American Bonanza Gold Corp

Feasibility Study and Test-Mining Operation

In late 2002, Taurus initiated a feasibility study and test-mining program to expand the positive results of the earlier bulk-sample program. New drilling has indicated a broad, and much larger zone of rock alteration and gold mineralization, which is similar to that of the bulk-sample area. Every drill hole within this zone intersected strong gold-related rock alteration or gold mineralization.

The study includes results from 1,000 channel samples and 42 close-spaced diamond-drill holes (totaling 450 samples from 2,150 metres of drilling). The core has been carefully logged and a detailed geologic map has been compiled. A structural study conducted by SRK Consulting augments this mapping. SRK also compiled all relevant data and constructed a new mineral model and resource estimate, dated April 2003, which is used as the base case for the feasibility study and test-mining project.

The results support a simpler mineral model than originally interpreted at Fenelon. Instead of a complex series of replacement zones, the mineralization appears to be controlled by several through-going parallel shear zones, which can be traced, with drilling in the main Discovery Area, for at least 200 metres along strike and for at least 250 metres in depth. These shear zones continue, and are open along strike and to depth.

Using a statistical estimation method known as kriging, SRK has estimated that, as a conservative base case, 88,000 tonnes grading 10.9 grams of gold per tonne (0.35 oz/ton) is present in an area 120 metres long, 25 metres wide and extending 50 metres below the bedrock surface. SRK chose to limit its estimation to this restricted area, despite drill holes intersecting high-grade mineralization deeper in the zone.