Corcoesto Gold Project - 2012

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Corcoesto Gold Mining Exploration Project - Spain

2011 Preliminary Economic Assessment Corcoesto Gold Project

November 17, 2011, Edgewater Exploration announced results of a Preliminary Economic Assessment ("PEA") on its 100%-owned Corcoesto gold project in Galicia, Spain.

The NI 43-101 compliant PEA study was overseen by Mr. Alan Noble, P.E Ore Reserves Engineering Inc. of Denver, Colorado as part of the on-going development plan on the Corcoesto Gold Project, Northwest, Spain.

Base Case Highlights

Average Annual Gold Production	102,000/oz
Average Annual Net Revenue (US$)	60.0 Million
Life of mine Net Present Value (NPV)(US$)(5%)	206 Million
Pre-Tax Internal Rate of Return (IRR)	24%
Pre-Tax Payback (years)	3.4
Initial Open pit and underground Capital Cost (US$)	135 Million
Average Annual Cost (US$/oz)	713
Combined open pit and underground operation	9.9 year mine life

Pre-Tax Financial Models

Pre-tax financial model was completed using a base case gold price of $1300 per ounce and an exchange rate of 1.38 Euro/$US. The Base Case economic evaluation has an IRR of 24%, payback of capital in 3.4 years and a NPV of $206 million at a discount rate of 5%.

The following table details Project sensitivity for two additional metal prices;


Initial Capital Costs for the mine and plant are estimated at $135 million, with an additional $9 million for resource drilling, $1.5 million to purchase part of the Lundin royalty, and $25 million (17.5%) for contingency. Working capital in the amount of $12.5 million, sustaining capital $33 million and reclamation and closure costs of $10.5 million are also included in the above economic evaluation.

Life-of-Mine Parametres

Mill Feed Grade	1.70 g/t gold
Stripping Ratio	8.0/1
Annual Throughput	2.1 million tonnes
Milling Rate	6,000 tonnes/day
Gold Recovery	89.1%
Mine Life	9.9 Years

NI 43-101 Mineral Resources

The PEA was based on the May 27, 2011 NI 43-101 Mineral Resource estimate. (See following table for details).

1. CIM definition standards were followed for the resource estimate
2. The 2010 and 2011 resource models used an inverse-distance-power (IDP) grade estimation within a three-dimensional block model with mineralized zones defined by wireframed solids.
3. A total of 19,075.7 m of surface trenching in 225 trenches, 443.1 m of adit sampling in 4 adits and 42,111.18 metres of diamond and RC drilling in 342 drill holes were used in the resource with sample spacing's that were less than 30 m for Measured resources, less than 40 metres for Indicated resources and less than 195 m for Inferred resources except for Inferred resources below 200 m from surface and for the northern two vein systems that used drill spacing's of 196 m
4. A base cutoff grade of 0.65 g/t Au was used for reporting resources above a depth of 200 m from surface and a cutoff grade of 2.0 g/t Au was used for reporting resources below 200 m from surface
5. Dilution is included for a minimum mining width of 2.0 m on a 4.0 m high mining bench
6. Mineral Resources that are not mineral reserves do not have economic viability. Preliminary Economic Assessment NI43‐101 Compliant includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized.

Initial Capital Cost using Contract Mining

An initial capital expenditure of $135 million is required to construct the project and is detailed in the following table.


This capital estimate utilized an exchange rate of 1.38 Euro/$US and is based on industry standard estimates and 2011 pricing supplied by vendors where applicable.

Site Operation Cost

The Corcoesto Project is modelled as a combined open pit and underground mining operation. Life-of-mine operating costs are $32.52/tonne ore milled for open pit and $56.78/tonne ore milled for underground, as detailed in the following table.

Infrastructure

The Corcoesto gold project is located in northwest Spain approximately 35 km west-southwest of the port city of La Coruna in the Autonomous Community of Galicia. The project has excellent infrastructure, which is connected to existing roads at the nearby community of Corcoesto. Delivery of electrical power will be completed connecting a new substation to the existing 22kV power line which currently bisects the project. Mine employees will commute daily from local communities.

Metallurgy and Processing

Metallurgical recovery is estimated at 89.1% based on a series of test completed at McClelland Laboratories in Sparks Nevada during 2011. Work included diagnostic tests completed on a series of composite samples from drill holes across the three main gold mineralized zones at Corcoesto. The 6,000 tpd process facility will utilize conventional crushing, grinding, gravity, flotation and cyanidation to produce gold dore.

Major equipment for the processing facility includes a primary crusher sized for 6,000 tpd (34" x 44"), a semi-autogenous (SAG) mill, two ball mills (14' x 18') and a vertical regrind mill for the flotation concentrate. The average ball mill work index is 14.3 kW/t and the mill feed will be ground to 53 microns.

The processing facility includes: centrifugal gravity units, leach and carbon adsorption tanks (13.8m x 13.8m), rougher, scavenger, and cleaner flotation cells (100 m3), concentrate thickener, elution circuit, electrowinning and smelting. Additionally the facility will include a reagent handling system which includes a cyanide detoxification unit.

Recommendations and Development Plan

The PEA demonstrates that the Corcoesto Gold Project has a NI 43-101 compliant mineral resource estimate that has the potential to be economically viable under a Base Case development scenario. As a result, Ore Reserves Engineering Inc. has recommended that the Company upgrade the PEA to feasibility-level status. Additional recommended work includes resource conversion utilizing surface drilling for in-pit resources as well as underground access and drilling targeted at the deeper resource areas.

Edgewater Exploration Anticipated Permitting Timeline

Property Description, Location and Accessibility

The Corcoesto Gold Mining Property (the "Property") is an advanced-stage gold exploration project situated in northwest Spain, approximately 36 km west-southwest of the port city of La Coruña in the Galician Autonomous Community. It is located approximately 1.5 km east of the village of Corcoesto, approximately 12 km west of the town of Carballo. The project has excellent infrastructure including a network of paved road access and a 22 Kv power-line that crosses the property. Galicia is one of the most pro mining regions in Spain with a number of active open-pit granite, slate, marble and coal mines currently in operation.

The Corcoesto region has limited commercial infrastructure, mainly consisting of local farming and agricultural activities. Although there are several small farms within a radius of 10 km of the project area, the primary targets for exploration and development are not in cultivated areas. The village of Corcoesto consists of small scattered centers of population located west, but outside the area to be affected by the planned mining operations.

Exploration History

Gold at Corcoesto was first exploited by the Romans and most recently in the late eighties and early nineties by mining companies including Sagasta Gold and Aurifera Gallega. During their exploration campaigns, they discovered 28 narrow high-grade gold-bearing structures, 12 of which became the focus of limited underground mining. Exploration efforts since that time were carried out by Rio Tinto Minera, Rio Narcea Gold Mines and Kinbauri Gold. Their efforts focused on defining a bulk tonnage, low grade gold resource, in view of potentiall developing an open-pit mining operation. A total of 31, 166 metres in 283 drill holes have been completed to date by the project's previous owners.

Drilling

RNGM has drilled more than 19,000 m in Corcoesto, 16,795m of which were HQ diameter core holes, with the balance being Reverse Circulation ("RC") drill holes. RC drilling was done during the infill program in 2003 only in those parts of the project where RC twinning of existing core holes had been successfully tested in 2002.

The RNGM holes were drilled towards the south for most of the project, except for the Peton de Lobo area where holes were drilled parallel to the Rio Tinto drill holes at an azimuth of 154º (S26E).

Three drilling companies performed drilling for the RNGM drilling campaigns using HQ or larger core) and core recoveries are generally excellent (>97%)

Most part of RNGM's drilling was conducted early in 2003, as part of the infill program for a proposed open pit, heap-leach operation. Almost 13,000 m of drilling was conducted as part of this program, including 2,000 meters of condemnation drilling.. General results of the infill program confirmed expected tonnage and grade for the deposit, although gold grade was unexpectedly higher in some areas. For Cova Crea vein system, results were quite homogeneous and predictable for the sheeted vein mineralization hosted in the fine grained orthogneiss which is located in the eastern part of Cova Crea system. Mineralization at Cova Crea is open at depth and to the west where COR200 intersected 1.77 g Au/t over 14.95m starting at 4.20m in section 3410.

For Peton de Lobo, RNGM did not complete the planned infill program and mineralization remained open to the east where COR202 had intersected 1.34 g Au/t over 30m starting at 37m, 3.15 g Au/t over 7m, starting at 107m and 2.45 g Au/t over 18.3m starting at 120m, including 8.13 g Au/t over 3.25m. Up to June 2006, KNB has drilled 21 DDH with a total of 4378.30m of drilling, in HQ core diameter.

In 2005, Kinbauri Gold Corp. ("KNB") focused most of the drilling in Pozo del Ingles area (8 holes) to test high gold grades at depth. In addition, four holes were drilled to investigate previously undrilled gold geochemical soil anomalies over which KNB had found high grade quartz float (17.7g Au/t ->30g Au/t).

In 2006, KNB drilled 3 deep holes at Pozo del Ingles, 2 deep holes at Peton de Lobo and 4 shallow holes over soil anomalies in the northern areas.

The KNB deep holes at Pozo del Ingles confirmed some high grade shoots for more than 300 m down dip in the footwall mineralized zone.

The westernmost section drilled at Pozo del Ingles, was Section 3460, where drill hole 06K20 intersected 10.26 g Au/t over 2.50m starting at 222m and 4.93 g Au/t over 3.55m starting at 264.75m including 8.40 g Au/t over 1.40m. Hole 05K2, drilled 25m east of 06K20, intersected 19.34 g Au/t over 2.50m, starting at 137m. KNB's deep hole confirming high grade shoot for zone PI-20, was 06K14 (section 3700) which intersected 5.45 g Au/t over 4.5m, starting at 340m, including 7.95 g Au/t over 2.0m. A previous shallower hole (05K5, section 3760) drilled by KNB in same shoot, had intersected 7.68 g Au/t over 3.30m starting at 211m, including 18.0 g Au/t over 1.0m.

Mineral Rights

The Corcoesto deposit is located within the boundaries of the "Ciudad de Masma", "Ciudad de Landró" and "Emilita" exploitation concessions (E.C.). The concession descriptions and coordinates for the corners of the overall concession are shown in Table 1. The concessions are 100% owned by Rio Narcea Gold Mines, SA (RNGM). These exploitation concessions were acquired February 26, 2003, by RNGM subsequent to the leasing contract initiated May 29, 1996.

                                 Table 1
                            Corcoesto Project
                             Mineral Rights
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Permit Name         Permit   Permit   Date Granted    Permit    Surface 
                    Type     Number                   Status    Area(Ha) 
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Emilita             E.C.     1221     May 18, 1912    Granted   270.5 
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Ciudad de Masma     E.C.     1455     June 16, 1926   Granted   305.5 
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Ciudad de Landró    E.C.     1454     June 16, 1926   Granted   197.6 
-----------------------------------------------------------------------

The Spanish exploitation concession, which is granted by the Spanish government, provides the holder of the concession the right to extract minerals from a specified area. The concession does not grant the surface rights, which must be purchased or leased from the surface rights owner. The exploitation concession is considered senior to the surface rights, however, and an unwilling surface rights holder may be forced to relinquish surface rights through a condemnation process. The normal duration of a concession is 30 years, but the concessions are renewable for another 30 years. The original exploitation concessions were awarded in1912 and 1926, and have been renewed several times since then.
There are no royalties on the property; although there is a minimal "surface cannon" payment in effect that is not a royalty.

There are no known environmental liabilities on the property

Geological Setting

The Corcoesto gold deposit lies in a 2 km wide N30E-trending dextral shear zonehosted within a regional antiform structure in the northwest part of the Schistose Domain of Galicia-Tras Os Montes (SDGTM), as shown in Figure 7. The SDGTM represents the basement within the Galicia-Tras Os Montes Zone (GTMZ), whichis part of the Iberian Hercynian Massif. The SDGTM is a strongly deformed metamorphic unit, which has been subjected to regional scale recumbent folding and thrust faulting. It consists of metasediments (phyllites, graywackes, quartzites and cherts) of Precambrian to Devonian age, and orthogneisses derived from Hercynian granites and migmatites.

Igneous rocks in the Corcoesto area are related to synkinematic granites, that were deformed during late stages of formation. Metamorphism deformed these rocks generating a strongly foliated texture.

Mineralization

Gold mineralization at the Corcoesto deposit consists of sheeted quartz veins, quartz breccias and silicification that is related to extensional zones within the north-east trending Malpica-Noia dextral Shear Zone. The quartz veins and breccias are hosted in potassically altered orthogeniss, biotitic gneiss and schists.

The Corcoesto gold deposit is composed of several major vein systems all of which trend in a north-easterly direction, as shown in figure 8. The southernmost vein system is the Cova Crea vein system. The NE part of the structure, hosted in the fine-grained orthogneiss band consists of sheeted veins. To the SW, the Cova Crea system is hosted in migmatites, biotitic gneiss and paragneiss. Narrow quartz veins with arsenopyrite in wider zones of silicification, are predominant. Typical Cova Crea mineralization is shown in Figure 8-1, Section 3885, where it is mostly sheeted veins with a thick low-grade zone (between 1.5 and 2.0 g Au/t) that includes a higher grade core (above 3 g Au/t). The structure has been drilled along strike for at least 500 m and to a vertical depth of 100 m and the mineralization remains open to the west and at depth.

The most significant mineralized structure in the Corcoesto gold deposit, is a N70E trending structure in the central area of the deposit, that crosscuts all of the N30E trending lithologic units. The central and west part of this structure has been named the Pozo del Ingles vein system following the local terminology for old underground workings in the area. The easternmost part of the structure is called Peton de Lobo vein system also following the local terminology.

From 2005 to 2008 previous operator KNB obtained an option on the Property from Rio Narcea and completed a NI 43-101 technical report entitled, "Technical Report for the Coroesoto Gold Deposit, Galcia, Spain" (the "Report") dated August 22nd, 2006 by Alan Noble, P.E. of Ore Reserves Engineering. The previous operator Kinbauri Gold Corporation (KNB) retained Ore Reserves Engineering (ORE) in June 2006, to compile a NI 43-101 Technical Report for the Corcoesto property located in Galicia, in the northeastern corner of Spain. The purpose of the 2006 Technical Report is to provide an independent assessment with regard to the exploration potential, gold resources, and further development of the Corcoesto property. This report provides a technical summary of the exploration and development activities and results, and the currently defined mineral resource for the Corcoesto Project.

May 31, 2011 announced an updated NI 43-101 Mineral Resource at the Corcoesto Gold Project, Northwest Spain.

Significant features of the Increased (2011) Resources include;

1. initial deeper resource at Cova Creo of 45,000 oz grading 4.09 g/t Au which is currently the highest grade for any individual resource area
2. increase in grade for near surface resource at Cova Crea from 1.50 g/t Au to 1.67 g/t Au and the zones remains open
3. resources for both the near surface and deeper portions of the main Pozo de Ingles Zone increased in size and grade; the inferred resources above 200m below surface have increased from 208,000 oz at 1.40 g/t Au (0.65 g/t Au cut off) to 246,000 oz at 1.41 g/t Au. At depth (> 200m below surface, 2.0 g/t Au cut off) it increased from 93,000 oz grading 3.14 g/t Au to 176,000 oz at 3.42 g/t Au
4. the near surface portion of the Peton de Lobo Zone was extended approximately 150 metres to the east by recent drilling and remains open (additional drilling is planned). The deeper portion of the Peton de Lobo resource decreased in grade due to lower than expected grades in drill hole 10W01.

Details of the Updated Resource (2011) compared to the previous (2010) resource are as follows;

Resource Year	Resource Class	Cutoff (g/t Au)	Tonnes (x1000)	g/t Au	Contained Gold (x1000 oz)
Previous Estimate (2010)	Measured	0.65	3,834	1.76	217
	Indicated	0.65	1,823	1.67	98
	Measured + Indicated	0.65	5,657	1.73	315
	Inferred	0.65/2.0	16,542	1.66	885
Current Estimate (2011)	Measured	0.65	3,899	1.77	222
	Indicated	0.65	1,823	1.69	103
	Measured + Indicated	0.65	5,783	1.74	325
	Inferred	0.65/2.0	20,265	1.76	1,149
Change (2011 vs 2010)	Measured + Indicated	0.65	+2%	+0.5%	+3%
	Inferred	0.65/2.0	+22.5%	+6%	+30%

1. CIM definition standards were followed for the resource estimate
2. The 2010 and 2011 resource models used an inverse-distance-power (IDP) grade estimation within a three-dimensional block model with mineralized zones defined by wireframed solids.
3. A total of 19,075.7 m of surface trenching in 225 trenches, 443.1 m of adit sampling in 4 adits and 42,111.18 metres of diamond and RC drilling in 342 drill holes were used in the resource with sample spacing's that were less than 30 m for Measured resources, less than 40 metres for Indicated resources and less than 195 m for Inferred resources except for Inferred resources below 200 m from surface and for the northern two vein systems that used drill spacing's of 196 m
4. A base cutoff grade of 0.65 g/t Au was used for reporting resources above a depth of 200 m from surface and a cutoff grade of 2.0 g/t Au was used for reporting resources below 200 m from surface
5. Dilution is included for a minimum mining width of 2.0 m on a 4.0 m high mining bench
6. Mineral Resources that are not mineral reserves do not have economic viability

The Updated (2011) Resource Estimate also evaluated the Corcoesto deposit at lower cut off grades of 0.5 g/t Au (above -200m) and 1.0 g/t Au (below -200m). Results are as follows;

Resource Year	Resource Class	Cutoff (g/t Au)	Tonnes (x1000)	g/t Au	Contained Gold (x1000 oz)
Current Estimate (2011)	Measured	0.50	4,832	1.54	240
(alternative cut-offs)	Indicated	0.50	2,348	1.49	112
	Measured + Indicated	0.50	7,180	1.53	352
	Inferred	0.50/1.0	31,554	1.50	1,517

The Updated (2011) Mineral Resource estimate was based on 42,111.18 m of diamond and RC drilling in 342 holes as well as surface trenching and adit sampling data. The Mineral Resource includes drilling results that were not included in prior resource estimates including deep drilling.






Pozo del Ingles vein system shows the highest and most continuous gold grades in Corcoesto Gold Deposit, particularly between sections 3460E and 3860E. Predominant host lithologies are migmatites that have textures varying from homogeneous holocrystalline to gneissose, with banding parallel to the main shear (N30E) and dark biotitic zones fringing granitoid layers. High grade mineralization consists of grey to bluish quartz veins striking N70-80E dipping from subvertical to 45N. These veins contain disseminated and stringer arsenopyrite (3%-10%) enclosed in larger zones of silicification. The breccia style of mineralization also occurs in this area and has the highest grades in the entire deposit.

Several silicified zones with quartz veins make up the main vein system at Pozo del Ingles. The footwall zone (PI20) has the highest grades and best continuity of the Pozo del Ingles Zones. It is a tight system of anastomosing veins rather than a single vein. The faulted-off portion of this zone on the south-west of the "Longitudinal Fault" is called Zone PI-20W and the portion in the north-east side is called Zone PI-20F. Although the zone seems to be the same on both sides, the sides are named independently for purposes of resource calculation. The PI-20 zone as a grade-thickness projection with 2m minimum thickness and 5 g Au/t cut off. Other Pozo del Ingles zones are called the PI-10, PI-25, PI-27, PI-30, PI-35, and PI-40 zones. Each of these zones shows continuous mineralization, but is not as strongly mineralized nor as continuous as the PI-20 zone. Sparse deep drilling in the PI-20 zone indicates potential underground minable resources at depth.

The Peton de Lobo vein system is the eastward continuation of the Pozo del Ingles vein system. The main host rock for mineralization at Peton de Lobo is the coarse-grained leucocratic gneiss band outcropping in the eastern part of the property. At least five mineralized N70E trending structures have been identified in this unit, with mineralization similar to that at Pozo del Ingles (ie. A system of anostomosed veins included in a wider silicified zone). Some of these structures may carry high gold grade which has sufficient grade and continuity for underground mining. Continuity of these zones seems to be significant both, vertically and in extension.

The Peton de Lobo area was intensively drilled by RNGM during the 2003 infill program, but it was not completed to the east and at depth. KNB drilled two deep holes in this area, early in 2006 and the results show excellent potential for new open pit minable and underground minable resources, to the east and at depth.

The northern part of the property was investigated by RNGM with a soil geochemistry survey and subsequent trenching over main soil anomalies and limited shallow diamond drilling. Some encouraging results from the RNGM drilling and from trenches that had not been tested by drilling led KNB to conduct a much more detailed soil geochemistry survey covering the areas north of Pozo del Ingles and Peton de Lobo up to the property boundary. Subsequent to that, 19 trenches (681 m) were dug and channel sampled, defining new drilling targets, four of which were drilled early in 2006. Two of the drillholes, 06K15 and 06K21, intersected shallow zones that returned up to 5.0 g Au/t over 5.25 m and 2.72 g Au/t over 5.35 m respectively.

Mineral Processing and Metallurgical Testing

                                Table 3
                           Corcoesto Project
               Summary of Metallurgical Testing Results
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Thus, metallurgical testing indicates several options for processing of Corcoesto ores:

1. Heap Leach with a fine (6mm) crush size providing approximately 60% gold recovery.
2. Conventional milling and cyanide leaching providing approximately 90% gold recovery.
3. Flotation and cyanide leaching or sale of the concentrate. (80% to 90% recovery)
4. Gravity concentration may be used to increase the recovery of the flotation or cyanide leaching options.

Corcoesto Gold Project - 2011 Exploration Work

Edgewater has a multi-rig 12,000m drilling program underway that is designed to expand the existing gold resource and provide sufficient data for the completion of an updated resource estimate and subsequently, the commencement of a Preliminary Assessment (Scoping Study) in H1 2011 at the Corcoesto Gold Project. Work to date is progressing on budget and ahead of schedule. The Company plans to drill a further 1800m as part of Phase I of this program and there will then be a brief pause in the drilling in order to allow the Company to assimilate the outstanding Phase 1 assays. Phase II, consisting of the remaining 6000m will then commence and it is expected that Phase II will be completed by the end of H1, 2011.

The drilling is being directed at high priority targets, specifically strike and dip extensions of open ended gold mineralization within the Pozo de Ingles, Peton de Lobo, and Cova Crea structures as well as others. The main focus of the step-out drilling are areas with the potential for wider widths and higher gold grades which have been shown to be related to flexures in the mineralized structures and controlled by a distinct plunge to the mineralization evident from previous drilling.