During the third quarter of 2008, the Company announced the discovery of a new gold zone at Cerro Pelon. Cerro Pelon is located approximately 2.5 kilometres southwest of the leach pad / 4 kilometres southwest of the Mulatos Pit and is a high-priority regional target for the Company, given both its proximity to existing mining operations and its geologic similarity to the Mulatos deposit.

Gold at Cerro Pelon is hosted within oxidized vuggy silica, starting at the surface and extending to over 90 metres in depth. Step-out drilling and detailed surface mapping has indicated that the zone has both structural and stratigraphic-controlled components, with gold appearing to be controlled primarily by late-stage structurallycontrolled hydrothermal breccias of both northeast and northwest trends. Drill holes within the broad breccia zones contain strong gold concentrations whereas those outside the zones are generally barren. Post-mineral fault offset is also indicated, complicating zone interpretation. The upper 70 to 100 metres of the zone is completely oxidized, determined both visually and by very low sulfur concentrations from geochemical analyses. Preliminary cyanideextractable analyses from the oxidized portion of the zone indicate 90 to 100% gold recovery, suggesting the zone is non-refractory in nature.

The Company announced significant drill intercepts from first phase drilling at Cerro Pelon during the third quarter of 2008, including 91.5 metres of 1.43 g/t Au and 90 metres of 1.97 g/t Au in two of six holes drilled. Drilling continued with two rigs throughout the remainder of 2008, with 69 holes representing 10,900 metres completed as at December 31, 2008.

Step-out and definition drilling testing the structural control concepts on 25-metre centres was completed in 2009. Recent drill holes have returned the best intercepts in the district outside of the Mulatos deposit, including 129.6 metres of 2.42 g/t Au and 158.5 metres of 1.55 g/t Au.

Drilling has delineated a continuous oxidized zone of gold-bearing vuggy silica that is approximately 250 metres long, 30 to 80 metres wide, 70 to 150 metres thick, which typically grades between 2 and 3 g/t Au.  A resource estimate for Cerro Pelon is expected during the second half of 2009, with most of the resources expected to be classified within the measured and indicated categories.  Feasibility studies and development is expected to commence in 2010.

Testing of soil geochemical anomalies coincident with silica alteration on the northwest side of Cerro Pelon approximately one kilometre from the main gold zone is also planned in 2009.