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Esperanza Resources research and analysis

Contributed by eResearch

By Bob Weir

Esperanza Resources Corp. (“Esperanza” or “the Company”) is a mineral exploration and development company focused on metal projects in Mexico, Peru, and Slovakia.

The Company’s key projects are: (1) Cerro Jumil (goldsilver), 100% ownership, in Mexico; and (2) Strieborná (silver-copper-antimony), a 32% indirect interest, in Slovakia.

INVESTMENT HIGHLIGHTS

Esperanza sold its share in the San Luis project in Peru in 2011 and currently has up to $22 million in cash available for advancing its projects.

The Company’s Cerro Jumil project has a NI 43-101 compliant resource estimate with 935,000 oz of gold Measured and Indicated (M+I) and 252,000 oz of gold Inferred;

Cerro Jumil should obtain a bankable feasibility study in 2012;

The Strieborná project is located in a highly-developed mining region of Europe, and should obtain a Preliminary Economic Assessment (PEA) in 2012.

PROJECTS

Esperanza has a geographically diversified portfolio of ten gold, silver and base metals properties located in Mexico, Peru, and Slovakia. See the summary table below.

This report covers the Company’s key Cerro Jumil and Strieborná projects.

1. Cerro Jumil Project

Location and Geology: The Cerro Jumil property is located 80 kilometers south of Mexico City and 12 kilometers from Cuernavaca in the State of Morelos (see the map below). The property is 3 km from a paved road and is easily accessible year round. Gold and silver at Cerro Jumil are associated with a variety of altered rocks around the periphery of a granitic stock that intruded into overlying limestones. The mineralized suite of rocks, collectively known as skarn, is well exposed at surface along the southern, eastern, and western margins of the granite/limestone contact.

Resource Estimate: In September, 2010, a NI 43-101 compliant resource estimate for the Cerro Jumil project was based on 41,713 meters of drilling in 251 drill holes. It included 935,000 oz of gold equivalent in the M+I categories and 252,000 oz of gold equivalent in the Inferred category and is based on a gold equivalent cut-off grade of 0.3 g/t (see the table below).

Preliminary Economic Assessment: In September, 2011, Golder Associates prepared a NI 43-101 compliant Preliminary Economic Assessment for the property. The PEA evaluated two options for open-pit mining and heapleach gold recovery. The first option considered two stages of crushing prior to heap-leach treatment and was considered the base case. The second option considered direct heap-leach treatment of run-of-mine ore without crushing.

Based on the individual pit designs, the PEA identified in-pit resources (see the table below). The resources are based on a gold equivalent cut-off grade of 0.2 g/t and include 757,000 oz of gold equivalent in the M+I categories and 113,000 oz of gold equivalent in the Inferred category.

The PEA’s NPV model had the following key assumptions and results:

Further Exploration and Feasibility Study: Mapping/sampling of the project, which was carried out in 2011, revealed 11 target areas. There are six target areas within a 10 km radius of the known Cerro Jumil resource that are drill-ready. Five target areas adjacent to or in close proximity to the known resource are currently being drilled and could be included the resource (see the map below). In 2011, Esperanza has drilled 8,236m for a project total of 49,818m. The most notable results are: 3.86 g/t Au in 16.5m and 2.44 g/t in 10.5m.

Based on the 2011 PEA, the Company has decided to complete a bankable feasibility study. With this purpose, Esperanza and its metallurgical consultants are designing a program to examine various processing alternatives. The main focus of the testing will be on analyzing crushed, versus uncrushed (run-of-mine), heap-leach scenarios for gold recovery. The Company also expects to begin a geotechnical drill program to provide data for engineering of pit slopes and various facility foundations. Esperanza intends to complete the feasibility study by late 2012.

2. Strieborná Project

Acquisition: In October of 2010, Esperanza announced an acquisition of 36% in a publicly-traded company Global Minerals Ltd. (TSX-V: CTG), owner of the Strieborná silver/copper/antimony project in Slovakia. According to Esperanza, its share in Global Minerals currently is about 32%.

Location and Infrastructure: The Strieborná Project is located in eastern Slovakia near the town of Roznava (see the map below). Roznava is a historic mining town with a skilled work force and the infrastructure to support mining operations. Rail, water and power are available at the project.

Exploration and Resource Estimate: Since its discovery in 1981, the Strieborná project has been explored by over 3,000 meters of drifts on four levels. The drifting has defined a total strike length of about 1,300 meters, and surface and underground drilling have defined a vertical extent of over 500 meters. In April, 2008, AMC Consultants Pty of Melbourne, Australia completed a NI 43-101 technical report on the project, which defined a significant silvercopper- antimony resource (see the table below).

Geology: The deposit consists of the Strieborná vein, the Maria Mine (a past producer, now on care andmaintenance), and three parallel veins: the Mayer, Podlozna, and Pallag (see the picture below). These veins have  been explored by underground tunneling and drilling. Although known to be mineralized, they have not been included in the resource estimate, as further exploration is required. Drilling has identified a separate area of mineralization that is either a distinct and parallel vein or a split of the Strieborná vein. The drill hole intercepted 2.2 meters of 667 grams of silver per tonne, 5.1% copper, and 3.4% antimony.

Planned Development: According to Esperanza, mine dewatering and rehabilitation is currently underway. In 2012, the project should be drilled and get metallurgical sampling which should help to obtain a Preliminary Economic Assessment. It is planned that 135 sq. km. of mineral concessions will be consolidated in the area.

FINANCIAL POSITION

As of September 30, 2011, Esperanza’s cash position was about $22 million, up from $10 million at the end of 2010 as a result of the sale of the Company’s 30% interest in the San Luis JV in Peru to Silver Standard Resources Inc. The Company’s cash position is healthy both in terms of its opex burn and its capex plans.

eResearch Analysts on this report:
Yuri Belinsky, B.A., M.A.
Bob Weir, B.Sc., B.Comm., CFA