Overview


Arco Resources Corp. is a Canadian junior resource company trading on the TSX Venture Exchange. The company was launched three years ago as a uranium explorer but recently unwound its uranium interests and, together with a name change, shifted focus to a package of gold, silver and polymetallic projects in southwestern Mexico. Additions to the company's technical and management team reflect this shift in focus. Arco is directed by an experienced board with significant success in managing early and advanced stage mineral exploration projects.

Today the company holds a portfolio of promising exploration properties with a 100% interest in some seven mineral claim blocks, several of which boast known mineralization and past production. Arco’s entire land portfolio is located in the Oaxaca district, itself a developing area play with several new and soon-to-be producers including Gold Resources Corp., Chesapeake Gold and Fortuna Silver Mines — all multi hundred million dollar companies. Arco management was formerly associated with the nearby San Jose Mine, now controlled by Fortuna Silver Mines, and is very familiar with both the land and the politics of the region.

In April 2010 the company completed a $1.3 million financing. While this is still a small sum considering the number of potential targets in its portfolio, it should be more than sufficient to drill test the company's two most promising targets, Predilecta and Taviche — both past producers of gold and silver. With a current market capitalization of less than $5M and a land package the envy of significantly larger mining companies, Arco presents a compelling value proposition for those following the junior explorers.


Project Summaries


Arco’s four core projects are the 100% owned Predilecta, Taviche, Cuatro Venados and Tres Hermanas properties. Of these, Predilecta and Cuatro Venados are drill ready and scheduled to see extensive work in the upcoming 2010 work program comprising approximately 2,000 metres of drilling. All four projects are located in the heart of the Oaxaca mining district in proximity to other mining companies (see below).


Predilecta

Arco entered into an agreement in January 2010 with a wholly-owned subsidiary of Fortuna Silver Mines Ltd. to acquire a 100% interest in the Predilecta property.

The Predilecta Property comprises a total of 3,181 hectares, located 68 kilometres southeast of Oaxaca City. The property contains multiple mesothermal gold-bearing quartz veins. This was a previously worked property and is close to infrastructure and transportation. Previous underground sampling returned values up to 143 g/t Au over 0.45m. Underground sampling averaged 19.26 g/t Au along 95m with an average width of 0.57m.


The property contains a number of gold-bearing quartz veins, lodged in shears within a Precambrian gneiss complex. Of these, the two best known are the Predilecta Vein, which is tested for a length of 120m by a tunnel, and the La Crus area, which is a complex zone of shearing, alteration and mineralization with old workings in three sectors. Both of these areas have been examined by the Mexican equivalent of a geological survey.

The vein or veins appear to pinch and swell considerably and be offset by faults. The Federal department Consejo de Recursos Minerales also examined this area, and on the basis of limited sampling found an average grade of 19.59 g/t Au and 63 g/t Ag in a vein averaging 0.82m in width.

In addition, there are other underexplored gold-bearing quartz veins on the property that have returned values between 13.85 and 19.8 g/t Au from limited sampling. Only seven drill holes have been spread over the two main veins with limited success, however Arco geologists believe the veins warrant further testing.


Work was started at the Predilecta site by the Spaniards, who were forced to leave during the Mexican War of Independence. Although there was minor production at various places and times, the next important exploration was the driving of the Predilecta exploration tunnel some 15 years ago under the management of Sr. Manuel Lopez. This work was partly financed by the Mexican government, and was stopped after about two years when that financing was withdrawn.

More recent effort has focused on the La Crus zone in the southern part of the property. In 1995 and 1996 considerable work, including trenching, was carried out on behalf of Harrison Western Company, who was subsequently unable to raise money for the project due to metal prices and the effect of the Bre-X scandal. Their data is not available, but at about the same time, sampling was carried out by the federal department Consejo de Recursos Minerales.

All known gold deposits occur in the mid-Proterozoic basement gneiss complex, which has been cut by rhyodacite, andesite and other dykes, as well as by pegmatites and the host quartz veins, which tend to follow shear zones. With few exceptions, the folding in the gneisses is open, although faulting and shearing are common. Some areas are migmatitic, and intrusives appear to be involved.

The gneisses are overlain by an undulating cap of massive marine limestones, which have been assigned to the Teposcolula Formation of Upper Cretaceous age. These do not appear to have been involved in the mineralizing episodes, although local silicification was noted in some areas. The contact between these units is remarkably clean and simple at most sites observed, although massive magnetite has formed by limestone replacement in at least one part of the contact. In general, however, the limestone is not of obvious importance, and the geology of the property has not yet been mapped.


Taviche

Taviche is a silver-gold-bearing quartz vein with typical epithermal textures and existing historic (Spanish and subsequent) underground workings. The vein can be traced for over 1.5 kilometres. Five hundred metres of continuous underground workings can be seen in one level. A second deeper level is known to have a 100 metres length. The laterally continuous vein varies in thickness from one to five metres but appears to average two metres and is sub- vertical. Epithermal textures include open space fillings, bladed veining and megacrystic carbonate replacement, all significant textures known in gold-silver epithermal deposits. There are no records of the grades from the vein system. Access to the project is good, as it is less than one kilometre from paved road and an approximately one and a half-hour drive from the capital of Oaxaca.

The Company completed an extensive surface and underground sampling program in November and December 2009 to determine the average grade before considering a drill program. Channel samples were taken every six metres across the full width of the vein along the full 500m of underground, as well as every 10 metres where exposed on surface. This sampling program defined a 230 metre long shoot of the vein with silver-gold values averaging 173 g/t Ag and 1.5 g/t Au. Corresponding surface sampling approximately 15m above the underground workings identified a similar 220m long shoot averaging 161 g/t Ag and 2.18 g/t Au. This defines an attractive target for Arco to follow to depth with drilling. In addition, the vein is mineralized in the westernmost 110 metres of the underground workings, with an average grade of 73 g/t Ag and 0.6 g/t Au, forming a secondary drill target. The Company has determined the results reasonable to proceed to the drill permit stage for this target.


Cuatro Venados

The 3,631 hectare Cuatro Venados property covers a 5 kilometre strike length of a gold-bearing quartz vein. Historic mining took place in the northern and southern parts of the vein. The northern multi-level underground workings lies on a claim held by the local community amenable to negotiate a deal with the Company. The vein is generally 1 metre wide with grades up to 12.6 g/t but appear to average 4-8 g/t Au. Very little prospecting and sampling has been done on the vein between the underground workings. The Company plans to prospect this area to evaluate the vein and identify sections of higher grade gold values.


Tres Hermanas

The 3,710 hectare Tres Hermanas Property covers a silver-lead-zinc-bearing vein system that has historic underground workings on 5 levels along a 400m strike. Sampling underground show local values >500g/t Ag. The Company has taken chip samples including 764.5 g/t Ag and 10.4% lead across 1.5m. Regional soil sampling has indicated the vein system continues along strike in both directions. The vein system shows widths of 1-2 metres with a lower grade shell upwards of 15 metres wide. The Company continues to evaluate this project and work with the community.

Management


Warren McIntyre
Position: President & CEO
Mr. McIntyre has been a director or officer of numerous stock exchange listed companies. He has extensive finance and M&A experience with both private as well as public companies. He has over 15 years of experience in the equity markets, primarily with venture capital, second round financings and IPOs in the mining sector. He has been a director and the corporate secretary of Continuum Resources Ltd., a junior exploration company, since March of 2003, and past director and Chief Financial Officer of Evolving Gold Corp., a junior exploration company listed on the CNQ, since June of 2004.

Paul Cowley
Position: Chief Geologist
Mr. Cowley brings over 30 years of experience and has held technical and managerial positions exploring for gold, base metals, diamonds and coal worldwide. He has extensive experience in a major company and on projects including the Escondida world-class copper mine in Chile, the Ekati diamond mine and the Slave gold project in the Canadian Arctic. The Slave gold project spawned four significant gold deposit discoveries amounting to approximately 5 million ounces of gold. He has contributed extensive involvement in junior mining companies at VP Exploration and directorship levels and was instrumental in putting the Lexington-Grenoble gold-copper mine into production. He has spent an aggregate of four years in Latin America.

Jeffrey Sheremata, M.B.A., LL.B.
Position: Vice President & Corporate Secretary
Mr. Sheremeta practiced securities law with the firm of Lang Michener LLP in Vancouver, British Columbia for six years until May 2006. His practice focused on financing, reorganization and acquisition of public and private companies, including reverse takeover transactions involving both Canadian and U.S. exchange-listed companies in all industries including resource, technology, and industrial issuers. During this period, he served on secondments with the TSX Venture Exchange in Vancouver and with the firm of Mound Cotton Wollan & Greengrass in New York City. He also helped prepare and teach a course on securities law for legal assistants at the Vancouver Community College in 2002 and 2004. Mr. Sheremeta now provides legal and consulting services to several public and private companies in Vancouver. Mr. Sheremeta received his M.B.A. from Queen's University in May of 2006. He received his Law Degree from the University of British Columbia in May, 1997, and was called to the British Columbia Bar in June of 1998. He originally received his Bachelor of Commerce from the University of Alberta in May 1992. He also completed his Canadian Securities Course in June of 1998.

Simon J. Anderson, C.A.
Position: Chief Financial Officer
Mr. Anderson is a Chartered Accountant with a range of experience as an officer and director of public companies in Canada and abroad, having acted as an officer or director of companies listed on the TSX, TSX Venture Exchange, American Stock Exchange and the OTC market. He articled with Collins Barrow, Chartered Accountants and subsequently moved to BDO Dunwoody where he specialized in business and securities valuations. For the last ten years, Mr. Anderson was a principal of MCSI Consulting Services Inc. where he helped develop the financial strategies and operations of public companies. Mr. Anderson is the Chief Financial Officer of IBC Advanced Alloys Corp. a vertically integrated rare metals manufacturing company.

Robert McMorran
Position: Director
Mr. McMorran is president of Malaspina Consultants Inc., a private company that provides accounting and administrative services to junior public companies. Robert has over 20 years of experience dealing with financial reporting and the administration of public companies, the last ten years through Malaspina. During this time, he has served as an officer and/or director of several public companies primarily involved in mineral exploration and development. Currently, Mr. McMorran is a director and Chief Financial Officer of Continuum Resources Ltd., a director of Terra Ventures Ltd., and Chief Financial Officer of both Wave Exploration Corp. and Merit Mining Corp. Until recently, Robert was Chief Financial Officer of the Canada Dominion Resources Group family of flow-through limited partnerships. Mr. McMorran has been a member of the Institute of Chartered Accountants of B.C. since 1981. He received his Bachelor of Science in Mathematics from Simon Fraser University in 1976.

John Sutherland
Position: Director
Mr. Sutherland is a Certified General Accountant and holds a diploma in Operations Management from the B.C. Institute of Technology. He is currently the Vice President and Chief Financial Officer of Goldgroup Resources Inc., a private gold exploration company. He is also the Corporate Secretary of Uracan Resources Ltd. In addition, he is currently a director of four other public companies: Aquiline Resources Inc., Silex Ventures Ltd. and Amicus Capital Corp., and International Absorbents Inc. Mr. Sutherland has a long and successful history of advising growth companies regarding corporate finance matters. He was Chief Financial Officer of Arequipa Resources leading up to its acquisition by Barrick Gold for $1.1 billion in 1996. He was also a partner in a venture capital company specializing in worldwide marketing ventures and previous to that, Site Manager in building a $110 million gold mine in California. Most recently, he was co-founder, Vice-President and CFO of Tekion, Inc., a private micro fuel cell developer, and was a key partner in its growth from four to 75 employees in less than three years while raising US$18 million in capital. Prior to Tekion, he was President and CEO of ASC AVCAN Systems Inc., which he helped build into an international operation.


Additional Information


Executives:
 Warren  McIntyre
Warren McIntyre
President & CEO

Mr. McIntyre has been a director or officer of numerous stock exchange listed companies. He has extensive finance and M&A experience with both private as well as public companies. He has over 15 years of experience in the equity markets, primarily with venture capital, second round financings and IPOs in the mining sector. He has been a director and the corporate secretary of Continuum Resources Ltd., a junior exploration company, since March of 2003, and past director and Chief Financial Officer of Evolving Gold Corp., a junior exploration company listed on the CNQ, since June of 2004.