El Potosi

Mustang Alliances' El Potosi project is comprised of five contiguous exploration/mining concessions totaling 40 sq. km of mineral rights granted by the Honduran government. The claims are located approx. 80 km S of Tegucigalpa, and 20 km E of Choluteca, Honduras' 6th largest city with about 95,000 inhabitants. Topography over the property is moderately rugged, with elevations ranging from 300 to 1,100 meters. Pine forest covers large portions of the land, particularly at higher elevations, while the lower slopes and hillsides are largely deforested and used primarily for agriculture and cattle ranching by a small community of local inhabitants.

The project area is underlain by a sub-horizontal sequence of Tertiary volcanic rocks, including andesite of the Oligocene age Matagalpa Formation, and dacite of the overlying Miocene age Padre Miguel Group. The (largely) andesitic volcanic rocks at El Potosi are cut by an anastomosing network of predominately west-northwest to east-northeast striking epithermal quartz veins and vein breccias. Where fresh, the veins locally contain small amounts of pyrite-galena-sphalerite-chalcopyrite, the presence of which is generally a good indicator of high grade ore. Mustang believes that El Potosi offers both the potential for high-grade "bonanza" vein targets, and bulk mineable stockwork veinlet ore.

The El Potosi concession block is centered over the historic San Antonio and Tajo low sulfidation epithermal vein prospects which were first identified centuries ago, and worked on a small scale by Spanish Colonial era miners. The prospects were later explored by Rosario-Honduras Mining during the 1940's, and between 1993-97 by Battle Mountain Gold (BMG) and Mar-West Resources (MWR). The available results for these past exploration efforts are highlighted at San Antonio by a 1994 BMG core hole which intersected 16.3 m 3.4 g/t Au, including a single 0.3 m sample (not included in the above calculation) which assayed 305.2 g/t Au. At Tajo, a round of core holes completed in 1997 by a BMG-MWR joint-venture returned a number of significant intercepts including: 0.9 m grading 7.24 g/t Au in PT97-5, and 13.36 g/t over 1.4 m) in PT97-7.

Recent efforts by the company have been directed toward acquiring and compiling the historic information, and initiating reconnaissance sampling and geologic mapping over the property. Rock chip sampling is proving to be an excellent method of evaluating the concession block; it has already identified several favorable areas of elevated gold values for follow-up work and drill testing. Telluris Consulting Ltd. was also contracted recently to complete an ASTER survey, to allow the assemblage of alteration minerals around El Potosi to be remotely sensed and evaluated, to try and generate additional exploration targets. Ground checking of some of these anomalous zones is underway.