Location

The Nueva California Property is situated in the Department of Ancash in north-central Peru, in the District and Province of Yungay, 42 kilometers north of Huaraz and approximately 320 kilometers north of Lima.

History

The Nueva California Mine began production in 1984 as a small 100 tpd cut-and-fill underground and open pit mining operation, which processes ore by crushing and dump heap leaching. It is estimated that in the order of 700,000 - 800,000 tonnes of ore has been mined to date, with poor recoveries largely due to the absence of milling.

Past and current mining operations have focused exclusively on mining high grade mineralization that was interpreted to be hosted by altered "dykes". Underground and open pit mining has traced the oxidized upper portions of these zones over distances of 200 -- 250 meters along strike, easily followed by miners due to the dark appearance in contrast with paler intrusive wallrocks. Such wallrocks contain low grade disseminate mineralization in the order of 0.5 -- 3 g/t Au, however these grades are deemed uneconomic by the current underground operations.

Despite production for over 25 years, the hard rock potential of the mine had never been explored systematically by drilling. Focus is the first company to drill the property, and has completed 3.950m of diamond drilling to date.

Regional Geology

The Nueva California property resides in the central part of a renowned polymetallic mining district of the Western Andean Cordillera of central Peru. The belt stretches over a distance of some 600 kilometers and is located approximately midway between the Morococha deposit in the south and the Yanacocha deposit to the north. The overall metal endowment and diversity of deposit types in this district make it truly exceptional with respect to mining and mineral potential. Exploitation is mainly from Intermediate Sulphidation, Low Sulphidation, High Sulphidation, Porphyry, and Porphyry--Skarn types of deposits, which are all types of hydrothermal deposits thought to be associated with Tertiary high-level c alkaline intrusions.

The property is located along the border of the Callejon de Huaylas Valley and the Cordillera Blanca Horst, which both trend NNE and are intersected by the NW trending and Carhuaz faults. Basement uplift of the Cretaceous basament has explosed the Chicama, Santa, Carhuaz y Chimu Formations. A regional scale Range Front Fault, traceable over some 150 km is related to late Miocene-Pliocene extensional tectonics and the growth of the Cordillera Blanca. Roof top environment associated with the emplacement of the the Cordillera Blanca Batholith. Multiple steep parallel N-S structures exercise local control on the emplacement of veins and hydrothermal breccia zones. Possibly NE - SW tears or platform faults have resulted in the formation of horst block in the area of the old mine. Mineralization is directly associated with the emplacement of the granodiorite (heat engine) of the batholith. Multiple dykes crosscut the argillite host rocks.

Property Geology

The Nueva California deposit occurs in granodiorite of the Cordillera Blanca Batholith at its western edge, where it contacts with rocks of the Early Cretaceous (113 -- 144 ma) Goyllarisquisca Group. The contact between the intrusive and sedimentary rocks is a northwest trending regional "range-front" fault that can be traced NNW -- SSE along the entire western edge of the Batholith. The fault dips moderately to steeply southwest, and has normal and right lateral strike slip movement.

The existing mine model interprets the high grade mineralization as hosted within a series of at least 5 parallel NNW -- SSE trending andesite dykes, which were originally part of the same structure having dislocated by a series of low angle faults and repeated down slope in a "staircase" arrangement. Focus' geologists believe that the mineralized dykes are in fact remnant layers or xenoliths of bituminous shale/siltstone and coal beds of the Cretaceous Chimu Formation that have been intruded and assimilated by the granodiorite sills and dykes. The sediments acted as the focus for intense hydrothermal activity evidenced by multiple pulses of quartz veining, quartz vein stockworks and siliceous hydrothermal breccias.

The new interpretation has importance on the future exploration potential of the deposit, and permits the deposit to be considered as a large disseminated gold deposit with bulk mining potential. This new model depicts multiple mineralized zones within wider zones of low grade mineralization that extend to depth. Strike and width of the mineralization are presently unconstrained.

The mineralization in the mine is for the most part strongly oxidized, consisting of goethite, limonite and lesser hematite as staining and as replacement of pyrite which is ubiquitous to the altered granodiorite and the sediments as fine and medium grained disseminations and veins, mostly with quartz. Oxidation penetrates at least to the lowest levels of the mine or 50 -- 70 meters below surface. Other principal sulphide minerals are arsenopyrite, galena and sphalerite. Traces of chalcopyrite, pyrrhotite, covellite, bornite, and chalcocite have also been observed.

Focus' Drilling

In late 2009, Focus completed a first-pass drill program at Nueva California. Four holes were drilled for a total of 405m. All holes intersected epithermal style gold mineralization, with higher grades (>5 g/t Au) associated with silicified and hydrothermally brecciated sediments. Significant mineralized intercepts include:

• Hole DDH-NC-003 which cut 69.6m grading 1.84 g/t Au* and 22 g/t Ag from surface
• Hole DDH-NC-002 which cute 38.2m grading 1.70 g/t Au and 20 g/t Ag from surface

* A high grade sample assaying 171 g/t Au and 816 g/t Ag drilled from 2.7m to 3.6m was cut to 30g/t for calculating this weighted average interval. Using the uncapped value, the interval grades 3.66g/t Au over 69.6m.

The holes were located in the upper elevations of the mine where the geology is poorly understood because the underground workings are mostly collapsed and inaccessible. Each hole was oriented to try to avoid the underground workings. Where workings were intercepted and/or no core was recovered, grades of nil g/t Au were conservatively assigned to calculate the weighted average grades. This preliminary drilling successfully verified the high-grades mined historically and confirmed the lower grade, near surface, bulk tonnage potential of the Nueva California mineralization in all holes.

In a second phase of drilling, Focus completed and released assays for 10 more holes. Drillholes were collared on a 100m spaced grid to create a broad, deep geological profile from the lower to the upper levels of the mine, and the intercepts cited above occur over various levels of the mine. All holes were drilled at bearing of 060 degrees to the north-east and at 45 degrees inclination.

Highlights include:

• Hole DDH-NC-012 which cut 46m @ 2.0 g/t Au + 95g/t Ag (3.6g/t Au Eq*.) from 52m and a shallower intercept of 24.4m @ 2.6g/t Au + 105g/t Ag (4.3 g/t Au Eq.) from surface in the tailings
• Hole DDH-NC-006 which cut 53.6m @ 1.6 g/t Au from surface
• Hole DDH-NC-013 which cut 20m @ 1.6 g/t Au from surface
• Hole DDH-NC-007 which cut 2.3m @ 17.8 g/t Au Eq. from 33.8m downhole.
*Gold Equivalent grades, where deemed significant. Calculation based on a silver to gold ratio of 62:1 with no grade capping or adjustment made for metallurgical recoveries.

A key interpretation of the on-going drilling is that the hydrothermal system appears to be much more extensive in the lower part of the Nueva California mine around DDH-NC-012, which drilled a sequence of altered argillite, hydrothermal breccias and phyllic altered granodiorites to 371m. The hydrothermal system appears to extend to the west and south of the limits of the current underground workings.

	NUEVA CALIFORNIA DRILL RESULTS
Hole #	From (m)	To (m)	Length (m)	Gold (g/t)	Silver g/t
DDH-NC-001	13	33.6	20.6	0.88	27
and	48	58.9	10.9	1.33	39
DDH-NC-002	Surface	38.2	38.2	1.7	20
DDH-NC-003	Surface	69.6	69.6	1.84*	22
includes	Surface	7.4	7.4	8.8*	122
DDH-NC-004	25	46.95	21.95	1.45	21
DDH-NC-005	60.6	63.3	2.7	3.67	43
DDH-NC-006	0.0	53.6	53.6	1.63	19
includes	35.1	51.3	16.2	2.88	29
DDH-NC-007	33.75	36.0	2.25	14.14	228
DDH-NC-008	No Significant Intercepts
DDH-NC-009	0.0	15.7	15.7	0.98	42	Tailings
	94.1	106.5	12.4	0.26	23
	159.8	160.8	1.00	5.74	32
DDH-NC-010	No Significant Intercepts
DDH-NC-011	No Significant Intercepts
DDH-NC-012	0.0	24.4	24.4	2.62	105	Tailings
	25.5	29.0	3.5	1.76	5.0
	52.0	98.0	46.0	2.03	95
includes	79.0	85.2	6.2	6.1	122
	165.0	166.2	1.2	4.36	17
	172.0	173.0	1.0	5.05	42
	174.0	175.0	1.0	5.61	5
DDH-NC-13	0.0	20.0	20.0**	1.56	47
Includes	14.5	20.0	5.5	3.64	149
DDH-NC-14	No Significant Intercepts
DDH-NC-15	0.0	9.8	9.8	0.91	36	Tailings
	30.2	73.9	43.7	0.25	15
DDH-NC-16
	37.5	49.8	12.3	0.83	52
	68.9	73.5	4.6	2.2	347
DDH-NC-17	0	11	11	0.73	32
DDH-NC-18	35.1	119.5	84.4	0.36	20
includes	80.6	87.1	6.5	1.53	123
	138.5	160.4	21.9	0.35	9

*High grade sample assayed 171 g/t Au and 816 g/t Ag drilled from 2.7m to 3.6m was cut to 30g/t for calculation purposes.
** Interval averaged 81% core recovery


The deep regional fault originally thought to be the controlling structure on mineralization was not intersected in any of the deeper drillholes. Focus geologists now believe that the mine may actually sit within the main fault zone itself. This implies that most of the upper part of the fault and hanging wall are preserved to the west in the lower levels of the mine, characterized by the thick granodiorite, argillite and breccia sequences drilled in DDH-NC-012 and DDH-NC-09.


Mineralization and Targets

Focus' exploration campaign has focused on bulk tonnage low grade 1 - 2 g/t Au mineralization hosted by the intrusion and argillite that remained between "high grade >8 g/t Au" zones that were exploited during the last 25 years by Nueva California. Mineralization is associated with late druzy quartz vein stockworks which appear to over print earlier more massive silicification and high density quartz vein stockworking. At least 4 stages of hydrothermal brecciation and quartz vein stockworking are observed in drillcore. Drill holes DDH 001, 002, 003, 006, 012, and 007 intersected significant intercepts of economic low grade mineralization as well as narrow intercepts of high grade. Geological modeling of underground mapping, drill hole results and IP - Resistivity geophysics have demonstrated that the mine geology and mineralization extend to the south and east in an area covered by gravels.

Alteration is pervasive and ubiquitous to date, and no drill hole has penetrated to fresh rock. Drillhole DDH NC-012 (the western most hole) intersected some of the best mineralization drilled to date (46m @ 2.03 g/t Au, 95 g/t Ag) hosted in argillites. Drillhole DDH NC-018 drilled 100m to the south of DDH NC-012, intersected 84.4m @ 0.36 g/t Au and the alteration appears to indicate that the system intensifies to the south. Drilling has shown that the geological environment conducive to gold mineralization, with chargeability and with overlaying low resistivity anomalies continuing to the south in an area at least the size of the old mine site where drilling was focused.

The probability of discovering low grade and/or high grade mineralization in this zone where the hydrothermal system is 100% preserved is high, and results from the drilling indicate that the system with respects to alteration, brecciation and metal content appears to intensify in the direction of the new target area.

Deposit Classification

Despite the fact that the deposit is located in a region with world-class mineral endowment, the geology and mineralization at Nueva California is poorly understood. The geological setting, distribution, multiple mineralization styles and episodic nature of the alteration and the overall strength and magnitude of the hydrothermal system observed at Nueva California are characteristic of large gold systems, such as the nearby Pierina Mine. The style and setting of mineralization at Nueva California is unusual for this part of Peru, where rapid unroofing / uplift of the porphyry hydrothermal system became transitional into an Intermediate Sulphidation epithermal system (known as "telescoping"). Smectite-illite alteration in argillite units as roof pendent to granodiorite intrusion is transitional downward into to muscovite-illite-phyllic alteration in the underlying granodiorite intrusion. Continued uplift after the hydrothermal; event and post mineralization displacement along the same structures that fed the system resulted in the eventual displacement of mineralization and formation of tectonic breccias often with mineralized gouge.

3D Models and Geophysics