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In the Heart of Two Giants
The Bale: Why two major gold producers may
bid for this gold explorer
Surrounded by two large gold producers, Urastar Gold Corp. owns the last properes within
a special gold district in Mexico that are not controlled by major mining companies. The well-
known miners Agnico-Eagle and Alamos Gold have secured all properes around the Mulatos
Gold Mine - solely Urastar is le operang prospecve projects in that district and even in theheart of those two majors. How valuable properes near the Mulatos Mine can be demonstra-
ted Grayd Resources in 2011 which company was taken over by Alamos for around $255 milli-
on thus paying more than $200 per ounce in the ground - a record price for this part of Mexico
Why this high price? Well, the Mulatos Mine is among the world`s gold mines with the highest
prot margins. The producon costs are below $400 per ounce, whereas the industry average
is geng close to $1,000. Hence, a potenal take-over or property acquision may be around
the corner, especially when considering the latest press-release dated August 3: Urastar is
exploring strategic alternaves available to the Company, including a potenal sale. The
Board of Directors intends to consider the full range of available opons. Also, the Companyis pleased to announce that it has engaged the services of Dahlman Rose & Company, LLC
of New York, as its exclusive nancial advisor to assist in the evaluaon of these opons.
INITIATING COVERAGE August 6, 2012 Urastar Gold Corp. TSX.V: URS OTCQX: URNRF Frankfurt: 3U3
Type of Analysis: Iniang Coverage
Recommendaon: Speculave Buy
Price Target: C$0.55
Price Target in view of: 6 months
Home Exchange: TSX Venture (Canada)
Market Capitalizaon: C$13.8 million
Current Price: C$0.40 (08/03/12)
Dierence to Price Target: +38%
Analyst: Stephan Bogner (Dipl. Kfm)
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Analyst: Dipl. Kfm. Stephan BognerResearch Label: Rockstone Research Ltd.
Bro #504, 81 Oxford St.London W1D 2EU, EnglandPhone: +44-20-8123-9832info@rockstone-research.comwww.rockstone-research.com
Analyzed Company: Urastar Gold Corp.Suite 804 - 750 West Pender StreetVancouver, B.C.Canada V6C 2T7Phone: +1.604.682.2928Toll Free: +1.888.400.2928Fax: [email protected]
ISIN: CA91704D1096Home Exchange: Toronto Venture Exchange (Canada)Symbol: URS
Type of Analysis: Iniang CoverageIniang Coverage: 08/03/12Recommendaon: Speculave BuyPrice Target: C$0.55Price Target in view of: 6 MonthsCurrent Price: C$0.40 (08/03/12)Dierence to Price Target: 38%52 Week High / Low: C$0.57 / C$0.18
Market Capitalizaon: C$13.8 millionShares (issued & outstanding): 34.54 million
Warrants (total outstanding): 20.9 million8.250.000 @ C$0.10 unl 11/02/1312.707.400 @ C$0.75 unl 03/11/16
Cash: approx. C$1.5 millionTrading Volume (10 Day Average): 64,640 (08/03/12)
Moving Averages (08/03/12)21 Day @ C$0.3250 Day @ C$0.27200 Day @ C$0.32
Price Performance (08/03/12)7 Day: +0.01 (+16%)21 Day: +0.03 (+25%)30 Day: +0.11 (+70%)90 Day: +0.08 (+48%)180 Day: +0.01 (-14%)200 Day: +0.14 (+91%)
Month to Date: +0.02 (+21%)Quarter to Date: +0.15 (+100%)Year to Date: +0.08 (+48%)
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INITIATING COVERAGE August 6, 2012 Urastar Gold Corp. TSX.V: URS OTCQX: URNRF Frankfurt: 3U3
URS @ TSX.V
(1 Year Linear in CAD)
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www.rockstone-research.com 3
INITIATING COVERAGE August 6, 2012 Urastar Gold Corp. TSX.V: URS OTCQX: URNRF Frankfurt: 3U3
OTCQX (USA):
Symbol: URNRF
Current Price: $0.415 (08/06/12)
Trading Volume (3 Month Average): 15,549
52 Week High / Low: $0.50/ $0.198
Frankfurt Exchange (Germany):Symbol: 3U3WKN: A1JJ8SCurrent Price: 0.37 (08/06/12)
2012 High / Low: 0.45 (03/09/12) / 0.11 (06/27/12)
Price Performance / Average Trading Volume per Day1 Week: +42% / 37,8964 Weeks: +123% / 30,34752 Weeks : +56% / 3,052
Sources:
www.urastargold.comwww.alamosgold.comwww.agnico-eagle.comwww.newmont.comwww.sedar.comwww.tsx.comwww.edgaronline.comwww.vantagewire.comwww.quotemedia.comwww.canadianinsider.comwww.otcmarkets.comwww.deutsche-boerse.dewww.consors.dewww.onvista.dewww.stockcharts.comwww.googlemaps.com
www.mininginvestor.net/company_prole/urastar-gold-corp-urs-v
www.theaureport.com/pub/co/5276
www.ickr.com/photos/goiricelaya/3479125923/in/pho-tostream
www.navdat.org/coverages/geology
www.unige.ch/sciences/terre/mineral/studchap/Acvies/eldtrips/mex/MexicoFieldGuide09-UniGeneva.pdf
Abbreviaons:
$ = U.S. Dollar = Euro@ = At% = Percent& = And> = Above; more than< = Below; less thanAg = SilverAs = ArsenicAu = GoldBa = BariumB.C. = Brish Columbia
C$ = Canadian DollarCAD = Canadian DollarCorp. = CorporaonCu = CopperEUR = Eurog = Gram(s)ha = HectaresISIN = Internaonal Securies Iden-caon Numberkm = KilometerLtd. = Limitedm = Meter(s)MA = Moving AverageMn = Manganese
NO = North-EastNSR = Net Smelter RoyaltyNW = North-WestOTC = Over The Counter ExchangePb = LeadRC = Reverse CirculaonSb = AnmonySE = South-EastSW = South-Westt = Ton(s) (metric)TSX.V = Toronto Venture ExchangeUS$ = U.S. DollarUSD = U.S. DollarOz = Troy Ounce(s) (31.1034768 g)
WKN = WertpapierkennnummerZn = Zinc
3U3 @ Frankfurt
(1 Year Linear in EUR)
90 Day MA (orange)
URNRF @ OTCQX
(1 Year Linear in USD)
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Evaluaon & Prognosis
Vancouver-based Urastar Gold Corp.
(URS) is a resource exploraon com-pany with 3 gold exploraon projects
(El Anminio, El Jabali and La Juliana)
in Mexicos Sierra Madre Gold Belt,
which is one of the richest gold belts
in the world with several major mines
and discoveries within the last few ye-
ars. Another asset is the Black Point
property in the prolic Bale Moun-
tain-Eureka District (Nevada, USA). All
4 properes have records of past pro-
ducon and are located in world-class
mining camps.
Formerly, URS was a capital pool com-
pany compleng its qualifying transac-
on on June 30, 2009.
Aer detailed review of all public
available informaon, we rate the
stock of Urastar Gold Corp. as underva-
lued. The reasons are simple.
First of all, a management team was installed that is highly experienced
in terms of Mexico. Chief geologist Bill Reed has more than 40 years of
experience in the mining industry, especially Mexico, where he was co-
founder and chief geologist of Paramount Gold & Silver Corp. (TSX, NYSE:
PZG; market cap: C$360 million) today developing more than 7 million
gold ounces equivalents. Prior to that, he was the chief geologist (Me-
xico) for Hecla Mining (NYSE: HL; market cap: $1.3 billion). Adrian Ro-
bertson (President & CEO of URS) is a professional engineer and worked,
among others, for Vale and Teck.
Hence, it does not surprise that such a Mexico-experienced manage-
ment team has secured such prospecve exploraon properes in the
prolic Sierra Madre Gold Belt.
Notably, there exist market rumors that senior mining companies may
have an interest in taking over URS or forming a joint-venture. The readeris cauoned that the exploraon results of the company along with the
respecve analysis of the author are solely preliminary in nature (ini-
ang coverage) and are not conclusive evidence of the likelihood of the
occurrence of an economic/mineable deposit at this stage as further ex-
ploraon is required by the company for a more in-depth interpretaon
by the analyst during the next months. However, the recent drilling suc-
cess made by URS may already lead to a take-over or property acquisi-
on by a senior mining company as the El Jabali and La Juliana properes
are situated within mining claims of Alamos Gold Inc. (TSX: AGI; market
cap.: C$1.9 billion) and Agnico Eagle Mines Ltd. (TSX: AEM; market cap.:
C$7.4 billion). Furthermore, URS has a market value of solely C$14 milli
on which may be considered a bargain by one (or both) of those neigh-
bors entering the bidding that may have already started or may start in
the near future as the latest press-release (08/03/12) has demonstrated
as having engaged Dahlman Rose as exclusive nancial consultant.
Last year, Alamos took over Grayd Resources for around C$250 as also
operang a prospecve project close to the Mulatos Mine.
The largest Mexican gold mine, La Herradura, is located only 50 km from
the El Anmonio property and where gold is mined with an average mi
neralizaon of only 0.78 g/t gold (cut-o: 0.33 g/t). Thanks to the possi
bility of heap leaching, La Herradura is one of the most cost-eecve and
thus most protable gold mines in the world. Close to La Herradura are
3 other gold mines that operate with average mineralizaons of around
0.6 g/t. Since El Anmonio is located next to a highway and close to bes
mining infrastructure, the chances seem good that a cost-eecve openpit operaon may start here as well, especially when considering that the
deposit is strongly oxidized making possible heap leaching.
We set our price target for the next 6 months at a minimum of C$0.55
(+38%) thus giving the company a market cap of around C$20 million
with 34.5 million shares issued and outstanding. Should the current
drilling successes be even improved over the next weeks and months
a much higher market valuaon is seen to be not unlikely, especially if
market prices for gold and silver stabilize.
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The Gold Report Interview with Jay Taylor (7/18/12):
There are four factors that lead me to consider Urastar Gold Corp. to
be a very worthy speculaon for investors who can aord to e up ca-pital for an undetermined length of me and who understand the risk/
reward tradeo for junior exploraon stocks. First, key personnel form
the foundaon for a strong management team. Secondly, I believe there
is a fairly high likelihood that the companys Anmonio property in Me-
xico can host a near-surface, mulmillion-ounce gold deposit. Thirdly,
I believe that various people who informally stand behind this project
have deep pockets and as such increase the probability that the lights
will be kept on even if market condions become even more strained.
Lastly, the current market cap makes this a very low-cost speculaon.
. .the upside could be a factor of 10, 20, or 30 mes the downside risk
with exploraon success and a turn in the markets. Its dicult to nd
beer A-4 risk/reward opportunies than Urastar Gold at this me.
Jay Taylor in Gold, Energy & Tech Stocks (6/29/12):
Urastar Gold Corp. is in the midst of a 10,000-m drill program and
results reported thus far have been very encouraging, given the fact
that sub-1 g/t deposits can be highly protable at this point in me,
especially for projects like the El Anmonio that are located with good
infrastructure and easy access. The potenal for the El Anmonio
property to become another mulmillion-ounce deposit within the
Mojave-Sonora megashear appears to be good, given the widespread,
near-surface mineralizaon on this 12,500-ha property...the presence
of extensive zones of alteraon and fracturing, as well as mineralized
veins over a large area, could provide the kind of massive tonnage that
could make for a very protable open-pit gold mine. Also, on a posive
note, there is evidence that this deposit would be largely oxidized and
thus most likely amenable to heap-leach extracon.
Morning Coee (6/14/12):
Urastar Gold Corp. released results for its reverse-circulaon drill pro
gram on the El Jabali property in Mexico, including several intercepts
of near-surface, high-grade gold. The highlight holes include: LJB-12
03, 59m grading 1.462 g/t Au from 7.667.1m, including 24m at 3.324
g/t Au from 13.738.1m and 112.8m grading 0.432 g/t Au and from
0112.8m; and LJB-12-04, 13.7m grading 1.173 g/t Au from 19.833.5m
and 53.3m grading 0.396 g/t Au and from 4.657.9m.
Jordan Roy-Byrne, The Daily Gold Premium (4/22/12):
Urastar Gold Corp. is just geng things started, so expect to hear a lo
more in the coming months. . .the backdrop is compelling; the company
was founded by a group that has had previous success and has con
sistently been able to raise money. El Anmonio is located in a highly
prospecve area and region. . .obviously, the mineralizaon is there
(old workings, extensive occurrences of oxidized rock); Urastar needs
to discover the best areas and expand from there.
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INITIATING COVERAGE August 6, 2012 Urastar Gold Corp. TSX.V: URS OTCQX: URNRF Frankfurt: 3U3
Disclaimer
At the time of publication of this document or its content, the respective author holds shares of Urastar Gold Corp. and may sell them any time. without notice. The
companies that are analyzed or mentioned here did not pay any monies or other tangible or intangible valuables (e.g. securities such as shares or stock-options) to
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EL JABILA & LA JULIANA
El Jabali and La Juliana are highly prospecve gold exploraon properes
in the largest epithermal precious metals region of the world - the Sierra
Madre Gold Belt. Over the last 400 years, some 40 million ounces of gold
and 2 billion ounces of silver were mined in the Sierra Madre Occidental
Range. Over the last few years, this district has become an area of global
focus and immense opportunity in the search for new precious metal
deposits.
Both properes are located only approx. 7 km from Alamos Golds ag-ship Mulatos Mine which, in 2010, reported reserves of 2.4 million oun-
ces gold (proven + probable) and is one of the lowest cost heap-leach
gold mines in the world. Gold mineralizaon at El Jabali and La Juliana is
similar to that found at the Mulatos Mine.
El Jabali consists of a single exploraon concession covering an area of
approx. 70 ha, contains several past producing mines including La Dura
and Zaragosa and is located only 2 km from La Juliana (704 ha), which is
also oponed by URS and where small-scale surface mining took place
in the past.
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Current Exploraon
EL JABALI:
Mapping and sampling work carried out in 2011 idened numerous tar-
gets in addion to the potenal extension of the historic mineral zones
of the La Dura Mine. Preliminary exploraon by URS has returned values
from trace to 30 g/t gold in grab samples. Nave gold has also been iden-
ed in outcrop on the southern extension of the La Dura Mine Trend.
URS completed an 805 m reverse circulaon (RC) drill program in May
2012 with a total of 10 drill holes, 2 of which were abandoned and twin-
ned in order to reach the target depth. The inial holes were drilled to
test for extensions of mineralizaon to the north (north of the open-pit)
and south on the El Jabali Mine Trend. While dicult ground condions
prevented half of the drill holes from reaching their target depth, only 2
of the 8 holes failed to intersect signicant gold mineralizaon. On June
13, URS released assays (see table on next page with best holes).
LA JULIANA:
URS has reviewed the results of past work and has completed conrma-
on eld work and construcon of a geological model.
An 850 m RC drill program was completed in early 2012 resulng in si-
gnicant new gold intersecons on the La Juliana deposit. This program
focused on historic areas of gold producon, interpreng historic drilling
and vectoring in on possible mineralized conduits. New assay highlights
include 6 m grading 1.9 g/t gold.
Previous drill programs employed convenonal RC and core drilling tech-
nics. These technics have proven to be ineecve for capturing the high
grade gold mineralizaon in the Mulatos district.
URS is employing modern centre-face sampling RC drilling at El Jabali
and La Juliana. Centre face sample RC has been proven very eecve in
the Mulatos district by Agnico Eagle (formerly Grady) and Alamos Gold.
Past Exploraon & Mining
EL JABALI:
In 1994, Francisco Gold Corp. undertook a campaign of mapping, soil and
rock geochemistry, geophysics, and drilling.
This work shows the presence of large areas of silica altered and brec-
ciated rhyodacite with associated coincident gold, anmony and lead
geochemical anomalies.
Drilling consisted of 1,218 m with 12 holes. The area of historic workings,
anomalies and gold showings is 1 km in strike length.
LA JULIANA:
Modern exploraon at the La Juliana property includes previous pro-
grams of mapping, soil and rock geochemistry, geophysics and drilling
by Chesapeake Gold Corp. (2002-2003), Dasher Exploraon Ltd. (2004
2005) and Pediment Exploraon (2007). This work shows the presence
of large areas of silica altered and brecciated rhyodacite with associated
coincident gold, anmony and lead geochemical anomalies.
Total drilling to date amounts to 3,668 m with 32 holes, of which 5 holes
(515 m) were cored. The area of anomalies and gold showings is 2 km in
strike length.
HistoryEL JABALI:
El Jabali has produced gold from small scale operaons since rst being
discovered by Jesuit priests in 1635.
Between 1990-2003, the property changed hands a number of mes
Previous owners included Kenneco and Placer Dome.
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RC drilling on the La Juliana property
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In 2003, Alamos and Naonal Gold merged to form Alamos Gold Inc.
(AGI). AGI, through its wholly owned Mexican subsidiary MON, owns
100% interest in the Salamandra property. The Salamandra property sur-
rounds the El Jabali property, which in turn covers the La Dura satellite
gold system.
In total, Alamos Salamandra property consists of the Mulatos deposit
(145,000160,000 oz gold producon expected in 2011) and 8 satellite
gold systems known as El Halcon, La Yaqui, Los Bajios, El Jaspe, La Dura
(covered by the El Jabali property), Cerro Pelon, El Victor/San Carlos and
El Carricito. Alamos connues to very successfully explore and develop
these addional gold resources throughout these claims.
The El Jabali property was acquired by loery. An exploraon program
of rock chip sampling and limited drilling was done on the property prior
to the loery. Rock chip sample results from this program are signicant
with gold values ranging up to 28 g/t Au.
LA JULIANA:
Since colonial mes, this area has been aracve for gold mineraliza-
on. Gold mineralizaon is hosted by all the sequences of volcanic and
volcano-sedimentary rocks correlated with the Tarahumara Formaon.
The historic mines on the La Juliana property are of signicant interes
for gold exploraon. Historic small scale mining has occurred in severa
small open-pits which focused on high-grade nave gold in the late stage
silica veinlets, as well as bulk mining of the silicied rhyodacites in relaon to local and regional fault systems.
Modern exploraon at the La Juliana prospect includes previous explo-
raon programs of mapping, soil and rock geochemistry, geophysics, and
drilling by Chesapeake Gold Corp. (2002-2003), Dasher Exploraon Ltd
(2004-2005) and Pediment Exploraon (2007).
The Juliana property consists of 3 concessions and covers an area of ap
prox. 704 hectares. An area of 300 hectares has been covered by detailed
exploraon including trenching, geological mapping, soil and rock geo-
chemistry, IP/Resisvity geophysics and drilling.
Property Interests
EL JABALI:
On November 18, 2010, the Company entered into a Leer of Intent to
acquire a 100% interest in the El Jabali property. To earn its interest, UR
is required to make cash payments of $2 million over a 5 year period as
follows:
$10,000 upon signing of the leer agreement; (paid)
$40,000 upon the TSX-Venture Exchange approval, subsequently
amended to December 31, 2011; (paid)
$75,000 on November 30, 2011, subsequently amended to $50,000
(paid) plus 120,000 common shares due within 5 business days from the
approval by TSX Venture Exchange.
$75,000 on November 30, 2012
$150,000 on November 30, 2013
$200,000 on November 30, 2014
$1.45 million on November 30, 2015.
The cash payments are subject to a 16% tax. The property is subject to a
3% NSR. URS has the right to purchase each 1% NSR for $1 million before
November 30, 2015.
LA JULIANA:
URS has entered into an opon agreement to acquire a 100% interest in
the La Juliana property. To earn its interest, URS is required to make cash
payments of $2 million over a 5 year period as follows:
$30,000 upon signing of the leer of intent; (paid)
$30,000 on January 14, 2012; (paid)
$30,000 on July 14, 2012; (paid?)
$30,000 on January 14, 2013
$30,000 on July 14, 2013
$100,000 on January 14, 2014
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$100,000 on July 14, 2014
$100,000 on January 14, 2015
$100,000 on July 14, 2015
$725,000 on January 14, 2016 $725,000 on July 14, 2016
The property is subject to a 2% NSR.
URS has the right to purchase each
1% NSR for $1 million 5 years aer
signing.
Local & Regional Geology
EL JABALI:
The property lies within the Sierra
Madre Occidental Terary volcanic
terrain and within the Mulatos Mi-
ning District, which is part of the Si-
erra Madre Gold Belt.
Gold mineralizaon is hosted by fractured rhyodacites on the south side
of a locally dominant rhyolite dome and is similar in habit to that found
at the Mulatos Mine.
Alteraon assemblages at Mulatos are typical of high suldaon depo-
sits with zonaon from distal propylic alteraon to illite to kaolinite to
dickite/pyrophyllite to pervasive and vuggy silica alteraon. Gold is pre-
dominantly hosted within silicic alteraon.
Gold mineralizaon controls are both structural and stragraphic; struc-
tural zones control silica alteraon and higher-grade gold concentraons,
and secondary stragraphic control is along ow boundaries and within
coarse grained volcaniclasc fragmental units.
The El Jabali property covers a massive, cli-forming, silica-hemate
altered rhyolite. Massive to banded rhyolite is exposed in the area of
mineralizaon, on clis to the east of the claim and extending north and
south of the claim.
The La Dura (Jabali) hydrothermal system is conguous with another pro-
spect to the south that is described in the Alamos 2003 Annual Reportas Los Bajios.
The La Dura satellite gold system is covered by the Jabali claim. In other
words, the Jabali project is actually a part of Alamos La Dura prospect,
which was described in their 2003 Annual report as follows:
The La Dura prospect contains a large area of intense silicic alteraon
of over 3.5 kilometres in length with several historic gold workings. A
core concession is not controlled by Alamos. (The core concession is
the Jabali project).
The Los Bajios area may be the central part of one large, regional hyd
rothermal system, with Halcon located in the western poron, La Dura
to the north, and La Yaqui on the south as lateral, distal equivalents
The size of the airborne resisvity anomalies and extent of alteraon
indicates potenal for at least one Mulatos-size deposit within the
zone.
LA JULIANA:
The La Juliana claim lies within the Sierra Madre volcanic province. It co
vers historic mine workings of interest for gold exploraon. Mineralized
structures at the La Juliana pit are exposed and consist of silicied vein
breccias with abundant iron oxide (hemate) and with nave gold lling
late stage veinlets in the breccias.
Stragraphic rock units that outcrop in the region range from Cretace-
ous to Quaternary in age and include sedimentary, volcano-sedimentary
and volcanic sequences with intrusive bodies of granodioric composi
on and rhyolite emplaced during the Oligocene. Extensive hydrotherma
alteraon zones and gold mineralizaon in the area is associated with
the youngest intrusive bodies. These strata overlie the northern edge ofthe Cortez basement terrane.
Structurally, the area is aected by 2 major fault systems: an older NW-
SE direcon and a younger NE-SW direcon. In general, the faults can
be aributed to tectonic basin and range extension. Curvilinear feature
oen reect intrusions emplaced during the laramide orogeny.
La Julianna hosts large areas of silica altered and brecciated rhyoda-
cite with associated coincident gold, anmony and lead geochemical
anomalies in both sill and fault bound environments. Silica alteraon
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District airborne resisvity respon
se. Silicied areas show up as highly
resisve anomalies, shown in red. (La
Dura / El Jabali indicated by gold star.
All known gold and gold-copper oc-
currences are associated with resis-
vity anomalies. (2003 Alamos Annua
report)
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may be vuggy, granular or patchy in tex-
ture and is associated with illite, dickite
and alunite. Gold-rich zones are closely
associated with hemac silica brecciasdeveloped along faults oriented.
Mineralizaon
Mineralizaon on the El Jabali property is
associated with iron-stained outcrops of
silicied volcanic rocks. Mineralized areas
are disnguished by yellowish limonite-
jarosite or blood-red hemate staining,
vuggy silica or grey silicicaon and zones
of crackle breccia.
Above: Cli forming rhyolite on the El Ja-
bali property. The view to the northeast
at mid-cli level shows strong blood red
hemate stain.
The main mineralized zone is marked by
a glory hole that exposes highly fractured
and jarosite-stained silicied and breccia-
ted rhyolite. An adit located just south
and downhill from the glory hole leads to
a honeycomb of old underground mine
workings. Several fault and fault brec-
cia structures are evident in the under-
ground exposures.
Gold was observed by URS geologists du-
ring the site examinaon just west of the
old mine. The gold is very ne and occurs
on fractures in a vuggy silica altered rhy-
olite. There are also physical remains of
a crude slucing operaon which indicates
that free gold is present.
Alteraon and gold occurrences:
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The following text and pictures are taken from the website of Alamos
Gold Corp. (www.alamosgold.com) and give an overview of their ag-
ship property Mulatos:
Alamos owns and operates the Mulatos Mine, which is located in the Si-
erra Madre Occidental mountain range in the east-central poron of the
State of Sonora, Mexico. The mine is approximately 220 km by air east
of the City of Hermosillo, and 300 km south of the border between theUSA and Mexico. The Salamandra group of concessions covers an area
of more than 30,000 hectares, which contains the Mulatos Deposit plus
several signicant satellite gold systems, including Puerto del Aire, El Hal-
con, La Yaqui, Los Bajios, Cerro Pelon, El Victor, San Carlos, El Carricito,
and El Realito. An advanced exploraon program to develop addional
mineral resources for inclusion into an expanded Mulatos Pit is ongoing.
In addion to increasing resources near current mining operaons, Ala-
mos has a regional exploraon program that is focused on other targets
within the Mulatos District.
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The Mulatos Mine operates 365 days a year and produces gold on-site as
dore containing approx. 60 to 80% gold by weight, which is sent to a re-
nery for nal processing prior to sale. Construcon of the mine began in
the third quarter of 2004, and the mine was completed in January 2006at a cost of approx. $74 million. Commercial producon was declared on
April 1, 2006.
Although the 2004 Feasibility Study called for only a 10,000-tonnes-per-
day ore crushing operaon, Alamos sized the major components of the
Mulatos Mine, including the crusher, conveyor, and gold recovery plant,
to handle a mining and processing operaon with a capacity of up to
15,000 tonnes per day. In 2005, an expansion budget of $20 million was
approved to increase the scale of mining operaons from the 2004 Feasi-
bility Study level of 10,000 tonnes of ore per day.
At the start of 2010, Alamos commissioned a closed circuit crushing sys-
tem designed to improve the size consistency of stacked ore. In October
2010, the company added a scalping screen plant to the crushing circuit
designed to increase throughput. Actual average daily crusher through-
put for 2010 was 13,000 tonnes per day.
Based on current proven and probable mineral reserves and current
throughput rates, Mulatos has an expected mine life of approx. nine
years. Inial capital costs incurred to construct the mine have been re-
covered, however, the company is invesng further in its current heap
leach operaons to improve recoveries and throughput, and in a planned
mill expansion in order to increase global producon.
In 2011, the company started to construct a gravity mill in order to incre
ase global producon. The mill has been designed to process high-grade
ores, such as those found within the Escondida zone.
In the year-ended December 31, 2010, the company produced 156,000
ounces of gold at a cash operang cost of $302 per ounce. In 2011, the
Company is forecasng gold pro
ducon of 145,000 to 160,000
ounces from the Mulatos Mine a
a cash operang cost of $365 to
$390 per ounce of gold sold, which
is exclusive of the 5% royalty. Inclu
sive of the 5% royalty and assuming
an average realized gold price o
$1,500 per ounce, this would equa
te to a total cash cost range of $440
to $465 per ounce of gold sold.
The Mulatos Deposit is part of an
epithermal, high-sulphidaon
disseminated gold system, hosted
within an Oligocene rhyodacite
ow dome and breccia complexIt is associated with a large hydro
thermal alteraon zone that covers
more than 10 square kilometres
Gold mineralizaon is closely asso
ciated with silicic and advanced ar
gillic alteraon occurring near the
upper contact of a rhyodacite por
phyry and in overlying dacite ows
and volcaniclasc rocks.
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2012 Producon Guidance
The Company is forecasng strong producon growth in 2012, between
200,000 and 220,000 ounces of gold at a cash operang cost of $365 to
$390 per ounce of gold sold, exclusive of a 5% royalty.
Including the 5% royalty and assuming a $1,600 gold price, this equates
to a total cash cost range of $445 to $470 per ounce of gold sold.
The Company expects gold produced from the gravity mill, which wil
process high-grade ore from Escondida, will add a minimum of 67,000
ounces of producon in 2012 at a grade of 13.4 g/t Au. Based on bulk
sample tesng conducted in 2007, the Company believes that there is
the potenal for higher producon from the gravity mill as a result of
realizing posive grade reconciliaon to the reserve grade.
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The following key parameters form the basis for the 2012 producon
forecast and operang cost esmate:
Combined gold recovery of 77% (heap leach ore, 72% recovery; mill
ore, 90% recovery)
Throughput: 17,500 tpd (includes 500 tpd from the gravity mill)
Average grade: 1.33 g/t Au blended grade (heap leach ore, 1.0 g/t Au;
mill ore, 13.4 g/t Au)
Waste-to-ore rao of 0.64:1
Mexican peso:United States dollar foreign exchange of 13:1
The Company expects these parameters to uctuate throughout 2012
and as a result, these parameters should be treated as full-year averages
and will not necessarily be reecve of quarterly operang
results.
2012 Mulatos Operang and Development Budget
The 2012 Mulatos capital and development budget is $26
million and includes the following key items:
Capital Expenditure - Mexico 2012 Budget
Capitalized pre-stripping costs $9.7 million
Construcon $3.0 millionCrusher improvements $5.4 million
Sustaining Capital $7.9 million
Total $26.0 million
2012 Mulatos Exploraon Budget
The 2012 Mulatos exploraon budget is $8.6 million. The
Company expects that approximately 65% of the 2012 ex-
ploraon costs in Mexico will be expensed.
A minimum of 22,500 metres (m) of reverse-circulaon
(RC) and core drilling is planned at Mulatos, with a focus on
the following targets:
San Carlos Northeast 5,000 m
Compadres 4,500 m
East Estrella 3,000 m
Mulatos Mine Area (Escondida, El Victor North, and El Vic-
tor South) 10,000 m
In addion to the drill programs outlined above, the Compa
ny also has a large reconnaissance-level exploraon program
planned for 2012 to assess several of its regional grassroots
targets, including Puerto del Aire, San Nicolas, La Dura, La
Palma, El Halcon and West Halcon, and Osmuri.
High-Grade Gravity Mill
Construcon completed in January 2012
Capital cost: $20 million
2012 Planned producon: minimum 67,000 oz Au
Ancipate about 1 month of gold producon in Q1/12
How the Gravity mill system works:
Plant recovers gold into a gravity concentrate through the rougher
and cleaner Inline Pressure Jigs (IPJ), in combinaon with a Knelson
Concentrator
Gold concentrate is intensively leached using the Inline Leach Reactors
(ILR) to produce pregnant soluon
Pregnant soluon treated using electrowinning
Gravity tailings are dewatered and conveyed to the leach pad.
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EL ANTIMONIOThe El Anmonio property is considered signi-
cant in respect of numerous factors:
The presence of mineralized veins over a large
area besides widespread fracturing and altera-
on of sedimentary rocks suggesng a potenal
for disseminated-style mineralizaon.
Geological similaries to the near-by La Herra-
dura Mine (largest gold mine in Mexico) with an
average mineralizaon of 0.78 g/t and a cut-o
grade of 0.33 g/t gold.
Previous arsanal mining acvies stopped at
the water table and where overburden conce-
aled the veins.
Extensive oxidaon suggesng possibilies for
heap leach oxide gold.
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Current ExploraonOn July 11, URS announced having entered into a contract for 1,500 m
of core drilling (3 holes with 500 m each) at its agship property El An-
minio (12,500 ha) in northwest Sonora, Mexico. Simultaneously, URS iscompleng its 10,000 m reverse circulaon (RC) drill ing program, where-
as some 8,000 m have been drilled with 37 holes already. Assay results
have been announced up to hole 30 (lastly on July 27) and have returned
several wide gold bearing intercepts including those summarized in the
table below. We consider the preliminary results from these holes to be
highly signicant and indicave of the potenal for a bulk tonnage gold
deposit to be mined via open-pit(s).
The exploraon target is a bulk mineable gold deposit centered on previ-
ously mined veins and new areas discovered through eld work.
So far, 6 main and 10 minor areas with gold values or mining workings
have been dened and the current 10,000 meter RC drilling program is
expected to test these dened targets in 2012.
Given the locaon in the Mojave-Sonora Megashear, the geology, and
the extensive historical workings on the property, we knew there was
potenal for widespread gold mineralizaon at El Anmono. I think
the results of the rst few thousand meters of drilling on the propertyshow that we may be onto something very signicant here. Based on
these results, were planning to connue to aggressively explore at E
Anmonio and expand on some of these intercepts. (Adrian Robert
son, P.Eng., President of Urastar Gold Corp.)
Past Exploraon & MiningSeveral clusters of veins have been previously mined for anmony within
an area extending over 6 x 4 km on the El Anmonio property. In each
cluster, one or more veins have been excavated by pits, or stoped along
the structure and accessed by shas or adits. Historically, there has been
producon of anmony and gold from placer workings of gravel. The
overall amount mined appears to be relavely small (below 250,000 t).
Today, arsanal miners are recovering small amounts of gold nuggets
from gravel using metal detectors. The nuggets do not appear to have
been transported very far as they are fairly coarse and not rounded or
aened.
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In 2009, a total of 42 samples were collected from historic workings and
altered outcrops over an area of over 4 x 2 km on El Anmonio. The-
se workings are sited on vein swarms, with each swarm localized within
areas approx. 0.5 km square. Further sampling was done in October of2010, following acquision of addional ground. Several samples from
the 2009 campaign returned elevated gold values ranging up to 2.2 g/t
Au, with the average of all 42 samples collected being 0.32 g/t Au. Silver
results are elevated and range up to 69 g/t Ag, and anmony is high (over
10,000 ppm). Elevated values for several other metals were obtained
including As, Ba, Mn and locally Pb and Zn.
We consider these results to be highly signicant, because most of the
samples are of altered and weakly mineralized material that was le be-
hind - hence, the ore grade material that was mined at surface is not in-
cluded in the sampling average made by URS. The best sample (in terms
of grade x width) is 1.23 g/t Au over 5.2 m, which was a chip sample
across a ferruginous siltstone containing 10-20% quartz stringers. This
sample demonstrates the presence of open-pit ore-grade material in al-
tered sedimentary rocks that were not previously mined.
HistoryThe rst recorded date of mining acvies in the district is 1722. In the
early 1800s, explorers panning for gold mistook anmony for nave sil-
ver. The rst underground workings were developed in 1882 by a Boston
company in the central part of the district. In 1942-1943, Rafael Ruiz,
Charlie Thompson and Roberto Moreno exploited several veins, deve-
loped new areas, and installed a 100 tons per day (tpd) otaon mill.
Producon never reached full capacity.
The main mines in producon during the 1960s were La Piedra Azul, La
Argenna, San Miguel, San Jos, La Montaa, El Promontorio, San Fran-
cisco, Palo Verde, La Limea, El Pensamiento and La Fortuna. Esmated
total producon was 25,000 t of anmony.
The Mexican company Vitro developed an exploraon program in 1982
cung 18 trenches that were 100-400 m long and drilled 18 core and
6 RC holes. From 1994 to 1997, Minorco and IMC developed another
extensive exploraon program that included mapping, sampling and
geophysics (VLF-EM and 4 IP-Mag lines). The drilling campaign of 1996-
1997 by Minorco reported several low-grade intersecons in the collared
RC holes. From 2005 to date, Peoles, thru the subsidiary Exploraciones
Mineras Parrea S.A de C.V., consolidated their land posion with inter-mient acvies in the central poron of the district. From 2007 to date,
Lic Benjamin Lagarda began to stake claims at El Anmonio, and in 2009,
URS oponed the claims from Lagarda.
Property InterestsBy an agreement dated November 8, 2010 and subsequently amen-
ded on December 22, 2011, URS has acquired an opon agreement to
purchase a 100% interest in the El Anmonio property. To earn its inte-
rest, URS is required to make cash payments of $2 million over a 5 year
period as follows:
US$10,000 upon signing of the leer agreement (paid);
US$40,000 upon the TSX-Venture Exchange approval (paid);
US$45,000 on December 20, 2011 (paid);
US$30,000 when drilling contractors and the required equipment aremobilised (paid);
US$75,000 on December 20, 2012;
US$150,000 on December 20, 2013;
US$200,000 on December 20, 2014;
US$1,450,000 on December 20, 2015.
The cash payments are subject to a 16% tax. The property is subject to
a 3% net smelter returns royalty (NSR). URS has the right to purchase
each 1% NSR for $1 million before November 2015.
Local GeologyThe El Anmonio property consists of 12,500 hectares and is located 40
km west of Caborca, Sonora, in the heart of the Mojave-Sonora Megas-
hear.
The host rocks are various sedimentary rocks including Permo-Triassic
limestone, Jurassic arenite, and Cretaceous arenite - all intruded by up
per Cretaceous-lower Terary diorite, Terary rhyolite and rhyodacite
Highly ferruginous argillaceous sedimentary units, that host low-grade
gold, are present. The mineralizaon is low sulphidaon Sb, Ag, Au veins
mesothermal style with a late-stage epitheral overprint. Quartz veins
vein breccia, quartz veinlets and silicicaon associated with faults and
shear zones cut sedimentary rocks including siltstone, greywacke and lo
cal limestone.
The vein quartz is of 2 types:
1. The main type is white, medium-grained, and cockscomb-textured to
massive white quartz of probable mesothermal style.
2. The second type consists of microcrystalline white chalcedonic quartz
of low temperature epithermal style.
The 2 types occur together in fault zones that are associated with purple
hemac altered wall rocks. The hemate iron oxide is a supergene wea
thering product of original sulphides presumed to be pyrite. Sulphide
mineralizaon is rare within the vein quartz and consists of patches and
small seams of black-grey ne-grained sulphide.
Alteraon is generally widespread and consists of argillizaon with li-monite and/or hemac iron oxide staining that extends a few hund
red meters around the mined fault/vein structures. The altered zones
commonly contain quartz stringers (10% quartz). There are large areas o
alteraon and some quartz veins that have never been pied or mined.
All of the historical workings are located on disconnuous quartz veins
and quartz stringer zones associated with faults. Several orientaons o
vein/fault structures are developed. The deposit is characterized by large
areas of altered rocks containing intense fracture networks and crackle
breccias, with hemate and/or limonite coangs on fractures.
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Regional Geology of La HerraduraFrom the guidebook of the ore geology eld trip to NW-Mexico by the
University of Geneva (2009):
In terms of crustal provinces, this region corresponds to the Caborca
block (Dickinson & Lawton, 2001) which is a Laurenan ane terrane
with an underlying Proterozoic basement ~1.7-1.8 Ga years old. How
ever, its proximity to the proposed Mojave-Sonora megashear in thenortheast, the structure that sutures the Caborca block and the North
American Block, results in pervasive deformaon and complex faulng in
the mine area. As would be expected in this tectonic seng, the deposit
exhibits a strong structural control. The mineralizaon is conned to a
NW-SE trending slice of amphibolite-facies Proterozoic gneisses that is
bounded to the NE by the Victoria fault and to the SW by the Ocollo
fault. These shear zones separate the Proterozoic rocks from a low-grade
metavolcanic/metasedimentaryurassic sequence to the east and an inci
piently metamorphosed sequence of limestones and quartzites of uppe
Paleozoic age to the west...
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La Herradura Mineralizaon & Mining...Gold rich veins are restricted to the
Proterozoic rocks which consist of bio-
te-feldspar-quartz and quartz-feldspar
gneisses of sedimentary and plutonic
origin. The hydrothermal system is struc-
turally controlled and the higher grade
mineralizaon occurs in quartz-sulde
veins lling tensional fractures. Quartz-
sericite-albite alteraon is widespread
in the core of the deposit and grades to
propylic in the outer parts where the
gneisses are more biote rich. Geochro-
nological results indicate that the age of
the mineralizaon is lower Terary, con-
rming its Laramidic origin. The averagegrade is calculated to 1 g/t of Au with
a cut-o of 0.33 g/t. Mining of the mi-
neralized body is being conducted in 2
adjacent open pits, the Centauro and the
Yaqui pits. The principal pit (Centauro)
is approx. 1km long and 0.65 km wide,
but the projected megapit will join the 2
smaller ones and will extend another 1.2
km to the NW following the gneissic host
rocks along strike.
Above: Simplied geological map of the mine area (from Quintanar-Ruiz
2008). The host rocks of the mineralizaon, the Proterozoic gneisses, are
shown in orange. These rocks dene a NW-SE trending belt, bounded by
the Victoria and Ocollo faults to the NE and SW respecvely. Topogra-
phic contours dene the actual sizes of the Centauro and Yaqui pits, and
the doed yellow line denes the perimeter of the projected megapit.
Below: The Centauro Pit; Mineralized hydrothermal breccias in the mi
ning front. The mineralogy consists of quartz-hemate-galena-gold.
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The La Herradura Mine (Centauro Pit); Picture above from Chema Goi-
ricelaya, Februar 2009, Flickr.com; Picture below from googlemaps.com
The Mojave-Sonora Megashear hosts millions of ounces of gold produc-
on, reserves, and resources. The most signicant gold mine along this
structure is La Herradura. It is the largest producing gold mine in Mexico
with resources of more than 8 million ounces, and is located only 50 km
from El Anmonio.
The district around Herradura is experiencing a major exploraon boom
which started just few years ago thanks to new discoveries, La Herraduraincreasing their mined reserves due to their exploraon success, and the
price increase of gold and silver.
Many of the mines in the district currently in producon started with
small mining prospects that underwent new geological interpretaons
or were explored in several stages. The mining of anmony with gold
and silver, along with the 50 veins in the El Alamo Range district, presents
a prospecve opportunity to explore for a mineable gold deposit at El
Anmonio.
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Satellite view of the Centauro open pit (Google Earth).
Newmont has a 44% interest in La Herradura, which is located in Mexico
Sonora desert 400 km south of Mesquite and 125 km northwest from the
nearest large town of Caborca in the State of Sonora, with a populaon
of 81,000 (2010 census). Workers from area villages are provided daily
transportaon to the mine site. La Herradura is operated by Fresnillo PLC
(which owns the remaining 56% interest and is the operator) and compri
ses an open pit operaon with run-of-mine heap leach processing.
The Centauro Deep exploraon project is taking shape below the
main pit of Herradura for development as an underground
mine.
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Management
Adrian Robertson, P.Eng President, CEO, Director
Mr. Robertson is a professional engineer with life of mine experience
ranging from exploraon and nancing through producon and reclama-
on.
Mr. Robertsons previous work experience includes posions with Vale
(formerly Inco Ltd), Teck, Golder Associates and TVX Corp.
In addion to his responsibilies with Urastar Gold Corp, Mr. Robertson
is also a consultant and corporate pilot working with several Vancouver
based junior mining companies.
Mr. Robertson is also a director of Meadow Bay Gold Corp and is Presi-
dent and CEO of Silver Pursuit Resources.
Charles (Bill) W. Reed Director, Senior Geologist
Mr. Reed is a Registered Professional Geologist with over 40 years of
work experience in the mining industry exploring for disseminated and
high grade vein gold-silver, porphyry copper-molybdenum, and volcano-
genic and replacement polymetallic deposits in United States, Mexico,
Lan America and Africa.
Mr. Reed was directly involved in the discovery and development of nu-
merous mines which have produced more than several million ounces
of gold. Mr. Reeds most recent success was as co-founder of Paramount
Gold and Silver Corp (TSX, NYSE: PZG). As he was responsible for bringing
the agship San Miguel project in Chihuahua, Mexico into the Paramount
porolio of assets. Mr. Reed is uent in Spanish and has a very strong
knowledge of the business and community culture in Mexico.
In addion, Mr. Reed was Chief Geologist (Mexico) for Hecla Mining
Company (NYSE: HL)
Michel Snglhamber Director
Mr. Snglhamber has signicant experience in the Mexican mining indus-
try. He currently represents Umicore Belgium (formerly Union Miniere),
a $8 billion public company, in Mexico. They are acve in precious metals
products and catalysts, advanced materials and zinc speciales.
Mr. Snglhamber is also the Chairman of two very successful Mexican
mining companies, Minera Productos Metalicos y Derivados SA de CV,
and Minera Recami SA de CV, an exploraon company in Sonora, Mexico.
He is also a director of Paramount Gold & Silver Corp. (TSX, NYSE: PZG).
Between 1991 and 2000, Mr. Snglhamber was on the Board of Director
and on the Technical Board of Mexicana de Cananea SA de CV (Grupo
Mexico).
In 1990, he was instrumental in the Union Miniere team that worked
in Mexico for the pre-nancing of the acquision of La Caridad coppe
mine from Nansa for Mexicana de Cobre of the Larrea Group, Grupo
Mexico.
From 1986 to 2004 he was the chairman of Sogem Mexico SA de CV, the
metal trading division of Umicore SA (today Traxis Mexico SA de CV).
Between 1980 and 1986, he represented Aquaroc Internaonal in Mexi
co, a lial of the Consorum BURRUS Switzerland.
Mr. Snglhamber was President of the Belgo Luxemburg Mexican Cham
ber of Commerce in 1987, and in 2002, and was awarded the Belgian
decoraon of Ocer of the Crown.
John Morita CFO, Director
Mr. Morita has been a professional accountant for over 35 years and a
member of the Cered General Accountants Associaon of B.C. For the
past twenty years.
Mr. Morita has been a management consultant, advising on income tax
and personal nancial maers, and has held a variety of senior posions
as a director and/ or CFO with various public companies listed on the TSX
Venture Exchange and Canadian Naonal Stock Exchange (CNSX).
Mr. Morita played a major role in referring and successfully compleng
(Mar/ 05) ACP Ace Venture Corps Qualifying Transacon which was the
RTO of Cantronic Systems Inc. (TSX.V: CTS) a Tier 1 company.
Mr. Morita is currently the CFO and a director of Urastar Energy Inc
(TSXV:URS) and Mineral Mounan Resources Ltd. (TSX.V: MMV). He is
CFO of Maxtech Ventures Inc. (TSX.V: MVT), Acadia Resources Corp
(TSX.V: AIC) and Golden Cross Resources (CNSX: GOX). Mr. Morita also
serves on the Board of Directors of Polo Biology Global Group Corpora-
on.
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Technical Analysis
In October 2009, the stock price of Urastar Gold Corp.
(URS) on the Toronto Stock Exchange (TSX) rosefrom approx. C$0.05 to C$0.35, whereaer a consoli-
daon beneath the blue resistance took place - which
together with the green support line was forming a
(blue-green) triangle.
In April 2010, the price managed to break above the
blue resistance and undertook a so-called breakout
to $0.55, whereaer a consolidaon beneath the red
resistance took place - which is called a pullback (to
the blue-green triangle).
In late 2010, the price managed to break above the red
resistance at approx. C$0.30, whereaer the so-called
thrust started (highlighted in light-green) reaching
approx. C$0.90 in mid-2011.
Aer this thrust, a consolidaon back to the green
support at approx. $0.20 occured, whereaer the pri-
ce consolidated sideways beneath the blue resistance
at approx. $0.30.
In early 2012, the price managed to break above the
blue resistance and undertook a breakout to approx.
C$0.55, whereaer a pullback beneath the red resis-
tance took place.
Recently, the price managed to break above the red
resistance at approx. C$0.30 - hence, we expect ano-
ther thrust to have just started.
Furthermore and in general, a strong buy-signal is ge-
nerated when a price succeeds in rising above the 260-
day Exponenal Moving Average (EMA) curve, which
currently runs at C$0.34. As the price currently tra-
des at C$0.40, a strong buy-signal is acve (sell-signal
when breaching this support).
Relavely to the HUI mining index, URS has a beerperformance since mid-2009 (green upward-trend).
The next strong buy-signal is generated when brea-
king above the red resistance. The MACD just rose
above the red resistance giving another buy-signal.
The PPO indicator generates a strong buy-signal when
rising above the red resistance. The ROC broke above
the red resistance recently and undertook a pullback.
A strong up-move (thrust) is ancipated when rising
above the red resistance again.
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Financials
Excerpt from the Condensed Consolidated Interim Financial Statements December 31, 2011:
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