Parlozi - Base Geology and Exploration Permit

Detail Geologic Map of Parlozi with drill site position

PA-1 validation drill hole with earlier geological interpretation

Highlights:

• High grade silver mineralization associated with lead and zinc sulphides: comparable to Trepca type, and Mexico -- Peru manto deposits
  
  
• Former Yugoslav resource estimate: 6.5 Mt @ 4.1% Pb, 2.1% Zn, 0.3% Cu and130 g/t Ag
  
  
• Reservoir's validation drilling identifies high silver (max 1175 g/t Ag, with 7.8 m @ 214 g/t Ag and 11.5 m @ 102 g/t Ag) and gold (2.81 g/t over 6.15 meters) contents, and confirms base-metal grades.
  
  
• Excellent potential for enhancing resource tonnage and silver content

Background:

The Parlozi Exploration Permit covers a historical lead-zinc-silver resource in the Kosmaj-Babé area in the north of the Šumadija mining district, central Serbia. The area has been a focus of lead-zinc-silver mining and exploration since the Roman times. Slags from earlier smelting activities occur extensively in the area.

Geology and Mineralization:

The Permit contains several circular structures that are interpreted to be volcanic collapse structures. related to dacitic breccias in the area. Quartz-latite dykes post-date the brecciation. The Neogene magmatic rocks intrude late Cretaceous clastic and carbonate sedimentary rocks. The mineralization occurs as veins and stratabound replacement of the Cretaceous carbonates and is spatially associated with intrusive Neogene quartz-latite dykes and dacitic volcanic breccias, which are intensely argillised and pyritized near the mineralization. The mineralization proximal to the breccias is enriched in gold, and marked by arsenopyrite and intense silicification of the host marls and limestones. Lead and zinc sulphides together with pyrite occur distally from the intrusive contact, but are also associated with intense silicification of the host carbonates. The ore mineralogy includes argentiferous galena, sphalerite and pyrite with accessory chalcopyrite, arsenopyrite, tetrahedrite, marcasite and gold.

This type of mineralization has long supported zinc-lead-silver mining operations at Trepca and other mines in Serbia and the western Balkan countries. However, the lead-zinc sulphide replacement mineralization at Parlozi is markedly enriched in silver (see table and images), which occurs at concentrations otherwise seen in the famous manto or carbonate-replacement-deposit (CRD) deposits in Mexico and Peru.

Title and Area:

The Parlozi Exploration Permit was granted to SEE d.o.o. on 21 August 2007, and covers an area of 91 sq. km.

Exploration Status:

Exploration work in the Permit area during the 1970's and 1980's by State-controlled companies of the Former Yugoslavia focussed on the Parlozi deposit, and included 39 deep drill holes (15,105 meters), airborne and ground geophysical surveys, and detailed geological and mineralogical studies. The data indicates that the base metals were the principal target, and silver and gold were only occasionally analysed. Based on this work, the Serbian mineral deposit database quotes a historical resource estimate of 6.5 million tonnes at an average grade of 4.1% lead, 2.1% zinc, 0.3% copper and 130 g/t silver within the Permit area. This resource estimate is not compliant with National Instrument 43-101, but is considered by the Company to be relevant.

The Company has compiled and digitized much of the historical data, and completed a validation drill hole PA-1 to a depth of 600 meters. The hole intersected several zones of lead-zinc-silver mineralization, as well as a zone of gold mineralization close to the contact with the dacite breccias. The best intercepts are shown in the table, and include 0.8 m @ 1175 g/t Ag, 7.8 m @ 214 g/t Ag and 11.5 m @ 102 g/t Ag. The lead and zinc values are closely comparable to those reported from the historical holes in the area.

The Ljute Strane location is considered to be a potential Ag -- Au epithermal target (surface sampling yielded 3 samples with >100 g/t Ag), possibly a high-level equivalent to that at Parlozi. The Company has documentation pertaining to earlier underground exploration, but the analytical results are restricted to the base metals.