October 23, 2012

President's Letter to Shareholders

Dear Shareholder:

This letter will serve as an update to our shareholders as it has been almost a year since our last letter went out in November of 2011. At that time we advised shareholders of our intent to list the Company's shares on the London AIM market in2012. Due to poor market conditions and the ongoing mining moratorium in the Philippines we were unable to complete the listing.

Company Updates:

1. Recent AGM, Management and Board Members:

The previous management of the Company was composed of predominately the same people who managed the AIM listed Copper Development Corp.("CDC") which completed a positive comprehensive technical report on the Hinoba'an Project in 2012 (the highly successful spinout of the Company ). CDC also drilled 32,878 meters on the Company's Basay Copper-Gold-Molybdenum Project, where CDC can earn a 70% interest by completing a bankable feasibility study. CDC has now stopped all work on this project and issued an interim technical report on all work done which was completed September of 2012. As the Company is no longer contemplating a listing on AIM, there were potential conflicts of interest in having the same directors holding board positions in both CDC and the Company , and the Company is currently in a 'care and maintenance' mode due to a shortage of funds and lack of drilling permits, an Annual General Meeting was held on October 16th of this year and CDC's directors were not re-elected to the board.

2. An Update on Philippine Mining Policy and Legislation

Since the new government under the Aquino administration came to power in 2009, there has been a steady assault on the mining industry resulting in a mining moratorium where no new exploration permits or mining permits have been issued since 2009. This action has had an extremely adverse affect on exploration and mining in the country, and as a result, the Company could not get any new exploration permits issued on any of its projects, resulting in a situation where it was impossible to raise funds and list the Company's shares. Recently a new 'Presidential Executive Order' was issued which was meant to clarify and outline a new mining policy in the Philippines and bring an end to the moratorium on the issuance of exploration and mining permits. There were further delays to the implementation of this new policy as the 'Implementing Rules and Regulations' (IRR) were drafted and debated. In early October 2012 the IRR was finalized and issued officially which has effectively ended the moratorium on the issuance of exploration permits. However, no new mining permits can be issued in the Philippines until congress enacts a new tax regime for the sharing of revenue derived from mining revenues and profits.

3. Effects of the New Policy on the Company

The positive effect of the new mining policy is that it can be reasonably expected that the government will now sign and issue new exploration permits to the Company on some of its applications. The Kilong-Olao and Bayosen applications as well as the Biliran application have completed all of the necessary requirements for issuance of the exploration permits.

The Tawi-Tawi and Bolo applications as well as the Masalin and Kibungan applications still require clearance from the NCIP (National Commission on Indigenous Peoples). This has become problematic as the NCIP, particularly in Benguet where these projects are located, has been infiltrated and highly influenced by anti-mining groups. In fact the head commissioner of the NCIP has stated publicly that she will not endorse ANY mining application as 'mining is bad for indigenous people' regardless if the indigenous people themselves have endorsed the project. As well, the St. Anthony project which consisted of Mining Lease Contracts expired in September and cannot be renewed under the new executive order as expired mining permits revert back to the government and will be put out to bid.

4. Problems with Basay

Despite the fact that the Company holds a valid and legally uncontested mining permit at Basay, the MGB has failed to endorse the deed of assignment for the project from the original claim holder, as another government agency, the Privatization Management Office (PMO), wrote a letter to the MGB stating that they felt the permit had been improperly issued and that the PMO had prior rights to the area. However, there are no legal challenges to the permit and the Company possesses two separate legal opinions which clearly show that PMO has no rights to the area. Regardless of the facts, this issue has created enough uncertainty regarding the rights to the area that all work has ceased and there is a real possibility that the government may not renew the permit, although there is no legal basis for a denial of the renewal. This is yet another example of the truly unfriendly mining policies of this current government, where they would let a publicly listed company spend in excess of $14 million USD on a project and then proceed with a policy that would deny them rights to the project with no legal basis for such denial.

Despite the hostile mining policies of the current Philippine government, the work done at Basay has increased the historical resource significantly as shown in the following grade/tonnage curve for the Basay Deposit:

5. No Further Ongoing Operations

The Company has maintained a constant presence in the Philippines and has actively pursued the permitting of all of its projects despite the hostile mining regime. However, until a clear mining policy, tax regime and an end to the moratorium on the issuance of mining permits is implemented, the Company will remain on care and maintenance and spend no further funds on any of its projects.