November 24, 2011

President's Update Letter to Shareholders

Dear Shareholder:

There have been many developments since the last letter sent to shareholders in December 2010. At that time, we advised shareholders of our intent to list Solfotara’s shares on the London AIM Exchange in 2011. Due to adverse market conditions, we were forced to defer this listing.

1. Management and Board Members

The current management of Solfotara is the same as that of London AIM- listed Copper Development Corp. (AIM:CDC) (“CDC”).  CDC is completing a pre-feasibility study at Hinoba’an (the highly successful spin-out by Solfotara) and is continuing with definition drilling of Solfotara’s exciting Basay Copper-Gold-Molybdenum Project, where they can earn a 70% interest by completing a bankable feasibility study. Solfotara’s board members are listed below:

Mitch Alland Chairman
Brian Lueck President and CEO
Denham Eke CFO
Darren Devine Director

2. Update on the Hinoba'an Project

CDC is currently completing a pre-feasibility study on the Hinoba’an Project in Southern Negros. This is a significant milestone that will allow CDC to market this project to prospective buyers, joint venture partners or off-takers. The success of CDC will impact on Solfotara, as it will demonstrate the Board’s ability to bring Philippine projects to development and will also show the viability of developing projects in Negros, where Solfotara’s most advanced asset, the Basay project, is located.  In addition, Solfotara still holds 7,029,334 CDC shares from the spin-out of Hinoba’an in 2009.

3. Solfotara's Basay Project

Last year in December, Solfotara signed an agreement with CDC on Solfotara’s fully permitted Basay Project, whereby CDC made property payments of US$1.9 million and subsequently incurring exploration and development expenditures of over US$5 million in the last 12 months. Currently, over 18,000 meters of drilling have been completed at Basay. CDC is committed to completing a bankable feasibility study on the Basay (within 6 years) to earn a 70% interest. Drill results to date on this project have been spectacular and demonstrate that the Basay Project has the potential to be a large world class copper deposit. News releases with results from this work are appended to this letter. This project is currently Solfotara’s main asset, and the ongoing work by CDC will allow a steady flow of news for Solfotara without Solfotara having to incur any expense, thereby allowing Solfotara to focus on its other mineral assets in the Philippines.

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Company President Brian Lueck and Ivanhoe’s Doug Kirwin holding high grade Basay core

4. Solfotara's St. Anthony Project

The St. Anthony Project, consisting of a mining lease contract and an exploration permit application, is located in Northern Luzon and is only a few kilometers south of the Far Southeast Deposit. The Far Southeast Deposit is currently being explored by Goldfields, who are currently undertaking a due diligence program consisting of 100,000 meters of drilling to confirm the historical resource. Goldfields have signed an agreement to pay US$340 million to earn a 60% interest in the Far Southeast Deposit from Lepanto, of which US$66 million has already been paid.  Solfotara intends to undertake initial confirmatory drilling at St. Anthony once it has the necessary funds. This strategic property is the closest known mineralization south of the Far Southeast Deposit and also contains a high gold/copper ratio similar to that at Goldfield’s project. There are at least three known copper porphyry deposits located on the Solfotara property.

5. Abra Kilong-Olao and Bayosen Projects

Solfotara has now completed the signing of several memorandums of agreement with the local indigenous communities, which will allow for Solfotara to commence exploration work on this large area of highly prospective ground. This area contains what Solfotara believes to be the largest area of untested copper in soil anomalies in the Philippines. As well, part of the area was previously drilled successfully by Marcopper in the 1970’s confirming the presence of copper porphyry mineralization. Upon permitting, Solfotara’s work program will comprise historic data compilation followed by drilling of initial exploration holes. As with all of Solfotara’s projects, there is ongoing interest from a number of major mining companies.

6. Ongoing Operations

Solfotara has maintained a constant presence in the Philippines and is actively pursuing the permitting of all of its other projects. Since the new Philippine Aquino government has taken power, the administration has been active in cleansing mining applications which are non performing, or which are held by individuals who are incapable or unwilling to develop the projects themselves. This process is largely completed and the mining industry is now looking forward to the issuance of new permits to companies like Solfotara which have demonstrated their financial and technical capability of advancing Philippine projects to feasibility level. Solfotara’s other projects (Biliran and Tawi-Tawi) remain in good standing. Biliran is currently awaiting final receipt of an exploration permit, as all of the mandatory requirements for issuance have been completed. The Tawi-Tawi project is currently undergoing the process of getting clearance from the indigenous communities to commence exploration work.

7. Strategy moving Forward

Solfotara maintains a large portfolio of highly prospective to advanced copper porphyry projects, as well as the rights to the Biliran Gold Project, an untested Lihir look alike prospect. As previously mentioned, Solfotara has signed Confidentiality Agreements with several major copper and gold mining companies who have expressed ongoing interest in joint venturing these projects. Solfotara is well positioned with its Basay Project as an ongoing, highly successful, resource definition project which will provide it with a steady flow of news at no cost. Solfotara also intends to undertake confirmatory drilling at its St. Anthony project to enhance the value of this project in anticipation of a joint venture to take the project to feasibility.

8. Share structure

Shares Outstanding 60,938,749
Warrants 26,727,344
Fully Diluted 87,666,093
Cash and Marketable Securities $3,000,000

I would like to take this opportunity to thank our shareholders for their continued support.  Although the stock market is in a distressed state, Solfotara feels that it is well positioned to take advantage of its large portfolio of quality projects, in the ongoing pursuit of enhancing shareholder value.

Sincerely,

Brian Lueck
President and CEO
24 November 2011


Disclosure
This shareholder letter is being provided for information purposes only and does not constitute or form part of, and should not be construed as, an offer or invitation to sell or any solicitation of any offer to purchase or subscribe for any common shares of the Company in any jurisdiction. Neither this shareholder letter, nor any part of it nor anything contained or referred to in it, nor the fact of its distribution, should form the basis of or be relied on in connection with or act as an inducement in relation to a decision to purchase or subscribe for or enter into any contract or make any other commitment whatsoever in relation to any common shares.

Certain statements in this letter are forward looking statements. These forward looking statements are not based on historical facts but rather on management’s expectations regarding the Company’s future growth, results of operations, performance, future capital and other expenditures, competitive advantages, planned exploration and development activity and the results of such activity, business prospects and opportunities. Such forward looking statements reflect management’s current beliefs and assumptions and are based on information currently available to management. Forward looking statements involve significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward looking statements including risks associated with vulnerability to general economic and business conditions, competition, environmental and other regulatory changes, the results of exploration and development drilling and related activities, actions by governmental authorities, the availability of capital markets, reliance on key personnel, uninsured and underinsured losses and other factors, many of which are beyond the control of the Company. Although the forward looking statements are based upon what management believes to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with these forward looking statements.


Click here to download the full President's Update Letter to Shareholders and Addendum (PDF)