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President's Letter
Dear Fellow Shareholder, 2007 was a great year for Esperanza with the company maturing and beginning its transition to becoming a gold and silver producer. Five years ago we began life as an exploration company with a little cash, no properties, some good ideas and the nucleus of a geological team. Now we have a portfolio of 18 exploration properties and two flagship development properties, San Luis in Peru and Cerro Jumil in Mexico. These two properties are now moving into the feasibility stage of development. Esperanza’s prospects for production will in time propel the company into the ranks of emerging gold and silver producers. None of this success would have been possible without the hard work and commitment of all Esperanza’s employees and consultants. The company’s greatest strength is the people who dedicate themselves to our growth – from the Board of Directors through to our field assistants in Peru and Mexico. No achievement would be possible, nor as satisfying, without them. 2007 Highlights
Cerro Jumil, MexicoWith three drill rigs turning for the better part of 2007, Esperanza has now completed 35,000 meters of drilling at our 100%-owned Cerro Jumil gold property. We have contracted an independent qualified person who is working with our geologists to complete the initial resource estimate at Cerro Jumil, which will conform to National Instrument 43-101 standards. The estimate should be completed in the third quarter of In parallel, we continue a program of metallurgical testing to determine the best way to recover gold. Although the work is ongoing, it appears that low-cost heap-leaching would be the preferred method. As our confidence in the project has grown we have put together a team of Mexican professionals to assist us in various important tasks, including permitting, surface land acquisition and water development – all essential for the construction of the project. Once our resource estimate is completed we will quickly move into scoping studies that will allow us to test various development alternatives before moving toward a full feasibility study. San Luis, PeruEsperanza takes great pride in having made the San Luis discovery and having shepherded the project from its earliest exploration phases through to the first 10,000 meters of drilling. During April 2007 Esperanza handed operation of the property over to Silver Standard Resources Inc. under the terms of our joint-venture agreement. In addition, prospecting within the greater claim block discovered the BP Zone which, although within the joint-venture area, is a separate exploration project. Towards the end of last year Silver Standard’s geologists were able to begin systematic prospecting of the area and have done an excellent job in showing the potential of the zone. Mineralization at BP is distinct from Ayelén and its associated veins. The zone has many of the characteristics of a large base-metal porphyry system containing copper, silver and other base metals. It is still early days and much exploration needs to be completed, however, we are very excited by the prospect. The 2008 work program at San Luis will have two main areas of focus: underground development and a feasibility study of the Ayelén Vein, and aggressive exploration of the BP Zone. Silver Standard currently has a 55% interest in San Luis and can increase that to 80% by carrying us through to production. 2008 Plans: New Project GenerationEsperanza is founded on our exploration teams’ expertise and we will continue to use that expertise to generate new projects. To that end we have assembled a first-class exploration portfolio consisting of 18 properties in Mexico and Peru. In 2008 we began a program to test at least eight of them with a first round of discovery drilling. This type of generative exploration is to a large extent a weeding out process, where we quickly discard less promising properties. One of Esperanza’s strengths is its exploration management experience. This provides us with the ability to apply rigorous economic and commercial criteria to the prospects to quickly identify those properties with the best potential to be developed. Exploration success can never be forecast, however, our track record has been excellent and we hope that is the best guide to future achievements. I want to thank you, our shareholders, for your continued support. Along with many other junior exploration companies, we have been disappointed with our stock-price performance in the recent buoyant gold and silver metal markets. However, we believe your support will be rewarded as we join the ranks of emerging producers. The emerging-producer category should bring improved multiples and hence better stock performance. In the interim we will continue to aggressively, yet prudently, build our company and its exploration portfolio. I look forward to reporting successful progress during the year.
Sincerely, William J Pincus |
April 18, 2008