Teras Resources Inc V.TRA

Desjardins Precious Metals Weekly Rept May 4/11

[thomsoni]

 The maps did not copy....a lot of high grade intercepts were present.

Precious Metals Weekly

PAGE 8

MAY 4, 2011

Desjardins

Securities

Brian Christie

Graham Markham, CA, CFA,

Associate

Cahuilla site visit—“a hidden gem in the California desert”

On April 28, 2011, we visited Teras Resources’ Cahuilla gold exploration project, which is located in northwest Imperial County, California, about 30 miles south of the city of Indio. Cahuilla is a large, epithermal, paleo–hot springs system hosting multiple bonanza-grade veins that occur within an extensive body of disseminated gold-silver mineralization.

Background—several major gold companies have been active on the property

The project is located on both tribal (Torres Martinez Desert Cahuilla Indians, TMDCI) and private lands, and Teras has an option to initially earn a 65% interest for shares and a work commitment.

In 1987, Fischer-Watt Gold Company leased private lands adjacent to the tribal lands and entered into a joint venture with Homestake Mining, which drilled 23 holes in 1989. Newmont leased 80 acres of private ground in 1988 and conducted a 20-hole exploration program. The results from both drill programs were encouraging, but indicated that the most favourable targets were on tribal lands. In 1990, TMDCI obtained Federal funding through the Bureau of Indian Affairs and drilled 56 holes that resulted in a major gold discovery. The discovery hole yielded 240ft at 0.112opt gold from 85–325ft. The Bureau of Indian Affairs and the Division of Energy and Mineral Resources subsequently estimated a non-NI 43-101–compliant mineral resource of

about 360,000ozs.

In 1993, Kennecott acquired the private lands from Fischer-Watt and then took out a lease on the TMDCI lands in 1995. From 1995–96, Kennecott drilled a total of 114 holes and successfully outlined what it believed was a significant zone of gold mineralization.

In 1995, Southwest Exploration mined about 4,500 tons of ore from a quartz vein in an area known as High Grade Hill. The ore graded 0.3–0.4opt and was used for flux at a copper smelter in Arizona. Kennecott collected a small royalty payment.

In 1996, Kennecott engaged Mine Development Associates (MDA) to perform an independent mineral resource estimate. At a 0.01opt cutoff, the Cahuilla deposit was estimated to contain 750,000ozs of indicated resource and 106,000ozs of inferred resource at a grade of ~0.02opt (all non-43-101–compliant). In its report, MDA stated that high-grade mineralization is likely understated in the resource due to the wide drill spacing. In addition, no attempt was made to quantify the silver content.

That same year, Kennecott was acquired by Rio Tinto PLC and the new company decided to relinquish all gold properties in the US. In 2004, Western Goldfields executed an exclusive letter of intent with TMDCI, but limited work was carried out. New management at Western Goldfields decided to drop all exploration lands and focus on the Mesquite mine in 2006. The letter of intent was then acquired by Dome Copper, a wholly owned subsidiary of a private company known as Consolidated Goldfields Corporation (CGC).

Teras is earning its interest from CGC, which is headed by Thomas Callicrate and Thomas (Toby) Mancuso, who work for Teras as Vice-President of Exploration and Vice-President of Corporate Development, respectively.

Geology and mineralization—both bulk mineable and high-grade veins

The Cahuilla property occurs along the western edge of the Salton Trough in the Santa Rosa mountains, which consists primarily of plutonic rocks of the Southern California batholith and their metamorphic equivalents. The property is underlain by Jurassic-aged quartz monzonite intrusive rocks to the north and separated from Quaternary Palm Springs Formation sedimentary and volcanic rocks to the south by the Modoc Fault Zone. The Modoc Fault is the main control for mineralization at Cahuilla.

Cahuilla is categorized as an epithermal, gold-silver–bearing hot springs system, which would have similar potential to the Midas, Sleeper or Comstock deposits. Two distinct styles of mineralization are present:

1. Tabular bodies within the sedimentary and volcanic rocks in the hanging wall of the Modoc Fault. This is basically lower grade bulk mineable mineralization.

2. Structurally controlled sheeted quartz veins and stockworks localized along the Modoc Fault. Channel samples and drilling have yielded values up to 0.85opt over 25ft.

Gold and silver mineralization is commonly associated with silicification, and gold occurs as high-silver electrum or in native form. Historical drill hole locations and high-grade vein intercepts are shown in Exhibit 15.

Exhibit 15: Historical drill hole locations and high-grade vein intercepts at Cahuilla

Source: Company reports

25’ @ 0.85opt

5’ @ 0.28opt

25’ @ 0.17opt

5’ @ 0.21opt

45’ @ .350opt

5’ @ 0.42opt

5’ @ 0.69opt

5’ @ 0.26opt

15’ @ .314opt

5’ @ 0.25opt

5’ @ 0.44opt

5’ @ 0.36opt

5’ @ 0.43opt

5’ @ 0.26opt

15’ @ 0.48opt

20’ @ 0.21opt

Work to date suggests that the mineralized system is 4,000ft wide by 2.5 miles long (Exhibit 16) and is completely open along strike and at depth.

Exhibit 16: Current resource area and potential mineralized trend

Source: Company reports

Drilling now underway at Cahuilla to upgrade and expand the resource

In late 2010, Teras drilled three core holes (1,356ft) within one of the main historical mineralized areas to
substantiate the existing mineralization and calculate a new NI 43-101–compliant resource. Significant intercepts include up to 0.024opt over 53.0ft. Significant silver mineralization was also encountered and geochemical sampling indicated that the epithermal system contained anomalously low mercury, arsenic and antimony values.

In early 2011, Teras drilled 14 shallow core holes to evaluate one of the high-grade, banded, epithermal quartz veins. Significant values from this program include 0.32opt gold and 12.47opt silver over 9.0 ft, 0.20opt gold and 0.78opt silver over 9.0ft and 0.42opt gold and 5.73opt silver over 2.5ft.

A 217-hole program is now underway with the goal of infilling and expanding the resource area, as well as further testing the extent of the high-grade vein systems. The first holes are being drilled at High Grade Hill (Exhibit 17).

The company is also permitting a second round of drilling (another 200 holes) to further test the extent of the mineralized zone. The company believes that the property has potential to host at least 3m ozs of gold that can be exploited by open pit and underground mining methods.