COSE

During the first quarter of 2010, exploration drilling in the environs of the Cap-Oeste project led to the discovery of a mineralized offshoot, which was named Cap-Oeste South East (“COSE”).

This deposit was deemed large enough to be considered a project in its own right and drilling continued on COSE. This campaign was completed during the second quarter of 2010 and in March 2011, the consulting firm of Chlumsky, Armbrust & Meyer, LLC (“CAM”) completed an audit and review of the maiden 43-101 mineral resource estimate, as well as a Preliminary Economic Assessment to define the potential viability for the construction, mining and processing of the COSE deposit.

The mineral resource estimate reported 63,835 ounces of gold equivalent in the indicated category and 42,557 ounces of gold equivalent in the inferred category, with an average grade of 96.21 grams of gold equivalent per tonne. The COSE deposit is located 150 metres below surface and will therefore be mined by underground methods with a decline access. SGS Minerals Chile completed the preliminary metallurgical testing and the results indicate that PGSA can process the high grade ore on-site, substantially reducing processing costs.

During November 2010, PGSA received approval of the biannual Environmental Impact Report (EIR) for the El Tranquilo property block from the State Secretary of Mining, Province of Santa Cruz, Argentina. The EIR provides for 200,000 metres of drilling on the Cap Oeste deposit. The EIR also includes a provision for a further 200,000 metres of drilling at the COSE Project and other prospective targets within the property block. In addition, the EIR includes a provision for the development of a decline access for underground drilling at the COSE Project, as well as bulk sampling for metallurgical test works.