Rio Alto's La Arena Project

ERIC ZAUNSCHERB, Canaccord Genuity (12/23/2009)
"Rio Alto Mining's primary asset is the 20,673 hectare La Arena project situated approximately 480 kilometers north-northwest of Lima, Peru, and approximately 18 kilometers from Huamachuco, a regional centre. Infrastructure is excellent with a paved road through the project and a power line within 20 kilometers; water appears to be abundant on site. Mineralization consists of Mesozoic epithermal precious metal mineralization overlying copper-gold porphyry intrusions. An NI 43-101 compliant March 2008 estimate for oxide resources (at a 0.15 g/t Au cut-off grade) amounts to 58 Mt indicated grading 0.49 g/t Au (910,000 oz Au) plus 1.7 Mt inferred grading 0.28 g/t Au (15,000 oz Au). In early September 2009, 100 tons of representative run-of-mine ore was collected for definitive metallurgical test work leading to detailed process plant design; a minimum gold recovery rate of 65% is expected by the company.

The company has filed an Environmental Impact Assessment (EIA) with Peruvian authorities to develop a 24,000 t/d open pit gold oxide mine at La Arena. Review and approval of the EIA is expected to be completed in six to nine months. Assuming adherence to strict planned timelines, Rio Alto may be able to meet its stated target for commencement of production at La Arena during Q4/10. Based on our site visit we expect very low mining and processing costs.

Rio Alto's current vision consists of gaining cash flow from the oxide gold project and then advancing to feasibility studies on the sulphide project. The March 2008 resource estimate (at 0.1% Cu sulphide cut-off grade) included 220 Mt indicated sulphides grading 0.27 g/t Au and 0.36% Cu (1.9 Moz Au and 790,000 t Cu) plus 170 Mt inferred sulphides grading 0.22 g/t Au and 0.32% Cu (1.2 Moz Au and 540,000 t Cu). We consider the project's exploration potential to be excellent with several targets identified and prioritized for future work.

Rio Alto owns the right to earn a 38.7% interest in the shares of La Arena S.A, which owns the project, from IAMGOLD Corp. (IAG: NYSE: US$15.67 | BUY) by expending US$30 million on the project. Rio Alto also owns the right to purchase all of the shares of La Arena S.A. for a cash payment of US$47.55 million by 15 June 2011, extendable by two nine-month periods."

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