The objective of Farallon's socioeconomic program is to promote sustainable development in the communities within the area of influence of the Campo Morado property. The communities characterize and define sustainable development in their region as access to health care, education, infrastructural issues such as access to transportation, clean water supplies, supporting their cultural identity, participation in community celebrations as well as care and consideration for the environment. Farallon is working to promote, participate and lobby in conjunction with the local mayors, municipal authorities and educational institutions for participation in coordination at all levels, including the state and federal government level.

The philosophy of participation is to encourage community advocates who will dialogue through the process of transformation as the communities within the area of influence work towards sustainable development. The area was losing its youth to emigration outside of the area in recent years. It would be our intention to half that trend and even reverse it.

Farallon's community and sustainability policies are to:

• Contribute to the promotion of equity between men and women in the mining work force
• Commit to the hiring and training of people from the local communities
• Foster integrity in the effort to promote sustainable development in the communities
• Promote economic and socially sustainable activities taking into consideration the local population, productivity, technology and the environment
• Encourage and retain local culture and customs

Education and training is fundamental to the promotion of a sustainable workforce as well as sustainability in the local communities. Farallon is currently working in the local communities and with the local workforce in the promotion of basic, technical and mine specific training programs.

In conjunction with the municipal, state and federal governments, Farallon is contributing to the salaries and transportation of locally certified instructors from the National Institute for Adult Education in providing basic, elementary and secondary educational programs to 22 communities and 154 adult students. The program boasts 40 graduates since its introduction into the area in November 2006. Farallon has signed training agreements with the federal technical training institution CONALEP in the certification of its labour force and is working with private institutions in the development of material for a multifunctional mining workforce.

Farallon is working in conjunction with the following federal and state government institutions:

• CONAFOR -- Comisión Nacional Forestal (National Forest Commission)
• SEDESOL -- Secretaria de Desarrollo Social (Secretary of Social Development)
• SDUOP -- Secretario de Desarrollo Urbano y Obras Públicas (Secretary of Urban Development and Public Works)
• SEMARNAT -- Secretario del Medio Ambiente y Recursos Naturales (Secretary of the Environment and Natural Resources)
• SAGARAP - Secretario de Desarrollo Rural (Secretary of Rural Development)

The Company continues to have an open door policy to the local community as well as working with local "Comtes de Asesoria Comunitaria" in the five satellite communities by further defining and working towards sustainable development in the local region.

Developing a Local Workforce

We have established and maintained positive relationships with the local communities during our years of exploration and development work at Campo Morado. The result is that the people of the region support our activities and want to be meaningful participants in development and production activities. The completion of a baseline socioeconomic survey in 2006 revealed an available pool of local workers. To prepare the workforce, Farallon has partnered with government and training institutes to implement education and training programs which will assist people in the local communities to prepare for direct and indirect jobs at G-9. The Company holds ongoing community information sessions to discuss a wide range of topics related to mine development and has assisted with the organization of community meetings for the five satellite communities from which the local workforce will be drawn.

The safety of our employees at the work site is a primary concern. We have designated safety officers overseeing work practices on the surface and underground. Each contractor working on site is required to have their own safety person who is in turn supervised by a Farallon employee.

A Commitment to the Environment

As part of Farallon's commitment to responsible mining, a high level of environmental planning and awareness has been maintained during all of the Company's activities at Campo Morado. In addition to routine air, meteorological and water quality monitoring (groundwater, surface and potable), a comprehensive environmental plan has been approved by the Mexican authorities. Farallon is working under the supervision of the National Program for environmental auditing -- "programa nacional de auditoria ambiental" -- to obtain clean industry certification. The Company's environmental team is led by an individual with 20 years of experience in environmental management, two forestry engineers and one agronomist.

Furthermore, Farallon has been steadfastly carrying out reclamation activities at old drill sites and roads. More than 30 kilometers of roads and 114 drill sites have been reclaimed using native plant species grown in nearby nurseries. The Company is in the process of developing an astonishing 100,000 tree nursery, the products of which will be used during the next rainy season for reforestation projects and for distribution to local communities in the region. Other environmental initiatives currently underway include water and soil conservation projects.