River Hills Resource

Ecuador: Napo Basin Project

Ecuador is situated along the equator on the western coast of South America between Columbia and Peru. The country is divided into 22 distinct provinces totaling 271,000 square kilometers and has a population of approximately 13MM. The population is approximately 90% indigenous and Mestizo (mixed Indian and Spanish). The official language is Spanish, but indigenous languages are still spoken. Quito is the capital city.

During the 1990s, Ecuador made some market-oriented structural reforms, but incomplete implementation failed to create sustainable growth. It was not until 2000 that Ecuador began showing signs of structural change and growth. Since then, the country’s per capita income has been rising annually between 2.5% and 5.0%, while gross domestic product (“GDP”) has grown annually by a similar amount. Dollarization has led to a marked deceleration in inflation, falling from an annual rate of over 90% in 2000 to 2.7% in 2004.

The mining sector is governed by the Ministry of Energy and Mines. The purpose of the Ministry is to help set and enforce the legislated mining regulations. Before 1991, Ecuador lacked a firm system of laws by which to govern the mining sector. Since 1991, the mining laws have been modified and simplified. Ecuador’s current Mining Law is oriented towards stimulating growth in the mining sector, encouraging foreign investment and is one of the most liberal mining laws in all of South America.

In Ecuador, the mining industry represents only 1% of GDP and less than 1% of exports. By comparison, in Peru and Chile mining accounts for 30% and 50% of annual exports, respectively. Ecuador, Peru and Chile all share a similar general geology in the Andes, but it was, in large part, the confusing, prohibitive and arcane nature of the previous mining law that retarded this sector of the Ecuadorian economy.

Honduras: El Transito Project

Conveniently located in the heart of Central America, Honduras' rich geological formations, gold mineralization and a stable, democratic government with an open approach to mining development, make it an ideal location for River Hills to begin its mining operations.

During the first millennium AD, western Honduras sat at the southeastern edge of the great Mayan civilization. The ruins at Copan attest to the advanced state of development of the country's population at the time. The large number of gold artifacts found in European museums demonstrate the abundance of gold located by the Mayans. The real conquest of Honduras began in 1524 and was characterized by bitter struggles among rivals representing Spanish power centers. Large population centers grew around gold mining areas, including Comayagua, Gracias, and Tegucigalpa, the country's capital. By the end of the colonial period, Honduras was an important supplier of foodstuffs and livestock to El Salvador and Guatemala.

In 1821, the country gained independence from Spain and, for the next century, conservative and liberal factions fought regional wars to control the republic. Over the past several decades, political control has vacillated back and forth between liberal and conservative parties, with any unrest caused mainly by the political instability in countries neighboring Honduras

Honduras is a member of the United Nations and the Organization of American States (OAS). Executive power in the country is vested in a president, who is elected by direct and universal vote for a four-year erm. The president appoints a Cabinet to assist him. Honduras is also divided into 18 departments, which are subdivided into municipalities. Each department is administered by a governor, who is appointed by the president. Municipalities are governed by elected councils.

In 1998, shortly after hurricane Mitch, the Honduras Legislature passed a new mining law, the "Ley General de Mineria" with the intention of attracting foreign capital to further develop its mineral resources.
In November 2001, Hondurans went to the polls and elected conservative businessman Ricardo Maduro as President. While he professed to be pro-business seeking greater economic integration, his term will be remembered as a "do nothing" administration.

As a direct result of his weak government, small political groups have been able to wield great power. Unfortunately for mining, one of those groups has been an active environmental faction that is clueless to how mining really works. The largest mine in the Honduras, the Entre Mares mine, owned and operated by Glamis Gold with production over 10,000 ounces per month, has suffered the majority of the public and political attacks, but all mining operations have been placed in peril by the inability of the current government to properly educate its people and enforce existing laws.

It is hoped that with a change in government, the mining industry in Honduras can be revitalized. In the meantime, the Company is focusing its efforts on establishing good relationships with the local governments and in running a safe mining operation.