Sediment-Hosted Gold Mineralization

Diamond drilling in 2011 encountered orpiment-realgar mineralization associated with zones of decarbonatized siltstone in 4 of 5 holes drilled across a 650 m transect comprising a transitional sequence of calcareous siltstone and lime - mudstone units overlying massive carbonate stratigraphy.  Results include 2.25 g/t gold over 3.60 meters from within a broader interval of 10.28 meters grading 1.14 g/t gold from drill hole ER-11-14.  This package of rocks is contained within a broad north-northeasterly trending structural corridor as interpreted by Natural Source Audio-Frequency Magneto-Telluric (NSAMT) geophysics and government supported regional mapping.

A number of key characteristics of the mineralizing system are recognized and include:

• Localized zones of intense decarbonatization accompanied by increased density of multi-phase calcite veining

• Orpiment and realgar preferentially replacing portions of the decarbonatized siltstone and also occurring in later stage calcite veins

• Increased silicification correlative with decarbonatization within the mineralized interval

• Significantly elevated thallium, mercury, arsenic and antimony trace element geochemistry exhibiting excellent correlation with gold mineralization in drill core
• Presence of bituminous or tar-like substance in two drill holes at or near the mineralized horizon

Gold mineralization is hosted in a dirty calcareous siltstone-mudstone, which overlies a thick package of Cretaceous aged limestone. Zones with elevated gold response coincide with visually evident decarbonatization, accompanied by multi-phase calcite veining and the presence of arsenic sulphides such as orpiment and realgar. Medium to coarse-grained crystalline diagenetic pyrite is also disseminated throughout the siltstone. The mineralization appears to be largely stratabound although there are a number of crosscutting structural features in proximity to the decarbonatized and mineralized intervals.

Elsewhere on the property, strong clay alteration is evident and a series of silicified dacite dykes is present.

Drilling at the Erika project initially targeted epithermal style mineralization in holes ER-11-01 to ER-11-08 (2,546 meters) based on prior geological modeling coupled with geochemical and geophysical anomalies.  This drilling intersected a series of limestone, clastic sediment and volcanic horizons with trace levels of gold, ranging from below detection to 55 ppb but significant values for arsenic ranging from below detection to 6,080 ppm.

Tarsis geological staff subsequently inspected historical drill core from 1997, specifically hole EK-03, which reportedly returned a 5.0 m interval averaging 0.48 g/t gold.  This intersection is largely comprised of decarbonatized dirty siltstone containing patchy orpiment and realgar preferentially replacing decarbonatized matrix and open spaces within vuggy multi-phase calcite veins. Medium-to coarse-grained crystalline diagenetic pyrite is also disseminated throughout the interval.  The mineralization appears to be largely stratabound although there are a number of crosscutting structural features in proximity to the decarbonatized and mineralized interval.

Five drill holes were located across a 650 m transect to establish vectoring data within this particular part of the mineralizing system.  A table showing analytical results is shown below:

* Tarsis quarter-cored and assayed historical diamond drill hole EK-03

* True widths are interpreted to represent 90% of the reported interval.

Coincident key pathfinder elements including arsenic (65 to >10,000 ppm), thallium (3 to 510 ppm), mercury (3 to 71 ppm), antimony (27 to 5,220 ppm) and molybdenum (3 to 1,385 ppm) are also moderately to strongly elevated within the gold zone.  Further analysis of the quartered core from EK-03 shows the mineralized interval has significant increased silica and coincident depleted calcium content.

Soil and Stream Sampling

Recent soil sampling has been carried out as follow up for prior stream sediment anomalies detected over two separate areas, known as the Maxela grid and the SW grid.  Two distinct gold-in-soil anomalies have been outlined within the SW grid, five to seven kilometers south of the current drill transect.  Both anomalies are defined by intermittent clusters of gold-in-soil values 20 ppb and greater and up to a maximum of 92 ppb.  The larger of the two anomalies measures approximately 1100 by 500 m and trends northeasterly while the second anomaly covers an area roughly 700 by 300 m and trends north-northeasterly.  The anomalies are 600 m apart and both contain coincidentally elevated arsenic (below detection to 3,320 ppm), thallium (0.07 to 23 ppm), mercury (below detection to 7 ppm) and antimony (0.35 ppm to 563 ppm) response.

One day of follow up prospecting on the SW grid recovered 16 rock samples containing various alteration assemblages.  Two of the samples returned anomalous gold values (0.27 and 0.15 g/t gold) from silicified, hematitic carbonate, strongly fractured, locally brecciated and infilled with white clay alteration.

Regional Geology

The Erika Property lies on the Guerrero-Morelos Platform, which consists of over 2,000 m of Mesozoic carbonate rocks unconformably overlaying Early Cretaceous to Late Jurassic island arc sequences of Guerrero Terrane. The Guerrero-Morelos Platform is bounded to the south by the Xolapa metamorphic core complex, and to the north it is covered by Trans-Mexican Volcanic Belt magmatic rocks.

On the property, Massive and fossiliferous, to locally silty banded limestone of the Cretaceous Morelos Formation are overlain by interbedded sandstones, siltstones, and mudstones of the Mezcala Formation.

The Mesozoic sedimentary sequence strikes generally to the north, and is overlain by a thin package of Tertiary felsic volcanic rocks. The felsic volcanic unit consists of brecciated volcaniclastics containing fine-grained, angular to sub-rounded lithic fragments, quartz phenocrysts, with rare pumice fragments.

Silicification, argillic alteration, and dolomitization are the main styles of hydrothermal alteration on the Erika Property.

The property includes several areas of intense clay-sulphate alteration, from which clay has been mined for industrial applications, including ceramics. Small-scale mining for mercury is recorded to have taken place in the 1940’s at Erika with up to 20 kg per week being produced from the richest mine.