Mr. Brent Johnson reports

OPTION AGREEMENT MINA PASCUA PROPERTY, CHILE

Further to the news release dated April 15, 2011, Mountain-West Resources Inc. has now entered into a written option agreement with Jorge Lopehandia and into a related historical disclosure agreement.

Pursuant to the option agreement, Mountain-West has acquired the right to purchase an option.

The price of purchasing the option is 2,000 troy ounces of gold. The purchase price is payable as follows:

• $925,589.88 (U.S.), which amount Mr. Lopehandia has acknowledged receiving;
• A further $1-million within 10 days of exchange approval;
• The balance of the purchase price within 15 days of exchange approval, which, among other things, is to confirm the registration of the option agreement against the mining claims (using a price of gold of $1,500 (U.S.) per troy ounce and an exchange ratio of $1 (Canadian) equals $1 (U.S.), the balance would be $1,074,410.12).

There is no express provision in the option agreement for extending the period in which to exercise the purchase right.

Upon exercise of the purchase right, Mr. Lopehandia will be deemed to have been granted Mountain-West the option to purchase 50 per cent of the property of Mr. Lopehandia, as described herein.

The option is exercised by delivering a notice of option exercise, which must be delivered within one year of the grant of the option, and then paying to Mr. Lopehandia 7 per cent of 18 million troy ounces of gold (assuming the gold price and exchange rates listed herein, the exercise price would be $1.89-billion). The payment and exercise of the option are conditional upon the delivery of a legal opinion opining, amongst other things, that the property is free and clear of all liens, charges, encumbrances, claims or rights of any kind whatsoever, including, but not restricted to, those of the owners of any underlying mining claims.

The option period may be extended for one year by the payment in cash of the cost of 2,000 troy ounces of gold, as determined in the agreement.

If Mr. Lopehandia fails to provide clear title, then all funds provided by the company become refundable. On the other hand, if for some other reason, the company fails to exercise either the purchase right or the option, then all amounts paid to Mr. Lopehandia become non-refundable.

The property includes Chilean mining claims that Mr. Lopehandia recently acquired and which he claims cover a portion of Mina Pascua, which is the Chilean portion of the mining deposit commonly called the Pascua Lama deposit, which lies in both Chile and Argentina. Barrick Gold Corp. claims to own the Pascua Lama deposit and thus the Mina Pascua deposit.

Mr. Lopehandia has a legal dispute with Barrick. The following is a very brief description of that dispute.

Mr. Lopehandia claims that he met John Lill, the president of a Barrick Chilean subsidiary, at the offices of the Barrick subsidiary in Santiago, Chile, in late 1996, at which meeting he entered into an oral agreement pursuant to which Mr. Lopehandia agreed to sell and Mr. Lill on behalf of the Barrick subsidiary agreed to purchase certain mining claims. Mr. Lopehandia says that those mining claims covered a significant portion of Mina Pascua, as Mina Pascua existed in 1996. Mr. Lopehandia's claims that he acquired those mining claims as a result of his due diligence of Barrick and Mina Pascua mining property areas pursuant to which he discovered in late 1995 and early 1996 some defects in Barrick's title to the Mina Pascua mining claims. Mr. Lopehandia advises that, following his discovery of those defects, he financed and organized the registration of his mining claims in the name of his mining engineer, Mr. Villar. Mr. Lopehandia advises that it was a common mining business practice to hold one's mining claims in the name of his mining engineer or in the name of his lawyer.

In 1996, Mr. Lopehandia informed Mr. Villar, his mining engineer, of Mr. Lopehandia's proposed sale to Mr. Lill of Barrick and authorized Mr. Villar and his wife (in Chile, a husband and wife must sign mining transfer documents) to sign a sale agreement regarding such. Mr. Villar and his wife attended the office of Eduardo Avello Concha, a notary in Santiago, Chile, just before the close of business on March 4, 1997, at which time Mr. Villar and his wife hurriedly signed a written agreement to sell the mining claims being the subject of the oral agreement between Mr. Lopehandia and Mr. Lill. Mr. Lopehandia says that Mr. Villar and his wife signed hurriedly as the office of notary Mr. Concha was about to close. Mr. Lopehandia claims that Barrick or the lawyers for Barrick prepared the form of purchase agreement, that Barrick did not provide Mr. Lopehandia any drafts of the agreement for review, that neither Mr. Lopehandia nor Mr. Villar reviewed any drafts of the agreement and that neither Mr. Lopehandia nor Mr. Villar had a lawyer present at the signing. Neither Mr. Lopehandia nor Mr. Villar was given a copy of the signed agreement, and neither Mr. Lopehandia nor Mr. Villar was paid anything for the mining claims.

After numerous requests by Mr. Villar to Mr. Lill of Barrick Chile for a copy of the signed purchase agreement, Mr. Villar then attended the office of notary Mr. Concha (about three months after the signing of the purchase agreement) whereat Mr. Villar was given a copy of the signed purchase agreement for the first time. Also for the first time, Mr. Villar noticed that the purchase price was 10,000 Chilean pesos (approximately $20 (Canadian)). Mr. Lopehandia claims this was not the price that he agreed with Mr. Lill. Mr. Lopehandia says that Mr. Lill agreed to a very substantial price.

Unbeknownst to Mr. Lopehandia, just four days before the signing of the agreement, Hector Unda Llanos, a mining engineer, staked some mining claims over very much the same area. Mr. Lopehandia claims that Mr. Llanos was the mining engineer for Barrick and staked the mining claims at the instruction of Barrick and for Barrick.

Following the signing of the purchase agreement, Barrick allowed the claims purchased from Mr. Lopehandia and Mr. Villar to expire. On the other hand, Barrick kept the Tesoros mining claims in good standing, and they now form part of each of Mina Pascua and Pascua Lama deposits.

Mr. Lopehandia advises that, in about 2000, Mr. Villar and Mr. Lopehandia had evidence that Mr. Llanos was applying to have the Tesoros mining claims transferred to a Barrick subsidiary. On March 4, 2001, at the instructions and financing of Mr. Lopehandia and for the benefit of Mr. Lopehandia, legal proceedings were commenced in the name of Mr. Villar in Santiago, Chile, in the 14th Civil Court, Court Action No. C-1912-2001 against Barrick subsidiary then named Compania Minera Nevada SA asserting that the written purchase and sale agreement of March 4, 1997, was null and void. Further, the lawyers for Mr. Lopehandia and Mr. Villar sought, and on June 5, 2001, obtained, an injunction prohibiting the transfer of the Tesoros mining claims to anyone. Mr. Lopehandia says that Barrick has attempted on numerous occasions to remove the injunction, but Barrick has failed each time. According to Mr. Lopehandia, the injunction as ordered by the Chile 14th Civil Court remains in place and in full force and effect.

The Barrick 2003 annual information form dated March 31, 2004, and filed in SEDAR (the AIF was also filed in EDGAR as part of the Barrick 40-F filing in the United States) admits to the commencement of Mr. Villar's legal proceedings and admits to the granting of the injunction (see the top of page 71 of the Barrick 2003 AIF). Mountain-West has not located any other public disclosure of Barrick admitting to the existence of Mr. Villar's litigation and Mr. Villar's injunction.

Barrick and Mr. Lopehandia also have had other legal proceedings between them. Barrick successfully sued Mr. Lopehandia for defamation in the Ontario Superior Court of Justice, court file No. 02-CV-238169CM2 (the judgment was a default judgment meaning that Mr. Lopehandia did not attend the court). Patrick Garver, the then general counsel for Barrick, swore an affidavit dated Feb. 11, 2003.

At paragraph 8, Mr. Garver stated the following: "One of Barrick's major mining projects is the Pascua Lama project in Chile. The Pascua Lama project is extremely important to Barrick and represents almost one-quarter of our worldwide gold reserves. That project, which will be developed through Barrick's subsidiaries or affiliates, is located at the northern end of the El Indio belt in Chile. The Pascua Lama project straddles the border between Chile and Argentina. Lopehandia's many false and defamatory postings are particularly troublesome to Barrick, and particularly damaging, because they call in question Barrick's title at Pascua Lama."

At paragraph 17, Mr. Garver stated the following: "The essence of Lopehandia's complaints appears to be that, during a meeting that he allegedly had with John Lill, the then president of CMN, he conveyed confidential information to Lill regarding the Amarillo claims, of which he allegedly was one of the four beneficial owners. He alleges that Villar, who was the only registered owner of the Amarillo claims, was, in effect, a trustee of the Amarillo claims for the undisclosed beneficial owners. He further alleges that during his meeting with Lill, Lill agreed to pay $3-million (U.S.) for the Amarillo claims. Lopehandia claims that Villar ultimately sold the Amarillo claims to CMN without his authority for only $25,000 (Canadian) and that the public documents evidencing the sale did not reflect the actual price of the sale in order to evade taxes. Lopehandia claims that the sale is null and void under Chilean law. Lastly, Lopehandia claims that the property comprising the Amarillo claims comprise the entire property of the Pascua Lama project. These allegations are more fully set out in a letter dated Jan. 23, 2001, from Lawrence Page, QC, who, for a brief period, represented Lopehandia."

At paragraph 18, Mr. Garver stated: "Mr. Page stressed in his letter of Jan. 23, 2001, that there was considerable urgency associated with resolving Lopehandia's claims because, he maintained, the applicable limitation period in Chile was about to expire. Notwithstanding his assertion, no legal action has been commenced against Barrick or CMN by Lopehandia or CMFCL."

At paragraph 20, Mr. Garver stated, "Following the delivery of our counsel's letter of Feb. 26, 2001, Lopehandia and his counsel stopped writing to Barrick and made no effort to commence legal proceedings against Barrick, either in Chile or in Canada."

Mr. Garver's Feb. 11, 2003, affidavit does not disclose the commencement of the Villar litigation in Santiago, Chile, on March 4, 2001. Mr. Garver's affidavit also does not disclose the granting of Mr. Villar's injunction on June 5, 2001. As stated herein, the Barrick 2003 annual information form dated March 31, 2004, and filed in SEDAR does disclose at page 71 the existence of Mr. Villar's litigation and does disclose the granting of Mr. Villar's injunction. Mountain-West needs to conduct further due diligence.

Mr. Lopehandia relies on a 2006 judgment of the 14th Civil Court (this was a trial judgment). The judge did not believe that the written price of 10,000 Chilean pesos was the agreed-upon and proper purchase price. Further, she found that the purchase and sale agreement to be null and void and that certain mining claims be restituted to Mr. Villar. Mr. Lopehandia states that the court ordered that the Tesoros mining claims be struck from the register in favour of the Amarillo North and South mining claims.

Various appeals and other hearings have since occurred. Mr. Lopehandia and Barrick agree that the last decision was not in Mr. Lopehandia's favour. Mr. Lopehandia says that he is appealing that decision. He says that the appeal should be heard shortly.

Barrick and Mr. Lopehandia do not agree on much more relating to the litigation following the 2006 judgment. Mr. Lopehandia states that Barrick's and Mr. Lopeahania's views of the facts, history and evidence are diametrically opposite.

Barrick suggests that Mr. Villar's legal proceedings have been defeated (Barrick letter of March 29, 2011). Mr. Lopehandia says that the legal proceedings are continuing. Barrick further says, "The concessions claimed by Mr. Villar are located outside of Pascua Lama's orebody." Mr. Lopehandia adamantly alleges that his mining claims cover at least 75 per cent of Mina Pascua and probably much more.

Barrick in its March 29, 2011, letter threatened to sue Mountain-West for defamation. Mountain-West retained a very well-known Vancouver lawyer specializing in the law of defamation. Many weeks ago, that defamation lawyer made written requests that Barrick provide:

• A map setting out the deposit and the mining claims of Mr. Lopehandia and Barrick;
• Copies of all of the Chile judgments.

Barrick has not provided the requested map nor has Barrick provided copies of all of the Chile judgments to Mountain-West or its legal counsel. On the other hand, Mr. Lopehandia has provided maps allegedly prepared by some Chile government officials. Mountain-West needs to conduct further due diligence.

On April 15, 2011, it announced a $900,000 private placement. The funds from this private placement are to be used to finance due diligence, both past and future, and for general corporate purposes. The exchange has required that none of those proceeds be provided to Mr. Lopehandia.

Provided that Mountain-West is satisfied with the results of the due diligence, Mountain-West will need to raise at least a further approximate $2.5-million and settle some debt to place itself in compliance with exchange working capital requirements and to place itself in a position for approval of the option agreement (once again, there is no guarantee that the exchange will grant approval).

Investors and the general public are urged to note that there are many great risks relating to these entire matters. Some, but not all, of those risk factors include:

• The option agreement is subject to exchange approval. There is no guarantee that the exchange will grant approval.

• Mountain-West has advanced a large sum of money ($925,589.88 (U.S.)) to Mr. Lopehandia toward the exercise of an option with Mr. Lopehandia without obtaining any security for those advances. If Mountain-West fails to exercise the purchase right or the option, then all amounts paid to Mr. Lopehandia are non-refundable.

• Mountain-West may not be able to complete the due diligence private placement.

• The further due diligence may not support the allegations of Mr. Lopehandia.

• Mountain-West may not be able to complete the further financing required to exercise the option and place Mountain-West in compliance with exchange working capital requirements.

• The matters relating to the Pascua Lama deposit and mining claims forming Pascua Lama are very complex. In particular, the issues of the title to the various mining claims are very complex. Further, the issues relating to the continuing Chile litigation relating to the various mining claims are very complex.

• Mountain-West has not retained legal counsel in Chile to confirm the status of the legal proceedings in Chile and to confirm the status of the various mining claims.

• The legal issues, including the Chile litigation, may take years to be resolved. This is supported by the fact that the Chile litigation between Mr. Villar/Mr. Lopehandia and Barrick has been continuing for approximately 10 years and that it is still not resolved.

• The mining property and mineral right issues of the underlying mining claims may not be resolved in favour of Mr. Lopehandia.

• Mountain-West has not yet been able to confirm Mr. Lopehandia's claim that the Mina Pascua deposit is substantially covered by his mining claims.

• Many of the statements of Mr. Lopehandia appear to be directly contradicted by the statements of Barrick.

• As a very senior mining company, Barrick should be considered to have well informed itself of all litigation risks.

• Barrick has claimed in a letter dated March 29, 2011, that the March 2, 2011, news release of Mountain-West was defamatory and threatened legal proceedings. Although Mountain-West is not aware of Barrick commencing any legal proceedings, Barrick may commence such legal proceedings in the future. If Barrick does commence legal proceedings claiming defamation, it may take years to resolve. Any such litigation could be extremely expensive for Mountain-West to defend. Barrick has far greater financial resources than does Mountain-West.

We seek Safe Harbor.