Marcona Copper Project
Technical Report

Chariot commissioned AMEC (Peru) S.A. during 2004 to provide an independent Qualified Person's Review and Technical Report for the Marcona Copper Project. This report was prepared in accordance with the requirements of the Standards of Disclosure of Mineral Projects as defined in National Instrument 43-101. The report is filed, on SEDAR Inc.

The following information has been taken from the report and has been reviewed and confirmed by Mr. Miron Berezowsky, P.Eng., Mr. Tracy Barnes, P.E., Mr. Rusty Craft, MAusIMM and Mr. Robert Cinits of AMEC who are the authors and Qualified Persons of the aforementioned NI 43-101 Report.

The Marcona Copper Project is located within the Nazca Province, Ica Department (Peru), in the southern Peruvian coastal belt, approximately 400 km southeast of Lima. The Project consists of two adjacent areas referred to as "Target Area 1" (Block TA1) and the "Rio Tinto Claims", which together cover approximately 32,899 ha. The Mina Justa Prospect is the principal exploration target on the Project and occurs at elevations ranging from 785 masl to 810 masl.

The most detailed geological work on the Mina Justa Prospect was carried out by Rio Tinto between 2000 and 2003 and consists of airborne magnetic and radiometric surveys, geological mapping, geochemistry, geophysics, RC and diamond drilling, limited petrographic examinations and metallurgical testing. A portion of the airborne geophysical programs were conducted after 1993 in the course of earlier district scale reconnaissance work. During the period 2001 to 2003, the Mina Justa Prospect was explored by Rio Tinto with the drilling of 103 holes aggregating to 30,971.55 meters of reverse circulation and diamond drilling.

The drilling identified two principal copper mineralized zones. The Main Zone has been intersected along its dip from surface over a 1,700 m distance, to a maximum depth of 500 m, where it is still open. The Upper Zone has been intersected along its dip from surface over its 1,100 m down-dip extension to a maximum depth of 250 m. The geometry of the Main Zone and Upper Zone is similar. Both structures appear to be curved flat-bowl-like features that have an overall east to southeast dip. Generally the upper 200 m of the zones is characterized by copper oxide mineralization with sulphides gradually becoming dominant at lower levels. The dominant oxide minerals are chrysocolla and atacamite. The sulphide assemblages have been reported to be concentrically zoned outward from bornite-chalcocite in the core through intermediate bornite, chalcopyrite to peripheral pyrite.

The copper mineralization of the Marcona Project is best represented by a hydrothermal iron-oxide copper gold ("IOCG") ore deposit model. Examples of economically important IOGC deposits include Olympic Dam and Ernest Henry in Australia, Salobo and Sossego in Brazil, and Candelaria, Mantos Blancos, Manto Verde and El Soldado in Chile. Considering their large metal accumulation, often in the order of 250 million to 1.0 billion tonnes of 1% Cu and 0.5 g/t Au, the IOCG class of ore deposits is an attractive exploration target.

The Marcona and Pampa de Pongo Iron deposits are located approximately seven km southwest and 30 km southeast respectively of the Mina Justa Deposit. Together, these are the largest iron ore accumulations (with associated copper and gold) along the western coast of South America. The two deposits, along with the Mina Justa Deposit form part of a cluster of similar occurrences that together define the "Marcona Fe-Cu District". AMEC was retained to review a block model, constructed by Rio Tinto in July 2003 on the Mina Justa Prospect. The estimate was made from 3-dimensional block models utilizing commercial mine planning software (Vulcan®). Tracy Barnes, P.E. was the QP responsible for the review of the Rio Tinto resource model. As part of this work AMEC also undertook a program of data verification by re-sampling a portion of the existing core and RC rejects.

The estimate was completed using a block model with 50 m x 50 m x 10 m blocks and 5 m bench composites. Grade interpolation was done by Inverse Distance Squared and was compared with two other methods, Ordinary Kriging and Nearest Neighbour. AMEC found no significant or fatal flaws in the model and considered that it was based on a spatially consistent geological interpretation and was constructed in a manner consistent with the data.

Preliminary engineering evaluations have been completed on the open pit portion of the mineral resources by AMEC to demonstrate that it has reasonable prospects for economic extraction. The assessment is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have 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. Certain qualifications and assumptions have been made by Tracy Barnes, regarding this preliminary assessment, which are described in the Technical Report.

The underground portion of the mineral resource was briefly reviewed by AMEC Senior Mining Engineer Bill Tilley P.E. to determine if reasonable prospects for economic extraction could be demonstrated.

AMEC re-classified the Rio Tinto block model, taking into account the above points.

The resource estimate is presented as % Total Cu, since the previous sampling campaigns included very few assays for soluble copper. A program of re-sampling of the previous drill hole sample pulps will be completed during the next phase of exploration to determine the amount of soluble copper in the oxide portion of the deposit. In addition all future analyses in the oxide portion of the deposit will include sequential copper analyses.

The total (oxide, mixed and sulphide) mineralization of the Mina Justa Prospect as of June 18, 2004, is classified as Inferred Mineral Resources, consistent with the CIM definitions referred to in NI 43-101 and are shown below.

Resource Table Info

The Inferred Mineral Resource presently defined consists of potentially open pit and underground minable tonnages. In addition significant potential exists to expand the current resources to the north, to the south on to an adjacent property, and to the west.

A preliminary economic assessment was completed by Chariot and reviewed by AMEC for inclusion in the NI43-101 on the potentially open pit mineable portion of the Mina Justa mineralization. The study was based on an Inferred Mineral Resource base of 159.5 million tonnes @ 0.76% copper (at a range of cut-offs as shown on Table 1 in Appendix 1). A total of 40% of the ROM mineralization has been removed from the open pit Inferred Mineral Resources shown in Table 1 for this study due to its potential to be high acid consuming. The underground resources were not incorporated into the economic study.

The economic assessment is preliminary in nature and includes the use of Inferred Mineral Resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves.

Therefore, there is no certainty that the preliminary assessment will be realized. This Technical Report and the Preliminary Assessment also speculates on the impact of exploration success on the project economics. The purpose of this preliminary assessment was intended purely to provide Chariot Resources with direction for future exploration.

Selected key assumptions used in the study are

Based on these assumptions Chariot has calculated a Net Present Value for the combined leach-milling operation (pre-tax) of US$ 91 million (at an 8% discount rate) to US$ 52 million (at a 10% discount rate). The Internal Rate of Return ("IRR") is 14%. Over the life of the mine the Mina Justa Prospect produces approximately 2.2 billion pounds of copper at a weighted average cash operating cost of approximately US$ 0.52 per pound of copper. These values are for the Marcona Project as a whole and do not take into account the proposed ownership changes as noted below under "Joint Venture".

The preliminary evaluation completed on the Mina Justa Prospect supports a reasonable expectation that the open pit resources could be mined and copper profitably produced.

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