WORLD

SHE’S THE MOST POPULAR GERMAN LEADER SINCE, WELL...

MICHAEL PETROU June 19 2006
WORLD

SHE’S THE MOST POPULAR GERMAN LEADER SINCE, WELL...

MICHAEL PETROU June 19 2006

MEXICO, it can be said, bas gone through dramatic changes in the last 20 years. With a fledging democracy and a GDP that recently entered the trillion-dollar class, the country is now known for far more than the sum of its stereotypes of sun, beaches and easy living. While tourism remains a staple of the country’s economy, it is other sectors - including mining, manufacturing and shipping - that present the best business opportunities for the world at large in general, and Canada in particular.

There is a certain affinity for Canucks in this part of the world. Not only do we line their

There is a certain affinity for Canucks in this part of the world.

beaches - Canadian tourists outnumber their American counterparts in several Mexican states - but also we invest in their projects: over 80 percent of the 68 foreign mining companies operating in Mexico are Canadian-owned. They dot Mexico’s western and southern flanks, areas considered some of the most minerally rich on earth. Engineer Francisco Escandon of the Geological Survey of Mexico puts the in-situ value of Mexico’s minerals at upwards of $100 billion (US) - which is open for exploration to anyone, Mexican or not.

"In 1992, it became legal for any Mexican person or company to own a mine, even if that company is 100 percent foreign owned,” Mr. Escandon said, noting that prior laws forbade majority foreign ownership in a mine.

The value of any given mineral is generally cyclical. When the price of, say, iron goes up, the price of another mineral (copper, for example) might be on its way down. However, the current economic booms in India and China, as well as generally robust economies around the world, have meant that just about ever}' mineral - including Mexican staples like gold, silver, tin, iron, copper and zinc -are at high values. It makes for an interesting investment situation, particularly since both smalland medium-sized mines are clamouring for capital.

As in any other country, however, mining remains a risky endeavour that takes a special breed of investor. “Canada has the most interesting mining culture in the world,” said Mauricio Candiani, a partner in Sedna bdp, an international business and investment banking firm. “Canadians have a tendency to take risks, to pilt money in place to finance risky projects earlier in the exploration stages.”

The Embassy of Mexico in Canada welcomes you. MEXICO has three Consulates in Quebec City, St. John's, enrichment, to discover Mexico's most General, one each in Montreal, Dartmouth, Winnipeg and Regina. significant developments and to see Toronto and Vancouver, one We invite you to explore with us our country> through Mexican eyes. Consular Agency> in Calgaryi, and this dynamic, vital relationship and María Teresa Garcia Segovia de Madero five Honorary Consulates, one each its enormous potential for mutual AMBASSADOR OF MEXICO TO CANADA

ECU Silver Mining Inc. is a Canadian mining company listed on the TSH Venture Exchange under the symbol 'ECU'. • We are engaged in gold, silver and base metals exploration and development in the Velardena mining district of Mexico. • We are presently extracting ore from one of our seven mines, which are all historical producers. , J • We process our ore at our own milling facilities in Velardena. We have important growth objectives, and plans to realize them through the development of our projects and acquisition of new properties in Mexico.

www.port-of-manzanillo.com.mx Port Authority of Manzanillo No. 9 Teniente Azueta Avenue, Burócrata District, 28250 +52(314)331.14.00

'The number one market for risk in the world for Mexican mining operations is the Toronto Stock Exchange."

Laura Diaz, lawyer and mining specialist

“The number one market for risk in the world for Mexican mining operations is the Toronto Stock Exchange,” echoed Laura Diaz, a lawyer and mining specialist with Mexico Citybased Diaz Nieves y Asociados S.C.

The Coahuila mining disaster in February showed that the dangers and pitfalls associated with the industry are ever-present, but Mexican mining officials stress that isolated incidents cannot detract from a very important source of Mexican jobs. There are over 250,000 registered miners in the country - and probably the same

number who are unregistered. “We have to keep mining,” said Enrique Gómez de la Rosa, of the Mining, Metallurg)' and Engineering Society of Mexico. “We must take the best measures to ensure a disaster doesn’t happen again, but this is certain: we have to keep mining.”

Indeed, the Mexican government itself recognized the importance of its mining sector some 15 years ago, and put into place some of the most dynamic and forward-thinking mining law's in North America, which balance the need for environmental safeguards with the impor-

tance of foreign investment and employment. With the foreign ownership law in 1992 and the signing of NAFTA two years later, Mexico’s mining philosophy changed completely from the way it had been for decades.

“Since the 90s, people realized that it was bad for business to have a nationalist ideal about the mining sector,” said Federico Kunz, a mining analyst and advisor to Mexican mining giant Peñoles. “We cannot be isolated from everyone else. Everyone, especially the Mexican investors, realize that we are in a global econo-

my, and it isn’t possible to do business outside this concept.”

Mexican law is structured for this reality. The government has completely removed itself from the exploitation business, and instead concentrates solely on research, promotion and control of the country’s mineral resources. Along with the liberal foreign investment rules, the Geological Survey of Mexico has effectively streamlined the mining concession process, putting most of their geological surveys and concession lists online, as well as providing a variety of services - including surveying, chemical analysis and atomic absorption testing - to mining companies and potential investors. (All are ISO 9001:2000 approved.)

The agency can also prot ide geologic, geochemical and geomagnetic maps, satellite mapping services and environmental impact surveys.

About 30 percent of the area has been mapped out in detail, and further detailed mapping is a priority for the Geological Survey of Mexico. All the maps are available at the agency’s website (www.coremisgm.gob.mx), as are those concessions available for bidding. In addition, about 14,000 mineral reports are online. “The first steps are as now as easy as going to your computer,” Mr. Escandon says.

ABOVE PAUL MARTINEZ' DESK is the first metal turning machine his father bought in 1970. The small machine formed both the pieces and the business model for Cross Line, Mexico's largest manufacturer of aluminum, fiberglass and galvanized steel cable trays - the kind lining every business office worldwide.

The company's products are ubiquitous -they've built these trays for everyone from Mitsubishi to Bombardier to Mexican oil giant Pemex - and are made from scratch in the Mexico City plant. But it is its approach that sets them apart. Cross Line, which is approved by Underwriters Laboratories, will do just about anything for their client. This includes even opening a new dedicated plant, if need be, as they did when they won the bid to provide trays to Mexico City's metro system. In 2004, Cross Line built 180 kilometres of aluminum trays alone. The company's dynamism shows: Cross Line recently began manufacturing elevators for American-based Otis, the largest elevator company in the world.

Both Paul and his brother José Martinez, who is the company's director general, are unequivocal in what they want: a direct link with Canadian aluminum, steel, PVC piping and fiberglass producers, so that they can cut out what

amounts to a very large and expensive middle man: The United States.

Cross Line currently uses 100 tons of aluminum and 60 tons of steel per month, purchased in Mexico through an American distributor. This makes raw materials considerably more expensive. Though its products cost 30 percent less than those of American companies, the brothers want to be even more competitive. "We'll buy it straight from Canada, if the price is right," Paul Martinez says.

As well, the company would like to sell directly to Canada, to make their products cheaper to Canadians. The brothers also want to expand into Mexico's burgeoning mining sector, dominated by Canadian companies, and have this to say: "If you need work done on site, we will put everything on a truck and do the bending, stamping and shaping wherever you need it," said Paul Martinez, adding that the company also manufactures metal stamping and bending tools.

Along with its main plant in Mexico City, Cross Line has ten offices scattered around Mexico and Guatemala. "Bring us the plans and we'll build it," said José Martinez, chuckling. "We Mexicans are geniuses. It's in our nature to figure things out, and Cross Line is always looking for niches in which to specialize."

Mexico's concession law is designed to encourage companies to explore and mine, which means more employment for Mexican miners, engineers, office staff and the like.

In 2005, Mexico further streamlined the permit system. Previously, companies needed both an exploration and an exploitation permit; now they need only one. “It makes it easier and cheaper for both sides to explore and exploit,” said Mr. Candiani. Concessions are typically 50 years, with the option to renew at the end.

What’s more, there are no royalty taxes on minerals in Mexico, unlike several other Latin American countries to tire south. It means mining companies pay only a flat rate tax on their concessions. “I always say that if you can’t pay these taxes, you really shouldn’t he mining,” laughs Mr. Kunz.

While landing concessions is simply a mat-

ter of winning a public auction and signing some papers - a fairly easy process, according to Mr. Kunz - the law itself is designed to discourage speculation by mining companies. Anyone acquiring a concession must realize that the fees are staggered by year: At first, they are relatively cheap, hut go up steeply every year that the land isn’t exploited.

ENGINEER LUIS E. PIZZUTO wants Canada to know that he wants its garbage.

As the director of Metal Vert, the fledging metal recycling division of Mexican soldering manufacturer Omega Solder, Pizzuto has dedicated most of his working hours to finding reliable sources of industrial castoffs, iron turnings, electrical wiring, copper ash, brass ingots and computers - all harvested for the valuable metals. Pizzuto doesn't call it garbage (he prefers "unresolved loops"), but Metal Vert's operation in San Luis Potosí proves that one company's junk is another's lifeblood.

Metal Vert recovers mainly copper, tin, lead, zinc, antimony and precious metals for their clients. The year-old company has become profitable in the last six months, largely because of the volume of the materials out there, and because Pizzuto and his sons have kept production costs down by manufacturing most of the needed machinery in-house. But they are growing, and they want more: "With a second line, we can produce 800 tons of copper and 500 of tin and lead antimony per month," Pizzuto says. "We can be an economical alternative to China. Even if it is hazardous material, the customer has no liability."

The plant, which is currently in the process of attaining ISO 14000, is dominated by two large blasting furnaces - fired with used engine oil and pure oxygen, cutting fuel costs by 40 percent. The material is blasted, separated and sold on the open market. A set of filters scrubs the resulting exhaust of its tin and lead oxides, which are then recycled. "We use a simple formula: the value of metals minus the cost of treatment. If the first is bigger than the second, the company will be paid."

The company, Pizzuto notes, is right in the centre of Mexico, near two main ports and within 500 kilometres of the bulk of the Mexican economy. "I'm interested in making contact with anyone who has a lot of something that they don't know what to do with."

Registered miners are unionized, though the country does not have a history of work stoppages.

This, according to Mr. Escandon, helps prevent concession sitting’ - and encourages companies to efficiently explore and mine, which means more employment for Mexican miners, engineers, office staff and the like. (Legislators have also boned up the rules regarding the nonpayment of fees, making it easier for the government to repossess defaulting mine operations.)

Nor are there any penalties for getting out of a particular concession or mining operation, as

there are in several other Latin American countries. This makes getting out of an investment easier than ever, according to Mr. Candiani. “There are no legal constraints from doing so, and no variable royalties to be paid,” he said.

The increase in mining activity7 in Mexico has sparked a renewed environmental awareness, which most mining analysts see as a mixed blessing. As it stands, Alexico’s mining laws are as stringent as those in the U.S. and Canada, according to Mr. De La Rosa. The last five years or so have seen an increase in the enforcement of existing environmental laws, but have also meant, on occasion, the interference of local governments in existing mining projects - even though they have been fully licensed by the federal government.

BEACHES AND BUSINESS. Sun and container ships. Palm trees and port activity. There is a definite yin-and-yang quality to the City of Manzanillo, a feeling that people here like to work as much as they like to play. Thanks to its geography, which neatly divides its fantastic beaches from the bustling port, the two worlds of Manzanillo are at once close together and far apart.

Manzanillo's 437-hectare deep-water port is Mexico's busiest, moving nearly 873,000 containers last year, for a total of 15 million tons of goods, excluding oil. It is the 83rd most important port in the world.

Port officials are enthusiastic about Manzanillo's future prospects, particularly when one considers that the distance from Manzanillo to New York City, for example, is shorter than to the Long Beach port in California. 'The other amazing thing about Manzanillo is that ships get a docking station right away," said Captain Fiéctor Mora Gómez, Port of Manzanillo's CEO. "Unlike in Long Beach, you don't have to wait around for three or four days."

The port is also open to foreign investment - which, according to Mexican law, can be at 100 percent. Visiting the port, one gets the feeling of huge, sustained change: The port is currently adding a tenth docking position, dredging the channel depth, adding a

Land access problems are often a simple matter of proper etiquette. Too often, Mr. Candiani says, foreigners don’t properly investigate who owns the surface rights to the land. As a result, the owners (particularly farming co-operatives) see the arrival of foreigners as an affront. His advice? Use locals when approaching landowners. “It’s often isn’t the mining site itself, but a road that passes through a community,” he says.

Mr. De La Rosa maintains that most of the perceived problems with mines - accidental spills, environmental fallout, damage to the landscape, among others - are best diffused

68 hectare trailer regulating centre and increasing the size of customs inspection areas - which already boast gamma ray inspection stations for faster processing.

The biggest project to come, of course, is the Liquefied Natural Gas (LNG) project, which will pump gas 300 kilometres to Pemex City. The ability to import large volumes of LNG at a time will save Mexican industry millions of dollars -savings that will make doing business in Mexico all the more attractive, says José Ignacio Peralta Sánchez, Colima's Industry Minister.

Captain Mora is frank about his desire for Canadian investment. "When Mexicans want Canadian products, they go through the U.S., and when Canadians want Mexican products, they go through the U.S.," he says. The end result is that it's more expensive. We want to develop strategic alliances with Canada, especially the port of Vancouver, to basically cut out the middle man."

In Mexico we have labour, both with workers and engineers. In Canada, you have natural resources and physical capital

through education of the local populace. “The best example of a ‘mine-positive’ project is the Metallica silver operation in San Luis Potosi,” he says. “It was an all-out campaign to convince people that it was environmentally safe for the workers and the community, and it

complied with most of the things ecological groups wanted.”

Registered miners are unionized, though the country doesn’t have a history of work stoppages (the recent strike at the Grupo Mexico mines is the first work stoppage in a generation, according to Mr. De La Rosa.) Mexico doesn’t allow for mining in the nucleus of designated ecological zones, but will allow it (with certain restrictions) within the surrounding so-called ‘buffer zone’.

A silver miner in Pachuca.

“I’d say we are in the middle,” Mr. Candiani says of his country’s environmental laws. “We are not as strict as some people would like, but we are not a country where you can just do anything.”

The possibility of a left-wing government in the coming July elections have some worrying that Mexico’s mining laws will regress to state ownership, as has happened under socialist Bolivian and Venezuelan governments. Not to worry: private mine ownership is written into the constitution, and changing it would require a two-thirds vote by the congress and senate -which is highly unlikely. “Besides, there hasn’t been a big noise about private companies in the mining industry,” Mr. Candiani said.

VISITING THE FLOOR OF TJR MANUFACTURING, one can get the answer to an obscure but intriguing question: What do about 400,000 earplugs look like?

The San Luis Potosi-based company, which sits squarely on the major north-south route known as the "NAFTA highway" has manufactured earplugs, as well as safety goggles, since 1995 for an American-based safety equipment company. Between 10 and 12 million earplugs move across TJR's floor every month.

Though the process is impressive - the plant's 400 floor employees work in modular stations, surrounded by hundreds of thousands of pairs of earplugs and goggles in varying states of assembly - TJR has expanded into a different (and far more complex) sector entirely: the manufacture of aircraft parts.

Last year, company founder and general manager Javier Rodriguez devoted a chunk of his 2,400 square metre plant to the production of noise and temperature buffer pads for commercial and business jets. The pads, made of fiberglass and fire-retardant film, are deceptively simple to look at. In fact, each must meet exacting aircraft standards. 'There was a perception that TJR could do only simple things, like put together earplugs," said the 41-year-old Rodriguez. "They thought more complex things were beyond our reach. They thought we could do only earplugs."

By gaining customers such as American-based Gulfstream and Brazilian aircraft behemoth Embraer in the last year, the company has already proven itself. The pads begin as rolls of fiberglass wool and a thin, flesh-coloured film with a texture similar to Mylar. In the dedicated, sealed-off area, workers cut the fiberglass and film by hand according to dozens of different

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design specifications. (The film itself is also branded with the aircraft company logo.)

The fiberglass 'pillow' is inserted between two film sheets, after which workers seal it with an ultrasonic welder. The final product is used to isolate noise and cold temperatures from the inside of an aircraft. The fledging operation has $500,000 in revenues already, and TJR hopes to have more contracts from Canadianbased aircraft companies. "Production costs are half of what they are in the U.S. and Canada" Mr. Ramirez points out. "Plus, fiberglass is not easy to deal with. It's prickly and irritating, and not many companies want to deal with it."

The company, which is unionized, has never has a work stoppage or issue since incorporating 11 years ago - "We have good relations with the union," says project manager Roberto Ramirez. TJR is ISO 9002 and Underwriters Laboratories (UL) certified. And Rodriguez has structured the company so that their clients would never be liable in the unlikely event of a strike.

The earplug business is TJR's meat and potatoes contract, providing the bulk of the company's $6 million in revenues last year alone. The producer sends the raw materials, and it is up to TJR's staff to put everything together - gluing, attaching, packaging and stocking boxes.

Though the market is dominated by the straightforward earplug available at the pharmacy, TJR also does smaller batch jobs for specialty products, including medical earplugs used by doctors to test hearing capability, and will manufacture to company-specific design. (Budweiser wanted their earplugs to match the colour of their beer.)

In the past, TJR has also done disassembly work for car parts company AC Delco, which has several plants in San Luis Potosi. And, in a show of TJR's farreaching ability, the company recently began a chocolate manufacturing wing, and has a contract to insert a toy into the centre of lollipops. Rodriguez, who himself used to work for AC Delco in Indiana, says his company was borne out of his goal to target and excel in any market.

Rodriguez is unequivocal in what he wants: More Canadian clients. "We're a service company. We can manufacture anything you want, no matter how simple or complex. We've done engines, and we are looking to get into the business of manufacturing safety harnesses and gear, which is an involved process. We can do it, no matter if it's earplugs, or airplane parts for Bombardier."

The workforce is certainly there. There are several car plants already located in San Luis Potosi, as well as five universities and two technical colleges - from which TJR has drawn for its facility. Rodriguez didn't base his company here only because it's his home town: San Luis Potosi is a straight drive north to the U.S. border, and Rodriguez says trucks can get to Indiana in three days, and to Canada in under four.

Project manager Ramirez says TJR offers an adaptive company structure and a dynamic labour force, which allow the company to take on (and finish) tasks faster and more cheaply than their competitors in the U.S. and Canada, and is a three-day drive from the biggest concentration of the American and Canadian market - something China cannot claim. 'We switched from earplugs to airplanes to chocolates, so there isn't much we won't do," Mr. Ramirez said.

"YOU CAN LIVE IN MEXICO two ways," says engineer Francisco Tarrega Ribes. "You can work and make money, or you can fall In love and lose your shirt."

It is evident what direction Mr. Tarrega chose. Not only is he fully clothed; he is also president of a mid-sized industrial engineering plant in Santa Isabel Xiloxoxtla, roughly 200 kilometres south of Mexico City. A Spaniard by birth, he moved to Mexico in 1983 and opened his plant, Suministros Internacionales y Acabados de México, which has become what amounts to onestop shopping for industrial interests from around the world.

Bring Mr. Tarrega the plans, and he'll build it. Show him an existing mining operation that needs to dismantled and reinstalled on another site, and he'll do so. He'll assemble and maintain the variety of complex mining machinery that usually arrives in pieces. He'll also build machinery from scratch, thus saving his clients thousands of dollars in import taxes.

In the past few years, Suministros has built paper recycling and recuperation tanks for Proctor & Gamble's pulp and paper operation in Apizaco Jlaxacala. Mr. Tarrega's company constructed an industrial warehouse in San Miguel Allende for Telmex, the country's

telecommuncations concern. He's built conveyor belts and mineral transporter systems, and has disassembled and moved an entire silver mining operation from Paral Chihuahua to Vera Cruz, a distance of roughly 4,000 kilometres, reassembling and refurbishing it thereafter.

Just about every tile and ceramics production facility in Santa Isabel Xiloxoxtla -including Porcelante, the area's biggest - bears Suministros' mark, right down to the assembly of the required high-pressure machinery.

The work is done either on-site or, in the case of machinery manufacture, in Suministros' 2,800 square metre warehouse that can be seen from Mr. Ribes' office window. On this day, the plant is alight with sparks and clanging noise, as workers finish up an order for railway car doors. Railway car doors? "Yeah, I can make them," Mr. Tarrega says nonchalantly.

Suministros' competitive edge lies in this kind of do-it-all business plan - as well as Mexico's very competitive labour cost, which is a fraction of what it is elsewhere in North America. The company's 125 permanent employees fluctuates to upwards of 500 when there is a plant disassembly job to be done. "I do it because I like big jobs, and I want more to do," Mr. Tarrega says.

EXCELLON RESOURCES INC. (TSX.V: EXN), is test-mining and developing high-grade silverzinc-lead mineralization on its 14,692-hectare (36,000-acre) Platosa/Saltierra Properties, which resemble several world-class Carbonate Replacement Deposits, in Mexico's northeastern Durango State. Mining operations commenced in September 2004. Excellon continues to expand its known mineralization through aggressive underground and surface drilling. With four rigs on site (three on surface and one underground), the Company is developing its two newest and largest mantos to date, the Guadalupe and Guadalupe South Mantos, and plans to update its mineral resource estimate by the end of June.

Excellon has become Mexico's newest high grade silver producer through exploitation of very high grade massive sulphide orebodies in its Platosa Mine in northeastern Durango State, Mexico. An aggressive U.S. $3-million in mine and district-scale exploration program has been launched, expected to be completed over the next nine months. A 6,000 metre surface-based diamond drilling program has begun, directed at

geological, geochemical and geophysical targets interpreted as reflecting large-scale mineralization throughout the balance of Excellon's 14,692-hectare (36,000-acre) Platosa/Saltierra Properties in the district. A parallel program including 3,000 metres of surface drilling, 7,500 metres of underground drilling and 200 metres of direct heading will be executed to expand the resources in and around the existing mine.

The company now ships between five and six thousand tonnes of ore monthly. Based on an NI 43-101 compliant mineral resource estimate prepared in September 2002 by Roscoe Postle Associates Inc., independent geological and mining consultants, the average grade of the mineral resource is 75 ounces/tonne of silver, 15% lead, and 12% zinc.

Although Excellon sees the possibility of larger development in the future, the revenue generated from ore shipments and funds to be provided by exercisable warrants provides the company with a positive cash flow, and thus there is no need for immediate additional financing.

The United States, Canada and Mexico cannot look at one another as just another market anymore.

Mr., Escandon, who has spent his life studying what Mexico can remove from its own soil and where, is confident that the environmental movement and business can co-exist, if only because it is in the interests of both that Mexico protect and succeed from its resources.

Mining, Mr. Escandon says, is in Mexico’s blood - despite what might happen in government or in the environmental movement. As an example, he points to the floor in his office in Pachuca, about 200 kilometres northeast of Mexico City. ‘T his building, this town is built on silver tailings,” he said, laughing. “Five percent of the world’s copper is mined in Mexico, and the minerals contained in Mexico’s soil have an in situ value of 100 billion dollars. We mined 25 tons of gold last year, which is the 19th highest in the world.”

If he sounds somewhat boastful, it’s only because Mr. Escandon believes that the Mexican mining industry is underrated in the world, and he appreciates what Canada has already learned: that Mexico has a thriving, vibrant and stable mining industry.

In Mexico as in Canada, NAFTA has provided both significant opportunities and challenges for the mining industry and beyond. A recent report by the Korea Institute for International Economic Policy said neither country has fully benefited from the elimination of customs duties with the United States.

“We need to increase our competitiveness,” said Dr. Réné Villareal, president of the Centre for Intellectual Capital and Competitiveness. Villareal singled out the North American auto industry as an example, but his advice applies to all sectors of the economy. “We are not taking full advantage of our

integration. In Mexico, we have labour, both with workers and engineers. Yon have natural resources and you have physical capital. The U.S., Canada and Mexico cannot look at one another as just another market anymore.”

Colima is the third smallest of Mexico’s 31 states, but in many ways it pushes well above its weight. The Port of Manzanillo, situated on the west coast of Mexico, ships 70 percent of the country’s exports, and is actually closer to inland American cities like Houston, St. Louis and others than the U.S. port in Long Beach California. The state has 40 percent of Mexico’s iron ore within its borders, and it is home to some of the most magnificent (and understated) tourist destinations in the country.

Perhaps the best news for Canadians, however, is Colima’s Department of Economic Development’s wish to do business directly with the Great White North. José

GREAT PANTHER RESOURCES LIMITED has

combined highly-experienced international management and ready access to capital, with high-quality silver & gold projects and established local professional staff in Mexico. With its 100% aquisition of both the high-grade Topia Silver Mine in Durango State and the Santa Fe Silver-Gold Mines in Guanajuato, Great Panther has recently become a silver producer, listed on Tier 1 of the TSX Venture Exchange, and is well-positioned to become one of the world's larger primary silver producers.

The Topia Mining District is one of the oldest in Mexico, with the discovery of silver dating back to 1538. The Topia Silver Mine was opened in 1952 by Minera Mexicana Peñoles, now Mexico's largest silver producer.

The Guanajuato Mining District is one of the most prolific and best known silver districts

in the world, with silver being discovered in 1548 and estimates of historic production ranging from 700 million to 1.5 billion ounces of silver and 4 to 7 million ounces of gold. During the 18th century, the district was reportedly "producing one-third of the world's silver".

The three principal mines in Great Panther's proposed acquisition, the Valenciana, Cata and Rayas, are situated on the main Veta Madre (Mother Lode) structure that trends northwestsoutheast through the district for at least 25 kilometres. The Valenciana Mine was once said to be "the richest silver mine in the world". Bonanzastyle mineralization in the Veta Madre structure in this historic mine is still being extracted and is often considered as "direct shipping ore" (to the smelter) as the grades exceed those of the concentrates produced from average ore in the flotation plant.

SANDY BEACHES, warm weather, easy living, Tequila. Mexico's very name conjures up all of these images, and more. Yet they are usually associated with places like Cancún and Acapulco, which are billed as ready-made tourist havens for anyone with a hankering for sun and a week off.

It makes for a tough sell for the rest of the country - including the state of Colima, a tiny, wedge-shaped province in southwestern Mexico. Indeed, it is best known, not for its beaches, but for the Port of Manzanillo, the most important in the country (see related article.)

Important as it is, the port overshadows what is a vibrant and important tourist sector that has had enormous success in drawing Canadian tourists. And it has done so in large part by billing itself as the 'anti-Cancun'.

You won't find the acres of imposing hotel highrises or the typically boozy clientele associated with them, anywhere on the state's 150 kilometres of beaches. They are rarely crowded, or noisy. The city of Colima, which is about an

hour from the coast, manages to be at once both bustling and serene - Cancún without the hustle. Most of Manzanillo's beaches are happily out of sight from the bustling port, where some 70 cruise ships landed last year.

The state has five golf courses, including the flagship Isla Navidad, designed by Robert von Hagge. It is renowned for its deep-sea fishing, and holds the international sail-fishing tournament every year. There are turtle and crocodile reserves, La Fundición Natural Park, as well as the active volcano, Volcán de Fuego, which puffs out majestic clouds of smoke over the city of Colima (not to worry, though: it won't erupt into the city itself.) There are five different climates. All of this, and more, are within an hour's drive in any direction.

'There's a saying in Kalima: If you drive too fast, you'll probably miss it," said Sergio Marcelino Bravo Sandoval, Colima's Minister of Tourism. "Within one hour, we have beaches, volcanoes, amazing food, cultural diversity, ecotourism and nature preserves."

It is also secure: a recent government survey said it was the safest city in the country. Mr. Bravo says the stability and lack of corruption, as well as the important shipping trade, have made the state a haven for 'business tourism', a place where business people can mix business with pleasure for the whole family.

What's more, roughly 75 percent of the one million visiting tourists are Canadian, and there are regular direct charter flights from Vancouver, Montreal, Toronto and Calgary.

The Port of Manzanillo, situated on the west coast of Mexico, ships 70 percent of the country's exports, and is actually closer to inland American cities like Houston, St. Louis and others than the U.S. port in Long Beach California.

Ignacio Peralta Sánchez, the minister in charge of all things industrial in the state, is bullish on trade between the two countries at NAFTA’s extremities.

Though he stresses the importance of increased economic cooperation between all three NAFTA countries - “We have to face China and India so let’s forget about fighting amongst ourselves, integrate and face the rest of the world,” he says - Mr. Peralta stresses the common interests between Mexico and Canada.

Shipping goods through the United States adds another layer of bureaucracy and customs hassles, which costs time and money. It’s a waste - especially considering the direct link between Colima and Vancouver. Mr. Peralta has met with Canadian trade officials to discuss a sister agreement between Manzanillo and the Fraser Port in Vancouver. “We have to develop the link between the two countries without going through the United States. You only have to deal with Mexican and Canadian customs, so you can forget about the United States.”

Colima’s environment is rich ground for potential investors. Transparency International recently rated Colima as having the lowest governmental corruption index in all of Mexico.

The linchpin of the industrial sector is the Port of Manzanillo, a 437-hectare deep-water port that is one of the key points of the so-called ‘Super Corridor’ that begins in Mexico and goes all the way to Churchill, Manitoba.

CONTINUUM RESOURCES holds in excess of 70,000 hectares of exploration ground in the state of Oaxaca, Mexico. Included in the property portfolio are two of the most significant past-producers of gold and silver in southern Mexico: the San Jose epithermal silver-gold deposit and the Natividad epithermal goldsilver deposit.

Continuum is exploring numerous additional, less advanced gold-silver projects located in Oaxaca, including the Lachiguire carbonate-hosted silver, lead, zinc prospect.

SOUTH-MALARTIC EXPLORATION is a Canadian junior mining exploration company dedicated to achieving its goal of enhancing shareholder value by acquiring, exploring and developing high potential precious metal projects in Mexico.

The Company is increasing its efforts in this country, offering great opportunities for new precious metal discoveries, and is in the process of accumulating a promising property portfolio.

KPMG PROVIDES CORPORATE GUIDANCE through its multi-disciplinary services by means of

As file busiest port in the country, the port had 1,558 ships dock in 2005, moving nearly 873,000 containers and roughly 71,000 new cars. “We are not hy ing to compete with the U.S.,” says Port of Manzanillo CEP 1 léctor Mora Gómez. “Of course, we haven’t had a work stoppage or a union problem in over 80 years.”

audit, tax and advisory services. Since 1995, Mexico has really become a true part of the North American economy. As a result of NAFTA, it has grown to become the ninth largest economy in the world. Stability has been, in recent years, the best way to describe this robust, emerging land of opportunity. There are 16,000 foreign-based companies established in Mexico today, a true testament of Mexican/foreign co-operation.

With 16 offices in Mexico, 1700 to 2000 employees (including 107 partners), KPMG works closely with Canadian companies who have the support of the Canadian Chamber of Commerce and the Bank of Nova Scotia (the only Canadian bank in Mexico).

CREAM MINERALS LTD. is a mineral exploration company with properties in Canada, Mexico and Sierra Leone, Africa. The Company is working to enhance its value through the acquisition of gold, silver, base metal and gemstone properties which may hold economic merit.

The 100% owned Nuevo Milenio Property is located in the Municipality of Xalisco, Nayarit, 20 km southeast of Tepic in the area of the Ejido El Refugio.

As well, Mr. Peralta points out, Colima’s mining sector is one of the most important in the country. Tire state produces 40 percent of Mexico’s iron ore, as well as important deposits of copper, gypsum, salt, dolomite and granite, among others.

Manzanillo is readying itself for a massive Liquefied Natural Gas (LNG) project that

AVINO SILVER is exploring five top silver projects in Canada and Mexico. All their properties are company-owned 100%. In Mexico, Avino has over 30 years of operating history and long-standing business relationships.

From 1974 to 2001, The Avino Mine produced silver, gold, copper and lead and provided hundreds of jobs for the Durango region before closing due to low metal prices. Beginning in 2002, Avino redirected its corporate strategy to focus almost entirely on silver, and began acquiring silver properties in North America. The Avino Mine and surrounding mineral leases continue to hold excellent silver potential.

The Avino mine was once described by Spaniards as a "mountain of silver." Indeed, the mine first opened in the 1500s and reportedly supplied considerable wealth to Spain for hundreds of years. Now, Avino Silver can capitalize on the mining efforts of the 70's and 80’s when only 55% of the metals were recovered, leaving 45% behind in the tailings to be reprocessed by heap-leaching methods, and furthermined ore will be processed in Avino's mill, which is just a part of the full infrastructure that is in place.

will see the transport of LNG 300 kilometres east to Pemex City in Guadalajara - a contract on which Trans Canada pipelines is bidding. “I believe that if Trans Canada wins the bid for the LNG plant, Trans Canada will have one of the most important presences of any Canadian company not only in Colima, but in all of Mexico,” Mr. Peralta said. S

o Avino Silver & Gold Mines Ltd 455 Granville Street, Suite 400 Vancouver, BC V6C 1T1 Canada T (604) 682-3701 David Wölfin shares@avino.com; www.avino.com Continuum Resources Ltd 1188 West Georgia Street, Suite 1200 Vancouver, BC V6E 4A2 Canada 1-866-386-7505 Lawrence A Dick ¡nfo@continuumresources.com www.continuumresources.com Farallón Resources Ltd 1020-800 West Pender Street, Vancouver, BC V6C 2V6 Canada T (604) 684-6365; (604) 684-8092 1-800-667-2114 David J Copeland info@hdgold.com Cream Minerals Ltd 570 Granville Street, Suite 1400 Vancouver BC V6C 3P1 Canada T (604) 687-4622 Frank A. Lang info@creamminerals.com; www.langmining.com Minera William - ECU Silver Inc 559Témiscamingue, Rouyn-Noranda (Québec) J9X 7C8 Canada T (819) 797-1210 Michel Roy ecu@ecu.ca; www.ecu.ca

Excellon Resources Inc 6 Adelaide Street East, Suite 220 Toronto, ON M5C1H6 Canada T (416) 364-1130 A. Douglas Mackenzie info@excellonresources.com www.excellonresources.com Great Panther Resources Ltd 1177 West blastings St, Suite 2100 Vancouver BC V6E 2K3 Canada T (604) 608-1766 Robert A Archer info@greatpanther.com; www.greatpanther.com South-Malartic Exploration 1745, Chemin Sullivan, Val-d'Or (Québec) J9P 1M8 Canada T (819) 824-5422 Mr León Méthot info@malarticsud.com; www.malarticsud.com Omega Solder (Metal Vert) Mariano Avila # 685 Col. Tequisquiapan C.P. 78250, San Luis Potosí, Mexico. T 52 444 833 00 25 Cross Line Alessandro Volta Lote 1 Y 2 Col. Paraque Industrial Cuautitlan Izcalli T 52 55 58 70 62 76 Suministros Internacionales KM. 20.5 Carr. Puebla-Santana Santa Isabel Xiloxoxtla, Tlaxcala C.P. 90185. T 52 246 461 81 31 Y 461 81 32

KPMG Bosque De Duraznos 55 Col. Bosques de Las Lomas; C.P. 11700, MEX. D.F T 01 800 292 KPMG TJR AV. CFE No. 780, Zona Industrial Del Potosí, C.P. 78090, San Luis Potosi, Mexico T 52 444 824 10 42 Secretaria de Fomento Económico Colima AV. Ejercito Mexicano S/N. Esq. Libriamiento 3 Anillo PerifÉrico, Edificio A, Piso 2, Colima, Mexico. C.P. 28010 T 52 312 316 20 00 Secretaria Turismo Colima Tercer Anillo Periférico, Esq. Libriamiento Ejercito Mexicano, Zona Norte, Edificio B Piso 1, C.P. 28010, Colima, Col. T 52 312 316 20 00 Puerto de Manzanillo Av. Teniente Azueta #9 Col. Burócrata, Manzanillo Colima. C.P. 28250 T 52 314 331 1400 Embassy of Mexico in Canada 45 O'Connor, Suite 1000 Ottawa, Ontario Canada Kl P 1 A4 T (613) 233 8988 www.embamexcan.com For information on this special section please contact: tomf@ns.sympatico.ca chodgkinson@rogers.com shehollan2@marcatel.com.mx