .......................................................................................................... 19
Figure 3.2 Analysis of Blind Standard Results............................................................................. 33
Figure 3.3 Analysis of Replicate Assay Results ........................................................................... 34
Figure 3.4 Analysis of Duplicate Assay Results........................................................................... 36
Figure 3.5 Laterite Assays Grade Distribution ............................................................................. 41
Figure 3.6 Weathered Zone Assays Grade Distribution ............................................................... 42
Figure 3.7 Fresh Zone Assays Grade Distribution........................................................................ 42
Figure 3.8 Block Grades versus 5 m Assay Composite Grades - Laterite.................................... 45
Figure 3.9 Block Grades versus 5 m Assay Composite Grades – Rosika .................................... 45
Figure 3.9 Block Grades versus 5 m Assay Composite Grades – Rosika .................................... 46
Figure 3.10 Block Grades versus 5 m Assay Composite Grades – Pisolita ................................. 46
Figure 3.11 Block Grades versus 5 m Assay Composite Grades – Coacia .................................. 47
Figure 3.12 Rosika Cross Section on 8595N ................................................................................ 51
Figure 3.13 Pisolita Cross Section on 8220N ............................................................................... 52
Figure 3.14 Coacia Cross Section on 525NW .............................................................................. 53
Figure 4.1 Mine Planning – Lerchs-Grossman Pit Design ........................................................... 61
Figure 4.2 Mine Planning - Detailed Ultimate Pit Design............................................................ 63
Figure 4.3 Section View – Section 615900 East........................................................................... 64
Figure 4.4 Section View – Section 616450 East........................................................................... 65
Figure 4.5 Section View – Section 808595 North ........................................................................ 66
Figure 4.6 Section View – Section 807825 North ........................................................................ 67
Figure 4.7 Plan View – Bench 170 ............................................................................................... 68
Figure 4.8 Plan View – Level 200 ............................................................................................... 69
Figure 4.9 Plan View – Level 220 ................................................................................................ 70
Figure 4.10 Plan View – Level 235 .............................................................................................. 71
Figure 4.11 Mine Planning – Year-End Plan – Year 1 ................................................................. 76
Figure 4.12 Mine Planning – Year-End Plan – Year 2 ................................................................. 77
Figure 4.13 Mine Planning – Year-End Plan – Year 3 ................................................................. 78
Figure 4.14 Detailed Ultimate Pit Design and General Site Layout............................................. 81
Figure 4.15 Optimized Pit Outline - Rosika, Coacia, Pisolita North and Pisolita South.............. 82
Figure 6.1 Sketch of the Canteen and Kitchen Facilities............................................................ 118
Figure 6.2 Sketch of the Services Building ................................................................................ 119
Figure 6.3 Sketch of the Guard House Building......................................................................... 119
Figure 6.4 Sketch of the Main Warehouse Building................................................................... 120
Figure 6.5 Sketch of the Laboratory ........................................................................................... 120
Figure 6.6 Sketch of the Mobile Equipment Maintenance Facility ............................................ 121
Figure 12.1 Sensitivity Analysis ................................................................................................. 159

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 LIST OF APPENDICES

Volume 1

Appendix A Selected Reference Quotations

Process Design Criteria

Volume 2

Appendix B Pit Slope Design for the Choco Project, Venezuela, Golder Associates,
October 2003

Appendix C Preliminary Design of Plant Facility Foundations, Choco Gold Project, El

Callao, Venezuela, Golder Associates, October 2003

Appendix D Preliminary Design of the Tailings Disposal Facility, Choco Gold Project,
El Callao, Venezuela, Golder Associates, December 2003

Appendix E Flow Predictions and Reservoir Requirements, Choco Gold Project, El

Callao, Venezuela, Golder Associates, November 2003

Appendix F Preliminary Water Reservoir Design, Choco Gold Project, El Callao,

Venezuela, Golder Associates, November 2003

Volume 3

Appendix G Factual Information from Geotechnical Investigations, Choco Gold

Project, El Callao, Venezuela, Golder Associates, November 2003

Appendix H An Investigation into the Recovery of Gold from Samples submitted by

Bolivar Gold Corp., LR 10586-001, Progress Report No. 1, SGS Lakefield
Research Limited, August 1, 2003

Appendix I An Investigation into the Rheological Properties of Slurry Samples,

prepared for Bolivar Gold Corp., LR 10586-002, Progress Report No. 2,
SGS Lakefield Research Limited, November 4, 2003

Appendix J An Investigation into the Recovery of Gold from Samples submitted by

Bolivar Gold Corp., LR 10586-002, Progress Report No. 3, SGS Lakefield
Research Limited, November 25, 2003

viii
 1.0 EXECUTIVE SUMMARY

The two contiguous mineral concessions Choco 10 and Choco 4, are located approximately 15
km west of the mining town of El Callao in Bolivar State, Venezuela. The Venezuelan mining
exploration company Promotora Minera de Venezuela, C.A. (Promiven) held, since the early
1990’s, exploration rights to these concessions through its 70 % ownership of Promotora Minera
de Guayana, C.A. (“PMG”), the holder of the concessions. After a program of exploration work
managed by Promiven, which ended in 1996, gold deposits were identified in the Choco 4 and
Choco 10 concessions, and resource estimates were prepared.

In 2002 Micon International Limited (Micon) was commissioned by TecnoPetrol Inc. (name
subsequently changed to Bolivar Gold Corp.) to review the existing data and advise TecnoPetrol
on a proposed acquisition of Promiven. Micon created a new mineral resource block model and
a resource estimate, referred to as the Micon Resource Estimate of October 1, 2002, prepared a
conceptual development plan, and proposed an in-fill drilling program for the main Choco 10
deposit to allow upgrading of the inferred mineralization.

Bolivar Gold Corp.(Bolivar) subsequently acquired Promiven (through Bolivar’s subsidiary

Carisma Corporation C.V.V.), and initiated the drilling program in February 2003. Bolivar/ PMG
commissioned the feasibility study for the Choco project, the subject of this report, in April
2003.

Results from drilling up to mid-July 2003 have been incorporated in the revised block model and
a new mineral resource estimate completed. The October 2003 estimate has utilized 39 new drill
holes totalling 3,807 m of new in-fill drilling, compared with the approximately 50,000 m of
prior drilling used for the October 2002 resource estimate. Micon’s Resource Estimate dated
October 1, 2003, summarized in Table 1.1, provides the following indicated and inferred
resources.

Table 1.1
Resource Estimate at October 1, 2003

Cut-Off g/t Category Tonnes Gold g/t Gold kg Gold ounces

0.5 Indicated 13,229,143 2.47 32,690 1,051,016
0.5 Inferred 2,300,254 1.93 4,443 142,842

In-fill drilling was completed and step-out exploration drilling commenced after the date for
inclusion of the results in the above resource estimate. Results from this later drilling have been
very encouraging and have been announced in recent press releases.

Based on the stated indicated resource and the accompanying resource model, an open pit mine
design has been completed using the MineSight pit optimizer program, with gold recovery and
cost parameters developed during this study. Golder conducted a geotechnical investigation in
the area of the Rosika pit, and reviewed an earlier study of the shallower saprolite, prior to
recommending pit slope design parameters. Following definition of the optimum economic pit,
detailed mine design was completed. Economic ore within the final pit design comprises the

1
mineable ore reserve. The calculated diluted ore reserve comprises a total of 12.582 million
tonnes at a gold content of 2.17 g/t, mined at an average cut-off grade of 0.5 g/t, shown in Table
1.2. A total of 33.835 million tonnes of waste and sub-grade material will be mined during the
planned life of mine, for an average stripping ratio (waste:ore) of 2.69:1.

Table 1.2
Diluted Mineable Reserves and Stripping Estimates
(0.5 g/t Au Cut-off)

Ore Grade Au-metal Inferred+Waste Strip Ratio Au

Ore Type
(000’t) (g/t) (000 oz) (000’t) (t/t) (%)
Laterite 2,850.52 1.400 127,883 2,465.09 - 14.5
Weathered 7,192.61 2.349 543,157 23,231.34 - 61.8
Fresh 2,549.35 2.544 208,549 8,138.97 - 23.7
Total 12,582.49 2.174 879,589 33,835.39 2.69 100.0

Included in the total tonnes of waste to be moved is an estimated 440,000 tonnes of mineralized
material currently considered as inferred, at a grade of 2.11 g/t and containing an estimated
30,000 ounces of gold. Production drilling is expected to convert much of this material to
indicated status.

Based on the mineable ore reserve and the available plant capacity for each of the ore types, a
mine production plan, fleet selection and operating costs were developed. The fleet is based on
55-tonnes capacity haul trucks (7) and 7-m³ excavators (2). Drilling and explosives costs will be
minimized in early years when laterite and weathered ore will be mined. The total rock
movement by year, ore grade and the calculated operating cost, are shown in Table 1.3.

Table 1.3
Mine Production and Cost

Period Ore mined( 000’t) Gold (g/t) Total mined (000’t) Operating cost ($/t)
Year 1 1,913.5 2.37 7,398.9 0.887
Year 2 2,084.0 2,10 7,695.9 0.857
Year 3 1,943.0 2.71 7,149.4 0.964
Year 4 1,950.0 1.82 7,058.6 1.016
Year 5 1,861.0 1.96 6,495.2 1.187
Year 6 1,831.7 2.03 6,313.6 1.212
Year 7 (1/2 year) 999.2 2.30 3,106.3 1.237
Total 12,582.5 2.17 45,217.9 1.027

Metallurgical testing, originally conducted on samples collected during the earlier Promiven
exploration program in 1994-6, and confirmed by testing during 2003 on samples from the current
program, indicates that the ore is free milling and will yield excellent gold extraction with
conventional processing. Grinding to 80 % passing 0.074 mm is proposed to ensure optimum gold
extraction from all ore types. The selected processing flowsheet follows conventional design with
SAG and ball milling and cyanide leaching followed by carbon-in-pulp gold extraction to produce
doré metal. The average gold recovery from the total ore blend is expected to attain almost 93 %.

2
Soon after commencement of this feasibility study, Bolivar identified a suitable existing processing
plant available for sale and negotiated its purchase. This is the Grouse Creek mill of Hecla Mining,
located near Challis, Idaho. After installation in 1994, it operated for less than two years and has
been idle since. The mill was designed to process an average of 5,400 t/d of medium hardness gold
ore using a SAG mill and ball mill, leaching and CIP circuits. As of November 2003 the plant has
been dismantled and prepared for shipment to the Choco site, under the supervision of Bolivar
personnel. Some processing equipment required for the Choco plant and not available from the
Grouse Creek facility will be purchased separately. The processing scheme, flowsheets, mass
balance, equipment list and general arrangement drawings prepared for this study are based on the
use of this plant.

The Choco mill production plan is configured to maximize the available mill capacity with each
ore type, ranging from the soft, fine-grained surface material to the hard, unweathered fresh ore.
The design daily processing rate for the surface ore is estimated to be 6,500 t/d, for weathered
deeper ore 5,400 t/d and for fresh ore, 4,700 t/d. The life-of-mine average milling rate is 5,300
t/d or 1.94 Mt/a, a function of the proportion (20 %) of the harder ore in the overall production
plan. The total gold production from the plant is estimated as over 814,000 ounces, based on the
current mineable reserve.

Plant operating costs are developed from reagent and material consumptions for the particular
ore types, the manning list and current local labour rates, and the quoted cost for electrical
power, shown in Table 1.4.
Table 1.4
Summary of Life of Mine Average Process Unit Operating Cost

Item Consumption Unit Cost

(kg/t milled) ($/t milled)
Crusher liners 0.15
Mill liners 0.22
Grinding steel balls 0.67 0.46
Lime 5.86 0.54
Cyanide 0.41 0.54
Other reagents and process supplies 0.36
Total Consumables 2.26
Process labour (81 people) 0.49
Maintenance Supplies 0.62
Power (0.026 $/kWh) 22.6 kWh/t 0.59
Total 3.95

The site general and administrative (G & A) costs were developed with input by Bolivar. Head
office costs are excluded. The estimated total cost for a typical operating year is $1,474,000,
equivalent to $0.80 per tonne milled.

Project infrastructure includes industrial buildings at the mine site, staff housing in El Callao, site
power supply, a tailings storage area with retaining dams and a water storage reservoir. Golder
Associates has developed designs and quantities for the dam structures after detailed site
investigations and consideration of the site water balance and climate. A water reservoir is

3
constructed in the best local catchment area for water storage during the dry season, due to the
uncertainty of a continuous supply from the nearby Yuruari River, which also provides the El
Callao municipal supply. The tailings storage area, selected after comparing reasonable
alternatives, is located in an area north of the plant site. Three earth fill dams provide
containment between natural barriers. Initial dam design provides total storage for approximately
13 million tonnes of tailings, and the dams may be raised for additional containment. Decanted
tailings water is recycled to the plant for process use.

Figure 1.1 illustrates the proposed site plan including locations of the plant, mine, tailings and
water reservoir. The local road passing the project site and concession boundaries are shown.

Environmental baseline and impact studies have been conducted by the Venezuelan firm of
Ambioconsult C.A. This firm has also assisted in the application for construction and operating
permits, and these are expected to be granted in December 2003. An English version of the
Executive Summary of the report “EIA Mining Development Choco 4 and Choco 10” dated
September 2003, was provided to Micon. No major environmental concerns were noted.

The project development schedule, after acceptance of the feasibility study and project
commitment, assumes a start date of mid-November 2003. Detailed engineering and preliminary
site work are the first tasks. Removal of the plant facilities from the Grouse Creek site has been
completed and the material will be shipped to the site once all necessary permits are in place.

The schedule shows that construction completion can be attained in August 2004 and after one
month allowed for plant start-up and commissioning, the full production rate shall be attained
during September 2004. Early completion of the tailings and water reservoir dams, by the end of
May 2004, is important to ensure adequate water supply for the start-up period, which will occur
at the end of the rainy season.

4
 Figure 1.1
General Site Plan – Choco Project
5
The total estimated capital cost is $37.6 million, including the purchase and dismantling of the
Grouse Creek plant and owner’s costs during project construction, shown in summary as Table
1.5. Costs are estimated to be precise within +/- 10 %. The pre-production stripping of the open
pit is capitalized and included in the total capital expenditure of $38.7 million.

Table 1.5
Project Capital Cost Estimate

Area Area total ($000)

Mine Equipment 7,439.8
Infrastructure 9,262.2
Process Plant 11,673.7
Light Vehicles 237.8
Indirect Costs 6,297.0
Contingency Allowance 2,680.0
Sub Total, Capital Cost 37,590.4
Pre-Production open pit stripping 1,036.4
Total Capital Expenditure 38,627.9

The total project operating cost over the life-of-mine period is estimated to average $8.44 per
tonne milled, shown in Table 1.6. Anticipated royalty payments total $13 million over the
projected project life. The resulting cash cost of gold produced is $146 per ounce averaged over
the total projected production of 814,000 ounces.

Table 1.6
Project Operating Cost, Life-of-Mine Basis

Cost Area $/t milled $/ oz

Mining ($1.03/t rock) 3.69 57.02
Processing 3.95 61.10
General and Administration 0.80 12.31
Sub total 8.44 130.45
Royalties 1.04 16.04
Total Cash Cost 9.48 146.49

The economic evaluation of the project is summarized in Table 1.7, showing results of the
discounted cash flow calculation. The evaluation is considered on a project basis and 100 %
equity financing is assumed. A gold price of $350 per ounce is used.

6
 Table 1.7
Project Economic Evaluation Summary

Item Unit Value

Pre-Production capital cost $000 38,627
Sustaining capital and closure $000 4,424
Operating cost, excl royalties $000 106,215
Total royalties $000 13,079
Gold production oz 814,319
Cash operating cost $/oz 146
Gold price $/oz 350
Gold sales $000 282,816
Net revenue $000 176,602
Cash flow, before tax $000 117,722
Cash flow after tax $000 82,856
NPV@ 10 % discount rate $000 45,669
IRR % 49.62

Factors assumed in the creation of the cash flow model include:

• Payment to Promiven for the acquisition, a total of $4.75 million.

• Payment of applicable royalties.

• Corporate taxation at 34 % of pre-tax income after exhausting tax credits of an existing $14
million plus the capital expense incurred in project development.

• Working capital is equivalent to three months of total site operating cost.

• The payment of VAT on operating supplies is excluded. VAT payable on the purchase of
used equipment is included in the total capital cost.

Sensitivity analysis performed on the cash flow model examined gold prices between $300 and
$400 per ounce, and 10 % +/- changes to gold production, operating and capital costs. The project
is most sensitive to gold price and least sensitive to capital cost. Figure 1.2 illustrates the
sensitivities.

7
 Figure 1.2
Sensitivity Analysis

120

110
Life of Mine Cash Flow

100
($ Millions)

90

80
Gold production
70 Capex
Opex
60
Gold price

50
-10% 0 10%

$300/oz $350/oz $400/oz

The feasibility study demonstrates that this is a robust project and Micon recommends its
immediate development to a significant new gold producer. Micon recommends that the
following items of work be commissioned to increase the resource base and reserves, and to
ensure orderly development of the project:

• Continuance of the current exploration drilling program to focus on defining the deeper
mineralization in the Rosika pit area, and possible extensions nearer surface, to define the
likely expansion of the present pit outline.

• Incorporation of recent and forthcoming drilling results in an updated resource model early
in 2004, and an update of the mine design and mine planning based on this revised model.

• Condemnation drilling of the selected plant site, tailings and waste dump areas.

• An immediate start to detailed engineering and letting of site development contracts in

order to achieve the proposed construction schedule.

• Continuance of environmental baseline studies and development of closure and

rehabilitation planning.

Throughout this study, the monetary unit used and referred to is the US Dollar. Cost estimates
are based on Third Quarter 2003 costs and quotations. Local costs, developed or quoted in
Venezuelan Bolivars, are converted at the current exchange rate of 1,600 Bolivars= $US1.00.

While this study was commissioned by PMG, the study supervision and collection of local data
was conducted mainly by technical representatives or officers of Bolivar. References to each
group throughout this study are considered to be interchangeable.

8
 2.0 INTRODUCTION

2.1 PREPARATION OF THE FEASIBILITY STUDY

During mid-2002, Micon International Limited (Micon) evaluated the gold deposit of the Choco
10 Concession and prepared the Development Plan for the Choco Concessions 4 and 10 on
behalf of TecnoPetrol Inc. The Development Plan recommended an in-fill drilling program for
the Choco 10 deposit, and completion of a detailed feasibility study and other site studies.
Following the name change of TecnoPetrol Inc. to Bolivar Gold Corp. in January 2003, and
Bolivar Gold Corp.’s acquisition of a 70 % interest in Promotora Minera de Guayana, C.A.
(“PMG”), the holder of the concessions, the feasibility study for the Choco project was
commissioned by PMG in April 2003.

This feasibility study has been prepared by Micon, based on original work by Micon and the
work of other consultants directed by Micon.

Micon prepared the resource model and estimate which incorporates results of the in-fill drilling
up to mid-July 2003, and which is the subject of a Technical Report dated October 31, 2003 by
Stanley Bartlett, Senior Geologist of Micon.

Micon provided the metallurgical testing evaluation, process design parameters, plant and
general operating costs, and the economic evaluation. Micon supervised the development by
Met-Chem Canada Inc. (Met-Chem) of the site plan, process flowsheets, plant arrangement
drawings, construction schedule and the capital cost estimate.

Met-Chem prepared the optimized open pit mine design, mine planning, mine equipment
selection and mine operating cost.

Golder Associates was responsible for the site investigations and engineering designs for the
tailings storage facility (TSF), water collection reservoir, site water management design, and
geotechnical investigations for plant foundation design and pit slope determinations.

Ambioconsult C.A. (Ambioconsult) was engaged by PMG to prepare the environmental baseline
and impact studies, and to assist in permitting.

During the initial period of this study, PMG concluded an agreement to purchase the Grouse
Creek processing plant from Hecla Mining, with the intent to remove it and to install it close to
the deposit to process the Choco 10 ore. In large part the flowsheets and plant arrangement
drawings for the Choco project are based on drawings of this plant provided by Hecla.

All currency amounts are stated in United States Dollars and Venezuelan Bolivars, expressed in
terms of constant mid-2003 value. The current official exchange rate of 1,600 Bolivars = 1.00
Dollar U.S. is employed for conversions.

9
Quantities are stated in SI units, the Canadian and international practice, including: metric tonnes
(t), kilograms (kg) for weight; kilometres (km), metres (m) and millimetres (mm) for distance;
hectares (ha) for area; grams (g) and grams per metric tonne (g/t) for gold content. Precious
metals quantities may also be reported in troy ounces (ounces, oz), a common practice in the
gold mining industry.

2.2 LOCATION, ACCESS AND CLIMATE

The Choco property is located approximately 15 km west of the mining town of El Callao which
is located between Guasipati and Tumeremo, in Bolivar State, Venezuela (see Figure 2.1, Map of
Venezuela). The Choco property comprises two contiguous mineral concessions Choco 10 and
Choco 4 as shown in Figure 2.2. They cover a total area of 7,214.51 ha. The coordinates listed
in Table 2.1 define the concessions.
Table 2.1
Choco 4 and 10 Vertices

Concession Vertices Easting (m) Northing (m) Area (ha)

Choco 10 NW 613464.61 809492.61
SW 613464.61 802982.61
NE 620002.75 809492.61
SE 620002.75 802982.61 4,256.33
Choco 4 NW 613464.61 814017.11
SW 613464.61 809492.61
NE 620002.75 814017.11
SE 620002.75 809492.61 2,958.18

Micon is not aware of any legal survey being conducted of the concessions, beyond the normal
requirements of the State, through the Ministerio de Energia y Minas (“MEM”) to define the
concession boundaries.

The area of the concessions is covered by gently sloping topography with elevation ranging from
200 m to 300 m above sea level. The annual rainfall of the area is about 1,260 mm and the
average temperature is 25°C. The area is classified as savanna type forest, and most of the
concessions are presently covered by forest.

A paved secondary road passes through the concessions in Choco 10 and provides access to the
town of El Callao, about 15 km to the east from the concessions. El Callao has a population of
approximately 25,000 and is the centre of population in the area. It is a historic gold mining area
and a number of present and past producing mines are located nearby. The main highway,
between the important city of Puerto Ordaz to the north, and other gold mining centres to the
south (El Dorado and Kilometer 88) and the Brazilian frontier, passes El Callao.

A major high voltage 400 kV electrical supply line carrying power from the Guri dam, and
destined for Brazil, passes near El Callao. A sub-station about 5 km from the Choco concessions
supplies power to El Callao. The potential water supply is from the Yuruari River, which passes
north of the concessions, approximately 8 km distant, and from which other local mines and El
Callao municipality draw water.

10
 Figure 2.1
Map of Venezuela
(after University of Texas)

11