CSG Journal

 March 27, 2012
Answers... and a bit more.

 It is time to answer the questions I posed on Feb 15th. As I thought about writing this, it occurred to me that a short time ago I was on the other side of the table as an investor, full of questions and looking for information. Now I have switched sides and am here preparing to provide answers. I find myself with one foot still in the investor camp and the other in the insider camp. Therein lies my challenge......to retain the curiosity I share with you as a shareholder... but now as VP Corporate Development, to also ensure that I communicate insights that are of value to you as investors and prospective investors. I will do my best to effectively communicate this exciting story, as the company executes its strategic plan. That's probably enough banter -- let's get on with the CSG Journal.

Thanks to all of you who took up the challenge. Everyone with whom I communicated found the answers I was looking for in the last journal entry when I wrote, "Find two items in the Corporate Presentation which explain what is unique about Cosigo's Machado property in comparison to most other exploration projects."

First: The flagship Machado was acquired in a competitive bid process by Cosigo in 2007. That was unique. Gold was discovered on the Machado Serrania (ridge) in the 1980's setting off a big goldrush. When the Colombian government heard about this, they decided to send in a team of government geologists to find out what was going on. In the 1990's, during a multi-year program these geologists determined that the structure:

• is a paleoplacer formation outcropping over a strike length of more than 35 km with an approximate average width of 1 km.
• is of Proterozoic age and more than 1,500 million years old
• hosts both fine and coarse gold

Second: It was put out to tender because the Colombian government considered Machado to be of 'vital national interest' and should not be left to be acquired by normal claim-staking procedures. In fact, they also determined that the Machado was a 'national treasure'. This was, at least in part, based on the Colombian geological team finding:

• that there were over 130 artisanal gold workings along the ridge
• visible gold was seen in 6 of 12 holes the government drilled*, and
• they reported that 3600 tonnes mined from a small open pit contained 83 g/t gold*

* Comments with respect of this work are not compliant with NI 43-101 rules and should not be viewed as such.

As an additional step, to secure the area and protect the national interest, the Colombian government has stationed a garrison of military police in Taraira and have built a local cell phone tower, linking the Machado area to the capital Bogota and the outside world. Using your cell phone, you can actually call Canada direct from the property. Machado -- under the work of government geologists - evolved from exploration to discovery --before Cosigo won the bid.

The above, I hope, helps describe what I think is a quite unique aspect of the Machado project.

In late 2007, Cosigo, then a private company, after securing the Machado Concession initiated a comprehensive $2 million exploration program, which included a $1.7 million Mobile Metal Ion (MMI) survey, plus - mapping, delivering boats, quads and materials, building a quality base camp and bringing reverse circulation (RC) drills to site. The MMI program, although expensive, has turned out to be a good investment in geochemical data acquisition, in that it provides many strong indicators as to where the 'intrusive events', such as coarse-gold bearing veins (see picture), may be prevalent along this structure. These clues will be studied closely by Magnus and Dr. Joe in relation to drill target selection. The premise being that the intrusive events have created zones of higher grades within the structure. Drilling those select targets will prove or disprove this theory.

After completion of the $2 million exploration program Cosigo set out to find a publicly listed partner that had experienced, market-savvy insiders, and key investors that were well connected in the junior resource markets. Horseshoe Gold was determined to be the perfect partner, and for Horseshoe, Cosigo had the high-quality project they had been seeking for the past decade.

Cosigo has since continued to move forward, by developing strong relations with local communities, acquiring additional highly-prospective properties in the area on both sides of the border , and completing a Reverse Take-Over (RTO) of Horseshoe Gold Mining Corp. on the TSX Venture Exchange.

During the past five years, Cosigo, under the guidance of our President Dennis Millburn, Executive Vice-President Dr. Joe Montgomery, Vice-President South American Operations Andy Rendle, and a skilled Colombian team has acquired control over more than 64,000 hectares of prime tenure, and has developed significant in-house expertise on the metasedimentary ridges in Colombia and Brazil, that are known as the Taraira Gold Belt. This strong team is invaluable for Cosigo's future development.

There is no doubt that patience is required in waiting for title applications to be processed and environmental approvals to be granted. A lot of the delays Cosigo is dealing with are due to the fact that the Colombian government has gone through an election and ministerial changes, plus changes within the civil service. Cosigo's March 12th news release announcing the Public Audience for April 12th is an important milestone in the application process. The Public Audience is held to allow residents of the local communities and other interested parties to voice their support or present any concerns that they may have with Cosigo's exploration program. Subsequent to the Public Audience, Cosigo will present to the Ministry of Environment how such concerns would be mitigated. Valid concerns will be dealt with while any concerns deemed frivolous are thrown out. With this process now in play we are starting to once again move forward towards the implementation of our drill program. We believe that the wait will have been worthwhile once the drills hit the ground.

In addition to the Colombian agenda, the evolving strategic plan for Brazil has produced some excellent results, with Cosigo being 'invited' into a partnership with the Indigenous peoples that live across the river from Machado on the Brazilian side. Their Traditional Lands are over one million hectares and covers a substantial part of the Taraira Gold Belt that cuts across a broad swath of both countries. Back in the 1980's, they had directed the Brazilian government to keep 'all' explorers out of their territories, and the government complied with that request. But there is no progress without change. The Indigenous people want to benefit from the resources on their traditional lands by utilizing these resources to improve quality of life, and to create employment opportunities backed-up by appropriate skills training. The objective is to develop resources using world-class exploration science and technology, and respecting strict environmental regulations. To achieve this objective, the Indigenous people needed to find a trustworthy partner that would respect their culture, traditions and aspirations. The partner they chose was Cosigo. This happened because of the reputation and respect Cosigo has established in their growing relationship with the locals on the Colombian side of the river.

I think this is a good place to leave this edition of the Journal. I hope that I have shed some light on a few under-appreciated elements of the Cosigo story and possibly enhanced your understanding of Cosigo's potential. And why joining Cosigo was such an easy and exciting decision for me.

Cheers,

Cosigo Barry



Coarse gold and pyrite in quartz-vein (intrusive) from Machado
 
 

You can view the Next CSG Journal item: Mon Apr 23, 2012, Public Audience: Taraira, Vaupes Province, Colombia

You can view the Previous CSG Journal item: Wed Feb 15, 2012, Questions -- Questions -- Questions

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