The continuing uncertainty in international capital markets has had a demonstrable and negative impact on the ability of junior resource exploration companies to finance their activities. As at June 30, 2009, the Company has a net working capital deficiency. In order to manage liquidity requirements, the Company is reviewing its plans for future activities which may require the further sale or disposal of assets, the relinquishment of exploration licenses, suspension or termination of exploration activities and/or the search for joint venture partners as part of a rationalisation plan to meet the challenges posed by this difficult environment. The Company is waiting for the completion of the sale of its wholly owned subsidiary, Cobre Sul Mineracao Ltda., subsequent to the quarter end.

To conserve its cash reserves, the Company's projects are currently on care and maintenance.

The Company remains encouraged by the publication of the Brazilian Government's inter-departmental deliberations over the finalization of permanent boundaries for the Serra da Canastra National Park which is located in proximity to the Canastra 1 project and the progress made with respect to the passage of this legislation. A draft bill (Projeto de Lei # 1448/2007) was submitted in June 2007 to the Brazilian Congress which excludes the Company's projects in the Serra da Canastra region from any new proposed National Park boundary. The draft bill was approved by the Camara dos Deputados (Lower House) on October 29, 2008 and has moved to the Senado (Upper House) for final approval which is expected during 2009. The Company has renewed the Canastra mineral licenses and is maintaining them in good standing while waiting for the trial mining permits. The Company hopes to commence trial mining at its Canastra 1 project once the bill has final approval. To conserve cash reserves, the projects in the Serra da Canastra region have been placed on care and maintenance.

The Company has kept its mineral licenses in the Santo Antonio do Bonito River region in good standing and the Company hopes to continue work on the project in the future. To conserve cash reserves, the Santo Antonio do Bonito River project has been placed on care and maintenance.

Only the Regis and Tucano mineral licenses in the Patos de Minas region have been renewed and maintained in good standing. To conserve cash reserves, the Patos de Minas projects have been placed on care and maintenance.